Annual Report 2012 - Kansas City International Airport

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City of Kansas City, Missouri Department of AviationManagement’s Discussion and AnalysisYears Ended April 30, 2012 and 2011Following is a summary of revenues and expenses and changes in net assets for the past three fiscalyears (in thousands):April 30,2012 2011 2010Operating Revenues $ 106,921 $ 100,819 $ 96,738Operating Expenses 77,703 78,723 79,853Operating Income BeforeNon-Cash Operating Expenses 29,218 22,096 16,885Non-Cash Operating Expenses:Depreciation/Amortization 55,626 53,751 58,220Operating Loss (26,408) (31,655) (41,335)Non-Operating Revenue:Earnings Cash/Investments 3,174 3,133 3,171Passenger Facility Charge 20,887 20,454 20,533Customer Facility Charge 6,036 5,675 5,440Operating Grant Revenue 155 265 316Other 899 351 520Total Non-Operating Revenue 31,151 29,878 29,980Non-Operating Expense:Interest 14,091 14,777 16,547Other 1,201 254 276Total Non-Operating Expense 15,292 15,031 16,823Non-Operating Income 15,859 14,847 13,157Loss Before Capital Contributionsand Transfers (10,549) (16,808) (28,178)Capital Contributions 17,075 16,647 26,766Transfers - 19,341 -Increase (Decrease) in Net Assets 6,526 19,180 (1,412)Net Assets, Beginning of Year 512,757 493,577 494,989Net Assets, End of Year $ 519,283 $ 512,757 $ 493,577SUMMARY OF OPERATING REVENUESIn order to understand the revenues presented in this Report, an overview of the Airline Use andLease Agreement (the Agreement) is required to enhance the readers’ knowledge of theinformation presented.This is the third year of a five year agreement, which utilizes the following four airline-specificcost centers: 1) airfield, 2) passenger boarding bridges, 3) terminal aprons, and 4) terminalbuilding. Airlines that have executed an agreement with the airport are referred to as signatoryairlines. Airlines using the airport without an executed agreement are referred to as non-signatoryairlines.A-8
City of Kansas City, Missouri Department of AviationManagement’s Discussion and AnalysisYears Ended April 30, 2012 and 2011The agreement cost centers are used to identify and reallocate airline-specific expenses related tothe leased premises, operations, facilities or functions conducted at the airport by signatory airlines.These cost center expenses are the basis for determining the rate charged to each signatory airline.All non-signatory airlines pay 125 percent of the signatory airline rate. In exchange for this higherrate, non-signatory airlines are not subject to the same terms and conditions as signatory airlines.There are a maximum of three calculations performed under the terms and conditions of theagreement: 1) budgetary calculation, 2) mid-year budgetary adjustment, and 3) settlement. Beforethe start of every fiscal year, a budget is adopted for the operations of the airport. Based on thisadopted budget, rates are calculated for each agreement cost center and used for billing the airlinesfor their airport operations. As the year progresses, the actual results are monitored and comparedto the adopted budget. If there is a significant change in circumstances from the adopted budget, amid-year budgetary adjustment is performed and the cost center rates are adjusted to reflect thechange in circumstances. After the year is completed, a settlement is performed to “true-up” thesignatory airline rates to reflect the actual operating costs of each agreement cost center. There isno settlement calculation performed for the non-signatory airlines.The Department has encountered growth in itsoperating revenue each of the last two years. InFYE12, operating revenue increased byapproximately $6.1 million, or 6.1%. In FYE11,operating revenue increased from the previous yearby approximately $4.1 million, or 4.2%.110,000,000105,000,000100,000,00095,000,000Total Operating RevenuesIn FYE12, revenue from Terminal Fees increased 90,000,000by $1.08 million, or 9.1%, from the prior fiscalFYE08 FYE09 FYE10 FYE11 FYE12year. This increase is the result of a $107 thousand,or 1.2%, increase in Terminal Floor Space revenue; a $162 thousand, or 10%, increase in TerminalApron revenues; and a $809 thousand, or 76.2%, increase in revenues from Passenger BoardingBridges. The increase in Terminal Floor Space revenue and Terminal Apron revenue was theresult of an increase in the terminal and apron rental rates. The increase in revenue from PassengerBoarding Bridges was largely the result of an increase in Passenger Boarding Bridge repair andmaintenance costs that were charged back to the airlines.In FYE11, revenue from Terminal Fees increased by $274 thousand, or 2.4%, from the prior fiscalyear. This increase is the net effect of a $153 thousand, or 1.6%, decrease in Terminal Floor Spacerevenue; a $75 thousand, or 4.4%, decrease in Terminal Apron revenues; and a $502 thousand, or90%, increase in revenues from Passenger Boarding Bridges. The reduction of Terminal FloorSpace revenue and Terminal Apron revenue was largely the result of the transition of one airlinefrom non-signatory to signatory designation. As noted earlier, non-signatory airlines pay 125percent of the signatory rates. The increase in revenue from Passenger Boarding Bridges waslargely the result of a 29% rate increase over the FYE10 settlement rate.A-9
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Annual Report 2012 - Kansas City International Airport

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