«BOARD OF DIRECTORS | MEETING MINUTES OF JANUARY 26, 2016 Present: Susan Tomasky, Chair William R. Heifner, Vice Chair Don M. Casto, III Frank J. ...»
BOARD OF DIRECTORS | MEETING MINUTES OF JANUARY 26, 2016
Present: Susan Tomasky, Chair
William R. Heifner, Vice Chair
Don M. Casto, III
Frank J. Cipriano
Elizabeth P. Kessler
Jordan A. Miller, Jr
Absent: Dwight Smith
CRAA Executive Staff: Elaine Roberts, A.A.E., President & CEO
Rod Borden, A.A.E., Chief Operating Officer
Randy Bush, Chief Financial Officer
Casey Denny, A.A.E., Vice President
Robin Holderman, Chief Development Officer Tory Richardson, A.A.E., Vice President, Human Resources & Strategy David Whitaker, Vice President, Business Development & Communications CRAA Staff: A. Beaver, S. Bell, D. Finch, P. Gehrisch, C. Goodwin T. Osborne, B. Sarkis, P. Streitenberger Others Present: Marla Rose, The Columbus Dispatch Alan Harding, Columbus Flight Watch Don Peters, Columbus Flight Watch Tom Eckl, Allpro Parking
CALL TO ORDERChair Tomasky called the Board Meeting of the Columbus Regional Airport Authority to order at 4:03 p.m. on Tuesday, January 26, 2016.
MINUTESChair Tomasky asked if there were any additions or corrections to the Minutes of November 24, 2015. Hearing none, Cipriano moved for approval; Heifner seconded. Minutes approved unanimously.
AIR SERVICE DEVELOPMENT:
Tomasky reported the Committee met on January 21. The committee discussed:
CRAA is learning more on what we can do to have a positive impact on the customer’s experience.
• CRAA is evaluating the quality of the travel experience holistically, understanding there are numerous touch • points by various service providers in any given journey.
We continue to look at where we can add additional flights. CRAA will continue its pursuit of growth with • additional destinations.
BUSINESS DEVELOPMENT:Casto reported that the Committee has not met and the next meeting is scheduled for February 16, 2016. Casto called on Holderman to provide an update on recent business activity.
Holderman reported on the following business activities:
Resolution 01-16 will authorize a ground lease agreement with the Black Family Limited Partnership for the • construction of a corporate aircraft hangar facility of approximately 49,000 sq. ft. at Port Columbus. CRAA is working with the FAA for airspace approval.
Resolution 13-16 will authorize the purchase of the Airnet building for FBO/Administration space needs at • Rickenbacker. The original cost for construction of this building in 2004 was $13 million. CRAA’s purchase price is $2.955 million. With improvement costs, the total cost will be $4.5 million.
The sale of the BASF building will occur on February 5.
• Construction continues on the Amazon building with completion scheduled for third quarter of 2016.
• Air Cargo Terminal #5 is under roof and scheduled to open this spring.
FACILITIES & SERVICES:Heifner reported that the committee met on January 20.
B. Sarkis reviewed the Major Capital Projects report for 2016. Also reviewed were the project status report, cost variance report, and construction schedules and timelines. A. Beaver reviewed the Capital Budget Update report.
Heifner reported on the following business items:
The Terminal Modernization Program is on schedule for a March 2016 opening.
• Airline ticket counters are now in their permanent counter locations.
• The curb front renovations will be a $7 million project. A resolution will be presented at the March board • meeting.
The North Runway project will have a 205 day duration. During that time, Port Columbus will operate with one • runway.
The Air Traffic Control Tower at Rickenbacker is scheduled for a May 1, 2016 commissioning • The committee reviewed the 2016 Capital Improvement Budget.
• The committee reviewed the Resolutions being presented to the full Board.
• On capital expenditures, percentage of baseline spent to date, is 92% through December 31, 2015.
Miller reported that the Finance Committee met prior to the Board Meeting and that the Authority has a strong Balance Sheet and Income Statement.
Miller requested Bush to report on the financial reports.
Operating Revenues – Actual vs. Budget, with $97.3 million in actual revenues and a budget of $95.1 million, leaving a positive variance of $2.2 million.
Parking – The unfavorable variance of ($1.1) million is due to decreases in garage short-term parking, the • blue and red lots, as well as valet parking of $1.7 million, offset by increases in garage long-term parking, the green lot, and Rickenbacker of $622,000.
Airlines has an unfavorable variance of ($677,000). The Signatory Airlines are billed rates established on • estimated annual expenses incurred by CRAA at an estimated landed weight. The variance is partially due to a $2.7 million Supplemental Credit which is being provided to the Signatory Airlines for the increase in enplanements offset by a $2.1 million increase in landing and gate use fees.
Ground Transportation – The favorable variance of $344,000 is the result of a 3.5% increase in rental car • commission related to increased enplanements and an audit finding of $281,000 due to underreported revenue, offset by a decrease of $21,000 in taxi cab commissions due to an increase in the usage of ‘peer to peer’ transportation.
Concessions and Misc. Lessees – The favorable variance of $1.2 million is the result of higher terminal and • lodging commissions of $806,000 at Port Columbus due to increased enplanements and the introduction of new concepts in the terminal. Additional increases are due to new space and ground rent leases at Rickenbacker of $543,000. These increases are offset by a reduction in advertising of $245,000 as a result of the Terminal Modernization Program.
Hotel – The favorable variance of $411,000 is the result of higher than anticipated occupancy levels.
• Operating Expenses – Actual vs. Budget, with $67.3 million in actual expenses, and a budget of $68.1 million, leaving a positive variance of $846,000.
Salaries and Wages – The favorable variance of $245,000 is a result of a vacancy credit of $1.2 million, offset • by lower than anticipated project management hours of $395,000, overtime due to vacancies and inclement weather of $369,000, incentives of $104,000 and paid time off accruals of $83,000.
Benefits & Personnel Expense – The favorable variance of $1.9 million is due to the recording of $1.6 million in • OPERS unfunded pension liability as required under GASB 68 and 71, and a $246,000 decrease in healthcare costs related to open positions.
Services – The unfavorable variance of $1.2 million is the result of unbudgeted HVAC repair costs of • $201,000, utility costs of $784,000, and increased professional services of $702,000 related to PCI review, rental car negotiations, tenant improvements, loop road study, legal services, and real estate taxes. The increase is offset by an underspend in employee development and training of $165,000, parking costs of $128,000 and glycol fees of $133,000 due to mild weather during the fourth quarter.
Composition of Operating Revenue – Parking represents 33.8% of our operating revenue. Airlines represent 29% of our operating revenue. This metric shows we are maintaining a competitive level of costs for the carriers to operate in our market and maximizing the potential for non-airline revenue generation. This is an important metric that is tracked by the rating agencies when evaluating the financial performance of Authority.
Composition of Operating Expenses – A large component of the Authority’s expenses is related to staffing costs.
Salaries & Wages for full and part-time staff represent 36.2% of operating expenses; Benefits & Personnel costs are 12.9%; while Contract Labor represents another 12.6% of the Authority’s operating expenses. Combined, this represents 61.7% of the Authority’s operating expenses.
CRAA Salaries & Wages (CMH & LCK) – Total filled headcount is 387 employees, and 46 vacancies of which 23 are full-time and 3 are part-time.
Hotel Operations – Year-to-date Net Operating Income is $1.9 million vs. a budget of $1.6 million, leaving a positive variance of $291,000. The actual occupancy rate is 78.3% compared to a budget of 71.6%.
Statement of Net Position Analysis – The Authority’s Net Position remains strong with $917.8 million in total assets and $165.6 million in total liabilities. Included in total assets is $128.3 million in Cash and Cash Equivalents.
Capital Expenditures – With an approved Capital Budget of $62.3 million and total cash expenditures to date of $49.7 million, this represents a year-to-date execution of 80% of the approved Capital Budget spend. The total accrued expenditures to date of $51.6 million represents 83% of the approved Capital Budget.
Bush reported that our debt per enplaned passenger is $30.44, showing significantly lower than average debt loads when compared to the 2014 Moody’s airport average of $54.19. The days of unrestricted cash on hand is 395 days, with the 2014 Moody’s airport average being 557 days. CRAA has $110.7 million of outstanding debt which includes $2 million outstanding under our Revolving Credit Facility.
Tomasky reported that the Committee last met on December 18, 2015. The Committee reviewed the 2016 Strategic Priorities; reviewed the past year’s performance of CRAA and our President & CEO; and, received an update on CRAA’s succession planning process. The next Committee meeting is scheduled for March 14, 2016.
PRESIDENT & CEO REPORTChair Tomasky called upon Roberts to provide the President & CEO Report.
Roberts reported on the following business items:
Passenger Air Service Port Columbus Port Columbus saw an 8.5% increase in passenger traffic for December when compared to the year prior, making it the 22nd consecutive month for growth. This brings 2015’s year-end total to just under 6.8 million passengers, a 6.9% increase over 2014. The year 2015 was Port Columbus’ fourth busiest year in history.
With 12.6% more passengers traveling this year than last, Southwest saw the largest growth in 2015 – an increase of over 260,000 passengers.
Southwest invested significantly in the Columbus market this past year with new service to Boston, Dallas, Oakland, and Washington D.C.
Delta saw the next largest increase in traffic for the year with 86,000 more passenger traveling than in 2014, a growth of 6%.
United saw a similar increase with nearly 82,000 more passengers traveling than in 2014, an increase of 10%. Air Canada was up nearly 21% for the year.
American was the only carrier to see a slight decrease for the year, down less than one percent.
Looking forward in 2016, this year is off to a great start with Frontier’s announcement of their launch from Port Columbus at the end of May. The airline will provide daily service to Denver and Las Vegas, and three times weekly service to Orlando and Philadelphia.
Next month, Dave Whitaker and some business leaders will meet with British Airways in London to discuss future service to Columbus.
At Rickenbacker, Allegiant saw an 84% growth of passenger traffic in 2015. This past year the airline introduced new year-round service to Ft. Lauderdale as well as seasonal service to New Orleans and Savannah helping to drive their growth. We expect all 2015 seasonal markets to return in 2016 including the two noted here plus Myrtle Beach.
Overall passenger traffic at Rickenbacker was up 82% in 2015 and over 166,000 total passengers.
Cargo Air Service Rickenbacker also experienced a very good year in 2015, handling nearly 200 million pounds of airfreight – our best year since 2008. This figure represents a 15.9% increase in total air cargo in 2015 versus 2014. International growth led the way with a 132% year over year increase while domestic tonnage was down 9% for the year, primarily a result of FedEx’s continued adjustments in this market.
Prospects for our continued international growth in 2016 are high as all three of our international carriers report being happy with their performance at Rickenbacker and are adding permanent staffing support. Emirates SkyCargo will also begin export service in 2016, joining Cathay Pacific Cargo and Cargolux in providing air export services through Columbus, connecting us to the vast majority of the global marketplace through the respective airline hubs. To support these services, the CRAA Business Development team will continue to spend extensive time traveling the region to educate forwarders and shippers of the options to export through Columbus.
2015 was outstanding for Rickenbacker in many other ways:
An astounding $1.67M net operating profit driven by the increased commercial activity and the unique • services we provide to the airlines such as ground handling and fueling.
FBO activity: Rickenbacker Aviation (CRAA’s FBO business) had a banner year in 2015. Helped in part by the • west coast ports labor dispute in February and March, the FBO handled nearly 500 international cargo flights, over 600 passenger flights, and nearly 1300 miscellaneous aircraft of all sizes. Along with those aircraft, the FBO handled 166,000 passengers and their baggage, and more than 67 million pounds of cargo. The FBO also delivered a total of 8.1 million gallons of fuel into more than 2800 aircraft.
New freighter service to/from Dubai, U.A.E. by Emirates taking us to 9 weekly scheduled international flights.
• Amazon, BASF and others maintain a boom cycle for industrial development in RGLP.
• New Air Traffic Control Tower to open this spring with the support of the County.
• New Air Cargo facility to open this spring with support from the State, City and private sector.