Click for next page ( 30

The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement

Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 29
30 the launch page through the use of a simple "ad bar" at the bottom or top of the screen. However, this needs to be nonintrusive and must avoid pop-ups. iFIDS--Internet-based Flight Information Display Sys- tems provide real-time airline information through the use of the Internet, eliminating the need for information technology investment and infrastructure. The cost- effective kiosks can be configured to display multi- media images and text messages offering a tremendous revenue potential. Sponsorship Opportunities FIGURE 24 Advertising on unpaved airport land in In the last decade, sponsorship programs have moved to the Johannesburg, South Africa. forefront of advertising programs and emerged as a specific business discipline, capturing the attention of the media and exploit commercial activities to increase revenue. The fol- the corporate world as it provides organizations with the lowing sections will explore some conventional and innova- ability to cut through the clutter of traditional advertising tive sources to enhance nonairline revenues and help lower and exhibition. Effective sponsorship that balances the ties airline costs while improving the quality of service and pro- between brand and product marketing and is done well fits viding a new level of convenience for the passenger. It also ideally with overall marketing objectives. The benefit of includes some key constraints to revenue development as sponsorship programs is that they help defray the cost of the well as opportunities. terminal while providing a valuable customer amenity. For example, in a sponsorship effort with the airport, a vendor Depending on the nature of the airport complex, there can provided flat screen televisions at no cost in the newly con- structed Dallas/Fort Worth International Terminal D/Hyatt be a variety of other revenue-producing leases from nonairline Hotel. Sponsorships do not replace the airport's identity and operations, including manufacturing, warehousing, freight for- may be of short duration or event driven. It is feasible to have warding, and even farming. Revenues from these areas have multiple sponsors for a single location or have a sponsored been categorized in the following way: meeting point. Fixed-base operator leases, Ground rentals, Maximize Exposure Cargo-area rentals (freight forwarders, etc.), Industrial areas, Opportunities also exist for nontraditional locations for air- Other buildings, port advertising. Advertising with banners, moving walkways Fuel and aircraft servicing, and and escalators, and even websites are cost-effective ways to Agriculture. generate additional revenue. Banners draped across the sky bridge or on the exterior of the terminal building are raising Although commercial development of the airport's land is the bar on nonaeronautical revenues and are quickly becom- another way to help support core aviation businesses by pro- ing the newest form of airport advertising that gives "owner- ducing nonairline revenues, it also redefines the airport as a ship" to a specific brand name, for example at MiamiDade center of commerce. To determine its goals and objectives for International Airport. commercial land development, it is essential for the airport Furthermore, advertisements can be used to improve the operator to identify the relative importance of the financial, airport's image and propose modern and creative ideas to political, and aesthetics/identity considerations. travelers. In Johannesburg, South Africa, advertising has been placed on unpaved airfield land to maximize advertising Commercial Property Development revenues (Figure 24). In most instances, simply providing basic services to airlines COMMERCIAL DEVELOPMENT AND LAND USE and passengers is no longer sufficient to ensure the viability of running an airport. Quality, innovation, and new services and Given the need to finance future capital expenditure and max- products are the key to ensuring survival in the competitive imize shareholder value, airport operators are under increas- marketplace. Today, airport operators are compelled to review ing pressure to optimize revenues they generate from com- their roles as mere landlords with a new energy to complement mercial sources. This can be achieved through adopting ancillary services. Although most revenue sources are tied to policies and practices that can unlock the considerable passengers, airports are now finding the need to identify a potential that exists within many airports to fully develop and long-term source of nonairline revenues.

OCR for page 29
31 Development and property management planning provides office, retail, and industrial land use is calculated by deduct- a long-term plan for nonairline revenue generation by helping ing the estimated cost to access and service the property. the airport communicate to all interested parties the long-term goals of the airport and the benefits of cost. Airport planning processes are performed at multiple levels: In recent years, legislation relating to environmental and Service plan--establishes the specific strategy for pro- security issues has required airport operators to take a more viding the access and utility improvements required for proactive role as "landlord." Therefore, airport operators are the implementation of the land use plan. Roadways, discovering the importance of putting in place land leasing storm drainage, water, sanitary sewer, and franchise util- policies for commercial property. Those land leasing policies ities are required for commercial uses of land. Police, are being evaluated in a number of respects: fire protection, and maintenance services are required for development. Existing leases--Airports need to evaluate existing lease The service plan identifies, evaluates, and recom- agreements and perform physical facility reviews as mends the most cost-efficient combination of methods to agreements are expiring and facilities are reverting back provide access and utility services. Efficiency is derived to the airport. from the determination of political, initial investment, Redevelopment plans--Airports should anticipate the operating, and administration costs. expiration dates of the existing leases and facilitate Financing plan--establishes the strategy for funding the "highest and best use" standards for aging facilities. infrastructure improvements required for commercial New development and vacant land--Airports are being development. The plan identifies public, private, and air- more active in identifying near- and long-term uses for port funding methodologies available considering: currently unused land. Ownership of property, Bond ordinances, and Land Use Plans FAA grant assurances. The financing plan quantifies and evaluates the costs Land use planning not only provides a long-term plan for tra- of funds, including initial (start-up) costs, interest, guar- ditional and nontraditional revenue generation but a number antees, and flexibility to change funding methods. The of other useful purposes as well: recommended funding method of the financing plan will Minimize costs--By guiding incompatible land users be compared with the financing strategies and fees away from the airport vicinity and encouraging compat- charged by neighboring municipalities. ible land users to locate around airport facilities, costs for Marketing plan--establishes the price of property to be noise studies, capital investment in noise mitigation, and set to achieve the airport's goals of quality of devel- legal fees can be minimized. Aircraft noise has been the opment, market share, and absorption rate. The target primary driver of airport land use compatibility con- market of users, disadvantaged business enterprises, and flicts and proper planning can alleviate noise issues with developers should be identified in the plan. A promo- advance "buy-in" from the surrounding community. This tion plan is developed using a mix of printed material, is a valuable tool for the overall strategic business plan- the Internet, presentations, mailings, and advertising to ning for small and large airports alike. reach the target market. Define alternatives--To the incumbent first-come-first- Development guidelines--direct development to create served policy, which can result in contracts having nego- a coordinated and cohesive appearance linking aviation tiated lease terms that are reasonable on a stand-alone and nonaviation land uses and an awareness that one is basis, but that otherwise may be inconsistent with the on-airport. They are used to give land for different com- long-term use needs of the airport system. mercial uses a unified and consistent appearance. The Determine the highest and best use--Forecast the mar- result is a campus-style look that accentuates each indi- ket demand for property having commercial uses. The vidual development: demand (land absorption and price) for office, retail, and Landscaping; industrial (which includes warehouse and distribution) Roadways, gateways, driveways, traffic signals, and property is projected to determine revenue. lighting; Identify future capital improvements--Determine the Architectural style, including materials, textures, major roadway(s) and utilities required to access and ser- shapes, and colors; vice the property for its highest and best use. Lotting, including setbacks and parking; and Parks of specific land uses, including office, retail, and The planned improvements are developed by phase based commercial/flex. on an analysis of areas that can be absorbed by the market over a reasonable amount of time and serviced with improve- Large Land Mass ments that can be developed in reasonable cost increments. The land use plan results in a cost-benefit analysis of prop- Airports are unique facilities in that they tend to occupy large erty development. The benefit of revenue generated from parcels of land, have unique siting requirements, produce

OCR for page 29
32 noise, and generate complex safety concerns, all of which Movie theaters affect neighboring communities. Retail businesses Agricultural uses (see Figure 26) By promoting nonaviation commercial development, an Recreational and training facilities. airport can generate additional revenue without increasing the number of aircraft or the level of operations at the airport. The The presence of these types of businesses at the airports sur- additional revenue could provide an increased level of reserves veyed contributes significantly to their revenues and their abil- and funding for both past and future airport needs. Airport ity to build up their reserves and invest in improvements to operators should be mindful of long-term compatibility with their facilities. aviation operations when developing commercial develop- ment plans. FAA Restrictions on Land Development A number of airports have developed portions of their air- There are numerous restrictions on the development of airport- port properties to accommodate nonaviation commercial owned land and the use of the revenue from that land that enterprises. The types of businesses found on airport property are driven by the grant assurances airports accept as a condi- include: tion of receiving grants or acquiring federal surplus property. Further restrictions are placed on land development through Industrial uses the airport master plan process and airport revenue diversion Importing and exporting regulations. These restrictions do not prohibit airport land Manufacturing development; however, they do put limitations to some aspects Warehousing of this development. Research and development Cargo facilities Grant assurances for land acquired with federal assis- Bulk storage tance. Grant Assurances 31a (land acquired for noise Outside storage compatibility purposes) and 31b (land acquired for Petroleum exploration and mineral rights (see Fig- development purposes) each state that when the land is ure 25). no longer needed for the purpose acquired, the sponsor Commercial uses shall dispose of it at fair market value, and the proceeds Restaurants from this sale that are proportional to the original federal Commercial office space/complexes share of projects cost either be returned to the trust fund Hotels and motels or reinvested in another approved (AIP or noise pro- Recreational centers gram) eligible project. It is important to note that this Training facilities particular assurance only applies to land specifically Small business centers acquired with federal assistance and not all airport land. Retail sales However, Grant Assurance 31c states: "Land shall be Industrial businesses considered to be needed for airport purposes under this Car rental agencies assurance if (1) it may be needed for aeronautical pur- Automobile dealers poses (including runway protection zones) or serve as Golf courses noise buffer land, and (2) the revenue from interim uses of such land contributes to the financial self-sufficiency of the airport." Grant Assurance 31d states: "Disposition of such land under (a) (b) or (c) will be subject to the retention or reservation of any interest or right therein necessary Under the lease program, the monies received from the sale of the farm crop have been divided on a ratio of one-third to the airport and two-thirds to the farmers. The farmland lease contracts bring in about $300,000 per year to DIA. FIGURE 25 Dallas/Fort Worth International Airport--Natural FIGURE 26 Denver International Airport--Farming on gas and oil exploration. currently unused airport land.