Airportweb
The home of Airport Corporation of America
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Airportweb The home of Airport Corporation of America
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PUBLIC
/ PRIVATE PARTNERSHIPS ACA's President, John P. Kennedy, has been involved with public/private partnerships in airport management since 1973 when he became Vice President of Pan Am World Services’ General Aviation Services Division (now known as American Port Services or Amport). In this capacity, Mr. Kennedy took over the management of Teterboro Airport via a lease agreement with the Port Authority of New York and New Jersey, conducted a similar operation with the City of New York at its East 60th Street Heliport in Manhattan, and in 1977, he bid and won for Pan Am the management contract for Westchester County Airport. He was personally responsible for establishing the management structure and staffing at each facility and for the Division’s headquarters. Mr. Kennedy was also responsible for the operational and financial performance of these facilities and, therefore, highly motivated to provide an organizational structure and management environment that produced maximum operational and financial performance in an orderly, sound environment at reasonable costs. The combined operation of the three facilities was equivalent to the activity at Atlanta - Hartsfield. The basic structures Mr. Kennedy put in place at those facilities remain in place today with continuing sound operational and financial performance results. During his tenure from 1973 through 1982, all three facilities progressed from losing operations to substantially profitable ones. Relations with tenants were also substantially improved. In 1980, Mr. Kennedy drafted and negotiated management contracts with the State of New York to operate two airports for it during the 1980 Winter Olympics in Lake Placid. Since founding ACA, Mr. Kennedy has been involved with the New York State Department of Transportation in the private contract management and development of Stewart International and Republic Airports as previously discussed, in the public acquisition and management of Palwaukee and Sugar Land Municipal Airports, the privatization of Alliance Airport, the privatization of the City of Phoenix FBO facilities and in military airport conversion analyses conducted for Hamilton and Ellington Air Force Bases. It is important to note that each of these public/private partnerships are different in substantive terms and conditions, ownership interests transferred, services to be rendered, length of term, development of capital projects and rents and fees to be paid to the airport proprietor. They are described below: Palwaukee Municipal Airport In 1987, ACA was given the responsibility by the FAA and the Illinois Division of Aeronautics to negotiate and implement the acquisition of Palwaukee Municipal Airport, a 350 acre privately owned General Aviation Reliever facility with approximately 400 based aircraft, including 70 jets, and over 200,000 annual operations, and to transition it to a publicly owned and operated facility. A condition precedent to the acquisition was the requirement that ACA conduct a financial feasibility study to assure that the Airport would operate profitably from acquisition and remain profitable for the long term. ACA was to determine whether and how that could be done, and implement the required financial, legal, administrative and operational infrastructure. This included the establishment of all rental rates and charges and policies for general aviation, and the development of a five year financial and operating plan based on those policies. ACA then negotiated the acquisition of the airport and the leaseback of all facilities in accordance with the financial and operating plan. The purchase price was $27,500,000. As a result of ACA research, planning, negotiating the Airport Purchase Agreement, rentals, rates and charges, lease terms and conditions, and ACA's transitional contract management of the facility for in excess of one year after acquisition, Palwaukee has been profitable from its inception as a municipal airport consistent with the financial and strategic plans developed and implemented by ACA. City of Sugar Land, TX. ACA was also engaged to conduct the management planning and recommendations, and financial feasibility analyses, for the acquisition of Houston Hull Airport by the City of Sugar Land, TX. It assisted the City in airport acquisition with FAA, established operational and financial management performance parameters and provided general management consultation services. Houston Hull was acquired by the City of Sugar Land in accordance with these parameters. It is now known as Sugar Land Municipal Airport, is a major G.A. Reliever for Houston, and has been awarded Outstanding Airport of the Year by the Southwest Region of the FAA. Alliance Airport Alliance Airport is a 418 acre General Aviation Reliever Airport owned by the City of Fort Worth, Texas. It is the centerpiece for the development of a 4,400 acre complex, complete with infrastructure, for international trade and commerce known as the Alliance Center. ACA was engaged by the City of Fort Worth to develop and implement a strategy for the privatization of Alliance Airport. The City’s goal was to extricate itself from the financial obligations of the Airport. Having conducted a detailed analysis of the Airport's operation and its revenue generating capabilities, ACA advised the City that, while the potential did exist for the Airport to generate significant revenue with the development of Alliance Center, it currently operated at a loss and the private sector would require significant financial incentives to take over that loss in return for future profits. The resulting business strategy for privatization developed by ACA was unique and innovative. ACA proposed and drafted a 30 year airport management agreement that could be terminated by the City if it became too profitable, or terminated by the selected airport managing firm if it became to costly. The management agreement also provided airport profit sharing provisions for the City and an optional ground lease for the development and provision of fixed base operator services or other aeronautical activities by the selected operator. ACA also proposed and drafted the Request For Bids and a Management Agreement that permitted bidders to set their own parameters, within certain minimums, for the risk, reward and profit sharing provisions of the agreement. The concept, including the Request for Bids, Management Agreement and Optional Ground Lease were very well received by the City and the FAA. Airport privatization was accomplished within these parameters. City of Phoenix FBO Services Review As a result of its performance on the rates and charges analyses conducted for Sky Harbor International, Goodyear and Deer Valley airports, the City of Phoenix requested ACA to evaluate, from an operational and financial perspective, whether the Aviation Department should continue to provide aircraft refueling services at all three airports. Again, the issues were complex because the levels of service provided were different. At Sky Harbor, the Aviation Department had its own GA terminal facilities, competed against other FBOs, provided retail refueling to GA, into-plane refueling to passenger and cargo airlines and handled charters. At Deer Valley, the Aviation Department conducted aircraft refueling in competition with other FBOs. At Goodyear, the Aviation Department was the only refueler. After a careful and pragmatic operational and financial analysis, ACA recommended to the Aviation Department that it get out of the FBO service business entirely and dispose of the associated assets in a competitive bidding and proposal process. The Aviation Department accepted the recommendations and completed implementation in 1997 with substantial savings to the Department. Hamilton Air Force Base Hamilton Air Force Base was decommissioned in 1974 and, by 1983, the U.S. General Service Administration (GSA) had disposed of most of its associated lands and facilities to the Army, Navy and Coast Guard, without providing for civilian use of the facility. ACA was charged with the development of a pragmatic Operating Plan and determining the revenues and expenses that would be associated with civil use of the airfield and whether the resulting cash flow would support the purchase of land from the GSA and development of the facilities needed for civilian use. Many alternatives were considered, including the level of revenues generated from different types of facilities, the ability of industrial development to support civilian aviation uses and cost sharing with the military. The required capital commitments and potential operating losses were so great that ACA determined that the conversion project was not financially feasible and recommended against it. The conversion did not proceed. Ellington Air Force Base ACA was responsible for all financial and management planning, analyses and recommendations associated with the public acquisition, development and operation of Ellington Air Force Base. ACA's efforts included the preparation of an Economic Feasibility and Financial Management Plan and it also analyzed alternative management structures, including an airport authority, commission, management through a City Department or private management company. The Plan included development schedules and costs, airport revenues and expenses, economic feasibility and financing options. This project was considered feasible. The Plan was eventually implemented by the City of Houston.
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