DENVER INTERNATIONAL AIRPORT (DEN)

Size: px

Start display at page:

Download "DENVER INTERNATIONAL AIRPORT (DEN)"

Suzan Irma Richards
6 years ago
Views:

1 DENVER INTERNATIONAL AIRPORT (DEN) 2017 Budget Submission America s favorite connecting hub, where the Rocky Mountains meet the world. 1

2 Financial Structure Denver International Airport is an Enterprise organization No tax dollars No general fund dollars Issues its own bonds Debt paid by net revenues generated 2

3 Revenue Profile Two revenue types: Airline and Non-airline Airline revenues Fees are charged to the Airlines in order to recover costs Includes facility rent and landing fees Governed by FAA policy and Airline Use & Lease Agreement Non-airline revenues Includes all other revenue sources such as parking, concessions, hotel, car rentals, aviation fuel taxes, oil and gas and land rentals Provides an additional revenue source for the Airport to reinvest in our facilities Continuing to diversify our sources of nonairline revenues is a key objective Some revenue sources are dedicated to supporting specific objectives 3

4 Revenue Use Restrictions FAA restrictions on revenue usage: All airport revenues to be used for aviation related purposes Support ongoing operation and maintenance (O&M) Fund capital improvements Develop additional sources of revenue Airport pays the City for services provided to the Airport (~$61M per year) Police Fire Auditor Human Resources Legal Services Division of Small Business Opportunity Indirect Cost Allocation costs shared/split amongst City entities Uniform Services Finance & Risk Management Technology Services General Services Mayor s Office & City Council 4

5 DEN Strategic Overview Inspiring Our Employees Excelling in Financial Performance Winning the Hearts of Our Customers Maximizing Our Real Estate America s favorite connecting hub, where the Rocky Mountains meet the world Partnering for Operational Excellence Putting DEN on the World Map Investing for Sustainability 5

6 DEN Organization Structure Kim Day Chief Executive Officer Xavier DuRán General Counsel Airport Legal Services Ken Greene Chief Operating Officer Executive Vice President Patrick Heck Chief Commercial Officer Executive Vice President Gisela Shanahan Chief Financial Officer Executive Vice President Eric Hiraga Chief of Staff Executive Vice President Darryl Jones Chief Real Estate Officer Executive Vice President Vacant Director Operations Administration Neil Maxfield Senior Vice President Concessions Greg Hegarty Senior Vice President Business Operations Vacant Senior Vice President Global Affairs Vacant Senior Vice President DEN Real Estate Dave LaPorte Senior Vice President Airport Operations Mukesh Patel Senior Vice President Properties, Hotel & Airline Affairs Hugh Curran Senior Vice President Financial Management Stacey Stegman Senior Vice President Communications & Marketing Robert Kastelitz Senior Vice President Technologies Dorothy Harris Senior Vice President Parking & Transportation Usha Yarlagadda Director Internal Audit Vacant Director Commerce Hub Mark Baker Acting Senior Vice President Airport Infrastructure Management Laura Jackson Director Air Service Development Adam Giombetti Director Fiscal Policy Stu Williams Senior Vice President Special Projects Vacant Director Strategic Planning 6

7 Aviation Key Performance Indicators (KPI) KPI 2013 Actual 2014 Actual 2015 Actual 2016 Target 2017 Target Debt Service Coverage All Bonds 183% 187% 184% 170% 165% Cost Per Enplaned Passenger (CPE) $11.95 $12.24 $11.82 $10.97 $11.43 Customer Satisfaction Score N/A N/A N/A Skytrax 4-Star Rating Skytrax 4-Star Rating Airside On-Time Performance 75% 76% 80% 81% 82% Total Solid Waste (in Tons) Total Destinations KPI Definitions Debt Service Coverage: Ratio of net revenues plus other available funds available for servicing senior and subordinate bond debt as defined in the Airport general bond ordinance Cost Per Enplaned Passenger (CPE): Average cost per enplaned passenger for all airlines [CPE = Airline rentals, rates, fees & charges / Enplanements] Customer Satisfaction Score: Customer satisfaction score based on passenger surveys Goal - Become the first U.S. airport to obtain a Skytrax 4-star rating by 2015; 5-star rating by 2018 Airside On-Time Performance: Monthly average on-time performance of both departures and arrivals Total Solid Waste: Total tons of solid waste sent to Denver landfill Total Destinations: Number of destinations served by DEN with regularly scheduled service at some point during the year 7

8 Aviation Mission Level Metrics Priority Metrics 2013 Actual 2014 Actual 2015 Actual 2016 Target 2017 Target Total Number of Passengers 52,556,359 53,472,514 54,014,502 58,200,000 59,364,000 Total Number of Enplaned Passengers 26,285,307 26,736,684 27,018,929 29,100,000 29,682,000 Bond Ratings A+/A1 A+/A1 A+/A1 A+/A1 A+/A1 Gross Concession Revenue per Enplaned Passenger $11.22 $12.28 $12.43 $12.43 $12.55 Cost per Enplaned Passenger $11.95 $12.24 $11.82 $10.97 $11.43 Explanation of Metrics Total Number of Passengers: Originating & destination passengers and transfers inbound & outbound Total Number of Enplaned Passengers: Originating passengers and transfers outbound Bond Ratings: S&P and Fitch (the same rating)/moody's Gross Concession Revenue per Enplaned Passenger: Gross concession revenues (from food & beverage, merchandise & service establishments) divided by applicable enplaned passenger count for the same period Cost Per Enplaned Passenger (CPE): Average cost per enplaned passenger for all airlines (CPE = Airlines rentals, rates, fees & charges / Enplanements) 8

2017 Sources of Revenue Explanation of Revenue Budget Sources Airline Revenues: Facility Rentals and Landing Fees Non-Airline Operating Revenues: Concession, Parking, Car Rental, Aviation Fuel Tax,

50 collected per enplaned passenger to fund Federal Aviation Administration (FAA) approved projects that, for example, enhance safety, security, or capacity; reduce noise; or increase air carrier

9 2017 Sources of Revenue Explanation of Revenue Budget Sources Airline Revenues: Facility Rentals and Landing Fees Non-Airline Operating Revenues: Concession, Parking, Car Rental, Aviation Fuel Tax, Hotel & Other Passenger Facility Charges (PFCs): $4.50 collected per enplaned passenger to fund Federal Aviation Administration (FAA) approved projects that, for example, enhance safety, security, or capacity; reduce noise; or increase air carrier competition Customer Facility Charges (CFCs): Daily fee charged on rental car contracts used for capital and major maintenance projects at the Car Rental Facilities Other Non-Operating Revenue: Includes investment income, joint marketing fund, insurance recoveries, TSA grant income and other miscellaneous non-operating revenues *Airline revenues do not include Airline Revenue Credit 9

10 2017 Uses of Revenue Explanation of Revenue Budget Uses O&M Expenses: Includes operating expenses of $430.0M, capital equipment of $8.1M and other expenses of $4.1M Debt Service: Interest and principal payments on all outstanding bonds and notes due in 2017 Hotel: Operating and reserve expenses for the newly opened Westin Hotel Rental Car: Capital and major maintenance projects at the Car Rental Facilities Airport Share of Revenues: Airport s deposit into the capital account Airline Revenue Credit: Airlines portion of the revenue split capped at $40.0M 10

11 Aviation Revenue Overview Operating 2014 Actual 2015 Actual 2016 Budget 2017 Projected $ Variance 2017 vs % Variance 2017 vs Airline: Landing Fees $147,840,516 $147,378,640 $140,300,000 $158,500,000 $18,200, % Facility Rentals (1) 235,773, ,004, ,100, ,700,000 14,600, % Non-Airline: Commercial 283,368, ,463, ,967, ,190,450 17,222, % Aviation Fuel Tax 26,297,725 19,457,756 24,200,000 19,500,000 (4,700,000) (19.4%) Hotel - 3,205,350 37,470,000 43,612,413 6,142, % Other 18,210,095 20,025,946 19,916,691 20,726, , % Total Operating Revenue $711,490,823 $687,535,755 $717,954,440 $770,229,659 $52,275, % Explanation of Operating Revenue Landing Fees: Residual fee charged per 1,000 lbs. of max aircraft landed weight. Increase primarily driven by higher O&M expenses and debt service allocated to the airfield Facility Rentals: Compensatory fees based on rented space and rates charged. Increase driven by higher operating and capital expenditures and increased terminal space and equipment utilization Commercial: Includes food/beverage, retail, rental car and parking. Increase driven by more favorable estimated gross concessions per passenger and increases in parking income and car rental income due to projected increases in O&D passenger traffic and a new parking structure Aviation Fuel Tax: Based on fuel rates and aircraft operations. Decrease in Aviation Fuel Tax driven by a decrease in oil and gas pricing. Hotel: Increase reflects full year of operations based on initial operating and start up costs Other: Includes oil and gas, ground transportation fees and other miscellaneous operating revenue. Increase driven by higher ground transportation and offsite parking fees due to an increase in O&D traffic Note: (1) Facility Rentals are shown net of the estimated $40M airline revenue credit 11

12 Aviation Revenue Overview Non-Operating 2014 Actual 2015 Actual 2016 Budget 2017 Projected $ Variance 2017 vs % Variance 2017 vs Passenger Facility Charges $103,958,931 $106,006,728 $107,400,000 $116,048,800 $8,648, % Customer Facility Charges 17,214,747 18,597,856 35,000,000 20,000,000 (15,000,000) (42.9%) Investment Income 44,030,400 40,648,169 23,069,000 26,031,409 2,962, % Other 6,135,145 21,562,765 3,740,000 6,165,000 2,425, % Total Non-Operating Revenue $171,339,223 $186,815,518 $169,209,000 $168,245,209 ($963,791) (0.6%) Explanation of Non-Operating Revenue Passenger Facility Charges (PFCs): $4.50 collected per enplaned passenger to fund Federal Aviation Administration (FAA) approved projects that, for example, enhance safety, security, or capacity; reduce noise; or increase air carrier competition. Increase due to higher level of enplaned passengers Customer Facility Charges (CFCs): Daily fee charged on rental car contracts used for capital and major maintenance projects at the Car Rental Facilities. Decrease due to timing of rate adjustment Investment Income: Increase primarily driven by projected fund balances available for investment Other Non-Operating Revenue: Includes concession joint marketing income (i.e. advertising fees), grant proceeds, and sales of surplus equipment 12

13 Aviation Base Budget Overview Budget Highlights (1) 2014 Actual 2015 Actual 2016 Budget 2017 Projected $ Variance 2017 vs % Variance 2017 vs Personnel Services $134,710,734 $144,894,118 $155,601,296 $165,146,752 $9,545, % Contractual Services 195,836, ,567, ,462, ,474,805 7,012, % Maintenance, Supplies & Materials 26,862,691 32,657,742 29,393,176 31,350,695 1,957, % Total O&M Expense $357,410,218 $375,119,156 $411,456,700 $429,972,252 $18,515, % Capital Equipment 4,298,390 6,215,693 7,191,700 8,072, , % Total O&M and Capital Equipment $361,708,608 $381,334,849 $418,648,400 $438,044,959 $19,396, % Summary of 2016 Budget Proposed Expenses Personnel Services: Increase driven by merit and benefit increases, reduced vacancies, increased retirement payouts and collective bargaining increases in Police and Fire Contractual Services: Increase driven by contractual increases in maintenance and service contracts and five existing contracts going out to bid in 2017 Maintenance, Supplies & Materials: Increase driven by rightsizing the budget for snow chemicals and solvents Capital Equipment: Increase due to replacing additional vehicles and baggage handling system equipment Note: (1) Expense budget numbers do not include the Hotel 13

14 Aviation Base Budget Overview Division 2014 Actual 2015 Actual 2016 Budget 2017 Projected $ Variance 2017 vs % Variance 2017 vs Executive Office $7,224,605 $8,126,469 $9,331,234 $10,731,619 1,400, % External Affairs 8,983,194 9,755,903 12,607,486 14,072,616 1,465, % Commercial 51,254,886 50,489,739 55,713,159 61,305,567 5,592, % Finance 37,724,004 30,659,645 37,820,078 36,390,013 (1,430,065) (3.8%) Operations 249,824, ,043, ,405, ,288,687 11,883, % DEN Real Estate 2,399,435 1,044,281 3,579,471 3,183,750 (395,721) (11.1%) Total O&M Expense $357,410,218 $375,119,156 $411,456,700 $429,972,252 $18,515, % Key Drivers: Executive Office: Increase due to merit and benefits increases, reduced vacancies, and an increase in consulting and legal contracts External Affairs: Increase due to merit and benefits increases, reduced vacancies, increased intern program, and increased contracts for web hosting and community outreach events Commercial: Increase due to merit and benefits increases, reduced vacancies, and additional shuttle bus, baggage handling service, and space planning contractual services Finance: Decrease due to a reduction in banking fees and insurance premiums offset by merit and benefits increases and reduced vacancies Operations: Increase due to merit and benefits increases, reduced vacancies, facility assessments and quality assurance for aging facility needs, rightsizing the snow budget, and increased costs for the baggage handling system, guard services, and technology systems coming online DEN Real Estate: Decrease due to reduced professional services offset by increased merit and benefits and reduced vacancies 14

15 Aviation CSA Personnel Overview Career Service Authority (CSA) Employees 2014 Actual 2015 Actual 2016 Budget 2017 Projected $ Variance 2017 vs % Variance 2017 vs Personnel $96,209,454 $103,073,419 $108,867,782 $115,458,348 $6,590, % Overtime $6,071,710 $6,292,367 $6,556,206 $6,712,683 $156, % FTE 1, , , , % On-Call $711,728 $458,879 $936,946 $1,296,915 $359, % On-Call FTE (8.00) (18.1%) Total FTE-CSA 1, , , , % City Personnel Services $31,717,842 $35,069,453 $39,240,362 $41,678,806 $2,438, % Total Personnel Services $134,710,734 $144,894,118 $155,601,296 $165,146,752 $9,545, % Key Drivers: No new FTE s in 2017; currently undertaking a workforce staffing analysis and position request program that will be implemented by year-end

16 City Agency Personnel Overview Community Planning & Development 8 new limited FTE requests for Permitting and Inspections teams 2 new FTE requests for Fire Protection Engineer Costs offset by projected permit fee revenues Approximately 50% of commercial project plan reviews are estimated to be completed on time in 2016 due to the increase in permit volume and project valuation Will allow for more qualified and consistent review staff, shorter learning curves, and reduced processing times Denver Fire Department 3 new FTE requests for Engineers to fill 5 th position on engine in Station 35 City Attorney s Office 1 new FTE request for Assistant City Attorney 1 extension FTE request for Assistant City Attorney 1 position upgrade FTE request for Paralegal 16

17 Aviation Uniform Personnel Overview Uniform Employees 2014 Actual 2015 Actual 2016 Budget 2017 Projected $ Variance 2017 vs % Variance 2017 vs Police Personnel $11,140,034 $11,927,682 $13,995,289 $15,588,030 $1,592, % Fire Personnel 11,629,416 12,200,578 14,255,487 15,082, , % Total Personnel Costs $22,769,450 $24,128,260 $28,250,776 $30,670,789 $2,420, % Police Overtime 3,163,905 3,294,986 2,764,773 2,025,000 (739,773) (26.8%) Fire Overtime 1,130,229 2,508,174 2,149,850 2,600, , % Total Overtime $4,294,134 $5,803,160 $4,914,623 $4,625,000 ($289,623) (5.9%) Total FTE % Key Drivers: Police personnel increase driven by collective bargaining increase of 4% offset by reduced overtime Staffing model reflects a shift of overtime dollars to regular personnel Fire personnel increase driven by collective bargaining increase of 4% and FTE requests 3 FTE requests for 2017 Worker s Comp increase 17

18 Hotel Base Budget Overview Hotel Budget 2015 Actual 2016 Budget (1) 2017 Projected $ Variance 2017 vs % Variance 2017 vs Room Revenue $1,978,229 $24,833,075 $28,510,772 $3,677, % Food & Beverage Revenue 1,201,515 11,314,325 14,537,922 3,223, % Other Revenue 25, , ,719 (214,473) (27.6%) Total Revenues $3,205,350 $36,925,592 $43,612,413 $6,686, % Operating Expenses 2,284,425 23,137,589 26,839,065 3,701, % Non-Operating, Administrative & Other Expenses 272,472 2,298,130 5,425,212 3,127, % Cumulative Capital Reserves 38, ,094 1,280, , % Total Expense Appropriation $2,595,735 $25,843,813 $33,544,619 $7,700, % Average Daily Room Rate $ $ $ $ % Occupancy Rate 41.6% 66.2% 68.9% 2.7% 4.1% Key Drivers: The Hotel Fund is for the operation and maintenance of the Hotel which opened in November 2015 (no impact on airline rates & charges). Revenue and expenses are based on estimates provided by hotel management, Airport estimates, and required contractual reserves. Note: (1) The 2016 Budget reflects the budget provided by Hotel Management per contract terms in November

19 Building for the Future Westin Hotel opened on November 19, 2015 Experiencing higher than anticipated meeting space demand The Train to the Plane, a 22.8 mile electric commuter rail from Union Station to DEN opened on April 22, % increase in average weekday ridership since opening day Additional 3,500 parking spaces at seven new stations Voters approved measure 1A in 2015 allowing for development of DEN land, such as retail, hospitality, manufacturing and offices Will generate an estimated 12,000 new jobs 19

20 Record-setting passengers in 2015 of 54,014,502 July 2016 was the busiest month in history with 5.5 million passengers Aviation Accomplishments Added two new international routes, Munich, Germany and Montreal, Canada, serviced by Lufthansa and Air Canada respectively Volaris and Aeromexico announced new service to Monterrey, Mexico beginning in December 2016 Southwest announced new service to Belize City, Belize beginning in March 2017 Virgin America began operations at DEN in March 2016 to operate three daily, roundtrip flights to San Francisco PenAir began operations at DEN in September 2016 to operate flights to Dodge City and Liberal, Kansas as part of the Essential Air Service program (EAP) Additional service to Kearney, North Platte, and Scottsbluff, Nebraska will begin in November

21 Aviation Accomplishments 2016 SkyTrax No. 1 World s Best Regional Airports for North America and top American Airport on the World s Top 100 Airports, moving up five spots from previous year No. 2 spot on Best U.S. Airport for Dining in USA Today s 10 Best Reader s Choice travel awards Airport Revenue News named DEN as the 2016 Airport with the best Customer Service among all large airports Awarded the Balchen/Post award for outstanding snow and ice removal at the International Aviation Snow Symposium Recognized by Skifties Social Media Awards for Travel Brands as having the Most Effective Brand on Social Media for airports 2015 Disadvantaged Business Enterprise Advocate and Partner Award by the Federal Aviation Administration (FAA) 21

22 Denver International Airport Questions 22

Aviation Organizational Chart. Aviation

Aviation Organizational Chart. Aviation Aviation Organizational Chart Aviation 381 Aviation Summary Denver International Airport 6000000 2015 2016 2017 Actual Appropriated Recommended Revenue Facility Rentals $194,004,325 $190,100,000 $204,700,000