2019 board of supervisors retreat sacramento …...2019/01/22 · cindy nichol, director department...

Cindy Nichol, DirectorDepartment of Airports

January 31, 2019

2019 Board of Supervisors Retreat

Sacramento County Airport System:The New Frame of Reference

2

Agenda

I. HighlightsII. Healthy Economy Drives Aviation DemandIII. Air Service Successes Boost Aviation ActivityIV. Improved Financial Performance Faces PressuresV. Emerging Facility Constraints and Capital Investment

NeedsVI. Summary and Next Steps

I. Highlights

4

Highlights

SMF:Better Financial Performance but

Facilities Increasingly Constrained

Mather:Asset with Huge

Potential in the New Air Cargo World

SMF:Start Planning to Add Gates, Parking, Rental

Car, and Roadway Capacity

Executive and Franklin Field:

Need Smart Capital Investments

This Is a New Era

Healthy Economy with Strong Demand for Air

Service

SMF:Successful Air Service

Development—All-Time High

Passenger Volumes

II. Healthy Economy Drives Aviation Demand

6

Sacramento County Economy

The unemployment rate ended 2018 at 3.7% in Sacramento County and has fallen steadily since 2010, gradually converging with State and national average.

Total jobs in the Sacramento MSA increased by 17,400 in 2018.

The Sacramento County per capita income was $50,107 for 2017.

Employment and Income Per Capita Income

Unemployment Rate Change in Employment (Non-Farm)

0%

2%

4%

6%

8%

10%

12%

14%

16%

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18Sacramento County State U.S.

-6%

-4%

-2%

0%

2%

4%

6%

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18Sacramento MSA State U.S.

$0

$10

$20

$30

$40

$50

$60

$70

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17Sacramento County State U.S.

Sources: Bureau of Labor Statistics, U.S. Department of Labor, California Employment Development Department

Economic indicators continue to improve.

7

Population Growth and Housing Demand

Population growth in Sacramento County continues to exceed the national average.

The Sacramento County population grew by almost 16,000, to 1.5 million from December 2017 to December 2018.

California has had an average population growth of 333,000 per year since 2010 and is home to 40 million people.

Population Growth

Population and home price growth signal the continuing strengthening of Sacramento County.

Source: Zillow (All Homes) (Sacramento MSA)

The local housing market has rebounded strongly since 2011.

10.5% compound annual growth rate.

Median home sale prices are up 6.1% year-over-year.

Prices are expected to increase 3.6% over the next year.

Median Home Prices & Values

Sources: US Bureau of Economic Analysis, California Department of Finance

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18SacramentoCounty

State U.S.

$248$225

$210$230

$283$303

$327$353

$381$403

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18

8

Air Service Area

Approximately 57% of SMF’s passengers are residents, and 43% are visitors. Approximately 3.2 million people live in the Primary Service Area. Approximately 2.3 million visitors fly into SMF to visit the area each year.

Sacramento County

San JoaquinCounty

El Dorado County Placer County

Sutter County Yolo County

Yuba County

Primary Service Area Primary Service Area

SMF benefits from its strategically advantageous location.

9

Travel and Tourism

Travel-related spending in Sacramento County reached $3.6 billion in 2016, up 22% vs. 2011.

Given its size and proximity, SMF is an attractive option for those visiting Sonoma/Napa wine country, Lake Tahoe, and Yosemite, among other destinations.

SMF is centrally located near many world-renowned tourist destinations.

Napa Valley attracted 3.5 million visitors in 2016, up 6.3% year-over-year.

Lake Tahoe attracts 2-3 million visitors annually, and has 2-3 times as many visitors in summer as during the other seasons.

Yosemite National Park attracts 5 million visitors annually, 25% of whom are international visitors.

Destination Driving Time

Napa (City of) 1 Hour 15 Minutes

Lake Tahoe 2 Hours 15 Minutes

Yosemite 3 Hours 15 Minutes

Sources: Sacramento County Airport System; Visit California (link below)https://industry.visitcalifornia.com/Research/Economic-Impact?sort=county&region=Sacramento

III. Air Service Successes Boost Aviation Activity

11

Air Service Successes

As of July 1, 2019, 12 scheduled passenger airlines will offer 166 daily flights to 40 nonstop destinations from SMF.

New service additions are helping to bolster traffic.

Current* Non-Stop Services

Source: Sacramento County Airport System * Includes seasonal services

FY2018 & FY2019 Service Additions

Airline Destination Type

FY2018

Air Canada Vancouver Reinstated daily nonstopservice

Southwest

Austin Launched daily service

Long Beach Launched new nonstop service

Los Cabos Launched weekly service

New Orleans Launched weekly service

Orlando Launched daily service

St. Louis Launched daily service

Spokane Launched daily service

FY2019

Alaska Kona Launched 3x weekly service

Delta Detroit Launch daily service (Jun)

FrontierDenver Launched 4x weekly service

Las Vegas Launched 3x weekly service

Hawaiian Maui Launch daily service (Apr)

Southwest Houston Launched weekly serviceHawaii (TBA) Launched daily service

Sun Country Minneapolis Launch 4x weekly service

(May)

Volaris Leon/Bajio Launched 2x weekly service

TBA—To be announced

12

Air Carrier MixSMF is served by a mix of low cost, foreign flag, mainline, regional, and all-cargo carriers.

CY2018 Enplanements by Airline

Southwest is the largest carrier at SMF, accounting for approximately 53.8% of traffic.

56.8% of SMF passengers flew on Low Cost Carriers (LCCs) in CY2018 (Southwest, Frontier, JetBlue).

Source: Sacramento County Airport System

American11.2%

Southwest53.8%

United10.3%

Other LCC 3.1%

Delta10.2%

Alaska8.0%

Hawaiian1.4%

International Carriers2.1%

International Carriers include: Air Canada, Volaris and AeroMexico

Other LCC includes: Frontier and Jetblue

13

Passenger Growth

13

0

1

2

3

4

5

6

7

8

9

1020

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

1620

1720

1820

1920

2020

2120

2220

2320

2420

2520

2620

2720

2820

2920

3020

3120

3220

3320

34

Historical FAA 2017 TAF MPU 2014

Historical

Enpl

aned

Pas

seng

ers

(mill

ions

)

Forecast

FAA—Federal Aviation AdministrationMPU—Master Plan Update for SMF by the CountyTAF—Terminal Area Forecast by FAA

14

Monthly Passenger Seasonality


Mark to Update

SMF handled over one million passengers for 8 consecutive months in 2018.

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

MONTHLY PASSENGERSSacramento International Airport

2007 2008 2013 2014 2015 2016 2017 2018

15

Comparative Growth in Scheduled Seats

Source: Airline Data Inc., Innovata schedules

Mark to Update

SMF was 3rd in seating capacity growth (11.7%) the first half of 2019 compared to peer airports with 10-15 million passengers per year.

(4%)

(2%)

%

2%

4%

6%

8%

10%

12%

14%

16%

0

1

2

3

4

5

6

BNA AUS SJC STL MSY OAK RDU SMF MCI SNA

Year

ove

r Ye

ar C

hang

e (!

st H

alf

of 2

018

vs.

1stH

alf

of 2

019)

Publ

ishe

d D

epar

ting

Sea

ts (

1stH

alf

of 2

019)

Mill

ions

SMF Peer Airport Seat Capacity

Total Dptg Seats Chg in Seats YOY

Airport Codes (alphabetically):

AUS – Austin BNA – Nashville MCI – Kansas City MSY – New Orleans OAK – OaklandRDU – Raleigh/DurhamSJC – San JoseSMF – SacramentoSNA – Orange CountySTL – St. Louis

Dptg—DepartingYOY—Year over year

16

Ground Transportation Daily Trips


Mark to Update

0

500

1000

1500

2000

2500

3000

3500

Jan-

07A

pr-0

7Ju

l-07

Oct

-07

Jan-

08A

pr-0

8Ju

l-08

Oct

-08

Jan-

09A

pr-0

9Ju

l-09

Oct

-09

Jan-

10A

pr-1

0Ju

l-10

Oct

-10

Jan-

11A

pr-1

1Ju

l-11

Oct

-11

Jan-

12A

pr-1

2Ju

l-12

Oct

-12

Jan-

13A

pr-1

3Ju

l-13

Oct

-13

Jan-

14A

pr-1

4Ju

l-14

Oct

-14

Jan-

15A

pr-1

5Ju

l-15

Oct

-15

Jan-

16A

pr-1

6Ju

l-16

Oct

-16

Jan-

17A

pr-1

7Ju

l-17

Oct

-17

Jan-

18A

pr-1

8Ju

l-18

Oct

-18

Average Daily Trips by Company

SITOA-AVI Avg Daily Trips

SuperShuttle/Sac Trans Sys-AVI Avg Daily Trips

UBER/LYFT/WINGZ-AVI Avg Daily Trips

Non-SITOA/SuperShuttle AVI Avg Daily Trips

Explosive growth in trips by Uber/Lyft/Wingz is challenging to manage.

17

The New World of Cargo

0

50

100

150

200

250

300

350

400

450

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Mill

ions

of

Poun

ds

International Mather

50.6%50.2%

53.4% 53.8%

Source: County of Sacramento, Department of Airports

On-line retail is driving rapid evolution in Cargo Operations.

18

General Aviation Trends

0

20

40

60

80

100

120

140

160

180

200

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

International Mather Executive


Thou

sand

s of

Ope

ratio

ns

GA activity is a function of a healthy economy.

IV. Improved Financial Performance Faces Pressures

20

Total Airport System Revenues

0

20

40

60

80

100

120

140

160

180

200

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Mill

ions

Airline Revenues Nonairline Revenues

50.6%

49.4%

$162.9

50.2%

49.8%

53.4%

46.6%

$160.6 $158.9$170.8

53.8%

46.2%

$178.1

53.5%

46.5%

$109.4$116.3

$122.6$131.8 $128.4

$146.1

53.6%

46.4%

63.9%56.4%66.5%69.9%73.7%

26.3%30.1% 33.5% 43.6% 36.1%

56.8%

43.2%

$187.4


Total Revenues are increasing. Department goal is to maintain Airline share at 40%.

21

Cost-Cutting and Increased passengers

SMF Cost per Enplaned Passenger (CPE)

$5.67 $5.54

$10.81

$9.51

$10.84

$14.95

$17.53

$16.74$15.84 $15.63 $15.62

$11.67

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Rate methodology change and 12% fewer passengers

Big Build: increased debt

service and operating expenses

New Airline Agreement w/Revenue

Sharing; Increased

passengers

Note: CPE reflects CAFR after year-end settlement with the airlines for under/overpayments Source: County of Sacramento, Department of Airports

Although Airports has been successful in reducing CPE, future capacity-driven projects will put pressure on future CPE.

22

Cost per Enplanement at California Airports (FY2018)

$17.82

$16.75

$12.05 $11.67$10.03 $10.01 $9.72

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

San Francisco Los Angeles Oakland Sacramento OrangeCounty

San Jose San Diego

Source: FAA Certification Activity Tracking System (Form 127)

SMF Airline Cost per Enplanement is competitive.

23

Total Airport System Operating Expenses

0

20

40

60

80

100

120

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Dol

lars

(in

Mill

ions

)

$94.1

New Terminal Opened October

$85.4$79.6

$85.9$88.9

$78.1

$87.9$84.9 $83.4 $83.8

$95.7$98.6

Note: Excludes DepreciationSource: County of Sacramento, Department of Airports

Operating costs are influenced by activity and asset maintenance.

24

Staffing Needed to Manage Growth and Commitments

415 406 414 412387

420 409382

314 309 307 306

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

-35

65

165

265

365

465

565

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Full-time Equivalent Staff Enplaned Passengers

Fiscal Year

Enpl

aned

Pas

seng

ers

(in M

illio

ns)

Num

ber

of F

ull-t

ime

Equi

vale

nt E

mpl

oyee

s (F

TE)

Staffing levels have not kept pace with passenger volumes.

25

Outstanding Debt—Airport Revenue Bonds

$0

$200

$400

$600

$800

$1,000

$1,200

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019

FY2020

Ou

tsta

nd

ing

Deb

t ($

mill

ion

s)

Series 2008May 1, 2008$586 million

($323 million for Terminal)

Series 2008May 1, 2008$586 million

($323 million for Terminal)

Series 2009Jul 28, 2009

$480 million (all for Terminal)

Series 2009Jul 28, 2009


Series 2010Aug 25, 2010


Series 2010Aug 25, 2010


Series 2016Dec 7, 2016

Advance Refunding$24.2 millionNPV Savings

Series 2018Apr 19, 2018$125.6 million NPV Savings

Significant debt from the Big Build is declining, but more debt will be needed to fund capacity-driven projects.

NPV—Net Present Value

V. Emerging Facility Constraints and Capital Investment Needs

27

SMF Capacity by FacilityImpact of Economy: Activity is outstripping capacity faster than projected.

Airfield has adequate capacity; currently undergoing improvements

Need to invest in capacity-driven projects Additional terminal gates

(morning peak) and aircraft parking (remain overnight)

Terminal A checkpoint capacity challenge partly addressed by expansion in 2019; may be enhanced by technology

Need more auto parking, rental car facilities, space for Uber/Lyft, and roadway capacity

Airport People Mover nearing capacity at peak times, acquiring additional cars in time to meet demand

In the near-term, Airports needs to use operational strategies and technology until new facilities can be planned, designed and constructed.

*does not include overflow lot

28

SMF Current Airfield Improvements

Taxiway D Reconstruction and Asphalt Concrete Repair Substantially Complete

West RunwayRehabilitation Spring and Summer 2019

SMF airfield projects remain a priority. ESN

W

29

SMF Passenger Growth Accommodation Projects

Preliminary projection: Over 15 million total passengers by 2021

Passenger forecast and planning efforts underway to validate growth and project scope

Likely need 4-6 additional gates

Either or both Terminal A and Terminal B

SMF needs more terminal gates and aircraft parking.

RON

RON

RON

RON

ES

NW

RON--Aircraft Remain Overnight Parking

30

SMF New Consolidated Rental Car FacilityCurrent RAC facility has reached the end of its useful life.

ESN

W

1

2

3

Current efforts:

Financial evaluation

Coordination with rental car companies

Site alternative analysis

Implement Customer Facility Charge (CFC)

Project goals: reduce travel time between terminals and rental car facility, financially reasonable project scope, and improved customer experience

Ties into traffic circulation and parking considerations

Depicts alternative service sitesCFC—Customer Facility ChargeRAC—Rental car

31

SMF Ground Access and Parking

Goals

Reduce curbside and inbound/outbound Airport Boulevard congestion

Enhance parking capacity

Provide secondary access to SMF

Improve customer experience

Improve and expand facilities for app-based ride services (Uber/Lyft)

Shuttle bus pick-up/drop-off

I-5 southbound ramp

Elkhorn Extension

Terminal and concourse pedestrian pathways and connectivity

Light Rail Green line

Need more close-in auto parking, roadway capacity, and pedestrian circulation. E

SNW

P

P

P

PP

P

P

P

32

SMF Cargo Facility and General Aviation Improvements

Southwest side of airfield:1. Taxiways A & P

realignment2. Second hangar

development for Cessna/Textron

3. Cargo sort facility4. Expansion of Cargo

apron

SMF needs additional facilities for cargo and general aviation (GA)

ESN

W

1

2

3

4

33

Mather Vision Plan – Airfield ImprovementsImprovements needed to accommodate expansion and expected growth of air cargo operators.

SA—Special Authorization by FAACAT—Category

Mather Airport Runway Rehabilitation and Instrument Landing System

$30-40 million in runway extension and rehabilitation to be completed by Fall of 2020

Upgrade Instrument Landing System to SA Cat II in November of 2019 to allow flights when visibility is as low as 1400 feet

Upgrade Instrument Landing System to CAT IIIb by late 2020 to allow flights when visibility is as low as 700 feet

34

Mather Vision Plan – Air Cargo Development

1. New Cargo Facility

2. New Cargo Sort and/or Maintenance, Repair Overhaul Facilities

3. Mather Roadway System Improvements to facilitate high volume of truck traffic

4. Extend jet fuel pipeline to Fuel farm

5. Taxiway realignment to optimize ramp efficiency and meet FAA design standards

31

2

4

3

2

5

Work is underway to start implementing the Mather Vision Plan.

35

Mather Vision Plan – Flightline Improvements

1. EVA Airline Flight Training Academy – Completed in 2017

2. EVA Airline Flight Training Hangar – Under construction

3. Truemper Way Extension Phase 1 – Completed in 2018

4. General Aviation Rehabilitation & Storm Water Runoff Mitigation Device – Completed in 2018

5. Mather Jet Center Hangar Development –Completed in 2018

6. Mather Jet Center Phase 2 Hangar Development – Design complete & undergoing permitting process

7. New Facility for Mather Aviation –preliminary design complete & undergoing financial feasibility analysis

8. Planes of Fame Museum – In discussion

1

3

4

567

2

Current and completed projects.

8

36

Mather Vision Plan – North Opportunity Areas

North Mather Commercial Industrial Development Opportunity Areas 350+ acres of commercial development opportunity Determine most advantageous delivery method: master developer vs. phased approach Planned infrastructure improvements New roadway extension for direct connectivity to Old Placerville Road

Development of the North Opportunity Area to maximize Mather Airport’s potential as an economic and commercial hub.

37

Mather Vision Plan – South Opportunity Areas

Path Forward:

Initiate planning activities to determine infrastructure needs

Analyze the feasibility to constructing Douglas Road Extension as depicted

Opens up south side of airfield for development

Relieve traffic in residential areas

Transfer roadway and existing drainage ditch right of way to other County departments

Release airport property for commercial development

Coordination with the FAA on land release

Development of the South Opportunity Area will maximize Mather Airport’s potential as a major air cargo, economic and commercial hub.

38

Sacramento Executive Airport

City-County Lease Agreement

25 year annually renewing (“Evergreen” lease)

Relatively stagnant revenue in the face of ongoing and significant maintenance costs

5-Year Capital Improvement Needs o Exceed $18 million o Includes major runway safety improvement

and pavement rehabilitation projects

Building and Hangar Leaseso Hangar leases are mostly below market

rate o Most of the leasable buildings require

significant improvements

Safetyo Off-airport tree restrictions and non-

compliant runway safety area may necessitate shortening of primary Runway 2/20

Create a Financially Sustainable Operating Model

ES

NW

39

Franklin Field

County-owned, former US Air Force training auxiliary field Primarily used for flight

training 12 tenants with portable

hangars pay $60/month ground lease

No infrastructure or utilities

Limited development opportunity, as the airport elevation is below 100 year flood plain elevation

5-year Capital Improvement needs exceed $2.35 million Runway, taxiway, and aircraft

ramp pavement require rehabilitation

Airport entrance road and vehicle parking require rehabilitation

ES

NW

Smart capital investment to preserve this County asset

40

Next Steps

Continue to seek new air service to un-served and under-served markets

Manage SMF’s gates, checkpoints, aircraft parking, Uber/Lyft, rental cars and roadways while new facilities are being planned Use operational strategies and technology Assess staffing and budget needs relative to increased activity Continue to plan and develop new facilities Take Rental Car Customer Facility Charge to Board on February 26th to

fund rental car facilities

Advance Mather development plans and projects

Identify optimal ways to invest in improvements at Franklin Field and Executive Airport

Return to Board in November to report on progress

Manage current opportunities and facilities while planning new facilities

2019 board of supervisors retreat sacramento …...2019/01/22 · cindy nichol, director department...

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