How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging (2019)

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.

41 This study includes five case examples, selected from airports ranging from non-hub to medium-hub airports and representing a broad range of airline upgauging scenarios and operations planning practices. According to the survey, the magnitude of impacts from airline upgauging seems to be relatively limited at large-hub airports compared with other challenges and considerations, especially regarding their long-term planning and capital programming efforts. For this reason, no case example presented in this chapter includes a large-hub airport. Case examples 1 through 3 represent airports that have recently experienced a consider- able growth of passenger traffic due to new airlines service and increase of aircraft size: they include two non-hub facilities, PGD and BLV, and one small-hub airport, IWA. Each of these three airports has individually experienced different challenges: • PGD: The project team’s country-wide airport enplanements data analysis identified PGD as the fastest-growing airport in terms of commercial service between 2011 and 2016. PGD started commercial service in 2008, but its major increase occurred recently from 2013 (143,000 enplanements) to 2016 (518,000). The airport is currently in a master plan process to determine its short-, medium-, and long-term needs and to identify solutions to keep accommodating traffic growth. • IWA: The airport has always had commercial service, essentially through charter airlines. In 2008, Allegiant started scheduled service and immediately increased its destinations and frequencies. While PGD has experienced its major growth recently (400% between 2011 and 2016), IWA has grown its traffic in a different period (2008 to 2013, from 160,000 to 762,000), and had now maintained a sustainable volume around 700,000 since 2013. IWA has completed its first major capacity expansion program and its master plan process. While IWA now has sufficient capacity for its immediate needs, it has developed a clear medium- and long-term strategy for the development of the airport. • BLV: Since 2005, the airport has experienced both successful and unsuccessful time periods. In 2005, the airport started to be approached by airlines to start service and as a result, made significant investments to accommodate these airlines. However, due to the recession in 2008/2009 and a number of airlines going bankrupt, the airport saw its number of passengers going down. As a result, BLV did not have any commercial service for two years (2011/2012). In 2013, the airport was approached again by airlines, and traffic has been significantly increasing since then. BLV passed 70,000 enplanements in 2016 and was expected to double this number in 2017. This dynamic condition has put the airport in a situation in which strategic planning is necessary. However, the challenge for the airport is to develop a flexible plan based on experience and lessons learned from previous disillusionment. Case Example 4 involves the medium-hub airport PIT, which has experienced a significant dehubbing scenario in the mid-2000s, with US Airways making the decision to move its hub C H A P T E R 4 Case Examples

42 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging operations to other airports. After a long period of downgauging and loss of service, PIT has decided to bet on innovation and customer experience to change its mission and provide a new type of facility to the airlines and its community. PIT is now home of a diversified group of airlines, including low-cost and international carriers. PIT provides its community with a high passenger experience and connectivity to many markets. Between 2014 and 2016, traffic was going up, and the airport recently announced the start of a major terminal modernization program, focusing on quality of service, cost efficiency, and flexibility. Finally, Case Example 5 involves a cargo-dedicated airport, with the objective to identify any differences in the issues and challenges between passenger and cargo growth. LCK, with strong support from its community, has been successful in significantly developing its cargo activity since 2008. The airport has particularly developed its international traffic and is now home to many cargo airlines and operators. The airport is currently upgrading its facilities to accommodate ADG-VI aircraft and is in the process of completing its master plan update. Case Example 1: Punta Gorda Airport PGD is a public airport located 3 miles southeast of the city of Punta Gorda, in Charlotte County, Florida. Since 2008 and the arrival of Allegiant Air, PGD has experienced a significant increase of commercial traffic from 36,000 enplanements in 2008 to 518,000 in 2016, which has triggered various important developments at the airport. This case example is based on an interview with James Parish, PGD’s chief executive officer, his responses to the survey, and publicly available information, including the airport’s website and master plan white papers (www.flypgd.com) as well as an article published in Airport Improvement magazine (Richards 2015). Background/Commercial Service at PGD Prior to 2007, PGD had no commercial service since 1985, when Southwest Florida Inter- national Airport (RSW) opened approximately 30 miles away. In 2007, the airport resumed Airport Characteristics NPIAS Category: Non-Hub Airport Governance: Charlotte County Airport Authority (CCAA) Part 139: Yes Number of Operations: 67,694 (2016, source: FAA Air Traffic Activity System [ATADS]) Number of Enplanements: 518,903 (2016, source: FAA Terminal Area Forecast [TAF]) Recent Traffic Growth (2009–2016) Enplanements 2009–2013: +33.4% CAGR* 2013–2016: +53.4% CAGR* *CAGR: Compound Annual Growth Rate

Case Examples 43 Comparison to Socioeconomic Factors (2009–2016) Gross Domestic Product (GDP) 2009–2013: +1.5% CAGR* 2013–2016: +7.6% CAGR* From 2009 to 2013, GDP showed a relatively limited growth (recovery period from 2008/2009 economic recession). The increase of enplane- ments for that period has primarily come from the arrival of Allegiant Air and the increase of destinations and flight frequencies. After 2013, when GDP started to increase at a faster rate, the positive effect on enplanements growth at PGD can be observed on the graph. Population 2009–2013: +0.8% CAGR* 2013–2016: +2.6% CAGR* The same observation can be made regarding the population, showing a relatively lower growth from 2009 to 2013, and a more significant increase from 2013 to 2016 in the Punta Gorda metropolitan statistical area, which may have been one of the key drivers of recent traffic growth at PGD. Sources: – Enplanements: FAA TAF – Gross Domestic Product: Bureau of Economic Analysis – Population: U.S. Census Bureau *CAGR: Compound Annual Growth Rate scheduled commercial service with the carrier Skybus Airlines (with three flights a day). Skybus was, at the time, seen as an ultra-low-cost airline modeled after the European airline Ryanair. Skybus’s business model revolved around offering low-cost tickets, made possible by flying routes to where other airlines did not have direct flights, especially into secondary airports with low traffic volumes. However, less than a year later, Skybus announced that it would cease operations effective April 2008 and filed for bankruptcy. Airline service into PGD resumed on November 22, 2008, when LCC Direct Air began twice-weekly service to 10 cities in the eastern United States. On December 2, 2008, another low-cost airline, Allegiant Air, also announced it would open a new focus city at PGD and began McDonnell Douglas MD-80 flights to Greenville, South Carolina, and Knoxville, Tennessee, on March 5, 2009. Thereafter, a third airline, Vision Airlines, commenced weekly flights to Northwest Florida Regional Airport.

44 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging Vision Airlines and Direct Air ended all service to PGD in 2012. Shortly after termination of Direct Air’s service to PGD, Allegiant grew its PGD presence from three to seven cities and started basing aircraft at the airport on a full-time basis. See https://en.wikipedia.org/wiki/ Punta_Gorda_Airport_(Florida). Allegiant continues to grow at PGD; by the end of 2017, Allegiant had service to 40 destina- tions from PGD. See http://www.flypgd.com/airlines. In addition to increasing the number of destinations and frequencies, the airline has progressively changed its fleet from MD-80s to A319s and A320s. Air Service Development/Drivers for Demand Increase PGD has relied significantly on industry events to both identify potential relationships with new airlines and to market the airport. The airport originally met with Direct Air through an airlines-airports “speed dating” event: the JumpStart Air Service Development Conference organized by ACI–NA. Following that event, PGD met with Allegiant through investor confer- ences and relationship-building events. Substantial follow-ups are generally required during that process, and detailed marketing information needs to be prepared to be able to attract new airlines. For PGD, extending financial incentives to airlines plays a key role in the airport’s ability to offer itself as an attractive package. The competition in the region is substantial, including with the Fort Myers and Sarasota airports, which have facilities particularly well suited to accommo- date commercial traffic. Initially, when it started negotiations with Skybus, PGD was highly cost-competitive because the construction of the new terminal did not cause any debt for the airport. PGD was able to offer Skybus an agreement that included waived turn fees for the first 3 years, and then fees decreasing with increasing activity. After the Skybus bankruptcy, the airport offered the same type of agreement to other airlines: turn fees decreasing with increasing activity. Under this arrangement, the airport would primarily get revenue from auto parking and rental car companies. It should be noted that the FAA Air Carrier Incentive Program Guidebook provides guidance to airport sponsors interested in offering promotional incentives to attract new air carrier service at federally obligated facilities. Another unique key factor for PGD’s attractiveness is its geographical location, next to interstate I-75 with minimum connection times to Sarasota in the north and Fort Myers in the south. Terminal Capacity Increase and Developments— Issues, Challenges, and Solutions Initial Situation—Commencement of Commercial Service With respect to the initial terminal development that was required for Skybus, the airport was in a unique situation. Three years before, in 2004, the airport was hit by Hurricane Charley and lost its entire terminal facility. After the hurricane, the airport had to plan a new terminal and originally contemplated that it would have to accommodate commercial service operated with regional jets only. However, when it started discussions with Skybus in 2006, the airport’s main operating assumptions changed completely because the airline was operating a fleet composed of MD-80s and Airbus A319s. Under its original plans, the airport had limited options to accommodate

Case Examples 45 Skybus’s aircraft. The airport, therefore, had to go back to square one and rework its planning/ design effort to build the appropriate facility for Skybus’s operations. The primary goal for the airport was to build a functional and inexpensive facility. This resulted in the construction of a 16,000 sq. ft. single-story terminal building with two gates (see Figure 22). From the standpoint of capital investment, the airport was able to build the new terminal without incurring debt. The construction was financed principally by the insurance proceeds of claims filed in connection with the 2004 hurricane and additional funding from the Florida DOT. The Florida Department of Transportation (FDOT) has a vigorous facility development program intended to support planned airport improvements that would result in economic benefits to local communities and to the state as a whole. The FDOT provides funding of up to 80% of costs for terminal and landside developments. On the other end, there was no funding from the FAA available for the airport to construct the new terminal. The primary reason behind the lack of FAA funding was that the airport did not have any track record of commercial service at the time, which was a requirement for the FAA to fund this type of project. Terminal Development Plans for Rapid Traffic Growth: Short- and Mid-Term Solutions In 2010/2011, the airport started to consider options to expand the terminal. Allegiant’s operations grew significantly, increasing to 10 cities with twice-a-week service. To accommodate the immediate needs of airlines, the airport decided to consider the construction of a modular building to provide temporary holdrooms. The building was completed in 2014; it was created by joining seven 58-foot trailers together and was able to seat 300 people (see Figure 23). The modular building gave the airport an opportunity to accommodate traffic growth while planning for a more consequential terminal building expansion. To fund the new construction project, the airport was able to combine both federal and state grants, because the airport had been upgraded to a “Primary Commercial Service” airport by the FAA in the 2011–2015 NPIAS. However, it was still a challenge to get the FAA on board Figure 22. New terminal building at PGD Airport (Source: Google Earth 2008).

46 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging because the recent activity growth at PGD did not fit the FAA model. According to Parish, at that time “the FAA model for small hub or non-hub airports was written in the early ’80s and it doesn’t really fit an origination/destination type airport. It fits an airport that’s part of a hub and spoke (system)” (Richards 2015). For this reason, the airport had to develop its own analysis to satisfy the need requirement and obtain FAA approval. The airport used a modeling tool and recommendations from ACRP to demonstrate need to the FAA. The overall expansion project included a 40,000 sq. ft. terminal addition as well as renovation of the existing 16,000 sq. ft. terminal (see Figure 24). The renovated building included ticketing, TSA, and bag screening, as well as two gates and holdrooms. The expansion included four new gates and holdrooms for a total of six gates. None of the gates have jetbridges. Discussions between airport management and the local community were held to reach a consensus on the final design of the building. The local community was interested in providing jetbridges to improve the passenger level of service. However, the airport and the airline were concerned that jetbridges and the addition of a second level would generate prohibitive cost increases. For this reason, a simpler design was adopted with a view to keeping costs down, both for the airport and the airlines. The final project cost amounted to $8.6 million. The FAA funded 70% of the cost, while the remaining 30% was covered by the state and the airport. In general, according to the airport, state funding is complementary to FAA funding. FDOT can fund non-aeronautical revenue generating facilities such as auto parking and rental car facilities, which are drivers for economic development. Other Airport Needs and Challenges Airside/Reliable Access As part of the increase in commercial service at the airport, the need for instrument approaches began to be raised by the airlines, to ensure accessibility to the airport during bad weather conditions. The airport initiated discussions with the FAA regarding the installation of an Modular Building (4,500sf) For Temporary Holdrooms Figure 23. Modular building at PGD Airport (Source: Google Earth 2014).

Case Examples 47 instrument landing system (ILS) on the main runway. Under its then-current policy, the FAA considered alternatives to the ILS, such as the implementation of satellite/GPS approaches. For this reason, the airport was not able to get funding from the FAA for the installation of an ILS. However, the fleet of Allegiant Air was primarily composed of MD-80s that did not have the capability to fly GPS approaches. To be able to improve its access reliability, and to maintain its growing commercial service, the airport took the initiative to buy, build, and operate its own ILS. Because of FAA standards and requirements for ILS procedures, the airport had to build a full parallel taxiway to the relevant runway. The full parallel taxiway was funded by the FAA with entitlement and discretionary funds, as it was part of a set of high priorities for the FAA. However, the taxiway was designed for use by GA aircraft only, not by the commercial airplanes. Air Traffic Control Another challenge that arose during the period of commercial activity growth was the availability of air traffic control and the extension of control hours. PGD currently has a contract control tower. The fact that it is a contract control tower may involve some challenges because the airport needs to coordinate with both the FAA and the contractor. However, the airport noted that it currently has a highly satisfactory and reliable relationship with the contractor, which is particularly valuable when any change of operations is needed. 2016 Figure 24. Terminal building extension at PGD Airport (Source: Google Earth 2016; terminal map from www.flypgd.com).

48 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging General Aviation Demand Even though this study focused on the challenges associated with rapid growth of commercial aviation at airports, it was noted during the interview that strong GA demand generally com- pounds those challenges. The airport has to manage development and capital programming priorities to meet the needs of all stakeholders and airport users: airlines, GA users, as well as expectations from the local community. For instance, PGD built 95 new t-hangars in 2005. At that time, 80 of them were empty. As of today, all of them are rented, and the airport currently has 80 applicants on the waiting list. The major driver for this demand is the number of retirees, which increases every year in the region and in Florida in general. The airport expects the demand at PGD to remain high for the next 10 to 15 years, while the FAA TAF shows a moderate growth of 2% to 3% for the airport based on the national trends. These different visions from the airport and the FAA are a challenge for the airport when funding is needed. Rental Car Facilities With auto parking, RACs constitute a primary source of revenue for the airport. At PGD, the consolidated rental car facilities were recently expanded, but the airport still has an overall shortage of capacity. The site currently provides 300 spots while the rental car companies’ inventory shows approximately 1,400 cars. It is a major problem for the companies because they need to find additional parking capacity in the vicinity of the airport. The airport does not charge rental car companies for operating the building. Recently, new long-term agreements were signed with rental car companies, in the hopes of encouraging them to invest in their own facility, such as adding car washing facilities. Transportation Network Companies The arrival of TNCs at PGD primarily affects the local taxi business. As of now, the airport has not observed any major impacts on the rental car companies’ business. The airport recently signed an agreement with Uber and Lyft. The main challenge for the airport is coordination/communication because TNC drivers are third-party contractors rather than direct partners. The actual TNC representatives are not local; they are based in offices located in Miami. Long-Term Planning (Master Plan Effort) Due to its significant traffic increase, the airport launched in September 2016 a comprehensive master plan update, which was scheduled for completion by the end of 2018. The study is funded by the FAA, the FDOT, and the Charlotte County Airport Authority. Because the commercial activity at PGD is recent, the airport does not fit the FAA’s traffic forecast model. The FAA model uses a national average of 2% to 3% growth while the airport has grown 20% to 30% annually for the past few years. For this reason, the original airport forecast developed as part of the master plan was too far from the FAA TAF and did not meet the FAA criteria. After coordination and discussions with the FAA, the consensus was reached to use the FAA TAF forecast for the 20-year planning horizon of the master plan. However, to mitigate the risk associated with uncertainty in traffic forecasting, planning activity levels (PALs) were identified and used during the terminal planning process (see Figure 25). PALs enable airport management to properly plan for future demand regardless of when specific levels of demand actually occur. This practice is particularly important for PGD in the near term

Case Examples 49 in case the actual growth of passenger enplanements and aircraft operations would be greater than the master plan forecast. Relationship/Communication with Airline Partners, FAA, and the Community Airlines Originally, for the Skybus transaction, the airport started negotiations with the airline about 15 months prior to its planned start of service. That extensive period of time was essential for the airport to appropriately plan and design the terminal facility to accommodate the airline’s operations. FAA As previously discussed, the airport has experienced various challenges in its coordination with the FAA in terms of definition of needs and funding. These situations required the airport to take initiatives to justify its vision of the airport’s future, including the following: • Finance and construct the new terminal in 2007, without any federal funding. • Buy, build, and operate its own ILS equipment. • Develop flexible plans as part of the master plan process to meet the FAA requirements and also to prepare the airport for unforeseen events and potential deviations from the master plan forecast. 120,000 100,000 80,000 60,000 40,000 20,000 0 Existing PAL 1 PAL 2 PAL 3 PAL 4 Existing Future Figure 25. Terminal baseline space requirements—PGD Master Plan Update (Source: Charlotte County Airport Authority 2017).

50 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging Regarding the National Environmental Policy Act process, the airport master plan effort has included an environmental assessment for the short-term development plan. Some differences have been observed by the airport in the interpretation of the regulations and requirements for an environmental assessment between the airport and the FAA. These differences can sometimes make the implementation of plans longer than initially planned by the airport. Community—Noise Impacts The airport has a noise tracking system with a phone number for the public to report any significant noise impact or concerns. The airport noted that the new generation of aircrafts, such as the A320, are much quieter than the older MD-80s and even some of the GA aircraft. The local community is cognizant of the fact that new technologies allow aircraft to be quieter. However, there is always the assumption that aircrafts will fly over homes, and for this reason, the airport will always have to communicate with its local community on concerns related to noise impacts. As part of the discussion, it is important to educate the public on some of the benefits of the airport for the community, including economic benefits such as employment. Lessons Learned Planning, capital programming, and risk assessment: How can airports develop a flexible plan and mitigate potential risks associated with the uncertainty from demand and airlines’ plans? The airport provided the following experiences and recommendations: • Each airport needs to look at its ability to build a new terminal and pay for the initial costs, but each airport also needs to think about operations and maintenance (O&M) costs. For instance, the new terminal at PGD was built with no columns, providing a clear span, to be more flexible if any changes are required inside the building. After Skybus left, the terminal stayed empty for 9 months. However, the fact that the airport did not overspend in its first terminal development project, with no major debt to reimburse during that 9-month period, allowed PGD to avoid a financial situation that would dictate its strategic choices. • Airports are advised to develop flexible plans as part of the master plan process to meet the FAA requirements and also to prepare the airport for unforeseen events and potential deviations from the master plan forecast. The use of PALs rather than milestone years is particularly helpful when the airport’s original forecast differs from the FAA forecast. • Relationship building and communication with local community is key, particularly when the airport is experiencing a period of growth or loss of service. The airport must make sure that it communicates effectively with the community to illustrate and gauge community members’ expectations. Case Example 2: Phoenix-Mesa Gateway Airport IWA is a reliever airport for Phoenix Sky Harbor International Airport. It is located in the southeastern area of Mesa, Arizona, and 20 miles southeast of Phoenix. Since 2007 and the arrival of Allegiant Air, IWA has experienced a significant increase in commercial traffic, from 14,500 enplanements in 2007 to 704,000 in 2016, which has triggered various important developments at the airport. This airport case example is based on an interview with Margi Evanson, the airport’s director of operations and maintenance; responses to the survey; and publicly available information, including the airport’s website and master plan (http://www.gatewayairport.com).

Airport Characteristics NPIAS Category: Reliever Airport Governance: Phoenix-Mesa Gateway Airport Authority (PMGAA) Part 139: Yes Number of Operations: 250,778 (2016, source: FAA ATADS) Number of Enplanements: 704,616 (2016, source: FAA TAF) Recent Traffic Growth (2007–2016) Enplanements 2007–2012: +115.8% CAGR* 2012–2016: +0.8% CAGR* *CAGR: Compound Annual Growth Rate Comparison to Socioeconomic Factors (2007–2016) Gross Domestic Product (GDP) 2007–2009: −4.9% CAGR* 2009–2012: +3.3% CAGR* 2012–2016: +4.1% CAGR* GDP for the Phoenix-Mesa metropolitan statistical area was decreasing for the period 2007–2009 (due to the 2008/2009 economic recession) while enplanements at IWA were significantly increas- ing. On the other end, for the period 2012–2016, enplanements seem to have stayed relatively stable while GDP was growing +4.1% on average every year. This seems to indicate that GDP growth and enplanements are not strongly correlated in the case of IWA. As discussed with the airport during the interview (see next pages), passengers flying from/to IWA are primarily leisure travelers who have enjoyed competitive fares offered by Allegiant Air since 2007. Population 2007–2012: +1.5% CAGR* 2012–2016: +1.9% CAGR* Both population and enplanements have been growing since 2007. However, enplanements seem to have remained relatively stable since 2013, while population of the metropolitan area has kept increasing. Sources: – Enplanements: FAA Terminal Area Forecast (TAF) – Gross Domestic Product: Bureau of Economic Analysis – Population: U.S. Census Bureau *CAGR: Compound Annual Growth Rate

52 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging Background/Commercial Service at IWA Prior to October 2007, the airport had only air charter service once or twice a month with seasonal traffic. One airline offering charter service, Allegiant, was already in operation. In addition, Western Air and Vision Air (based in Las Vegas) were providing some sporadic charter flights as well but no “true” commercial service. Allegiant Air service began in October 2007 to 14 destinations in the country. In 2012, both Frontier and Spirit Airlines started service at IWA with daily flights. However, both airlines ceased operations less than a year after. Spirit decided to relocate its operations to the nearby Phoenix Sky Harbor International Airport. By the end of 2013, Allegiant Air was the only airline at IWA. In January 2017, Phoenix-Mesa welcomed its first international flights from WestJet Airlines, connecting IWA to Calgary and Edmonton, Alberta. Both destinations are operated on a seasonal basis only. They are listed as preclearance locations by the U.S. Customs and Border Protection (CBP) that do not require Federal Inspection Services (FIS) at Phoenix-Mesa. By the end of 2017, Allegiant had increased its destinations and flight frequencies to a total of 44 cities in the country. In addition, the fleet type was changed from 166-seat MD-80s to 150-seat A319s. Air Service Development/Drivers for Demand Increase ASD was a multiyear effort at Phoenix-Mesa, undertaken to attract its first airline and get scheduled commercial service. The key factor in IWA’s attractiveness was to keep costs down for airlines, to attract LCCs. The goal of the airport was not to compete with Phoenix-Sky Harbor—a partner airport for IWA. Phoenix-Mesa tailored its ASD and incentives program to attract low-cost airlines, which are more likely to operate non-daily departures, and irregular/ intermittent schedules. This is a niche market for IWA. The airport’s Air Service Incentive Program is updated on a regular basis and is accessible to all airlines on the airport’s website. The following policy statement is provided by the airport authority (Appendix E of this synthesis): It is the desire of Phoenix-Mesa Gateway Airport Authority (“PMGAA” or “Authority”) to establish and implement a robust, consistent, responsible, and non-discriminatory Air Service Incentive Program. The program is applicable to incumbent, new direct, and indirect carriers and operators, and complies with Federal Aviation Administration rules, regulations, and policies. The program details the requirements needed for airlines to be eligible for the program and the types of incentives the authority may provide with regard to the following three cases: • New nonstop markets • Additional nonstop service to underserved markets • Maximum revenue guarantee The type of incentives can be in the form of landing and terminal use fees waivers or pro- vision of marketing and facility “fit out” assistance. As per the FAA guidebook, incentives are negotiated by market and frequency of service. In addition to keeping the costs down for airlines and providing financial incentives, Phoenix-Mesa relies on the fact that the region is a destination location. There are limited business travelers; the vast majority are leisure travelers. In particular, the Phoenix area and surrounding cities, including Mesa, are the “second home” to multiple Major League Baseball teams during Spring Training. The busiest month for the airport is March. State, city, and airport

Case Examples 53 efforts are coordinated to promote Spring Training and the Cactus League activities. With the low prices offered by Allegiant, this season is a key factor for the airport to maintain sustainable commercial service in the long term. Terminal Capacity Increase and Developments— Issues, Challenges, and Solutions Initial Situation—Commencement of Commercial Service In 2007, when Allegiant started scheduled service, the airport had adequate terminal facilities. The airline was operating twice a week on the four existing gates. However, after 6 to 9 months of operation, Allegiant announced to the airport that it was planning to increase service from IWA. Terminal Development Plans for Rapid Traffic Growth: Short- and Mid-Term Solutions The airport then started to develop a plan to accommodate traffic growth. The plan was split into three phases: • Phase 1 (2009): 12,000 sq. ft. modular building to add four more gates and concessions. • Phase 2 A/B (2012): main terminal building expansion. Four-gate expansion and additional restaurant/concession space airside, expanded baggage claim (two flat plate carousels). TSA checkpoint with four lanes, which was designed to expand to a six-lane checkpoint. The original building was maintained and renovated for expanded ticket counters and baggage make-up. • Phase 3 (2013): That phase consisted of an additional 15,000 sq. ft. building extension to the north, including two more gates, concessions, and an airside courtyard. After completion of this final expansion, the airport has now a total of 10 gates available, and the total terminal area is approximately 95,000 sq. ft. For the initial development of the modular building, the airport borrowed the capital from Allegiant and then paid the principal and interest as a short-term loan. Once regular commercial activity started at IWA, the airport obtained grants from the FAA (for new buildings in 2012/2013) and the Arizona Department of Transportation. The largest building expansion, Phase 2, was actually built in two smaller phases, each one based on a different grant. The second half was open 1 year after the first half. It was a continuous development, and everything was built just in time to accommodate progressive increases of traffic. Despite busy periods of activity, there is still available terminal capacity. The primary issue when airlines want to use terminals is that they generally want to fly during the same time of the day. For example, flights usually leave in the morning between 6 a.m. and 8 a.m. IWA cur- rently has nine departing flights during that 2-hour period. After that, there is no activity until approximately noon. In terms of potential future development, the ramp is long enough to add two more aircraft stands. However, the walking distances from the terminal would be too long for the passengers. There are no jetbridges in use at IWA. Other Airport Needs and Challenges Airside/Reliable Access In terms of airside capacity, the airport has three runways, each around 10,000 feet long. The airport can accommodate any type of commercial aircraft up to but not including ADG-VI aircraft, such as the A380.

54 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging The main impact on the airside from the increase of airline traffic is the need for RON stands. Because most of the flights arrive in the evening and leave in the morning, some extra aircraft parking capacity is needed to support the terminal activity. Depending on the season, between eight and 12 aircraft can be based at IWA. The airport had to resurface the RON stands in 2009/2010. However, no particular location issues currently exist (the airport has sufficient available space in proximity of the terminal), which makes apron operations (aircraft towing) easier. Air Traffic Control According to FAA ATADS data, IWA currently has the busiest contract ATCT in the nation (250,778 total movements in 2016, including 11,239 air carrier operations, according to FAA ATADS). Because of the increase in commercial activity and requests from airlines, the airport initiated coordination with both the contractor and the FAA to increase air traffic control hours. Since 2007, the airport has requested two increases in covered hours: initially to extend closing from 9 p.m. to 10 p.m., then to expand both in the morning and at night to provide control from 5 a.m. to noon. The airport must engage in a great amount of coordination. It is up to the airline (under their operations specifications, or OpsSpecs) to determine if it can operate into an airport without air traffic control services, but it generally does not expand flight schedules without it. The airport needs to initiate the process with the FAA and with the contractor if it wants to get the extended commercial service from the airlines. The airport needs to build a solid case to the FAA to justify the need for the increase in hours. The process generally takes 3 to 4 months, or longer. The fact that the airport has a contract tower may involve more coordination challenges, since the airport is coordinating with both the FAA and the contractor instead of one organization. However, the coordination process with the FAA alone can take some time. One challenge in the case of IWA is that the FAA Air Traffic Organization office that oversees the Phoenix area is based in Seattle, Washington. In all cases, the contractor needs to approve the request before the case is submitted to the FAA; since it increases the contractor’s expenses, the change must be approved through the FAA Contract Office. Long-Term Planning (Master Plan Effort) The most recent master plan for the airport was completed in 2008 and was mostly based on assumptions and analysis done before the major increase in traffic that the airport experienced from 2008 to 2012. In 2012, the airport unveiled a major redevelopment program titled Gateway 2030, A Vision for the Northeast Area Development. The specific objectives influencing the plan are associated with four distinct goals categories: • Surface Infrastructure (e.g., “Ensure easy access with multiple layers of transportation access and modes.”) • Economic Development (e.g., “Proactive economic development efforts to maximize opportunities—both Airport and private.”) • Aviation/Airport Related (e.g., “Fundamental implementation plan supporting staged growth”) • Lifestyle Oriented (e.g., “Clear, strong identity—a positive Sense of Place & Community”) To keep accommodating the major commercial service growth forecast for the next 20 years, the airport outlined four distinct phases of new terminal development at an estimated total cost of $1.4 billion:

Case Examples 55 • Phase 1: 1.5 million annual enplanements • Phase 2: 2.2 million annual enplanements • Phase 3: 5.0 million annual enplanements • Phase 4: 10 million annual enplanements Relationship/Communication with Airline Partners In 2007, because it was a new station start-up, Allegiant started negotiations with the airport about 90 days in advance of starting operations. In the past, some other airlines had reached out to the airport with smaller or longer notice periods: 30, 60, 90, and 120 days. For the current airlines operating at the airport, the Terminal Use Allocation requires 60 days in advance for any schedule modification to make sure resources are available and that there is no conflict with other airlines. However, the airport has access to airlines schedules 6 months in advance through publicly available airline information, such as the Official Airlines Guide database. Lessons Learned Planning, capital programming, and risk assessment: How can airports develop a flexible plan and mitigate potential risks associated with the uncertainty from demand and airlines’ plans? The airport provided the following experiences and recommendations: • When airlines start to increase commercial service, airports should plan ahead for facility development. When the design of one phase starts, the airport should already plan for the next phase. At IWA, the airport continuously expanded its terminal facility from 2009 to 2013. • The airport should select an architect/engineering firm that is familiar with and has experi- ence in planning and construction on an airport while maintaining continuity of operations (even during construction). • Resiliency/flexibility is key: when the airport starts to invest significant amounts of money for its first major terminal development, always think about the what-if scenario: what if the airline decides one day to cease operations, or significantly increase/decrease the flight schedule. Value engineering is key to keeping costs down and to avoid overbuilding facilities. In par- ticular, at IWA the building was built on a single level, with floors in polished concrete and with no boarding bridges which, if included in the plan, would have brought the cost way up. • In addition, the airport needs to plan for facilities that can be easily reconverted. At IWA, the main terminal expansion was planned to be able to potentially be reconverted to accom- modate a fixed-base operator (FBO) or other business when commercial flight operations are moved to a larger (east side) facility. • As an initial development, the airport built a temporary modular building. The original life expectancy was 10 years, but with good maintenance from the airport staff, the building life can be extended. It was built in 2007 and still works perfectly well. • “Do not forget about your revenue opportunities.” For instance, at IWA, while the airport planned for an extensive increase of concession storefront space to generate more revenue, not enough storage space was planned for concessions. This results in more frequent deliveries, more inspections, and, occasionally, stock items using temporary storage spaces. It will be challenging to fix this problem until the next expansion. • In terms of other revenue opportunities, do not forget to plan for auto parking capacity in line with your airside/terminal developments. At IWA, the initial parking lot adjacent to the terminal was expanded to accommodate about 900 spaces. A 2,800-space long-term economy parking lot was built in 2011/2012, with free shuttle every 7 minutes. In addition, the terminal

56 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging has a close-by short-term parking lot with 170 spaces that charges on an hourly basis. Parking is an important source of revenue for the airport. Case Example 3: MidAmerica St. Louis Airport BLV is a joint-use airport co-located on the grounds of Scott Air Force Base and managed by St. Clair County. BLV is the secondary domestic passenger airport for the St. Louis, Missouri, metropolitan area. Since 2012 and the arrival of Allegiant Air, BLV has experienced a significant increase of commercial traffic and reached 71,039 enplanements in 2016 (122,158 in 2017). The airport mission is to “provide the best Joint Use Operations in America, to host international cargo commerce, to host leisure and region augmenting passenger service, to provide residency and climate for aircraft maintenance, repair and overhaul businesses.” (See Appendix B of this synthesis.) This case example is based on an interview with the following airport employees: • Dan Trapp, director of engineering and planning • Rich Burke, director of operations • Matt Goover, deputy director of operations The case example is also based on publicly available information, including the airport’s website (http://www.flymidamerica.com). Background/Commercial Service at BLV The civil side of the airport was constructed in 1997, originally with the objective of relieving Lambert-St. Louis International Airport. This included acquisition of the land, relocation of a state highway, relocation of the existing military ATCT, relocation of two creeks, relocation of a military housing facility, and construction of the main runway, parallel taxiway, aprons, terminal, aircraft rescue and fire fighting (ARFF), snow removal equipment facility, electrical vault, and so forth. Essentially it was a new airport built from the ground up with a connection to an existing Air Force base. The total project cost was $313 million, funded by the FAA, the state, and the county. Between 2000 and 2010, BLV started to receive some commercial service from different airlines, but the traffic never went up to the expected levels. Allegiant originally Airport Characteristics NPIAS Category: Non-Hub Airport Governance: Airport Authority—St. Clair County Public Building Commission Part 139: Yes Number of Operations: 7,106 (2016, source: FAA TFMSC Report) Number of Enplanements: 71,039 (2016, source: FAA TAF) Recent Traffic Variations (2007–2016) Enplanements 2007–2012: -73% CAGR* 2012–2016: +549% CAGR* *CAGR: Compound Annual Growth Rate

Case Examples 57 started service in 2005 but stopped its operations in 2009, following the economic recession. The airport did not have any commercial service for the period 2009–2012. In 2012, Allegiant restarted operations at BLV, with twice-weekly direct flights to Orlando- Sanford International Airport, South Carolina, Arizona, and Nevada. Since that time, the airline has expanded to other destinations in Florida (nine cities as of December 2017). The aircraft originally used by Allegiant was the McDonnell Douglas MD-83, which was then upgraded to the Airbus A320 family. By the end of 2018, the fleet used by Allegiant at BLV will be exclusively composed of Airbus aircraft. Air Service Development/Drivers for Demand Increase According to the airport, ASD is a long-term process. It takes some time to speak with airlines and discuss the potential opening of new routes. The airport hired a consultant that worked for 2 years on promoting the airport and negotiating with the airlines. Comparison to Socioeconomic Factors (2007–2016) Gross Domestic Product (GDP) 2007–2012: +2.0% CAGR* 2012–2016: +3.0% CAGR* GDP for the St. Louis metropolitan statistical area continuously increased from 2007 to 2016. In terms of commercial traffic (enplanements), the airport experienced a major loss of service from 2007 to 2012 and then a major increase of traffic from 2012 to 2016. These important variations are directly related to the opening and closure of service by the airlines at the airport. The airport has not reached a maturity stage that would allow a strong cor- relation between GDP variations and air traffic. Population 2007–2012: +0.3% CAGR* 2012–2016: +0.1% CAGR* Population of the metropolitan area seems to have remained relatively stable since 2007, while enplanements varied significantly. The population factor does not seem to be a key driver of the variation of air traffic at BLV for the past 10 years. Sources: – Enplanements: FAA Terminal Area Forecast (TAF) – Gross Domestic Product: Bureau of Economic Analysis – Population: U.S. Census Bureau *CAGR: Compound Annual Growth Rate

58 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging After the 2008/2009 recession and the decline of commercial service, the county supported the airport, which was operating at a loss. However, even though no more commercial flights were flying at that time, it was extremely important to maintain the security levels at the airport to be ready to accommodate any potential new airline. When Allegiant returned in 2012, the security aspect played a key role for the airline to start operating again at BLV in a prompt manner. In terms of drivers for the recent demand increase, one key factor for BLV is the business traveler market, due to the airport’s convenient location and the military activities at the airport. With the help of its consultant, the airport is constantly looking for additional airlines, in order to not rely solely on one airline. Terminal Capacity Increase and Developments— Issues, Challenges, and Solutions Loss of Service—Period 2009–2012 It was challenging to maintain airport operations during that period, but BLV was able to rely on activity types other than commercial: cargo operations, GA, and support services provided to the military. When Allegiant left, the airport status was changed by the FAA from primary to non-primary: the Airport Improvement Program grant was supposed to be reduced from $1 million to $150,000 per year. But at that time, the FAA created the Limited Virtual Primary Program, which was supporting airports seriously affected by the 2008/2009 recession. For this reason, BLV was able to maintain its $1 million entitlement for 2 more years, even though it was classified as non-primary. In 2012, after the return of Allegiant, the FAA changed the airport category back to primary. Terminal Development Plans for Rapid Traffic Growth: Short- and Mid-Term Solutions The main passenger terminal built in 1997 is the one in use today. It is equipped with four gates: two with boarding bridges and two walkout gates. During peak hours, the airport uses only three of the four gates available. The main improvements that have been made in the terminal building are the addition of TSA security checkpoint lanes and some improvements in the baggage claim area. Overall, only small modifications were done, as the terminal was initially built to handle this type of traffic. The current boarding bridges are flexible and are capable of accommodating any aircraft from regional jets to a B747. None of them are Group-VI capable. As of 2017, the main challenge is the capacity of the holdrooms during peak hours. The airport is currently looking at solutions as part of the ongoing master plan effort that was started in 2017. Other Airport Needs and Challenges Landside The main challenge at the airport to accommodate recent traffic growth was to increase the auto parking capacity. The original parking lot built with the terminal had a limited capacity of 569 cars. After two expansions in 2016 and in 2017, the total capacity was brought to 1,281 (see Figure 26). Construction was completed just in time to handle the increase of demand. The airport’s goal is to convert it from free parking to paid parking and hire a third-party management firm to handle the operations.

Case Examples 59 Airside/Airfield Access Reliability No major change on the airside was recently required. The runways have ILS-Cat 1 capability in both directions. Since the airport is a joint-use facility with the military, it has access to the military runway in case the passenger traffic keeps increasing in the near future. Long-Term Planning (Master Plan Effort) The last master plan was completed in 2009. The airport recently hired a consultant to update it. Relationship/Communication with Airline Partners Airlines Allegiant provided the airport with a 90-day notice prior to restarting service at BLV in 2012. FAA The state and FAA are always in the loop and are reactive for any request. The airport has a good relationship with them. Lessons Learned Planning, capital programming, and risk assessment: How can airports develop a flexible plan and mitigate potential risks associated with the uncertainty from demand and airlines’ plans? The airport provided the following experiences and recommendations: • Security: even if an airport loses its commercial service, maintaining the security level for air passengers as much as possible is a key factor to attract airlines again. At BLV, Allegiant was able to restart service in 2012 quickly because security was properly maintained between 2010 and 2012, even though no commercial traffic was present at the airport. • Convincing local agencies to invest in the development of the airport is always challenging. The general practice (area for improvement) is usually to wait as long as possible until the airport cannot wait anymore and needs the improvements. For instance, at BLV investment toward the increase of auto parking capacity only came when the schedules published by the Figure 26. Auto parking expansions at BLV Airport in 2016/2017 (Source: Google Earth).

60 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging airline showed that the demand would exceed current capacity. Local funding and the county are supportive. The previous master plan (2009) was also a key tool to identify shortfalls and demonstrate the need for new developments. • ASD recommendation: “to have a consultant who knows the industry very well and who puts the figures together.” BLV has substantial competition in the area so the airport has to offer the lowest costs to be attractive. In addition, another selling point for the airport is the brief processing time for passengers due to its smaller size. Case Example 4: Pittsburgh International Airport Pittsburgh International Airport (PIT) is a civil-military international airport located in the suburbs of Pittsburgh, Pennsylvania. PIT experienced a major loss of traffic for the period 2004–2013 due to the reduction of service from US Airways. As a result, the airport has changed its mission and has been focusing on origin and destination traffic rather than being a connect- ing hub. This case example is based on an interview with the following airport employees: • Eric Buncher, manager of planning services • Paul Hoback, senior vice president of facilities, engineering, and maintenance The case example is also based on publicly available information, including the airport’s website (http://www.flypittsburgh.com). Background/Loss of Service at PIT Between 2001 and 2004, US Airways was still in a growth mode at PIT. The airport was one of the oldest hubs for US Airways. The airline suffered from a first bankruptcy in 2002 and then a second one in 2004, which resulted in the decision to dehub its operations at PIT. According to the airport, the key reasons that drove that decision from the airline are (1) US Airways had too many hubs in its network at that time and (2) the population in the region was not sufficient to support a major airline’s hub. Other factors on the airline’s side probably played a key role in the decision too. Airport Characteristics NPIAS Category: Medium-Hub Airport Governance: Allegheny County Airport Authority Part 139: Yes Number of Operations: 141,630 (2016, source: FAA ATADS) Number of Enplanements: 3,950,678 (2016, source: FAA TAF) Historical Traffic Variations (2004–2016) Enplanements 2004–2013: -6.3% CAGR* (-22% drop from 2004 to 2005) 2013–2016: +1.0% CAGR* *CAGR: Compound Annual Growth Rate

Case Examples 61 However, the drop was not a sudden shutdown of operations; it was reasonably slow. It actually took some time for the airport to fully realize that passenger volume was going to keep going down, and that it would have too many facilities at some point. For many years, the airport thought that US Airways would eventually come back and make PIT a hub again. This perception was coming from the airport staff and management, but also from the public and local community. The airport was built in the 1990s as a hub for US Airways; it was hard for everybody in the region to see that change as final. Issues, Challenges, and Airport Initiatives Immediate Impacts At that time, the airport went into a “survival mode”; it was looking at any possible means of saving money to reduce cost: • Reduction of staff • Reduction of facilities: the ends of concourses A and B were closed Comparison to Socioeconomic Factors (2004–2016) Gross Domestic Product (GDP) 2004–2013: +3.3% CAGR* 2013–2016: +2.9% CAGR* GDP for the Pittsburgh metropolitan statistical area continuously increased from 2004 to 2016. The major loss of traffic that the airport experienced between 2004 and 2013 is primarily due to the reduction of activity from US Airways (see interview summary in next pages). After being relatively stable in 2014, enplanements went up +1.1% in 2015, and +2.5% in 2016. Population 2004–2013: -0.1% CAGR* 2013–2016: +0.3% CAGR* Population of the metropolitan area seems to have remained relatively stable for the entire period 2004–2016. The major loss of traffic that the airport experienced between 2004 and 2013 is primarily due to the reduction of activity from US Airways (see interview summary in next pages). Sources: – Enplanements: FAA Terminal Area Forecast (TAF) – Gross Domestic Product: Bureau of Economic Analysis – Population: U.S. Census Bureau *CAGR: Compound Annual Growth Rate

62 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging • Energy savings in the facilities: lights were turned off for the gates that were not being used often during the day. During off-peak times, conveyance systems that were not used were turned off. Airport Initiatives Initiative 1: Airline Services Department and Jetway Rehabilitation Facility. Around 2004, US Airways decided to shut down its maintenance services for both passenger boarding bridges (PBBs) and the baggage handling system (BHS). For the airport, the initial reaction was to hire an outside contractor to take care of these duties. However, that solution became too expensive and not sustainable for the airport. Around the same time, a bakery in downtown Pittsburgh that was using conveyors similar to the ones from the airport also went bankrupt. The airport authority decided to take this opportunity to hire the most qualified people laid off by both US Airways and the bakery and built a new “in-house” airline services department. PIT is now one of the few airports in the country that maintains all their PBBs and BHSs with internal staff. The new department was created from square one, with a budget of around $7–$8 million. In 2004/2005, the PBBs started to get close to their end of service life (they were installed in the 1990s). The airport and the new airline services department had the idea to reuse one of the hangars left empty by US Airways as a jetway rehabilitation center. The staff went all the way to Boston Harbor to purchase an old crane to maneuver the jetways inside the new hangar facility. In the same time, the needs of the airport’s capital budget continued to grow year after year, while the budget was continuously decreasing because of the reduction of activity by US Airways and the diminution of the associated revenues from passenger facility charges and other sources. The airport could not afford to buy new jetways, so it developed a 6- to 8-week process to rehab each jetway: the PBB would be taken off from the facility, then taken completely apart, rehabbed, and finally put back into the building. The airport staff was calling the process “zero timing them” because at the end, the PBBs were like new. The airport rehabbed 26 of its jetways with this program. Because of the quality and success of the process, the manufacturer JBT, which was a partner at the time, decided to offer an exclusive agreement to the airport for jetway rehabilitation. JBT would provide the parts and would take on full responsibility, and the airport would provide staff and would be able to make a profit. The agreement was for all airports east of the Mississippi River. That initiative was successful because it created a new revenue source for the airport and provided some new jobs to the Pittsburgh community. Initiative 2: Auto Parking Capacity Increase—Concourse E Ramp Conversion. At some point in the dehubbing process, US Airways stopped all its commuter flights from PIT, which had been accommodated in Concourse E (landside terminal). The airport decided to close all the commuter gates in that concourse, in addition to the ones closed in concourses A and B. Overall, the airport went from 125 gates to 75 (still current conditions). A few years later, while US Airways’ activity was going down, the airport started to bring in LCCs, such as Southwest, which were driving the ticket prices down. That trend resulted in a major reduction of connecting traffic and progressive increase of O&D passengers. One of the main impacts on the airport facility was soon the increase of auto parking capacity need. One solution chosen by the airport was to convert the Concourse E ramp area (airside) into employee auto parking (see Figure 27). The investment made in that conversion allowed the airport to save approximately $1 million per year by getting rid of the employee bus service from the old employee parking to the terminal. In addition, the old employee parking was repurposed

Case Examples 63 to provide an additional parking lot for O&D passengers. On the airside, the overall pavement cost was reduced as well, due to the reduction of apron space. Initiative 3: International Service—Customer Experience Improvement. In addition to the growth of low-cost airlines’ activity at the airport, the airport authority also brought in new international service to the Pittsburgh community. This created a new challenge for the airport because the terminal facility (two main buildings, airside and landside, connected by a people mover) was originally built to handle connecting traffic. Passengers arriving on international flights originally had to go through three different lines—even the passengers not connecting to another flight: two lines from the FIS/CBP process (immigration and agricultural/plant health inspection) and one line for the TSA security check- point. This situation was caused by the configuration of the two terminal buildings (airside and landside); the destination passengers who needed to go back to the landside terminal to get to their cars had to go through that TSA security checkpoint as well. To fix the situation, the airport had to be creative and had to rethink the flow of inter- national passengers from the gate to the landside terminal. The airport needed to improve passenger experience to keep attracting more international service. The airport found a way to use a series of guards and convert old hallways used at the time as storage closets to create a route that would keep the sterile passengers flying out in airside from interacting with the ones getting off international flights. In addition, to be able to bring the passengers back to the landside terminal without going through that TSA checkpoint, the people mover cars (from airside to landside terminal) were closed off for those passengers to not interact with the sterile outbound passengers. That improvement in passenger flow and experience was essential for the airport in its discussions with potential new international carriers that would be interested in flying to PIT. Initiative 4: Airside/Airfield Reliable Access. During the period of airline downgauging, the authority did not want to close nor reduce any part of its airside/airfield infrastructure. It was important for the airport to keep maintaining its airside facility in case US Airways decided to come back and make PIT a hub again. For this reason, no coordination or request to close pavement was made to the FAA. Because the airport was still looking for ways to reduce costs, it tried to adjust its winter operations. During snow events, operating costs can get high because of the additional staff Figure 27. Concourse E ramp conversion into employee parking at PIT airport (Source: Google Earth).

64 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging needed, the use of heavy equipment, and the use of high volumes of glycol. However, it was essential for the airport to stay open at all times, even during snow. The major change was the decision to close the crossing runway 14–32 to reduce the overall operation cost of such events. Additional Initiatives for Cost Reduction. Because of the reduction of traffic and also the new technologies for passenger check-in, the airport does not need the same ticketing space it used to. The airport looked at converting those areas, and it hired a consultant to do the analysis. The conclusion was that the cost of renovation would go beyond what anyone would be able to collect for that kind of use. The same went for gates and the BHS—the analysis showed that for the BHS, the best solution was to not take it out because of the expenses that would be incurred. It was hard to believe at first that nobody could come up with any uses for gates and ticketing areas. But the more they looked at it, the more it made sense. Air Service Development/Recovery After the decline of US Airways, the airport started to talk with other airlines, particularly low-cost and international carriers. The authority shifted its focus from operations and facilities to air service, through operational excellence and customer experience. The culture at the airport is that every single person affects air service. Each manager has to think about how the work performed by his or her staff can add to that passenger experience. When promoting the airport, the story of PIT is actually strongly related to the story of the city of Pittsburgh, which used to rely heavily on one industry alone, the steel industry. After the industry collapsed, the city and the region had to turn around and diversify their business economy. The airport’s story is similar. After starting to lose traffic and after people started to lose their jobs, the airport went through a period when it first had to survive. And then, the airport had to find ways to thrive again, through diversifying its airlines, bringing new carriers in, and convincing LCCs to come into the airport. The success of the airport recovery is demonstrated through the recent awards received from the industry, including the ATW 2017 airport of the year. Another key item to keep in mind for airports is “know your market.” It is important for the airport authority to know where people from Pittsburgh are going. Then that information needs to be shared with the airlines: the ones that are serving the airport but also the ones that are not yet. The airport can show them how they can make money serving the population. That is what has brought many of the new low-cost airlines (and others) to PIT. The airport had a good idea of what the airlines wanted and what information they needed to determine if they could make money in Pittsburgh. That is key. Long-Term Planning (Master Plan Effort) The last master plan completed at the airport was done in 2004. In 2010, an assessment/study was done on all the excess facilities. Within the past few years, that study was integrated into a comprehensive master plan update, which was to be completed in 2018. While the previous master plan considered a potential fourth parallel runway, it was taken out of the new master plan update. The new plan actually goes further, as it shows the potential removal of the southernmost runway, which would result in a dramatic cost saving. This cost saving could be beneficial not only for the airport, but also for the airlines. The new master plan recommends constructing a new landside terminal and closing and removing the old landside terminal. This idea came up recently, around 1 or 2 years ago. Before that, the thought was to renovate the existing facility and to go from there. It took a

Case Examples 65 focus on air service to realize that it might not be the best thing to do. That led to the decision to build a new landside terminal. The airlines have been involved in that decision and they are supporting it. The airport’s main objective was to look at the ways to reduce the operating cost for the airlines. One advantage of the new terminal modernization program is the fact that it would close the people mover train, which costs $4 million per year to maintain, as well as the capital program every 10 years to update/purchase new equipment and vehicles. In addition, this new program would reduce operating costs related to the baggage handling system. Currently, the airport has 8 miles of conveyor belts that go from landside to the airside terminal. There is a significant airside matrix, composed of many layers of conveyors that are costly to maintain. The system was built mostly for transfer traffic, which is not what the airport needs anymore. Another major consideration as part of the program is the landside configuration. It was decided to construct a new parking garage rather than renovating or expanding the current one. On the other end, the current terminal, with all these different levels, has a total of 17 bridges. Further, the bridges are over 25 years old and would need major rehabilitation within the next 10 years. The new proposed terminal would have no bridges associated with the new landside terminal building and would eliminate those costs. The overall terminal footprint will be reduced, but the key item is the fact that the facility would go from a three-story building to primarily a single-level amenity. This would result in a 40% reduction in the number of conveyors (elevators, escalators, moving walkways) from that in the current terminal, which could be equivalent to approximately $25 million saving per year in O&M cost. Overall, a key factor that convinced the airlines is that their operating cost would remain the same, maybe even go down, even though the new proposed plan corresponds to a $1 billion program. Finally, for capital cost, including construction and phasing considerations, the development of a new terminal was found to be almost identical to renovating the existing facility. However, the funding from the FAA is expected to be higher for new construction than for a renovation. This was an important factor as well in the decision process. Lessons Learned Planning, capital programming, and risk assessment: How can airports develop a flexible plan and mitigate potential risks associated with the uncertainty from demand and airlines’ plans? The airport provided the following experiences and recommendations: • Something that all airports in the situation of airline downgauging might run into is the thought that maybe airlines will come back. It’s a perception that both the airport manage- ment and the public can have during that period. It usually makes difficult the decision to close some parts of the airport facilities. • However, during periods of downgauging, airports need to look at everything to reduce costs: for example, the number of gates, the pavement, the baggage claim, and the gate assignments. Operating and maintaining these airport facilities costs a lot of money. PIT actually hired a consultant to conduct the analysis and identify its options to save money. Completely closing gates is always a hard thing to do. PIT tried to save some gates and used them for overnight. But in the long run, it realizes now that it should not have because they are expensive to maintain, keep clean, and heat. It is quite a decision to take, not only to the airport staff, but also to the public. It’s difficult to consider reducing the overall gate capacity of a terminal.

66 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging • “Revenue diversification is very important.” PIT has unique revenue sources that other medium-size airports may not have, such as gambling revenues from the state and revenues from gas drilling. However, it’s always a good practice that helps for the development of the future of the airport. “Try to mine as much out of your non-aeronautical revenues you can possibly get.” • “If you focus on air service, and you have experts in air service, it seems to work, and it has made a significant difference at PIT.” Case Example 5: Rickenbacker International Airport LCK is a civil-military public airport 10 miles south of downtown Columbus, Ohio. It is managed by the Columbus Regional Airport Authority (CRAA). As a result of an aggressive advertising and marketing effort from the airport authority and major investments made to develop its facilities, LCK has recently experienced a significant expansion of its air cargo traffic. In particular, the international segment has kept growing since 2014, with the introduction of very large aircraft, such as the B747-8F. This case example is based on an interview with the following airport employees: • Joe Herrmann, manager, aviation and airside efficiency • Christopher Pollock, supervisor, aviation and airside efficiency • Bryan Schreiber, manager, business development–air cargo • Eric Hensley, senior manager, project management In addition, the case example is also based on publicly available information, including the airport’s website (https://rickenbackerinlandport.com) and the airport master plan website (http://rickenbackermasterplan.com). Background/Recent Air Cargo Activity Growth at LCK The airport was originally a military air base and was one of the first airports in the country to transition from a military air base to a civil airport (included in the 1991 Base Realignment and Airport Characteristics NPIAS Category: Non-Hub Airport Governance: Columbus Regional Airport Authority (CRAA) Part 139: Yes Number of Operations: 26,307 (2016, source: Airport Master Plan Update) Air Cargo Operations: 7,458 (2016, source: Airport Master Plan Update) Air Cargo Pounds: 202,159,519 (2016, source: Airport Master Plan Update) Recent Air Cargo Activity Growth (2011–2016) Air Cargo Volume (in Pounds) 2011–2013: +2.5% CAGR* 2013–2016: +9.6% CAGR* *CAGR: Compound Annual Growth Rate

Case Examples 67 Closure Commission). Since then, the airport has always had cargo/freight activity, including operations from FedEx and UPS. FedEx and UPS activities were significant at LCK until FedEx considerably expanded its hub operations at Indianapolis International Airport. Historically, the airport has been known for its ability to manage all types of commodities but particularly fashion imports, auto parts, electronics, livestock, and other products. LCK has remained one of the only U.S. airports with no belly cargo activity. In 2013, the airport’s main anchor tenant (L Brands), headquartered in Columbus, Ohio, decided to make significant investments at the airport to develop the facility and expand opera- tions. This major development was a key factor in increasing the airport’s attractiveness to other carriers as well. The airport’s foreign-trade zone is another strong selling point for businesses to operate from LCK. The zone is ranked among the top 10 foreign trade zones in the United States, as measured by the value of goods moving through it. Comparison to Socioeconomic Factors (2011–2016) Gross Domestic Product (GDP) 2011–2013: +5.7% CAGR* 2013–2016: +4.9% CAGR* From 2011 to 2016, both the GDP of the Colum- bus metropolitan statistical area and the air cargo volume at LCK have been going up. However, a sharper increase of cargo volume was observed since 2013 due to major investments and facility improvements that have recently occurred at the airport (see discussion notes in next pages). Population 2011–2013: +1.1% CAGR* 2013–2016: +1.2% CAGR* From 2011 to 2016, population within the Columbus metropolitan area has also shown steady growth. However, the annual growth rates are relatively lower than the GDP and air cargo volume increases. Sources: – Enplanements: FAA Terminal Area Forecast (TAF) – Gross Domestic Product: Bureau of Economic Analysis – Population: U.S. Census Bureau *CAGR: Compound Annual Growth Rate

68 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging For a long time, the airport mostly accommodated import cargo. Therefore, cargo airlines flew to LCK, unloaded their shipment, and traveled to another location to load the aircraft again. When in 2013, L Brands decided to invest in the airport’s facility, LCK started to develop greater capabilities for export activities. For instance, CargoLux was originally flying from Hong Kong International Airport twice a week and would only unload cargo at LCK. With full import/export cargo capabilities available at LCK, CargoLux has increased its operations to 15 times a week. Before 2013, 90% of the activity was domestic, essentially through FedEx and UPS, and 10% international. In 2017, the airport accommodated around 650 weekly cargo flights, and the domestic/international split was close to 50/50. Facility Development/Investments and Partnership Opportunities Airside and Apron/Ramp For the development of the apron/ramp, the airport initially planned to use FAA funding. However, after discussion with the FAA, the airport discovered no discretionary money could have been used for the expansion of the ramp. The FAA required giving priority to taxiway improvements to upgrade the taxiway system to ADG-VI standards. A modification of standards (MOS) application process was then necessary. The airport decided to use both its entitlement and discretionary funds for the ADG-VI compliance program on its taxiway system. For the apron/ramp development project, the airport had to look for other sources of funding. Because of the progressive closure of military activities, local politicians and state representatives were looking at options to support the local economy and were instrumental in getting funds for the development of LCK. The airport was able to secure the funds required to rehabilitate and expand the apron/ramp space to support the cargo activity growth. The fact that the Columbus Airport Authority and Rickenbacker Port Authority merged in 2003 to create the CRAA also helped in getting government and county funding. Another key factor to attract investment is the creation of relationships and partnerships with many local and regional stakeholders. The airport director has played a key role in attracting funding and creating new partnerships, at the local and state levels. For instance, to develop and improve the access roadways to the airport, the city of Columbus and the county were highly involved in the project. ADG-VI Modification of Standards Request In 2011, after being approached by various airlines to potentially operate ADG-VI aircraft at LCK, the airport initiated a preliminary feasibility analysis. At the time, the airport was able to accommodate all ADG-V aircraft, including the B747-400. The airport wanted to start coordi- nating with the FAA at the early stages, even though no airlines had scheduled ADG-VI aircraft flights yet. However, to be able to review the MOS request, the FAA required the airport to be listed by an airline as a destination airport—not an alternate airport—for its ADG-VI aircraft. These circumstances resulted in a “chicken and egg situation” for the airport, because the FAA was requiring some form of commitment from an airline to fly the ADG-VI aircraft, while on the other end, the airline would not fly the aircraft without the authorization from the FAA. About 2 years later, a “Phase 2” report was prepared by the airport to look more in detail at the requirements to accommodate ADG-VI aircraft. The airport faced some difficulties

Case Examples 69 during the coordination process with the FAA and obtained the FAA authorization only a few days before the first airline started operating its ADG-VI aircraft (B747-8). A letter of agreement was signed with the FAA to restrict B747-8 operations to some parts of the taxiway system. The MOS was approved with conditional requirements: • Speed limit of 15 miles per hour on the taxiways • Airport operations needs to inspect the taxiway after being used by a B747-8 to ensure that no damage is made to the pavement, signs, or lights before being able to use it again. Then, to make the airfield infrastructure fully compliant with ADG-VI standards, the airport’s plan was originally developed in three phases: 1. Upgrading of main runway 2. Upgrading of secondary runway 3. Upgrading of taxiway system After consultation with the FAA, the airport was eventually required to first move forward with the taxiway improvements. At that time, the FAA released its new Taxiway Design Group standards (new Advisory Circular 150/5300-13A), which reduced the requirements for the upgrading of the taxiway system. The B747-8 is actually in the same design group as the B747-400. For this reason, the taxiway geometry itself was not too far from the new standards, and no major fixes were needed. It gave the airport the opportunity to start with these modi- fications first as part of its compliance program. Lessons Learned/Recommended Checklist for MOS Process: • Quickly identify the types and magnitude of the MOS fixes needed. • Develop order of magnitude costs. • Prepare detailed and clear exhibits of possible options and fixes. • Incorporate these fixes into the Airport Capital Improvement Plan (ACIP) as early as possible for the FAA to have a view on the airport’s long-term plans. • Understand the exact FAA standards because they can change on a regular basis. • Make sure to maintain a great relationship with the FAA. • Always ensure a safe operating environment; no compromise on safety at any level. At that time, the airport did not contact any peer airports that had gone through a similar process to obtain valuable lessons learned. However, the consultants hired for the study were required to have previous experience on the ADG-VI upgrade/MOS process at other airports in the country. As part of the MOS process, the airport noticed that the International Civil Aviation Organization recently updated its airport design standards for ADG-VI aircraft. In particular, the taxiway-to-taxiway separation and taxiway centerline to fixed objects distance were reduced. However, at that time, there was no indication that the FAA would plan on updating its standards for U.S. airports. Air Traffic Control The airport recently invested $8 million to build a new ATCT (opened in 2016). No partici- pation or funding was available from either the military or the FAA. Since passenger activity remains limited at the airport, non-aeronautical revenue is limited too (no auto parking, no concessions). For the control tower, the state funded around half of the cost, and the county/ airport funded the other half.

70 How Airports Plan for Changing Aircraft Capacity: The Effects of Upgauging Long-Term Planning (Master Plan Effort) • Runway work initially planned as Phase 1 of the ADG-VI compliance program is now included into the new master plan update. Construction work will not start before completion of the master plan. • Since 2013, the B747-8 has exceeded the annual threshold of 500 operations, making it the airport’s critical aircraft. • The master plan update was scheduled to be completed by 2018. • Overall, the upgrade of the airfield to ADG-VI standards will result in a major capital cost increase (estimated to triple airfield improvement costs from around $20 million to $60 million). • Future trends: – The airport does not foresee any future demand for the cargo version of the Airbus A380F, but the Boeing B747-8F seems to be used more and more (for instance, UPS ordered 14 B747-8F in 2016). – The airport officials believe that the technology is available for manufacturers to build the very large aircraft, but the cost incurred by airports to accommodate them is significant, and this is probably one of the reasons the number of orders remains low compared with smaller aircraft with fewer impacts on airports’ infrastructure. Lessons Learned Planning, capital programming, and risk assessment: How can airports develop a flexible plan and mitigate potential risks associated with the uncertainty from demand and airlines’ plans? The airport provided the following experiences and recommendations: • “Personality and relationship building, with your community, local and state potential partners, is essential. Also relationship within the organization/company: make sure that everybody speaks of one voice.” • Advice and recommendations for cargo airports: – Dedicated staff/team for the development of cargo activity/business is important. For instance, CRAA has been maintaining a dedicated staff position responsible for cargo business development only (Bryan Schreiber, who attended the interview). Most of the airport authorities have one person responsible for the development of both cargo and passenger activities at the airport, but they are two different worlds, working in two differ- ent ways. While business development for passenger activity is primarily based on numbers and data (for instance, passenger demand, forecast, operating costs, capacity), business development on the cargo side is primarily based on relationships, trust, and other specific business considerations that do not apply to passenger airlines business. – Operate your own FBO for exclusive rights and to control all ground handling operations. In addition, it creates an important revenue stream for the airport. – A dedicated access road for cargo operations should be provided when feasible to avoid mixed traffic with passengers and with other airport or nonairport related activities. • Any organization/authority should make sure they have staff who are going to look at the issues and technical problems in detail. In some situations, it is not sufficient to rely only on external consultants. The airport team needs to be aware of the latest standards, as they can change or be updated on a regular basis. For instance, learning about the specifics of the aircraft fleet operating at the airport (e.g., dimensions, characteristics) is essential because they can have a significant impact on the planning and design of facilities. At LCK, the CRAA was able to fine-tune its ramp rehabilitation/expansion program and save significant capital cost, using the guidance provided by ACRP Report 143: Guidebook for Air Cargo Facility

Case Examples 71 Planning and Development (Maynard et al. 2015). LCK requested the model from ACRP to refine the original space program/requirements and reduce the overall area of concrete pavement needed. The separation between aircraft wingtips was revised too, as well as the maneuvering plans to save ramp space. • “Monitor closely your fuel capacity and demand.” When not planned correctly, fuel supply limitations can become a major challenge for the growth of airport operations. • “Maximize your grant opportunities; not only State DOT and FAA, a variety of other sources are available.” Face-to-face relationships are usually required to maximize them and confirm new partnerships. “Go outside of the airport to talk to potential partners and promote your airport.”