Cover Image

Not for Sale

View/Hide Left Panel
Click for next page ( 3

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 2
2 Guidebook for Developing and Managing Airport Contracts sell bonds without long-term leases. The most common lease term in the industry today is 5 years. This is tied in part to the PFC requirement that leases for exclusive space can be no greater than five years. In addition, as monumental changes take place in the airline industry (e.g., bankrupt- cies, mergers, and hub closures) and the overall fluid airline economic picture, airports prefer the greater flexibility of the shorter term (in addition to other flexibilities in the agreements). Some airports have created even greater flexibility by including option terms in the agreement, either airport unilateral or by mutual agreement. See CRP-CD-81 (enclosed herein), Appendix to Chapter 1, Airline Agreements, for excerpts from the PDX Airline Agreement for provisions regarding the extension of the agreement by mutual agreement. 1.2 Control of Space A strong trend in airline agreements is for the airport to have greater control over its facili- ties. This is driven by (1) needs and requirements to maximize use of facilities, (2) an affirmative obligation imposed by federal statute requiring airports to accommodate all carriers desiring to operate at their airports; and (3) a desire to minimize costs that result from the construction of new facilities and overall good husbandry of airport resources. To increase their control, airports are shifting from exclusive-use premises to preferential and common/joint-use premises. There are a multitude of combinations of these constructs which in turn are driven by existing and projected airline activity, current space and planned construction of additional space, historical anomalies, and the existence of a hub or heavily dominant carrier, and other airport-specific drivers. The general trend is for ticket counter and airline ticket office (ATO) space to be designated preferential space. This gives the airport flexibility in accommodating changing dynamics. How- ever, based on the particular circumstances, airports continue to lease ticket counters and ATO space on an exclusive basis. This is motivated by availability of this type of space and airline con- cerns about proprietary functions, labor agreements and security (e.g., ticket stock and check out procedures). Every airport must customize its own requirements. Gates (which include holdrooms, loading bridges, and apron parking) are most frequently leased on a preferential or common-use basis. In addition, many airports have utilization requirements related to the ability to lease a preferential gate. See CRP-CD-81 (enclosed herein), Appendix to Chapter 1, Airline Agreements, for excerpts from the STL and BWI Airline Agreements for provisions regarding minimum gate utilization requirements. Many airports strive to have a combination of preferential-use gates (the majority of gates) and common-use gates to create flexibility to accommodate new entrants and increased flight activity by incumbent carriers. Baggage claim and tug roadway space is most commonly leased on common/joint-use basis, the notable exceptions being unit terminals or special facilities. The most frequently used formula for allocation of costs in these areas is a 20/80 formula (20% based on number of carriers and 80% based on deplaned passengers), however, many airports use a 10/90 formula. Generally, the air- ports do not have a strong preference for any one formula; the decision is frequently driven by the airlines' preference. One issue that has been largely resolved is how to count deplaned passengers (i.e., total deplaned passengers versus deplaned destination passengers). The strong trend is for deplaned passengers to be defined as deplaned destination passengers for purposes of calculating the airlines' rela-