A. Approval of the Greenville-Spartanburg Airport Commission September 18, 2012 Regular Meeting Minutes (document)

Transcription

1 AGENDA Greenville-Spartanburg Airport Commission Regular Meeting Greenville-Spartanburg International Airport Conference Room at Administrative Offices Monday, November 19, 2012, 9:00 a.m. * NOTE TO ALL PUBLIC ATTENDEES: The public may speak on any item on the agenda. There are request cards located outside the public seating area. These cards must be completed and presented to the Recording Secretary prior to the item being heard. Your comments will be addressed prior to the Airport Commission s discussion and you will have 5 minutes to address the Airport Commission. Thank you for your attention. I. CALL TO ORDER: II. CONSENT AGENDA: A. Approval of the Greenville-Spartanburg Airport Commission September 18, 2012 Regular Meeting Minutes (document) B. Approval of Airport Commission Meeting Dates/Times for Calendar Year 2013 (document) C. Acceptance of Audit Committee Minutes (document) III. PRESENTATIONS: A. GSP Police Department Firing Range (document) IV. OLD BUSINESS: V. NEW BUSINESS: A. Adoption of the GSP Land Use Planning and Development Study (document) B. Approval of Terminal Improvement Program Baggage Claim/South Bridge Package (document)

2 GREENVILLE-SPARTANBURG AIRPORT COMMISSION AGENDA Monday, November 19, 2012 Page 2 C. Award of the Rental Car Concessions at the GSP International Airport (document) D. Acceptance of Greenville-Spartanburg International Airport Financial Audit and Schedules of Expenditures for the Fiscal Years Ended June 30, 2012 and 2011 (document) VI. PRESIDENT/CEO REPORT: A. Aviation Industry Update. B. Close-out Report for the Loading Bridge/PC Air/Fixed Ground Power Project VII. INFORMATION SECTION: (Staff presentations will not be made on these items. Staff will be available to address any questions the Commission may have.) A. September Traffic Report (documents). B. September Monthly Financial Report (document). C. November Development/Project Status Report (document). D. November 2012 Communications Status Report (document). E. Quarterly Customer Service Satisfaction Survey (document). F. Industry Presentation(s)/Article(s) of Interest (document). G. Potential Items for the Next Regular Scheduled Commission Meeting: Presentation on IT Security VIII. COMMISSION MEMBER REPORTS: IX. EXECUTIVE SESSION: The Airport Commission may hold an Executive Session for the purpose of receiving legal advice on various matters. X. ADJOURNMENT GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

3 GREENVILLE-SPARTANBURG AIRPORT COMMISSION AGENDA Monday, November 19, 2012 Page 3 This agenda of the Greenville-Spartanburg Airport Commission is provided as a matter of convenience to the public. It is not the official agenda. Although every effort is made to provide complete and accurate information to this agenda, the Airport Commission does not warrant or guarantee its accuracy or completeness for any purpose. The agenda is subject to change before or at the Airport Commission meeting GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

4 GREENVILLE-SPARTANBURG AIRPORT COMMISSION MINUTES September 18, 2012 The Greenville-Spartanburg Airport Commission met on September 18, 2012 at 9:00 a.m. in the Greenville-Spartanburg Airport District Office Conference Room located at 2000 GSP Drive, Suite 1, Greer, SC MEMBERS PRESENT: Minor Shaw, Hank Ramella, Bill Barnet, Leland Burch, Valerie Miller, and Doug Smith STAFF AND LEGAL COUNSEL PRESENT: Dave Edwards-President/CEO, Kevin Howell-Vice President/COO, Jack Murrin-Vice President Administration and Finance/CFO, Rosylin Weston-Vice President Communications, Larry Estridge-WCSR Firm, Wanda Jones-Secretary, Dan Ingram-IT Manager, Whitney Code-Marketing Coordinator, and Mike Gula-Operations Director. GUESTS PRESENT: Nat King-Jacobs/GSP, Gary Lott, Ken Holt, Frank Curti- LPA/Baker Group, Jim Fair-Greer Today, Damon Hylton-Seabury APG, Tom Tveidt- Syntva, Richard Nelson, Eric Beane, Jim Bracken-TSA, and Jack Ellenberg-SC Ports Authority CALL TO ORDER: Chair Minor Shaw called the meeting to order. CONSENT AGENDA: A. Approval of the Greenville-Spartanburg Airport Commission July 16, 2012 Regular Meeting Minutes: A motion was made, seconded, and unanimous vote received to approve the minutes from the July 16, 2012 Commission Meeting. Chair Shaw and the Commissioners congratulated Mr. Edwards on his accomplishment on becoming ACI-NA Chair. Mr. Edwards thanked the Commission for their support. PRESENTATIONS: A. Transportation Security Administration Security Update: Eric Beane, Federal Security Director gave a security briefing to the Commission. He stated the Transportation Security Administration s (TSA) mission is to protect the Nation s transportation systems to ensure freedom of movement for people and commerce. Mr. Beane stated that TSA activities not only include airports but trucking, train, bus, freight rail and Amtrak sectors. The transportation systems are 1

5 only as strong as the weakest link. Mr. Beane stated that TSA screens approximately two million passengers a day. Mr. Beane also discussed that TSA has twenty layers of security in place to help deter a potential terrorist attack. The twenty layers of security make it more difficult for a terrorist to circumvent security as a whole. Mr. Beane stated TSA uses intelligence to try to stop an attack before it happens. The Canines and Behavior Detection Officers have proven to be an effective way of deterring an activity. After a brief discussion, Mr. Beane concluded by stating aviation remains a high target for terrorist and capabilities and tactics of terrorist groups will continue to evolve. Remaining vigilant and agile and working together can deter and disrupt the next attack. Mr. Beane stated he has great partnerships in South Carolina and thanked the Commission for their support. B. Inland Port Project: Mr. Jack Ellenberg discussed the Upstate Inland Port, gave a snapshot of where the port is and what is going on in the industry. Mr. Ellenberg stated the Port s job is to benefit the citizens and businesses of South Carolina and to do so in a financially self-sustaining manner. Mr. Ellenberg stated the Port of South Carolina is the fastest growing Port in the United States and is fixated on growing the cargo business and doing so ahead of market. The Port has expanded direct service from Charleston to Australia and New Zealand. Mr. Ellenberg stated that the Inland Port is still in the design phase, however; the Port is operating on an aggressive time frame. Clients have been promised the facility will be open by September Mr. Ellenberg stated the unique factor for the Upstate Inland Port is the close proximity to the airport which is critical when companies want the ability to drop ship overnight. Mr. Ellenberg stated the Port will spend approximately 2 billion dollars on infrastructure between now and 2020 and will help clients increase performance while lowering cost and risks. Mr. Ellenberg stated the Port is being aggressive and appreciates the support and leadership. He encouraged a visit to the SC Port. C. Economic Impact Study Update: Mr. Edwards introduced Mr. Tom Tveidt, Mr. Tveidt completed an Economic Impact Study in 2009 for the Airport District. The Commission decided to complete another Economic Impact Update this year since Southwest Airlines has been operational for over a year. Mr. Tveidt highlighted the following: the total economic impact of GSP supports a total of 9,528 jobs; which supports an additional nine jobs in the community. GSP adds $170.9 million in local income meaning every dollar of income produced at the airport generates another $3.05 in the community. GSP increases tax revenues by $112.5 million. Total output increased by $817.1 million in local economy as a result of GSP Airport. The planned capital improvements at GSP through 2025 will support a total of 3,085 local jobs, will increase local income by $130.9 million, and boost tax revenues by $35.3 million. The terminal renovation modernization at GSP will support a total of 1,397 local jobs, increase local income by $59.6 million, and boost tax revenues by $16 million. 2

6 Visiting passengers supports a total of 7,828 local jobs, adds $195.9 million worth of income, and tax revenues equaling $88.2 million. Total Annual Impact 2009 compared to Local Jobs Supported 3,692 9,528 Total Output $377 million $817 million Some of the factors that changed from 2009 to 2012 are more people are traveling from GSP and they are staying longer in the Upstate. D. GSP Leakage Analysis Update: Mr. Damon Hylton stated that since Southwest launched service in 2011 the impact has been massive with a large number of seats coming from Southwest. However, what is equally impressive is that the legacy carriers have brought bigger planes and additional flights to GSP which have increased the legacy carrier s enplanements. Fares at GSP are down about 13. GSP is one of the few airports experiencing declining airfares. Fares in general across the country are up. When the previous leakage study was completed prior to Southwest, the leakage was 63, prior to the launch of Southwest the leakage increased to 69. Fast forward a year later, enplanements have increased, and leakage is at 59. The main reason passengers are leaking is for the service; mileage and planned preferences play a part in the leakage. International flights are the second reason for leakage. GSP leakage is being driven by much higher service levels out of Charlotte and Atlanta and the fares exacerbate the situation further. While the share of GSP traffic originating from each catchment area has remained the same, the number of bookings has increased 40. GSP has also seen an increase in traffic originating from Asheville and Columbia. Leakage of outbound GSP traffic from the primary catchment totals 884 lost passengers per day each way. Mr. Hylton briefly suggested some recommendations: maintain Southwest Airlines service, continue airport marketing and community outreach efforts, and maintain/enhance community air service input to help target efforts. Chair Shaw stated the presentation shows the airport has a lot of opportunity and it is extremely helpful to know where the strengths and weakness are. After a 5 minute break the Commission reconvened at 10:45 am. 3

7 OLD BUSINESS: None. NEW BUSINESS: A. Terminal Improvement Program Enabling Projects Budget Amendment: Mr. Edwards stated at the July Commission Meeting when the overall budget amendment was approved, it was discussed at that meeting, that from a cost effective standpoint certain items should be procured in their entirety for the project. This would also prevent purchasing from different vendors. Staff is recommending that the Bag Claim Devices 2 and 3, and the Specialty Curtainwall for Baggage Claim and Ticketing Area be procured in their entirety for the enabling phase. The cost has been identified at $3,808,701. The overall Terminal Improvement Program Budget of $115,000, will not be affected. Mr. Edwards respectfully requested that the Commission resolve to approve the $3,808,701 amendment to the enabling projects budget for the Bag Claim Devices 2 and 3, and the Specialty Curtainwall for Baggage Claim and Ticketing Area, in order to have them procured in their entirety during the enabling phase. A motion was made, seconded, and unanimous vote received to approve the amendment to the enabling projects budget in the amount of $3,808,701 for the Bag Claim Devices 2 and 3, and the Specialty Curtainwall for Baggage Claim and Ticketing Area. PRESIDENT/CEO REPORT: A. Aviation Industry Report: Mr. Edwards stated that the US Airways and American merger is likely to happen. GSP is fortunate to be in a situation where there are no overlapping routes. No negative impacts should be felt if the merger does happen. Sequestration is a big topic of discussion. A report from the Federal Government indicated that based on the parameters the AIP Program will not be affected by the Sequestration. There will be portions of the FAA that will be affected but it is not clear what that will be. Ms. Miller asked if the AIP Funding was at the level everyone wanted. Mr. Edwards stated no, but it was realistic. GSP is in good shape for right now. There is still a big push for changes to the Passenger Facility Charges. Mr. Burch asked if the airport could get some of the Fall-Out money that is being turned back in from other airports. Mr. Edwards stated Fall- Out money is usually picked in smaller bites with a project that is ready to go. GSP will not make it this year but will be ready next year with possibly the apron work. 4

8 B. The LPA Group Incorporated fully transitioning to the Michael Baker Corporation: Mr. Ken Holt briefly discussed the merger between The LPA Group Incorporated and the Michael Baker Corporation. The merger began in May 2010 and internal transitions have been taking place for the full integration of the two firms. The name will change before the end of year to Michael Baker Corporation. Mr. Holt stated on behalf of The LPA Group Incorporated and Michael Baker Corporation he appreciates all the opportunities to perform planning, design, and construction engineering services to the airport and thanked the Commission and Staff. B. Transportation Security Administration (TSA) Grant for Checked Baggage Screening Project: Mr. Edwards stated a grant was received and executed from Transportation Security Administration (TSA) for $2,279,972 to help support the construction related services to provide for the TSA in-line Checked Baggage Inspection System (CBIS). INFORMATION SECTION: Chair Shaw asked if anyone had any questions concerning the information section. No questions from the Commission. Potential Items for the next meeting: Approval of the Component Guarantee Maximum Price for the Bag Claim/South Bridge Phase of the Terminal Improvement Program, Award of the Rental Car Concessions, and a briefing on GSP Police Department Firing Range. Mr. Edwards stated Mr. Howell will give a close-out report on the Boarding Bridges at the November Commission Meeting but he is happy to report the project came in under budget. Mr. Burch asked when the old Boarding Bridges would be removed because it has become an eye sore. Mr. Edwards stated that the old bridges will be sold and Staff is working on it. Ms. Miller asked if the dirt is coming from the new parking expansion. Mr. Edwards stated it is being taken from there and put in the new parking lot expansion. Once complete the area will be graded and reseeded. Mr. Edwards stated that the economy lot expansion is still on track for completion in the October time frame. The rain has impacted the work but it will be open before the Thanksgiving Holiday. An additional 400 spaces were added and baggage carts which were approved in the budget will be added to the lot as well as added to baggage claim. Mr. Barnet asked if Dashboards will be available to view. Mr. Edwards stated it is on the website now and Staff will re-send user names and passwords. 5

9 Mr. Edwards stated that preliminary reports indicate August passenger traffic is up and Southwest load factors continue to grow. Ms. Miller asked Mr. Edwards to make a comment on Jet Blue starting service in Charleston, SC. Mr. Edwards stated Charleston has a very strong destination market out of New York. The Boston O&D numbers don t seem as strong but New York service should be successful. Mr. Edwards stated GSP does not have the numbers to support Jet Blue service. COMMISSION MEMBER REPORTS: None. ADJOURNMENT: There being no further business, a motion was made, and adopted to go into Executive Session to discuss legal matters and personnel matters. It was announced that no actions would be taken during the Executive Session. At the end of the Executive Session, at approximately 12:00 p.m., the meeting was adjourned. 6

10 MEMORANDUM TO: FROM: Members of the Airport Commission David Edwards, President/CEO DATE: November 19, 2012 ITEM DESCRIPTION Consent Agenda Item B Approval of Airport Commission Meeting Dates/Times for Calendar Year 2013 BACKGROUND During Calendar Year 2012 the Airport Commission scheduled regular Commission meetings every other month during the year. The meetings have been held on the 2 nd Monday of the month at 9:00 a.m. ISSUES Staff recommends continuing to schedule the regular Airport Commission meeting every other month at 9:00 a.m. for Calendar Year The proposed meeting dates are as follows: ALTERNATIVES None recommended. January 22, 2013 March 11, 2013 May 13, 2013 July 8, 2013 September 9, 2013 November 25, GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

11 Greenville-Spartanburg Airport Commission Consent Agenda Item B Approval of Airport Commission Meeting Dates/Times for Calendar Year 2013 Page 2 FISCAL IMPACT None. RECOMMENDED ACTION It is respectfully requested that the Airport Commission resolve to approve the Airport Commission Meeting Dates/Times for Calendar Year 2013 as outlined above GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

12 MEMORANDUM TO: FROM: Members of the Airport Commission David Edwards, President/CEO DATE: November 19, 2012 ITEM DESCRIPTION Consent Agenda Item C Acceptance of Audit Committee Minutes ISSUES The Audit Committee is presenting its minutes from the October 9, 2012 meeting for acceptance by the full Commission ALTERNATIVES None recommended. FISCAL IMPACT None. RECOMMENDED ACTION It is respectfully requested that the Airport Commission accept the attached Audit Committee Minutes from the October 9, 2012 as presented. Attachment 2000 GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

13 GREENVILLE-SPARTANURG AIRPORT COMMISSION AUDIT COMMITTEE MINUTES OCTOBER 9, 2012 On October 9, 2012, the Greenville-Spartanburg Airport Commission s Audit Committee met at 2:00 p.m. in the Greenville-Spartanburg Airport District Office Conference Room located at 2000 GSP Drive, Suite 1, Greer, SC Committee Members Present: Bill Barnet (Chair), Minor Shaw, and Valerie Miller Staff Present: David Edwards-President/CEO, Jack Murrin-Vice President Administration and Finance/CFO, Wanda Jones-Secretary. External Audit Representation: Alan Robinson-Partner, Cherry, Bekaert and Holland, and Mary Peasly. Mr. Barnet opened the meeting and turned it over to Mr. Robinson. Mr. Robinson thanked the task force on behalf of Cherry Bekart and Holland. Mr. Robinson stated the audit report is a clean and an unqualified report with no exceptions, surprises or qualifications. The estimate on the significant accounting and accounts receivable allowing is a zero (0) due to the good collection record. Concentrations were focused on construction (spending and activity) and bonds. Mr. Barnet asked Mr. Murrin when the airport gets to the lowest cash investment balance what the actual debt coverage ratio will be. Mr. Murrin stated he expected it to be less than 40 to 1. He also stated the income stream will increase as the concession revenues increase and we will continue to pay down the principal on the $3.5 million in outstanding bonds. The bonds cannot be paid off early. In three to four years when the projected minimum investment balance is reached we will still have $3.2 million left on the books for the bonds. Mr. Barnet asked if the ratio is between bond debt and investments. Mr. Murrin stated no, the ratio is between how much income is coming in versus how much principal and interest have to go out in terms of debt service. The normal debt service coverage ratio is 1.25, so GSP is far in excess of this number, which is positive. Mr. Robinson explained the steps with the audit which included planning in April 2012; speaking with the Chair of the Audit Committee, Audit Team being here the week of August 6, 2012 and the week of August 13, 2012 to finish the audit. The audit was signed off on September 6 th, and delivered on September 19 th. Mr. Robinson stated it is exceptional to have a completed audit five (5) weeks after year-end. Mr. Robinson stated a couple of changes coming up with accounting rules. One pending change is involving concessionaire agreements. Mr. Robinson and Mr. Murrin have researched and determined it will not apply to GSP Airport District.

14 One of the biggest discussions currently going on in government public sector finance is pension obligations. This has to do with the unfunded pension of a retirement system. The Airport District participates in the SC retirement system. The SC Retirement System has a $30 billion dollar obligation to all the retirees in the state and only has funded approximately $20 billion dollars. This leaves a potential $10 billion dollar shortage. Plans are to divide this shortage among all of the cities, counties, school districts, and political subdivisions that have employees who participate. When this happens the District will have to record that liability. Mr. Robinson stated it would be a non-cash journal entry. Mr. Edwards stated he would like to add some additional clarity to this item. The State has responded to this potential shortfall by increasing rates to organizations and individuals in order to help fund the unfunded balance. Mr. Edwards has asked if we can insure against this potential exposure. The insurance company is continuing to investigate if this can be done, but to date no insurance vehicle has been found. Mr. Edwards also stated another item that has occurred in South Carolina is when employees have previously taken early retirement there has not been an issue on how long that person could stay employed and draw a retirement check. The State of South Carolina has addressed this item effective December 31, After December 31, 2012, if you earn more than $10,000 then there will be a dollar for dollar reduction of an individuals retirement benefit. This is something the State of South Carolina has enacted to keep people from being a major burden on the retirement system. Mr. Robinson stated there was a letter that was attached to the audit package which is a past audit adjustment. This has to do with another accrual estimate which is an audit adjustment and in theory CB&H may record. CB&H views this as immaterial and believes the Commission has taken a conservative view. Mr. Robinson commented that the audit included approximately $6.6 million dollars of construction expenditures during the audit--67 were tested. This percent was a very high audit sample with no exceptions found. The audit team will continue to focus on construction. Mr. Robinson noted this year no vendor test was completed. The advertising agency that was scheduled to be tested has been postponed due to other circumstances. Further discussion with the airport attorney will need to take place before a final decision is made. Mr. Barnet asked how aggressive or how much money should be applied towards vendor audits. Several of the vendors have not been audited in a very long time and over a ten year period every sector should be at one point or another audited. After a brief discussion, Mr. Murrin will come up with a ten year plan and present to the Audit Committee for their review and adoption.

15 Mr. Barnet asked if the Airport District insurance and/or liability coverage s are appropriate. Mr. Murrin sated the District s insurance broker has reviewed and is comfortable with the coverage s. Mr. Barnet asked in five years what are the issues that CB&H might recommend that this Board and management team be thinking about. Mr. Robinson stated, construction, commissioning of assets, monitor investment and technology information systems, deferred out flows and deferred flows, and asset retirement. Ms. Miller asked if the growth of the airport in the audit by Moody s is in line with what Staff has stated. Mr. Edwards stated that historically growth at the airport has averaged 5.5 since The growth rate used for future financial forecasts has been more in the range of 2 3. Mr. Edwards stated the forecast is in line with what is predicted by Moody s. Ms. Miller asked what is going to be done with the cash coming from the Car Rental Facility Charge (CFC). Mr. Edwards stated that the approximately $4 million dollars that is being spent on the relocation of the Car Rental Facilities to Garage A will be paid back to the Commission through the CFC. Also, previous capital improvements funded by the CFC will continue to be received by the District Ms. Shaw stated that when attending the ACI World Conference several discussions were being held about cyber security which she views as a huge risk. Mr. Robinson stated, as a CPA Firm, CB&H oversees and facilitates contractors, however; they would be glad to follow through. Mr. Edwards stated that Staff has completed vulnerability testing on PCI compliance and Staff has budgeted for some penetration testing. Staff is doing some various testing to see where a weak link may be. Ms. Miller stated for the future there is land use planning study being conducted. As land is sold, it will add revenue. She also requested that per the investment policy the Commissioners should be receiving a detailed investment schedule in the monthly financial package. Mr. Murrin stated Staff would include in the monthly package. Mr. Barnet asked Staff to re-verify the District has no choices in how investments are made. Mr. Murrin stated the District is governed by state statue. The Audit Committee Task Force adjourned the meeting at 3:00 p.m.

16 MEMORANDUM TO: FROM: Members of the Airport Commission Kevin E. Howell, Vice President/COO DATE: November 19, 2012 ITEM DESCRIPTION - Presentation Item A GSP Police Department Firing Range BACKGROUND In response to the Commission s request for more information regarding the Airport Police Firing Range, Chief Welborn will provide a brief presentation about the range, how it is utilized and best management practices for environmental compliance GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

17 MEMORANDUM TO: FROM: Members of the Airport Commission Kevin E. Howell, Vice President/COO DATE: November 19, 2012 ITEM DESCRIPTION - New Business Item A Adoption of the GSP Land Use Planning & Development Study BACKGROUND In October 2011, the Greenville-Spartanburg Airport District embarked on a Land Use Planning & Development Study (Study). This Study will be used by Staff and the Commission as a guide and general planning tool for land use and development of certain aviation and non-aviation development parcels on the Greenville-Spartanburg International Airport campus. The Study team was led by CDM Smith and they were supported by several local sub consultants. Over the past 12 months, the team has worked diligently through all project task items, holding multiple meetings with local stakeholders, District Staff and the Land Use Planning & Development Study Task Force. ISSUES A presentation will be provided reviewing the work completed to date, the information gathered, recommended land use types, recommended development concepts, recommended phasing plans and estimated costs of development for phase 1 and phase 1 sites. The Commission will be asked to adopt the Study as a guide for development on and around the GSP campus. The Study is intended to be a living document that is highly flexible and may be updated as needed to respond to changes in local and regional real estate trends and market demand GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

18 Greenville-Spartanburg Airport Commission New Business Item A Adoption of the GSP Land Use Planning & Development Study Page 2 ALTERNATIVES No alternatives are recommended at this time. FISCAL IMPACT Approval of the Study itself has no financial impact. Upon adoption, the Study will be used as a resource to Staff and the Commission to guide future development on and around the GSP campus. RECOMMENDED ACTION It is respectfully requested that the Airport Commission resolve to adopt the final Greenville-Spartanburg International Airport Land Use Planning & Development Study GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

19 MEMORANDUM TO: FROM: Members of the Airport Commission David N. Edwards, Jr., President/CEO DATE: November 19, 2012 ITEM DESCRIPTION New Business Item B Approval of Terminal Improvement Program Baggage Claim/South Bridge Package BACKGROUND The next package of work for Terminal Improvement Program (TIP) is the Baggage Claim/South Bridge Package. The work included in this package is the complete renovation of the Baggage Claim area, and the construction of the new South Bridge and associated vertical transportation. ISSUES Staff has worked with the Design and Construction Team to develop the work for this package. The work in the package was reviewed with the TIP Commission Task Force on November 1, Staff is seeking approval to move forward with the Baggage Claim/South Bridge work. ALTERNATIVES Staff does not have any alternatives to recommend, as this package needs to move forward in order to keep the TIP on schedule. FISCAL IMPACT The estimated budget for the Baggage Claim/South Bridge Package $ million (see attachment). There have been some elements of work that have been move between various phases of the overall TIP changes which have resulted in increases/decreases to different packages, but the overall TIP budget remains at $115 million as approved GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

20 GSP Airport Commission New Business Item B Approval of Terminal Improvement Program Baggage Claim/South Bridge Package Page 2 RECOMMENDED ACTION It is respectfully requested that the Airport Commission (1) approve the Baggage Claim/South Bridge Package Budget in the amount of $ million; and (2) authorize the President/CEO to negotiate a final Component Guaranteed Maximum Price with Skanska/Moss (Construction Manager at Risk) for this phase of the project not-toexceed $ million and execute the necessary documents to complete the work. Attachment 2000 GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

21 NB Item B - Attachment Terminal Improvement Program Bag Claim/South Bridge & Canopies Package Budget November 8, 2012 Item Amount Bag Claim/South Bridge/Canopies BP Demo $ 1,532,723 BP Earthwork/Utilities 197,879 BP Piles (Augercast & Micro) 1,277,011 BP Hardscapes 100,830 BP Landscape and Irrigation 49,862 BP Concrete 1,195,657 BP Unit Masonry 234,987 BP Structural and Misc Steel 4,477,939 BP Finish Millwork and Casework 135,175 BP Waterproofing/Roofing/Fireproofing/Stucco 38,749 BP Roofing 422,227 BP Doors/Hardware/Storefront 22,000 BP Storefront, Glass and Glazing 315,795 BP Drywall/Ceiling/Stucco/Fireproofing 773,261 BP Tile and Terrazzo 379,462 BP Flooring 88,107 BP Painting 315,899 BP Specialities 142,608 BP Speciality Curtain Wall - BP Elevators and Escalators - BP Baggage Handling 30,000 BP Fire Protection/Plumbing/HVAC 221,653 BP Plumbing 269,431 BP HVAC 1,668,171 BP Controls 274,943 Page 1 of 2

22 BP Electrical 2,529,130 Total Direct Cost of Work $ 16,693,499 Subguard $ 225,362 $ 16,918,861 GCs - LS 6.90 $ 1,167,791 $ 18,086,652 CM Fee $ 651,119 $ 18,737,772 Contingency $ 676,754 $ 19,414,526 General Liability 0.80 $ 157,726 Building Permit $ 14,894 CMR P&P Bond $ 177,266 $ 19,764,412 Owner Reserve $ 988,221 Total Budget Estimate $ 20,752,633 Page 2 of 2

23 MEMORANDUM TO: FROM: Members of the Airport Commission David N. Edwards, Jr., President/CEO DATE: November 19, 2012 ITEM DESCRIPTION - New Business Item C Award of Rental Car Concessions at the GSP International Airport BACKGROUND In July 2012, Staff issued a Request for Bids for new Rental Car Concession opportunities at the Greenville-Spartanburg International Airport ( GSP ). In addition, two pre-bid conferences were held; one on August 14, 2012 and the other on September 24, There are five (5) concessions opportunities available for award. Bids were due on October 12, 2012 and five (5) bids were received. The term of the new Rental Car Concession Agreements will be for five (5) years with one (1) Five (5) year option at the discretion of the Greenville-Spartanburg Airport District ( District ). ISSUES The Airport Commission is required to approve the final ranking for the award of the Rental Car Concession opportunities at GSP. The bid ranking for Year 1 of the Concessions Agreement is as follows: Company Amount DBE 1. Hertz $696, Avis $649, Alamo/National $607, Enterprise $475, Budget $390, GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

24 Greenville-Spartanburg Airport Commission New Business Item C Award of Rental Car Concessions at the GSP International Airport Page 2 ALTERNATIVES No alternatives are recommended at this time. FISCAL IMPACT The total Minimum Annual Guaranteed Bids for Year 1 of the Concessions Agreement is $2,818,088. This amount represents an increase of approximately $234,000 in annual revenue to the District in Year 1 of the new Concession Agreement over the current revenue levels. This amount does not include rents to be paid for rental car maintenance facilities, rental car counters/office, and rental car ready/return spaces. RECOMMENDED ACTION It is respectfully requested that the Airport Commission resolve to (1) approve the rental car bid ranking as presented above; (2) award the bids for the five (5) Rental Car Concession opportunities at the Greenville-Spartanburg International Airport to the Rental Car companies identified above; and (3) authorize the President/CEO to executive the necessary documents GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

25 MEMORANDUM TO: FROM: Members of the Airport Commission Jack G. Murrin, VP of Administration & Finance/CFO DATE: November 19, 2012 ITEM DESCRIPTION New Business Item D Acceptance of Greenville-Spartanburg International Airport Financial Audit and Schedules of Expenditures for the Fiscal Years Ended June 30, 2012 and 2011 BACKGROUND Article 7 Certain Covenants of the District, Section 716, of the 1988 GSP Master Bond Resolution mandates that the District shall annually, within 120 days after the close of each Fiscal Year, cause an audit to be made of its books and accounts by an independent and recognized certified public accounting firm. Also, as a recipient of FAA grant funds, the requirement for an audit is further established by incorporation of grant assurance #13 and by reference to Federal Regulation 49 CFR Part 18. Sponsors that expend $500,000 or more in an year in Federal funds must have a single or program-specific audit conducted for that year in accordance with the Single Audit Act of 1984 (as amended) and OMB Circular A-133 "Audits of States, Local Governments and Nonprofit Organization". The $500,000 threshold represents all Federal funding sources. ISSUES The Audit Committee met on October 9, 2012 and was presented with the audit findings. The audit was clean and unqualified. Representatives of the Cherry, Bekaert & Holland audit firm will present the Audit findings and answer questions the Airport Commission may have GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

26 Greenville-Spartanburg Airport Commission New Business Item D Acceptance of Greenville-Spartanburg International Airport Financial Audit and Schedules of Expenditures for the Fiscal Years Ended June 30, 2012 and 2011 Page 2 ALTERNATIVES None recommended. FISCAL IMPACT None. RECOMMENDED ACTION It is respectfully requested that the Airport Commission accept the audit report as presented GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

27 GREENVILLE-SPARTANBURG AIRPORT DISTRICT FINANCIAL STATEMENTS AND SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS As of and for the Years Ended June 30, 2012 and 2011 And Independent Auditors Reports

28 GREENVILLE-SPARTANBURG AIRPORT DISTRICT TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT MANAGEMENT S DISCUSSION AND ANALYSIS FINANCIAL STATEMENTS Statements of Net Assets...13 Statements of Revenues, Expenses, and Changes in Net Assets...14 Statements of Cash Flows...15 Notes to Financial Statements FEDERAL FINANCIAL ASSISTANCE Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditors Report on Compliance with Requirements that Could Have a Direct and Material Effect on Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A Schedule of Expenditures of Federal Awards...31 Notes to the Schedule of Expenditures of Federal Awards...32 Schedule of Findings and Questioned Costs Schedule of Status of Prior Year Findings and Questioned Costs...35

29 Independent Auditors Report To the Commissioners of Greenville-Spartanburg Airport District: We have audited the accompanying statements of net assets of the Greenville-Spartanburg Airport District (the Airport ), a political subdivision of the State of South Carolina, as of June 30, 2012 and 2011, and the related statements of revenues, expenses, and changes in net assets and cash flows for the years then ended. These financial statements are the responsibility of the Airport s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Airport s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, based on our audits, the financial statements referred to above present fairly, in all material respects, the financial position of the Greenville-Spartanburg Airport District as of June 30, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated September 15, 2012, on our consideration of the Airport s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 1

30 Accounting principles generally accepted in the United States of America require that the management s discussion and analysis information on pages 3 through 12 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Government Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audits were conducted for the purpose of forming our opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the financial statements. The schedule of expenditures of federal awards is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Greenville, South Carolina September 6,

31 GREENVILLE-SPARTANBURG AIRPORT DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2012 AND 2011 The following Management Discussion and Analysis (MD&A) of Greenville-Spartanburg Airport District ( GSP, District or the Airport ) activities and financial performance for the fiscal years ended June 30, 2012 and 2011, is presented in accordance with the Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements Management s Discussion and Analysis For State and Local Governments. The intent of the MD&A is to provide the reader with an introduction and overview to the financial statement package. Following this MD&A are the basic financial statements of the Airport together with the notes thereto, which are essential to a full understanding of the data contained in the financial statements. In addition to the basic financial statements and accompanying notes, this section also presents certain required supplementary information regarding debt service requirements to maturity. Overview of Annual Financial Report Management s Discussion and Analysis serves as an introduction to the basic financial statements. The MD&A represents management s examination and analysis of the Airport s financial condition and performance. Summary financial statement data, key financial and operational indicators used in the Airport s budgeting and other management tools were used for this analysis. The Airport s financial statements include a Statement of Net Assets; a Statement of Revenues, Expenses, and Changes in Net Assets; a Statement of Cash Flows; and Notes to Financial Statements. The Statement of Net Assets presents the financial position of the Airport on a full accrual historical cost basis and provides information about the nature and amount of resources and obligations at the end of a year. The Statement of Revenues, Expenses, and Changes in Net Assets present the results of the business activities over the course of the fiscal year and information as to how the net assets changed during the year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. This statement also provides certain information about the Airport s recovery of its costs. The Airport s rates and charges are based on a cost recovery methodology provided in its airline use agreements. The primary objective of the rates and charges model is to determine the costs not covered by nonairline sources and to annually compute landing fees and terminal rents which will provide sufficient funding to reimburse the Airport. The Statement of Cash Flows presents changes in cash and cash equivalents, resulting from operational, financing, and investing activities. This statement presents cash receipts and cash disbursement information, without consideration of the earnings event, when obligations arise, or depreciation of capital assets. The Notes to Financial Statements provide disclosures and other information that is essential to a full understanding of material data provided in the statements. The notes present information about the Airport s accounting policies, significant account balances, and activities, material risks, obligations, commitments, contingencies and subsequent events, if any. 3

32 GREENVILLE-SPARTANBURG AIRPORT DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2012 AND 2011 The financial statements were prepared by the Airport s staff from the detailed books and records of the Airport. FINANCIAL HIGHLIGHTS STATEMENTS OF NET ASSETS, JUNE 30, 2012 AND 2011 June Change Assets: Cash and investments $ 87,843,801 $ 88,222,464 $ (378,663) (0.43) Bond funds 354,406 1,115,598 (761,192) (68.23) Receivables 3,306,167 3,738,692 (432,525) (11.57) Capital assets - net 121,784, ,417,361 4,367, Other 492, ,423 21, Total assets $ 213,781,490 $ 210,964,538 $ 2,816, Liabilities: Current liabilities $ 3,856,559 $ 2,478,461 $ 1,378, Long-term liabilities 6,289,256 9,907,033 (3,617,777) (36.52) Total liabilities 10,145,815 12,385,494 (2,239,679) (18.08) Net assets: Invested in capital assets - net 115,872, ,976,087 8,896, Restricted 863,095 1,301,600 (438,505) (33.69) Unrestricted 86,900,006 90,301,357 (3,401,351) (3.77) Total net assets 203,635, ,579,044 5,056, Total $ 213,781,490 $ 210,964,538 $ 2,816, As can be seen from the above, the Airport has a very strong Statement of Financial Position. Liquidity continues to be very strong cash and investments alone outweigh current liabilities over twenty fold. Total net assets, exclusive of liabilities, is $203,635,675 of which $86,900,006 is unrestricted. 4

33 GREENVILLE-SPARTANBURG AIRPORT DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2012 AND 2011 Total assets at June 30, 2012 were approximately $214 million, which included $8 million in cash and receivables, $82 million in investments, $350 thousand in investments held by US Bank (GSP s Revenue Bond Trustee), and $122 million in capital assets. Total liabilities were $10 million, $3 million of which related to GSP s 2001 rental car facility bond issue outstanding at year end. The difference between the $214 million in assets and the $10 million in liabilities is categorized as Net Assets ($204 million) and is composed of $116 million invested in capital assets (net of related debt), $1 million in restricted assets to be used for capital projects, and $87 million in unrestricted assets. FINANCIAL HIGHLIGHTS STATEMENTS OF NET ASSETS, JUNE 30, 2011 AND 2010 June Change Assets: Cash and investments $ 88,222,464 $ 87,029,182 $ 1,193, Bond funds 1,115,598 2,969,986 (1,854,388) (62.44) Receivables 3,738,692 4,091,360 (352,668) (8.62) Capital assets - net 117,417, ,972,453 (3,555,092) (2.94) Other 470, ,370 (100,947) (17.67) Total assets $ 210,964,538 $ 215,634,351 $ (4,669,813) (2.17) Liabilities: Current liabilities $ 2,478,461 $ 2,837,952 $ (359,491) (12.67) Long-term liabilities 9,907,033 18,117,931 (8,210,898) (45.32) Total liabilities 12,385,494 20,955,883 (8,570,389) (40.90) Net assets: Invested in capital assets - net 106,976, ,607,710 4,368, Restricted 1,301,600 2,922,938 (1,621,338) (55.47) Unrestricted 90,301,357 89,147,820 1,153, Total net assets 198,579, ,678,468 3,900, Total $ 210,964,538 $ 215,634,351 $ (4,669,813) (2.17) As can be seen from the above, the Airport had a very strong Statement of Financial Position. Liquidity was strong cash and investments alone outweighed current liabilities over twenty fold. Total net assets, exclusive of liabilities, was $198,579,044, of which $90,301,357 is unrestricted. 5

34 GREENVILLE-SPARTANBURG AIRPORT DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2012 AND 2011 Total assets at June 30, 2011 were approximately $211 million, which included $10 million in cash and receivables, $82 million in investments, $1 million in investments held by US Bank (GSP s Revenue Bond Trustee), and $117 million in capital assets. Total liabilities were $12 million, $7 million of which related to GSP s 2001 rental car facility bond issue outstanding at year end. The difference between the $211 million in assets and the $12 million in liabilities was categorized as Net Assets ($199 million) and is composed of $107 million invested in capital assets (net of related debt), $1 million in restricted assets to be used for capital projects, and $91 million in unrestricted assets. STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS, JUNE 30, 2012 AND 2011 June Change Operating revenues: Landing and other airside fees $ 2,422,773 $ 2,609,565 $ (186,792) (7.16) Space and ground rental fees 5,931,549 6,111,712 (180,163) (2.95) Concessions revenue 12,200,620 10,611,416 1,589, Expense reimbursements 530, ,116 (27,485) (4.92) Other revenue 1,182, , , Total operating revenues 22,268,416 20,241,982 2,026, Operating expenses: Direct operating expenses 11,759,238 12,080,768 (321,401) (2.66) Loss on disposal of assets 181, ,348 36, Depreciation 9,240,394 8,808, , Total operating expenses 21,181,276 21,034, , Operating income 1,087,140 (792,941) 1,879,952 (237.09) Non-operating income (expense) 1,262, , , Income before capital contributions 2,349,140 (286,407) 2,635,418 (920.17) Capital contributions 2,707,491 4,186,983 (1,479,492) (35.34) Change in net assets $ 5,056,631 $ 3,900,576 $ 1,155,

35 GREENVILLE-SPARTANBURG AIRPORT DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2012 AND 2011 Total operating revenues were $22,268,416 for the fiscal year ended June 30, 2012, up from $20,241,982 as compared to the prior year. This increase was primarily the result of increased concession revenues, the byproduct of increased enplanements. Total direct operating expenses were $11,759,238 for the fiscal year ended June 30, 2012, down 2.66 from $12,080,768 as compared to the prior year. This decrease was largely due to marketing incentives initiated in order to attract new service from existing and potential airlines in the fiscal year ended June 30, Depreciation expense was $9,240,394 for the fiscal year ended June 30, 2012, as compared to $8,808,807 in the fiscal year ended June 30, Non-operating income was $1,262,000 for the fiscal year ended June 30, 2012, as compared to $506,534 in the fiscal year ended June 30, 2011 primarily as a result of increased CFC revenues as a byproduct of increased traffic. The debt service coverage ratio was 2,977, which exceeded the 125 required by the debt covenants of GSP s various bond issues. The blended result of increased operating revenues, depreciation expense and non-operating income, along with decreased operating expenses, as discussed above resulted in GSP s net income before capital contribution of $2.3 million (fiscal year ended June 30, 2012) compared to net loss of $0.3 million (fiscal year ended June 30, 2011). 7

36 GREENVILLE-SPARTANBURG AIRPORT DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2012 AND 2011 STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS, JUNE 30, 2011 AND 2010 June Change Operating revenues: Landing and other airside fees $ 2,609,565 $ 2,819,956 $ (210,391) (7.46) Space and ground rental fees 6,111,712 6,221,583 (109,871) (1.77) Concessions revenue 10,611,416 9,243,201 1,368, Expense reimbursements 558, ,516 97, Other revenue 351, ,898 67, Total operating revenues 20,241,982 19,029,154 1,212, Operating expenses: Direct operating expenses 12,080,768 11,249, , Loss on disposal of assets 145,348 1,908,001 (1,762,653) (92.38) Depreciation 8,808,807 8,579, , Total operating expenses 21,034,923 21,736,850 (701,927) (3.23) Operating income (792,941) (2,707,696) 1,914,755 (70.72) Non-operating income (expense) 506, , , Income before capital contributions (286,407) (2,402,032) 2,115,625 (88.08) Capital contributions 4,186,983 10,346,785 (6,159,802) (59.53) Change in net assets $ 3,900,576 $ 7,944,753 $ (4,044,177) (50.90) Total operating revenues were $20,241,982 for the fiscal year ended June 30, 2011, up 6.37 from $19,029,154 as compared to the prior year. This increase was primarily the result of increased public parking revenues. Total direct operating expenses were $12,080,768 for the fiscal year ended June 30, 2011, up 7.39 from $11,249,448 as compared to the prior year. This increase was largely due to marketing incentives initiated in order to attract new service from existing and potential airlines. Loss on disposal of assets was $145,348 for the fiscal year ended June 30, 2011, as compared to $1,908,001 in the fiscal year ended June 30, The prior year included a new runway overlay project that replaced certain portions of the old runway that was not yet fully depreciated. The debt service coverage ratio was 765, which exceeded the 125 required by the debt covenants of GSP s various bond issues. 8

37 GREENVILLE-SPARTANBURG AIRPORT DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2012 AND 2011 The blended result of increased operating revenues, increased operating expenses and decreased non-operating loss on disposal of assets as discussed above resulted in a decrease in GSP s net loss before capital contribution of $0.3 million (fiscal year ended June 30, 2011) compared to $2.4 million (fiscal year ended June 30, 2010). Looking Ahead Aviation Industry Overview The airline industry is particularly susceptible and sensitive to many variables we find in our world today: Terrorist events, like 9/11 Domestic and global economic conditions Pandemics and other health concerns Aircraft accidents Fleet & maintenance issues / aircraft orders and delays Customer service issues / failures & resultant negative press Extreme volatility of fuel prices Volcanic activity Merger, acquisitions, bankruptcies of airlines Any one of these can impact airline traffic dramatically, as recent experience has abundantly proven. And yet, when you combine these factors in an ever-changing world, you can expect very volatile results. Airlines have attempted to minimize financial losses through these periods of extreme volatility by lowering operating costs, merging, canceling unprofitable routes, charging for baggage/food/etc., and grounding older, less fuel efficient aircraft. Overall, it appears that many aviation industry prognosticators believe that: Air fares are likely to stay high most of this decade Passenger travel will continue to grow at reduced rates, but airline capacity will shrink. This combination will cause planes to get more crowded, and is likely to remain that way. Passenger miles flown on domestic flights are expected to decrease this year and grow an average 2.8 per year over the next two decades Over the next two decades, U.S. airline travel is expected to nearly double Further airline consolidation in North America is likely Two of the larger risks facing airlines, especially those in Europe, include rising oil prices and Europe s sovereign debt crisis. The Boyd International Aviation Forecasting & Strategic Solutions Group has predicted that (Prospects for the Airline Industry In 2012; January 12, 2012) in 2012, airlines will accelerate the mothballing of smaller 50-seat jets, the workhorses for connecting service between many midsize airports, and even some big ones. Many airlines will continue shrinking overall capacity and trimming domestic routes in 2012 to preserve profitability. 9

38 GREENVILLE-SPARTANBURG AIRPORT DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2012 AND 2011 The FAA s (Federal Aviation Administration) Aerospace Forecast for contains the following Forecast Highlights : Since the beginning of the century, the commercial air carrier industry has suffered several major shocks that have led to reduced demand for air travel. These shocks include the terror attacks of September 11, skyrocketing prices for fuel, debt restructuring in Europe and the United States (U.S.), and a global recession. To manage this period of extreme volatility, air carriers have fine-tuned their business models with the aim of minimizing financial losses by lowering operating costs, eliminating unprofitable routes and grounding older, less fuel efficient aircraft. To increase operating revenues, carriers have initiated new services that customers are willing to purchase. Carriers have also started charging separately for services that were historically bundled in the price of a ticket. The capacity discipline exhibited by carriers and their focus on additional revenue streams bolstered the industry to profitability in 2011 for the second consecutive year. Going into the next decade, there is cautious optimism that the industry has been transformed from that of a boom-to-bust cycle to one of sustainable profits. As the economy recovers from the most serious economic downturn and slow recovery in recent history, aviation will continue to grow over the long run. The 2012 FAA forecast now calls for one billion passengers in 2024, three years later than projected last year. Growth over the next five years will be moderate, with a return to historic levels of growth only attainable in the long term. This delayed trajectory represents the downward adjustments of the overall economy, here in the U.S. and abroad, and the aviation sector s responses. One of the many factors influencing the delayed recovery is the uncertainty that surrounds the U.S. and European economies. The latter, primarily those belonging to the Euro area, have been hit hard by the pressure from bond markets for fiscal austerity. Combined with the slow pace of these economies, debt restructuring pulled the European economy into recession in early This has not helped the pace of U.S. economic growth given the importance of its trade with Europe. Despite this and the ambiguity surrounding its own fiscal imbalances, the U.S. economy has managed to avoid a double dip recession and trudges along the path of slow recovery. System capacity in available seat miles (ASMs) the overall yardstick for how busy aviation is both domestically and internationally will remain flat this year after posting a 3.4 percent increase in 2011; it will then grow at an average annual rate of 3.1 percent through In the domestic market, capacity overall shrinks by 0.8 percent in 2012 after having registered an increase of 2.0 percent in Domestic capacity is projected to grow at an average annual rate of 2.5 percent for the remainder of the forecast period. Domestic mainline carrier capacity will decrease by 0.8 percent in 2012 after registering a one-year increase in 2011 of 2.3 percent following three years of decline. For the regional carriers, domestic capacity will shrink by 0.5 percent from 2011 levels thus registering another decline after shrinking in 2009 the only two periods when the industry has shrunk since deregulation. Commercial air carrier domestic revenue passenger miles (RPMs) are forecast to shrink 0.2 percent in 2012, and then grow at an average of 2.8 percent per year through 2032; domestic enplanements in 10

39 GREENVILLE-SPARTANBURG AIRPORT DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2012 AND will decrease 0.1 percent, and then grow at an average annual rate of 2.4 percent for the remainder of the forecast. The average size of domestic aircraft is expected to increase by 0.2 seats in FY 2012 to seats. Average seats per aircraft for mainline carriers are projected to stay relatively flat as network carriers continue to reconfigure their domestic fleets. While demand for seat aircraft continues to increase, we expect the number of 50 seat regional jets in service to fall, increasing the average regional aircraft size in 2012 by 0.5 seats to 56.8 seats per mile. Passenger trip length in domestic markets will decrease by 1.3 miles during the same period. Although the slow growth and expectations of a European recession has dampened the near term prospects for general aviation, the long-term outlook remains favorable. We see growth in business aviation demand over the long term driven by a growing U.S. and world economy especially in the turbo jet and turbine rotorcraft markets. As the fleet grows, the number of general aviation hours flown is projected to increase an average of 1.7 percent a year through The global economy is facing a prospect of slow growth again including a possible recession in the first part of the year in Europe which may slow the demand for air travel. Profitability for U.S. carriers will hinge on a stable environment for fuel prices, an increase in demand for corporate air travel, maintaining the ability to pass along fare increases to leisure travelers, and the continual generation of ancillary revenues. To navigate this volatile operating environment, mainline carriers will continue to drive down costs by better matching flight frequencies and/or aircraft gauge with demand, delaying deliveries of newer aircraft and/or grounding older aircraft, along with pressuring regional affiliates to accept lower fees for contract flying. Over the long term, we see a competitive and profitable industry characterized by increasing demand for air travel and airfares growing more slowly than inflation. Source: FAA Forecast Highlights Moody s Investor Service Airport Industry Outlook Moody s has assigned a negative outlook for the short-term (12-18 months) US Airport industry sector. This outlook is based upon several observations: Enplanement growth will be limited by a struggling economic recovery (Moody s is projecting growth to be in the +1 to -4 range) Seat capacity will continue to decline due to further airline consolidation Domestic and international economic conditions do not favor growth, especially considering European debt concerns and likely impacts on the US economy The economic downturn of the last 3-4 years has generally weakened domestic airport financial health and reduced flexibility. We see financial metrics declining in 2012, or remaining flat at best. 11

40 GREENVILLE-SPARTANBURG AIRPORT DISTRICT MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2012 AND 2011 Overall, Moody s does not expect to change the negative outlook until the sector stabilizes and consistent positive enplanement growth is realized. Source: Moody s Investor Service month outlook on US Airport Industry January 21, 2012 GSP (Greenville-Spartanburg International Airport) Outlook Although profitability levels have been strong historically, management is focused on and remains committed to providing increased levels of air service for the surrounding population base.. We are pleased to report that Southwest Airlines, the nation s leading low fare carrier, started service at GSP on March 13 th, 2011 with 7 daily non-stops (2 to BWI, 2 to Chicago, 1 to Houston, 1 to Nashville, and 1 to Orlando). Some of our legacy carriers have also increased capacity and lowered fares. Consequently, we are recapturing much of the passenger leakage that we have historically lost to Atlanta and Charlotte. This has resulted in a rather dramatic increase in passenger enplanements. We are quickly approaching the 1 Million enplanement threshold, which would, of course, represent a historical record for GSP. As passenger traffic increases, so will associated parking lot fees, rental car fees, and other concession fee / revenue streams to the Airport. For the fiscal year ended June 30, 2012 our enplanements have increased Another major project initiative currently underway is a redesign of our aging terminal facilities. This $115 million project has just started the construction phase which is expected to be completed in January, Management agrees with the FAA forecasts and continues to plan for long-term growth in accordance with local initiatives/demands, planning forecasts, and the Airport Master Plan update which was approved in February Management is committed to providing our customers with the highest level of service possible in these challenging and exciting times and look forward to the future. 12

41 GREENVILLE-SPARTANBURG AIRPORT DISTRICT STATEMENTS OF NET ASSETS JUNE 30, 2012 AND ASSETS Current assets: Cash $ 4,969,496 $ 6,043,090 Receivables 464, ,418 Inventories and prepaid insurance 428, ,039 Investments 82,471,012 81,997,246 Notes receivable - current portion 185, ,625 Total current assets 88,518,955 89,303,418 Restricted assets: Cash 403, ,128 Receivables 219, ,276 Investments - held by Trustee 354,406 1,115,598 Total restricted assets 977,499 1,506,002 Notes receivable - net of current portion 2,436,089 2,621,373 Deferred bond financing costs - net 64, ,384 Capital assets - at cost: Land 40,113,111 37,783,836 Buildings and equipment 127,210, ,749,171 Runways 70,121,168 70,121,168 Construction-in-progress 7,237, ,490 Total capital assets 244,682, ,310,665 Less accumulated depreciation (122,897,297) (119,893,304) Capital assets - net 121,784, ,417,361 Total $ 213,781,490 $ 210,964,538

42 LIABILITIES AND NET ASSETS Current liabilities: Payable from unrestricted assets: Accounts payable and accrued liabilities $ 3,316,871 $ 1,623,434 Deferred credits - current portion 185, ,625 Total payable from unrestricted assets 3,502,155 1,799,059 Payable from restricted assets: Accrued interest payable 114, ,402 Revenue bonds - current portion 240, ,000 Total payable from restricted assets 354, ,402 Total current liabilities 3,856,559 2,478,461 Deferred credits - net of current portion 2,436,089 2,621,373 Long-term employee benefits 738, ,214 Revenue bonds payable - net of current portion, unamortized bond discount of $0 and $19,554 at June 30, 2012 and 2011, respectively. 3,115,000 6,560,446 Total liabilities 10,145,815 12,385,494 Commitments and contingencies (Note 9) Net assets: Invested in capital assets - net of related debt 115,872, ,976,087 Restricted: Held by Trustee 240, ,196 Contract facility charges 623, ,404 Total restricted 863,095 1,301,600 Unrestricted 86,900,006 90,301,357 Total net assets 203,635, ,579,044 Total $ 213,781,490 $ 210,964,538 The accompanying notes to the financial statements are an integral part of this statement. 13

43 GREENVILLE-SPARTANBURG AIRPORT DISTRICT STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS YEARS ENDED JUNE 30, 2012 AND Operating revenues: Airside $ 2,422,773 $ 2,609,565 Space and ground rental 5,931,549 6,111,712 Concessions 12,200,620 10,611,416 Other 1,713, ,289 Total operating revenues 22,268,416 20,241,982 Operating expenses before loss on disposal of assets and depreciation: Airfield 260, ,396 Terminal building 1,845,043 2,025,006 Administrative 3,424,721 3,671,267 Maintenance and operations 2,676,063 2,375,542 Fire and crash department 951,371 1,056,810 Security 931, ,571 Other direct expenses 1,670,820 1,691,176 Total operating expenses before loss on disposal of assets and depreciation 11,759,238 12,080,768 Operating income before loss on disposal of assets and depreciation 10,509,178 8,161,214 Loss on disposal of assets 181, ,348 Depreciation 9,240,394 8,808,807 Operating (loss) income 1,087,140 (792,941) Nonoperating revenues (expenses): Contract facility charges 1,522,950 1,066,365 Interest on accounts 82, ,967 Change in fair value of investments (42,849) (422,787) Interest and other financing costs - net (300,845) (617,011) Nonoperating revenues (expenses) - net 1,262, ,534 (Loss) income before capital contributions 2,349,140 (286,407) Capital contributions 2,707,491 4,186,983 Increase in net assets 5,056,631 3,900,576 Net assets: Beginning of year 198,579, ,678,468 End of year $ 203,635,675 $ 198,579,044 The accompanying notes to the financial statements are an integral part of this statement. 14

44 GREENVILLE-SPARTANBURG AIRPORT DISTRICT STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2012 AND Cash flows from operating activities: Cash received from providing services $ 22,536,840 $ 20,235,643 Cash payments to suppliers for goods and services (4,343,318) (6,437,892) Cash payments to employees for services (5,776,407) (5,515,214) Net cash provided by operating activities 12,417,115 8,282,537 Cash flows from capital and related financing activities Acquisition and construction of capital assets (13,796,827) (5,399,064) Net proceeds from sale of investments - held by Trustee 761,192 1,854,387 Principal payments on bonds (3,680,446) (8,645,000) Interest payment on bonds (338,509) (761,101) Capital contributions 2,707,491 4,387,341 Contract facility charges 1,511,426 1,048,233 Net cash used in capital and related financing activities (12,835,673) (7,515,204) Cash flows from investing activities Net purchase and maturity of investment securities (516,615) 1,860,041 Investment income 82, ,558 Net cash provided by (used in) investing activities (433,871) 2,630,599 Net increase (decrease) in cash (852,429) 3,397,932 Cash: Beginning of year 6,225,218 2,827,286 End of year $ 5,372,789 $ 6,225,218 Reconciliation of operating income to net cash provided by operating activities: Operating (loss) income $ 1,087,140 $ (792,941) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 9,240,394 8,808,807 Amortization of deferred credit Loss on disposal of capital assets 181, ,348 Change in assets and liabilities: Trade and other receivables 268,424 (286,615) Inventories and prepaid insurance (74,130) (10,644) Trade accounts payable and accrued liabilities 1,700, ,050 Other long-term liabilities 12,953 8,532 Total adjustments 11,329,975 9,075,478 Net cash provided by operating activities $ 12,417,115 $ 8,282,537 The accompanying notes to the financial statements are an integral part of this statement. 15

45 GREENVILLE-SPARTANBURG AIRPORT DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 Note 1 Organization The Greenville-Spartanburg Airport District (the Airport ) is a political subdivision of the State of South Carolina (the State ). Commissioners of the Airport are recommended for appointment by a majority of the Greenville and Spartanburg County Delegations and appointed by the governor of the State. Note 2 Summary of significant accounting and reporting policies Basis of Presentation Due to its organizational structure, the Airport is subject to the application of accounting pronouncements issued by the Governmental Accounting Standards Board (GASB). GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities that Use Proprietary Fund Accounting, provides guidance on how GASB pronouncements affect governmental entities that use business-type accounting and financial reporting. As is allowable under this statement, the Airport has elected to follow the GASB hierarchy exclusively regarding authoritative literature issued after November 30, Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash For purposes of the statements of cash flows, all highly liquid investments (including restricted assets) with an original maturity of three months or less, and which are not limited as to their use, are considered to be cash equivalents and are recorded at fair market value. The cash equivalents as of June 30, 2012 and 2011 were $62,063,446 and $44,998,887, respectively. Inventories Inventories are stated at the lower of cost (first-in, first-out method) or market. Investments The Airport s investments, consisting of U.S. Treasury bills and notes at June 30, 2012 and 2011, are carried at fair value. All investments are carried in the Airport s name and held by the dealer/safekeeping agent. Investment maturities are currently spread up to 6 months in such a fashion that a portion of the portfolio matures each month and as such are reported in current assets in the accompanying statements of net assets. Investments Held by Trustee Investments Held by Trustee represent funds held by a trustee under bond indenture agreements as required by provisions of the Series 2001 Bonds. Such trusteed funds include debt service reserve, construction, and principal and interest accounts. These investments consist primarily of U.S. Treasury securities. Deferred Bond Financing Costs Costs incurred in connection with the issuance of long-term debt are deferred and amortized over the life of the related bond issuance using the effective interest method. Unamortized bond financing costs are reported in the accompanying statements of net assets as deferred bond financing costs, net of accumulated amortization. 16

46 GREENVILLE-SPARTANBURG AIRPORT DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 Note 2 Summary of significant accounting and reporting policies (continued) New Pronouncements The GASB has issued several statements which have not yet been implemented by the Airport. Those statements which may have a future impact on the Airport include: GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, effective for periods beginning after December 15, 2011, provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources requiring segregation of deferred outflows and inflows from assets and liabilities for both governmental financial statements and accrual basis financial statements. The standard amends the net asset reporting requirements in GASB 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments, and other pronouncements by incorporating deferred outflows of resources and deferred inflows of resources into the definitions of the required components of the residual measure and by renaming that measure as net position, rather than net assets. GASB Statement No. 67, Financial Reporting for Pension Plans an amendment of GASB Statement No. 25, effective for periods beginning after June 15, 2013, replaces the requirements of Statement No. 25 and 50, as they relate to pension plans that are administered through trusts or equivalent arrangements that meet certain criteria. The standard provides for financial statements to be presented in accordance with Statement No. 63, which separates the deferred inflows and outflows and arrives at a net position, and requires disclosure of the pension plan s fiduciary net position, net pension liability, the pension plan s fiduciary net position as a percentage of total pension liability, and related assumptions used to calculate the pension liability. The standard also provides for presentation of required supplementary information for each of the 10 most recent fiscal years, including the sources of changes in the net pension liability and information about the components of the liability and related ratios. GASB Statement No. 68, Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27, effective for periods beginning after June 15, 2014, replaces the requirements of Statement No. 27 and No. 50 as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements that meet certain criteria. The standard requires government employers to recognize as a liability, for the first time, their long-term obligation for pension benefits. The employer liability is to be measured as the difference between the present value of projected benefit payments to be provided through the pension plan for past periods of service less the amount of the pension plan s fiduciary net position, with obligations for employers with cost sharing plans based on their proportionate share of contributions to the pension plan. The standard also requires more immediate recognition of annual service cost, interest and changes in benefits for pension expense, specifies requirements for discount rates and actuarial methods and changes disclosure requirements. 17

47 GREENVILLE-SPARTANBURG AIRPORT DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 Note 2 Summary of significant accounting and reporting policies (continued) Capital Assets Capital assets are stated at historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets ranging from 3 to 25 years. The Airport s threshold for capitalization is $10,000. Repair and maintenance costs are expensed when incurred. Changes in accumulated depreciation during 2012 and 2011 are as follows: Fixed Assets Acquired by Other Fixed Total Fixed FAA Grants Assets Assets Accumulated depreciation - June 30, 2010 $ 53,463,085 $ 58,719,955 $ 112,183,040 Fiscal year 2011 depreciation 5,462,199 3,346,607 8,808,806 Less capital asset write-offs (451,744) (646,798) (1,098,542) Accumulated depreciation - June 30, ,473,540 61,419, ,893,304 Fiscal year 2012 depreciation 5,574,472 3,665,922 9,240,394 Less capital asset write-offs (492,907) (5,743,494) (6,236,401) Accumulated depreciation - June 30, 2012 $ 63,555,105 $ 59,342,192 $ 122,897,297 Contract Facility Charge Contract Facility Charges (CFCs) are levied by the Airport pursuant to a Memorandum of Understanding signed with the rental car companies serving the Airport. This rate is adjusted from time to time as deemed necessary by airport management in order to cover the related annual expenses. The CFC rate was $4.00 per contract rental day as of June 30, 2012 and 2011, respectively. Up to the date of beneficial occupancy, April 1, 2003, the amounts received were recorded as non-operating revenues when earned and were to be used for construction of the rental car facility in addition to funding the debt service requirements of the associated Series 2001 Bonds. Subsequent to April 1, 2003, CFCs received are recorded as space and ground rental operating revenue in addition to non-operating revenue related to the continued funding of the related Series 2001 Bonds. The Airport is to receive the CFCs for the term of the related bonds (through fiscal 2020). The Memorandum of Understanding between the Airport and rental car companies serving the Airport also provides for the reimbursement of the construction costs which the Airport funded out of operations. The Airport is to be reimbursed over a 20-year period, payable monthly, including a 5.5 per annum finance charge. Upon receipt, the Airport records such reimbursement as nonoperating revenue in the accompanying statements of revenues, expenses, and changes in net assets. The Airport has recorded the total amount of reimbursement outstanding from the rental car companies at June 30, 2012 and 2011, as notes receivable and deferred credits totaling $2,621,373 and $2,796,998, respectively, in the accompanying statements of net assets. 18

48 GREENVILLE-SPARTANBURG AIRPORT DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 Note 2 Summary of significant accounting and reporting policies (continued) For the years ended June 30, 2012 and 2011, the Airport has recorded CFCs related to space and ground rental as operating revenue of $666,573 and $655,870, respectively, in addition to nonoperating revenue consisting of the following: Funding of Series 2001 Bonds $ 468,811 $ 467,716 Reimbursement of Airport-funded construction costs 329, ,460 CFC surplus receipts 724, ,198 $ 1,522,950 $ 1,066,374 Additionally, as of June 30, 2012 and 2011, the Airport had received but not yet spent CFCs totaling $403,293 and $182,128, respectively, which are reported as restricted net assets in the accompanying statements of net assets until expended. Net Assets Net assets are classified as invested in capital assets, net of related debt; restricted; and unrestricted. Restricted net assets represent constraints on resources that are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law. Capital Contributions Certain expenditures for airport capital improvements are significantly funded through the Airport Improvement Program (AIP) of the Federal Aviation Administration (FAA) or from various State allocations or grant programs. Capital funding provided under government grants is considered earned as the related allowable expenditures are incurred. Grants for capital asset acquisition and facility development and rehabilitation are reported in the accompanying statements of revenues, expenses, and changes in net assets, after non-operating revenues (expenses), as capital contributions. Operating Revenues and Expenses All of the Airport s activities relate to the operation of the airport except for the investment of residual cash and investments and financing-related activities. Accordingly, all of the Airport s revenues and expenses, except for investment income and financing-related costs and charges, are classified as operating in the accompanying statements of revenues, expenses, and changes in net assets. Revenue Recognition Airside and space and ground rental revenues consist of amounts received under Airline Operating Agreements with the major airlines serving the Airport, certain fixed fees for nonscheduled airlines and private users of the Airport, and certain fixed fees for other ancillary services provided. The Airline Operating Agreements stipulate that landing fees and space rental revenues will be based on maintenance and operations costs, as defined in the agreements. Additionally, the Series 2000 and 2001 Bonds contain a restrictive covenant which provides that the aggregate of airline fees and charges together with other revenues, including nonairline revenues, for each fiscal year should be sufficient to pay the operating expenses and to make all deposits and payments under bond ordinances. Airside and space and ground rental fees are recognized as revenue when the related services are provided and facilities utilized. 19

49 GREENVILLE-SPARTANBURG AIRPORT DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 Note 2 Summary of significant accounting and reporting policies (continued) Concessions and other revenue consist primarily of rental car, parking, and other ancillary services revenue. Such revenue is generally based on a fixed percentage of tenant revenues subject to certain minimum monthly fees or a fixed fee schedule. Concessions and other revenue are recognized when earned. Other Direct Expenses Other direct expenses consist primarily of the upkeep of the cargo, rental car, and parking lot facilities. Other direct expenses are recognized when incurred. Post-Employment Benefits During the 2010 fiscal year GSP implemented a new personnel policy in which it will pay for a portion of an eligible retiree s health insurance premiums between ages 60 to 65 who also have at least 10 years of service with GSP. The liability related to this new benefit was not material; however, a liability related to this benefit is included in the long-term employee benefits in the statement of net assets. Compensated Absences During the 2010 fiscal year GSP amended its personnel policies related to compensated absences. Employees now earn vacation leave at a rate of 80 to 160 hours per year dependent upon length of service. Unused vacation hours can be carried over from year to year up to a maximum of 480 hours and are payable upon termination, resignation, retirement, or death in accordance with the Airport s personnel policy. Under the previous policy, unused vacation hours could not be carried over to the next year. The noncurrent portion of the accrued liability related to vacation hours is included in long-term employee benefits and the current portion in accrued liabilities in the statements of net assets. Regular full-time employees accumulate sick leave at the rate of 96 hours per year and can accrue up to 720 hours. All employees who properly resign, are laid off, or otherwise separated from the Airport in good standing are entitled to be paid 33 of any unused sick balance not to exceed 240 hours. An accrual for sick leave has been made as of June 30, 2012 and has been categorized into a short-term and long-term portion. Sick leave can be taken for medical appointments, personal illness or illness of a member of the immediate family. Sick leave may be used in the determination of length of service for retirement benefit purposes. The noncurrent portion of the accrued liability related to sick leave is included in long-term employee benefits and the current portion in accrued liabilities in the statements of net assets. Note 3 Cash and Other Financial Instruments All the cash deposits of the Airport are in a single financial institution and are carried at cost plus interest which approximates market. The carrying amount of cash deposits is separately reported as cash in the accompanying statements of net assets. These deposits are either insured or collateralized by using one of two methods. Under the Dedicated Method, all deposits that exceed the federal depository insurance coverage level are collateralized with securities held by the Airport. Under the Pooling Method, which is a collateral pool, all uninsured deposits are collateralized with securities held by the State Treasurer s agent in the name of the State Treasurer. 20

50 GREENVILLE-SPARTANBURG AIRPORT DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 Note 3 Cash and Other Financial Instruments (continued) Airport cash accounts are part of a nightly multi-account sweep with a major financial institution s automated investment system repurchase agreement. The overnight repurchase agreements are collateralized by the underlying U.S. government securities. Public fund accounts, according to state law, are required to be collateralized using the dedicated method. Under the dedicated method, the bank custodian is required to pledge specific securities for collateralized balances in excess of the amounts covered by the Federal Depository Insurance Corporation. At June 30, 2012 and 2011, the Airport s cash deposits totaled $5,372,789 and $6,225,218, respectively, of which $250,000 was covered by federal depository insurance and the remainder was covered by collateral held under the dedicated method. Note 4 Receivables Receivables are recorded at their gross value when earned and are reduced, if applicable, by the estimated portion that is expected to be uncollectible. The allowance for uncollectible amounts, when applicable, is based on collection history, aviation industry trends, and current information regarding the creditworthiness of the tenants and others doing business with the Airport. As of June 30, 2012 and 2011, no allowance for uncollectible amounts was recorded. Receivables (including restricted assets) consisted of the following as of June 30, 2012 and 2011: Trade and contract facility charge $ 618,999 $ 750,116 Interest and other 65, ,578 $ 684,794 $ 941,694 Note 5 Investments At June 30, 2012 and 2011, the Airport s investment balances, recorded at fair value, were $82,471,012 and $81,997,246, respectively. Of these amounts, at June 30, 2012 $55,405,005 was invested in U.S. Treasury bills and notes, $12,023,581 in the South Carolina Local Government Investment Pool program and $15,042,426 in the Capital Bank CDARS program. At June , $81,997,246 was invested in U.S. Treasury bills and notes All investments held at June 30, 2011 and 2010 have maturities of less than one year and have an AAA rating. In addition, investments with fair values of $354,406 and $1,115,598 as of June 30, 2012 and 2011, respectively, were held by a trustee. Interest Rate Risk As a means of limiting its exposure to fair value losses arising from rising interest rates, the Airport generally limits a portion of its investment portfolio to maturities of less than 12 months. Also, the Airport s purchases of securities are laddered with staggered maturity dates. 21

51 GREENVILLE-SPARTANBURG AIRPORT DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 Note 5 Investments (continued) Credit Risk The Airport has no written policy regarding credit risk. However, a conservative investment strategy is maintained. Currently, management only invests in U.S. Treasury bills. Custodial Credit Risk For an investment, the custodial risk is the risk that in the event of the failure of the counterparty, the Airport will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Airport has no written policy on custodial credit risk. Concentration of Credit Risk The Airport places no limit on the amount that the Airport may invest in any one issuer. All of the Airport s investments are in U.S. Treasury bills. Note 6 Capital assets A summary of changes in capital assets during fiscal 2012 and 2011 is as follows: Transfers/ June 30, 2011 Additions Disposals June 30, 2012 Capital assets not being depreciated: Land $ 37,783,836 $ 2,329,275 $ - $ 40,113,111 Construction-in-process 656,490 10,024,402 (3,443,046) 7,237,846 Total capital assets not being depreciated 38,440,326 12,353,677 (3,443,046) 47,350,957 Capital assets being depreciated: Buildings and equipment 128,749,171 4,886,199 (6,425,301) 127,210,069 Runways 70,121, ,121,168 Total capital assets being depreciated 198,870,339 4,886,199 (6,425,301) 197,331,237 Total accumulated depreciation (119,893,304) (9,240,394) 6,236,401 (122,897,297) Net capital assets $ 117,417,361 $ 7,999,482 $ (3,631,946) $ 121,784,897 22

52 GREENVILLE-SPARTANBURG AIRPORT DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 Note 6 Capital assets (continued) Tranfers/ June 30, 2010 Additions Disposals June 30, 2011 Capital assets not being depreciated: Land $ 37,783,836 $ - $ - $ 37,783,836 Construction-in-process 2,389,549 3,174,173 (4,907,232) 656,490 Total capital assets not being depreciated 40,173,385 3,174,173 (4,907,232) 38,440,326 Capital assets being depreciated: Buildings and equipment 122,826,576 7,132,123 (1,209,528) 128,749,171 Runways 70,155,532 - (34,364) 70,121,168 Total capital assets being depreciated 192,982,108 7,132,123 (1,243,892) 198,870,339 Total accumulated depreciation (112,183,040) (8,808,807) 1,098,543 (119,893,304) Net capital assets $ 120,972,453 $ 1,497,489 $ (5,052,581) $ 117,417,361 Note 7 Revenue bonds A summary of the revenue bond changes during fiscal 2012 and 2011 is as follows: Outstanding Net Cash Outstanding Current June 30, 2011 Disbursements Amortization June 30, 2012 portion Revenue bonds: Series 2001A $ 3,475,000 $ (3,475,000) $ - $ - $ - Series 2001B 3,580,000 (225,000) - 3,355, ,000 Deferred credits 2,796,998 - (175,625) 2,621, ,284 Total $ 9,851,998 $ (3,700,000) $ (175,625) $ 5,976,373 $ 425,284 Outstanding Net Cash Outstanding Current June 30, 2010 Disbursements Amortization June 30, 2011 portion Revenue bonds: Series 2000 $ 8,195,000 $ (8,195,000) $ - $ - $ - Series 2001A 3,710,000 (235,000) - 3,475, ,000 Series 2001B 3,795,000 (215,000) - 3,580, ,000 Deferred credits 2,963,467 - (166,469) 2,796, ,625 Total $ 18,663,467 $ (8,645,000) $ (166,469) $ 9,851,998 $ 650,625 23

53 GREENVILLE-SPARTANBURG AIRPORT DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 Note 7 Revenue bonds Series 2000 Bonds In September 2000, the Airport issued $11,970,000 in revenue bonds ( Series 2000 Bonds ). Proceeds of the issuance were used to construct a new cargo facility and related improvements. These bonds were paid off on August 13, Series 2001 Bonds In August 2001, the Airport issued $5,140,000 of tax-exempt revenue bonds ( Series 2001A Bonds ) and $4,990,000 of taxable revenue bonds ( Series 2001B Bonds ) (collectively, the Series 2001 Bonds ). Proceeds of the issuances were used to construct a new rental car facility and related improvements. Interest is payable semiannually on July 1 and January 1. Annual principal installments are due on July 1 and commenced on July 1, The Series 2001A Bonds and Series 2001B Bonds are composed of serial bonds which bear interest at rates between 3.1 and 5.0 annually and 4.4 and 6.2 annually, respectively. In addition, the Series 2001A Bonds include $775,000 of 5 term bonds due July 1, 2021, and the Series 2001B Bonds include $3,355,000 of 6.82 term bonds due July 1, A Term Bonds were paid off in August $3,355,000 in principal on the 2011B Term Bonds matures on July 1, Under the terms of the Series 2000 and 2001 Bonds, the Airport is subject to certain covenants including, but not limited to, limitations on the transfer or sale of assets, limitations on the incurrence of additional indebtedness, maintenance of adequate insurance coverage on property, and maintenance of a minimum level of net revenues, as defined, to aggregate annual debt service. As of June 30, 2012 and 2011, the Airport was in compliance with these restrictive covenants. The future debt service requirements of the Series 2001 Bonds are as follows as of June 30, 2012: Principal Interest Total 2013 $ 240,000 $ 228,811 $ 468, , , , , , , , , , , , , ,960, ,089 2,379,089 Total $ 3,355,000 $ 1,386,165 $ 4,741,165 See Note 13 regarding repayment of the Series 2001A Bonds subsequent to June 30, Note 8 Capital contributions For the years ended June 30, 2012 and 2011, the Airport recognized capital contributions primarily from the FAA totaling $2,707,491 and $4,186,983, respectively, in its statements of revenues, expenses, and changes in net assets. 24

54 GREENVILLE-SPARTANBURG AIRPORT DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 Note 9 Commitments and contingencies The Airport is party to various legal action in the ordinary course of business from time to time. Management believes that such matters will not have a material adverse effect on the Airport s financial condition, results of operations or cash flows. The Airport s ability to derive net revenues from operations depends upon various factors, many of which are not within the control of the Airport. The primary sources of net revenues are parking revenues and the Airline Operating Agreements between the Airport and the airlines. The Airline Operating Agreements provide for the landing fees, terminal rentals, and ramp fees to be charged to the airlines. Should an airline default under the terms of the Airline Operating Agreement, management believes it can take certain actions to mitigate any potential adverse impact. At any point in time, the U.S. economy, excess airline capacity, and industry-wide competition through airfare discounting may create significant constraints on the operations of the airlines. Due to these factors, the financial results of the Airport are largely dependent upon conditions in the national economy and the U.S. airline industry. The scheduled debt service requirements on the 2001 Bonds are guaranteed by third-party insurers. Debt service on the Series 2001 Bonds is insured by Financial Security Assurance, Inc. The ultimate ability of such insurers to meet their obligations with respect to the debt service requirements will be predicated on their future financial condition. Additionally, the Airport receives significant financial assistance from federal governmental agencies in the form of grants and other awards. The disbursement of resources received under such programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit by grantor agencies. Management believes the Airport is in compliance with all such terms and conditions. The Airport had entered into commitments for construction contracts for $40,134,985, of which $34,328,513 is outstanding at June 30, Note 10 Pension plan and post-retirement benefits All Airport permanent employees are members of the South Carolina Retirement System (the Plan ), a cost-sharing multiple-employer defined benefit pension plan administered by the Retirement Division of the State Budget and Control Board. The Plan offers retirement and disability benefits, cost of living adjustments on an ad hoc basis, life insurance benefits, and survivor benefits. The Plan s provisions are established under Title 9 of the South Carolina Code of Laws. A Comprehensive Annual Financial Report containing financial statements and required supplementary information for the Plan is issued and is publicly available by writing to the South Carolina Retirement System, P.O. Box 11960, Columbia, South Carolina Plan members were required to contribute 6.5 (7.0 as of July 2012) of their annual covered salary to the Plan, and the Airport contributes (including incidental death benefit, 10.6 as of July 2012), which is an actuarially determined rate. The Airport s Plan-matching contribution in fiscal years 2012, 2011 and 2010 was approximately $464,500, $462,700 and $400,100, respectively, and equaled the required contributions for those years. 25

55 GREENVILLE-SPARTANBURG AIRPORT DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 Note 10 Pension plan and post-retirement benefits (continued) As a result of the fiscal year 2010 change in personnel policy, the Airport now matches 100 of employee contributions to their 401K and/or 457 plans up to 5 of the employee s gross income. The Airport s 401K-matching contribution in the fiscal years ending June 30, 2012 and 2011 was approximately $70,100 and $73,500, respectively. Note 11 Restricted assets Certain proceeds from the Airport s debt service accounts and reserve funds held by their bond trustee, as well as its CFC receipts and receivables not yet spent at year-end, are classified as restricted assets on the statements of net assets because their use is limited by applicable bond covenants and concession agreements. The Investments Held by Trustee account is used to represent resources set aside to subsidize potential deficiencies from the Airport s operations that could adversely affect debt service payments. The Cash and Receivables accounts represent contract facility charges that have either been received or earned by the Airport but not yet spent as of June 30, 2012 and These funds are to be used by the Airport to either prepay their 2001 revenue bonds or to fund additional improvements to the rental car facilities at the Airport. Note 12 Risk management The Airport is exposed to various risks of loss related to torts, errors, omissions, destruction/damage of assets, natural disasters, and other events, for which the Airport carries the following policies: Policies carried with individual insurance carriers and competitively bid out with an insurance brokerage firm: General liability, war risk, non-owned aircraft liability, and hangarkeepers Dishonesty coverage/commercial crime Public officials liability Directors & Officers (D&O) liability Workers Compensation Auto comprehensive/collision/liability Building and personal property Business interruption Data processing General tort liability Inland marine The Airport has not significantly reduced any of its insurance coverage from the prior year, and settled claims have not exceeded the Airport s insurance coverage in the past three years. ***** 26

56 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Commissioners of Greenville-Spartanburg Airport District: We have audited the financial statements of the Greenville-Spartanburg Airport District (the Airport) as of and for the year ended June 30, 2012, and have issued our report thereon dated September 6, We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting Management of the Airport is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Airport s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Airport s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Airport s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined previously. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Airport s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion 27

57 on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, the Airport s Board of Commissioners, others within the entity, the U.S. Department of Transportation, and federal awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. Greenville, South Carolina September 6,

58 Independent Auditors Report on Compliance with Requirements that Could have a Direct and Material Effect On Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A-133 To the Commissioners of Greenville-Spartanburg Airport District: Compliance We have audited the Greenville-Spartanburg Airport District s (the Airport ) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the Airport s major federal programs for the year ended June 30, The Airport s major federal programs are identified in the summary of auditors results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the Airport s management. Our responsibility is to express an opinion on the Airport s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A- 133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Airport s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the Airport s compliance with those requirements. In our opinion, the Airport complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, Internal Control Over Compliance Management of the Airport is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the Airport s internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB 29

59 Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Airport s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of management, the Airport s Board of Commissioners, others within the entity, the U.S. Department of Transportation, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Greenville, South Carolina September 6,

60 GREENVILLE-SPARTANBURG AIRPORT DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2012 Grant Status - Grant Funds Total Project Costs Incurred Received from FAA July 1, 2011 Cumulative July 1, 2011 Cumulative Maximum Project Number and Description CFDA to to to to Federal (Notes 1 and 2) Number June 30, 2012 June 30, 2012 June 30, 2012 June 30, 2012 Participation Department of Transportation - Airport Improvement Program: Grant No Rehabilitate Terminal Building $ 5,493,753 $ 5,493,753 $ 2,705,706 $ 2,705,706 $ 3,770,082 Transportation Security Administration N/A 149,394 1,871, ,377 1,787,320 1,862,015 Total $ 5,643,147 $ 7,364,894 $ 2,953,083 $ 4,493,026 $ 5,632,097 See notes to schedule of expenditures of federal awards. 31

61 GREENVILLE-SPARTANBURG AIRPORT DISTRICT NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2012 Note 1 Summary of significant accounting policies Basis of Presentation The accompanying schedules of expenditures of federal awards for the year ended June 30, 2012, for projects in effect from August 15, 2011 through June 30, 2012, was prepared using the accrual basis of accounting, taking into consideration costs incurred and payable at year end. Grant Descriptions The Greenville-Spartanburg Airport District (the Airport ) and the Federal Aviation Administration (FAA) entered into the following agreement: a. Grant agreement dated August 15, 2011 (Project # ), provides funds to rehabilitate the Terminal Building. Under the provisions of the grant agreement, the FAA is to reimburse the Airport for 95 of allowable costs (60) not to exceed $3,770,082. The Airport and the Transportation Security Administration (TSA) are parties to a Law Enforcement Personnel Agreement dated September 2, 2003, which provides reimbursement for the cost of law enforcement officers at the Airport s passenger screening locations. This agreement was effective June 1, 2003 through September 30, 2003, but allowed for annual extension through September 30, The Airport received an additional assistance award of $699,820 for the period from October 1, 2007 through September 30, Under the provisions of the agreement, the TSA is to reimburse the Airport for 100 of the cost of law enforcement, not to exceed $1,862,015. Note 2 Status of Projects As of June 30, 2012, the following projects were open: Project # Transportation Security Administration Note 3 Audits Performed by Other Organizations There were no audits performed by other organizations of the Airport s federal award program for the year ended June 30, ****** 32

62 GREENVILLE-SPARTANBURG AIRPORT DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2012 Section I. Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X no Noncompliance material to financial statements noted? yes X no Federal Awards Internal control over major programs: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X no Noncompliance material to federal awards: yes X no Type of auditors report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of OMB Circular A-133? yes X no Identification of major programs: CFDA# Program Name Department of Transportation- Airport Improvement Program Dollar threshold used to distinguish between type A and type B programs: $ 300,000 Auditee qualified as low-risk auditee? X yes no 33

63 GREENVILLE-SPARTANBURG AIRPORT DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2012 Section II. Financial Statement Findings No findings reported. No findings reported. Section III. Federal Award Findings and Questioned Costs 34

64 GREENVILLE-SPARTANBURG AIRPORT DISTRICT SCHEDULE OF STATUS OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2012 There were no prior year findings. Section IV. Summary of Prior Year Findings 35

65 MEMORANDUM TO: FROM: Members of the Airport Commission David N. Edwards, Jr., President/CEO DATE: November 19, 2012 PRESIDENT/CEO S REPORT: A. Aviation Industry Update. B. Close-out Report for the Loading Bridge/PC Air/Fixed Ground Power Project 2000 GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

66 MEMORANDUM TO: FROM: Members of the Airport Commission David N. Edwards, Jr., President/CEO DATE: November 19, 2012 ITEM DESCRIPTION Information Section Item A September 2012 Traffic Report SUMMARY Passenger numbers continue to show positive growth. For September 2012 passenger traffic was up slightly at 1.1 over the same month in Cargo traffic was down 15.1 for September 2012 over September On a national basis for the same period passenger traffic was down 0.2 and cargo was down 1.5 Attached is a copy of the detailed traffic report September GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

67 Monthly Traffic Report Greenville-Spartanburg International Airport September 2012 Percentage Percentage Category Sep 2012 Sep 2011 Change *CYTD-2012 *CYTD-2011 Change *MOV *MOV Percentage Change Passenger Traffic Enplaned 77,117 76, , ,647 Deplaned 75,931 75, , ,386 Total 153, , ,381,588 1,279, , , , , ,857,658 1,606, Cargo Traffic (Pounds) Mail Enplaned Deplaned Subtotal 0 0 #Num! #Num! #Num! Express Enplaned Deplaned Subtotal Freight Enplaned Deplaned Subtotal 4,505 5,322 9,827 5,231 5,163 10, ,166,018 2,121,596 2,437,346 2,613, ,287,614 5,050, ,709 51,487 36,598 48,820 85, ,307 20,513,599 20,343,494 21,469,256 20,135,113 41,982,855 40,478, ,975 57,697 51,506 54, , ,151 26,861,147 27,152,623 30,217,348 27,360,754 57,078,495 54,513, Total 4,297,441 5,061, ,068,162 40,579, ,220,976 54,625, *CYTD = Calendar Year to Date and *Mov12 = Moving Twelve Months. Wednesday, October 31, 2012 Page 1 of 2

68 Monthly Traffic Report Greenville-Spartanburg International Airport September 2012 Percentage Percentage Category Sep 2012 Sep 2011 Change *CYTD-2012 *CYTD-2011 Change *MOV *MOV Percentage Change Aircraft Operations Airlines Commuter /Air Taxi 1, ,118 2, ,907 20,218 7,275 21, ,734 27,383 8,523 28, Subtotal 3,147 3, ,125 28, ,117 37, General Aviation ,410 7, ,810 10, Military ,169 1, Subtotal ,393 8, ,979 11, Total 4,114 4, ,518 36, ,096 48, Fuel Gallons 100LL Jet A (GA) Subtotal Jet A (A/L) Total 2,322 70, ,934 2,156 83, , , ,406 26, ,931 33, ,415 35, ,194 72,821 86, , , , , ,771,752 8,591, ,768,295 11,011, ,755 1,083, ,360,750 9,203, ,558,017 11,813, *CYTD = Calendar Year to Date and *Mov12 = Moving Twelve Months. Wednesday, October 31, 2012 Page 2 of 2

69 Scheduled Airline Enplanements, Seats, and Load Factors Greenville-Spartanburg International Airport September 2012 Sep 2012 Sep 2011 Percentage Change *CYTD-2012 *CYTD-2011 Percentage Change Allegiant Air Enplanements 5,146 4, ,791 64, Seats 6,000 5, ,950 72, Load Factor American Airlines Enplanements 3,677 3, ,928 38, Seats 4,200 4, ,593 45, Load Factor Continental Airlines Enplanements 0 5, ,275 46, Seats 0 8, ,750 68, Load Factor #Num! 72.6 #Type! Delta Air Lines Enplanements 24,153 23, , , Seats 32,811 29, , , Load Factor Wednesday, October 31, 2012 *CTYD = Calendar Year to Date and *Mov12 = Moving Twelve Months.

70 Sep 2012 Sep 2011 Percentage Change *CYTD-2012 *CYTD-2011 Percentage Change Southwest Airlines Enplanements 17,688 16, , , Seats 28,085 28, , , Load Factor United Airlines Enplanements 11,811 7, ,932 56, Seats 16,437 10, ,509 81, Load Factor US Airways Enplanements 14,416 13, , , Seats 17,702 18, , , Load Factor Totals Enplanements Seats Load Factor 76,891 76, , , , , , , Wednesday, October 31, 2012 *CTYD = Calendar Year to Date and *Mov12 = Moving Twelve Months.

71 Monthly Enplanements By Year Greenville-Spartanburg International Airport Enplanements Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Blank) (Blank) (Blank) Wednesday, October 31, 2012

72 Monthly Seats By Year Greenville-Spartanburg International Airport Seats Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Blank) (Blank) (Blank) Wednesday, October 31, 2012

73 Monthly Load Factors By Year Greenville-Spartanburg International Airport Load Factor Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Blank) (Blank) (Blank) Wednesday, October 31, 2012

74 Total Monthly Passengers By Year Greenville-Spartanburg International Airport Total Passengers Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Blank) (Blank) (Blank) Wednesday, October 31, 2012

75 Scheduled Airline Market Shares (Enplanements) Greenville-Spartanburg International Airport Report Period From September 2012 Through September Allegiant Air American Airlines Continental Airlines Delta Air Lines Southwest Airlines United Airlines US Airways Wednesday, October 31, 2012

76 Airline Flight Completions Greenville-Spartanburg International Airport September 2012 Airline Scheduled Flights Cancellations Due To Field Mechanical Weather Other Total Cancellations Percentage of Completed Flights Allegiant Air Alliance Air Charter American Airlines Ameristar Jet Charter Continental Airlines #Num! Delta Air Lines Federal Express Wednesday, October 31, 2012

77 Airline Scheduled Flights Cancellations Due To Field Mechanical Weather Other Total Cancellations Percentage of Completed Flights GTA Air IFL Group Kalitta Charters II Kolo Canyons Air Service McNeely Charter Service Miami Air Miller Aviation Northern Air Cargo PAK West Airlines Wednesday, October 31, 2012

78 Airline Scheduled Flights Cancellations Due To Field Mechanical Weather Other Total Cancellations Percentage of Completed Flights Priority Air Charter Royal Air Freight Sky King Southwest Airlines United Airlines UPS US Airways USA Jet Total 1, Wednesday, October 31, 2012

79 MEMORANDUM TO: FROM: Members of the Airport Commission Jack G. Murrin, VP of Administration & Finance/CFO DATE: November 19, 2012 ITEM DESCRIPTION Information Section Item B September, Monthly Financial Report SUMMARY Operating Income was up by 3.42 when compared to the budget for Year-to-Date September Operating Expenses were down by over the budgeted amount for the period. Net operating income was up versus the budget through September, For the period ending September 2012 which is 3 months of the fiscal year a total of about $3.32 million has been returned to the bottom line in operating income. Attached is a copy of the detailed financial report for September Please recognize that this is a preliminary report, unaudited, and only represents three months of activity resulting in variances from budget which can be quite volatile GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

80 September 30, 2012 FINANCIAL STATEMENT PACKAGE

81 GREENVILLE SPARTANBURG AIRPORT DISTRICT BALANCE SHEET Current Month Current Month Current FY Prior FY 9/30/2012 9/30/2011 ASSETS Cash Accounts 4,370, ,444, Investments-Airport 82,489, ,414, Bond Trustee Assets 118, , Accounts Receivable 611, , Less: Reserve for Doubtful Accts - Net Accounts Receivable 611, , Inventory 178, , Prepaid Insurance 274, , Unamort Bond Underw, Insur, Legal Fees 62, , Notes Receivable-RAC District Funds 2,575, ,753, Property, Plant & Equipment (PP&E) 246,742, ,101, Less: Accumulated Depreciation (125,394,430.87) (122,275,238.91) Net PP&E 121,348, ,826, TOTAL ASSETS 212,026, ,609, LIABILITIES & EQUITY Accounts Payable 621, , Revenue Bonds Payable 3,168, ,512, Benefit Liability 738, , Deferred Revenues 2,575, ,753, TOTAL LIABILITIES 7,102, ,550, Contributed Capital-Grants 143,029, ,322, Retained Earnings - Beginning of Year 60,606, ,257, Net Profit/(Loss)-YTD 1,288, ,479, TOTAL EQUITY 204,923, ,058, TOTAL LIABILITIES & EQUITY 212,026, ,609, Terminal Improvement Project (TIP) life-to-date payments by vender through September 30, 2012 Skanska 1,751,200 Jacobs 1,151,900 RS&H 3,888,700 TPM 29,200 Tidewater Lumber 18,900 Other 2,800 6,842,700 Interim Report: Prepared on a "Non-GAAP" Basis for Internal Use only UNAUDITED

82 GREENVILLE SPARTANBURG AIRPORT DISTRICT PROFIT and LOSS STATEMENT FISCAL YEAR TO DATE September 30, 2012 September 30, 2012 Actual Budget Actual - Budget Change INCOME Landing Area: Landing Fees 500, , , Aircraft Parking Fees 72, , (1,395.91) FBO Into-Plane & Fuel Flowage 27, , , Subtotal Landing Area 600, , , Space & Ground Rentals 1,595, ,582, , Auto Parking 2,191, ,112, , (a) Commercial Ground Transportation 39, , Concessions: Advertising 46, , , Food & Beverage 123, , , (b) Rental Car 767, , , (c) Retail 113, , , Other (24.99) Subtotal Concessions 1,049, , , Expense Reimbursements 166, , (10,439.56) Other Income 140, , (29,486.82) Total Operating Income 5,784, ,593, , EXPENSES Salary & Benefits 1,431, ,622, (191,022.86) (d) Professional Services 87, , , Promotional Activities 47, , (101,069.11) (e) Administrative 157, , (33,299.97) (f) Insurance 88, , Contractual Services 258, , (120,409.26) (g) Rentals & Leases 9, , (1,469.84) Repairs & Maintenance 58, , (17,813.96) Supplies & Equipment 103, , (93,133.03) (h) Utilities 221, , (107,966.03) (i) Total Operating Expenses 2,464, ,111, (647,216.13) NET OPERATING INCOME 3,319, ,481, , Interim Report: Prepared on a "Non-GAAP" Basis for Internal Use only UNAUDITED

83 September 30, 2012 YTD ACTUAL VS YTD BUDGET FOOTNOTES (a) Auto Parking OVER BUDGET $79, Enplanements & Gross revenues are higher than conservative estimates (b) Food & Beverage OVER BUDGET $51, FYE 2012 Profit share of $53K (c) Rental Car OVER BUDGET $45, Conservative budgeting (d) Salary & Benefits UNDER BUDGET $191, days of first payroll were booked back to FYE 6/30/12 148K; budgeted vacant positions as if employed entire year (e) Promotional Activities UNDER BUDGET $101, Timing of activities budgeted (f) Administrative UNDER BUDGET $33, Travel & Training 16K under budget - Dues & Subscriptions 23K under budget (g) Contractual Services UNDER BUDGET $120, Janitorial Services 23K under budget; FYE 6/30/12 expenses paid in July were booked back into June for proper cutoff - Computer-annual contracts 10K under budget - Parking Mgmt Agreement Expenses 56K under budget; FYE 6/30/12 expenses paid in July were booked back into June for proper cutoff - Nursery/landscaping 8K under budget (h) Supplies & Equipment UNDER BUDGET $93, Computer-Equip 22K under budget; FYE 6/30/12 expenses paid in July were booked back into June for proper cutoff - Nursery/landscaping 14K under budget; FYE 6/30/12 expenses paid in July were booked back into June for proper cutoff - Painting 14K under budget (i) Utilities UNDER BUDGET $107, Water & Sewer 35K under budget; FYE 6/30/12 expenses paid in July were booked back into June for proper cutoff - Gas 39K under budget, gas usually is almost non-existant this time of year - Electric 30K under budget

84 September 30, 2012 YTD ACTUAL VS YTD BUDGET FOOTNOTES FY $ Amount $ Amount Authorized Used YTD Emergency Repair Reserve Fund $ 750,000 $ 24,703 Chandler Construction Services-Canal Gate installed $ 339 Phil R. Onkotz Jr-Damaged car by Facilities in garage $ 25,042 $ 724,958 Remaining Reserve Business Development Obligations/Incentives $ 600,000 $ - $ 600,000 Remaining Reserve

85 Greenville-Spartanburg Airport District September 30, 2012 Issue Maturity Interest Cost Basis or EOM FMV Date Date Rate BOY FMV Par FMV Adj US Treasury UST T-Bill 4-wk 9/6/ /4/ ,999, ,000, ,999, /13/ /11/ ,999, ,000, ,999, /20/ /18/ ,999, ,000, ,999, /20/ /18/ ,999, ,000, ,999, UST T-Bill 13-wk 8/30/ /29/ ,998, ,000, ,999, /20/ /20/ ,998, ,000, ,999, /20/ /20/ ,998, ,000, ,999, UST T-Bill 26-wk 7/5/2012 1/3/ ,996, ,000, ,998, , /26/2012 1/24/ ,996, ,000, ,998, , /19/ /18/ ,998, ,000, ,999, , /3/ /1/ ,997, ,000, ,999, , UST T-Note 6/30/ , , , Subtotal-UST 55,395, ,411, $ 55,405, , SC Local Gov Inv Pool: Issue Cost Cumulative Date Basis Yield Balance 9/16/2011 2,000, ,000, /17/ ,000, ,000, Add: Life-to-date Interest , Subtotal-UST $ 12,032, Capital Bank ICS: Issue Cost Cumulative Date Basis Yield Balance 9/20/2011 2,990, ,990, /18/ ,010, ,000, Add: Capital Bank Account 10, Add: YTD Interest , Subtotal-UST $ 15,051, Total $ 82,489, US Treasury Investment Types T-Bill T-Note T-Bond Fed Ag Negotiable Debt Obligation Yes Yes Yes Yes Backed by Gov Full Faith/Credit Yes Yes Yes No Maturity < 1 yr 1-7 yrs 7+ yrs 1-5 yrs Coupon-Bearing No Yes Yes Yes Interest is paid at Maturity Semi-Ann Semi-Ann Semi-Ann State & Local Tax Exemption Yes Yes Yes Only FHLB (*) (*) Note: Since GSP is a political subdivision of SC, w e are tax-exempt from all taxes, including state and local. Blended yield =

86 MEMORANDUM TO: FROM: Members of the Airport Commission Kevin Howell, Vice President / COO DATE: November 19, 2012 ITEM DESCRIPTION Information Section Item C November 2012 Development/Project Status Report SUMMARY Control Tower Site Study: Status This project is in the process of being cancelled. Project Budget na Estimated Completion Date - na District Staff were recently verbally notified by the FAA that they are unable to find a way to partner with the District in a cost sharing partnership for a new air traffic control tower at GSP. Once this is formalized in writing from the FAA, District Staff will cancel the project, including canceling the pre-funded reimbursable agreement with the FAA for the AFTIL process and returning all budgeted project funding to the reserve fund balance. Terminal Improvement Program: Status Construction is underway on the Rental Car Customer Center in Garage A and site work has begun for the North Wing. Project Budget $115,000, Estimated Completion Date January 2016 Work is progressing on the Rental Car Customer Center in Parking Garage A. Glazing and interior finishes are underway. Site work is also now underway on the North Wing expansion area. CMR procurement continues for various components of the Enabling Package work. The CGMP for Bag Claim/South Bridge is being evaluated and will be 2000 GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

87 Greenville-Spartanburg Airport Commission Information Section Item C November 2012 Project Status/Update Page 2 presented at the November 19 Commission meeting for budget approval. The Design team is currently working on finalizing the 100 Construction Documents for the Bag Claim and South Bridge package, which is due November 16. Economy Parking Lot Expansion Project: Status Wrap up phase Project Budget $2,700, Estimated Completion Date November 2012 This project involves the expansion of the Economy Parking Lot with an addition of over 400 spaces and the construction of a round-a-bout on GSP Drive. Weather has impacted project completion. Punchlist work is underway inside the parking lot areas in order to turn over the parking spaces to the District in time for the holiday rush. Work continues along GSP Drive and outside the fence. Land Use Planning & Development Study: Status Task 4 underway Project Budget $500, Estimated Completion Date November 2012 The CDM-Smith Team is working on wrapping up the final presentation and final deliverables for this project. A Task Force meeting was held on October 31, 2012 to review the draft final and a final presentation will be made at the November 19, 2012 Commission meeting. South Cargo Modernization Project: Status Design underway Project Budget $3,000, Estimated Completion Date to be determined The South Cargo Modernization Project is a budgeted capital improvement project and includes general improvements to the South Cargo Building. Phase 1 included a professional evaluation of the facility and an estimate of probable construction costs. Schematic design is being finalized with the LPA Group GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

88 MEMORANDUM TO: FROM: Members of the Airport Commission Rosylin Weston, Vice President - Communications DATE: November 19, 2012 Item Description Information Section Item D November 2012 Communications Report Summary The highlights for the month of October include the 50 th Anniversary Celebration and Editorial Board meetings with The Greenville News and the Spartanburg Herald Journal. News Stories Broadcast, Print and Online: WYFF 4 GSP to add economy lot parking spaces (on-air & online) FOX Carolina WHNS 21 Additional economy lot parking just in time for the holidays (on-air & online) Greenville News and Greenvilleonline.com GSP s benefits to Region are clear Greenville News and Greenvilleonline.com Airport brought development to region for 50 years Greenville News and Greenvilleonline.com GSP s Economic Impact in the Upstate doubles, survey finds Spartanburg Herald Journal GSP still delivers on growth and development Spartanburg Herald Journal and GoUpstate.com Study: GSP s impact on Upstate economy soars to $817 m Greenville Business Magazine WINGSPAN exceeds goals Greer Citizen GSP celebrates 50 th Anniversary The Greenville Journal Airport renovation aids locals Your Carolina with Jack and Kimberly GSP 50 th Anniversary: Details on WINGSPAN News Releases: GSP International Airport Administrative Offices Expanding GSP International Airport Parking Lot Expansion Nearing Completion 2000 GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

89 Greenville-Spartanburg Airport Commission Information Section Item D November 2012 Communications Report Page 2 GSP International Airport has Best August Ever! GSP International Airport Delivers a Major Economic Impact Website Statistics: WINGSPAN BLOG 567 Visitors - 62 New/38 Returning 1056 Page Visits 1:36 Average Visit Length From the Twitter Pages: GSA Business GSP Airport Expands Office Space GOGADC WINGSPAN is moving forward with North Wing Greer Chamber Mayor Danner addressing crowd at 50 th Anniversary celebration ACI-NA GSP Airport brought development to region for 50 years JDPR Love reading so many updates about what s going on at GSP 2000 GSP Drive, Suite 1 Greer, SC Greenville: Spartanburg: Fax:

90 CUSTOMER SATISFACTION TRACKING RESEARCH 3 rd QUARTER 2012 September 21, 2012 Prepared for: Rosylin Weston Director of Public Relations Greenville-Spartanburg International Airport 2000 GSP Drive, Suite 1 Greer, SC rweston@gspairport.com Prepared by: Research Inc Royal Blvd. South, Ste. 120 Alpharetta, GA FX: dmcnamara@researchincorporated.com

91 TABLE OF CONTENTS INTRODUCTION... 1 METHODOLOGY... 2 SATISFACTION... 4 SUGGESTED IMPROVEMENTS RESPONDENT PROFILE QUESTIONNAIRE... 34

92 INTRODUCTION Greenville Spartanburg (GSP) International Airport desires to deliver top-notch service to Upstate travelers. Towards this end, GSP would like to Measure satisfaction with the services offered at the airport. Identify ways the airport can be improved to better serve traveler needs. Track changes over time. This document presents the findings from a quantitative intercept study conducted quarterly among airline passengers and consumers who visit GSP International Airport to drop off or greet airline passengers. 1

93 METHODOLOGY WHO Airline passengers and consumers visiting the airport to meet or drop off airline passengers. WHAT One-on-one intercepts. WHEN Intercept interviews were conducted on one day of each month on an alternating schedule, comprising two weekdays and one weekend day each quarter. See below. January February March April May June July August September October November December 2012 Q1 Q2 Q3 Q4 Saturday Sunday Monday Sunday Monday Tuesday Wednesday Thursday Saturday Sunday Monday Tuesday 7 am to 10 am 18 10:01 am to 1 pm 18 1:01 pm to 4 pm 18 4:01 pm to 7 pm 18 7:01 pm to 10:00 pm INTERVIEWS Passengers Greeters 5 5 WHERE GSP International Airport. HOW Research Inc. was responsible for research design, report preparation and report presentation. Representatives from GSP had the opportunity to approve questionnaire design and methodology at all stages of the research. Data was verified, coded and tabulated. Findings were analyzed by senior analysts at Research, Inc. 2

94 SATISFACTION 3

95 OVERALL SATISFACTION 1 Airport travelers and meeters/greeters were asked to rate their overall satisfaction with GSP International Airport by using a 1 to 7 scale, with 7 indicating they are very satisfied and 1 meaning they are not satisfied at all. Findings reveal that most (92) airport patrons are very satisfied (a 6 or 7 rating) with GSP International Airport in are somewhat satisfied (a 4 or 5 rating). Only 1 is dissatisfied. VERY SATISFIED ("6" OR "7") 92 NOT AT ALL SATISFIED ("1", "2", OR "3") 1 SOMEWHAT SATISFIED ("4" OR 5") 7 YEAR-TO-DATE 2012 Satisfaction with GSP Airport slightly decreased slightly in 3 rd quarter from 2 nd quarter (1200) 2006 (1200) 2007 (1200) QUARTER 2008 (1200) 2009 (1200) 2010 (1200) 2011 (1200) YTD 2012 (900) 1 st QTR 2012 (300) 2 nd QTR 2012 (300) 3 rd QTR 2012 (300) VERY SATISFIED ( 6, OR 7 ) RATING RATING SOMEWHAT SATISFIED ( 5, OR 4 ) RATING RATING DISSATISFIED ( 1, 2, OR 3 ) RATING RATING RATING Blue shading indicates a significant difference from the total study at the 95 confidence interval. Yellow shading indicates a significant difference from the previous year at the 95 confidence interval. 1 Please indicate your overall satisfaction with the GSP International Airport by using a 1 to 7 scale. Let a 7 indicate you are extremely satisfied with the airport and a 1 indicate you are not satisfied at all. You can use any number in between. 4

96 OVERALL SATISFACTION 2 (CONTINUED) Satisfaction ratings reveal that people who traveled for leisure purposes are more likely to be very satisfied with GSP International Airport than business travelers. TYPE OF TRAVEL YTD 2012 (900) BUSINESS TRAVELERS (290) LEISURE TRAVELERS (497) COMBO (23)* VERY SATISFIED ( 6 or 7 ) [NET] RATING RATING SOMEWHAT SATISFIED ( 4 OR 5 ) [NET] RATING RATING DISSATISFIED ( 1, 2, OR 3 ) [NET] RATING RATING RATING Blue shading indicates a significant difference from total study at the 95 confidence interval. *Caution: Small base. Consumers between 25 and 44 years of age are more likely than passengers in other age groups to be very satisfied with GSP Airport. AGE YTD 2012 (900) (78) (217) (454) 65+ (72) VERY SATISFIED ( 6 or 7 ) [NET] RATING RATING SOMEWHAT SATISFIED ( 4 OR 5 ) [NET] RATING RATING DISSATISFIED ( 1, 2, OR 3 ) [NET] RATING RATING RATING Blue shading indicates a significant difference from total study at the 95 confidence interval. 2 Please indicate your overall satisfaction with the GSP International Airport by using a 1 to 7 scale. Let a 7 indicate you are extremely satisfied with the airport and a 1 indicate you are not satisfied at all. You can use any number in between. 5

97 OVERALL SATISFACTION 3 Consumers with annual incomes between $35,000 and $74,999 are most likely to be very satisfied with the airport than other consumers. INCOME YTD 2012 (900) LESS THAN $35,000 (85) $35,000 TO $74,999 (230) $75,000 OR MORE (438) VERY SATISFIED ( 6 or 7 ) [NET] RATING RATING SOMEWHAT SATISFIED ( 4 OR 5 ) [NET] RATING RATING DISSATISFIED ( 1, 2, OR 3 ) [NET] RATING RATING RATING Blue shading indicates a significant difference from total study at the 95 confidence interval. Yellow shading indicates a significant difference from the previous year at the 95 confidence interval. 3 Please indicate your overall satisfaction with the GSP International Airport by using a 1 to 7 scale. Let a 7 indicate you are very satisfied with the airport and a 1 indicate you are not satisfied at all. You can use any number in between. 6

98 SATISFACTION WITH AIRPORT SERVICES 4 RATING A 6 OR 7 All airport patrons were asked to use a 1 to 7 scale to indicate their satisfaction with GSP International Airport s performance in 12 different areas. Findings reveal that airport patrons are most satisfied with the Welcome Center in They are least likely to be very satisfied with Ground Transportation. WELCOME CENTER 100 CLEANLINESS 98 SKYCAPS 98 LANDSCAPING 97 FRIENDLINESS OF EMPLOYEES SPEED OF SERVICE SIGNAGE SECURITY AT GATES SECURITY AT PARKING 85 RESTAURANT 81 PARKING 72 GROUND TRANSPORTATION 50 RATING "6" OR "7" ON A "1" TO "7" SCALE YEAR-TO-DATE Please use the same 1 to 7 scale to indicate your satisfaction with the various vendors and services at the GSP International Airport. Note: Respondents who refused to answer this question are excluded from the data. 7

99 SATISFACTION WITH AIRPORT SERVICES 5 RATING A 6 OR 7 Comparisons of 2 nd quarter and 3 rd quarter 2012 performance ratings reveal that satisfaction, in general, increased or stayed the same in 8 of the 12 areas measured. However, note many of the bases are extremely small (76:1189) 2008 (521:1200) 2009 (15:1197) QUARTER 2010 (15:1194) 2011 (18:1199) YTD 2012 (8:897) 1 st QTR 2012 (1:300) 2 nd QTR 2012 (1:299) 3 rd QTR 2012 (6:299) WELCOME/INFORMATI ON CENTER (n=75) CLEANLINESS (n=896) SKYCAPS (n=97) LANDSCAPING (n=847) FRIENDLY EMPLOYEES (n=897) SPEED OF SERVICE (n=896) SECURITY AT GATES (n=795) SIGNAGE (n=869) SECURITY AT PARKING (n=13) WINDOWS RESTAURANT (n=181) PARKING (n=621) GROUND TRANSPORTATION (n=8) N=# of respondents answering the question year-to-date. Yellow shading indicates a significant difference from the previous year at the 95 confidence interval. 5 Please use the same 1 to 7 scale to indicate your satisfaction with the various vendors and services at the GSP International Airport. Note: Respondents who refused to answer this question are excluded from the data. 8

100 SATISFACTION WITH AIRPORT SERVICES 6 RATING A 6 OR 7 Passengers who travel for leisure are more likely than business travelers to be very satisfied with most of the airport s services. TYPE OF TRAVEL YTD 2012 (8:897) BUSINESS TRAVELERS (4:290)* LEISURE TRAVELERS (2:497)* COMBO (0:23)* WELCOME/INFORMATION CENTER (n=75) CLEANLINESS (n=896) SKYCAPS (n=97) LANDSCAPING (n=847) FRIENDLY EMPLOYEES (n=897) SPEED OF SERVICE (n=896) SECURITY AT GATES (n=795) SIGNAGE (n=869) SECURITY AT PARKING (n=13) WINDOWS RESTAURANT (n=181) PARKING (n=621) GROUND TRANSPORTATION (n=8) *Caution: Small base. N= # of total respondents answering question year-to-date. 6 Please use the same 1 to 7 scale to indicate your satisfaction with the various vendors and services at the GSP International Airport. Note: Respondents who refused to answer this question are excluded from the data. 9

101 SATISFACTION WITH AIRPORT SERVICES 7 This table presents all the performance ratings given for the various services at GSP International Airport in Positively, few customers are dissatisfied (a 1, 2, or 3 rating) with any aspect of the airport s services. YEAR-TO-DATE SKYCAPS (n=97) LANDSCAPING (n=847) WELCOME/INFORMATION CENTER (n=75) CLEANLINESS (n=896) FRIENDLY EMPLOYEES (n=897) SECURITY AT GATES (n=795) SIGNAGE (n=869) SPEED OF SERVICE (n=896) SECURITY AT PARKING (n=13) WINDOWS RESTAURANT (n=181) GROUND TRANSPORTATION (n=8) PARKING (n=621) Please use the same 1 to 7 scale to indicate your satisfaction with the various vendors and services at the GSP International Airport. Note: Respondents who refused to answer this question are excluded from the data. 10

102 RESTAURANT/SNACK BAR PURCHASE 8 In 2012, airport patrons were asked if they had visited the restaurant or the snack bar on the second floor on the day they were intercepted. Findings reveal that while 20 dined in the restaurant and 0 visited the snack bar, 80 claim they have not dined in either establishment. NEITHER 80 ATE IN RESTAURANT 20 YEAR-TO-DATE 2012 Passengers who travel for business are slightly more likely than leisure travelers to have visited a food and beverage establishment in TYPE OF TRAVEL 2006 (1200) 2007 (1200) 2008 (1200) 2009 (1200) 2010 (1200) 2011 (1200) YTD 2012 (900) BUSINESS TRAVELERS (290) LEISURE TRAVELERS (497) COMBO (23)* ATE IN RESTAURANT TODAY ATE AT SNACK BAR TODAY NEITHER *Caution: Small base. Yellow shading indicates a significant difference from the previous year at the 95 confidence interval. Blue shading indicates a significant difference from total study at the 95 confidence interval. 8 Did you eat in the restaurant or snack bar today? Note: Respondents who refused to answer this question are excluded from the data. 11

103 GATE SNACK BAR PURCHASE 9 In 2012, airport patrons were asked if they had made a purchase from the snack bars in the gate areas. Findings reveal that the majority (84) claim they have not purchased anything from the snack bars. ATE IN NEW SNACK AREA 16 NOT EAT IN NEW SNACK AREA 84 YEAR-TO-DATE 2012 TYPE OF TRAVEL 2006 (449) 2007 (1078) 2008 (1080) 2009 (1079) 2010 (1080) 2011 (1080) YTD 2012 (900) BUSINESS TRAVELERS (290) LEISURE TRAVELERS (497) COMBO (23)* EATEN OR PURCHASED FOOD AT NEW GATE AREA SNACK BAR HAVE NOT EATEN OR PURCHASED FOOD Yellow shading indicates a significant difference from previous year at the 95 confidence interval. Note: This question was added in August Blue shading indicates a significant difference from total study at the 95 confidence interval. *Caution: Small base. 9 Have you eaten or purchased food from the new gate area snack bars? Note: Respondents who refused to answer this question are excluded from the data. 12

104 GATE SNACK BAR SATISFACTION 10 In 2012, airport patrons were asked to use a 1 to 7 scale to indicate their satisfaction with the snack bars in the gate area. Findings reveal that nearly nine in ten (84) consumers are very satisfied (a rating of 6 or 7 ). VERY SATISFIED ("6" OR "7") 84 SOMEWHAT SATISFIED ("4" OR 5") 13 NOT AT ALL SATISFIED ("1", "2", OR "3") 3 YEAR-TO-DATE 2012 Business travelers are slightly more likely to be very satisfied with the gate snack bars than leisure travelers. TYPE OF TRAVEL YEAR END 2007 (297) YEAR END 2008 (374) YEAR END 2009 (228) YEAR END 2010 (176) YEAR END 2011 (117) YTD 2012 (130) BUSINESS TRAVELERS (54) LEISURE TRAVELERS (74) COMBO (2)* VERY SATISFIED ( 6, OR 7 ) [NET] RATING RATING SOMEWHAT SATISFIED ( 5, OR 4 ) [NET] RATING RATING DISSATISFIED ( 1, 2, OR 3 ) [NET] RATING RATING RATING Yellow shading indicates a significant difference from previous year at the 95 confidence interval. Note: This question was added in August Blue shading indicates a significant difference from total study at the 95 confidence interval. *Caution: Small base. 10 On the same 1 to 7 scale, how would you rate the new gate area snack bar? Note: Respondents who refused to answer this question are excluded from the data. 13

105 SATISFACTION WITH AIRPORT VENDORS 11 RATING A 6 OR 7 Airport patrons were asked to use a 1 to 7 scale to indicate their satisfaction with various airport vendors. Findings reveal that airport patrons were most satisfied with the services provided by Delta, National/Alamo and Hudson News (100) in However, note many of the bases are extremely small. DELTA NATIONAL/ALAMO HUDSON NEWS SOUTHWEST ALLEGIANT AIR HERTZ BUDGET US AIRWAYS ENTERPRISE UNITED EXPRESS THRIFY AVIS AMERICAN EAGLE CONTINENTAL NORTHWEST RATING "6" OR "7" ON A "1" TO "7" SCALE YEAR-TO-DATE 2012 *Small bases. 11 Please use the same 1 to 7 scale to indicate your satisfaction with each of the following airlines and rental cars that you interacted with today. Note: Respondents who refused to answer this question are excluded from the data. 14

106 SATISFACTION WITH AIRPORT VENDORS 12 RATING A 6 OR 7 (CONTINUED) Satisfaction with the various vendors varies by whether a customer is a business or leisure traveler. Note that leisure travelers tend to be more satisfied in general than business travelers. TYPE OF TRAVEL 2009 (6:477)* 2010 (1:406)* 2011 (0:311)* YTD 2012 (0:324)* BUSINESS TRAVELERS (0:106)* LEISURE TRAVELERS (0:209)* COMBO (0:9)* DELTA (n=5) NATIONAL/ALAMO (n=13) HUDSON NEWS (n=3) SOUTHWEST (N=324) N/A N/A ALLEGIANT AIR (n=96) HERTZ (n=18) BUDGET (n=8) US AIRWAYS (n=202) ENTERPRISE (n=10) AVIS (n=6) UNITED EXPRESS (n=221) THRIFTY (n=9) AMERICAN EAGLE (n=0) CONTINENTAL (n=0) NORTHWEST (n=0) *Caution: Small base. N= # of total respondents answering question year-to-date. 12 Please use the same 1 to 7 scale to indicate your satisfaction with each of the following airlines and rental cars that you interacted with today. Note: Respondents who refused to answer this question are excluded from the data. 15

107 SUGGESTED IMPROVEMENTS 16

108 SUGGESTED IMPROVEMENTS 13 Passengers and greeters were asked how the services at GSP International Airport could be improved to better meet their needs. Their most common suggestion in 2012 is to improve the availability of services. Note that most consumers (69) had no suggestions. MORE/BETTER SERVICES 9 IMPROVE FLIGHTS/AIRLINES 7 MORE SIGNS 4 LOWER PRICES 3 INCREASE PARKING 3 IMPROVE SECURITY 2 BETTER CUSTOMER SERVICES BETTER BAGGAGE HANDLING 1 0 IMPROVE RESTAURANT 0 MORE/BETTER SEATING 0 OTHER 5 DON'T KNOW 69 YEAR-TO-DATE How could the products and services at this airport be improved to better serve your needs? 17

109 SUGGESTED IMPROVEMENTS 14 (CONTINUED) When comparing 2 nd quarter with 3 rd quarter 2012, travelers are more likely to complain about the high prices and inadequate parking this quarter than 2 nd quarter (1200) 2008 (1200) QUARTER 2009 (1200) 2010 (1200) 2011 (1200) YTD 2012 (900) 1 st QTR 2011 (300) 2 nd QTR 2011 (300) 3 rd QTR 2011 (300) MORE/BETTER SERVICES [NET] More food selection More electrical outlets Place to watch TV/movies More smoking areas More variety stores/services Improve food quality More entertainment in general Maintain facility better FLIGHTS/AIRLINES [NET] More direct flights Fewer cancellations/delays Cheaper flights Have accurate flight information More airline affiliation MORE SIGNS LOWER PRICES Cheaper parking Food prices too high Lower prices INCREASE PARKING IMPROVE SECURITY BETTER CUSTOMER SERVICES [NET] Better/faster customer service Need friendlier customer service More professional customer service BETTER BAGGAGE HANDLING LONGER RESTAURANT/BAR HOURS MORE/BETTER SEATING ADD CURBSIDE CHECK-IN/SKY CAPS MORE/CLEANER RESTROOMS LOUDER PA OPEN OUTSIDE GARDEN ADD COVERED WALKWAYS OTHER DON T KNOW Yellow shading indicates a significant difference from the previous year at the 95 confidence interval. Blue shading indicates a significant difference from total study at the 95 confidence interval. 14 How could the products and services at this airport be improved to better serve your needs? 18

110 SUGGESTED IMPROVEMENTS 15 (CONTINUED) In 2012, business travelers are more likely than leisure travelers to request more availability of services and improved signage. TYPE OF TRAVEL YTD 2012 (900) BUSINESS TRAVELERS (290) LEISURE TRAVELERS (497) COMBO (23)* MORE/BETTER SERVICES [NET] More food selection More electrical outlets Place to watch TV/movies More smoking areas More variety stores/services Improve food quality More entertainment in general Maintain facility better FLIGHTS/AIRLINES [NET] More direct flights Fewer cancellations/delays Cheaper flights Have accurate flight information More airline affiliation MORE SIGNS INCREASE PARKING LOWER PRICES Cheaper parking Food prices too high Lower prices IMPROVE SECURITY BETTER CUSTOMER SERVICES [NET] Better/faster customer service Need friendlier customer service More professional customer service BETTER BAGGAGE HANDLING LONGER RESTAURANT/BAR HOURS MORE/BETTER SEATING ADD CURBSIDE CHECK-IN/SKY CAPS MORE/CLEANER RESTROOMS LOUDER PA OPEN OUTSIDE GARDEN ADD COVERED WALKWAYS OTHER DON T KNOW Blue shading indicates a significant difference from total study at the 95 confidence interval. *Caution: Small base. 15 How could the products and services at this airport be improved to better serve your needs? 19

111 SUGGESTED IMPROVEMENTS 16 (CONTINUED) A sampling of airport patrons comments when asked how the GSP International Airport could better meet their needs follow. There should be healthier food options. The security lines are too long. The cost for parking is quite expensive. They really need to make more parking spaces. I d like a shuttle from the parking area. They need a larger food selection. They should have more variety of food. There should be a shuttle from parking. Parking is very expensive. There aren t enough food options. There isn t enough parking. They need more direct flights to Nashville. They need to expand the long term parking. Make sure you update the monitors when there are delays. There needs to be more signage to the baggage area. They need to expand the parking area. There should be better signage at check-in. Parking is too expensive. They need to have a shuttle from long-term parking. They need to get another carrier like Jet Blue to fly into here. They could offer a greater selection of food. 16 How could the products and services at this airport be improved to better serve your needs? 20

112 SUGGESTED IMPROVEMENTS 17 (CONTINUED) They need to have more direct flights to Tampa. They really need to expand the parking lot. The food selection should be expanded. Maybe they should add a Starbucks or McDonald s. The lines at security are too long. There aren t enough shops. They need to add some more. Maybe they can add a play area for children. When your flight is delayed it would be nice to take them somewhere to get some energy. They should offer a shuttle from the parking areas. Long term parking is far! The ticket prices are getting out of control! They need to update the monitors more frequently especially if there are delays. There needs to be more signage to the baggage areas. The prices in parking are getting too expensive. I d like a shuttle from the parking area. They need a larger food selection. I think there should be a place to watch TV or movies. 17 How could the products and services at this airport be improved to better serve your needs? 21

113 FREE WIRELESS INTERNET SERVICE 18 Over half (58) of airport patrons plan to use the airport s free wireless Internet service. NOT USE SERVICE 42 PLAN TO USE FREE WRELESS SERVICE 58 YEAR-TO-DATE 2012 Business travelers are more likely to plan to use the free wireless Internet service available than leisure travelers. TYPE OF TRAVEL 2007 (1200) 2008 (1200) 2009 (1200) 2010 (1200) 2011 (1200) YTD 2012 (900) BUSINESS TRAVELERS (290) LEISURE TRAVELERS (497) COMBO (23)* PLAN TO USE SERVICE DO NOT PLAN TO USE SERVICE Yellow shading indicates a significant difference from the previous year at the 95 confidence interval. Blue shading indicates a significant difference from total study at the 95 confidence interval. 18 Have you or do you plan to use the free wireless internet service? 22

114 GSP WEBSITE 19 The majority (84) of airport patrons have not visited the airport s web site. VISITED THE WEB SITE 16 DID NOT VISIT THE WEB SITE 84 YEAR-TO-DATE 2012 Business and leisure travelers are equally as likely to have visited GSP s website. TYPE OF TRAVEL 2007 (1080) 2008 (1080) 2009 (1079) 2010 (1080) 2011 (900) YTD 2012 (810) BUSINESS TRAVELERS (290) LEISURE TRAVELERS (497) COMBO (23)* VISITED WEB SITE HAVE NOT VISITED WEB SITE Yellow shading indicates a significant difference from the previous year at the 95 confidence interval. Blue shading indicates a significant difference from total study at the 95 confidence interval. 19 Have you visited the GSP airport website? 23

115 FLIGHT RESERVATIONS VIA THE WEB SITE 20 Consumers who claim to have visited GSP Airport s web site were asked if they booked a flight through the site. Findings reveal that only one in seven (15) web site visitors have booked a flight through the web site. DID NOT BOOK A FLIGHT 85 BOOKED A FLIGHT 15 YEAR-TO-DATE 2012 Business travelers are less likely to book a flight through the airport s web site than leisure travelers. TYPE OF TRAVEL 2007 (188) 2008 (181) 2009 (238) 2010 (184) 2011 (177) YTD 2012 (131) BUSINESS TRAVELERS (45) LEISURE TRAVELERS (78) COMBO (8)* BOOKED A FLIGHT THROUGH THE WEB SITE HAVE NOT BOOKED A FLIGHT THROUGH WEB SITE Yellow shading indicates a significant difference from the previous year at the 95 confidence interval. Blue shading indicates a significant difference from total study at the 95 confidence interval. *Caution: Small base. 20 Have you booked a flight on the GSP airport web site? 24

116 REASONS FOR NOT BOOKING THROUGH THE WEB SITE 21 Respondents who have visited the GSP web site, but did not book their reservation through the site were asked to explain why they did not book a flight through the web site. The most common explanation is that they already booked a flight before looking online. ALREADY PURCHASED TICKET 50 DIDN'T KNOW YOU COULD BUY ONLINE 49 FLIGHT BOOKED BY SOMEONE ELSE 2 YEAR-TO-DATE 2012 *Note: N= Why not? Why didn t you book your flight through the GSP web site? 25

117 FLIGHT RESERVATION BOOKING METHODS 22 Passengers were asked how they booked their flight today. Findings reveal that the most common method for booking a flight is through the airline s web site or a travel agent. AIRLINE WEB SITE 56 TRAVEL AGENT 24 EXPEDIA.COM TRAVELOCITY ORBITZ.COM AIRLINE - PHONE CHEAPTICKETS HOTWIRE PRICELINE AMERICAN EXPRESS GSP WEBSITE YAHOO.COM OTHER DON'T KNOW YEAR-TO-DATE 2012 Business travelers are more likely than leisure travelers to book their reservations through a travel agent. TYPE OF TRAVEL 2007 (1080) 2008 (1080) 2009 (1080) 2010 (1080) 2011 (1080) YTD 2012 (810) BUSINESS TRAVELERS (290) LEISURE TRAVELERS (497) COMBO (23)* AIRLINE WEB SITE TRAVEL AGENT EXPEDIA.COM TRAVELOCITY ORBITZ.COM AIRLINE PHONE GSP WEB SITE CHEAPTICKETS HOTWIRE AMERICAN EXPRESS PRICELINE.COM TICKET COUNTER OTHER DON T KNOW Yellow shading indicates a significant difference from the previous year at the 95 confidence interval. Blue shading indicates a significant difference from total study at the 95 confidence interval. 22 How did you book your flight today? 26

118 ORIGINATION 23 Passengers who live in the Greenville/Spartanburg area were asked how many flights they originated from GSP International, Atlanta Hartsfield International and Charlotte-Douglas International Airport in the past year. As expected, local passengers originated most of their flights from GSP International Airport. YEAR-TO-DATE 2012 MEAN NUMBER OF FLIGHTS GSP 6.4 CHARLOTTE-DOUGLAS 4.8 ATLANTA HARTSFIELD 4.4 As expected, the mean number of flights booked at GSP International Airport is highest among business travelers. TYPE OF TRAVEL 2008 MEAN 2009 MEAN 2010 MEAN 2011 MEAN YTD 2012 MEAN BUSINESS TRAVELERS MEAN LEISURE TRAVELERS MEAN COMBO MEAN GSP INTERNATIONAL AIRPORT [N=288] CHARLOTTE-DOUGLAS INTERNATIONAL AIRPORT [N=106] ATLANTA HARTSFIELD INTERNATIONAL AIRPORT [N=40] *Caution: Small base. 23 During the past year, about how many flights did you originate from 27

119 REASONS FOR FLIGHT ORIGINATION FROM ATLANTA 24 Passengers most common reason for originating flights from Atlanta is that Hartsfield International has cheaper flights than GSP. 59 prefer Hartsfield because the airport has more direct flights. PRICE 72 MORE DIRECT FLIGHTS 59 FLIGHT AVAILABILITY 5 FAMILY/BUSINESS IN AREA SOMEONE ELSE BOOKED FEWER CANCELLED FLIGHTS YEAR-TO-DATE 2012 TYPE OF TRAVEL 2007 (85) 2008 (100) 2009 (80) 2010 (54) 2011 (62) YTD 2012 (39) PRICE MORE DIRECT FLIGHTS FLIGHT AVAILABILITY FAMILY/BUSINESS IN AREA FEWER CANCELED FLIGHTS SOMEONE ELSE BOOKED AIRLINE PREFERENCE DON T KNOW Note: This question was added in June *Caution: Small base. 24 Why did you originate your trip out of Atlanta instead of GSP International? 28

120 REASONS FOR FLIGHT ORIGINATION FROM CHARLOTTE 25 Passengers most common reason for originating flights from Charlotte instead of GSP is cheaper fares. Similar to Hartsfield, more direct flights is the second most common reason. PRICE 79 MORE DIRECT FLIGHTS 46 FAMILY/BUSINESS IN AREA 5 SOMEONE ELSE BOOKED 5 FLIGHT AVAILABILITY 3 FEWER CANCELED FLIGHTS 2 YEAR-TO-DATE (54) TYPE OF TRAVEL 2008 (143) 2009 (171) 2010 (172) 2011 (180) YTD 2012 (106) PRICE MORE DIRECT FLIGHTS FAMILY/BUSINESS IN ARE SOMEONE ELSE BOOKED FLIGHT AVAILABILITY FEWER CANCELED FLIGHTS AIRLINE PREFERENCE OTHER DON T KNOW Note: This question was added in June *Caution: Small base. 25 Why did you originate your trip out of Charlotte instead of GSP International? Added in June

121 PREFERRED ORIGINATION 26 When asked which of the three airports they would prefer to originate their air travel, the vast majority (95) of travelers say they prefer to originate their flight out of GSP. DOESN'T MATTER 1 ATLANTA HARTSFIELD 1 CHARLOTTE DOUGLAS 3 GSP 95 YEAR-TO-DATE 2012 Business passengers are slightly more likely than leisure passengers to prefer to originate their travel from GSP International Airport. TYPE OF TRAVEL 2007 (399) 2008 (586) 2009 (574) 2010 (569) 2011 (584) YTD 2012 (408) BUSINESS TRAVELERS (92) LEISURE TRAVELERS (230) COMBO (14)* GSP INTERNATIONAL AIRPORT CHARLOTTE-DOUGLAS INTERNATIONAL AIRPORT ATLANTA-HARTSFIELD INTERNATIONAL AIRPORT DOESN T MATTER Note: This question was added in June *Caution: Small base. 26 Which of the following airports do you prefer to originate your air travel? 30

122 RESPONDENT PROFILE 31

123 RESPONDENT PROFILE The following table compares respondents demographics by quarter. YR END 2005 (1200) YR END 2006 (1200) YR END 2007 (1200) YR END 2008 (1200) AGE YR END 2009 (1200) YR END 2010 (1200) YR END 2011 (1200) YTD 2012 (900) 1 st QTR 2012 (300) 2 nd QTR 2012 (300) 3 rd QTR 2012 (300) 18 TO TO TO INCOME UNDER $35, $35,000 TO $74, $75, GENDER MALE FEMALE Yellow shading indicates a significant difference from the previous year at the 95 confidence interval. Blue shading indicates a significant difference from total study at the 95 confidence interval. 32

124 QUESTIONNAIRE 33

125 FINISH TIME: : INTERVIEW: [1:4] START TIME: : STUDY: [5:8] MINUTES: DATE: / [9:12] GREENVILLE SPARTANBURG INTERNATIONAL AIRPORT INTERCEPTS Revised May 16, 2008 DAY OF WEEK [15:16] Monday TIME OF DAY [13:14] Tuesday Wednesday a.m. to 10 a.m Thursday :01 a.m. to 1 p.m Friday :01 p.m. to 4 p.m Saturday ;01 p.m. to 7 p.m Sunday :01 p.m. to 10 p.m DATA [17:21] Hello. I am with Research Incorporated, a market research firm. We re conducting a study about the services here at the Greenville Spartanburg International Airport, and I wonder if you d like to participate in a brief interview. Thank you. 1. Why did you come to the airport today? Did you come As an airline passenger To meet, greet or send off an airline passenger [22:23] 2. If you are traveling today, is this trip mainly for ***[32:33]*** Business Travel Leisure/Personal Travel A mix of business and leisure travel Are you (the person you are meeting/greeting/sending off) Beginning your/their trip today in Greenville Ending your/their trip today in Greenville [24:25] 4. About how many round trips did you take during the past year? 1 to to to More than NONE [26:27] 5. About what percentage of those round trips that you took during the past year originated from the Greenville Spartanburg International Airport? [RECORD THREE-DIGIT NUMBER.]... [28:30] 1

126 GREENVILLE SPARTANBURG INTERNATIONAL AIRPORT INTERCEPTS 6. Now, please indicate your overall satisfaction with the Greenville Spartanburg International Airport by using a 1 to 7 scale. Let a 7 indicate you are very satisfied with the airport and a 1 to indicate you are not satisfied at all. You can use any number in between. [RECORD ONE-DIGIT RATING. DON T KNOW = 9. ]... [31] 7. Please use the same 1 to 7 scale to indicate your satisfaction with the airport in the following areas. [RECORD ONE-DIGIT RATING. DON T KNOW = 9. ] RATING Friendliness of airport employees [40] Speed of service from airport employees [41] Signage [42] Cleanliness [43] Landscaping [44] Security checkpoint at the parking deck [45] Security checkpoint at the gates [46] Parking [47] Ground Transportation (Limousine & Taxicab) [48] Welcome/Information Center [49] Restaurant (Windows) [50] Skycaps [51] DATA ONLY 8. Did you eat in the restaurant or snack bar on the second floor today? Restaurant Snack Bar NEITHER *[100:103]* 2

127 GREENVILLE SPARTANBURG INTERNATIONAL AIRPORT INTERCEPTS [SKIP IF A GREETER] 9. Now please use the same 1 to 7 scale to rate your satisfaction with each of the following services that you interacted with today. [RECORD ONE-DIGIT RATING. DON T KNOW = 9. ] RATING American Eagle [106] Continental [107] Delta [108] Northwest [109] United Express [110] US Airways [111] Hertz [112] Thrifty [113] Budget [114] National/Alamo [115] Avis [116] Hudson News [117] Allegiant Air [118] DATA ONLY [ASK Q.10 & Q.11 TO PASSENGERS ONLY] 10. Using the same 1 to 7 scale, how would you rate the new gate area snack bars?... [119] 11. Have you eaten or purchased food from the new gate area snack bars? Yes... 1 No... 2 [120] [ASK EVERYONE] 12.. How could the services at this airport be improved to better serve your needs? [PROBE. RECORD RESPONSE VERBATIM.] **[60:77]** 3

128 GREENVILLE SPARTANBURG INTERNATIONAL AIRPORT INTERCEPTS 13. Have you used or do you plan to use the free wireless internet service now available? YES NO [78:79] [SKIP TO Q.24 IF A GREETER] 14. Have you visited the GSP airport s website? **[122:123]** YES NO... [SKIP TO Q.18] Have you booked a flight on the GSP airport website? YES... [SKIP TO Q.17] NO [124:125] [IF NO IN Q.15 ASK Q.16, THEN SKIP TO Q.18] 16. Why not? [PROBE. RECORD VERBATIM RESPONSE.] [126:135] 17. Using the same 1 to 7 scale, where a 7 is the highest rating you can give and a 1 is the lowest, how would you rate your experience booking your flight on the GSP website? [136] 18. How did you book your flight today? Travel agent Airline reservations - telephone Airline website Expedia.com CheapTickets Other: Don t know [137:138] 19. Do you live in the Greenville/Spartanburg area? Yes No... [SKIP TO Q.25] [139:140] 4

129 GREENVILLE SPARTANBURG INTERNATIONAL AIRPORT INTERCEPTS 20. During the past year, about how many flights did you originated from Atlanta Hartsfield International Airport... [150:152] Charlotte-Douglas International Airport... [153:155] GSP International Airport... [156:158] [IF FLEW OUT OF ATLANTA IN Q. 20, ASK:] 21. Why did you originate your trip out of Atlanta instead of GSP International? [DO NOT READ, RECORD POSITIVE RESPONSES.] [159:168] Price or lowest faire Airline preference Flight availability/# of flights per day Family/business in area Fewer cancelled flights More direct flights/no stop or layover Someone else booked flight Other: Don t know [IF FLEW OUT OF CHARLOTTE IN Q. 20, ASK:] 22. Why did you originate your trip out of Charlotte instead of GSP International? [DO NOT READ, RECORD POSITIVE RESPONSES.] Price or lowest faire Airline preference Flight availability/# of flights per day Family/business in area Fewer cancelled flights More direct flights/no stop or layover Someone else booked flight Other: Don t know [169:178] 23. Which of the following airports do you PREFER to originate your air travel? GSP International Airport Atlanta Hartsfield International Airport Charlotte-Douglas International Airport [DO NOT READ.] Doesn t matter [179:184] Now, a few questions for classification purposes only. 24. What zip code do you live in? ***[142:146]*** 5

130 GREENVILLE SPARTANBURG INTERNATIONAL AIRPORT INTERCEPTS 25. Please stop me when I read your age group. [READ LIST] ***[80:81]*** 18 to to to to to and older [DO NOT READ] REFUSED Please stop me when I read the range that best describes your total household income for the past year. Before taxes and other deductions was it...[read LIST] Under $25, $25,000 to $34, $35,000 to $49, $50,000 to $74, $75,000 to $99, More than $100, [DO NOT ASK] REFUSED [82:83] 27. Gender Male Female [84:85] DATA [86:200] Thank you very much for your time. The Greenville Spartanburg International Airport values your opinion. May I have your name, address and phone number in the event my supervisor would like to verify the interview. NAME PHONE # 6

131 Air Cargo Briefs Published by Air Cargo Committee NOV 2012 $60,000,000,000 The Air Cargo Perspective Air Cargo is a $60 billion business that transports 35 of the value of goods traded internationally worth some $5 trillion. (IATA) For some U.S. airports cargo plays a vital role in its economics contributing to approximately 5 of its operating revenue. For example, in Atlanta, Qatar Airway s two weekly 777F flights bring in an estimated $12M in economic impact to metro Atlanta annually. In 2012, the air cargo industry is faced with a wide-range of emerging issues that challenge airports of all sizes to adapt to the new operating environment. To successfully adapt and address these concerns a sharing of knowledge and expertise is required. This article will briefly discuss some of the challenges airports are currently facing or will need to deal with. MISSION The Air Cargo Committee is committed to advancing the industry's understanding and knowledge of air cargo economics and practices. Its focus is to assist airport operators in the management of existing air cargo resources, maximization of potential air cargo opportunities and the enhancement of air cargo revenues, in addition to providing a forum to discuss cargo-related security issues and developing concerns in the air cargo industry. 1

132 Exploring the Current Issues in Air Cargo CHANGING DISTRIBUTION SYSTEMS Prior to the economic downturn of there was increasing interest on the part of Asian manufacturers and shippers in general, and Chinese industry in particular, of shifting some manufacturing out of Asia and back to North America and Europe. This interest will continue as the U.S. economy recovers. Rising labor costs in Asia, the accelerating consumption of a growing middle class, higher fuel costs, and the added expense of security screening have substantially increased shipping costs. This makes this repatriation of previously exported industry and the importation of new business to the U.S. and Europe more viable. As this trend matures international shipping will be adversely affected. Domestically, manufacturing and distribution continue to move to a decentralized business model in order to reduce the cost of transportation logistics. This increases demand for trucking and conversely reduces the need for air support. EMERGENT GATEWAY FRAGMENTATION The basic issue is that increasing number of airports because of growing demand, better aircraft technology, and evolving carrier route structures have introduced a number of international routes. These new flights, although of relatively limited frequency, all serve to pull belly cargo out of traditional gateways. This represents the greatest challenge to an existing, mature gateway since it is virtually impossible to structure any rational counter to the use of available belly space from an inland airport. RATIONALIZATION OF BELLY CAPACITY As carrier fleets expand to accommodate international passenger demand they have almost universally up-gauged to wide-body aircraft. A number of carriers long-term plans for the carriage of cargo have shifted from a reliance on freighters over passenger lift, to a greater use of the belly capacity in wide-body fleets. Freight forwarders have been quick to capitalize on this shift which allows them to ship freight in the lowerpriced bellies. Although the use of freighters will still continue to grow as gross industry volumes increase, carriers will continue to make better use of previously underutilized space in the passenger fleets. This exacerbates gateway fragmentation and has changed cargo routing substantially. STEERING GROUP 2012 Leadership Warren Jones Chair Hartsfield-Jackson Atlanta International Airport Tom Green Vice Chair Port of Seattle Ceceilia Poster Second Vice Chair Allegheny County Airport Authority Michael Bednardz Immediate Past Chair Port Authority of New York and New Jersey Daniel Muscatello Associate Representative Landrum & Brown William Restall Board Liaison Saskatoon Airport Authority Steering Group Member Andy Lyall Member Halifax International Airport John Parrot Member Ted Stevens Anchorage International Airport 2

133 Committee Secretary Nelson Lam Committee Secretary ACI-NA Liying Gu Committee Secretary ACI-NA AIRPORT MARKETING Since 9/11, and the subsequent adverse impacts on airport and airline revenues, airports have increased their focus on cargo and cargo-related activities to augment cash flows. While most airports are not well-positioned to compete in the international market, the numbers alone create a competitive presence and a range of alternatives that did not exist prior to Through working directly with the airlines and government officials a number of airports have been able to achieve increases in air services, for both passenger and cargo. EMERGENCE OF NEW MARKETS New markets are developing in Eastern Europe, Africa, and the Middle East that will probably have some impact in the next five years. Africa has been a difficult market to anticipate since it has had substantial ups and downs economically. Nevertheless, most industry analysts anticipate expansion for the African markets. Airports in the Middle East are building substantial portions of their growth assumptions around economic development in the African nations. In North America, of the major gateways, New York, Miami, and Atlanta are best positioned to pursue this market. However, of these three, New York has the greater physical capacity and interlining diversity. The Middle East continues to prosper as a transfer center for cargo with its three main carriers, Emirates, Etihad and Qatar, aggressively pursuing expansion and competing with one another. It is unclear whether the transfer strategies of these carriers will remain sustainable as new more fuel efficient aircraft facilitate expanded non-stop capability to the industry. Additionally, carriers are also expanding their markets. Between 2000 and 2010, Delta Air Lines inaugurated nonstop flights to Accra, Bogota, Dakar, Montego Bay, Port au Prince, Prague, Santo Domingo, Sao Paulo, Tel Aviv, Tokyo and other destinations. This expansion increased the supply of belly capacity at all these airports. THIRD PARTY DEVELOPMENT AND LEASING As carriers pull back from owning or leasing property on an airport the gap has been filled by third party developers, typically in partnership with the airport. More recently cargo handling companies have become part of the equation. The handlers are now either financing the development or leasing the facility. This enables them to make better use of space and manage physical and human resources more effectively. This concept also lends itself to a common-use pricing structure in which the airport receives revenues on processed cargo rather than a square footage basis. If structured properly this kind of arrangement can reduce start-up costs and have a higher payout for all parties as the operation matures. 3

134 SECURITY Perhaps the most significant change over the past ten years has been in the area of cargo security and the implementation of measures to prevent the introduction of explosives. Historically the industry installed antitheft systems at facilities both on and off airport, with overall security being a key consideration in their planning. The industry now must screen all belly cargo before it is loaded on passenger aircraft. Screening can take place on or off airport (as long as the chain of custody is secure), and can be conducted by a certified entities further up the supply chain. CENTRALIZED SCREENING FACILITIES Because of the costs associated with screening passenger belly cargo, independent contractors and forwarders designed have become certified to conduct screening. These entities are capable of servicing multiple small users including shippers and carriers. Using economies of scale, their facilities (primarily located off-airport) enable users to reduce the cost of screening, or mitigate the issues associated with retrofitting their own facilities to accommodate the screening process. MAJOR GATEWAY SHIPPING One of the major side effects of the new air cargo security guidelines has been that the economies of scale offered by the gateways and the proportionately higher costs of screening at small to mid-size facilities encourages the migration of cargo screening to the gateways. The utilization of a centralized cargo screening facility at a gateway can offer further incentives to this shift by creating economies of scale. THE CARGO VILLAGE Perhaps the most visible and discussed phenomenon is the emergence of the Cargo Village. Despite its increasing popularity, this is simply a new name for an on-airport logistics complex. It can include virtually any elements of the air cargo industry, but for the most part, given restrictions on commercial development at most airports, is best focused on carriers, forwarders, customs brokers, and other directly supporting services as opposed to manufacturing and assembly. One of the fallacies in the industry is that such complexes will attract cargo. They are usually only successful if there is an existing or strong potential market, While they have a limited marketing appeal, their value, if properly constructed is to create functional proximities that will enable tenants and users to realize cost benefits and time savings. We encourage you to join the ACI-NA Air Cargo Committee, share your thoughts and broaden our industry s ability to respond appropriately over the coming decade. Value added service to all ACI-NA members Benefits to You Inquiries response the steering group leadership is comprised of diverse and dedicate cargo professionals with over decades of experience that can assist in answering any questions you may have Surveys and Whitepapers the Committee has published numerous air cargo documents to assist airport directors, various airport professionals, and new entrants to the industry better understand air cargo Monthly calls in an effort to better connect with various air cargo stakeholder, the Committee host monthly calls i.e. airlines, freight forwarders, and other related associations If you would like to explore any of these issues, the AirCargo 2013 in Las Vegas, NV would be an ideal opportunity. For more information or an immediate question on any of the issues, please contact Nelson Lam at nlam@aci-na.org. 4

135 INDUSTRY ALLIANCES AND CONSOLIDATIONS Airline alliances continued to evolve in For example, SkyTeam was established in 2000 and both the Star Alliance and OneWorld have continued to recruit new members. Several airlines have in fact left one alliance and joined another as strategies for growth create the potential for new partnerships. These alliances have particularly helped Detroit, Newark, Minneapolis, Memphis, Washington Dulles, Atlanta and Chicago O Hare obtain new international services. The alliances have also contributed to the expansion of international flights at alternative airports reducing the need for many travelers to transit coastal gateways such as Los Angeles or JFK. SkyTeam includes a cargo alliance among a subset of its members, while WOW Cargo Alliance consists of Scandinavian and Singapore Airlines. However, alliance has had a significant impact on air cargo. The passenger airlines have largely ceded control of the market to integrators and forwarders. The forwarders consolidation of gateways and road feeder services provide them with traffic feed from points not served by their purchases of aircraft capacity. The gateways therefore serve as a substitute for airline alliances. MODAL SHIFTS Costs (mostly associated with security) have helped shift a substantial amount of domestic air cargo to trucks. This trend began in 2000 as many businesses, in the face of a developing recession, began to opt for second and third day delivery of shipments as opposed to overnight delivery. At a number of airports cargo facilities have become truck terminals. Interestingly, much of the tonnage has not disappeared: it has shifted to trucks but is not reported. On the international side, shipping historically has focused on dramatically different products which are typically incompatible with air freight. More recently, however, the advent of the fast ship has attracted attention from some shippers because of the vastly improved product. Maersk has introduced a new ship that is 1,302 feet long, and has a net cargo capacity of 123,200 tons that can be transported much more cheaply than by air. Most remarkable, the ship carries a crew of only 13, and cruises at 31 knots halving the time of typical trans-oceanic shipping. LIBERALIZATION International air service liberalization continued after 2000 through the Open Skies and US/European Union agreements. Major liberalizations include Turkey (2000), France (2001), India (2005), Australia (2008), Brazil (2010) and Japan (2010). The Air Transport Agreement with the European Union in 2007 lifted restrictions on services to London Heathrow. While the Chinese bilateral remains very restrictive, negotiations in

136 allowed for additional services. Several of the U.S.-China bilateral revisions resulted in new routes from Chicago, Newark and Atlanta. These liberalization measures were much more important to the interior hub airports, e.g.,. Atlanta, Houston, Dallas/Fort Worth and other cities obtained their first nonstop flights to Heathrow. Before the 2007 Air Transport Agreement, these flights were required to use less popular London airports such as Gatwick. This is consistent with a broader pattern, in which liberalization creates very large opportunities for new gateways but only incremental gains for established gateways. EMISSIONS TRADING The growing concerns about anthropogenic carbon dioxide and its impact on climate have prompted several governments to impose carbon taxes and emissions trading schemes (ETS). Although aviation is a relatively small source of greenhouse gases (GHG), it is growing as the industry continues to expand worldwide. To combat the rise in GHGs, the European Union has extended its ETS to aviation, including non-european carriers. The political and economic issues involved are complicated and the issue has created a conflict between the EU and other states. Under the EU s ETS, each airline must produce one carbon allowance (or carbon credit) for each ton of carbon dioxide emitted on flights either to or from the EU. Emissions from the entire flight are counted not just those over EU airspace. Each airline is granted an initial quantity of carbon allowances, but the airline must purchase additional allowances or carbon credits if their emissions are higher than the initial allotment. Most planners use a baseline of 30 Euros per ton of carbon dioxide for each allowance. The cost of the carbon allowance would raise the effective price of fuel by about 12 percent, but because airlines will be granted initial allowances the effective cost increase will likely be less than 12 percent. The aviation industry has resisted this policy. The added costs will lead to higher fares and air cargo charges which will reduce the growth of the industry. Changes will be particularly detrimental to the smallest commercial aircraft and short routes, where fuel consumption per unit of capacity is the highest. States have also raised concerns that the EU ETS violates national sovereignty, and some countries have threatened retaliatory actions against EU air carriers or airframe and engine manufacturers. Many countries, including the U.S. and Canada believe that any emissions management program for aviation should be developed by the UN International Civil Aviation Organization (ICAO). ICAO is currently developing an emissions efficiency standard for aircraft and is investigating possible global market based measures. GROWTH OF AIRCRAFT, CREW, MAINTENANCE, AND INSURANCE (ACMI) CARGO OPERATORS As carriers move to right-size their fleets many are shifting away from owning their freighters, preferring instead to wet-lease their all-cargo aircraft to include the ACMI. This strategy also reflects the greater reliance on wide-body belly capacity for most shipping, and an increasing dependence on outsourcing for unusual or peak shipping requirements. The higher costs of the leases are off-set by reduced maintenance and operating costs incurred by the carriers. A side effect of this trend is that airports do not always know which carrier has chartered the operation. This can be problematic for planning both aircraft ramp and facility size unless appropriate tracking is in place that tells the airport where the aircraft is parking and for which carrier the aircraft is flying. 6

137 SPECIAL THANK YOU ACI-NA would like to thank Dan Muscatello from Landrum & Brown who was commissioned by the Air Cargo Committee to assist in researching and publishing this newsletter. Upcoming Events AirCargo 2013 Red Rock Resort Las Vegas, NV March 10-12, 2013 This Conference is a unique opportunity that brings together all elements of the air cargo industry that will allow airport operators to gain invaluable insights into how the industry really works and how it relates to their airport. With the industry stakeholders all attending (freight forwarders, handlers, freighters, airlines, airports, logistic integrators, security vendors, third-party developers, and more), get all your cargo questions answered. QUESTIONS? If you have any questions concerning any of the items discussed or about the Air Cargo Committee, please contact Nelson Lam at nlam@aci-na.org or (202) This Conference is a joint partnership between Airports Council International North America (ACI-NA), Express Delivery & Logistics Associations (XLA), Airforwarders Association (AfA), and the Air & Expedited Motor Carriers Association (AEMCA). For more information visit: Airports Council International North America 1615 L Street NW Suite 300 Washington, DC ph fax 7

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