AvAirPros was retained by the Alaska Airlines Airport Affairs Committee in 1999 to develop a business plan with the State. This effort involved identifying the funding capacity of the Alaska International Airport System, developing a mutually agreeable capital improvement program, developing mutually acceptable business terms to recover the costs of the capital program, and executing a new use and lease agreement.

In its role, AvAirPros determined the financing capacity of the Alaska International Airport System through a review of all funding sources including revenue bonds, general obligation bonds, passenger facility charges, State and federal grants, commercial paper and other financing techniques Airport system costs were closely analyzed including operating expenses, debt service, debt service coverage, investment service and airline rates and charges. This analysis resulted in a firm understanding of the amount of capital spending the airlines and the State can mutually support.

AvAirPros developed, in conjunction with the airlines and the State, a list of capital projects to be included in this business plan. This effort required a review of all proposed capital projects based on the materials presented by the State. Individual capital projects were prioritized based on their need and timing and the list was then refined through the negotiation process. Through this process the State and the airlines have agreed upon a five-year capital program.

AvAirPros is also developing a system of rates and charges to recover the costs of the capital program from the airlines in an equitable manner. This process requires AvAirPros to demonstrate the cost of the proposed business plan to each individual airline serving Alaska. The proposed system of rates and charges is currently being negotiated with the State.

Finally, AvAirPros is working with the airlines and the State to develop the use and lease agreement that will formalize the business plan that is being negotiated. The result will be a mutually agreeable business plan that provides the State with necessary capital improvements. The business plan will provide, at a price the airlines are able to afford, a new use and lease agreement that adequately addresses airport-airline issues such as competitiveness, preferential versus exclusive airline space, capital project procedures, and the flow of funds.

For additional information, please contact James O. Burchett at j.burchett@avairpros.com
Based in Naples office

Updated: Wed Aug 10 11:42:03 2005

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