Guidebook for Developing General Aviation Airport Business Plans (2012)

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4CHAPTER 1 INTRODUCTION 1.1 Purpose of this Guidebook 1.2 Overview of this Guidebook 1.3 Using this Guidebook 1.4 Reasons for an Airport Business Plan 1.5 Value of an Airport Business Plan 1.6 Wrap-Up The City Council chamber was packed. The gavel struck (BANG) and the Mayor called the meeting to order. The airport budget was on the agenda and likely to be closely scrutinized as the Council looked for ways to slash the City’s operating expenses. The airport manager expected that the airport’s $100,000 operating subsidy would be debated as well. In past years, there had been little discussion about the operating subsidy as the airport manager had a reputation for running a tight ship. This year, however, as a result of a downturn in the economy, airport revenues were down and expenses were up. To address these challenges, the airport manager had been thinking about developing and implementing an airport business plan. When the Mayor said, “Okay… let’s move on to the airport budget,” the Council had plenty of questions. At one point, the airport manager indicated that “It’s important to remember that the airport is an economic engine that facilitates the provision of vital air transportation and emergency services and serves as a gateway to the community.” When there were no more questions, the airport manager suggested that developing and implementing a business plan would be the best way to address the challenges facing the airport. The airport manager’s preparations paid off. The airport budget and operating subsidy were approved, and the Council agreed that the airport manager should proceed with the business plan and provide an update at the next meeting.

Introduction 5 1.1 PURPOSE OF THIS GUIDEBOOK This Guidebook and accompanying digital files are designed to help general aviation airport managers and policymakers develop and implement an airport business plan. This resource has been prepared specifically for general aviation airport practitioners. It is based on research sponsored by ACRP. The research included a literature review, two focus groups, a survey of 238 general aviation airports, and follow-up interviews with 42 survey respondents. The research revealed that diverse views exist about the nature, role, and value of an airport business plan. The research also indicated that budgets can be tight, staffing can be minimal, and resources can be limited at general aviation airports. Further, research participants at airports without an airport business plan seem to share a perception that developing and implementing a plan could be a complex and resource-intensive task. This Guidebook was created to help general aviation airport managers and policymakers gain a better understanding of (1) the value of an airport business plan, (2) the elements of an airport business plan, and (3) the process for developing and implementing an airport business plan. This Guidebook defines an airport business plan, discusses the interrelationships among the primary planning documents for airports, identifies the compelling reasons for an airport business plan, and provides step-by-step guidance for preparing the elements of an airport business plan. In addition, this Guidebook discusses best-practice approaches that simplify the process; provides real-world examples that bring the plan and the process to life; and contains easy-to-use resources, including worksheets and templates, that can be used by general aviation airport managers and policymakers as building blocks to develop and implement an effective business plan that can help maximize an airport’s financial self-sufficiency. 1.2 OVERVIEW OF THIS GUIDEBOOK This Guidebook is organized from both a process standpoint (i.e., what steps need to be taken to develop and implement an airport business plan) and a subject matter standpoint (i.e., what is the value of an airport business plan and what elements make up an airport business plan). As depicted in Figure 1-1, this Guidebook consists of 11 chapters (5 essential chapters and 6 resource chapters). General aviation is often described as all aviation with the exception of scheduled commercial air carriers and the military. General aviation flights are made for a wide variety of personal, business, commercial, and government purposes, including transporting passengers and cargo, giving flight instruction, engaging in aerial applications, making aerial observations, providing law enforcement, and performing emergency services. General aviation airports play a key role in the national aviation system. A general aviation airport is much more than infrastructure—it is an economic engine that facilitates the provision of vital air transportation and emergency services and serves as a gateway to the community. At most public-use, general aviation airports, airport managers and policymakers work to foster aviation development, encourage aviation activities, and generate revenue to help the airport be financially self-sustaining.

6 Guidebook for Developing General Aviation Airport Business Plans Figure 1-1: Essential and Resource Chapters ESSENTIAL CHAPTERS The essential chapters provide the basis for initiating the planning process and developing and implementing an airport business plan. An overview of each of the essential chapters follows: • Chapter 1: Introduction identifies the purpose of this Guidebook, provides an overview of this Guidebook, describes the use of this Guidebook, outlines the reasons for an airport business plan, and discusses the value of an airport business plan. • Chapter 2: Airport Business Plan provides an overview of an airport business plan, identifies and describes the primary planning and guiding documents, and discusses the interrelationships among the various documents. • Chapter 3: Airport Business Planning Process describes the process for preparing and developing an airport business plan, discusses the various approaches to planning, and provides information about best practices. This chapter also explores who should be involved in the planning process, the types of resources that may be needed, and the importance of communicating throughout the planning process. A checklist that can be used to guide the process is provided at the end of this chapter. • Chapter 4: Preparing the Elements of an Airport Business Plan discusses six of the principal elements (mission, vision, values, goals, objectives, and action plans) and each of the ancillary elements (executive summary, introduction, and appendix) of an airport business plan. The seventh principal element—budgets—is discussed in Chapter 11: Financial. This chapter also describes the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis used to identify the strengths and weaknesses of an airport, as well as the opportunities and threats it faces. To help with goal setting, this chapter explains the SMART (Specific, Measureable, Attainable, Relevant, and Time Bound) model for developing goals and the GROW (Goal, Reality, Options, Will) model for refining goals. Several worksheets are provided at the end of this chapter to help develop the principal elements of an airport business plan. • Chapter 5: Implementation describes a best-practices approach for implementing an airport business plan and identifies the keys to success, which include assuming full responsibility, being accountable, and taking ownership. This chapter discusses the importance of leadership, empowerment, and recognition. This chapter also outlines the Plan, Do, Check, Act process. •Chapter 1: Introduction •Chapter 2: Airport Business Plan •Chapter 3: Airport Business Planning Process •Chapter 4: Preparing the Elements of an Airport Business Plan •Chapter 5: Implementation Essential Chapters •Chapter 6: Airport and Market •Chapter 7: Organization •Chapter 8: Operations •Chapter 9: Marketing •Chapter 10: Aviation Products, Services, and Facilities •Chapter 11: Financial Resource Chapters

Introduction 7 RESOURCE CHAPTERS The resource chapters are provided to support the development of an airport business plan. Chapter 4 discusses the process of establishing goals, developing objectives, and formulating action plans. After goals have been established, the resource chapters can be referenced to help develop objectives in the relevant airport functional areas, which could include the airport and market, organization, operations, marketing, aviation products, services, facilities, and financial. Although this Guidebook devotes a chapter to each of the airport functional areas, only those portions of each chapter relevant to achieving the goals established for the airport need be consulted during the process of developing and implementing the airport business plan. An overview of each of the resource chapters follows: • Chapter 6: Airport and Market discusses the importance of having an intimate understanding of the airport, the community, the industry, and the market. This chapter provides guidance for examining the market from a macro to micro perspective, evaluating the competition, exploring market and customer segments, understanding key market drivers, and assessing demand and capacity for airport infrastructure and aviation products, services, and facilities. • Chapter 7: Organization discusses the various forms of airport ownership, governance, and management; the roles, powers, and responsibilities of airport sponsors, governing bodies, and managers; organizational structures; the role of management, policies, and systems; and the relationships among policymakers, airport management, and airport staff. • Chapter 8: Operations discusses key operational responsibilities (including inspections and reporting, safety and security, maintenance and repair, emergency operations, and wildlife management) and key operational areas (including staffing, vehicles and equipment, tools and materials, vendors and suppliers, and insurance). • Chapter 9: Marketing discusses the role and importance of marketing as a communications and implementation tool (that can be used to achieve goals), as a platform for reaching customers and stakeholders, and as a way to position an airport within the marketplace. This chapter also examines the Five Ps of marketing (i.e., product, price, placement, promotion, and people), discusses airport branding, and describes the steps for designing a marketing initiative. • Chapter 10: Aviation Products, Services, and Facilities identifies some of the most common aviation products, services, and facilities available at general aviation airports today. This chapter discusses the importance of determining the level of demand in the market and the capacity for meeting that demand at the airport. This chapter also outlines various approaches that can be used to meet the needs of customers and describes some of the actual and perceived advantages and disadvantages of each approach. • Chapter 11: Financial provides information to help facilitate the development of airport financial statements, budgets, and performance measures which are considered essential tools for achieving goals and realizing the mission and vision for the airport. In addition, this chapter discusses generally accepted accounting principles (GAAP), financial and accounting systems, financial controls, common financial departments, and typical funding mechanisms.

8 Guidebook for Developing General Aviation Airport Business Plans DIGITAL FILES Additional resources are provided in a set of digital files on CRP-CD-119. The digital files consist of four parts, as follows: • Part 1: Overview of the Guidebook and the Digital Files—A narrated, self-directed presentation providing an overview of the Guidebook and the digital files. • Part 2: Making the Case for an Airport Business Plan—A narrated, self-directed presentation discussing the reasons for and the value of an airport business plan. This part also includes a presentation template that can be customized for the airport, the market, and the audience. Once customized, the presentation can be used to educate, make the case for an airport business plan, and obtain buy-in from policymakers. • Part 3: Airport Business Planning Process—A narrated, self-directed presentation outlining a step-by-step approach for the preparation, development, and implementation phases of the airport business planning process. • Part 4: Worksheets and Templates—A digital collection of the Guidebook worksheets and templates that can be opened, modified, and saved for future reference or printing. CRP-CD-19 is also available as an ISO image on the TRB website. Search for ACRP Report 77 on the TRB website to find this ISO image. 1.3 USING THIS GUIDEBOOK To get started, it is recommended that the remainder of Chapter 1 and all of Chapter 2 (in this Guidebook) be read and Part 1 (of the digital files) be viewed. The discussion (in Chapter 3) about obtaining buy-in from policymakers—which is considered one of the most critical steps in the process—corresponds to Part 2: Making the Case for an Airport Business Plan of the digital files. Chapters 4 and 5 correspond with Part 3: Airport Business Planning Process of the digital files. The supplemental materials provided in this Guidebook (i.e., the glossary of terms and bibliography) can be referenced as needed and the resources provided in Part 4: Worksheets and Template of the digital files can be used to help facilitate the development of an airport business plan. A brief story has been included at the beginning of each chapter. The story, which helps set the stage for the chapter, is carried throughout the Guidebook. After reading Chapters 1 and 2 of the Guidebook and viewing Part 1 of the digital files, the airport business planning process can be initiated (based on the guidance provided in Chapter 3) and the elements of an airport business plan can be prepared (based on the guidance provided in Chapter 4). After the airport business plan has been prepared and approved, the implementation phase can be initiated (based on the guidance provided in Chapter 5).

Introduction 9 1.4 REASONS FOR AN AIRPORT BUSINESS PLAN There are several compelling reasons to have an airport business plan (see Figure 1-2). The survey of general aviation airports conducted for the development of this Guidebook revealed that airports with business plans are more likely than airports without business plans to • Generate more revenue • Reduce or eliminate expenses • Secure more capital funding • Rely less (or not at all) on subsidies • Create more jobs When more revenue is generated, more capital funding is secured, and more jobs are created, a general aviation airport is likely to have a greater economic impact on the community and provide a stronger platform for aviation development. Figure 1-2: Survey Results—Airports with Business Plans There is another compelling reason to have an airport business plan. Under Airport Sponsor Assurance #24, the FAA requires that any obligated (or AIP-funded) airport be as financially self-sustaining as possible given the circumstances that exist at the airport. One of the best ways to comply with Airport Sponsor Assurance #24 is to develop and implement an airport business plan that, at its core, demonstrates the ways airport management and policymakers are striving to be (or continuing to be) financially self-sustaining. Another compelling reason to have an airport business plan: There is an expectation that a general aviation airport will be operated and managed as a public enterprise; having a business plan demonstrates good stewardship by establishing goals, developing objectives, and formulating action plans, consistent with realizing the mission and vision for the airport. Generate more revenue Reduce or eliminate expenses Secure more capital funding Rely less (or not at all) on subsidies Create more jobs

10 Guidebook for Developing General Aviation Airport Business Plans As depicted in Figure 1-3, good stewardship challenges airport management to • Identify the assets that are (or will be) required to meet the needs of airport customers and stakeholders • Obtain and invest capital in the airport assets identified • Make the highest and best use of airport assets • Meet the needs of customers and stakeholders by providing quality airport infrastructure and improvements and ensuring the delivery of quality aviation products, services, and facilities at the airport • Maximize revenues and minimize expenses These challenges need to be met while maintaining compliance with the full range of Airport Sponsor Assurances (including, but not limited to, #5 Preserving Rights and Powers, #22 Economic Nondiscrimination, and #23 Exclusive Rights), a wide array of additional FAA requirements (including, but not limited to, FAA Order 5190-6B Airport Compliance Manual, Advisory Circular 150/5190-6 Exclusive Rights at Federally Obligated Airports, and Advisory Circular 150/5190-7 Minimum Standards for Commercial Aeronautical Activities), and numerous federal, state, and local regulatory measures applicable to general aviation airports. Figure 1-3: Airport Stewardship An airport business plan serves as a flight plan for being a good steward of airport assets. Identify assets required Obtain and invest capital in assets identified Make highest and best use of assets Meet needs of customers and stakeholders Maximize revenues and minimize expenses

Introduction 11 He who fails to plan is planning to fail. - Winston Churchill 1.5 VALUE OF AN AIRPORT BUSINESS PLAN An airport business plan is an important planning tool, a critical management tool, and a vital communications tool. As a planning tool, as depicted in Figure 1-4, an airport business plan • Articulates the mission, vision, and goals for the airport • Sets forth the objectives for achieving goals • Identifies the action plans for accomplishing objectives • Establishes the parameters for checking progress • Provides the basis for making adjustments—as needed—to achieve the goals and realize the mission and vision for the airport Figure 1-4: Value of an Airport Business Plan—As a Planning Tool As a management tool, as depicted in Figure 1-5, an airport business plan helps keep airport managers, policymakers, and stakeholders focused on achieving goals and realizing the mission and vision for the airport while providing an actionable plan for building on strengths, addressing weaknesses, capitalizing on opportunities, and managing threats. Most important, an airport business plan provides the framework for making informed, prudent, and defensible decisions concerning the operation and management of an airport. Articulates mission, vision, and goals Sets forth objectives for achieving goals Identifies action plans for accomplishing objectives Establishes parameters for checking progress Provides basis for making adjustments

12 Guidebook for Developing General Aviation Airport Business Plans Figure 1-5: Value of an Airport Business Plan—As a Management Tool As a communications tool, as depicted in Figure 1-6, the airport business planning process provides the opportunity for airport managers, policymakers, and stakeholders to engage in discussions about the current and future direction of the airport. Once implemented, an airport business plan provides the information needed to assist general aviation airport managers and policymakers in demonstrating the role and value of the airport to the local community (or increase awareness); justifying investment in the airport (or build support); or explaining the airport’s financial performance and position (or foster transparency). Figure 1-6: Value of an Airport Business Plan—As a Communications Tool 1.6 WRAP-UP This chapter identified the purpose of this Guidebook, provided an overview of this Guidebook, and described the use this Guidebook. This chapter also outlined the reasons for an airport business plan and discussed the value of an airport business plan as a planning, management, and communications tool. Maintains focus Keeps everyone on the same page Provides actionable plan Provides decision-making framework Provides opportunity for discussion Increases awareness Builds support Fosters transparency