A Guidebook for Airport-Airline Consortiums (2014) / Chapter Skim
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Pages 82-103
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From page 82... ...
82 A P P E N D I X E Feasibility Study -- Illustrative Example
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From page 83... ...
Feasibility Study -- Illustrative Example 83 MEMORANDUM Date: April 26, 2010 To: Michael Moroney Andrea Goodpasture Peter Houghton From: Paul Demkovich cc: Jeff Crosby Bob Spielman Subject: San Antonio International Airport (SAT) Airline Consortium Study The Terminal B Development Project at San Antonio International Airport (Airport)
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From page 84... ...
84 A Guidebook for Airport-Airline Consortiums April 26, 2010 Page 2 The purpose of this report is to demonstrate the financial feasibility of an airline consortium at the Airport. To do so, the following tasks were undertaken: • Conduct interviews of airline personnel, airport staff and Concourse B project personnel • Perform site review and examine current operations • Perform site review and examine new systems in new facilities • Review airline and airport operating and maintenance budgets • Review existing operations and maintenance contracts • Document and quantify the designated airline consortium scope and desired service levels • Evaluate the designated airline consortium scope and document findings • Estimate the recommended consortium administrative and operations support staffing and budget requirements • Estimate operations and maintenance budgets for the consortium, including startup costs • Evaluate alternatives and recommend a viable method for the capitalization of the consortium • Build a financial model to demonstrate the estimated costs of an airline consortium and, where possible, compare the results with existing efficiencies, costs and service levels • Prepare, distribute and present a report that documents the airline consortium scope, service levels and demonstrates the financial feasibility of the consortium This report summarizes findings of this research and analysis effort.
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From page 85... ...
Feasibility Study -- Illustrative Example 85 April 26, 2010 Page 3 Airline Consortium Organization and Staffing It is assumed for the purposes of this study that the new airline consortium will be organized as a Texas non-profit corporation to manage, maintain and operate certain Airport and Airline equipment, systems and facilities. Using this approach, it is also assumed that the new airline consortium will qualify and will be exempt from federal and state taxes.
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From page 86... ...
86 A Guidebook for Airport-Airline Consortiums The GMO Administrative Function will be accomplished by the General Manager, Operations Manager, Finance Manager, Finance Clerk and Administrative Assistant. They will be responsible for the following: • Administer all agreements and contracts, monitoring timely and effective performance of responsibilities there under.
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From page 87... ...
Feasibility Study -- Illustrative Example 87 April 26, 2010 Page 5 • Attend meetings, conferences and other related industry functions as required by the airline consortium. • Handle correspondence and administrative matters as required.
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From page 88... ...
88 A Guidebook for Airport-Airline Consortiums April 26, 2010 Page 6 Airline Consortium Finances It is anticipated that the airline consortium will prepare an annual budget that will be submitted to the Airport for inclusion in Airport rates and charges. The Airport will collect terminal rentals, equipment and passenger processing fees from the airlines and provide the necessary funding to the airline consortium.
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From page 89... ...
Feasibility Study -- Illustrative Example 89 April 26, 2010 Page 7 The following diagram illustrates the anticipated flow of funds if the airline consortium model is implemented as described above: The impacts to the financial analysis included with this report as a result of the assumptions stated above in the Airline Consortium Organization, Staffing and Finances sections above may be summarized as: • Texas non-profit corporation – No tax expenses included in analysis • No airline consortium employees – No employee expenses included in analysis • Independent Vendors provide all services – Estimated costs of service providers under contracts with the airline consortium included in analysis • Funding – Airport rates and charges provide primary funding, therefore: o Capitalization – No capitalization costs included in the analysis o Membership Fees – Minimal membership fees required
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From page 90... ...
90 A Guidebook for Airport-Airline Consortiums April 26, 2010 Page 8 Site Review of Terminal B and Terminal 1 AvAirPros made two field visits to the Airport to collect data and produced detailed site meeting notes at the conclusion of each visit. The field visits, which are summarized below, served to define the preliminary scope for the new airline consortium.
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From page 91... ...
Feasibility Study -- Illustrative Example 91 April 26, 2010 Page 9 On the afternoon of March 23, 2010, Mr. Crosby and Mr.
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From page 92... ...
92 A Guidebook for Airport-Airline Consortiums April 26, 2010 Page 10 Mr. Moroney also outlined various areas to improve Airport and Airline operations and passenger experience: • Dockmaster Operation to review the logistics of efficient concession deliveries • Jet Fuel Storage Tank review based on capacity issues of the current 2 tank system • Hydrant Fueling System review because current activity levels might support the financial feasibility of system installation • Terminal 1 Passenger Loading Bridge Replacement Project • Terminal 1 Facility Upgrade Project including lights, toilets, HVAC system, elevator/escalator rehab, and painting • Consolidated Wheelchair Services to provide consistent passenger service from a single vendor, rather than the current split operations • Passenger Assistance Agents at the Checkpoint during peak time periods Mr.
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From page 93... ...
Feasibility Study -- Illustrative Example 93 April 26, 2010 Page 11 Airline Consortium Preliminary Scope of Services The following preliminary airline consortium scope of services has been identified based on discussions and meetings with the Airport and the Airlines:
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From page 94... ...
94 A Guidebook for Airport-Airline Consortiums April 26, 2010 Page 12 The following is a description of consortium operations and maintenance contracts and other major components of an estimated budget for the first operating year of a new airline consortium at the Airport. Included with each description is a brief synopsis of the scope of work of that contract.
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From page 95... ...
Feasibility Study -- Illustrative Example 95 April 26, 2010 Page 13 General Managers Office (GMO) - The GMO is the consortium's administration and operations staff at the Airport.
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From page 96... ...
96 A Guidebook for Airport-Airline Consortiums April 26, 2010 Page 14 Waste Removal - The waste removal vendor will be responsible for providing and emptying dumpsters and trash compactors within the Terminal facility. Pest Control - The pest control vendor will be responsible for monthly treatments required in the Terminal facility.
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From page 97... ...
Feasibility Study -- Illustrative Example 97 April 26, 2010 Page 15 Financial Feasibility and Budget Estimate Based upon the assumptions described earlier in this report, site visits, data collected, interviews with airport personnel, and AvAirPros' industry knowledge, we have analyzed the airline consortium proposed scope requirements and prepared an Estimated Airline Consortium Annual Operations and Maintenance Costs including passenger processing services and first year capital acquisitions. A summary of this estimate is presented on the next page and Attachment 1 provides additional detail.
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From page 98... ...
98 A Guidebook for Airport-Airline Consortiums April 26, 2010 Page 16 These estimated costs were prepared based on the assumptions previously stated and will appropriate staffing and service levels to meet the Airport and Airline high service level expectations.
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From page 99... ...
Feasibility Study -- Illustrative Example 99 April 26, 2010 Page 17 Recommendation The report and analysis presented above were prepared based on a number of assumptions. It is recommended that these assumptions be evaluated for accuracy and that the report and analysis be adjusted if assumptions revisions are made.
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From page 100... ...
100 A Guidebook for Airport-Airline Consortiums Corporate Office 5551 Ridgewood Drive, Suite 401 Naples, FL 34108 Tel 239.262.0010 Fax 239.262.8808 To: SAT Airline Affairs Committee From: Jeffrey J Crosby Staff Vice President Date: October 13, 2010 Subject: San Antonio Airline Consortium Business Structure Review As part of the ongoing discussions regarding the formation of an airline consortium to operate and maintain certain equipment and provide certain services at San Antonio International Airport (SAT)
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From page 101... ...
Feasibility Study -- Illustrative Example 101 October 13, 2010 Page 2 To operate in Texas, a business entity must file a certificate of formation with the Texas Secretary of State's office. The Texas Secretary of State has published the Texas Business Organizations Code (BOC)
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From page 102... ...
102 A Guidebook for Airport-Airline Consortiums October 13, 2010 Page 3 LLC may elect to be taxed as a Corporation, which transfers the tax liability from the members to the LLC. Nonprofit Corporation - A Nonprofit Corporation is a corporation in which no part of the income is distributable to members, directors, or officers [BOC, Section 22.001(5)
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From page 103... ...
Feasibility Study -- Illustrative Example 103 October 13, 2010 Page 4 The LLC provides the desired limited liability for the consortium and the airlines, however its tax implications would unneccesarily complicate the organizational structure of the consortium, From a tax perspective, there are two options available to an LLC. It can be taxed as a "flow-through" entity, whereby any income tax liability would be passed onto its owners (members)
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