Airport Revenue Diversification (2010)

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51 Above and Below the Wing—Used in conjunction with a description of ground-handling services, above the wing refers to catering and other cabin services as well as “in the terminal” passenger services. Below the wing refers to ramp services including baggage and cargo handling. Aeronautical Revenue—Operating revenue that an airport collects from: • Terminal rents—based on the amount of space an airline uses inside the terminal. • Landing fees—a per plane charge, usually based on the weight of the aircraft. • Other charges—specific fees for extra airport services (i.e., use of a jet bridge). An airline does not have to have a signed contract to use an airport. However, an airline with a contract, called a signatory airline, enjoys special benefits, such as lower rates, that other airlines do not. Aeronautical Use—An aviation activity that takes place on the airfield or at the terminal gates. Compensatory Agreements—The airport operator assumes the major financial risk of running the airport and sets rates and charges to recover the costs of the facilities and services that airlines use. Connecting Passengers—Passengers that disembark one aircraft and connect to another aircraft at the same airport. Cost Recovery—Method of establishing rates and charges that recovers capital costs and operating costs. Current Dollars—Value of a dollar adjusted for inflation. Enplanements—Passengers boarding an aircraft. Hook-Up Fee—A hook-up fee occurs when a ground service agent fuels an aircraft. Hub and Spoke Systems—Hub and spoke describes one model airlines use to organize their network of service. Airlines operate hubs in a few cities where most of their flights originate. Service goes out to spoke cities. Hub and spoke systems give passengers from smaller cities much greater access to a variety of destinations as passengers connect at the hub on flights to their destination. The carriers in the United States that operate hub and spoke systems are: United Airlines, American Airlines, Frontier Airlines, Alaska Airlines, Air Tran Airways, Delta Airlines, Conti- nental Airlines, and US Airways. Other carriers operate point-to-point service, although carriers such as Southwest Airlines and Air Tran operate focus cities where it is pos- sible to make connections. Large, Medium, Small, and Non-Hub Airports—FAA defines large hubs as having 1% or more of total national annual passenger boardings. A medium hub airport has 0.25% to 1% of boardings; a small hub airport has at least 0.05%, but less than 0.25%; and a non-hub airport has more than 10,000 boardings, but less than 0.05%. There are 30 large hub, 38 medium hub, 68 small hub, and 385 non-hub airports. Marketing Collateral—Materials that an airport or company use to identify their brand. Marketing collateral usually includes a logo, tagline, business card, and brochure. Nominal Dollars—The actual amount of a dollar with no adjustment for inflation. Non-Aeronautical Revenue—Non-aeronautical or landside revenue is generated from the following types of activities: • Concessions—rents paid by gift shops, restaurants, and newsstands. Most concession contracts also require a concession to pay a percentage of its profits to the airport. • Parking—fees for all airport-owned parking lots. • Advertising—ads placed on airport walls, billboards, and buses as a source of airport income. • Land rent—excess airport land rented for golf courses, office buildings, hotels, or farming. • Permits—fees paid by off-airport companies to access the airport and pick up passengers (e.g., taxis or shuttle buses). Originating Passengers—Passengers that begin the first leg of their trip. Per Turn—One arrival and departure. Power Purchase Agreement—Agreement between a power company and a host site for electric generation where the power company assumes the risks and responsibilities of ownership when it purchases, operates, and maintains a power generation facility. The host site in turn agrees to purchase energy or the capacity for a set amount of time and a specific price. This is a common way for airports to finance solar and wind power generation systems. Residual Cost Agreements—A type of contract with an airport owner where airlines collectively agree to pay any costs of running the airport that are not allocated to other users or covered by non-airline revenue. Triple Net Lease—A lease in which the lessee pays rent to the lessor as well as all taxes, insurance, and maintenance expenses that arise from the use of the property. GLOSSARY