Airport Business Plan
Airport Business Plan Presentation Overview Business Plan Outline Part I - Strategic Planning Part II - Policy Guiding Documents (PGDs) Part III - Airport Regional Value (ARV)
Part I - Airport Business Plan Strategic Business Plan SWOT Analysis Financial Analysis Management Analysis* Strategic Policy Statements* Goals and Objectives* * deferred to Court/Commission Workshop
SWOT Analysis SWOT Analysis (Controllable Elements) Strengths - internal features that can be controlled and improved - characteristics seen as unique assets that airport possesses & benefits - can/should take advantage to better accomplish Airport s mission - should be preserved and enhanced to greatest extent possible Weaknesses - internal airport features that are perceived as lacking - still controllable by management - based on priorities and cost-benefits - should be addressed as rapidly as possible
SWOT Analysis SWOT Analysis (External Elements) Opportunities - external advantages to improve Airport s performance - result of location or other strategic characteristic outside control - should be leveraged to maximize Airports competitive edge Threats - factors that can negatively influence Airport s competitive position - often requires pro-active response to mitigate impact - generally cannot be changed or otherwise altered
SWOT Analysis Strengths Land/ Developable Property (18) Runway & ILS (16) Commercial Air Service (13) Air Traffic Control Tower (7) FBO/Fuel (7) Military Ops (6) Aircraft Storage/Hangars (5) Highway Access (5) Local Support (2) Restaurant (2) Remarks Available property w/infrastructure 9,111 x 150 (IFR minimums - 200' & ½ mile) Non-stop service to AUS/HOU Hours of Operation (7:00 am 10:00 pm) Full / Self Service Steady flow of activity/fuel sales 36 T-Hangars / 2 Community Hangars U.S. 59/U.S. 77/ U.S. 87/Zac Lentz Parkway Operations/Development/Special Events Funding Open 6 days/week (11:00am 9:00 pm)
SWOT Analysis Weaknesses Aging Infrastructure (24) Public Perception/Support (13) Commercial Air Service (17) Lack of Quality Hangar Space (7) Lack of Marketing (6) Funding Grants (6) Appearance /Aesthetics (6) Economic Development (6) Aviation Services Flight School (4) Governance (3) Remarks Pavement, drainage, utilities (and costs) Small population, reasons to visit, events Schedule, equipment, interline agreement Availability, security Best kept secret Project costs, availability Old Air Force structures FAA restrictions, space for immediate needs No established flight school Lack of control, narrow focus
SWOT Analysis Opportunities Growth Potential (25) Location/Monopoly (15) Intermodal Accessibility (10) Marketing for Commercial Development (7) Education Partnerships (4) Uncongested airspace (2) Growing Community (2) Aviation Business Markets Eagle Ford Shale Growth Potential (25) Remarks Available property to attract businesses Central to major cities (SAT/HOU/AUS/CRP) Access to ports, rail, highways Dedicated economic development specialist University of Houston, potential aviation program Attract quick turns Population, businesses, workforce development MRO, UAV Capitalize on proximity Available property to attract businesses
SWOT Analysis Threats Commercial Air Service (29) General Aviation Services (7) Governance & Management (7) Development Restrictions (4) National/Local Economy (3) Community Support (3) Infrastructure Remarks EAS funding, leakage, poor service & connections No flight school, aircraft maintenance Lack of budget funding, financial stability FAA requirements, land release policies Economic downturn (national & energy sector) Lack of support Proximity of U.S. 59 near end of runway
Financial Analysis HISTORICAL NET OPERATING REVENUE ACTIVITY 2011 2012 2013 2014 2015 Administration (Unallocated) Revenue 60,081 43,208 79,747 109,304 76,656 Expenses (457,678) (567,280) (605,996) (739,206) (704,666) Subtotal Administration (397,597) (524,073) (526,249) (629,902) (628,010) Fixed Base Operations (FBO) Revenue 2,406,174 2,428,579 2,376,226 2,655,617 1,762,489 Expenses (2,252,063) (2,133,500) (2,154,762) (2,471,042) (1,565,875) Subtotal Fixed Base Operations (FBO) 154,111 295,079 221,464 184,574 196,614 Airside (Aeronautical Leases + EAS) Revenue 51,398 51,244 23,397 236,750 2,141,455 Expenses (150,577) (122,868) (125,396) (546,715) (2,121,732) Subtotal Airside (99,179) (71,624) (101,999) (309,965) 19,723 Landside (Non-Aeronautical Leases) Revenue 435,105 466,659 353,085 390,554 376,469 Expenses (151,841) (128,352) (106,628) (112,598) (105,541) Subtotal 283,264 338,307 246,457 277,956 270,928 NET OPERATING REVENUE Total Operating Revenue 2,952,759 2,989,689 2,832,455 3,392,225 4,357,069 Total Operating Expenses (3,012,159) (2,951,999) (2,992,781) (3,869,562) (4,497,813) TOTAL NET OPERATING REVENUE (DEFICIT) (59,400) 37,690 (160,326) (477,337) (140,745) Note: does not include depreciation, PFCs and other non-operating items
Financial Analysis
Strategic Policy Statements Purpose of Strategic Policy Statements - articulates present & future role of Airport - conveys sense of direction to guide governance and management regarding operations & development - establishes expectations for users and community - must be realistic and congruent with governing policy and practices
Strategic Policy Statements Mission Statement - describes Airport s purpose and reason for being - serves as tool to focus on philosophy driving plans & decision making Prototype: The mission of the Victoria Regional Airport is to provide safe, secure, reliable, and efficient airfield facilities and aeronautical services to serve the aviation transportation needs of Victoria County s residents and visitors.
Strategic Policy Statements Vision Statement - should be aspirational and forward looking - represents the big picture of what the Airport should become Prototype: The Victoria Regional Airport serves as an award-winning example of a regional airport that consistently excels in providing a safe, secure, and financially self-sustaining aviation transportation and economic development asset for the community.
Strategic Policy Statements Values Statement - provides a public declaration of the highest priorities and core beliefs of the airport s governing authority, management - expresses the culture of the organization and illustrates the realistic expectations of those the airport serves Prototype: {to be determined}
Goals & Objectives Goals - Centered around strategies - Stated in terms of achievement of desired outcome Objectives - Clear and specific measurable outcomes consistent with goals - Short-term objectives should be accomplished within 1-3 years - Long-term objectives should be completed within 3-5 year horizon
Goals & Objectives Typical Goals Preserve and Enhance Airfield Enhance Financial Performance (Financial Self-Sustainability) Promote & Facilitate Commercial Air Service Promote & Facilitate General Aviation Services Enhance Non-aeronautical Development Goals for VCT {to be determined}
Airport Business Plan Presentation Overview Business Plan Outline Part I - Strategic Planning Part II - Policy Guiding Documents (PGDs) Part III - Airport Regional Value (ARV)
Part II - Policy Guiding Documents General Provisions (New) - Provides detailed information regarding how VCT business is conducted - Includes procedures for lease application - Provides information on how application is processed - Detail the various insurance requirements and limits Definitions for Use (New) - Definitions extracted from Rules & Regulations and Minimum Operating Standards - Includes additional terms common to aviation environment
Part II - Policy Guiding Documents Minimum Operating Standards (Updated) - Developed to promulgate fair business practices & nondiscrimination among commercial aeronautical services - Protects interests of airport's existing and future business operators - Definitions extracted and added to new Definitions for Use document - Application process extracted and added to new General Provisions document - Application review, appeals, and variances sections extracted and added to new General Provisions document
Part II - Policy Guiding Documents Rules & Regulations (New) - Provide guidance and direction for safe, orderly, and efficient airport operation - Apply to everyone (not just aeronautical users) - Definitions extracted and added to new Definitions for Use document
Part II - Policy Guiding Documents Development Guidelines and Standards (New) - Guides new development by Airport tenants - Provide detailed information regarding how planning, design, and construction efforts are managed - Provides opportunity to encourage creativity and quality in design and construction which will enhance the appearance of all future development
Airport Business Plan Presentation Overview Business Plan Outline Part I - Strategic Planning Part II - Policy Guiding Documents (PGDs) Part III - Airport Regional Value (ARV)
Part III - Airport Regional Value (ARV) ARV identifies Airport s value to region Identify direct economic value in terms of employment & output activity of on-airport tenants/businesses Estimate indirect & induced impacts in regional economy Estimate tax contribution created by Airport businesses Identify Airport s qualitative benefits for region's health, welfare and safety Estimate estimated depreciated, insured, and replacement cost Identify value rating factors (VRF) to estimate impacts on current and future ARV
Economic Benefit Analysis Economic Impact Model Most widely accepted approach - "Input-Output" (I-O) method Measures cumulative effect of direct, indirect, and induced economic activity Represented as annual flow of dollars to and through community Popular due the readily accessible data (IMPLAN)
Economic Benefit Analysis Direct Economic Impacts Business activity generates: Employment (Jobs) Income (Payroll) Output (raw materials and finished products) Direct association with Airport Aviation related activities Non-aeronautical businesses Impact = dollars following through Airport to community
Economic Benefit Analysis Indirect Economic Impacts Employment income and output generated by off-airport businesses that can attribute relationship, support, or use of the airport. Any industry sector that serves: Businesses located on-airport, Users of the Airport Use Airport to transport goods, supplies, or personnel in order to enhance their business opportunities and activities Indirect = Second round impacts
Economic Benefit Analysis Induced Economic Impacts Generated in community caused by recycling of dollars from both the direct and indirect economic impacts Airport businesses, users, employees, and Airport itself are consumers Expenditures support other businesses and employment in the community Commonly referred to as "multiplier or rollover effect At least equal to sum of the direct and indirect impacts
Economic Benefit Analysis Putting It All Together Total economic impact = direct + indirect + induced impacts Example Airport generates $60 in direct impacts (income/output) Activity generates additional $40 in indirect impacts Induced activity = 1.2 multiplier Total economic impact $60 + $40 + ((60+40)*1.2) = 100 + 120 = $220 Contributed taxes are also counted
Economic Benefit Analysis Employment Impact Total Aviation Percent Direct Impact 322 29 Indirect Impact 350 36 Induced Impact 918 106 Total Industry Impact 1,590 172 10.8%
Economic Benefit Analysis Income Impact Total Aviation Percent Direct Impact 14,535,144 2,098,776 Indirect Impact 16,160,434 2,551,462 Induced Impact 19,264,327 3,042,123 Total Industry Impact 49,959,906 7,692,361 15.4%
Economic Benefit Analysis Output Impact Total Aviation Percent Direct Impact 38,881,551 5,397,881 Indirect Impact 43,079,346 6,573,654 Induced Impact 52,418,518 8,082,344 Total Industry Impact 134,379,415 20,053,880 14.9%
Economic Benefit Analysis Tax Contribution Total Aviation Taxes 1,228,144 241,324 19.6%
Airport Asset Value Can VCT be replaced? Depreciated Book Value (Balance Sheet) Buildings $1.1 million Improvements $15.0 million (pavement, etc.) Equipment - $741,000 Total = $16.9 million Value only considers assets not fully depreciated
Airport Asset Value Can VCT be replaced? Insured Value (Replacement) $10.8 million (aviation & county facilities) Valuation does not include: - Most non-aeronautical properties (self-insured) - Loss of revenue/jobs Replacement Value (Basic Airport Facilities only) Estimated $30.2 million Does not include full replacement value of existing facilities
Airport Asset Value Can VCT be replaced? Truth Not reallyvct is IRREPLACEABLE Valuations do not capture true asset value - much of Airport s value is depreciated out Loss of VCT would devastate economy of region Direct Impacts Jobs (318) Employment Payroll ($14.1 million) Output to global marketplace ($38.3 million) Cascading indirect/induced regional impacts
Value Rating Factors (VRF) Purpose of Value Rating Factors - Economic impact & replacement costs offer baseline for establishing overall economic value of airport - Identifies attributes, circumstances or influences could enhance or diminish value? - Method to assess sensitivity of specific conditions that may positively or adversely affect value - Provides ability to quantify components of SWOT analysis
Value Rating Factors (VRF) Regional Resource Value Rating Factors V RR Airport Facility Airport Protection Airspace Constraints Airport Access Airport Expandability Community Commitment V AF V AP V AC V AA V AE V CC
Value Rating Factors (VRF) Regional Resource Factor (V RR ) Next closest airport with similar GA services and facilities within 25 miles of VCT VCT Distance T-Hangars Fuel 5,000 Runway ILS Approach A/C Maintenance Total Points 1-24 mi 1 1 1 1 1-25-49 mi 2 2 2 2 2 10 > 50 mi 3 3 3 3 3 - VCT Total 2 1 2 3 2 10 Note: max V RR = 15
Value Rating Factors (VRF) Airport Facilities Factor (V AF ) Aviation facilities that allow larger business aviation aircraft to operate Factor Metric Points Remarks 1. Runway Length > 5,000' 3.0 9,100 2. Runway Strength (SWA) > 30K lbs 2.0 Asphalt (28K lbs) 3. Precision Approach Y/N 3.0 ILS RW 13R (200 ½ mi) 4. Air Traffic Control Services Y/N 3.0 7:00 am 10:00 pm 5. GA Terminal Y/N 2.0 Needs work Total (V AF ) 13.0 Notes: max V AF = 15
Value Rating Factors (VRF) Airport Protection Factor (V AP ) Local controls in place to provide adequate safety and compatible land use Factor Metric Points Remarks Runway Protection Zones Ownership 3.0 RW 31 RPZ Height Hazard Zoning Published/Updated 3.0 Update w/map Land Use Compatibility Planning/Zoning Published/Updated 1.0 Develop w/map Total (V AP ) 7.0 Note: max V ap = 15
Value Rating Factors (VRF) Airspace Constraints Factor (V AC ) Conflicts with adjacent airspace that could constrain use of the Airport Factor Metric Points Remarks Traffic Pattern Conflicts Proximity 5.0 none within 4 miles Approach Zone Conflicts Proximity 5.0 none within 10 miles Other Controlled Airspace Proximity 5.0 None within 5 miles Total (V AC ) 15.0 Notes: max V AC =15
Value Rating Factors (VRF) Airport Access Factor (V AA ) Access to major highways and local circulation Factor Metric Points Remarks Primary Airport Access Road Lanes/Signals 4.0 Turn Lane Proximity to Regional Highway Distance 5.0 U.S. 59/U.S.77/U.S. 87 Total (V AA ) 9.0 Notes: max V AA = 10
Value Rating Factors (VRF) Airport Expandability Factor (V AE ) Ability to accommodate expanded facilities Factor Metric Points Remarks Aeronautical Expandability adequacy 5.0 Airside Frontage Non-Aeronautical Expandability adequacy 5.0 West Campus & East Area Total (V AE ) 10.0 Notes: max V AE = 10
Value Rating Factors (VRF) Community Commitment Factor (V CC ) Political support for Airport development and public perception of Airport as community asset Factor Metric Points Remarks Governance Support 2.5 Court/Commission Funding Support Contribution 5.0 Sponsor share / Ops budget Financial Sustainability Net Surplus 2.0 Consistent deficit Airport Capital Plan Aggressiveness 3.0 Master Plan Update Good Will Positive 2.5 Air Service / Governance Media Total (V CC ) 15.0 Notes: max V CC = 20
Value Rating Factors (VRF) Putting it All Together Factor Metric Points Remarks Regional Resource (V RR ) 15.0 10.0 Monitor competition Airport Facility (V AF ) 15.0 13.0 Runway Strength / GA Terminal Airport Protection (V AP ) 15.0 7.0 RPZ/Zoning Updates Airspace Constraint (V AC ) 15.0 15.0 Monitor airspace plans Airport Access (V AA ) 10.0 9.0 Road Improvements Airport Expandability (V AE ) 10.0 10.0 Continued improvements Community Commitment (V CC ) 20.0 15.0 Financials / PR Total (VRF) 79.0 Notes: max VRF = 100
Airport Regional Value (ARV) Questions? For more information contact: Dr. David A. Byers, Q 321.574.5633 DAByers@Quadrex.aero