Legislative Program Review and Investigations Committee

Chapter II

Airport Planning

Planning is a critical function of airport administration. It is a tool that can be used to guide an airport's management toward meeting the needs of the airport's service area and achieving equilibrium between future demand for and supply of facilities and services. There are multiple planning processes that help management meet these objectives.

Vision/mission

A critical part of any airport planning is the underlying vision of those responsible for the airport. Although Bradley has no formal vision statement, the program review committee believes one can be inferred from DOT's mission statement for the Bureau of Aviation and Ports. An examination of the mission statement shows it focuses on providing customers an efficient, effective, convenient, and safe airport. This implies a vision of Bradley as a transportation facility.

It must be pointed out DOT objects to this characterization. DOT notes it views the airport's mission in broader terms, but deliberately understates this to avoid promising more than can be delivered. While DOT's response should not be totally dismissed, the department's actions cast doubt on the complete validity of its objection.

In the opinion of the program review committee, DOT's vision and stated mission encourages it to pursue a planning methodology that is focused on estimating future demands on the airport and developing solutions. Strong evidence in support of this opinion is the fact the airport master plan - a plan designed to accomplish this exact goal - is currently the primary planning document guiding development at Bradley.

One consequence of this reactive approach to planning is it discourages DOT from developing strategic plans to grow the airport for the economic benefits that would be provided in terms of jobs and income. Those benefits have been estimated by the Center for Economic Analysis, at the University of Connecticut. The center determined, for each increase of 1,000 passengers, 2.25 jobs are created and the state's personal income increases by more than $100,000.

A further analysis of DOT's vision indicates growth at the airport is also limited by a dollar-driven mindset. For example, DOT specified that its consultant, in preparing the airport's capital improvement plan, use a "back-in" financial analysis where estimates of future revenues are generated from existing sources (e.g., airlines, passenger facility charges, concessions, etc.) in order to establish budget limits for use in developing the capital plan. This in contrast to other airports, such as Baltimore/Washington, that view capital spending as a means to make changes that will increase future revenue.

Also, a two-year delay in initiating the non-airside recommendations contained in the 1993 master plan (discussed below) can in large part be attributed to DOT's reluctance to take on the financial risks associated with major capital projects. The unwillingness to assume risk was illustrated in DOT's testimony to the program review committee on October 12, 2000. (See pages 50-52, of the public hearing transcript).

In fairness to DOT, it must be emphasized the characteristics just noted are laudable within the context of managing a government facility and DOT does not deserve to be criticized for operating in a manner that is consistent with its current vision. However, in the opinion of program review committee, this is not the management culture needed to grow an airport in a competitive market.

Findings

In summary, the key findings related to the Bradley's vision and mission are:

• DOT does not have a formal vision statement specific to Bradley International Airport;
• DOT's mission statement for Bradley International Airport is focused on safety, efficiency, and convenience - implying a view of Bradley as transportation facility; and
• DOT's dollar-driven mindset limits investments and slows growth at Bradley International Airport.

Recommendations

To address the problems associated with these findings the program review committee recommends:

• Bradley International Airport should in consultation with its stakeholders develop a vision statement that defines the airport in terms of its purpose.
• Bradley International Airport should in consultation with its stakeholders develop a mission statement that encourages policies aimed at promoting economic development as well as efficiency, effectiveness, safety, and convenience.
• Proposed capital projects for Bradley International Airport must be evaluated using the risk/return approach of financial analysis relevant to a business enterprise.

Airport Master Plan

A critical part of the development and administration of an airport is its master plan. The master plan forecasts the volume of passengers, air cargo, and aircraft operations and analyzes the capacity of an airport's current facilities and services to meet the estimated demand. The plan contains proposals to eliminate present or future imbalances.

An important element of the master plan is the airport layout plan. It details the basic physical configuration of the airport including:

• the present boundaries and offsite areas the airport sponsor owns or controls, and any proposed additions;
• the location and nature of existing and proposed airport facilities (such as runways, taxiways, aprons, terminal buildings, hangars, and roads) and of their proposed modifications and extensions; and
• the location of existing and proposed non-aviation areas (such as cargo handling, parking, and other facilities).

The airport layout plan, and any change in it, is subject to FAA approval. This is important for two reasons. First, an approved plan is required by the FAA for an airport to be eligible for federal funding. Second, the FAA requires all airport development to be done in accordance with an approved layout plan.

1993 Bradley master plan. The last comprehensive master plan developed for Bradley International Airport was completed in 1993. It cost approximately $560,000 and covered the period up to 2015. The plan was prepared by consultants who worked with DOT staff and a Master Plan Technical Committee composed of representatives of the FAA, aviation industry, state Department of Environmental Protection, Bradley business community, and communities surrounding the airport.

The major findings and recommendations presented in the 1993 master plan can be summarized as follows:

• the existing runway system has the basic capacity to meet the long-range demand forecast;
• the existing amount of terminal space is inadequate to meet current and future demand and will need to be increased, and Terminal B (Murphy) is functionally deficient and should be replaced;
• a significant increase in cargo facilities will be needed;
• the existing general aviation facilities are in good condition and of adequate size to meet anticipated levels of activity; and
• if attrition of off-airport parking operators occurs, additional airport parking spaces will be needed.

These findings and recommendations were based primarily on the forecasts developed by the consultants who prepared the master plan and their professional judgment. Some of the key forecasts are shown in Table II-1, along with the actual 1991 base-year data. The forecasts are presented in five-year intervals beginning with 1995 and ending with 2015.

Table II-2 shows the amount of passenger terminal space, aircraft gates, and on-airport parking spaces the master plan estimated Bradley would need to accommodate current and future demand. The master plan indicated by the year 2000 the airport would need eight additional aircraft gates (contact type), nearly 210,000 more square feet of passenger terminal space, and about 850 new parking spaces. The plan stated the latter would increase if off-airport parking operators significantly decreased the number spaces they provided. It is noteworthy that at the time the plan was being prepared the consultants found Bradley was already deficient by more than 90,000 square feet in the amount of usable terminal space needed (1991 needs minus 1993 existing terminal space).

The 1993 master plan addressed the airport deficiencies by proposing an expansion of the passenger terminal facilities and changes in parking and traffic flow. The plan called for the project to be implemented in five phases over a 20-year period. The first three phases were to be completed by 1999, and included an expansion of an existing terminal, the addition of a new terminal, demolition of the Murphy Terminal, and the construction of a multilevel parking garage.

The financial plan for implementing the proposals contained in the 1993 master plan estimated the project would cost $365 million in constant 1993 dollars. Two separate scenarios for financing the project were outlined. One assumed virtually no FAA discretionary or US DOT highway money would be available, while the other assumed $47 million in federal funds could be obtained.

The source and amount of funds under each assumption are shown in Table II-3. In each instance, revenue bonds are the largest source of funds to finance the project, varying from 86.3 percent of the total cost when the accessibility to federal funds is assumed to be limited, to 73.8 percent when the availability of federal money is seen as possible.

Implementing the 1993 Bradley master plan. Figure II-1 outlines the major events in implementing the 1993 master plan. As shown in the figure, the draft of the master plan was completed and circulated for comment by DOT in October 1993. The final report was distributed in April 1994.

In July 1994, officials within the Bureau of Aviation and Ports sought to get DOT's approval to hire separate consulting firms to provide engineering and financial planning assistance. Key aspects of the services sought were:

• a recalculation of the passenger forecasts done for the 1993 plan;
• preliminary engineering studies for the expansion of the terminal and related facilities, construction cost estimates, and sequencing plans; and
• a determination of whether Bradley could financially support the construction proposed in the master plan.

Although the FAA approved the Bradley plan in January 1995, it was not until the fall of 1996 that DOT gave final approval to proceed with the new terminal and hire an engineering/architectural firm to begin the preliminary study. A financial consultant was not hired until April 1997.

In June 1997, the engineering consultant (HNTB Corporation) provided DOT an updated passenger forecast and recommended an expansion of Bradley's passenger terminal capacity. The findings and proposals of the 1997 study diverged from the 1993 master plan in a couple of areas. First, as illustrated in Figure II-2, the enplaned passenger forecasts provided in the 1997 study projected a much smaller rate of increase than did the 1993 master plan. Second, the terminal configuration presented in the 1997 report differed from all the alternatives proposed in the master plan including the preferred option.

Yet, despite these differences both studies called for significant increases in passenger terminal capacity over the approximate 445,000 square feet and 28 contact-type gates that exist at present. Table II-4 compares the two studies in terms of the forecasts each made for the 2000-2001 time-period. Given the variance in the passenger forecasts it is not surprising the 1997 study proposed a smaller terminal. Similarly, the 1997 study estimated a construction completion date of 2001, two years later than the 1993 master plan's proposed 1999 completion date.

The consultant hired (The Louis Berger Group, Inc.) to advise DOT on the financial feasibility of expanding Bradley produced a draft report in May 2000. Among other aspects of the study, the consultant determined Bradley could support a project in the range of $202 million.

In February 1998 an expansion of the terminal complex at Bradley was announced. Scheduled for completion in 2003, the project includes the construction of a new terminal and the demolition of the Murphy Terminal.

Analysis

Table II-5 outlines the key proposals contained in the 1993 master plan. The data show that, with a few exceptions, most of the completed projects proposed in the plan have been related to airside operations. In general, the program review committee believes this reflects the shorter lead-time required for many of the plan's airside recommendations, the availability of federal funding for increasing airside capacity, and the priority given to airside operations by the DOT.

However, the delays in completing non-airside projects cannot be ignored. A review of the timeline outlined above for completion of the terminal expansion shows it has moved from 1999, as proposed in the master plan, to 2001, as recommended in the 1997 update, to the current date of 2003. This delay has had consequences in terms of cost increases, revenue losses, and customer inconvenience.

The cost increases can be inferred in two areas. First, the rate of inflation in the construction industry will push up costs. Based on the Annual Construction Cost Index compiled by the U.S. Census Bureau, the increase is likely to exceed 5 percent (the index rose by slightly more than 4 percent between 1997 and 1999). Also, based on current market conditions as reported in the Bond Buyer's municipal bond index, the cost of borrowing has been pushed up during the delay period.

The revenue loss associated with the delay in expanding the terminal is related to two primary sources. First, Bradley reached its capacity to park airplanes overnight -- every gate is occupied and one additional plane has been allowed to park without a gate. Thus, unless the demand for and supply of gates is in equilibrium, Bradley may be foregoing revenue from airlines that potentially would, if space permitted, base additional planes overnight at the airport. This would increase the fees paid by airlines.

The other revenue shortcoming relates to automobile parking, which is Bradley's largest source of non-airline revenue. If the garage currently under construction and scheduled to open in May 2001 had been completed two years sooner considerable additional revenue could have been realized.

A less tangible consequence of DOT's initial inaction on the 1993 master plan has been the inconvenience to customers forced to use a functionally obsolete terminal. Related to this is the perception visitors are presented of the region as a place to live and do business. While the extent to which exposure to the conditions at the Murphy Terminal has increased the propensity of customers to fly from other airports or choose to locate elsewhere is assumed small, it cannot be entirely dismissed.

Findings

In summary, the program review committee finds:

• the delay in completing the terminal expansion project at Bradley can in large part be attributed to DOT's lack of action between 1994 and 1996;
• the delay increased the expansion project's construction costs;
• the delay increased cost of borrowing money to pay for the project;
• the delay prolonged the inconvenience of customers forced to use a functionally obsolete terminal;
• the delay reduced potential airport revenues by causing fewer gates to be available than airlines were willing to pay for and use; and
• the delay limited revenues and inconvenienced customers by allowing the development of a shortage of on-airport parking spaces during peak travel periods.

Recommendations

To minimize the delays in implementing proposals emerging from major studies undertaken by Bradley the program review committee recommends:

• There must be recognition by those with authority over Bradley International Airport that it is a business enterprise operating in a competitive environment and proposed capital projects must be implemented in a timely manner.
• Bradley International Airport's leadership shall review all policies and procedures imposed on requests from the airport to implement capital projects and modify, directly or through legislation, the policies and procedures found to be inconsistent with the operation of a business enterprise, or unnecessary given Bradley's reliance on the Enterprise Fund.

Airport Planning Capacity

Another issue related to the planning process concerns DOT's limited in-house capacity to conduct planning activities, particularly those related to non-airside operations. As DOT's organizational chart shows (see page 26) the staff resources devoted to airport planning are scarce. Also, a review of the posted qualifications for all management level jobs, including those responsible for planning, reveals the emphasis for these positions is on experience in engineering and airside operations, not planning, marketing, and business management.

Further, a review of the minutes of meetings of the Bradley Airport Commission demonstrates reluctance on the part of DOT to develop such plans. Specifically, when asked by the commission to explore preparing a strategic business plan (March 1996) DOT responded (January 1997) that only one of the five airports contacted had business a plan, implying that developing such a plan would be of little value to Bradley.

There are other instances documenting the effect of limited staff resources and expertise in the planning area. For example, within months of receiving the 1993 master plan, DOT indicated a need to hire separate consultants to determine, among other things, if Bradley could generate the revenue needed to support the 1993 master plan, and to recalculate the master plan's passenger forecast. Similarly, after being indirectly asked to develop a strategic business plan through the Governor's Executive Order No. 18, which established a council to review the airport, DOT worked the task into the scope of study for the new airport's master plan, which is scheduled for delivery in 2001.

Findings

In summary, the program review committee finds:

• DOT has insufficient resources and expertise to address non-airside planning activities, particularly those associated with strategic business planning; and
• DOT's commitment to ongoing strategic business planning has not been institutionalized.

Recommendations

To reduce the problems identified in the findings above, the program review committee recommends:

• Bradley International Airport should be statutorily required to develop and periodically update strategic and business plans.
• Bradley International Airport should increase its staff resources to assure an in-house presence and the expertise needed to coordinate the development of strategic business plans and measure their performance on an ongoing basis

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