Guidebook for Developing General Aviation Airport Business Plans (2012)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

19 CHAPTER 3 AIRPORT BUSINESS PLANNING PROCESS 3.1 Introduction 3.2 Process Overview 3.3 Buy-in 3.4 Approach 3.5 Planning Team 3.6 Communication 3.7 Resources 3.8 Wrap-Up 3.9 Worksheet 3.1 INTRODUCTION This chapter provides an overview of the airport business planning process and conveys a work plan that can be used to help facilitate the process. This chapter also discusses buy-in, which is considered one of the most critical steps in the process. The remainder of the chapter outlines various approaches for developing an airport business plan, identifies possible participants, describes potential assignments, discusses communication, and examines possible resources. 3.2 PROCESS OVERVIEW The process consists of three significant phases—preparation, development, and implementation. Each phase is discussed in this section. Most of the runway, the FBO, and the airport’s T-hangars could be seen from the airport manager’s office. A Cirrus SR-22TN had just landed; one of the airport’s maintenance technicians was mowing the grass near a row of T-hangars; and, one of the FBO’s line service technicians was directing an aircraft to a parking spot on the ramp. While contemplating this snapshot of airport activity, the airport manager began to think about the process of developing and implementing an airport business plan. The airport manager knew that the process was important and that it was going to take a team effort to succeed.

20 Guidebook for Developing General Aviation Airport Business Plans PREPARATION Consistent with a best-practices approach, an airport manager should take the following steps before developing an airport business plan: • Educate airport management and staff about the reasons for and the value of an airport business plan, the elements of a plan, and the process for developing and implementing a plan. • Obtain buy-in from policymakers—the presentation template provided in Part 2 of the digital files 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. • Determine whether to use an internal, external, or combination approach to develop the airport business plan. • Form the planning team and select a facilitator and a champion. • Brief the planning team about the reasons for and the value of an airport business plan, the elements of a plan, and the process for developing and implementing a plan. DEVELOPMENT Once the planning team has been briefed, the following steps should be taken to develop an airport business plan: • Develop mission, vision, and values statements • Conduct a SWOT analysis • Establish and prioritize goals • Identify the airport functional areas to be consulted • Develop and prioritize objectives • Formulate action plans and budgets • Draft, review, and finalize the plan • Obtain policymaker approval of the plan Each of these steps is discussed in detail in Chapter 4. IMPLEMENTATION After the airport business plan has been approved by policymakers, the following steps, which are consistent with a best-practices approach, should be taken to implement the plan: • Execute the plan (action plans) • Check progress and make adjustments • Report results to policymakers, the planning team, and stakeholders • Update, review, and finalize the plan • Obtain policymaker approval of the updated plan • Execute the updated plan (action plans) Each of these steps is discussed in detail in Chapter 5. The relationships among the preparation phase, development phase, principal elements, functional areas, and implementation phase are summarized in Figure 3-1.

Airport Business Planning Process 21 Figure 3-1: Phases, Principal Elements, and Functional Areas—Relationships Worksheet 3-1: Work Plan The Work Plan Worksheet, provided at the end of this chapter and in Part 4 of the digital files, can be used to assign actionable items to individual planning team members. 3.3 BUY-IN One of the most critical steps in the airport business planning process is obtaining buy-in from policymakers. The following steps are consistent with a best-practices approach for obtaining buy-in: • Arrange a meeting with policymakers • Identify (and strategize responses for) potential concerns and questions • Customize the presentation template (provided in Part 2 of the digital files) for the airport, the market, and the audience • Make the presentation at the meeting with policymakers—use the customized presentation to educate, make the case for an airport business plan, and obtain buy-in • Address potential concerns and questions • Obtain buy-in—before moving forward with the process Buy-in can be obtained informally or formally. Either way, buy-in should be documented and verified to ensure agreement among the parties involved. Without buy-in, it is difficult, if not impossible, to develop and implement a successful business plan. Preparation Phase •Educate airport management and staff •Obtain buy-in from policymakers •Determine approach •Form planning team •Brief planning team Development Phase •Draft, review, and finalize the plan •Obtain policymaker approval of the plan Principal Elements •Mission •Vision •Values •Goals •Objectives •Action Plans •Budgets Functional Areas •Airport and Market •Organization •Operations •Marketing •Aviation Products, Services, and Facilities •Financial Implementation Phase •Execute the plan •Check progress and make adjustments •Report results •Update, review, and finalize updated plan •Obtain approval of updated plan •Execute the updated plan

22 Guidebook for Developing General Aviation Airport Business Plans 3.4 APPROACH After obtaining buy-in from policymakers, the next step is to determine the best approach for developing the airport business plan. Each of the following options should be considered: • Internal approach—the airport business plan would be developed in-house by airport management and staff with support, input, and direction from policymakers and stakeholders. • External approach—the airport business plan would be developed by a consultant with support, input, and direction from airport management and staff, policymakers, and stakeholders. • Combination approach—a blend of the internal and external approaches. While completing an airport business plan using the internal approach may be cost-effective, it may not be efficient. In addition, if airport management and staff have limited time, the resulting business plan may not be as effective as it could be. In such a case, it may be necessary to enlist the help of outside resources. Using the external approach makes it possible to secure expert help and allows airport management and staff to focus on the day-to-day operation of the airport. However, this approach is more costly. The combination approach brings the internal and external approaches together. Airport management and staff are typically responsible for developing the airport business plan while a consultant provides guidance, support, and expertise. Under the combination approach, more time and effort is required from airport management and staff compared to the external approach; however, the combination approach is typically less costly than the external approach. The following additional factors may influence the choice of approach: • Knowledge of the airport, business, and political environment • Ability to envision the airport’s future • Industry and market knowledge • Understanding of the airport business planning process • Experience with goal, objective, and action plan development and implementation 3.5 PLANNING TEAM POTENTIAL PARTICIPANTS After the approach has been selected, the next step is to identify the people who will participate in the process. Participants should have diverse backgrounds, experiences, expertise, and interests. Ideally, on a collective basis, the members of the planning team would have a wide range of airport and business experience and planning expertise, as well as a comprehensive understanding of the operating environment. However, as the number of participants increases so can the challenges associated with coordinating and managing meetings, obtaining input from all participants, and resolving conflicting points of view. It is important for the airport manager to identify the best mix and ideal number of participants.

Airport Business Planning Process 23 The following list identifies some internal and external stakeholders who could be involved in the process: • Internal stakeholders—includes policymakers, the airport sponsor, advisory bodies, airport management, and airport staff from a range of departments such as administration, properties, operations, and legal. • External stakeholders—includes airport businesses, aircraft owners and operators; industry colleagues; community leaders and associations; aviation consultants, economic development organizations; local, regional, or state planning and transportation agencies (including state aviation agencies); chambers of commerce; educational institutions; and outside legal counsel. Potential participants are identified in Figure 3-2. Figure 3-2: Potential Participants Planning Team Policymakers Airport sponsor Advisory body Management and staff Customers Industry colleagues Community Aviation Consultants Economic development organizations Planning / transportation agencies Chambers of commerce Educational institutions Aviation legal counsel

24 Guidebook for Developing General Aviation Airport Business Plans The following questions can serve as a framework for identifying potential participants: • Who best understands the role and value of the airport to the community? • Who best understands the role and value of an airport business plan? • Who has prior experience with business planning (in general) and airport business planning (in particular)? • Who will most likely provide useful insight, input, and direction? • Who will most likely be able to stay involved throughout the entire process? Although many people may want to be involved in the process, the key is determining who needs to be involved. This can be accomplished by weighing each potential participant’s background, experience, expertise, and interests against the individual’s readiness, willingness, and ability to participate in the process. If a participant has a bias in a certain area, the bias needs to be disclosed and discussed. Participants with a conflict of interest, however, need to be excluded from the process. Additionally, individuals from a particular stakeholder group must be able to effectively represent stakeholder interests and present the consensus view of the group rather than a personal opinion. KEY PARTICIPANTS At a minimum, participants in the process should include representatives from the following groups: policymakers, the airport sponsor, advisory body, airport management, airport customers, and community leaders. Depending on the size of the airport, an effective planning team could consist of 5 to 15 people. Regardless of the number of participants, the planning team should have a facilitator and a champion. FACILITATOR A best-practices approach requires a facilitator to lead the planning effort. The facilitator could be the airport manager, a designated staff person, or an external advisor. The facilitator is integral to success and should be involved in every aspect of the planning process. CHAMPION A champion should be selected from the group as well. This individual, who is typically an internal team member, serves as the cheerleader for the process and is tasked with ensuring that stakeholders understand the reason for and the value of the airport business plan. In some cases, the facilitator and the champion may be the same person. The business plan needs a champion who can • Assess reality • Define issues, challenges, and problems • Articulate the mission, vision, and values • Build and lead a team • Develop systems that can be used to realize the mission and vision and maintain values • Motivate and inspire others • Solve problems • Orchestrate change

Airport Business Planning Process 25 ASSIGNMENTS After participants have been selected and briefed, tasks can be assigned to each member of the planning team based on the individual’s background, experience, expertise, and interests. Some examples of assignments include • Participating in meetings • Conducting research • Analyzing research findings • Developing draft documents • Reviewing draft documents and providing insight, input, and direction • Providing public relations support by promoting the process and the plan After assigning tasks, the next step is to develop a schedule for completing tasks. Consideration should be given to the following: • What is the overall schedule for the development and implementation of the plan? • How long will it take to conduct research or compile information? • How long will it take to analyze the findings of the research? • What are the key milestones in the process? • How often will members of the planning team meet? • How often will other stakeholders have the opportunity to participate in the process? Matching assignments to the background, experience, expertise, and interests of members of the planning team will help keep these individuals engaged, save time, and increase the likelihood of a good outcome. 3.6 COMMUNICATION Throughout the process, airport management must communicate, communicate, communicate. During the preparation phase, airport management must make the case for an airport business plan and obtain buy-in from policymakers before developing the plan. During the development phase, airport management must engage in discussions with interested parties while continuing to communicate the reasons for and the value of an airport business plan to policymakers, staff, planning team members, and stakeholders. During the implementation phase, airport management must keep policymakers, staff, planning team members, and stakeholders informed of progress being made toward achieving the goals established for the airport. It is important to have an effective public relations program, also known as a public information or community relations program. To gain support for an airport business plan, it is crucial to be able to explain the contribution of the airport to the community. This may include providing vital air transportation and emergency services, connecting the community to the nation and the world; generating direct and indirect economic benefits; and creating jobs. This ability to tailor and communicate this message clearly and consistently to various groups is critical to the success of the public relations program.

26 Guidebook for Developing General Aviation Airport Business Plans 3.7 RESOURCES LITERATURE There is a wide variety of literature available to the planning team. In addition to this Guidebook and the digital files, relevant literature includes • The Successful Business Plan: Secrets and Strategies, 5th edition, R.M. Abrams • The Business Planning Guide, 9th edition, D.H. Bangs • Business Plans Made Easy, D.H. Bangs • Essentials of Aviation Management: A Guide for Aviation Service Businesses, J.F. Rodwell, et al. • Write a Business Plan, U.S. Small Business Administration • Creating a Business Plan: Expert Solutions to Everyday Challenges, Harvard Business School Additional materials may be available from industry colleagues, aviation consultants, economic development organizations, planning and transportation agencies (including state aviation agencies), chambers of commerce, educational institutions, the U.S. Small Business Administration (SBA), the Small Business Development Center (SBDC), and the Service Corps of Retired Executives (SCORE). Some of the most relevant FAA materials include • Airport Sponsor Assurances • FAA Order 5190-6B Airport Compliance Manual • Advisory Circular 150/5190-6 Exclusive Rights at Federally Obligated Airports • Advisory Circular 150/5190-7 Minimum Standards for Commercial Aeronautical Activities • FAA General Aviation Airports: A National Asset In addition, ACRP has published some reports that may provide helpful information—particularly as it relates to the airport functional areas—including • ACRP Report 16: Guidebook for Managing Small Airports • ACRP Report 19: Developing an Airport Performance-Measurement System • ACRP Report 20: Strategic Planning in the Airport Industry • ACRP Report 28: Marketing Guidebook for Small Airports • ACRP Report 47: Guidebook for Developing and Leasing Airport Property • ACRP Report 66: Considering and Evaluating Airport Privatization • ACRP Synthesis 10: Airport Sustainability Practices • ACRP Synthesis 19: Airport Revenue Diversification • ACRP Legal Research Digest 7: Airport Governance and Ownership • ACRP Legal Research Digest 11: Survey of Minimum Standards: Commercial Aeronautical Activities at Airports

Airport Business Planning Process 27 Plans are nothing. Planning is everything. - President Dwight Eisenhower FUNDING The level of funding required to develop an airport business plan will depend on the extent of external involvement. After the approach has been determined and participants have been identified, a budget needs to be developed to cover costs. In addition to internal funding, various external sources could provide funding for the development of an airport business plan, including economic development organizations, planning and transportation agencies (including state aviation agencies), private donors, and local financial institutions. 3.8 WRAP-UP This chapter provided an overview of the airport business planning process, conveyed a work plan that can be used to help facilitate the process, discussed buy-in, outlined the various approaches for developing an airport business plan, identified possible participants in the process, described potential assignments, discussed communication, and examined possible resources. The importance of the process cannot be overemphasized. 3.9 WORKSHEET • Worksheet 3-1: Work Plan

28 Guidebook for Developing General Aviation Airport Business Plans Task Ch ap ter As sig ne d to Du e D ate Co mp leti on da te Essential Chapters Preparation Educate airport management and staff 3 Obtain buy-in from policymakers 3 Determine approach (internal, external, or combination) 3 Form the planning team 3 Select facilitator 3 Select champion 3 Brief the planning team 3 Assign tasks to planning team members 3 Chapters of the guidebook 3 Parts of the digital files 3 Development Develop/update mission, vision, and values 4 Conduct/update SWOT analysis 4 Establish preliminary goals 4 Ensure consistency with SMART and GROW models 4 Organize and prioritize goals 4 Identify the airport functional areas to be consulted 4 Develop preliminary objectives 4 Organize and prioritize objectives 4 Formulate action plans and budgets 4 Draft, review, and finalize the plan 4 Obtain approval of the plan 4 Implementation Execute the plan (action plans) 5 Check progress and make adjustments 5 Report results 5 Progress report 5 Update, review, and finalize the updated plan 5 Obtain approval of the updated plan 5 Execute the updated plan (action plans) 5 Resource Chapters Develop airport overview 6 Develop community overview 6 Develop industry overview 6 Develop market overview 6 Develop competition overview 6 Assess demand and capacity 6 Products 6 Services 6 Facilities 6 Infrastructure 6 Identify deficiencies 6 Develop organizational chart 7 Identify roles, responsibilities, and authority of all parties 8 Identify obligations 8 Identify limitations, restrictions, or prohibitions 8 Identify staffing 8 Identify vehicles, equipment, tools, and materials 8 Develop marketing initiatives 9 Target audience 9 Message 9 Tactics 9 Tools 9 Develop statement of capital assets 11 Develop statement of financial activities 11 Develop statement of cash flows 11 Develop operating budget for the airport 11 Develop capital budget for the airport 11 Identify performance measures (operational and financial) 11 WORKSHEET 3-1: WORK PLAN CHAPTER 3: AIRPORT BUSINESS PLANNING PROCESS This work plan identifies actionable items and provides a place to identify the targeted and actual completion dates for each task. This work plan provides a systematic checklist that can be used to guide the preparation, development, and implementation phases of the process.