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1 AIRPORT NEWS QUARTERLY NEWSLETTER Issue #8, August 2013 BRISBANE CANBERRA MELBOURNE PERTH AAREC CONFERENCE REVIEW AAREC CONFERENCE REVIEW AIRPORT RENTAL CARS Rental cars are an important component of an airport s function as an intermodal transportation hub. They also provide a valuable source of income for regional and metropolitan airport operators. To ensure the airport s customers (its passengers) can experience a stress free and seamless transfer through the airport, airport operators need to carefully consider where an on-airport rental car s business components are located. The on airport rental car business has three main functional components: (i) the kiosk; (ii) the ready bays; and (iii) the storage area. The kiosk or desk is the first contact between the customer wishing to collect a vehicle and the hiring company. As the hiring customer has usually arrived on an aircraft, it makes sense for the kiosk to be in the arrival hall. Continued on page 2. The Airport Group in conjunction with Auckland International Airport hosted the 2013 Australasian Airports Real Estate Conference 2013 in Auckland over the 6th-7th of June. The conference brought together 49 delegates from 22 Airports around Australia and New Zealand. This year s conference focused on landside planning, processes and strategies. Speakers from a range of airports outlined the processes they have undertaken to plan their landside areas to maximize their value and revenue streams. With topics ranging from metropolitan airports (subject to the Commonwealth s Airports Act) to regional airports (subject to state planning legislation), delegates shared the strategies they are using to maximize their own asset values as well as creating exciting urban places. We wish to say a special thanks to our sponsors, Norton Rose Fulbright, Hertz and Accor, as well as our host airport, Auckland International Airport. Contents: Financing of Airports Part 3: Preparing for a Capital Raising... 3 Mary Street Brisbane, Aeronautical Assessment Case Study... 4 Standards Australia New Subsurface Utilities Standard... 5 The Airport Group Airspace Review... 5 Training Review PANS-OPS, OLS and PAAR... 5 Recent Appointments... 6 Staff Appointments... 7 Upcoming Events... 7

2 AIRPORT RENTAL CARS By Rob Mactaggart, Director The ready bays. These are the bays located as close as possible to the terminal, again ideally adjacent to the arrival hall. This land is amongst the highest value real estate on an airport and consequently, the bays demanded by the rental car companies need to be balanced with land availability, other competing uses and the commercial return available. The function of these bays is to hold vehicles that are ready to be hired, and usually to receive vehicles that are being returned. Quite often the general public begrudge the positioning of rental cars in close proximity to the terminal which they believe should be the preserve of short term public parking. However aligning the rental cars goals of enhanced customer service through ease of access to its products is ultimately aligning with the airport s goals of facilitating access for its passengers. The storage area accommodates all of the important support functions that ensure the rental car companies have sufficient product (cars for hire) ready when required by their customers. It also serves as a holding yard of vehicles ready to move back onto the ready bays. These areas do not need to be on high value land and can be located in very much back of house areas (ideally within reasonably close proximity to the terminal ready bays). The storage area will hold returned vehicles to be repaired and cleaned, and will incorporate wash facilities and administration offices. Because this use does not need exposure nor ease of public access, it is ideal for airport owners to generate income for land that would otherwise have a low commercial value (and which might otherwise impact on OLS setbacks). Industry Commercial Activity We typically look at varying rates for the three components above and we benchmark the rates with airports with comparable pax data and characteristics. We advise some regional ports that as yet don t charge anything for car rental operations, and others that charge high rates due to specific industry demand. In our view a blend of fixed or floor rates and a share of turnover is the most efficient approach for an airport owner. This achieves: Fixes the downside risk for the airport; Avoids an excessive fixed cost to the car rental operator; Ensures that the airport is rewarded for additional turnover, which is usually directly linked to pax growth which in turn requires additional airport infrastructure investment; and Aligns the parties interests to grow turnover wherever possible. An example of benchmarking of regional ports might look like this. Airport Kiosk and Ready Bay Rental With this knowledge, the airport manager can run a tender process which stipulates base rates that are industry relevant. With these rates locked in through license agreements, the airport can invest in new car rental assets such as expanded parking areas required in response to business growth. Car rental is a growth industry and is an ideal opportunity for airport managers to secure commercial income in a way that achieves an alignment of interests with the car rental operators for the promotion of future activity growth. Ready Bay Kiosk We have recently been involved in advising a number of airports on the location analysis for on airport rental car operations as well as the commercial and legal structuring to maximize the commercial return for airport owners.

3 FINANCING OF AIRPORTS PART 3: PREPARING FOR A CAPITAL RAISING By Wayne Ticehurst (CPA), Consulting Director Airport Finance & Governance In this, the final part of the series on financing of airports in Australia, we look at how airports can best prepare themselves for a capital raising to maximise the chances of successfully meeting their objectives. The nature and extent of the preparation will vary according to the nature of the capital raising, with a share issue for example requiring some different measures than abi-lateral bank borrowing. However, there are some core initiatives that an airport wishing to raise any form of capital must have in hand before it approaches the market. Indeed, a number of these initiatives will inform the business case to approach the financial markets in the first instance. Aside from general market risks, providers of capital essentially focus on the risks of the borrower being able to service the amounts advanced and, ultimately, the ability of the borrower to repay the amounts advanced (or at least the ability to refinance). To properly assess these risks, the providers will undertake a due diligence on the borrower. This due diligence will be more extensive where the borrower is either not known to the provider or where there has been no previous relationship with the provider. The due diligence will typically focus on the following areas, each of which the borrower can be proactive, prior to engaging with the capital providers, with some of the more important initiatives illustrative of some of the measures that will be well regarded (if not expected) by capital providers. 1. The nature of the industry/ market that the borrower operates in Business plan should contain a SWOT analysis, demonstrating an understanding of the key external factors, trends and influences on the business. Borrower party executives must be able to clearly articulate a deep understanding of the business and drivers of performance. Business plan should contain a SWOT analysis, demonstrating an understanding of the key external factors, trends and influences on the business. Borrower party executives must be able to clearly articulate a deep understanding of the business and drivers of performance. 2. The historic and projected financial performance of the borrower Well-developed financial reporting systems and processes, concise management reports highlighting key business performance indicators. Demonstrated track record of achieving budgets/forecasts. Robust but flexible financial model, allowing for appropriate sensitivity and scenario analysis. Current aviation traffic forecasts. Forecasts of capital expenditure, clearly differentiating stay in business capex from expansionary or growth capex (the key here is to be able to demonstrate which capex can be deferred if necessary). 3. The corporate and shareholder structure of the borrower Up to date organisation chart, with bios for key executives. Current and complete information on shareholders and directors. Shareholders agreement. Dividend/distribution policy. 4. The existing capital structure of the borrower Documentation on hand relating to any existing funding facilities Demonstrated understanding by key finance staff of terms of existing financing Track record of compliance with terms of existing financing Documented capital management policies and procedures 5. The condition of the borrower s assets and the nature of any security to be provided Complete and up to date asset register Adequate information on the condition and maintenance of the core assets Appropriately valued assets Complete records of any existing security interests granted 6. Major supplier and customer dependencies Contracts register showing key terms of major supplier and customer agreements. In the case of tenancies, a detailed tenancy schedule, showing lease maturity, rent reviews. Evidence of stakeholder consultation practices. Evidence of agreements with airlines on airport charges (of if no formal agreement, a published conditions of use). 7. Legal actions either in progress or threatened Opinion from legal advisers on any litigation, including sufficient details on the nature of the action and the possible outcomes.

4 8. The regulatory environment impacting on the borrower Demonstrated understanding of key legislation and regulations impacting on the business, together with an awareness of emerging developments Demonstrated compliance with airport regulations and resourcing of regulatory compliance 9. The existence of sound governance and risk management disciplines Documented risk management framework and risk registers. Documented risk treatment plans for core risks. Documented policies and procedures for key processes. Business continuity plan. Certificates of currency from insurers on insurance policies. Board charter. Succession planning for key staff. Audit reports. Many of the initiatives highlighted above should be already in place in organisations, however to the extent there are gaps, or if airports seek a health check on the adequacy of their systems, processes and documentation, The Airport Group is well placed to assist. MARY ST BRISBANE, AERONAUTICAL ASSESSMENT CASE STUDY The protection surface methodology which we have developed specifically for the Mary St aeronautical assessment has now been widely adopted for other major airport airspace models around Australia. The Airport Group is regularly engaged by various stakeholders to assess the aeronautical hazards associated with building developments in close proximity to Australia s major airports. A recent exercise involved the aeronautical examination of the existing and future airspace protection surfaces in relation to the allowable development activity height on a vacant Mary St site, within the Brisbane CBD. We based the assessment on the existing protection surfaces including MOS part 139, (139) Obstacle Limitation Surfaces (OLS), PANS-OPS AIP-DAP (then) 126 instrument flight procedures, in accordance with CASA MOS 173 and ICAO Document 8168 OPS-611, Procedures for Air Navigation Services - Aircraft Operations, and the allocated future protection surfaces in relation to the approved Brisbane Airport Master Plan. This was conducted and documented under the Department of Infrastructure and Transport (DoIT) - Airport Protection of Airspace Regulations (APAR) Additionally, under direction from DoIT, and based on CASA and AsA advice, we also included the protection of RNAV- Required Navigation Performance (RNP) procedures specific to Brisbane Airport. As RNAV (RNP) procedures are a recent technological additional to the air navigation systems of modern commercial aircraft, our modelling and application of the (RNP) protection surfaces required extensive research and development, in collaboration with CASA and AsA. Due to the proximity of Brisbane Airport to the Brisbane City CBD, the development height and associated construction activity of the CBD site is limited by several significant current and future airspace protection surfaces. These protection surfaces are associated with the safe aeronautical movements of aircraft, generally on final approach to Brisbane s runway 01, however surfaces for departing aircraft on runway 19 also limit the construction height at the site based on procedure requirements at the time of the assessment. For the purposes of the assessment all current and future (master plan) protection surfaces were examined. However, as the site was restricted to a city block within the CBD, our investigation could be reduced to the most critical of the assessment surfaces relevant to the assessment site. The most critical protection surfaces were examined in relation to horizontal and vertical separation distances over or in close proximity to the Mary St site. Importantly, the application of the findings of the assessment were not restricted to the final development height of the primary structure on the nominated site. All construction methodologies, i.e. cranes, scaffolding, equipment etc were also considered in relation to the controlling protection surfaces. Furthermore, any structure appurtenances such as spires, antennae/aerials, secondary structures, etc. also were examined for the potential introduction of hazardous conditions. All of these could be considered part of the overall activity and were assessed against the aircraft clearances and controlling protection surface. Obstacle Limitation Surfaces Manual of Standards part 139 The application of the Obstacle Limitation Surfaces suggest any development height greater than 152.5m (above sea level) creates an infringement of the outer horizontal surface and would require obstacle treatment in accordance with MOS 139 requirements. This however, would not have precluded development, as there were significant penetrations of the OLS by other structures within the CBD which, based on the Mary St location, would shield the proposed site. No aeronautical penalties were determined based on structure height and location. Importantly, an obstacle penetration of this nature requires any current or future building owners/managers to ensure the development conforms to CASA s requirements in relation to the lighting of the obstacles. PAN-OPS CASA 173, ICAO Doc 8168 From our investigation it was clear that the two most critical protection surfaces are the Standard Instrument Departure (SID) procedure for Runway 19 west (jet) operations and the Radar Lowest Safe Altitude Sector (RLSALT) over the Brisbane CBD, determined by the Radar Terrain Clearance Chart (RTCC). Specifically, the identified RLSALT protection surface limited any construction heights to just over 270m above sea level. While other protection surfaces provide greater height allowances in relation to the assessment site, the influence of the RLSALT is directly associated with current and future (master plan) runway 01 approach operations. Given that the RLSALT elevation, directly over the CBD and in close proximity to the runway 01 threshold and the necessity to provide instrument guidance in adverse weather conditions, the critical nature of this controlling surface became the determining height limitation in relation to the proposed development. Our conclusions stated that any structure heights (including appurtenances), developed on the assessment site would be limited to a height of just over 270m above sea level. Temporary construction methodologies associated with the development were also considered under the specific regulatory requirements for intended construction activity as stated under the APAR provisions. For further information, please contact Mike Thompson at: miket@theairportgroup.com.au

5 STANDARDS AUSTRALIA NEW SUBSURFACE UTILITIES STANDARD Australian Standard for the classification of subsurface utility information is now available Knowing precisely where & what a subsurface utility is, its condition and status in its asset lifecycle can significantly reduce the occurrence of interference and conflict with valuable infrastructure. In an effort to improve public safety, prevent costly conflicts, utility service disruptions and redesigns, Australia now has its first standard for the classification of subsurface utility information, providing a common method for utility owners, operators, locators and engineering professionals to capture more accurate and consistent information about the characteristics of a subsurface utility than what has been available in the past. For the past two years, Bruce Potter (representing Engineers Australia) has participated in Standard Australia Committee IT-036, (along with representatives of 19 other organisations) which has prepared AS Classification of Subsurface Utility Information (SUI). For further information, please contact Bruce Potter at: brucep@theairportgroup.com.au TAG173 SUCCESSFUL CASA ENTRY AUDIT FOR FLIGHT PROCEDURE DESIGN TAG s procedure design business TAG173 has very recently completed a successful entry audit as a precursor to certification by CASA for flight procedure design. We are continuing to work with CASA to achieve our certification in the coming months. Please contact Ray Romano on rayr@theairportgroup.com.au or for all procedure design enquiries. TRAINING REVIEW OLS, PANS-OPS AND PAAR Course (PAAR) TAG is now tailoring our Protected Awareness and Responsibilities course for clients involved with not only building developments but also wind farms, farms and plumes. All reflective surfaces and gas emissions need to be considered when siting these developments and the course is able to address all of the responsibilities associated within the regulations. Airport operators and councils are also finding these courses relevant to the development applications they receive or are associated with. Course (PAAR) Ballina May 2013 Ray Romano gave a short presentation at the AAA NSW Divisional Meeting at Ballina Airport on airspace awareness and the regulations associated with airspace. The following day the TAG Course was held. The course addressed such topics as: Need for protected airspace Regulatory requirements Controlled activities Components of protected airspace Proponent and Operator responsibilities Course (PAAR) Brisbane July 2013 Ray Romano presented at the AAA QLD Divisional Meeting at Brisbane Airport on airspace awareness and the regulations associated with airspace. Please contact Julie Neylon at: julien@theairportgroup.com.au or (07) for any training enquiries. THE AIRPORT GROUP AIRSPACE REVIEW TAG has conducted wide ranging investigations and reporting with respect to airspace issues at many aerodromes around Australia. These include investigation of future ILS (and GLS) Cat 2 operations at Canberra Airport. Further capability was demonstrated through investigation of an Optus telecommunications tower and its effect on the new Gladstone ILS. The latter required creating and running a Collision Risk Model (CRM) where traditional evaluation methods cannot apply. We also provided training to industry members at Perth, Jandakot, Gold Coast, Ballina, Essendon, Whyalla, and Albury and New Zealand. The explanation of fundamentals of operator responsibilities for safety, efficiency and regularity of future air transport operations is intended to strengthen aviation operations around Australia. Facilitation of awareness and protection of Aviation Airspace around Airports ( Prescribed Airspace ) is a key service we offer. We work with Adelaide, Brisbane and Melbourne International Aerodromes for review and update of Prescribed Airspace Models. Brisbane s Prescribed Airspace Model has recently been gazetted by Department of Infrastructure and Transport. Revisions to Melbourne and Adelaide RNAV procedures have been incorporated to meet ICAO s criteria revision. Recently, Hobart Airport has commissioned TAG to review its OLS and create a new 3D Prescribed Airspace model, in accordance with the Airports (Protection of Airspace) Regulations TAG continues to facilitate aviation sustainable developments on, or near, Aerodromes. Examples include: Bankstown evaluation of potential development sites; Melbourne advice to APAM regarding future development on airport and protection of future airspace; Brisbane review of lighting in accordance with CASA Regulations; and Various advice to developers regarding maximum heights available during and after construction. For further information, please contact Mike Thompson at: miket@theairportgroup.com.au

6 RECENT APPOINTMENTS Q2, 2013 Brisbane Airport Corporation (QLD) Master Plan Stakeholder Facilitation TAG has been retained by Brisbane Airport Corporation to facilitate workshops to provide input to the 2014 Master Plan. This has included Brisbane City Council, TMR, ground transport operations, freight industry, and ground handlers. Gippsland Aviation Strategy & Issues (VIC) TAG has been retained by the Victorian State Government (co-ordinated by Wellington Shire Council and Latrobe Valley Council) to prepare an Issues and Opportunities Paper for the West Sale and Latrobe Airports, and the opportunities that the region can play in the Victorian Aviation Industry. We are working with economic consultancy AECgroup in this appointment. Sunshine Coast Airport (QLD) Airside Master Planning TAG has been retained by Sunshine Coast Airport to complete Airside Master Planning and Preliminary Schematic Design services to identify an optimal development rollout for a staged airside expansion based on forecast passenger growth and associated aeronautical activity. Brisbane West Wellcamp Airport (QLD) Whole of Airport Concept Plan, Business Park Master Plan TAG has been engaged by Wagners Group to prepare a whole of airport concept plan, aeronautical concept plan, and Business Park Master Plan for the airport which is currently under construction. Newcastle Airport (NSW) Development Concept Plans TAG has been retained by Newcastle Airport to prepare development plans for the proposed expansion of the landside asset (GTO, parking). Whyalla Airport Master Plan (SA) TAG has been appointed to complete the Whyalla Airport Master Plan to assist with the strategy for the overall airport upgrade initiative. Darwin International Airport Tender Documentation and Evaluation for the RPT Expansion (NT) TAG is nearing completion of the tender documentation and evaluation phase of the RPT Expansion work at Darwin International Airport. This work included the preparation of all tender and contract documentation, communications with tenderers, responding to requests for information, assessment, clarifications, evaluation of alternatives and reporting. Banana Shire Council Runway Overlay Detailed Design and Tender Documentation and Evaluation for Thangool Aerodrome (QLD) Following on from the detailed civil design of the runway extension and apron upgrade, TAG has been engaged for the detailed design and tender documentation for the runway overlay at Thangool Aerodrome. We also assisted Council with a successful RDA funding applications. Gladstone Airport Ongoing Services (QLD) TAG has been engaged for a number of services for Gladstone over a long period of time. More recently, the siting of an airport rescue and fire fighting facility, northern zone development plan, civil design of ILS pad, reposition of wind sock, PAPI placements and light positions, glidepath earthworks, PANS-OPS and collision risk model assessment on a telecommunications tower. Alex Seip also assisted, spending four days on site with the Gladstone Airport team to assist with some operational assessments and bay redesign work including GA parking positions for Kingair aircraft. Hobart Airport OLS and PANS-OPS Modelling (TAS) Hobart Airport has engaged TAG to create the PANS-OPS airspace model for endorsement. Department of Infrastructure and Transport Additional Maintenance Plans Following on from the 13 maintenance plans we completed in recent months, the Department of Infrastructure and Transport has engaged TAG to prepare an additional 25 maintenance plans through QLD, NT and WA. Brookfield Multiplex Brisbane CBD Aeronautical Risk Assessment (QLD) Brookfield Multiplex has engaged TAG to perform an aeronautical assessment on the development in William Street, Brisbane City. TAG will also be assisting Brookfield with the liaison with CASA, Airservices Australia, Department of Infrastructure and Transport and Brisbane Airport Corporation. Brisbane Airport Corporation Jet Blast Assessment (QLD) TAG has been engaged by Brisbane Airport Corporation to perform a jet blast assessment at Brisbane Airport. Hydro Tasmania Protected Awareness and Responsibilities Training (TAS) Hydro Tasmania has engaged TAG to formulate a training course for the protected awareness and responsibilities for siting of wind farms around aerodromes. Ray Romano will be travelling to Hobart to present the course in August Melbourne Airport RNAV Update (VIC) TAG has been engaged by APAM to update their PANS-OPS model in accordance with the change in the surface geometry requirements for RNAV-GNSS as described in the current ICAO Doc 8168 Volume II Fifth Edition, Amendment 4, and under the Airport Protection of Airspace Regulations (APAR). Kingaroy Airport (QLD) Strategic Review TAG has been engaged by South Burnett Shire to undertake a Strategic Review to prepare a Development Plan for Kingaroy Airport. Yarrawonga Airport (VIC) Stategic Development Plan TAG has been engaged to undertake a Strategic Development Plan for the Yarrawonga Aerodrome Precinct for Moira Shire.

7 CONGRATULATIONS TO WAGNERS FOR THE COMMENCEMENT OF THE BRISBANE WEST WELLCAMP AIRPORT! We congratulate John & Denis Wagner and their team led by Phil Gregory for the recent commencement of the construction of the greenfield Brisbane West Wellcamp Airport. In one of the most exciting new projects in the Australian aviation industry and one of the most visionary pieces of new Australian infrastructure the Wagner Family is off and running with the construction of this completely new 747-capable airport. BWW will service the Darling Downs, Surat Basin and Lockyer Valley areas and provide the highest level of capability for domestic and international RPT and freight operations. Wellcamp Business Park is also under construction, providing >300 hectares of developed land for a full range of hotel, industrial, education, retail, recreational and office projects. TAG is proud to be associated with this exciting project through the preparation of the aeronautical concept plan, business park commercial plan and feasibility, and the whole of airport concept plan. ABOUT US The Airport Group offers a comprehensive whole of airport solution for regional and metropolitan airports in Australia, New Zealand and the Pacific Region. We are the only firm that brings together 60 years of airport operational, planning and design experience coupled with Australasia s leading airport commercial experience. Increasingly, airport stakeholders require a complete solution that is cognisant of the balancing priorities of airside and landside assets, and the benefits that the effective integration and commercialization of these assets can deliver. > Airside civil design > Airport master plans and approvals > Air space and procedure design > Land use planning and feasibilities > Airport management > Airport finance and governance > Training STAFF APPOINTMENTS TAG welcomes Marcel Boberg, Junior Civil Engineer. Marcel is currently completing his civil engineering degree at the Queensland University of Technology and will be joining TAG on a part-time basis. You can contact Marcel at marcelb@theairportgroup.com.au or TAG welcomes Clare Robinson, Analyst. Clare recently completed a Bachelor of Design (Majoring in Property Economics) (Hons) and works with TAG in a wide range of research, report writing and benchmarking and visual design work. You can contact Clare at clarer@theairportgroup.com.au or UPCOMING EVENTS AAA National Conference Darwin, September 2013 TAG is pleased to be a speaker and sponsor of the National Conference to be held at Darwin. Please contact AAA for all the details. > Strategy and business planning > Commercial transactions > Development and construction management Like us on Facebook The Airport Group Follow us on The Airport Group knows airports. Visit us at Please contact: Hans Pearson Director m: e: hansp@theairportgroup.com.au Unit 1, 425 Nudgee Road, Hendra QLD 4011 Australia Melbourne Office p: e: enquiries@theairportgroup.com.au Cecil Street, South Melbourne VIC 3205 Australia Rob Mactaggart Director m: e: robm@theairportgroup.com.au Perth Office m: e: enquiries@theairportgroup.com.au 49A Bouton Street, Dianella WA 6059 Australia Mike Thompson Director Aeronautical m: e: miket@theairportgroup.com.au 4/10 Kett Street, Kambah ACT 2902 Australia