Loading...
HomeMy WebLinkAbout06 - Section 5 - Baseline Airport Operating/Finance ModelSECTION 5 5 Baseline Airport Operating /Finance Model 5.1 Introduction This section identifies historical revenues and expenses attributable to Georgetown Municipal Airport (GTU) and projects those revenues and expenses to the year 2022. The projections consider a baseline scenario with some revenue enhancements in GTU's fueling operation as well as leases and rents. All baseline assumptions are carried on each conceptual P &L sheet for easy reference. 5.2 Financial Operations The Profit & Loss Statement shows that GTU has historically operated at a loss and will continue to do so if the City does not make changes in the way it operates the Airport. GTU loss $198,594 and $54,069 in FY 2011 and FY2014, respectively. Furthermore, GTU is projected to lose approximately $1.7 Million over its next 10 fiscal years. 5.2.1 Operating Expenses For the purpose of this business plan, operating expenses are made up of two primary categories. Fuel Cost and Overhead Expenses. Overhead Expenses include items such as personnel cost, office supplies, educational supplies, janitorial supplies, postage /mailing /freight, food, contract /leases, telephone, utilities, equipment maintenance, building maintenance, travel /training, insurance, vehicle lease, administration allocation, etc. 5.2.2 Historical Operating Expenses From FY 2011 to FY2012, GTU's operating expenses increased from $3,232,845 to $3,427,127. This included large increases in fuel expense, insurance, admin allocation and Transfer Out — ISF. 5.2.3 Cost Center Accounting Cost Center Accounting should be used by the City for controlling purposes at GTU. All costs incurred by the City at GTU should be transparent. This will enable the City to check the profitability of GTU and provide decision - making data for management. This will require that all costs be assigned according to their source. However, source - related assignment is especially difficult for overhead costs. Cost Center Accounting will enable the City to analyze the overhead costs according to where they were incurred within the organization. 5.2.4 Projected Operating Expenses The projected operating expenses expected to increase from $3,561,736 in FY2013 to $4,140,184 in FY2022. The increase in mostly due to cost of living increases over the next 10 years. 5.3 Operating Revenues The Profit & Loss Statement shows the projected operating revenues for FY 3013 to FY2022. The revenues are derived from the following: • Hangar Rents: Lease revenue is earned from the City's Corporate and T- hangar facilities at the Airport. • Aircraft Storage (Tie- downs): The Airport has a paved aircraft parking apron that has tie -downs for itinerant and based aircraft use. • Contract Leases: Revenues from ground leases at the Airport. • Fuel Sales: Revenues from fuel sale to airport tenants including FBO's and flight schools, as well as fuel flowage fees for fuel facilities. GEORGETOWN MUNICIPAL AIRPORT BUSINESS CASE ANALYSIS 73 COPYRIGHT 2013 BY CH2M HILL, INC. BASELINE AIRPORT OPERATING /FINANCE MODEL 5.3.1 Historical Operating Revenues From FY 2011 to FY2012, GTU's operating revenues increased from $3,529,816 to $3,635,796. The increase was largely due to a $58,981 increase in leases and rents and a $151,535 increase in fuel sales. 5.3.2 Baseline Revenue Scenario The baseline revenue scenario includes increases in hangar rents as well as fuel prices to generate additional income for GTU. However, these increases still do not result in a profitable operation of GTU. 5.3.3 Net Revenues The Profit & Loss Statement shows a net Toss each of the next 10 fiscal years from (FY2013 to FY 2022). The total loss over the 10 year period is project to be more than $1.7 Million. 5.4 Debt Service The City's projected debt service for GTU over the next 10 fiscal years is $1,200,878. 5.5 Conclusion Under the current operating and management scenario, the airport will struggle to meet its operational breakeven. In years when substantial capital improvements are anticipated, the City general fund will be the primary source of funding coverage. From this perspective, it is imperative that GTU be operated from a more solid business basis, so that general fund impacts can be lessened, and the airport can be more financially self sufficient. 74 GEORGETOWN MUNICIPAL AIRPORT BUSINESS CASE ANALYSIS COPYRIGHT 2013 BY CH2M HILL, INC.