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Airport/Airline Business Working Group
This working group pertains to issues that are related to airport-airline relationship, and use and lease agreements between airports and airlines. The working group works on identifying emerging trends and best practices relating to capital project planning including capital projects consultation process, airport opportunities to explore providing services historically provided by airlines, airline rate making methodologies and enhancing and streamlining rates and charges consultation processes.
Working Group Projects
Rates and Charges Policy Survey - FAA has started the process to review the current Rates and Charges Policy by scheduling three informal listening sessions on Rates and Charges – one with airports, one with airlines, and one with lawyers and consultants. ACI-NA hosted the meeting at the office in Wahsington, D.C. and had three staff members participate in addition to five airport representatives, including the leadership of this Working Group. In preparation for the meeting, staff set up multiple conference calls with the Joint Finance/Legal Taskforce on the Rates and Charges Policy Review to develop our strategy for the meeting. The consensus is that the current Rates and Charges Policy has great flexibility that takes into account the significant differences among airports of different size and governance structure. The priority for us is to preserve this flexibility.
In addition to the conference calls, the Taskforce also developed a survey to gather feedback from the broader airport membership and raise awareness of the potential changes to the Rates and Charges Policy. A total of 17 airport organizations participated in the survey providing valuable comments that assisted in developing the ACI-NA position.
Airport Business Terms Survey - The Airport/Airline Business Working Group rolled out the Airport Business Terms Survey with the objective of cataloguing commonly-understood airport and aviation business practices and agreement terms across airports of different sizes in a way that would be easy to reference. This would help address one of the biggest challenges airports face when engaging airlines in negotiations regarding new or changed business terms, i.e. the airport operators' ability to articulate alternative methods and practices where such terms/practices are already in place for consideration.
A searchable table of 63 airport responses (19 large hubs, 19 medium hubs and 25 small & non-hub airports) was produced as a result of the survey, which would allow users to sort the information by airport size, form of agreement or specific business practice or agreement term. The survey information includes: rates and charges agreement type and methodologies, airline consortium responsibilities, application of security deposits, preferential gate rights, common use charges and MII provisions. The output of this survey is available to ACI-NA members from our resource center. Data will be updated annually.
UPDATE (Sept 2013): Liying Gu, Managing Director, Finance and Research at ACI-NA presented the findings of the survey to the working group committee during the 2013 ACI-NA Annual Conference in San Jose, CA. Her presentation can be viewed here.
Industry Database (May-September 2012) - The Airport/Airline Business Working Group would like to create an industry database, accessible by all members, incorporating characteristics of agreements/ordinances currently in place at different airports. The database should be searchable by: airport size (small, medium, large), classification (hub vs O&D), and implementation tool (agreement vs ordinance).The intent of the database is two-fold: provide airport/airline users with current information as to the frequency with which various business practices are actually utilized around the industry, and pinpoint where specifically these practices are being employed. Instead of developing an ACRP problem statement, the working group plans to conduct an online survey to collect the information in-house.The information gathered will be made available to all airports in an easily searchable format.
Airline Agreement and MII Provision Survey (April 16, 2012): This survey was launched to support our Financial Policy Campaign, i.e. enactment of a new financial framework for US airports. The information would also help us prepare for the upcoming revisions to the DOT rates and charges policy. The survey has been completed. The result of the survey will be presented during the working group meeting at the 2012 ACI-NA Economics & Finance and Human Capital Conference.
Airport/Airline Business Use & Lease Agreements Webinar (June 21 2011): The purpose of the call was to share information on the latest developments and challenges in airline lease negotiations. The participants on the call also agreed to share updated use & lease agreements with ACI-NA for inclusion in the Finance Committee Resource Center of the website.
Airport Credit Standards vs Airline Credit Standards White Paper (March 2011):An industry white paper explaining the rating difference between airports and airlines has been developed by the working group. The white paper explores different industry characteristics and credit factors that lead to different credit ratings by airports and airlines. The paper explores the importance of liquidity to both airports and airlines. The white paper concluded that the disparity in airport and airline ratings reflect differences in the industries and differences in bond structures and risks. Higher ratings and application of cash can reduce borrowing costs. Maintaining a higher rating and cash reserves do have associated costs, and market conditions will affect the magnitude of the savings achieved by maintaining a higher rating. Airports should work to develop policies/goals regarding cash reserves. And airports should maintain a continuing dialog with the airlines on these issues and communicate its policies and goals with both the airlines and the rating agencies.To access the full version of the white paper, please click here. To access the presentation made by Peter Stettler on March 15, 2011, please click here.
Airline Rates and Charges Consultation Guidance(February 2010):The ACI-NA Finance Committee has developed the “Airline Rates and Charges Consultation Guidance” based on Appendix I of the DOT Rates and Charges Policy to offer guidance that may help Airports identify ways to improve transparency during the consultation process. It is recognized that Airports have unique circumstances to be considered when consulting with Airlines on various issues. This document has been reviewed by airport representatives on the Finance Committee Steering Group as well as Air Transport Association (ATA), International Air Transport Association (IATA), and their member carriers. To access the document, please click on the following link: Airline Rates & Charges.
Airport Airline Collaboration Initiative -The Working Group continues to develop and implement a process by which airports and airlines could work cooperatively and collaboratively to undertake a review of total airport costs for the purpose of increasing overall airport operating efficiencies and /or reducing airline costs. ATA participated in a coalition letter organized by ACI-NA to the Chairman and Ranking Member of the Senate Commerce Committee opposing the inclusion of any legislation that would change existing standards for Airport Rescue and Fire Fighting (ARFFA meeting was held on May 13, 2009 at ACI-NA office in DC which included airport attendees and attendees from five airlines along with representatives from ATA and IATA. During the meeting, all parties agreed to take respective actions to support legislation to permanently eliminate the AMT penalty for airport bonds and to oppose changes to standards on ARFF. The group also identified topics for further collaboration including the development of case studies detailing the pros and cons from both the airline and airport perspectives of airline consortiums operating at airports; exploration of current airport joint purchasing programs and opportunities for further expansion of such programs; dissemination of information regarding energy savings initiatives to all airports to encourage further adoption; and investigating the merits of defining checklists and possible best practices in rates and charges consultation with a view towards the dissemination of information to promote beneficial dialogue. Regular conference calls will be set up to further discussing these issues.