Kansas City International Airport Airport Terminal Advisory Group … · Presentation Agenda 1. Overview of Findings 2. Definitions 3. ... – Limited concessions space and retail/food

Kansas City International Airport Airport Terminal Advisory Group

Airport Benchmarking February 11, 2014

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Presentation Agenda

1. Overview of Findings 2. Definitions 3. Airport Benchmarking Caveats 4. Benchmark Airports

- Criteria for Selecting Benchmark Airports - Selected Benchmark Airports

5. Airport Activity and Air Service Profiles 6. Airport Market Area/Demographic Profiles 7. Airport Terminal Building Characteristics 8. Airport Financial Characteristics 9. Airport Terminal Development Case Studies – “Before and After” 10. MCI Takeaways

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Overview of Findings

• MCI has attracted a diverse airline base and higher level of service relative to its peers

• MCI generates higher demand per capita and per household relative to its peers

• MCI has a higher utilization of its terminal relative to its peers

• MCI’s airline costs are nearly 50% lower than the peer group average

• While MCI generates strong parking revenues, its generation of terminal concession revenues are the lowest among the peer group

• MCI’s terminal facilities are unique - Other peer airports generally consist of a single central processing facility with parallel or radiating terminal concourses or piers

• There appears to be no correlation that higher airline costs result in higher fares; increased fares reflect nationwide air fare trends

• There are many common themes among the factors that have resulted in major terminal development programs at other airports, including among others, the need to:

– Replace aging facilities and terminal systems – Expand security checkpoints and passenger check-in – Improve passenger convenience and amenities – Inefficient airline ticketing check-in and aircraft gate utilization – Provide inline baggage systems – Alleviate terminal curbside and roadway congestion

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Definitions

• Enplaned Passengers (Enplanements): The total number of passengers boarding an aircraft

• Deplaned Passengers (Deplanements): The total number of passengers disembarking from an aircraft

• Total Passengers = Enplanements + Deplanements

• Origin & Destination Passengers (O&D): Passengers that begin or end their trip at the airport

• Connecting Passengers: Passengers that connect from one flight to another at an airport

• Average Gross Fare: Average gross air fare including revenue paid to the airline plus fees and taxes (i.e., ticket tax, security fees, PFCs, etc.)

• Average Net Fare: Average gross air fare minus fees and taxes (i.e., ticket tax, security fees, PFCs, etc.)

• Airline Cost per Enplanement (CPE): Total airline revenues (terminal rents, landing/apron fees, etc.) divided by total enplaned passengers

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Airport Benchmarking Caveats

• “If you’ve seen one airport, you’ve seen one airport” – No two airports are identical – Each has unique characteristics including passenger market, runway

configuration, terminal layout, age of terminal, etc.

• Comparing “Apples and Oranges” – While benchmarking against other airports can uncover “high level”

relationships, each airport’s unique circumstances must also be considered

– The list of airports to compared may change depending on benchmark(s) under examination

• Benchmarking works best if you compare your airport to your airport over time

– However, even with time series benchmarking, all unique and uncontrollable circumstances must be carefully considered

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Criteria for Selecting Benchmarking Airports

*Enplanements between 0.25% - 1% of total U.S. enplanements (or 1.8M – 7.3M) per FAA

MEDIUM HUB AIRPORTS* +/- 2 MILLION ENPLANEMENTS TO MCI OVER 70% O&D ENPLANEMENTS U.S. MAINLAND AIRPORTS

SELECTED BENCHMARK

AIRPORTS 20 Medium Hub Airports

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Selected Benchmark Airports

AIRPORT NAME (Listed Alphabetically) CODE Austin-Bergstrom International AUS

Cincinnati/Northern Kentucky International CVG

Dallas Love Field DAL

General Mitchell International (Milwaukee) MKE

Indianapolis International IND

John Wayne Airport-Orange County SNA

Kansas City International MCI

Lambert-St Louis International STL

Louis Armstrong New Orleans International MSY

Metropolitan Oakland International OAK

Nashville International BNA

Norman Y. Mineta San Jose International SJC

Pittsburgh International PIT

Port Columbus International CMH

Portland International PDX

Raleigh-Durham International RDU

Sacramento International SMF

San Antonio International SAT

Southwest Florida International (Ft. Myers) RSW

William P Hobby (Houston) HOU

• MCI ranks 6th among the selected benchmark airports in the number of annual passengers (2012)

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Benchmark Airport Terminal Buildings

Kansas City Int’l Austin-Bergstrom Int’l Cincinnati/Northern Kentucky Int’l

Dallas Love Field General Mitchell Int’l (Milwaukee)

Indianapolis Int’l John Wayne-Orange County

Lambert-St Louis Int’l Louis Armstrong New Orleans Int’l

Metropolitan Oakland Int’l

Nashville Int’l Norman Y. Mineta San Jose Int’l Pittsburgh Int’l Port Columbus Int’l Portland Int’l

Raleigh-Durham Int’l Sacramento Int’l San Antonio Int’l Southwest Florida Int’l (Ft. Myers)

William P Hobby (Houston)

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AIRPORT ACTIVITY AND AIR SERVICE PROFILES Section I

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Overview of Airport Activity and Air Service Profiles

• MCI attracts a higher level of airline service than most of its peers and its air fares fall in the average range

Sources: ACI-NA and Diio Mi.

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Airline Diversity

MCI enjoys a diverse airline base relative to its peers. The largest of its 7 airlines, Southwest/AirTran, has a 47% share

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AIRPORT MARKET AREA/DEMOGRAPHIC PROFILES Section II

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Overview of Airport Market Area/Demographic Profiles

• Compared to its peers, MCI ‘s market area ranks in the lower third in total population, purchasing power, and number of households

• However, MCI generates higher than average enplanements per capita, per $1 million of purchasing power, and per household

Sources: Diio Mi and ACI-NA.

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Nearby Regional Airports

MCI benefits from the fact that its nearest competitor airport is nearly 3 hours driving time away

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AIRPORT TERMINAL BUILDING CHARACTERISTICS Section III

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Overview of Airport Terminal Building Characteristics

• MCI’s total terminal space is in the lower third of its peers * – As a result, its utilization of terminal space is high

• MCI falls in the middle of its peer group in available terminal gates and gate utilization

* Note: MCI figures exclude Terminal A which was recently closed. The Airport is currently only using approximately 30 of the 40 available gates in Terminals B and C.

Sources: Airport websites, ACI-NA, and FAA Form 127.

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Enplanements per Square Feet

• Utilization of MCI ‘s terminal space exceeds the peer group average *

Former connecting hubs (green bars)

* Note: Excludes Terminal A which was recently closed.

Higher Utilization

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Average Daily Aircraft Turns per Gate

• The airline’s gate utilization at MCI falls below the peer group average *

Higher Utilization

* Note: MCI is currently only using 30 of the 40 available gates in Terminals B and C. Excludes Terminal A which was recently closed.

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Airport Enplanements per Available Gate

• Enplaned passenger throughput per gate at MCI is average relative to peers *

Higher Utilization


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AIRPORT FINANCIAL CHARACTERISTICS Section IV

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Overview of Airport Financial Characteristics

• MCI’s airline costs (CPE) are the third lowest in its peer group – CPE as a percentage of average air fare is below 3% (2.8%)

• MCI produces acceptable levels of nonairline revenues overall; however, it is dead last in generation of terminal concession revenues

• MCI’s operating expenses per enplanement are just below the peer group average

Sources: FAA Form 127 and Airport Official Statements.

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Current (FY 2012) Airline Cost per Enplanement (CPE)

• Airlines operate at a significantly lower cost at MCI relative to peer airports


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Projected Future Airline Cost per Enplanement (CPE)


• When projected increases in CPE are considered, MCI holds its position

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Terminal Concession Revenues per Enplanement

• MCI’s terminal concession revenues per enplanement are the lowest among the peer group

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AIRPORT TERMINAL DEVELOPMENT CASE STUDIES “BEFORE AND AFTER”

Section V

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Indianapolis International Airport

• New midfield terminal with 2 concourses on greenfield site • Opened – November 2008 • Cost - $1.1 Billion • Total Terminal Space – 1.2 million square feet • Security screening - 2 security checkpoints and 22 screening lanes with inline EDS baggage screening • Number of Gates - 40 initially, expandable to 44, including 2

international gates accommodating up to an A380 aircraft • Dual-level roadway system for arrivals and departures • New Air Traffic Control Tower • Auto Parking – 5,900 public spaces and 1,200 rental car spaces

Source: Airport website. http://www.indianapolisairport.com/information_news/midfieldProject.aspx Old Terminal

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Indianapolis International Airport - Continued

Source: Airport website. http://www.indianapolisairport.com/information_news/midfieldProject.aspx

Need For a New Terminal • Old terminal site was constrained on both landside and

airside, thereby limiting expansion capacity • Old terminal space was constrained:

– Lobby width was too narrow – Limited space for security checkpoints and x-ray equipment,

resulting in improvised security checkpoints and long lines – Limited concessions space and retail/food & beverage offerings

• Old terminal needed major rehabilitation of systems and equipment

• Location of new terminal in midfield (between two parallel runways) significantly improved the efficiency of aircraft taxiing and operations - saving airline fuel costs

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Indianapolis International Airport - Continued

What has actually happened? • Enplanements have fallen since 2008 –

primarily due to a nationwide recession • Airline CPE peaked at $11.35 in 2009, due in

part to increased debt service and declining enplanements, but has since fallen

• Air Fares at the Airport have continued to increase since 2009 commensurate with nationwide trends

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Sacramento International Airport

• New Terminal B • Opened – October 2011 • Cost - $1.03 billion • Total Terminal B Space – 669,000 square feet

(~1.2 million square feet total) • Number of Gates - 19, expandable to 27 (in addition to 15

gates in Terminal A) • Landside processing building (unsecured area) and airside

concourse (secured area) connected by an elevated Automated People Mover

• Inline EDS baggage screening system • Dual-level roadway system for arrivals and departures

Source: Airport website: http://www.sacramento.aero/smf/about

Old Terminal Area New Terminal Area

Source: Turner Construction Company.

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Sacramento International Airport - Continued

Source: Airport Improvement Magazine.

Need For a New Terminal • Aging infrastructure – old Terminal B was 44

years old • Existing mechanical and electrical systems had

reached their useful life and needed replacement

• Old Terminal B could not meet projected future demand

• Narrow entrances on the upper concourse were too small for new TSA security checkpoint requirements

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Sacramento International Airport - Continued


primarily due to a nationwide recession • Airline CPE increased to $15.74 in 2012, due

in part to increased debt service and declining enplanements


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Raleigh Durham International Airport

• New Terminal 2 • Opened – January 2011 • Cost - $570 million • Total Terminal 2 Space – 920,000 square feet (~1.1 million square feet total) • Number of Gates - 36, including 3 international gates (in addition to 9 gates in Terminal 1) • Common use check-in equipment to improve facility utilization • Improved terminal concessions with 40 shops and restaurants • Security screening - 10 checkpoint lanes, a fully automated inline

EDS baggage screening system, and Federal Inspection Services (FIS) for international passengers

• Dual-level roadway system for arrivals and departures • Demolition of old Terminal C

Source: Raleigh Durham International Airport

Old American Terminal C

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Raleigh Durham International Airport - Continued

Need for a New Terminal • Old terminal was functioning well above its designed capacity • Old terminal was originally designed and optimized to function as

American’s connecting hub in 1985 • Pre-security areas (ticketing and baggage claim) were undersized and

over capacity to serve non-connecting passenger traffic • Heating, electrical and utility systems were over 20 years old • Inefficient airline ticketing check-in and aircraft gate utilization

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Raleigh Durham International Airport


primarily due to a nationwide recession • Airline CPE increased to $6.53 in 2012, due in

part to increased debt service and declining enplanements

• Air Fares at the Airport have continued to increase since 2009 – commensurate with nationwide trends

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Louis Armstrong New Orleans International Airport

• Proposed new terminal on greenfield site • Anticipated opening - 2018 • Estimated Cost - $826 million, plus another $85 million

for exit ramps on Interstate 10 • Total Terminal Space - 650,000 square feet • Two terminal concourses with consolidated security

checkpoints and airline ticket counters • Number of Gates – 30 initially, expandable to 43 • Auto Parking - 2,000 spaces • New on-airport hotel

PROPOSED NEW AIRPORT

TERMINAL

Source: Airport website: http://flymsy.com/press-room/Mayor-Landrieu-Aviation-Board-unveil-conceptual-design-for-new-world-class-airport-terminal-complex?&Sort=

Source: Need For a New Terminal • Aging infrastructure – Portions of terminal are over 50 years old • Existing mechanical and electrical systems have reached their

useful life and need replacement • Inefficient passenger and baggage processing:

– Multiple security checkpoints and long passenger wait times – Baggage screening is done manually through EDS machines located

at multiple ticket counters – Terminal concessions are not balanced between secured and non-

secured areas. Passenger choices are also limited due to multiple security checkpoints

• Vehicle access and level of service is poor during peak traffic periods – Direct connection to I-10 is not possible

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Dallas Love Field

New Terminal Facts • New terminal being rebuilt on existing terminal site • Anticipated opening – In phases starting in late 2012; complete in Fall 2014 • Cost - $505 million • Total Terminal Space – 825,000 square feet • Single terminal concourse with consolidated security checkpoints and airline ticket

counters • Number of Gates - 20

Need For a New Terminal • The old terminal had outlived its useful life

– All mechanical and electrical systems were in need of replacement

• Old terminal was dark and confining • Southwest wanted a new terminal in place when

the Wright Amendment expires (Oct. 2014)

Source: Airport website: http://www.lovefieldmodernizationprogram.com

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Dallas Love Field - Continued

Source: Hensel Phelps Construction Co.

Old Terminal

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MCI “TAKE-AWAYS” Section VI

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MCI Takeaways from Benchmarking Analysis

• MCI has attracted a diverse airline base and offers more nonstop flights than its peers (at average fare levels)

• When compared to other markets served by a single airport, MCI generates higher demand per capita and per household

• MCI utilizes its terminal space more fully than its peers, which is in part a function of having less available space within the terminals

• MCI’s airline costs are nearly 50% lower than the peer group average, which suggests it can undertake major capital projects in the future without pushing airline CPEs to unreasonable levels

• While MCI generates strong parking revenues, it falls short in its generation of terminal concession revenues (nearly 60% lower than the peer group average); largely a function of MCI’s terminal layout

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MCI Takeaways from Benchmarking Analysis

• MCI’s terminal facilities are unique – Other peer airports generally consist of a single central processing facility with parallel or

radiating terminal concourses or piers

• At airports that have recently undertaken major terminal development programs: – Average airline CPE has generally risen to a total of $10 to $18 per enplanement – There appears to be no correlation between airline costs and fares; increased fares reflect

nationwide air fare trends, not increased airport costs

• Common themes among airports that have recently undertaken major terminal development programs, include:

– Aging facilities and terminal systems (40 to 50 years old) – Inadequate terminal capacity that led to overcrowding and poor passenger amenities – Existing terminal expansion possibilities constrained by airside and landside geometries – Insufficient number of security checkpoints with inadequate space and long passenger

processing times – Inadequate space for inline baggage Explosive Detection System (EDS) machines – Inefficient airline ticketing check-in and aircraft gate utilization – Desire to expand terminal concessions to enhance passenger offerings and increase concession

revenue – Congestion on the terminal curbside and roadway and need for dual level roadway/curbs – New terminal location improved airfield operating efficiency and aircraft taxiing

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APPENDIX

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AIRPORT ACTIVITY AND AIR SERVICE PROFILES Section I Appendix Charts

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Daily Nonstop Flights

• MCI falls slightly above average with 152 daily nonstop flights

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Total Nonstop Destinations

• MCI serves 41 domestic markets and 4 international markets with nonstop service (for the month of January 2014)

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Origin & Destination vs. Connecting Passengers

• Approximately 8% of MCI’s passengers connect to other flights

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Average Gross One-Way Fares

• MCI’s average gross fare falls just below the peer group average

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AIRPORT MARKET AREA/DEMOGRAPHIC PROFILES Section II Appendix Charts

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Total Market Area Population

• MCI’s total population within a 60-mile radius is lower than the peer group average

Airports that serve large markets with more than one commercial service airport (green bars)

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Total Purchasing Power


• Total purchasing Power within a 60-mile radius of MCI is lower than the peer group average

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Total Households • The total number of households within a 60-mile radius of MCI is lower than the peer

group average


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Airport Enplanements per Capita

• MCI’s passenger enplanements per capita are higher than the peer group average


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Airport Enplanements per $1 Million of Purchasing Power

• MCI’s passenger enplanements per $1 Million of Purchasing Power is higher than the peer group average


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Airport Enplanements per Household

• MCI’s passenger enplanements per household are higher than the peer group average


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AIRPORT TERMINAL BUILDING CHARACTERISTICS Section III Appendix Charts

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Gross Terminal Square Footage

• MCI’s has less gross terminal space than the peer group average*

* Note: Excludes Terminal A which was recently closed.


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Total “Available” Gates

• MCI has more available gates than the peer group average *


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AIRPORT FINANCIAL CHARACTERISTICS Section IV Appendix Charts

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Current Airport CPE as Percentage of Gross One-Way Fares

• MCI’s airline CPE as a percentage of its average gross one-way fare falls below the peer group average

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Nonairline Revenues per Enplanement

• MCI’s nonairline revenues per enplanement are above the peer group average (nonairline revenues include parking, terminal concessions, rental car, other airport tenants, etc.)

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Operating Expenses per Enplanement

• MCI’s operating expenses per enplanement are lower than the peer group average

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AIRPORT TERMINAL DEVELOPMENT CASE STUDIES “BEFORE AND AFTER”

Section V Appendix Charts

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Southwest Florida International Airport (Ft. Myers)

• New midfield terminal with 3 concourses (expandable to 5) on greenfield site

• Opened – September 2005 • Cost - $438 million • Total Terminal Space – 798,000 square feet • Security Screening - 3 checkpoints with inline EDS baggage screening • Number of Gates - 28 (including 2 Int’l gates), expandable to 65 gates

(on 5 concourses) • Dual-level roadway system for arrivals and departures • Auto Parking – 11,250 Spaces

Old terminal

Source: Lee County Port Authority

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Southwest Florida International Airport (Ft. Myers) - Continued

Need For a New Terminal • By 2004, at 5 million passengers the old terminal had exceeded

its design capacity (3 million passengers) • Old terminal was too narrow and could not be expanded due to

airside and landside constraints • Lack of dual taxilanes inhibited aircraft flow and required push

back of aircraft from gates • Existing single-level roadway system and curb frontage was

routinely congested • Existing parking spaces were often full, requiring auto parking on

grass areas • Old terminal location was not ideally suited for long-term

efficiency of aircraft operations Source: Lee County Port Authority

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Southwest Florida International Airport (Ft. Myers) - Continued


primarily due to a nationwide recession • Airline CPE increased to $7.29 in 2006 due to

increased debt service but has since remained relatively stable


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San Jose International Airport

• Terminal Area Improvement Program • New Terminal B/North Concourse & Renovated Terminal A • Opened – June 2010 • Cost - $1.3 billion • Total Terminal Space – 943,757 square feet • Number of Gates - 28, expandable to 40 • Inline EDS baggage screening system in both terminals • Expansion of security checkpoints and terminal concessions

in Terminal A • Single-level split roadway system for arrivals and departures • 3,000 space consolidated rental car facility • Roadway and terminal access improvements • Demolition of old Terminal C

Terminal C (Demolished)

Source: Airport website: http://www.flysanjose.com/fl/about.php

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San Jose International Airport – Continued

Need For a New Terminal • Aging infrastructure at Terminal C – Originally built in 1965 • Terminal C only allowed for ground loading of aircraft • Terminal A was inefficient and inadequate in size, resulting in long

security checkpoint lines and inefficient airline ticket counter queuing

• Underperforming terminal concessions due to limited space and expansion capabilities

• Outdated technology and insufficient passenger amenities • Congested and complicated terminal roadway system • Old Rental car facilities were at capacity with no room for

expansion

Source: Hensel Phelps Construction Co.

Source: Fentress Architects

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San Jose International Airport – Continued


primarily due to the nationwide recession • Airline CPE increased to $12.29 in 2012, due

in part to increased debt service and declining enplanements


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John Wayne Airport (Orange County)

• New Terminal C • Opened – November 2011 • Cost - $543.1 million • Total Terminal C Space – 282,000 square feet (730,505 square feet total) • Number of Gates - 20, including 2 international gates • Common use terminal equipment • Inline EDS baggage system • Expanded Remain Over Night (RON) aircraft parking apron • Five-level parking garage, with 2,000+ spaces • Expanded terminal concessions • Dual-level roadway system for arrivals and departures • New central utility plant

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Need For a New Terminal • Old terminal was functioning well above its designed capacity • Passenger demand was not balanced between the two existing

terminals • Existing terminal concessions space was undersized • Utilization of old terminal check-in counters, aircraft gates, and

boarding processes was unbalanced and inefficient for both passengers and air carriers

• Old terminal did not have capability to process international passengers

Source: Parsons

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primarily due to a nationwide recession • Airline CPE increased modestly to $9.71 in

2012, due in part to increased debt service and declining enplanements


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Nashville International Airport • Terminal building renovations 2006 - 2011 • Completed: Summer 2011 • Cost – Phase I: $46 million Phase II: $34.5 million • Total Terminal Space – 882,000 square feet • Phase I - Updated and expanded food & beverage services, flight

information systems, and created a new consolidated security checkpoint with 12 lanes (completed in 2009)

• Phase II - Expansion of the ticketing and check-in areas, expansion and renovation of bathrooms, and renovation of the baggage claim and an in-line explosive detection system (EDS) (completed in 2011)

• Number of Gates – 46 gates

Need For Terminal Renovations • Consolidation of dual security checkpoints into one

central checkpoint allowed for more efficient operations, expanded security area, and space for new concessions

• New Inline EDS machines allowed for additional space in airline ticket counter space

• Expanded terminal concessions increased terminal concession offerings and revenue

• Expanded bathrooms in secured areas increased passenger convenience

Source: Airport website. www.flynashville.com

Source: Airport website. www.flynashville.com

Kansas City International Airport Airport Terminal Advisory Group … · Presentation Agenda 1. Overview of Findings 2. Definitions 3. ... – Limited concessions space and retail/food

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