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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2015. Innovative Revenue Strategies – An Airport Guide. Washington, DC: The National Academies Press. doi: 10.17226/22132.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2015. Innovative Revenue Strategies – An Airport Guide. Washington, DC: The National Academies Press. doi: 10.17226/22132.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2015. Innovative Revenue Strategies – An Airport Guide. Washington, DC: The National Academies Press. doi: 10.17226/22132.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2015. Innovative Revenue Strategies – An Airport Guide. Washington, DC: The National Academies Press. doi: 10.17226/22132.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2015. Innovative Revenue Strategies – An Airport Guide. Washington, DC: The National Academies Press. doi: 10.17226/22132.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2015. Innovative Revenue Strategies – An Airport Guide. Washington, DC: The National Academies Press. doi: 10.17226/22132.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2015. Innovative Revenue Strategies – An Airport Guide. Washington, DC: The National Academies Press. doi: 10.17226/22132.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2015. Innovative Revenue Strategies – An Airport Guide. Washington, DC: The National Academies Press. doi: 10.17226/22132.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2015. Innovative Revenue Strategies – An Airport Guide. Washington, DC: The National Academies Press. doi: 10.17226/22132.
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Suggested Citation:"Summary." National Academies of Sciences, Engineering, and Medicine. 2015. Innovative Revenue Strategies – An Airport Guide. Washington, DC: The National Academies Press. doi: 10.17226/22132.
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S-1 Summary Innovative Revenue Strategies—An Airport Guide S.1 Backstory S.2 Project Objec ves and Research Approach S.3 Innova ve Revenue Strategies S.4 Implementa on of the Strategies S.5 Airport Guide Organiza on S.6 Conclusions S.1 BACKSTORY Airports are complex organiza ons that increasingly depend on a variety of revenue sources to fund maintenance of airport facili es, day-to-day management of opera ons, capital improvements, marke ng, and business innova ons. If an airport is fortunate enough to own large tracts of land, real estate or natural resource development may provide the opportunity for significant revenue development. For the majority of airports, achievement of new net revenues to the airport sponsor involves incremental ac ons that take advantage of mul ple opportuni es. Mobile technologies are changing the way that passengers use the terminal and airport tenants communicate with their customers. Point of sale (POS) systems provide concessionaires with detailed informa on about what customers buy and when. Technology presents opportuni es to alter use of space in the terminal and focus more precisely on customer needs and wants. In this sense, airports are following in the footsteps of other travel industries, such as hotels and airlines, by geŽng to know exactly who are their best customers. Some airports are taking over businesses that airlines or other companies once provided or managed. These include services such as ground handling, gate management, central logis cs and warehousing, and trash and recycling. In smaller markets, airport operators are consolida ng and managing services and facili es that benefit mul ple users, such as janitorial services, communica ons systems, and consolidated cargo facili es. Increasingly, airport sponsors are experimen ng with different types of par cipa on in real estate development and natural resource extrac on. While a ground lease con nues to be the most common

INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE S-2 way to parcipate in on-airport development, some airport sponsors are foregoing a poron of ground rent for a future share of tenant rent or gross revenues or for an equity share in the project. Airports that sit on land with natural resources and decide to develop the mineral estates can collect bonus payments, royales, and rent for use of surface areas. Both airports owned by municipalies and by authories have experimented with parcipatory leases. The policies of the airport’s governing enty shape the ways that an airport can parcipate in a development project. Other modes of transportaon, such as highways and public transit, have recognized the value added by construcon or improvements to these systems. Beneficiaries of these projects oŠen parcipate in their financing through user fees and special taxaon districts. While airports aŒract economic acvity near the airport, airports do not usually employ value capture techniques, except to charge access fees to off- airport shuŒles and parking facilies for use of the airport. Some airports, such as Denver Internaonal, Detroit Metropolitan Wayne County, Memphis Internaonal, and Hartsfield-Jackson Atlanta Internaonal, are pursuing airport city concepts that recognize the contribuon of industry and commerce near an airport. Perhaps one of the most frui–ul areas of potenal innovaon resides within exisng airport businesses. Passenger-dependent enterprises, such as parking, rental cars, and concessions, each present tangible opportunies for airport operators to acvely manage program offerings, secure the best tenants for the airport, and increase net revenues to the airport sponsor. S.2 PROJECT OBJECTIVES AND RESEARCH APPROACH The objecve for this Airport Guide is to organize and describe a broad paleŒe of strategies and techniques used by airports and other modes of transportaon to improve exisng revenue sources or to engage in new businesses or services. This Airport Guide seeks to encourage airport operators to envision innovave revenue opportunies as a start-up company would, by: Recognizing and responding quickly to the opportunies Embracing a culture of change Using available informaon to gauge market demand and project feasibility Understanding the level of acceptable risk to airport sponsors and taking acon accordingly To arrive at a set of useful strategies, the Research Team embarked on the process described in Figure S-1. Many groups and individuals parcipated in the effort, represenng a rich knowledge base that included airport execuves and managers, FAA, TRB, experts in airport financing, airport directors, chief financial officers (CFOs), business development and property managers, concession and adversing specialists, and experts in parking, rental cars, ground transportaon, and value capture. One expert was from Canada and at least two have had extensive internaonal experience. Airport staff and economic development enes also contributed to in-depth case studies of Indianapolis Internaonal Airport, Springfield-Branson Naonal Airport, PiŒsburgh Internaonal Airport, McCarran Internaonal Airport (Las Vegas), Dallas/Fort Worth Internaonal Airport, and the Boston Convenon and Exhibion Center.

SUMMARY S-3 Figure S-1: Research Process Prepared by: KRAMER aerotek inc. 2014 Improve Net Revenues of GOAL the Airport Review Revenue Acvies and Techniques at Airports Process Improvements New Opportunies & Partnerships A Few Good Ideas Expert Board Working Session Honorable Menon Summary Discussion Detailed Evaluaon Case Studies Implementaon Consideraons Airport Guide Other Prospect Techniques (not used by airports)

INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE S-4 S.3 INNOVATIVE REVENUE STRATEGIES Ul mately, the Research Team built this Airport Guide around five strategies. 1. Focus on Airport Customer Needs and Wants a. Customers = airlines, passengers, general avia on, and airport tenants b. Objec ves = enhanced customer experience, greater customer sa sfac on, and increased customer spending 2. Airport-Provided Services/Shared Services, Facili€es, and Equipment a. Greater efficiencies and cost savings through shared use of equipment and facili es b. Where feasible, airport provides services to tenants and passengers using airport staff or through direct management of third-party contractors 3. Revenue Par€cipa€on in Real Estate and Natural Resource Development a. Leases and equity shares b. Direct ownership c. Public-private partnerships (P3s) d. Joint development 4. Value Capture and Other Innova€ve Financing a. Airport access and privilege fees b. Improvement districts c. Tax sharing d. Tax increment financing e. Infrastructure banks and TIFIA (the Transporta on Infrastructure Finance and Innova on Act) 5. Improvements to Exis€ng Airport Businesses a. Management alterna ves b. Administra ve program development c. Performance measures d. Informa on technology to support revenue development This Airport Guide presents innova ve revenue strategies and 96 techniques that can be used to implement those strategies. The mul tude of ways to implement the strategies speaks to the fact that every airport operator will arrive at a unique combina on of solu ons to improve net revenues to the airport sponsor. The strategies provide a useful framework to consider revenue opportuni es and the techniques serve as examples of ways to implement each strategy. S.4 IMPLEMENTATION OF THE STRATEGIES Within the airport complex, implementa on of the strategies will occur across mul ple departments and func onal areas. To locate implementa on op ons that may hold promise, each of the techniques is numbered and associated with a primary func onal area. Aircra™ and Passenger Services – AS Business Development – BD Cargo – CA Concessions – CN Energy Management and Alterna ves – EN

SUMMARY S 5 Environmental – EV Finance and Property Management – FN Ground Transportaon – GT Informaon Technology – IT Legal and Contracts – LC Parking – PK Planning, Design, and Administraon – PL Service Quality – SQ Terminal Operaons – TO Table S 1 presents a master list of the revenue techniques and links each technique to a primary funconal area and a primary strategy. Obviously, there are interrelaonships. For example, tax increment financing is listed as a financing technique that also would involve legal and contracts. Similarly, improvements to an exisng parking program would engage both parking staff and planning, design and administraon staff, and probably also legal staff. Airports also organize funcons differently. For example, at the largest airports, Finance is oen a separate department from Properes, whereas at smaller airports these funcons may occur in one department. Table S 1 is intended to help readers find specific discussions in this Airport Guide and should be used as a navigaon tool. S.5 AIRPORT GUIDE ORGANIZATION This Airport Guide presents a macro approach to innovave revenue strategies with many ideas and addional references for further informaon. The organizaon of the Airport Guide is intended to make it easy for readers to search the document and find topics of interest. Chapter 1 presents an overview of why a discussion of innovave revenue strategies is relevant. Chapter 2 explains each of the five revenue strategies. The next five chapters discuss each strategy and present implementaon techniques and examples. Chapter 8 offers six in depth case studies from organizaons that have tried various techniques described in this Airport Guide. Indianapolis Internaonal Airport, for its innovave concession program McCarran Internaonal Airport and Pisburgh Internaonal Airport, for their use of different types of parcipatory leases Springfield Branson Naonal Airport, for its ground handling enterprise Dallas/Fort Worth Internaonal Airport, for its foreign trade zone and use of value capture The Boston Convenon and Exhibion Center, for its combined state and local effort to use value capture to help finance the project There are three appendices. Appendix A is an annotated bibliography. Appendix B lists definions and abbreviaons. Appendix C is an index of the revenue generang techniques discussed in the Airport Guide, with page numbers to facilitate finding discussions of a parcular topic.

INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE S-6 S.6 CONCLUSIONS Today, there is no such thing as a simple commercial airport. Most airports oversee a complex set of enterprises. Except at their largest connec‚ng hubs, airlines depend more on airport sponsors and third- party contractors to provide ground support, passenger processing, and baggage handling. While the financial contribu‚on of airlines to airports remains very significant, airport operators are seeking addi‚onal ways to pay for maintenance, day-to-day opera‚ons, and capital projects. For most airports, increasing net revenue to the airport sponsor comes from cost savings, improvements to exis‚ng airport businesses, and engagement in new, non-aeronau‚cal ac‚vi‚es. This approach calls on airports to have vision, a strategy, and an ac‚vist approach to recognizing opportuni‚es, evalua‚ng risk, and engaging in innova‚on. The U.S. domes‚c system of airports offers many examples of innova‚on. This Airport Guide provides five strategies to increase net revenues to the airport sponsor. Implemen‚ng the strategies is likely to be a con‚nuous process of incremental improvements. Each airport will find its own combina‚on of techniques that work, and every airport can contribute addi‚onal ideas and its own experience of ways to implement the strategies.

Table S-1: Index of Implementa on Techniques and Revenue Strategies Primary Code Innova ve Techniques and Improvements Customer Focus Shared Services, Facili es, Systems, and Equipment Revenue Par cipa on Value Capture Improvements to Exis ng Businesses Aircra€ & Passenger Services – AS AS-1 Above the Wing X AS-2 Below the Wing X AS-3 Deicing X AS-4 Glycol Recovery and Recycling X AS-5 Fuel Sales and Fueling Vehicles X AS-6 Consolidated Fuel Farm X AS-7 Ground Services Equipment and Maintenance Facility X Business Development – BD BD-1 Passenger Services X BD-2 Business Services X BD-3 Leisure Services X BD-4 Other Services X BD-5 Communicaon Systems and Cell Phone Towers X BD-6 Joint Markeng and Adversing X BD-7 Airport Cies X BD-8 Foreign Trade Zones (FTZs) X BD-9 Marine Port Districts X Cargo – CA CA-1 Consolidated Air Cargo Facility X Concessions – CN CN-1 Concession Mix – Time, Price, Concept, and Brand X CN-2 Conversion of Non-Revenue Space X CN-3 Incubator/Assistance Programs X CN-4 Point of Sale (POS) Data Collecon X CN-5 Direct Contracts with Individual Brands or Brand Families X CN-6 CONRACs and QTAs X (connued on next page)

Primary Code Innovave Techniques and Improvements Customer Focus Shared Services, Facilies, Systems, and Equipment Revenue Parcipaon Value Capture Improvements to Exisng Businesses CN-7 Definion of Terms in Rental Car Agreements X CN-8 Bid Document and Concession Agreements X CN-9 Rental Car Facility Rents (if not in a CONRAC) X CN-10 Off-Airport Privilege Fee X CN-11 Audits X CN-12 Environmental Mi ga on X CN-13 Rental Car Trash Recycling X CN-14 Leers of Credit X CN-15 Direct Contracts with In-Terminal Concessionaires X CN-16 Fee Manager Alterna ve X CN-17 Master or Prime Concessionaire Alterna ve X CN-18 Third-Party Developer Alterna ve X CN-19 Combined Management Approach X CN-20 Program Strategy, Vision, Goals, and Objecves X CN-21 Selecon of Concession Management Alternave X CN-22 Market Research X CN-23 Commercial Plan X CN-24 Facilies Requirements X CN-25 Procurement Methods X CN-26 Concession Documents X CN-27 Communicaons and Monitoring X Energy Management & Alternaves – EN EN-1 Ulies Reimbursement/Separately Metered Ulies X Environmental – EV EV-1 Trash Removal and Recycling X Finance & Property Management – FN FN-1 Parcipang Leases and Equity Parcipaon X FN-2 Direct Ownership X FN-3 Public-Private Partnerships (P3) X Table S-1 (Connued).

Primary Code Innovave Techniques and Improvements Customer Focus Shared Services, Facilies, Systems, and Equipment Revenue Parcipaon Value Capture Improvements to Exisng Businesses FN-4 Joint Development X FN-5 Mineral Estate Parcipang Leases X FN-6 Airport Access and Privilege Fees X FN-7 Tax Increment Financing (TIF) District X FN-8 Local Income and Payroll Tax X FN-9 Sales Tax/Occupancy Tax X FN-10 Transfer of Development Rights (TDRs) X FN-11 Connecon Fees X FN-12 Business Improvement Districts (BIDs) X FN-13 Special Assessment/Be erment District X FN-14 Land Value Tax X FN-15 Transportaon Ulity Fees (TUFs) X FN-16 Infrastructure Bank X FN-17 TIFIA X Informaon Technology – IT IT-1 Mobile Applicaons X IT-2 Free Wi-Fi to Airport Passengers X IT-3 Digital Adversing X IT-4 Social Technologies X Parking – PK PK-1 Parking Product Mix X PK-2 Parking Reservaon and Payment Systems X PK-3 Guidance Systems X PK-4 Parking Loyalty Programs X PK-5 Self-Operaon X PK-6 Management Contract X PK-7 Concession Agreement X PK-8 Combined Approach X PK-9 Parking Analycs and Alternaves X (connued on next page)

Primary Code Innovave Techniques and Improvements Customer Focus Shared Services, Facilies, Systems, and Equipment Revenue Parcipaon Value Capture Improvements to Exisng Businesses PK-10 Performance Monitoring X PK-11 Technologies that Support Parking Revenue Development X Planning, Design, & Administraon – PL PL-1 Badging X Service Quality – SQ SQ-1 Quality Assurance X SQ-2 Customer Assistance X SQ-3 Special Assistance X SQ-4 Loyalty Programs X Terminal Operaons – TO TO-1 Passenger Processing X TO-2 Way-Finding X TO-3 Airport Cleanliness X TO-4 Baggage Delivery Services X TO-5 Building Services to Airlines/Concessionaires X TO-6 Curbside or Remote Baggage Drop-off/Check-in X TO-7 Janitorial X TO-8 Logiscs Services and Warehouses for Concessionaires X TO-9 Lounges/Clubrooms X TO-10 Meeng Rooms X TO-11 Shared Gates X TO-12 Wheelchair Services X Table S-1 (Connued).

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TRB’s Airport Cooperative Research Program (ACRP) Report 121: Innovative Revenue Strategies – An Airport Guide describes a broad range of tools and techniques to improve airport revenue streams, recover costs, and achieve operational efficiencies. The report identifies customer needs; airport-provided services and shared services, facilities, and equipment; revenue participation in real estate and natural resource development; value capture and other financing opportunities; and improvements to existing airport businesses.

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