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Evaluating and Understanding the Organization 49 After the key failure factors have been identified through the problem tree analysis, the plan- ning team should brainstorm about how the identified key failure factors can be avoided in the future. To avoid landside commercial development yielding lower revenues than budgeted in the future, for example, the organization might develop an airport land use plan, and ensure that land leasing policies encourage third-party development. A similar type of analysis, an objective tree analysis, can be used to assess the means (key suc- cess factors) and ends of the successful achievement of a goal. The causes at the bottom of the diagram depicted in Exhibit 4-1 should be replaced with success factors, and the effects at the top of the diagram should be replaced with results. The same process as described above for the key failure factors should be used for the key success factors, and the planning team should brain- storm about how the identified key success factors could be leveraged in the future. To identify the factors critical to achieving or not achieving an organization's previously set goals and determine how these factors can be leveraged or avoided in the future, complete Worksheet 4.03, "Reviewing Recently Set Goals and Their Attainment." 4.4 Examining How the Organization's Governance Structure Has Evolved (Optional) Depending on the circumstances of the particular organization, the planning team may find it useful to understand how the organization's governance structure evolved to its current form and how the structure might affect attainment of the organization's future strategic objectives. As part of completing optional Worksheet 4.04, "Examining How the Existing Governance Structure Has Evolved," the planning team will first describe the existing governance structure of the organiza- tion, including any future changes to the structure that are currently planned and the reasons for selecting the existing governance structure. The planning team will then assess if the current gov- erning structure has been successful in addressing the objectives for which it was created. 4.4.1 Organizational and Jurisdictional Structures of Public Use Airports Various organizational and jurisdictional structures have been developed for the ownership and management of the nation's public use airports. Ownership and operational authority usu- ally reside with the same entity; however, in some instances, they may be separated. For exam- ple, Bob Hope Airport is owned by the Burbank-Glendale-Pasadena Airport Authority, but is operated by TBI Airport Management, a private company, through a management agreement with the Authority. An airport may be owned by a public entity, such as a city, but operated by a separate com- mission or authority created solely for the purpose of airport management. An airport may also be owned by a government entity or authority and operated by a private company. While many airports outside the United States are operated by national governments, the operating entity is more varied in the United States. The responsibility for airport operations and management can be vested with one or more of the following entities: City government County government

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50 Strategic Planning in the Airport Industry Airport authority/board (quasi-governmental) Private entity (leased or operated under a third-party management contract with one of the above-listed entities or owned and operated privately) State government Overall, the most prevalent form of airport ownership and management in the United States is municipal (city governments), followed by county governments, then airport authorities, with a small number of airports being operated by private entities or state governments. For medium and large commercial service airports, the most prevalent form of airport ownership and manage- ment is an airport authority. This structure governs approximately 46 percent of the 67 large and medium hub airports included in the National Plan of Integrated Airport Systems (NPIAS). A majority of the small commercial service and general aviation airports in the United States are owned and managed by the local city or county government. 4.4.2 Benefits and Drawbacks of Various Governance Structures Once the planning team has examined the existing governance structure of the organiza- tion, the team should examine the benefits and drawbacks associated with the organization's existing governance structure and any previous governance structures for the airports in the organization. The following are some commonly cited benefits and drawbacks associated with the main entities that operate and manage airports (city/county government, airport authority/ board, and private entity). 4.4.2.1 City/County Government The benefits of city/county government operation and management include the following: The airport organization has access to other city/county department resources (legal, account- ing, engineering, and so forth). The city/county retains control over revenues, use of funds, contractual agreements, and staffing. There is low staff turnover. The organization has the ability to issue general obligation bonds through the city/county. The drawbacks of city/county government operation and management include the following: There is a diffusion of leadership focus, with decisions sometimes based on broader city/ county needs. This governance structure is accompanied by additional burdens--such as budgetary con- trol, hiring restrictions/staffing inflexibility, complicated purchasing procedures--that make it difficult for the airport organization to function as a business. The airport organization may not be the city's/county's first priority for issuing general obligation bonds. Commingling of airport revenues with city/county funds may be cumbersome and cause FAA concern regarding the diversion of airport revenues. 4.4.2.2 Airport Authority/Board The benefits of airport authority/board operation and management include the following: This governance structure provides the greatest autonomy from the local government; the needs of the airport organization/users are the sole focus. The airport organization can potentially enter into contractual agreements, make purchases, and hire personnel more efficiently and cost effectively. The airport organization can have the ability to issue debt, acquire property, and exercise emi- nent domain powers.

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Evaluating and Understanding the Organization 51 Authorities are self-sustaining entities, which allows them to operate more as businesses, with- out outside influences. The drawbacks of airport authority/board operation and management include the following: The airport organization must be self-sustaining from staffing, operational, and financial standpoints. The airport organization cannot draw upon the personnel and services offered by the local government. The airport organization typically does not have the ability to levy taxes. 4.4.2.3 Private Entity The benefits of private entity operation and management include the following: Operation as a private entity can provide efficient and businesslike management of airport operations. Operation as a private entity can offer an infusion of third-party capital investment into the airport organization. Operation as a private entity can provide increased corporate income taxes from the pri- vate entity. The drawbacks of private entity operation and management include the following: There is a potential for increased costs to tenants, airlines, and other airport users resulting from the desire of a private entity to make a profit. There can be increased expenses to the local airport owner (i.e., city or county) resulting from the fees of a management contract. There is a potential for a lack of investment in facility maintenance or improvement to main- tain operating profits. Once the planning team has completed its examination of the benefits and drawbacks associ- ated with the organization's existing governance structure and any previous governance struc- tures for the airports in the organization, the team should perform the most critical step of Worksheet 4.04: assessing the effects of the information collected in the first two steps of the worksheet regarding selection of the organization's future strategic objectives. For example, a city department in charge of operating and managing an airport may have difficulty achieving the goal of optimizing staff efficiency because of the limitations posed by its governance structure. There- fore, it may not be realistic for the organization to adopt this type of goal in its strategic plan. To examine how an organization's existing governance structure has evolved, complete optional Worksheet 4.04, "Examining How the Existing Governance Structure Has Evolved."