ASSESSMENT & ACTION PLAN FOR 2012
Tulsa Airports Improvements Trust (TAIT)
and the
Tulsa Airport Authority (TAA)
ACTION PLAN FOR 2012
TABLE OF CONTENTS
I.
INTRODUCTION
II.
ASSESSMENT OF OPERATIONS
Customers
Airline Passengers
Passenger & Cargo Airlines
General Aviation
Military
Tenants
Neighbors
Business Community
Bondholders
Resources
Financial
Human
III.
TAIT ORGANIZATIONAL GOALS
Mission Statement
IV.
ONGOING ISSUES
Airline Costs
Terminal Improvements
Security
Runway 36R/18L
Noise Land Reuse
V.
PRIORITIES FOR 2012
Operating Revenue Growth
Airport Liquidity
Operating Cost Control
Air Service Development
Property Development
VI.
ACTION PLAN
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ACTION PLAN FOR 2012
Introduction
Tulsa Airports Improvement Trust (TAIT) and Tulsa Airport Authority (TAA) have
developed a Business Plan for 2012 that will continue to strengthen the delivery
of services, improve financial performance, maximize the airport system’s
services to the community, and allow for continued airport development.
Most of the focus for our 2011 Business Plan was to continue to make
adjustments to respond to the economic downturn that began in 2008.
The emphasis for 2012 will be to continue to make adjustments to respond to the
slow economic period that we are currently in, and review and make adjustments
to our Strategic Plan based on the structural changes that are taking place in the
aviation industry. We will potentially be making some organizational changes
with a new lease agreement with the City of Tulsa.
ASSESSMENT OF OPERATION
Customers
Airline Passengers – For 2011, our total passengers were 2,794,469
which is a decrease of - 1.83% from our 2010 passenger level. We anticipated
passenger activity would remain flat for 2011, however due to the slow growth in
the economy and a limited number of available seats we had a slight decrease in
total passengers. It is anticipated that passenger enplanements will remain flat
throughout 2012 due to the slow recovery of the economy and the higher air
fares that we are experiencing relative to the last few years.
Passenger & Cargo Airlines – For 2011 the airline industry had a
challenging year due to high fuel prices, which significantly limited growth
opportunities for air service. The number of available seats remained stable
throughout 2011 at around 5,800 seats per day. During 2011, we gained new
nonstop service to Washington Dulles Airport that began in April 2011.
American Airlines declared bankruptcy in November of this year. At this point we
do not know what the impact on air service for TUL will be.
General Aviation – Richard L. Jones Jr., Airport (RVS) saw a drop in air
traffic activity due to the economic recession. Both Riverside Flight Center and
the Spartan School of Aeronautics experienced reduced flight training activity,
which is the primary source of takeoffs and landings at RVS.
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ACTION PLAN FOR 2012
Military – The Authority continues to work with the Oklahoma Air National
Guard (OKANG) on the development of a weapons depot and fuel farm facility.
Tenants – During 2011 we completed the acquisition of Hangars 8 and 10
at TulsAir. Hangar 8 has been demolished, and Hangar 10 should be
demolished the 1st quarter of 2012.
Neighbors – The FAR Part 150 Noise Mitigation Program at Tulsa
International began in 2000 and should be complete by the end of 2012. As of
December 2011, 1,484 homes have been sound attenuated or are under contract
to be complete in early 2012, the airport has purchased an easement for 111
homes, 64 homes participated in the sales assistance program, and five
properties have been acquired and demolished.
Over the last two years the airport has conducted neighborhood advisory
meetings with representatives of neighborhood associations around the airport.
At these meetings we brief the attendees on airport projects and any impacts that
they may have on the neighborhoods.
Business Community – TAA staff works closely with the Tulsa Chamber
of Commerce, the Oklahoma Aerospace Alliance, and individual aerospace
companies as a facilitator to provide opportunities for new and expanded
business for our airport and region. The Airport Authority was a sponsor at the
Oklahoma Aerospace Summit held in Tulsa in 2011.
Airport staff continues to be involved in a business retention program with the
Tulsa Chamber that involves visits to local businesses to learn more about them
and provide assistance. We also routinely coordinate with chamber staff on
potential development projects at the airport.
Bondholders – Airport staff responded to inquiries from rating agencies
about American Airlines bankruptcy, and the Great Plains Airlines litigation.
RESOURCES
Financial – The Airport derives revenues primarily from airline landing
fees and terminal space rental, in addition to non-airline revenues such as
parking, rental cars, fuel flow, and retail and food concessions. Federal grants
and passenger facility charges (PFC’s) provide an important source of funds for
capital projects.
The proposed budget for FY 11-12 was $51,072,492, which consisted of a
$21,361,632 operating budget, a $21,405,160 debt service requirement, and
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ACTION PLAN FOR 2012
$8,305,701 of transfers. The revenues are forecasted to be $34,099,911 with
$16,972,582 in Other Resources. The revenue activity year to date for the FY
11-12 budget is tracking .4% above the forecasted amount, and the expense
activity is tracking 8% below forecasted expenses.
Human – We may have some organizational changes in 2012 as a result
of the expiration of the lease between the Airport Authority and the City of Tulsa.
We are currently conducting an organizational review that will provide
recommendations on improving efficiency, expanding our system to meet general
aviation property development demand, and explore development of multi-modal
facilities.
MISSION STATEMENT
Tulsa Airport Authority’s Mission Statement, as approved by the Board, is as
followsTAIT and TAA are committed to providing a safe, secure, efficient,
self-supporting airport system; having accessible, functional, wellmaintained and attractive facilities; as well as fostering high-quality
needed services; and promoting industrial development and
economic growth for the area; while maximizing efforts to be a good
neighbor to the surrounding communities.
Consistent with the Mission Statement, TAIT has a number of ongoing and
specific objectives for the operation of the airport system. These include:
-
Operate Tulsa International Airport and Richard Lloyd Jones, Jr. Airport in a
safe and secure manner; and provide necessary protective services to the
public, customers, tenants, and employees.
- Provide safe, secure, accessible, functional, well-maintained, and attractive
Airport facilities that provide the desired services and accommodate the air
transportation needs of the Airport’s service areas.
- Make the business decisions required to keep the Airports efficient, selfsupporting, fiscally sound, and able to attract needed growth.
- Provide and support air service development activities to expand and retain
air service.
- Work with the surrounding communities to be a good neighbor.
- Enhance the Airport’s position as an economic development partner for the
region; by supporting aerospace and aviation-related firms and
organizations in their efforts to grow and expand in our region.
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ACTION PLAN FOR 2012
ONGOING ISSUES
Airline Costs
During FY10-11 our airline costs per enplaned passenger increased to $7.87
from $7.64 due to the loss of passengers and an increase in airline rates. The
total airline costs during FY-10-11 were $10,692,117, and the forecast airline
costs for the FY11-12 budget are $11,353,000. The cost per enplaned
passenger for the FY11-12 year to date is $6.42, since we are at revenue
projections and below cost projections so far this fiscal year, however this rate
may increase dependent on the weather and economic conditions that we see
over the next 6 months.
Terminal Improvements
The Transportation Security Administration (TSA) provided final approval to
proceed with the outbound baggage system upgrade. We are currently in the
design stage, and anticipate bidding the project the 2 nd quarter of 2012. The
existing system is obsolete, and needs an upgrade to operate more efficiently
and with more reliability.
The Concourse B upgrade is scheduled to be complete by mid January 2012.
The design for Concourse A will begin the 1st quarter of 2012, with a bid
anticipated later in 2012.
A project to replace and upgrade the switchgear for the Terminal Building
electrical system is currently underway. A contract was awarded to purchase
and install backup generators that will provide coverage for the whole terminal
building. The pre-security and Concourse B areas of the terminal should be
covered by the 3rd quarter of 2012, and Concourse A will be addressed when the
upgrade of that area begins in 2012.
Security
During 2011, the TSA completed installation of the advanced technology
screening machines at the checkpoint. This addition, combined with the
advanced technology walk through units installed several years ago, provide
Tulsa with one of the most advanced checkpoints in this county.
Runway 36R/18L Reconstruction
The phase one reconstruction of Runway 36R/18L was completed in July 2011.
This phase consisted of the reconstruction of 1200 feet of pavement on the south
end of the runway. Phase 2 will begin at the end of February 2012, and consist
of the reconstruction of 1200 feet of pavement on the north end of the runway.
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ACTION PLAN FOR 2012
Phase 3 is currently under design, and will involve the reconstruction north of the
intersection with Runway 8/26. We will also explore other financing options for
this project that will involve pledging future grant funds to make more resources
available in the short term to reduce the overall timeframe for this project.
Noise Land Reuse Plan
The plan for Tulsa International was completed in 2010 and was accepted by the
FAA. The plan requires the airport to dispose of a variety of parcels, most
notably two large areas: 1) along Virgin Street south of the Gilcrease
Expressway, and 2) west of 89th East Avenue a portion adjacent to the Layman
Van Acres Neighborhood south of the airport. While using proceeds from the
sale or lease of the land to reimburse noise grant funds is contemplated by the
plan accepted by the FAA, the airport has the option to pay the FAA (or apply the
funds directly to the Noise Mitigation Program) the current appraised value of the
land as a way to keep the property as part of the airport. For noise grant
property that has already been developed, the airport has set up an escrow
account that will be used to provide reimbursement in an amount equal to the
value of the land at the time it was leased. Appraisals for the vacant parcels are
being developed and will be completed and available for consideration in 2012.
PRIORITIES
Operating Revenue Growth
Due to the economy we continue to see depressed revenues relative to several
years ago and don’t anticipate any significant increases until passenger traffic
returns to previous levels. We began a rewards program for airport purchases
over the last year, and will continue to promote and attempt to expand that
program. The convenience store development did not occur this year when the
developer was not able to obtain financing to move forward.
The next available revenue growth opportunities will be increased parking and
rental car revenues and lease revenue from property development. The Rental
Car Garage is currently in the initial design stages, and it is expected that the
project may move forward in 2013. Airport staff is issuing an RFP for the Mingo
development area, and gathering information to prepare a development plan for
the Highway 169 development area.
The board approved an amendment to the leasing policy that will allow the
payment of a broker’s commission in the lease of property or buildings. This
action was taken to attempt to lease vacant areas of the cargo buildings.
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ACTION PLAN FOR 2012
Airport Liquidity
One of the primary objectives of the new airline lease that began in 2008 was to
increase our liquidity. Specifically, the agreement introduced a revenue sharing
formula for the 5-year agreement that will allow TAA to reach 180 days of cash
by the end of the 5th year. During 2011 we significantly increased our cash
position to over 300 days of cash on hand. This is by far the best cash position
the airport has ever had, and addresses a significant and long term concern.
This was accomplished over the last three years by significantly under spending
our budget, and with the transfer of several restricted accounts to more liquid
accounts as part of our new bond indenture.
Operating Cost Control
The following data is the annual operating expense at ten (10) comparable
airports for 2010.
We continue to compare favorably with our peer airports in regards to opearting
expenses, and we reduced our operating budget by more than 10% for this
budget year. However, as the chart below shows we continue to trail the other
airports in non-airline revenue, which keeps our airline cost per passenger at a
higher level, relative to our peer airports.
Several of our peer airports have large scale parking operations with limited off
airport competition. Oklahoma City has significant property and facilities leases
with the FAA, the Bureau of Prisons, and oil and gas leases. Since Tulsa does
not have those resources available we will need to continue to focus on limiting
and reducing our operating expenses, while we continue to develop our non
airline revenue producing assets.
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ACTION PLAN FOR 2012
As the chart below shows, Tulsa is at the high end of cost per enplaned
passenger due to our lack of non-airline revenue. We are aggressively pursuing
property development efforts, and a rental car garage development that will
provide additional non-airline revenue over the next few years.
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ACTION PLAN FOR 2012
Air Service Development
Airport staff will continue to meet with airlines about potential service restoration
in 2012 and will focus on restoring service to Kansas City and exploring new
service to the northwest. We will continue to face a difficult competitive
environment with other airports to attract new air service to Tulsa. We intend to
explore expanding our incentive program to make it more attractive to airlines
and more competitive with other airports.
Property Development
Infrastructure development continued in the North Development Area with an
extension of a water line from Port Road into the development area. Memorial
Drive was also reconstructed on a new alignment to allow for additional
development in the North Development Area.
Airport staff is currently involved in issuing a Request for Proposals for the Mingo
development area, and a property exchange between the City of Tulsa and the
University of Tulsa for a parcel that will be needed for the development of a
trans-modal rail and truck facility. The other property development projects that
are currently active include the Highway 169 Area, Virgin Street, Airport Hotels,
Cargo Building utilization, CNG station, and the east Terminal Area development.
A consultant was also retained this to assist with the intermodal development
efforts.
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ACTION PLAN FOR 2012
ACTION PLAN
The Action Plan for 2012 will continue to be based on our lines of business which
include Commercial Aviation, Property Management & Development, and
Finance & Business Services.
Commercial & General Aviation
Provide facilities and services for commercial air transportation and General
Aviation at the Tulsa International Airport and the R.L. Jones, Jr. Airport for
residents and visitors to Tulsa, northeast Oklahoma, and portions of Arkansas,
Kansas, and Missouri.
This line of business includes those employees in Building Maintenance, Airfield
Maintenance, Electrical Maintenance, Fleet Maintenance, Fire Department,
Operations, Building Services, R.L. Jones, Jr. Airport, and Marketing. The
priorities for employees involved in this line of business are superior customer
service, public safety, and cost efficient operation.
Key Outcome Measure -
Successfully pass the annual FAA Part 139
Airport Certification Inspection.
Key Outcome Measure -
Comply with TSA security regulations and
the Airport Security Plan.
Key Outcome Measure -
That 80% of user surveys indicate they are
satisfied with the services provided at TUL
and RVS.
Key Outcome Measure-
Maintain an operating cost of $15.00 per
passenger.
Strategies for Commercial & General Aviation1) Continue to utilize the Above and Beyond Program to recognize
and promote the great customer service provided by our Airport
employees and tenants.
2) Conduct at least two customer service surveys during 2012 to track
our performance, and expand our marketing research efforts to
include interactive web-based surveys.
3) Continue to collect comments and utilize the Customer Service
Advisory Team to review them and provide feedback and direction.
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ACTION PLAN FOR 2012
4) Meet regularly with Airport employees, tenants, users, FAA, and
TSA to address and resolve issues pertaining to safety and
security.
5) Conduct a full-scale or table top emergency exercise in compliance
with Part 139 inspection requirements.
6) Conduct an annual review of the Airport’s Aviation Security Plan
(AVSEC) in compliance with TSA requirements.
7) Utilize local media and the T-GOV channel to promote Airport
events and activities, including the latest information on concourse
renovations.
8)
Continue our outreach to the Tulsa Public Schools through our
Aviation Education Program and an adopt-a-school program.
9)
Identify and continue to develop, through the Cultural Advisory
Group, exhibits/facility enhancements that reflect Tulsa's unique art
and cultural attributes and also improve the aesthetic appearance
of the Airport.
10) Update Mission, Vision, and Brand Image for the Airport Authority.
11) Implement organizational changes identified with new lease with
the City of Tulsa.
Property Management & Development
Lease property and buildings to generate revenue to cover Operating and Capital
costs for Tulsa International and R.L. Jones, Jr. Airport.
Provide
infrastructure/systems that are reliable to avoid any impact on services.
This line of business includes employees in Administration, Engineering and
Marketing. The priorities for employees in this line of business are revenue
generation, the development of vacant property, and reliable and cost effective
infrastructure.
Key Outcome Measure -
Increase non-airline revenue above $14 per
passenger.
Key Outcome Measure -
Lease/develop additional property (5-10
acres).
Key Outcome Measure -
Limit capital costs using discretionary funds
to keep our liquidity at present levels.
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ACTION PLAN FOR 2012
Strategies for Property Management & Development1) Actively seek additional State and Federal funds for infrastructure
improvements to assist our aerospace tenants in meeting their facility
requirements.
2) Actively participate and support the efforts of the Oklahoma Aerospace
Industry Association.
3) Complete design and begin construction of rental car/public parking
facilities.
4) Select a developer for the Mingo Development Area.
5) Continue a neighborhood information network with surrounding
neighborhoods.
6) Continue our efforts to closely monitor and participate in community
planning efforts and development review for properties in the area
around RVS.
7) Complete the implementation of the FAR Part 150 Noise Mitigation
Program.
8) Begin the upgrade of the outbound baggage system.
9) Begin the remodeling of the A Concourse.
10) Prepare a Landside Development Plan that includes the requirements
from the Federal Aviation Administration land reuse program for the
Virgin Street area.
11) Complete the property exchange with the University of Tulsa.
12) Complete feasibility plan and solicit development partners for the
development of the rail/truck facility at 56th Street North.
13) Create Development Plan for area east of the Terminal Building.
14) Complete Phase 2 of the Runway 18L/36R reconstruction.
15) Explore additional capital financing for Runway 18L/36R reconstruction
in order to reduce the time of the project.
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ACTION PLAN FOR 2012
Finance & Business Services
This line of business needs to provide timely, accurate, and cost effective
information that assists the other lines of business in meeting their objectives.
This line of business includes employees from Finance, Purchasing, Information
Technology, and Legal.
Key Outcome Measure-
Retain our liquidity to more than 300 days
of unrestricted cash.
Key Outcome Measure-
Keep the annual debt service to 35% of
annual revenue.
Strategies for Finance & Business Services –
1) Continue to benchmark with comparable airports for expense and
revenue comparisons.
2) Complete the development of information systems to provide financial
and management reports that will help support management decisions
for efficient operation.
3) Review staffing levels as appropriate and make adjustments based on
activity and financial conditions. Continue to invest in technology that
will reduce workload and improve efficiency.
4) Develop a stand alone financial system for the Airport.
5) Work with City of Tulsa to renegotiate our Annual Service Agreement
and expiring lease agreement to reduce our annual costs, and to
realign our organization to meet existing challenges and opportunities.
6) Identify a specific suite of interim/periodic management reports for use
by Trustees and Airport Management.
7) Review the performance of the Pikepass system and the agreement
with the Turnpike Authority.
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