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ACRP AIRPORT COOPERATIVE RESEARCH PROGRAM SYNTHESIS 19 Sponsored by Airport Revenue Diversification the Federal Aviation Administration A Synthesis of Airport Practice

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ACRP OVERSIGHT COMMITTEE* TRANSPORTATION RESEARCH BOARD 2010 EXECUTIVE COMMITTEE* CHAIR OFFICERS JAMES WILDING Chair: Michael R. Morris, Director of Transportation, North Central Texas Council of Independent Consultant Governments, Arlington Vice Chair: Neil J. Pedersen, Administrator, Maryland State Highway Administration, Baltimore VICE CHAIR Executive Director: Robert E. Skinner, Jr., Transportation Research Board JEFF HAMIEL MEMBERS MinneapolisSt. Paul Metropolitan Airports Commission J. BARRY BARKER, Executive Director, Transit Authority of River City, Louisville, KY ALLEN D. BIEHLER, Secretary, Pennsylvania DOT, Harrisburg MEMBERS LARRY L. BROWN, SR., Executive Director, Mississippi DOT, Jackson DEBORAH H. BUTLER, Executive Vice President, Planning, and CIO, Norfolk Southern JAMES CRITES Corporation, Norfolk, VA DallasFt. Worth International Airport WILLIAM A.V. CLARK, Professor, Department of Geography, University of California, RICHARD DE NEUFVILLE Los Angeles Massachusetts Institute of Technology NICHOLAS J. GARBER, Henry L. Kinnier Professor, Department of Civil Engineering, and KEVIN C. DOLLIOLE Director, Center for Transportation Studies, University of Virginia, Charlottesville Unison Consulting JEFFREY W. HAMIEL, Executive Director, Metropolitan Airports Commission, Minneapolis, MN JOHN K. DUVAL EDWARD A. (NED) HELME, President, Center for Clean Air Policy, Washington, DC Beverly Municipal Airport RANDELL H. IWASAKI, Director, California DOT, Sacramento KITTY FREIDHEIM ADIB K. KANAFANI, Cahill Professor of Civil Engineering, University of California, Berkeley Freidheim Consulting SUSAN MARTINOVICH, Director, Nevada DOT, Carson City STEVE GROSSMAN DEBRA L. MILLER, Secretary, Kansas DOT, Topeka Jacksonville Aviation Authority PETE K. RAHN, Director, Missouri DOT, Jefferson City TOM JENSEN SANDRA ROSENBLOOM, Professor of Planning, University of Arizona, Tucson National Safe Skies Alliance TRACY L. ROSSER, Vice President, Corporate Traffic, Wal-Mart Stores, Inc., Mandeville, LA CATHERINE M. LANG STEVEN T. SCALZO, Chief Operating Officer, Marine Resources Group, Seattle, WA Federal Aviation Administration HENRY G. (GERRY) SCHWARTZ, JR., Chairman (retired), Jacobs/Sverdrup Civil, Inc., GINA MARIE LINDSEY St. Louis, MO Los Angeles World Airports BEVERLY A. SCOTT, General Manager and Chief Executive Officer, Metropolitan Atlanta Rapid CAROLYN MOTZ Transit Authority, Atlanta, GA Hagerstown Regional Airport DAVID SELTZER, Principal, Mercator Advisors LLC, Philadelphia, PA RICHARD TUCKER DANIEL SPERLING, Professor of Civil Engineering and Environmental Science and Policy; Huntsville International Airport Director, Institute of Transportation Studies; and Interim Director, Energy Efficiency Center, University of California, Davis EX OFFICIO MEMBERS DOUGLAS W. STOTLAR, President and CEO, Con-Way, Inc., Ann Arbor, MI C. MICHAEL WALTON, Ernest H. Cockrell Centennial Chair in Engineering, University of SABRINA JOHNSON Texas, Austin U.S. Environmental Protection Agency RICHARD MARCHI EX OFFICIO MEMBERS Airports Council International-- THAD ALLEN (Adm., U.S. Coast Guard), Commandant, U.S. Coast Guard, U.S. Department of North America Homeland Security, Washington, DC LAURA McKEE PETER H. APPEL, Administrator, Research and Innovative Technology Administration, U.S.DOT Air Transport Association of America J. RANDOLPH BABBITT, Administrator, Federal Aviation Administration, U.S.DOT HENRY OGRODZINSKI REBECCA M. BREWSTER, President and COO, American Transportation Research Institute, National Association of State Aviation Smyrna, GA Officials GEORGE BUGLIARELLO, President Emeritus and University Professor, Polytechnic Institute MELISSA SABATINE of New York University, Brooklyn; Foreign Secretary, National Academy of Engineering, American Association of Airport Washington, DC Executives ANNE S. FERRO, Administrator, Federal Motor Carrier Safety Administration, U.S.DOT ROBERT E. SKINNER, JR. LEROY GISHI, Chief, Division of Transportation, Bureau of Indian Affairs, U.S. Department of Transportation Research Board the Interior, Washington, DC EDWARD R. HAMBERGER, President and CEO, Association of American Railroads, Washington, DC SECRETARY JOHN C. HORSLEY, Executive Director, American Association of State Highway and CHRISTOPHER W. JENKS Transportation Officials, Washington, DC Transportation Research Board DAVID T. MATSUDA, Deputy Administrator, Maritime Administration, U.S.DOT VICTOR M. MENDEZ, Administrator, Federal Highway Administration, U.S.DOT WILLIAM W. MILLAR, President, American Public Transportation Association, Washington, DC CYNTHIA L. QUARTERMAN, Administrator, Pipeline and Hazardous Materials Safety Administration, U.S.DOT PETER M. ROGOFF, Administrator, Federal Transit Administration, U.S.DOT DAVID L. STRICKLAND, Administrator, National Highway Traffic Safety Administration, U.S.DOT JOSEPH C. SZABO, Administrator, Federal Railroad Administration, U.S.DOT POLLY TROTTENBERG, Assistant Secretary for Transportation Policy, U.S.DOT ROBERT L. VAN ANTWERP (Lt. Gen., U.S. Army), Chief of Engineers and Commanding General, U.S. Army Corps of Engineers, Washington, DC *Membership as of October 2009. *Membership as of February 2010.

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AIRPORT COOPERATIVE RESEARCH PROGRAM ACRP SYNTHESIS 19 Airport Revenue Diversification A Synthesis of Airport Practice CONSULTANT LOIS S. KRAMER KRAMER aerotek inc. Boulder, Colorado S UBSCRIBER C ATEGORIES Aviation Finance Research Sponsored by the Federal Aviation Administration TRANSPORTATION RESEARCH BOARD WASHINGTON, D.C. 2010 www.TRB.org

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AIRPORT COOPERATIVE RESEARCH PROGRAM ACRP SYNTHESIS 19 Airports are vital national resources. They serve a key role in Project 11-03, Topic S01-02 transportation of people and goods and in regional, national, and ISSN 1935-9187 international commerce. They are where the nation's aviation sys- ISBN 978-0-309-14312-7 tem connects with other modes of transportation and where federal Library of Congress Control Number 2010925480 responsibility for managing and regulating air traffic operations intersects with the role of state and local governments that own and 2010 National Academy of Sciences. All rights reserved. operate most airports. Research is necessary to solve common oper- ating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. COPYRIGHT INFORMATION The Airport Cooperative Research Program (ACRP) serves as one Authors herein are responsible for the authenticity of their materials and for of the principal means by which the airport industry can develop obtaining written permissions from publishers or persons who own the innovative near-term solutions to meet demands placed on it. copyright to any previously published or copyrighted material used herein. The need for ACRP was identified in TRB Special Report 272: Cooperative Research Programs (CRP) grants permission to reproduce Airport Research Needs: Cooperative Solutions in 2003, based on material in this publication for classroom and not-for-profit purposes. a study sponsored by the Federal Aviation Administration (FAA). Permission is given with the understanding that none of the material will The ACRP carries out applied research on problems that are shared be used to imply TRB or FAA endorsement of a particular product, method, by airport operating agencies and are not being adequately or practice. It is expected that those reproducing the material in this addressed by existing federal research programs. It is modeled after document for educational and not-for-profit uses will give appropriate the successful National Cooperative Highway Research Program acknowledgment of the source of any reprinted or reproduced material. For and Transit Cooperative Research Program. The ACRP undertakes other uses of the material, request permission from CRP. research and other technical activities in a variety of airport subject areas, including design, construction, maintenance, operations, safety, security, policy, planning, human resources, and administra- NOTICE tion. The ACRP provides a forum where airport operators can coop- eratively address common operational problems. The project that is the subject of this report was a part of the Airport The ACRP was authorized in December 2003 as part of the Cooperative Research Program, conducted by the Transportation Research Vision 100-Century of Aviation Reauthorization Act. The primary Board with the approval of the Governing Board of the National Research participants in the ACRP are (1) an independent governing board, Council. the ACRP Oversight Committee (AOC), appointed by the Secretary The members of the technical panel selected to monitor this project and of the U.S. Department of Transportation with representation from to review this report were chosen for their special competencies and with airport operating agencies, other stakeholders, and relevant indus- regard for appropriate balance. The report was reviewed by the technical try organizations such as the Airports Council International-North panel and accepted for publication according to procedures established and America (ACI-NA), the American Association of Airport Execu- overseen by the Transportation Research Board and approved by the tives (AAAE), the National Association of State Aviation Officials Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those (NASAO), and the Air Transport Association (ATA) as vital links of the researchers who performed the research and are not necessarily those to the airport community; (2) the TRB as program manager and sec- of the Transportation Research Board, the National Research Council, or the retariat for the governing board; and (3) the FAA as program spon- program sponsors. sor. In October 2005, the FAA executed a contract with the National Academies formally initiating the program. The ACRP benefits from the cooperation and participation of air- port professionals, air carriers, shippers, state and local government The Transportation Research Board of the National Academies, the National officials, equipment and service suppliers, other airport users, and Research Council, and the sponsors of the Airport Cooperative Research research organizations. Each of these participants has different Program do not endorse products or manufacturers. Trade or manufacturers' interests and responsibilities, and each is an integral part of this names appear herein solely because they are considered essential to the cooperative research effort. object of the report. Research problem statements for the ACRP are solicited period- ically but may be submitted to the TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by identifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel, appointed by the TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport professionals, the intended users of the research products. The panels prepare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the Published reports of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing coop- AIRPORT COOPERATIVE RESEARCH PROGRAM erative research programs since 1962. As in other TRB activities, are available from: ACRP project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the Transportation Research Board intended end-users of the research: airport operating agencies, service Business Office 500 Fifth Street, NW providers, and suppliers. The ACRP produces a series of research Washington, DC 20001 reports for use by airport operators, local agencies, the FAA, and other interested parties, and industry associations may arrange for work- and can be ordered through the Internet at http://www.national-academies.org/trb/bookstore shops, training aids, field visits, and other activities to ensure that results are implemented by airport-industry practitioners. Printed in the United States of America

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished schol- ars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and techni- cal matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Acad- emy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achieve- ments of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, on its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academys p urposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Acad- emy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scien- tific and engineering communities. The Council is administered jointly by both the Academies and the Insti- tute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transportation Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisci- plinary, and multimodal. The Board's varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation depart- ments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation. www.TRB.org www.national-academies.org

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ACRP COMMITTEE FOR PROJECT 11-03 COOPERATIVE RESEARCH PROGRAMS STAFF CHRISTOPHER W. JENKS, Director, Cooperative Research Programs CHAIR CRAWFORD F. JENCKS, Deputy Director, Cooperative Research BURR STEWART Programs Seattle, Washington MICHAEL R. SALAMONE, Senior Program Officer EILEEN P. DELANEY, Director of Publications MEMBERS RANDALL P. BURDETTE ACRP SYNTHESIS STAFF Virginia Department of Aviation STEPHEN R. GODWIN, Director for Studies and Special Programs GARY C. CATHEY JON M. WILLIAMS, Program Director, IDEA and Synthesis Studies California Department of Transportation GAIL R. STABA, Senior Program Officer KEVIN C. DOLLIOLE DON TIPPMAN, Editor Unison Consulting, Inc. CHERYL KEITH, Senior Program Assistant JULIE KENFIELD DEBBIE IRVIN, Program Associate Jacobs Engineering Group, Inc. CAROLYN MOTZ TOPIC PANEL Hagerstown Regional Airport VOLODYMYR BILOTKACH, University of CaliforniaIrvine MARK EARLE, Colorado Springs Airport FAA LIAISON CHRISTINE GERENCHER, Transportation Research Board RANDY MOSENG RICHARD GOLASZEWSKI, GRA Incorporated, Jenkintown, PA STEPHEN GORDON, Oakland International Airport ACINORTH AMERICA LIAISON ROBERT GRIERSON, Southern Illinois University, Carbondale A.J. MULDOON J. DWIGHT HADLEY, Albany International Airport BILL JOHNSON, Florida Airports Council AIRCRAFT OWNERS AND PILOTS ASSOCIATION DEREK V. MARTIN, Klamath Falls Airport JOHN L. COLLINS PAUL L. FRIEDMAN, Federal Aviation Administration (Liaison) KEN JACOBS, Federal Aviation Administration (Liaison) TRB LIAISON LIYING GU, Airports Council InternationalNorth America (Liaison) CHRISTINE GERENCHER Cover figure: Collage--Toronto Pearson International Airport (lower left); International Terminal at San Francisco International Airport (lower right and upper left); Courtesy: The Woodland Trust, Lincoln- shire, U.K. Cover design: Annie Kitchen, Jviation, Inc.

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FOREWORD Airport administrators, engineers, and researchers often face problems for which infor- mation already exists, either in documented form or as undocumented experience and prac- tice. This information may be fragmented, scattered, and unevaluated. As a consequence, full knowledge of what has been learned about a problem may not be brought to bear on its solution. Costly research findings may go unused, valuable experience may be overlooked, and due consideration may not be given to recommended practices for solving or alleviat- ing the problem. There is information on nearly every subject of concern to the airport industry. Much of it derives from research or from the work of practitioners faced with problems in their day- to-day work. To provide a systematic means for assembling and evaluating such useful information and to make it available to the entire airport community, the Airport Coopera- tive Research Program authorized the Transportation Research Board to undertake a con- tinuing project. This project, ACRP Project 11-03, "Synthesis of Information Related to Airport Practices," searches out and synthesizes useful knowledge from all available sources and prepares concise, documented reports on specific topics. Reports from this endeavor constitute an ACRP report series, Synthesis of Airport Practice. This synthesis series reports on current knowledge and practice, in a compact format, without the detailed directions usually found in handbooks or design manuals. Each report in the series provides a compendium of the best knowledge available on those measures found to be the most successful in resolving specific problems. PREFACE This synthesis study is intended to inform airport operators, stakeholders, and policy- By Gail R. Staba makers about how airports are diversifying revenue streams. The report provides a brief Senior Program Officer discussion of different sources of revenue for airports, separating core aeronautical rev- Transportation enue from ancillary revenues. The report also provides a description and examples of ways Research Board that airports have diversified activities and a discussion of the challenges that arise when non-aeronautical activity is proposed on land that is subject to FAA grants obligations and assurances. Information used in this study was developed through a review of available literature and discussions with industry experts and airport operators. Lois S. Kramer, KRAMER aerotek inc., Boulder, Colorado, collected and synthesized the information and wrote the report. Members of the panel reviewed the original work plan and this document. The topic discussed is currently receiving extensive attention within the industry as airports strive to provide revenue consistency and self-sufficiency in an envi- ronment where both commercial aviation and general aviation is undergoing structural changes affecting the level of activity at individual airports and the financial agreements between airports and airlines, tenants, and other users. This synthesis strives to be immedi- ately useful with the knowledge that many airport operators are evaluating new options for revenue development and diversification. The ACRP program is committed to more exten- sive investigation of the topic through a fully funded research effort in FY 2010.

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CONTENTS 1 SUMMARY 3 CHAPTER ONE INTRODUCTION Purpose of the Synthesis, 3 Study Methodology, 3 Report Structure, 3 5 CHAPTER TWO AIRPORT BUSINESS AND REVENUES Transformation of the Airport Business, 5 Federal Role in Shaping the Business of Airports, 7 Necessity and Opportunity for Revenue Diversification, 14 16 CHAPTER THREE PLANNING ISSUES Airport Planning Process, 16 Planning for Non-Aeronautical Development, 16 Dayton International Airport Strategic Business Plan, 17 20 CHAPTER FOUR LEADERSHIP, PARTNERS, ALLIANCES, AND INCENTIVES Importance of Airport Leadership, 20 Alliances and Partnerships, 21 Incentives, 22 25 CHAPTER FIVE AVIATION SERVICES Ground Handling Services, 25 Redevelopment of Airport Facilities, 29 32 CHAPTER SIX NON-AERONAUTICAL DEVELOPMENT Multi-Use Development, 32 Other Revenue Diversification Development, 37 41 CHAPTER SEVEN ANCILLARY LAND USE Advertising and Sponsorships, 41 Temporary Uses and Special Events, 41 Easements and Rights-of-Way, 41 Agriculture, 41 Mineral Extraction, 41 Renewable Energy, 42 Utility Services, 44 Precious Metal Storage, 45 46 CHAPTER EIGHT CONCLUSIONS

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48 REFERENCES 49 BIBLIOGRAPHY 51 GLOSSARY 52 ACRONYMS 53 APPENDIX A AIRPORT CONTACTS 54 APPENDIX B EXAMPLES OF NON-AERONAUTICAL DEVELOPMENT