Guidebook for Developing General Aviation Airport Business Plans (2012)

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A I R P O R T C O O P E R A T I V E R E S E A R C H P R O G R A M ACRP REPORT 77 TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2012 www.TRB.org Research sponsored by the Federal Aviation Administration Subscriber Categories Aviation Guidebook for Developing General Aviation Airport Business Plans Aviation Management Consulting Group, Inc. Centennial, CO KRAMER aerotek, inc. Boulder, CO Gary R. Shafer Southern IllInoIS AIrport Carbondale, IL Southern Illinois University Carbondale Carbondale, IL

AIRPORT COOPERATIVE RESEARCH PROGRAM Airports are vital national resources. They serve a key role in trans­ portation of people and goods and in regional, national, and inter­ national commerce. They are where the nation’s aviation system connects with other modes of transportation and where federal respon­ sibility for managing and regulating air traffic operations intersects with the role of state and local governments that own and operate most airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Coopera­ tive Research Program (ACRP) serves as one of the principal means by which the airport industry can develop innovative near­term solutions to meet demands placed on it. The need for ACRP was identified in TRB Special Report 272: Airport Research Needs: Cooperative Solutions in 2003, based on a study spon­ sored by the Federal Aviation Administration (FAA). The ACRP carries out applied research on problems that are shared by airport operating agencies and are not being adequately addressed by existing federal research programs. It is modeled after the successful National Coopera­ tive Highway Research Program and Transit Cooperative Research Pro­ gram. The ACRP undertakes research and other technical activities in a variety of airport subject areas, including design, construction, mainte­ nance, operations, safety, security, policy, planning, human resources, and administration. The ACRP provides a forum where airport opera­ tors can cooperatively address common operational problems. The ACRP was authorized in December 2003 as part of the Vision 100­Century of Aviation Reauthorization Act. The primary participants in the ACRP are (1) an independent governing board, the ACRP Oversight Committee (AOC), appointed by the Secretary of the U.S. Department of Transportation with representation from airport operating agencies, other stakeholders, and relevant industry organizations such as the Airports Council International­North America (ACI­NA), the American Associa­ tion of Airport Executives (AAAE), the National Association of State Aviation Officials (NASAO), Airlines for America (A4A), and the Airport Consultants Council (ACC) as vital links to the airport community; (2) the TRB as program manager and secretariat for the governing board; and (3) the FAA as program sponsor. 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 airport professionals, air carriers, shippers, state and local government officials, equipment and service suppliers, other airport users, and research orga­ nizations. Each of these participants has different interests and respon­ sibilities, and each is an integral part of this cooperative research effort. Research problem statements for the ACRP are solicited periodically 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 iden­ tifying 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 pro­ fessionals, the intended users of the research products. The panels pre­ pare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing cooper­ ative research programs since 1962. As in other TRB activities, ACRP project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the intended end­users of the research: airport operating agencies, service providers, and suppliers. The ACRP produces a series of research reports for use by airport operators, local agencies, the FAA, and other interested parties, and industry associations may arrange for work­ shops, training aids, field visits, and other activities to ensure that results are implemented by airport­industry practitioners. ACRP REPORT 77 Project 01­17 ISSN 1935­9802 ISBN 978­0­309­25858­6 Library of Congress Control Number 2012948352 © 2012 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not­for­profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB or FAA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not­for­profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The project that is the subject of this report was a part of the Airport Cooperative Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical panel selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the Airport Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report. Published reports of the AIRPORT COOPERATIVE RESEARCH PROGRAM are available from: Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at http://www.national­academies.org/trb/bookstore Printed in the United States of America

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars 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 technical 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 Academy 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 achievements 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 Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, 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 scientific and engineering communities. The Council is administered jointly by both Academies and the Institute 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 Transporta- tion Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, 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 departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individu- als interested in the development of transportation. www.TRB.org www.national-academies.org

C O O P E R A T I V E R E S E A R C H P R O G R A M S CRP STAFF FOR ACRP REPORT 77 Christopher W. Jenks, Director, Cooperative Research Programs Crawford F. Jencks, Deputy Director, Cooperative Research Programs Michael R. Salamone, ACRP Manager Marci A. Greenberger, Senior Program Officer Joseph Brown-Snell, Program Associate Eileen P. Delaney, Director of Publications Hilary Freer, Senior Editor ACRP PROJECT 01-17 PANEL Field of Administration Joseph T. Pestka, Jviation, Jefferson City, MO (Chair) John W. Anderson, McCall Airport, McCall, ID Diana D. Lewis, Miami Dade College, Homestead, FL Fred W. Sington, Jr., Gadsden Airport Authority, Gadsden, AL Carolyn E. Strock, C. E. Strock Consulting, Vienna, WV Steve Tibbetts, Eastern Aviation Fuels, Inc., New Bern, NC Chris Hugunin, FAA Liaison John L. Collins, Aircraft Owners and Pilots Association Liaison Christine Gerencher, TRB Liaison

F O R E W O R D By Marci A. Greenberger Staff Officer Transportation Research Board This report consists of a Guidebook and a CD­ROM that are designed to help airports develop and implement an airport business plan and maximize financial self­sufficiency. The Guidebook begins by identifying the role, the value, and the compelling reasons for having an airport business plan as it applies to all size airports. The report discusses the elements of an airport business plan and walks users through each step of the development and implementation process, allowing users to focus on those areas in which they need additional information. The resource chapters of the Guidebook do not have to be read sequentially, but can be referred to as necessary, based on the user’s knowledge and interest. The accompanying CD­ROM, which provides the user the option of learning the material by watching a series of presentations, can be used to jump start the process. In addition, the CD­ROM also provides worksheets that are helpful in gathering the information necessary for developing and implementing an airport business plan. Ultimately, the completed work­ sheets can be integrated into and become part of the airport business plan. This Guidebook and CD­ROM are useful for airport managers and staff at all size general aviation airports. Airport business planning and airport master planning are both essential in planning the future of an airport. Sound business planning will provide airport managers and policy­ makers with the tools to make informed, prudent, and defensible business decisions relat­ ing to the operation and management of the airport. Many general aviation airports are minimally staffed and have tight budgets to maintain and operate the airport. The focus of the airport manager is, by necessity, usually on the day­to­day operations and less on the vision and future of the airport or on strategic and business planning. The Guidebook and the CD­ROM are a valuable resource that airports can use to successfully develop and implement an airport business plan and maximize financial self­sufficiency. Aviation Management Consulting Group tells the story of an airport manager working with the airport’s governing board and planning team to develop and implement an airport business plan. Through the story, users will learn about the benefits of an airport business plan, the different stakeholders who may be able to help throughout the process, the infor­ mation that needs to be collected, and the steps necessary to complete an airport business plan. The research that went toward this comprehensive document included obtaining information from airports with and without business plans as well as gleaning best practices from other industries and organizations relating to business planning/plans.

C O N T E N T S 1 Summary 4 Chapter 1 Introduction 5 1.1 Purpose of this Guidebook 5 1.2 Overview of this Guidebook 8 1.3 Using this Guidebook 9 1.4 Reasons for an Airport Business Plan 11 1.5 Value of an Airport Business Plan 12 1.6 Wrap­Up 13 Chapter 2 Airport Business Plan 13 2.1 Introduction 13 2.2 What is an Airport Business Plan? 16 2.3 Elements of an Airport Business Plan 18 2.4 Wrap­Up 19 Chapter 3 Airport Business Planning Process 19 3.1 Introduction 19 3.2 Process Overview 21 3.3 Buy­in 22 3.4 Approach 22 3.5 Planning Team 25 3.6 Communication 26 3.7 Resources 27 3.8 Wrap­Up 27 3.9 Worksheet 29 Chapter 4 Preparing The Elements of an Airport Business Plan 29 4.1 Introduction 30 4.2 Mission, Vision, and Values 31 4.3 SWOT Analysis 32 4.4 Goals 35 4.5 Objectives 37 4.6 Action Plans 39 4.7 Ancillary Elements 40 4.8 Written Business Plan 41 4.9 Wrap­up 41 4.10 Worksheets 55 Chapter 5 Implementation 55 5.1 Introduction 56 5.2 Process Overview 56 5.3 Implement

59 5.4 Plan, Do, Check, Act 62 5.5 Report Results 62 5.6 Review and Update 63 5.7 Wrap­up 64 Chapter 6 Airport and Market 64 6.1 Introduction 65 6.2 Airport Overview 65 6.3 Community Overview 66 6.4 Industry Overview 66 6.5 Market Overview 70 6.6 Competition Overview 71 6.7 Market and Customer Segments 72 6.8 Market Drivers 74 6.9 Demand and Capacity 78 6.10 Wrap­Up 78 6.11 Worksheets 94 Chapter 7 Organization 94 7.1 Introduction 95 7.2 Ownership 97 7.3 Governance 98 7.4 Management 107 7.5 Wrap­Up 107 7.6 Worksheet 110 Chapter 8 Operations 110 8.1 Introduction 111 8.2 Key Operational Responsibilities 113 8.3 Key Operational Areas 114 8.4 Wrap­Up 115 Chapter 9 Marketing 115 9.1 Introduction 116 9.2 Five Ps of Marketing 117 9.3 Airport Branding 118 9.4 Marketing as a Communication and Implementation Tool 120 9.5 Designing a Marketing Initiative 121 9.6 Additional Marketing Resources 122 9.7 Wrap­Up 123 Chapter 10 Aviation Products, Services, and Facilities 123 10.1 Introduction 124 10.2 Market 125 10.3 Organization 130 10.4 Operations 131 10.5 Marketing 131 10.6 Financial 131 10.7 Wrap­Up

132 Chapter 11 Financial 132 11.1 Introduction 133 11.2 Financial and Accounting Principles 134 11.3 Financial Departments 136 11.4 Funding 138 11.5 Financial Statements 142 11.6 Performance Measures 143 11.7 Budgets 146 11.8 Wrap­Up 146 11.9 Templates 156 Glossary of Terms and Acronyms 162 Bibliography Note: Photographs, figures, and tables in this report may have been converted from color to grayscale for printing. The electronic version of the report (posted on the Web at www.trb.org) retains any color versions.