ST. PETERSBURG-CLEARWATER INTERNATIONAL AIRPORT

BUSINESS CASE ANALYSIS: RUNWAY EXTENSION PROJECT

Prepared By:

JOHN F. BROWN COMPANY, INC.

April 19, 2004

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TABLE OF CONTENTS Executive Summary ........................................................................................................................ 1 Issue................................................................................................................................................. 2 Background ..................................................................................................................................... 2 Demand Analysis ............................................................................................................................ 3

The Current State of the Transatlantic Charter Travel Industry .................................................. 3 The UK Charter Market into Central Florida .............................................................................. 4 The Continental Europe Charter Market ..................................................................................... 5 The Latin American Charter Market ........................................................................................... 6 Orlando Sanford International Airport ........................................................................................ 6 The St. Petersburg-Clearwater Area as a Transatlantic Charter Tour Destination...................... 8 Potential Sources of Transatlantic Charter Demand at PIE......................................................... 8 Existing Local Demand ............................................................................................................... 9 Future Local Demand................................................................................................................ 10 Regional Demand ...................................................................................................................... 12 Conclusion................................................................................................................................. 12

Breakeven Cost Analysis............................................................................................................... 13

Project Costs.............................................................................................................................. 13 Project Funding ......................................................................................................................... 13 Annual Breakeven Costs ........................................................................................................... 13

Federal Investment Approach........................................................................................................ 15 National Interest in Local Airport Investment............................................................................... 15 State and Local Interest in Local Airport Investment.................................................................... 16 Appendices .................................................................................................................................. A-1

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EXECUTIVE SUMMARY

While scheduled airlines primarily serve independent travel demand, tour operators primarily use charter airlines to serve group travel demand. Europe, especially the United Kingdom, has historically been a strong source of group travel demand to Central Florida. Groups on packaged tours from Europe are often booked on charter airlines that fly large aircraft requiring long runways (10,000 ft. in length). European charter travel, primarily from the United Kingdom but also from the Continent, to central Florida began in the 1970s and grew with the expansion of Walt Disney World and other attractions in its vicinity. This travel peaked in the 1990s and has somewhat declined since that time. Despite the ongoing efforts of many airports in Florida to attract this business, Orlando has remained the primary European charter travel destination in Florida. Orlando Sanford International Airport has emerged as the airport of choice in central Florida for the European charter travel business. While proximity to the Orlando area attractions is a key asset, in addition, the airport has invested in facilities specifically designed to accommodate the needs of the charter travel market and the tour operators that serve it. It appears the airport has been willing to make this investment for highly cost-sensitive tour operators and charter airlines, while accepting the risk that its rates might not produce revenues sufficient to cover annual costs of the airport. Although Sanford is owned and operated by the City of Sanford, under the auspices of the Sanford Airport Authority, the international and domestic terminals at Sanford are managed by TBI plc, a UK company, through a private/public partnership. TBI has financial interests in the charter tour business. TBI continues to make investment in Sanford, and is keenly interested in protecting these investments.

There are presently only three major European tour operators, and each operates highly integrated businesses that seek to control every stage of the travel experience from the travel agent reservation, the flight, the rental car, the hotel, and the attractions. The objective is to derive a margin, however slim, from each stage of travel. Like legacy carriers in the U.S., the European tour operators face increasing competition from scheduled airlines, particularly the low-cost carriers, and they also serve a market whose needs and preferences are changing due in part to the effects of Internet shopping. The St. Petersburg-Clearwater Area beaches and other attractions are of interest to European travelers, and of exploratory interest to tour operators and charter airlines. Thus, there may be a European charter demand, yet unrealized and of uncertain size, that might be developed in the future. Based on our investigations, it is our opinion that extending the primary runway to 10,000 feet will not, by itself, result in group travel demand for the St. Petersburg-Clearwater Area or in transatlantic charter carriers operating at PIE. To improve its chances of developing the European charter market at PIE, the County would need to identify, with the participation of affected business interests, this outcome as a high priority strategic goal, to conceive (with the help of specialized expertise) an intelligent program of initiatives, and to commit the resources necessary to implement the strategies. The technical analysis in the master plan supports the idea that a key component of this program would be the extension of the runway to 10,000 feet. The runway extension project is part of a larger project that includes the construction of runway safety areas in addition to the runway extension. The entire project is estimated to cost $13.1 million dollars. Of this amount,

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$6.5 million is expected to be expended for construction of the runway safety areas. These safety areas are mandated by the FAA, and the Airport is obligated to construct the safety areas whether or not the runway is extended. The runway extension portion of the project is estimated to cost approximately $6.6 million dollars. The Airport has already programmed 95 percent of the funding for this project through grants under the federal Airport Improvement Program (AIP). Half of the remaining five percent of the cost will be covered by state grant dollars. The Airport’s actual out of pocket costs for the entire project are estimated to be approximately $165,000, which equals approximately 2.5 percent of the entire project cost. With the extension of the runway, the Airport has the opportunity to secure at a relatively modest cost a critical component of the infrastructure necessary to support a strategic plan with respect to the European charter market. This cost is estimated to be in the range of about $17,000 to $43,000 per year. (See page 14, Table 1, Breakeven Cost Analysis.) Assuming no project cost overruns from current estimates, PIE would require approximately 22 additional charter flights per year to break even. (See page 15, Table 2, Breakeven Cost Required Activity.) Beyond the relatively low cost, this option, if secured, has a value in itself because it enables the Airport and the County to pursue opportunities they might not otherwise be equipped to pursue. Finally, we note that the business case for this investment decision should be predicated on the local cost to the Airport, not the total cost of the runway extension project. Given local, state, and national interests in aviation infrastructure, public finance principles suggest each constituent unit of government apply its own investment criteria to a project commensurate with its responsibility for the costs. Having satisfied federal and state criteria, the ultimate authority remains the local unit of government that owns and operates the airport. Are the benefits to the local unit worth the costs to the local unit? Ultimately, the answer to this valuation question rests with the County. ISSUE

Is the discernable potential demand for long haul, transatlantic charter flights and Latin American charter flights into St. Petersburg-Clearwater International Airport a sufficient basis to warrant the necessary runway investment to extend the primary runway to 10,000 feet? BACKGROUND

The St. Petersburg-Clearwater International Airport (hereinafter “PIE” or “the Airport”) is located on the west shoreline of Tampa Bay north of St. Petersburg. The Airport is a 2,000-acre fully certified facility with ILS-equipped 8,800-foot runway and two 5,500-foot runways. The Airport and businesses operating on the Airport reportedly employee over 3,000 people and produce an economic benefit to the St. Petersburg-Clearwater Area that exceeds $783 million per year. The entire 2,000-acre tract of the Airport is designated as a Foreign Trade Zone.

The main runway at PIE is 8,800 feet by 150 feet. According to the September 2003 PIE master plan, “Forecast of aircraft operations and fleet mix, and interest by foreign carriers to service PIE identify large long-haul aircraft, such as the Boeing 747, which require longer runway lengths due to their longer stage lengths and operating characteristics. These aircraft will likely become the design aircraft at PIE. Additionally, these aircraft require approximately 10,000 feet for takeoff depending on stage length, temperature, and weather conditions.”

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In 2001, the County received expressions of interest in a longer runway from tour operators and airlines operating charter service. These expressions of interest related primarily to transatlantic charter travel originating in the UK, Germany, and the Netherlands, as well as Latin American travel originating in Venezuela. The letter expressing interest in the runway extension for Latin American travel originating in Venezuela has since been rescinded, but, based upon subsequent discussions, some measure of interest remains from the charter operators in the UK and continental Europe.

The Airport has completed a benefit-cost analysis (BCA) of the runway extension to 10,000 feet consistent with the methodological requirements specified by the FAA. The FAA has reviewed and approved the BCA, thereby making the project eligible to compete for federal funds with other projects to support aviation infrastructure nationwide. DEMAND ANALYSIS The Current State of the Transatlantic Charter Travel Industry

In an article in the October 2003 issue of Airline Business magazine examining at the current state of the European charter travel, author Colin Baker makes the point that after decades of largely profitable industry growth, the last few years have seen the profitability of European tour operators (both the UK and continental Europe) dwindle into the same range as the scheduled carrier sector, and points out that one of the three major UK tour operators, MyTravel, has only narrowly avoided bankruptcy. As Mr. Baker states in his article, the demise has coincided with the rise of the low-cost airlines and the increased popularity of independent travel. The tour operators themselves concede that this is a mature market, with few signs of growth.

The emergence of the Internet as a player in the travel market is also having an effect on people’s travel habits as they relate to charter travel. In addition to an increased ability to compare prices on the Internet, the Internet is contributing to a shift to late booking to take advantage of chronic excess capacity in the charter travel industry, making capacity and yield management that much more difficult. This shift to late booking is also reducing the income the charter companies have historically enjoyed from travelers making deposits for travel as much as a year in advance.

According to Mr. Baker, this has all come at a time when the major tour operators have moved toward vertically integrated business models, buying up hotels, cruise ships and airlines to offer complete vacation packages. This vertical integration served to control costs, but now may have the effect of limiting the flexibility of the charter travel industry to respond to changing travel needs and increased low-cost competition in the air transport sector of the business.

There have also been a series of cross-border mergers as tour operators sought geographical scale. As a result, there are now only five major travel groups in Europe: TUI, Thomas Cook, MyTravel, First Choice, and Kuoni.

Although there are a large number of smaller charter airline operators, it is fair to say that the three largest travel groups have more aggregate market share than the next 13 or 14 charter airline operators combined. This means there is little room for new entrants into the charter airline

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industry, and the future of charter travel as a viable industry is in the hands of a few extremely large travel groups.

The current challenges facing the charter industry, including competition from scheduled carriers; the impact of the Internet on travel choices, pricing and practices; and the need for flexibility to respond to a changing market place suggest that the industry, while not necessarily facing any greater crisis than its scheduled airline industry counterpart, is likely to take a more cautious approach to any expansion of business into new destinations than it might have three years ago.

Even during the relative boom period of the latter half of the 1990s, international charter traffic into the central Florida region was essentially flat. Attracting new service into the region is likely to get even more difficult as the top three charter travel groups struggle economically and search for new business models to address critical challenges in their industry. The UK Charter Market into Central Florida

By far, the largest sector of the charter market bringing groups to the Central Florida attractions is the British charter operators. This stream of charter travel from the UK began in the 1970s and essentially grew with the Orlando theme parks, Walt Disney World in particular. Over time, this stream of large charter group travel from the UK has been the largest and most reliable source of charter tour operations into Central Florida.

There are a number of significant characteristics unique to the UK group charter market.

As stated in the previous section, the charter travel companies of the UK are, in general, vertically integrated. Typically the tour operator owns the retail travel agency, the wholesale travel agency, the charter airline, and in some instances, the tour destination resort. When an individual in the UK decides to book a tour, in most instances they will call a travel agent advertising the particular tour in which they have an interest. This travel agency is often owned by the charter company sponsoring that particular tour. When the advance bookings indicate the demand for the tour is sufficient, the travel agency will move the booking up the line to the wholesale agent, also owned by the charter company. The wholesale agent puts together the 200 plus rooms, rental cars, theme park tickets, etc. and arranges the logistics of the tour. Flights are then booked for the group on an airline that may or may not be owned by the charter tour operator. In the UK in particular, this travel is typically booked by a very cost conscious, leisure traveler, and profit margins for this travel are very thin. This characteristic of vertical integration allows the tour operator to enjoy a small return at every level of the operation, thereby making the venture financially feasible.

The uniqueness of the UK charter travel has developed over time to satisfy what appears to be almost a cultural bias on the part of middle-class British citizens to travel abroad, and to do so on packaged tours where everything, from the car, the flight, the room, and the attractions are bundled into one economical price. It seems to be this propensity of the British to travel abroad, and their taste for fully packaged vacations, that have brought them to central Florida, essentially Orlando, in large numbers. UK charter travelers generally make trips of two weeks in duration, and often book these trips as far as one year ahead. They also appear to have a propensity to repeat their travel to Orlando once they have made the trip.

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Because they are moving a large number (anywhere from 200 to 600 passengers per flight) of very cost conscious customers through airports to rental cars, hotels, theme parks, etc., these charter tour companies are focused on both cost and logistics. Margins are razor thin in this industry, so keeping costs as low as possible is critical. On the other hand, tour operators rely strongly on repeat business, so the travel experience must be a positive one. To this end, they are very focused on convenience, accessibility, and efficiency.

The large majority of UK charter tour operators have exclusive contracts with Dollar Rent A Car for the provision of rental cars at their central Florida destinations. Most of their travelers rent cars, so the provision of rental cars is an important part of the logistical equation.

Tour operators also seek opportunities to sell their customers higher grades of services at various points in their travel – to offer them a rental car upgrade, a room upgrade, tickets to additional attractions, etc.

One of the current challenges in the UK charter industry is an increasing desire on the part of charter travelers for the types of amenities, such as first class cabin service, typically offered on schedule service but not historically offered by charter operators. As a result, some companies are refitting their planes to provide varying grades of service. Orlando Sanford International Airport, acting jointly with the charter companies flying into the airport, recently built a leisure class VIP lounge to accommodate this desire for service differentiation.

A potential area of growth identified by the UK charter operators stems from a change in the pattern of the UK visitor. Historically, when the UK visitor came to Orlando, he/she generally stayed in the area. That pattern is changing somewhat, and more UK travelers are venturing away from Orlando to a second destination for part of their vacation. Tour operators refer to these as twin-center holidays. In these twin-center holidays, the tour companies arrange the travel, accommodations, etc. for both destinations. This shift in travel patterns of the UK charter tour traveler may provide incentives for charter tour operators to explore destinations outside of Orlando. The St. Petersburg / Clearwater area would appear to be positioned to offer their beaches as alternative attractions to the theme parks of Orlando.

See Appendices 2 and 4. The Continental Europe Charter Market

There are significant differences in the typical customer profile of the continental European charter traveler as well, and therefore of large charter tour travel from these countries.

The continental European charter traveler often travels for a longer period than two weeks, and is typically thought to be less drawn to attractions like the theme parks of Orlando and more to what are considered “eco – tourism” destinations, or to sun and sand destinations.

These travelers do not travel to central Florida in the numbers typical of the UK travelers, so there is not the large stream of charter travel from these countries. The charter market to destinations such as Spain, Ibiza, etc. is a large draw for Europeans, and outside of the charter market, inexpensive fares on scheduled low-cost carriers make staying in Europe very attractive. Those travelers who do venture across the Atlantic in charter tour groups are thought to be spread out across Florida, the Caribbean, and other tropical destinations. They are also thought to be

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more inclined to travel within the state or even the country once they arrive at their Florida destination. If they travel to Orlando to the theme park attractions, they are likely to spend only a couple of days there, unlike the UK tourists who tend to spend the bulk of their vacation time at these attractions.

See Appendices 2 and 4. The Latin American Charter Market

The Latin American Charter Market into Central Florida is not a large market segment. The greatest number of flights into Florida is into MIA, with MCO a distant second. This charter travel segment peaked in the late 1990s, and declined thereafter. In 2002, there were 506 nonscheduled flights from Latin America into MIA. More importantly, there is little evidence that these travelers make their way to the St. Petersburg-Clearwater Area in significant numbers. As no significant market currently exists for charter travel from Latin America to the St. Petersburg-Clearwater Area, such a market would have to be built.

See Appendices 2 and 5. Orlando Sanford International Airport

Orlando Sanford International Airport’s international terminal (hereinafter “SFB” or “Sanford”) is a unique phenomenon in the charter travel industry. It was conceived as a facility essentially dedicated to the service of large charter carriers. Sanford has succeeded in capturing the bulk of charter carrier service into central Florida, much of it at the expense of Orlando International Airport (hereinafter “MCO”), which had built up the business over a period of more than twenty years. In order to understand the unique demands and desires of the transatlantic charter carriers and tour operators, it is necessary to understand what Sanford offers this industry that has made it such a successful airport destination for these operators.

The largest stream of transatlantic charter travel in to the central Florida region, the charter travel originating in the UK, began coming to Orlando in the early 1970s. The stream grew steadily, and skyrocketed in the late 1980s and early 1990s. Up until this point, all of that traffic flew into MCO. By the early 1990s, when Sanford was conceived as a charter tour airport, the stream to Orlando from the UK was already well established.

With a concept that allegedly came from a charter tour operator flying over the Sanford airfield and thinking it might make a good charter airport, a partnership was formed to develop the facilities on the airport to accommodate large-scale charter travel. In order to put themselves in the position to obtain financing in the bond market, the new partnership signed three major UK charter carriers, for a very favorable financial deal, to move their business from MCO to Sanford.

From the time Sanford began operations in 1996, the air traffic statistics suggest that Sanford did not create a lot of new large charter tour business into the region, but moved the bulk of the business away from MCO into Sanford. Because of the financial deals that were struck with the carriers in order to get Sanford started, the airport allegedly operated with significant losses throughout the 1990s.

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In 1999, operation of Sanford’s domestic and international terminals was taken over by TBI Airport Management Inc. TBI is a subsidiary of TBI PLC, a publicly traded British company. TBI agreed to pay $10 million dollars for the 30-year management contract, paid first in one payment of $7.5 million and then five payments of $500,000. The $7.5 million was to help with $25 million in expansion expenses.

TBI’s stewardship of Sanford is more than that of simply an airport management company. TBI’s investment in Sanford appears to be widespread, ongoing and substantial. TBI appears to be well positioned to protect the interests of Sanford, which are deeply connected to its own interests, and to fend off much attrition of its charter carrier service to other airports in the region.

A review of Sanford, conducted by Infrastructure Management Group of Washington, D.C., was released the first week of January 2003. This review stated that at that time, while the airports concession revenue was well above the average, with travelers paying an average of $10.00 per person for food, beverages, and other concessions compared with a national average at that time of $2.00, an unfavorable concession agreement with Dollar Rent A Car negotiated by TBI’s predecessor, and the services TBI offered to charter carriers, such as ground handling and aircraft maintenance, were negatively impacting profitability at the international terminal.

While profitability has apparently been an issue since the inception of Sanford, the service model at the international terminal is successfully geared to the unique needs of the charter airline industry.

At Sanford, the FIS facility is located very close to the gates, providing short waking distances for arriving passengers. It is also a short walking distance to the rental car counters and ready spaces. All facilities at the airport are designed for very high volumes. An example is the Dollar Rent A Car counter, which is 170 linear feet and has space for as many as 40 rental agents to serve arriving passengers. At Sanford, Dollar has approximately 70 percent of the rental car market share, Vanguard (Alamo and National) has approximately 20 percent, and Avis and Hertz split up the rest, but concentrate more on domestic traffic. There are times when as many as six flights carrying up to 600 passengers each arrive at the airport within a 90-minute period. The airport is also laid out in such a way that the tour companies have an opportunity to try to sell their customers upgraded accommodations or services once they have cleared FIS and before they rent their car or board their bus

In Orlando, the area south of the city’s center is the area focused on tourism, and the area north of the city’s center is the corporate headquarter and bedroom community area. MCO is located 12 miles south of the city’s center, and Sanford is located 16 miles north of the city’s center. However, Sanford has the elapsed time advantage for passengers of wide body jets. On average, it takes the passengers of a wide body jet landing at Sanford seven minutes less time to reach the Orlando attractions than it takes the passengers of a wide body jet landing at MCO. In other situations it takes passengers the same time or only slightly more to reach the Orlando attractions. Sanford has hired outside experts to make these comparative measurements. Sanford gains the time advantage by having adequate facilities to move large groups through FIS and the rest of the facility very quickly. The walking distances are short, and the facilities are convenient, with no need to bus passengers to pick up their rental cars.

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Sanford is also the beneficiary of a charter tour destination that has grown and matured over 30 years. Not only does Orlando have the attractions that draw the large groups, it has developed the infrastructure to handle groups of this size. There is adequate availability of middle range (three star) hotel/motel rooms available to tour companies at deeply discounted rates. UK operators are looking for rooms in the $39.00 to $49.00 range, which is not always possible in other parts of Florida. The highway system makes access to the attractions relatively straightforward. The rental car companies, especially Dollar, have adequate infrastructure and fleet to meet the needs of such large groups. These conditions can be difficult to duplicate in other locations.

On a much smaller scale, PIE may also have the potential to offer short walking distances; convenient facilities, and close proximity to the desired beach destinations. Without attempting to actually compete with Sanford, PIE may be able to offer charter tour operators a low cost, conveniently located airport facility for the occasional charter flights serving smaller or niche markets seeking an alternative to Sanford and the Orlando area.

See Appendices 3, 6, and 7. The St. Petersburg-Clearwater Area as a Transatlantic Charter Tour Destination

The St. Petersburg-Clearwater Area is surrounded by 35 miles of white, sandy beaches, the waters of the Gulf of Mexico, and Tampa Bay. While area attractions also include the Salvador Dali Museum, Bay Walk Downtown/Waterfront Shopping and Dining, the Tarpon Springs’ Historic Greek Sponge Docks, Busch Gardens, the Florida Aquarium, and many parks and historic sites, it is the 35 miles of beach and the Gulf of Mexico that are the primary draws of the area. Three of the top five beaches in the United States are located in the St. Petersburg-Clearwater Area.

There are over 36,000 rooms in the St. Petersburg-Clearwater Area, ranging from 5-star resorts to bed and breakfasts. The average room rates for the peak season, extending from November to May, range from $42.00 to $90.00. These rates are among the lowest of the resort beach areas in Florida, according to the St. Petersburg-Clearwater Area Convention and Visitors Bureau.

In addition, Walt Disney World, Sea World and Universal Studios are 90 minutes away on Interstate 4, making it a relatively easy drive.

For the typical continental European traveler who is reportedly more drawn to sun and beaches than to theme park attractions, the St. Petersburg-Clearwater Area offers the opportunity to spend most days at the beach, and to visit the attractions of Orlando for a day trip or overnight and return to the beach Potential Sources of Transatlantic Charter Demand at PIE

No direct evidence exists to predict traffic demand with certainty. The following discussion explores the circumstantial case from which potential demand might reasonably be inferred.

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Existing Local Demand

In 2002, a reported 4,714,432 people visited the St. Petersburg-Clearwater Area. This data, as well as the data that follows, is collected and tracked by the St. Petersburg-Clearwater Area Convention and Visitors Bureau.

Of these 4,714,432 visitors to the area, 756,971 were UK and Continental European visitors. As of November 2003, the total number of visitors to the area year to date was 2.3 percent over 2002, and the number of European visitors to the area year to date was 4.6 percent over 2002.

Of the 756,971 European visitors to the St. Petersburg-Clearwater Area in 2002, 33.3 percent deplaned at Tampa International Airport (hereinafter “TPA”), 58.6 percent deplaned in Orlando at either SFB or MCO, and 5.1 percent deplaned at Miami International Airport (hereinafter “MIA”).

The car rental statistics are similar, with 31.7 percent of the European visitors to the area in 2002 having rented their car in Tampa, 59.8 percent in the Orlando Area, and 4.9 percent in Miami.

Approximately 44.4 percent of these European visitors in 2002 indicated this was their first trip to the St. Petersburg-Clearwater Area, and 20.2 percent indicated this was their first trip to Florida. This suggests a high level of return visitors – over half of the visitors indicated this was not their first visit to the St. Petersburg-Clearwater Area, and nearly 80 percent were repeat visitors to Florida.

In those cases where visitors were in Florida the night prior to arriving in the St. Petersburg-Clearwater Area, 78.7 percent spent that night in Orlando.

While these numbers do not indicate how many of these visitors are transatlantic charter travelers, they do support the premise that repeat European travelers to the Orlando attractions are more likely to seek time outside of Orlando, and specifically at the beaches.

Approximately 68 percent of these visitors also indicated that during their trip to Florida, they would be visiting areas of Florida in addition to St. Petersburg-Clearwater for overnight stays.

In determining the routes currently taken by charter group travelers primarily destined for the St. Petersburg-Clearwater Area, the following must be considered:

There is no transatlantic charter traffic into Sarasota-Bradenton International Airport (hereinafter “SRQ”), so it is not a factor.

Only 5.1 percent of the European visitors to the St. Petersburg-Clearwater Area deplaned at MIA, suggesting that transatlantic traffic into Miami is not a significant source of visitors to the region.

TPA, while never a significant transatlantic charter carrier destination, declined to only 17 charter flights in 2002. TPA is not currently a significant source of existing charter travel into the Area.

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All of this leads to the conclusion that currently the most abundant stream of transatlantic charter travelers making their way to the St. Petersburg-Clearwater Area are coming from either MCO or Sanford. If a portion of this existing local demand is to move from MCO or Sanford to be served through PIE, a number of significant challenges must be met. The extension of the primary runway from 8,800 feet to 10,000 feet is one of the measures that would have to be undertaken, but convincing charter tour operators to move transatlantic charter operations from Orlando, even those with passengers bound for the St. Petersburg-Clearwater Area, might also involve improvements (to the extent they do not already exist) to other areas of the airport to allow for timely movement of large numbers of passengers through FIS, to provide adequate rental car counter and ready space facilities for rental car operators to serve groups of 200 or more, and to insure that the facilities in general are easy to traverse, and convenient for large groups arriving and departing together.

All of this assumes that any transatlantic tour operators who might have an interest in the area determine, after their own investigation and analysis, that the risk of moving a portion of their service from a well-established destination such as Orlando, or adding new service to a new destination, is one they are willing to take. Future Local Demand

Given the current state of the European charter tour industry, meaningful attempts to increase local demand into the St. Petersburg-Clearwater Area will require a willingness on the part of the Airport and the community to meet many of the challenges listed in the section above, as well as the implementation of a long term strategic plan to work with the European charter travel industry to grow and nurture such demand. Both the Airport and the County have been pro-active in this regard, and have developed long-standing relationships in the European travel industry as well as the charter travel industry.

Development and execution of a serious long-term strategy would require a joint commitment on the part of the County, PIE, and the area resort and tourism community to make the marketing and selling of the St. Petersburg-Clearwater Area as a viable European charter tour destination a priority. It would require the commitment of County and community resources, not just to development of the required infrastructure at PIE, but to the development of relationships and ties within the European charter travel industry for the purpose of fostering understanding of the needs of the industry and for individuals within the industry to be convinced, if they can be, that PIE and the St. Petersburg-Clearwater Area are a viable new destination for their tour groups. It might also be necessary to engage specialized expertise from outside the County to assist in this effort. While it is unlikely that there will be transatlantic charter travel service into PIE without this type of strategic plan, such a plan would not guarantee a successful result.

It is conceivable for PIE, if the runway is extended, to market to specialized niche charter tour markets, such as eco tourists, golf tourists, etc. to create incremental new demand sufficient to result in a moderate number of transatlantic charter flights into PIE. The occasional long haul aircraft may be able to be accommodated with minor terminal improvements that can be integrated into a phased terminal development program.

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The Airport, in partnership with the St. Petersburg-Clearwater Area Convention and Visitors Bureau, has certainly made a concerted effort and some progress toward increasing future local demand.

In 2001, PIE secured three letters of intent from UK and European tour operators and carriers who have expressed an interest in introducing transatlantic service into PIE. While none of the letters rise to the level of an actual commitment to bring operations into PIE, and upon further exploration it appears the level of interest of these three parties varies somewhat, nonetheless they are at a minimum evidence that the 35 miles of area beaches are sufficient draw to at least spark the exploratory interest of the charter travel industry.

The three parties signing these letters of intent are Travel City Direct in the UK, Condor in Germany, and Martinair in the Netherlands.

Within the last month, Travel City Direct, when contacted for this report, indicated it is still interested in introducing service into PIE, with the caveat that it would depend on the strength of the market at the time, and that there are other airports in the region trying to get Travel City Direct to commit to exactly the same thing. The Managing Director of Travel City Direct, G.C. Medhurst, stated that they would like to have more of a presence along the Gulf Coast, but the problem is getting people to leave Orlando. He also stated his belief that once one of the UK charter carriers begins service into one of the region’s airports vying for their service along the Gulf Coast, others will follow. But again, the problem is getting travelers to select the Gulf Coast over Orlando. Mr. Medhurst advised that Travel City Direct already has contracts with hotels along the coast, so if they were to bring large groups directly into PIE they would simply have to ask these hotels for larger accommodations than they currently require. He did go on to say, though, that in order for his organization to bring large groups into PIE, the necessary infrastructure would need to exist, meaning the FIS capacity, the ability for Dollar Rent A Car, its exclusive provider, to provide 200 to 250 rental cars to passengers in a short period of time, and any other accommodations necessary to effectively and efficiently serve the needs of large groups of international visitors.

Condor, when contacted for this report, had a somewhat more ambiguous position. Until April 2003, Condor was flying into Ft. Myers, Tampa, and Ft. Lauderdale. In April 2003 Condor stopped service to Tampa. The reason they cited for stopping service to Tampa was that it did not make sense to fly into all three coast airports. Josef Kohl also indicated that Condor is planning to begin service into Orlando. At the insistence of its tour operators, Condor will be flying into MCO rather than Sanford. While he expressed a desire to remain supportive of the runway extension at PIE, he was clear that in order to pursue PIE as a potential destination, the tour operators with which he works would have to select PIE as a viable market destination.

Despite repeated attempts, Martinair could not be reached during to the preparation of this report. However, Airport marketing personnel indicate Martinair continues to express an interest when engaged at trade shows, etc., but subject to the same caveat as Travel City Direct that such service would be subject to market conditions at the time.

There is adequate evidence that the beaches and surrounding attractions of the St. Petersburg-Clearwater Area provide appeal as a charter travel destination. However, there is stiff competition in the region, and PIE would require a long term strategic plan to identify the segment of the charter market for which the Area would have sufficient appeal to actually create

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new demand, in order to increase the likelihood that transatlantic charter carriers will bring operations into PIE if the runway is extended. Part of this strategy would have to include positioning PIE as the alternative low cost airport close to the beaches.

It does appear, however, that the Area’s proximity to Orlando, its beaches, golf courses and other attractions, and the smaller size and convenient location of its airport would provide a relatively strong foundation for a long term strategy to position PIE to attract, over time, at least one if not more transatlantic charter carriers.

Whether or not there is potential to attract scheduled transatlantic flights, as opposed to non-scheduled charter flights, into PIE is beyond the scope of this report. However, Airport staff report they are having dialogue with a start-up scheduled transatlantic carrier interested in PIE and the St. Petersburg-Clearwater area. Regional Demand

A less likely potential source of demand is the existing group market that is destined for other areas but might, under certain conditions, be served from PIE instead of TPA, MCO, Sanford or MIA. This source is identified as less likely because, in order for a charter carrier or tour operator to choose to bring customers into PIE when those customers are actually destined for areas outside of St. Petersburg-Clearwater, the facilities and cost structure at PIE would have to be so attractive as to outweigh the inconvenience of having to deliver customers from PIE to their intended destinations. The facility requirements of the European charter tour industry as well as the financial constraints of this industry suggest that if PIE were to be able draw the existing group market that is destined for other areas, PIE would have to compete directly with Sanford and develop itself into an airport facility along the lines of Sanford’s international terminal, with facilities and a cost structure at least as attractive as Sanford. Even if this were possible, it might require a complete shift away from PIE’s current direction and mission. Attracting transatlantic charter business on this scale is also beyond what would be required to break even on the costs of the runway extension. Conclusion

While there is not a transatlantic charter tour operator or carrier standing in the wings declaring a firm intent to begin operations into PIE if the primary runway were extended to 10,000 feet, there is evidence of an interest on the part of some members of the industry to explore the area further. The St. Petersburg-Clearwater Area offers the pristine beaches and sun that some European charter group travelers appear to be seeking. If the Airport, the County, and the community were able to reach consensus that attraction of this business warranted the development and execution of a long-term strategy, and if the County were willing to make the investments in the additional airport infrastructure development that may be required, the 10,000-foot runway would be a critical prerequisite for bringing transatlantic charter operations to PIE. If the runway were extended at this time, prior to any commitments from transatlantic charter carriers to conduct operations into PIE, the possibility exists that, after consideration of the risk, no transatlantic charter carriers will actually elect to fly to PIE. However, construction of the runway extension at this time would allow for the ability to seize any opportunities for

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transatlantic charter or other operations requiring a 10,000 ft. runway that might arise, and the cost to the County to prepare itself to take advantage of any such opportunities is relatively low. BREAKEVEN COST ANALYSIS This section discusses the annual breakeven costs of the runway extension. Annual breakeven costs are the sum of annual amortization expense and annual operating expense. The derivation is discussed below. Project Costs The Airport estimates the project costs to extend runway 17/35 would be $6.6 million. The estimate covers both the “hard” and “soft” costs of the project including planning, design, engineering, land acquisition, site preparation, construction, program management fees, inspection fees, escalation, and contingencies. The project is currently at the 30 percent design phase, thus the cost estimate is to subject change. We suggest a +20 percent confidence level, given the current phase of design, and we suggest that consideration be given only to the possibility of an increase (no decrease) in project costs. Under these parameters, total project costs might range from $6.6 million to $7.92 million. Project Funding The Airport plans to fund the runway extension project using federal AIP grants (95 percent), state aviation grants (2.5 percent), and local funds (2.5 percent).1 The FAA has informally committed to funding 95 percent of the costs of the project when the Airport applies for the construction grant in 2005. The State of Florida has issued a grant covering its expected share of the project costs. The Airport expects costs overruns up to 15 percent of the as-bid construction price would be covered by increases in federal and state funding. Overruns in excess of 15 percent would by funded solely from local sources. Thus, the Airport share of project costs would be $165,000 given total project costs of $6.6 million. In the event project costs increased 15 percent to $7.59 million, the Airport share would increase 15 percent to $189,750. However, in the event final project costs increased 20 percent to $7.92 million, the Airport share would increase 174 percent to $519,750. Annual Breakeven Costs The runway extension will have a useful life of approximately 30 years. The commitment of local funds will have an opportunity cost (e.g., lost interest income), which we assume to be 6.0 percent for analytic purposes. Based on these parameters, the amortization expense associated with the local investment in the runway extension would range from $12,000 to $38,000, depending on the level of local investment. (See Table 1 below.)

1. The local obligation (2.5 percent) could be funded from any source of local funds including passenger facility charges. Federal law authorizes airports to collect PFCs in the amount of $1.00, $2.00, $3.00, $4.00, or $4.50 per enplaning passenger for the allowable costs of eligible projects. The local share of an AIP-funded project would be a permitted use of PFCs.

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Incremental operating expenses attributable to the runway extension are not easily identified, since they are not readily separable from other operating expenses of the runway system. The Airport estimates that such expenses would be approximately $5,000 per year.2 Annual breakeven expenses (amortization plus operating expenses) are estimated to be in the range of $17,000 to $43,000. Of course, it should be recognized that the Airport and Airport are primarily interested in acquiring the potential to access future economic benefits that could not otherwise be accessed without the construction of the runway extension. While financial breakeven may not occur in the near-term, the investment is modest relative to the potential benefits that could result from only a small amount of incremental charter activity. 

Table 1 Breakeven Cost Analysis

St. Petersburg-Clearwater International Airport

Current Estimate

15 Percent Overrun

20 Percent Overrun

Project Costs for Runway Extension Land Acquisition $2,400,000 $2,760,000 $2,880,000 Inspection, Survey, and Testing 740,000 851,000 888,000 Construction 3,060,000 3,519,000 3,672,000 Related Project Costs 400,000 460,000 480,000 Total $6,600,000 $7,590,000 $7,920,000

Project Funding

AIP Grants1 $6,270,000 $7,210,500 $7,210,500 State Grants 165,000 189,750 189,750 PFCs - - - Local Funds 165,000 189,750 519,750 Total $6,600,000 $7,590,000 $7,920,000

Net Local Cost $165,000 $189,750 $519,750 Amortization of Local Cost2 $11,987 $13,785 $37,759 Annual Operating Expenses3 5,000 5,000 5,000 Annual Breakeven Cost $16,987 $18,785 $42,759

Source: Cost estimates and funding assumptions by St. Petersburg-Clearwater International Airport; calculations by John F. Brown Company, Inc.

Notes: 1. Calculated as 95 percent of all project costs. 2. 30-year amortization at six percent interest rate. 3. The Airport estimates additional incremental operating expenses of $5,000 annually. Furthermore, to help contextualize the annual breakeven costs calculated above, Table 2 below provides order of magnitude estimates of annual flight activity sufficient to achieve breakeven. If the Airport were able to benefit $2.00 of operating revenue per incremental additional enplaned charter passenger, a figure considered highly conservative by Airport management, 22 annual 400-passenger flights would be sufficient to achieve financial breakeven

2. Future capital expenditures for major repairs and maintenance, such as overlays, might add approximately $2,000 per year to this amount. Like the original investment in the runway extension, FAA and FDOT would reimburse the County for such costs at the rate of 95 percent and 2.5 percent, respectively.

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for current project cost estimates. Even with a 20 percent project cost overrun, 54 annual flights would enable financial breakeven. We do not have an estimate of the magnitude of financial impact to the County of direct, indirect, or induced income that would be forfeited should the investment in the runway extension not be made.

Table 2 Breakeven Cost Required Activity

St. Petersburg-Clearwater International Airport

Current Estimate

15 Percent Overrun

20 Percent Overrun

Annual Breakeven Cost $16,987 $18,785 $42,759

Assumed Revenue Benefit per Additional Enplaned Passenger $ 2.00 $ 2.00 $ 2.00

Assumed Enplaned Passengers 400 400 400 Per Charter Flight Annual Charter Flights Required 21.2 23.5 53.4 To Break Even

Source: Assumptions as communicated by St. Petersburg-Clearwater International Airport management. FEDERAL INVESTMENT APPROACH The division of tax and spending powers among the constituent levels of government in the United States is a product of design and a multiplicity of historical factors. There is a strong national interest in airports and other elements of aviation infrastructure, and the federal government advances this interest through the use of grants to airports for specific expenditures to the extent such expenditures advance national aviation priorities. National Interest in Local Airport Investment It is the policy of the United States to encourage the development of transportation systems that use various modes of transportation in a way that:

Will serve the states and local communities efficiently and effectively; and Will see that airport construction and improvement projects that increase the

capacity of facilities to accommodate passenger and cargo traffic be undertaken to the maximum feasible extent so that safety and efficiency increase and delays decrease.3

The public finance rationale for federal funding of local airport investment has been formed over a number of years, reaching back to at least 1939. The principles are deeply engrained and strongly embraced. The rationale is generally expressed along the lines of the following. We have a national funding system, rather than a state or local system, because

3. U.S. Code. Title 49, Sec. 47101(a) (5) and (7).

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airplanes do not take off and land only within state lines.4 The benefits of aviation permeate our entire society. Part of what has been bound together by our significant transportation investment in the United States has been our national economy.5 Virtually all sectors of the economy are now dependent on air transportation for the movement of goods and people. In short, the aviation system has become a basic element of the infrastructure of the nation’s and the world’s economic way of life. So, however the government sets spending levels, matching formulas, user fees and taxes, there should be one national interest in mind.6 Underinvestment in airport infrastructure keeps the national benefits of airport and air traffic investments from being fully realized, resulting in potentially higher costs, lost productivity and poorer economic performance. The Civil Aeronautics Board recommended to Congress, in 1939, that the Federal Government participate in funding the development and maintenance of airports, with preference to airports along trade routes or those useful to national defense.7 The Airport and Airway Development Act of 1970 established a specific trust fund, financed through user fees, to fund capital improvements to the nation’s airport and airway system. The Airport and Airway Improvement Act of 1982 created the FAA’s AIP grant program as it is known today. The Act’s broad objective is to assist in the development of a nationwide system of public-use airports adequate to meet the current projected growth of civil aviation. The Act provides funding for airport planning and development projects at airports included in the National Plan of Integrated Airport Systems (NPIAS). The Act also authorizes funds for noise compatibility planning and to carry out noise compatibility programs. The Secretary of Transportation, in a biennial report to Congress, identifies those airports that are important to national transportation and, therefore, eligible to receive AIP grants.8 This report—the National Plan of Integrated Airport Systems (NPIAS)—identifies more than 3,000 airports (including PIE) that are significant to national air transportation. It also includes estimates of the amount of AIP money needed to fund infrastructure development projects that will bring these airports up to current design standards and add capacity to congested airports. State and Local Interest in Local Airport Investment It is the FAA policy to fund only a portion of the allowable cost of eligible airport projects, leaving the balance to be funded by the local airport sponsor and, if available, state funding sources as well. The federal portion varies depending on the nature of the project and the size of the airport. The FAA funds a larger portion of project costs at smaller airports in keeping with federal policy and priorities. The State of Florida, whose economy is highly reliant on tourism, also has a strong interest in promoting the development of aviation infrastructure. Thus, it has committed itself to funding a portion of the cost of local airport investment. The State has one of the largest aviation grant programs in the country.

4. “Transportation Investments and the Danger of Devolution”, Rep. James Oberstar, Roll Call, February 10, 1997, page 2. 5. ibid. 6. ibid. 7. “Aviation: Direct Federal Spending, 1918-1998.” Congressional Research Service Report for Congress, February 3, 1999. 8. National Civil Aviation Review Commission “Airport Development Needs and Financing Options.” June 4, 1997.

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In this public finance context, local communities must determine whether the local investment in the airport is warranted. The local investment, as discussed above, would amount to approximately 2.5 percent of estimated project costs of the runway extension. Given that federal and state criteria for investment decisions support the expenditure of 97.5 percent of total project costs, the County must determine whether local criteria for investment decisions support the expenditure of 2.5 percent of total project costs.

APPENDICES CONTAINED ON FOLLOWING PAGES

A-1

Appendix 1 Total International Air Passenger Arrivals

All U.S. Airports (calendar years)

Yearly Yearly Yearly Percent of Total Year Scheduled Percent Chg. Charter Percent Chg. Total Percent Chg. Sched. Non-sched.1990 39,597,876 3,113,431 42,711,307 92.7% 7.3% 1991 38,100,693 -3.8% 3,135,336 0.7% 41,236,029 -3.5% 92.4 7.6 1992 41,330,157 8.5 3,749,528 19.6 45,079,693 9.3 91.7 8.3 1993 43,522,256 5.3 3,818,690 1.8 47,340,951 5.0 91.9 8.1 1994 45,687,111 5.0 3,866,385 1.2 49,553,501 4.7 92.2 7.8 1995 49,433,257 8.2 3,558,510 -8.0 52,991,775 6.9 93.3 6.7 1996 53,589,813 8.4 3,200,652 -10.1 56,790,473 7.2 94.4 5.6 1997 56,986,889 6.3 3,324,669 3.9 60,311,564 6.2 94.5 5.5 1998 59,804,253 4.9 3,010,225 -9.5 62,814,483 4.1 95.2 4.8 1999 63,170,324 5.6 3,249,095 7.9 66,419,425 5.7 95.1 4.9 2000 68,558,805 8.5 3,185,904 -1.9 71,744,718 8.0 95.6 4.4 2001 62,685,380 -8.6 2,686,591 -15.7 65,371,962 -8.9 95.9 4.1 2002 59,945,669 -4.4 2,340,084 -12.9 62,285,749 -4.7 96.2 3.8

Source: DOT, Schedule T-100.

0

10

20

30

40

50

60

70

80

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Calendar Years

Pass

enge

rs (i

n m

illio

ns) Scheduled

Charter

A-2

Appendix 2 Charter Passenger Arrivals

at All U.S. Airports, by World Area (calendar years)

Latin Trans- Trans- Year America1 Atlantic2 Pacific3 Canada Total 1990 972,743 1,013,795 50,043 1,076,850 3,113,431 1991 1,075,258 970,321 76,235 1,013,522 3,135,336 1992 1,525,880 1,042,928 59,585 1,121,135 3,749,528 1993 1,757,846 1,002,236 67,922 990,686 3,818,690 1994 1,873,561 928,805 89,385 974,634 3,866,385 1995 1,743,449 923,390 88,935 802,736 3,558,510 1996 1,636,985 1,088,453 102,733 372,481 3,200,652 1997 1,801,897 983,583 88,807 450,382 3,324,669 1998 1,955,062 802,379 64,691 188,093 3,010,225 1999 2,150,971 760,332 78,740 259,052 3,249,095 2000 2,177,940 804,623 123,666 79,675 3,185,904 2001 1,834,539 659,216 93,931 98,905 2,686,591 2002 1,770,113 440,639 58,563 70,769 2,340,084

(1990) (2002) Source: DOT, Schedule T-100. Notes: Latin America includes Mexico, Central and South America and the Caribbean. Transatlantic includes the U.K., Europe, Africa, and the Middle East. Transpacific includes Asia and Oceania.

Latin America

31%

Canada34%

Trans-atlantic

33%

Trans-pacific

2%

Latin America

76%

Canada3%

Trans-pacific

2%

Trans-atlantic

19%

A-3

Appendix 3 International Charter Passenger Arrivals

by U.S. Airport (calendar year 2002)

Airport Arriving Percent of Arrival Airport Code Passengers Total

TOTAL—All U.S. Airports 2,340,084 100.0% Orlando-Sanford SFB 380,659 16.3 Miami MIA 208,121 8.9 Chicago-O'Hare ORD 177,109 7.6 Dallas/Ft. Worth DFW 160,296 6.9 New York-Kennedy JFK 114,560 4.9 Denver DEN 109,223 4.7 Las Vegas LAS 103,819 4.4 Detroit DTW 86,640 3.7 St. Louis STL 79,138 3.4 Minneapolis-St. Paul MSP 72,420 3.1 Houston-Bush IAH 71,260 3.0 Boston BOS 66,000 2.8 Los Angeles LAX 60,896 2.6 Oakland OAK 55,942 2.4 New York-Newark EWR 50,329 2.2 San Juan SJU 44,930 1.9 Orlando MCO 41,925 1.8 Milwaukee MKE 41,571 1.8 Baltimore BWI 37,534 1.6 All Other 377,712

Source: DOT, Schedule T-100.

0 50 100 150 200 250 300 350 400

All OtherBaltimore

MilwaukeeOrlando

San JuanNew York-Newark

OaklandLos Angeles

BostonHouston-Bush

Minneapolis-St. PaulSt. Louis

DetroitLas Vegas

DenverNew York-Kennedy

Dallas/Ft. WorthChicago-O'Hare

MiamiOrlando-Sanford

Passengers (in thousands)

A-4

Appendix 4 Charter Passengers Arriving From Europe

at All U.S. Airports (calendar years)

United Percent of Continental Percent of Total Year Kingdom Total Europe Total Europe 1990 502,936 49.6% 510,859 50.4% 1,013,795 1991 510,793 52.6 459,528 47.4 970,321 1992 568,865 54.5 474,063 45.5 1,042,928 1993 569,877 56.9 432,359 43.1 1,002,236 1994 482,131 51.9 446,674 48.1 928,805 1995 438,028 47.4 485,362 52.6 923,390 1996 585,709 53.8 502,744 46.2 1,088,453 1997 569,871 57.9 413,712 42.1 983,583 1998 602,725 75.1 199,654 24.9 802,379 1999 550,812 72.4 209,520 27.6 760,332 2000 571,533 71.0 233,090 29.0 804,623 2001 528,384 80.2 130,832 19.8 659,216 2002 367,006 83.3 73,633 16.7 440,639

Source: DOT, Schedule T-100.

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002Calendar Years

Pas

seng

ers

(in m

illio

ns) Continental Europe

United Kingdom

A-5

Appendix 5 Charter Passengers Arriving From Latin America

At All U.S. Airports (calendar years)

Percent of Percent of South Percent of Central Percent of L.America Year Mexico Total Caribbean Total America Total America Total Total 1990 483,906 49% 471,956 48.5% 15,755 1.6% 1,126 0.1% 972,743 1991 547,329 50.9 488,209 45.4 36,933 3.4 2,787 0.3 1,075,258 1992 794,781 52.1 660,717 43.3 66,232 4.3 4,150 0.3 1,525,880 1993 920,644 52.4 776,037 44.1 49,596 2.8 11,569 0.7 1,757,846 1994 1,014,064 54.1 777,720 41.5 66,121 3.5 15,656 0.8 1,873,561 1995 950,287 54.5 680,011 39.0 90,709 5.2 22,442 1.3 1,743,449 1996 1,008,936 61.6 553,323 33.8 52,471 3.2 22,255 1.4 1,636,985 1997 1,116,960 62.0 614,236 34.1 54,500 3.0 16,201 0.9 1,801,897 1998 1,251,142 64.0 607,124 31.1 66,141 3.4 30,655 1.6 1,955,062 1999 1,350,528 62.8 664,136 30.9 103,752 4.8 32,555 1.5 2,150,971 2000 1,270,247 58.3 755,585 34.7 110,568 5.1 41,540 1.9 2,177,940 2001 1,137,390 62.0 654,952 35.7 11,436 0.6 30,761 1.7 1,834,539 2002 1,093,379 61.8 618,033 34.9 33,329 1.9 25,372 1.4 1,770,113

Source: DOT, Schedule T-100.

0.0

0.5

1.0

1.5

2.0

2.5

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002Calendar Years

Pas

seng

ers

(in m

illio

ns)

Central AmericaSouth AmericaCaribbeanMexico

A-6

Appendix 6 Charter Passengers Arriving at Florida Airports

(calendar years) Year SFB MIA MCO FLL TPA All Other Total 1990 0 200,625 456,408 350,551 41,868 155,632 1,205,084 1991 608 231,214 590,856 353,388 38,808 174,514 1,389,388 1992 0 226,948 618,337 471,409 38,896 193,807 1,549,397 1993 0 290,029 571,205 319,191 41,847 179,813 1,402,085 1994 0 255,261 578,751 234,920 33,202 163,541 1,265,675 1995 0 203,104 546,447 181,929 32,337 133,680 1,097,497 1996 216,962 193,335 420,956 122,182 29,011 35,405 1,017,851 1997 408,516 218,778 274,290 116,781 26,964 76,900 1,122,229 1998 510,559 169,034 138,283 24,682 5,216 27,172 874,946 1999 419,785 235,171 235,487 73,918 1,668 45,931 1,011,960 2000 463,885 280,553 207,461 5,786 9,133 4,966 971,784 2001 476,086 175,356 136,900 13,788 2,918 4,933 809,981 2002 380,659 208,121 41,925 8,206 1,215 11,242 651,368

Source: DOT, Schedule T-100.

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

1990 1994 1998 2002Calendar Years

Arr

ivin

g P

asse

nger

s (in

mill

ions

)

All OtherTampaFt. LauderdaleOrlandoMiamiOrlando-Sanford

A-7

Appendix 7A International Charter Passenger Arrivals

at Orlando International and Orlando-Sanford Airports (calendar years)

Orlando International Orlando-Sanford Latin Trans- MCO Trans- Latin SFB

Year America1 Atlantic2 Canada Asia3 Total Atlantic2 America1 Canada Total 1990 26,033 258,197 172,178 - 456,408 - - - -1991 51,790 332,945 206,121 - 590,856 - 608 6081992 85,473 310,811 222,053 - 618,337 - - - -1993 54,823 338,776 177,606 - 571,205 - - - -1994 68,031 357,903 152,817 - 578,751 - - - -1995 69,693 360,181 116,573 - 546,447 - - - -1996 60,861 271,850 87,006 1,239 420,956 216,962 - - 216,9621997 64,344 77,392 132,554 - 274,290 407,339 518 659 408,5161998 74,443 11,568 52,272 - 138,283 502,346 5,533 2,680 510,5591999 44,572 110,695 80,220 - 235,487 390,511 29,274 - 419,7852000 45,480 122,283 39,698 - 207,461 428,786 35,099 - 463,8852001 30,459 103,208 3,233 - 136,900 395,408 27,539 53,139 476,0862002 26,909 10,651 4,365 - 41,925 316,235 64,100 324 380,659

Source: DOT, Schedule T-100. Notes: 1. Includes Mexico, Central and South America and the Caribbean. 2. Includes the U.K., Europe, Africa, and the Middle East. 3. Includes Asia and Oceania.

A-8

Appendix 7B International Arriving Charter Passengers, by Equipment Type

Orlando International Airport (calendar years)

Aircraft Type Equipment 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Grand Total 456,408 590,856 618,337 571,205 578,751 546,447 420,956 274,290 138,283 235,487 207,461 136,900 41,925Narrowbody 260,865 226,675 292,333 280,078 187,999 109,485 58,037 78,890 55,102 61,205 43,645 32,296 30,696 727 38,628 25,398 53,239 42,635 34,298 23,580 25,590 24,221 36,193 29,497 29,194 25,322 17,665 A320 - 8,460 33,742 27,752 42,592 22,408 945 1,799 1,889 4,917 7,189 4,899 5,722 757 142,745 136,828 140,267 132,707 50,997 34,196 28,079 44,901 11,961 23,076 5,096 163 3,932 737 43,825 28,831 42,848 52,975 50,689 23,637 1,275 5,553 2,551 2,395 327 1,436 1,886 F-100 19,195 15,841 - - - - - 71 252 - - - 1,326 A321 - - - - - - - - - - - - 165 A319 - - - - - - - - - - - 476 - MD-80/DC-9 5,588 9,621 18,745 12,555 7,477 4,764 2,148 2,345 2,256 1,320 1,839 - - DC-8 10,884 1,696 3,492 11,454 1,946 900 - - - - - - - Widebody 195,543 364,181 326,004 291,127 390,752 436,962 362,919 195,400 83,181 174,282 163,816 104,604 11,229 747 49,212 60,376 24,390 4,562 7,691 6,695 15,383 20,213 13,150 512 503 470 9,949 767 117,354 211,578 224,087 244,958 325,506 333,047 154,038 48,013 685 104,153 121,939 102,494 1,280 L-1011 14,168 51,395 46,157 11,609 15,586 50,306 69,016 95,302 42,379 61,011 40,013 849 - A310 4,791 23,516 4,319 3,823 6,601 8,842 - 862 5,449 5,296 - 550 - MD-11 - - - 13,981 18,161 4,350 23,527 6,076 692 479 1,361 241 - DC-10 9,699 16,953 25,939 4,238 15,979 33,630 99,900 23,512 20,826 2,197 - - - A334 - - - - - - - - - 634 - - - A300 319 363 1,112 7,956 1,228 92 1,055 1,422 - - - - - Percent of Total Narrowbody 57.2% 38.4% 47.3% 49.0% 32.5% 20.0% 13.8% 28.8% 39.8% 26.0% 21.0% 23.6% 73.2% Widebody 42.8 61.6 52.7 51.0 67.5 80.0 86.2 71.2 60.2 74.0 79.0 76.4 26.8

Source: DOT, Schedule T-100.

A-9

Appendix 7C International Arriving Charter Passengers, by Equipment Type

Orlando-Sanford International Airport (calendar years)

Aircraft Type Equipment 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Grand Total - 608 - - - - 216,962 408,516 510,559 419,785 463,885 476,086 380,659Narrowbody - 608 - - - - 2 4,478 3,503 6,094 7,110 5,167 58,822 737 - - - - - - - - - - - 1,350 56,493 757 - - - - - - 2 4,162 1,317 721 - - 1,159 MD-80/DC-9 - - - - - - - - - - 2,072 526 785 727 - 608 - - - - - 316 1,803 5,131 5,038 3,291 385 CV-340/580 - - - - - - - - 383 242 - - - Widebody - - - - - - 216,960 404,038 507,056 413,691 456,775 470,919 321,837 767 - - - - - - 213,929 332,491 344,192 262,775 250,795 209,982 173,519 A333 - - - - - - - - - - - - 140,067 DC-10 - - - - - - 2,685 66,693 63,005 41,142 22,668 18,438 7,849 A310 - - - - - - - - - - - - 254 MD-11 - - - - - - - - 43,092 5,082 - 358 118 A300 - - - - - - 346 352 74 - - - 30 A332 - - - - - - - - - - - 188,362 - L-1011 - - - - - - - 659 2,536 1,146 - 53,779 - A331 - - - - - - - - - - 183,312 - - A330 - - - - - - - - - 103,546 - - - 747 - - - - - - - 1,135 54,157 - - - - A341 - - - - - - - 2,380 - - - - - A340 - - - - - - - 328 - - - - - Percent of Total Narrowbody n.a. 100.0% n.a. n.a. n.a. n.a. 0.0% 1.1% 0.7% 1.5% 1.5% 1.1% 15.5% Widebody n.a. 0.0 n.a. n.a. n.a. n.a. 100.0 98.9 99.3 98.5 98.5 98.9 84.5 Source: DOT, Schedule T-100.