City and County of Denver Municipal Airport System ANNUAL ...

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City and County of Denver Municipal Airport System INTRODUCTION (UNAUDITED) December 31, 2010 and 2009 The overall cost per enplanement (CPE) decreased in 2010 largely due to the increase in landing fees, higher airline revenue credit, and more enplaned passengers. LF $4.00 CPE $16.00 $3.50 $14.00 $3.00 $2.50 $2.00 $1.50 $1.00 $12.00 $10.00 $8.00 $6.00 LF CPE $0.50 $4.00 $0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $2.00 LF = Landing Fee – Cost per 1,000 lbs. landed weight CPE = Cost per enplaned passenger (enplanement) Source: Airport Management Records Cash Management The Airport System’s cash is under the control of the City’s Chief Financial Officer who invests the funds pursuant to the City’s investment policy. As of December 31, 2010 and 2009, cash and investments totaled approximately $1,420.7 million and $1,476.6 million, respectively. Current investment vehicles include U.S. Government securities, high-grade commercial paper, and local government investment pools. In 2010 and 2009, the City charged a fee of $457,958 and $332,544, respectively, to the Airport System for performing the cash management function. 4
City and County of Denver Municipal Airport System INTRODUCTION (UNAUDITED) December 31, 2010 and 2009 Events and Other Factors Affecting the Airport System Passenger traffic was up 4.1% in 2010 compared with a national average increase of 2.1% as reported by the Department of Transportation’s Bureau of Transportation Statistics (BTS). Passenger traffic was up through March 2011 by 1.4% compared to year-to-date March 2010. Activity-based revenues at Denver International Airport (e.g., Passenger Facility Charges (PFCs), concession, car rental, and parking revenues) increased 6.1% in 2010 compared to 2009, largely as the result of increase in passenger traffic. United Group (United and Continental) United, one of the world’s largest airlines is the principal air carrier operating at Denver International Airport. United Airlines operates a major connecting hub at Denver International Airport under a use and lease agreement with the City that expires in 2025. United currently leases 35 of the Airport’s 92 full-service jet gates and all 16 gates at Concourse B’s regional jet facility. At Denver International Airport, United, together with its United Express commuter affiliate, accounted for approximately 44.1% and 42.5% of passenger enplanements in 2010 and the first three months of 2011, respectively. The UAL Corporation, Inc. (the parent company of United) and Continental merged effective October 1, 2010, under a plan in which United and Continental became wholly-owned subsidiaries of UAL, which then changed its name to United Continental Holdings, Inc. United Continental Holdings, Inc. is integrating the two airlines under the United brand to operate under a single Federal Aviation Administration (FAA) operating certificate, by the end of 2011. Continental currently leases three gates on Concourse B under a use and lease agreement and accounted for approximately 2.1% and 3.0% of the Airport’s passenger enplanements in 2010 and the first three months of 2011, respectively. The United Group (United and Continental) accounted for approximately 46.2% and 45.4% of Denver passenger enplanements at the Airport in 2010 and the first three months of 2011, respectively. In addition, the Airport would rank as the 4 th busiest airport in the combined route network of United and Continental based on enplaned passenger data for 2010. In December 2009, the United use and lease agreement was further amended to temporarily reduce, for a period of six years ending December 31, 2015, the number of gates leased by United on Concourse B by five gates. In connection with the amendment of the United use and lease agreement in December 2009, Continental and US Airways, each belong to the Star Alliance airline network (to which United belongs), relocated their operations from Concourse A and Concourse C, respectively, to the other five full service jet gates on Concourse B. In an agreement between United Airlines and the Airport System dated October 6, 2009, United agreed to provide the Airport System with five gates on Concourse B and in exchange, the Airport agreed to compensate United for these gates in the amount of $2.5 million per gate, for a total of $12.5 million, payable on December 31, 2009. United will be relieved of all lease payment obligations for the leasehold (gates, holdrooms, support areas, equipment rental, etc.) for a period of six years beginning January 1, 2010. The Airport System will lease the gates to other carriers. Effective January 1, 2016, the leasehold will automatically revert to United Airlines. 5
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City and County of Denver Municipal Airport System ANNUAL ...

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