2024-020 Update on Airport Financial Analysis June 7,2024 Report No. 2024-20
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Update on Airport Financial Analysis
EXECUTIVE SUMMARY:
Denton Enterprise Airport (the Airport), a public airport that accepts federal grants, must comply
with Federal Aviation Administration (FAA) Grant Assurances, including maintaining a self-
sustaining fee and rental structure. The Airport generates revenue primarily through property lease
rents and various fees.Despite record activity in recent years,the Airport's revenue has not covered
operational costs, leading to a budget deficit. The City Council hired Airport Management
Consulting Group(AMCG)to conduct a financial analysis to make rate recommendations and fees
to achieve full cost recovery.
BACKGROUND:
As a public airport that accepts federal grant funding, the Airport must comply with the 39 FAA
Grant Assurances. An essential requirement under these obligations is that the Airport "will
maintain a fee and rental structure for the facilities and services at the airport which will make the
airport as self-sustaining as possible." This codifies a practice that dates to the beginning of the
aviation industry—that airports are funded by those who use them.
The Airport generates the vast majority of its revenue through two avenues:
1. Rent revenue from leased Airport property. This revenue is prescribed by long-term lease
agreements that receive periodic Consumer Price Index adjustments and
2. Rates and Fees on aeronautical or non-aeronautical activities. The airport currently charges
the following fees:
a. Fuel Flowage Fee
b. Percentage of Gross Receipts Fee*
c. Aeronautical Permit Fee**
d. Airport Access Fee
*Applies to certain charges of fixed-based operators only
**Currently only utilized as a development application fee
During the last five (5) years, the Airport has experienced record amounts of activity, driving its
operational and infrastructure costs. During this same period, the Airport revenues were
insufficient to recover operations costs. As a result,the fund balance of the Airport Fund has been
steadily reduced due to the ongoing budget deficit. If not addressed,this ongoing deficit will, over
time,utilize the remaining available fund balance.
On Dec. 12, 2023, the City Council approved a contract for a consultant, AMCG, to perform a
financial analysis to assess and make recommendations regarding Airport rates and fees with the
goal of full Airport cost recovery.
June 7,2024 Report No. 2024-20
Airport Financial Anal
The Financial Analysis involves three elements:
1. A General Aviation Fee Study to recommend aeronautical fees to help recover the
operating expenses and non-operating sources of funds that have been and are anticipated
to be incurred by the City relating to the planning, development, operation, and
management of the Airport.
2. An Airport Financial Allocation Analysis to allocate and analyze the Airport's operating
revenues, expenses, and non-operating sources and uses of funds by the Airport's primary
functional areas and revenue streams.
3. An Economic Impact Analysis to include an analysis of total direct airport employment
(City and commercial operators) and tax revenue (e.g., property taxes, sales tax, etc.).
The Financial Analysis will assist the Airport's policymakers, management, and staff in the
identification of the Airport's operating revenues and sources of funds that need to be enhanced,
and operating expenses and uses of funds need to be managed to fulfill the City's FAA airport
sponsor assurance obligation.
Additionally, as the Airport grows,the information gained from the financial study will be critical
to ensure that the Airport fund can support the operational and infrastructure enhancements
required to sustain that growth.
DISCUSSION:
On May 24, the City received the results of AMCG's General Aviation Fee Study (see attached
report). The report summarizes various general aviation fees used by airports nationwide then
identifies nine comparable airports (airports similar in size, condition, circumstance, and activities
to Denton Enterprise Airport) and competitive airports (airports in proximity to Denton Enterprise
Airport and serve a similar market).
Based on an analysis of comparable and competitive airports, the consultants recommended the
following assumptions be used in developing suggested rate and fee amounts in its Financial
Allocation Analysis:
1. Continue to charge a fuel flowage fee.
2. Implement a landing fee.
3. Continue to charge a percentage of gross receipts fee to fixed-based operators.
4. Expand the development application fee by implementing a permit fee for classes of
aeronautical activities conducted at the airport.
5. Expand the access fee to include an initial fee and annual renewal fee.
Landing Fee
Implementing a landing fee is justified as "the most equitable, cost-recovery mechanism for the
City, and a general aviation fee program which includes a landing fee is consistent with the best
practice approach. While a fuel flowage fee is only paid by those aircraft operators purchasing(or
dispensing) fuel, at the Airport, the landing fee is paid by all aircraft." A landing fee would help
correct the inequity of Airport users not purchasing fuel having their costs of operations subsidized
by those who do purchase fuel.
June 7,2024 Report No. 2024-20
It is important to note that as the Airport intends to recover its costs fully, a new fee type will help
ensure the proper allocation of that total cost recovery.
Next Steps
City staff provided direction to AMCG to develop a rates and fees structure, that included the
above assumptions. Due to the planning and stakeholder communication required to implement a
landing fee, staff also directed that any landing fee rate recommendations be recommended for
implementation no earlier than FY 2025-26.
Once AMCG's recommended rates and fees for FY 2024-25 are developed and reviewed by staff,
they may be recommended for inclusion in the FY 2024-25 budget.
CONCLUSION:
The AMCG's analysis recommends several current rate and fee structure changes. These changes
aim to ensure equitable cost recovery and financial sustainability for the airport. As part of the
budget process, staff will present new rates and fee structure to the City Council for consideration
for FY 2024-25 so that the City can comply with its federal obligation to be as self-sustaining as
possible.
ATTACHMENTS:
1. AMCG General Aviation Fee Study Report
STAFF CONTACT:
Ryan Adams
Airport Director
Ryan.Adams@cityofdenton.com
(940) 349-8565
REOUESTOR:
Staff Initiated
STAFF TIME TO COMPLETE REPORT:
3 hours
PARTICIPATING DEPARTMENTS:
Airport
Finance
i
- k MCG
Aviation Management
Consulting Group
General Aviation Fee Study
( Phase I )
City of Denton
Denton Enterprise Airport
May 24, 2024
i
A MCG
Aviation Management
Consulting Group
May 24, 2024
Ryan Adams
Director of Airport
5000 Airport Road
Denton, Texas 76207
RE: General Aviation Fee Study (Phase 1)
Dear Ryan:
In accordance with your request and authorization, Aviation Management Consulting
Group (AMCG) has prepared a Phase I of the General Aviation Fee Study for the Denton
Enterprise Airport for your review and consideration. It is AMCG's recommendation that
the City of Denton establish general aviation fees utilizing a cost recovery-based
approach or methodology, not a market-based approach.
Based on the type of general aviation fees selected by Airport management for
implementation, AMCG will provide a recommendation for the fee amounts and develop
a General Aviation Fee Schedule in Phase 11.
AMCG is pleased to have been called on to conduct this General Aviation Fee Study.
Please contact me if you have any questions pertaining to this analysis or the
recommendations provided.
Helping your aviation management excellence,
0=�( .pcl�—
David C. Benner, C.M.
Managing Principal
Aviation Management Consulting Group
9085 East Mineral Circle I Suite 315 1 Centennial,Colorado .792.2700 1 wvvw.aviationmanagement.com
i
% TABLE OF CONTENTS
I. EXECUTIVE SUMMARY ........................................................................................ 1
II. INTRODUCTION..................................................................................................... 2
A. Scope of Work................................................................................................. 2
B. Project Approach............................................................................................. 2
C. General Aviation Fee Summary...................................................................... 2
D. Current Situation ............................................................................................. 3
1. Fuel Flowage Fee ................................................................................... 3
2. Percentage of Gross Receipts Fee ......................................................... 3
3. Aeronautical Permit Fee.......................................................................... 3
4. Airport Access Fee.................................................................................. 3
III. INDUSTRY PRACTICES ........................................................................................ 4
A. Fuel Flowage Fees.......................................................................................... 4
B. Landing Fees .................................................................................................. 4
C. Aircraft Parking Fees....................................................................................... 5
D. Percentage of Gross Receipts ........................................................................ 5
E. Aeronautical Permit Fees................................................................................ 6
F. Based Aircraft Fee .......................................................................................... 6
G. Through-the-Fence Fee .................................................................................. 6
H. Airport Access Fees........................................................................................ 7
IV. SIGNIFICANT FINDINGS....................................................................................... 8
A. Comparable Airports ....................................................................................... 8
B. Competitive Airports...................................................................................... 10
V. RECOMMENDATIONS......................................................................................... 12
A. Cost Center Approach................................................................................... 12
B. Fees Recommended..................................................................................... 12
1. Fuel Flowage Fee ................................................................................. 12
2. Landing Fee.......................................................................................... 13
3. Percentage of Gross Receipts Fees ..................................................... 14
4. Aeronautical Permit Fee........................................................................ 14
5. Airport Access Fees.............................................................................. 14
C. Fees Not Recommended .............................................................................. 15
1. Aircraft Parking Fees............................................................................. 15
2. Based Aircraft Fee ................................................................................ 15
3. Through-the-Fence Fee ........................................................................ 15
D. Adjustment of Fees ....................................................................................... 15
VI. FEES CALCULATION.......................................................................................... 17
A. Fees Selected ............................................................................................... 17
B. Financial Analysis ......................................................................................... 17
C. Establishment of Fees................................................................................... 17
1. Fee Calculation Analysis....................................................................... 17
2. Projected General Aviation Fee Revenue............................................. 17
VII. GENERAL AVIATION FEE SCHEDULE.............................................................. 18
General Aviation Fee Study(Phase 1) i
City of Denton, Denton Enterprise Airport (0512412024)
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IL EXECUTIVE SUMMARY
I. EXECUTIVE SUMMARY
Airport: Denton Enterprise Airport
5000 Airport Road
Denton, Texas 76207
Scope of Work: The City has engaged Aviation Management Consulting
Group (AMCG) to prepare a General Aviation Fee Study for
the Denton Enterprise Airport. Based on the type of general
aviation fees selected by Airport management for
implementation in Phase I, AMCG will provide a
recommendation for the fee amounts and develop a General
Aviation Fee Schedule in Phase II.
Date of Report: May 24, 2024
Methodology: AMCG recommends that the City establish general aviation
fees utilizing a cost recovery-based approach or
methodology, not solely a market-based approach.
Fee Recommendations: The following table identifies the recommended general
aviation fees for the Airport.
Type of Fee
Fuel Flowage Fee TBD in Phase II
Landing Fee TBD in Phase II
Percentage of Gross Receipts TBD in Phase II
Aeronautical Permit Fees TBD in Phase II
Airport Access Fee TBD in Phase II
General Aviation Fee Study(Phase 1) 1
City of Denton, Denton Enterprise Airport (0512412024)
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IL INTRODUCTION
II. INTRODUCTION
A. Scope of Work
The City of Denton (City) has engaged Aviation Management Consulting Group (AMCG)
to prepare a General Aviation Fee Study for the Denton Enterprise Airport(Airport). Based
on the type of general aviation fees selected by Airport management for implementation,
AMCG will provide a recommendation for the fee amounts and develop a Geneal Aviation
Fee Schedule for the Airport in Phase II.
To achieve this objective, AMCG identified current industry practices for establishing
general aviation fees including identification of the types of fees that are generally
charged and the measures that are generally utilized in the industry.
The results of this analysis, AMCG's recommendations for the structure of a general
aviation fee program, and the methodology for determining the general aviation fees are
outlined in this summary report. A General Aviation Fee Schedule for the Airport will be
developed in Phase II.
B. Project Approach
To achieve the scope of work, AMCG completed the following work program:
identified the elements of the existing general aviation fee program at the
Airport,
identified current industry practices,
obtained and analyzed general aviation fees (and related information) from
comparable airports and competitive airports identified, and
provided recommendations to Airport management for the methodology and
types of the general aviation fees.
Based on the structure of the general aviation fees selected by Airport management,
AMCG will provide recommendations for the fee amounts in Phase II.
C. General Aviation Fee Summary
Table 1 provides a brief overview of general aviation fees typically charged by airports,
the current situation, industry practices, and recommendations for the City's
consideration.
It is important to note that additional fees may be imposed by the City or commercial
aeronautical operators at the Airport. However, this analysis is focused solely on general
aviation fees charged by the City, as the airport sponsor, for the aeronautical use of the
airport. Each of the below fees are addressed in detail in this report.
General Aviation Fee Study(Phase 1) 2
City of Denton, Denton Enterprise Airport (0512412024)
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H ILMCG INTRODUCTION
Table 1 -General Aviation Fee Summary
Type of General Aviation Current Industry Practices Recommendation
Fee Situation
Fuel Flowage Fee Yes Most common Yes
Landing Fee No Moderately common Yes
Aircraft Parking Fees No Moderately common No
Percentage of Gross Receipts Yes Less common Yes
Aeronautical Permit Fees Yes Moderately common Yes
Based Aircraft Fee No Less common No
Through-the-Fence Fee No Less common No
Airport Access Fee Yes Moderately common Yes
D. Current Situation
It is AMCG's understanding that the City currently charges the following general aviation
fees at the Airport.
1. Fuel Flowage Fee
The Airport charges a fuel flowage fee (i.e., aviation fuel delivery fee)for the Fixed Based
Operator (FBO) of$0.17 per gallon and $0.29 per gallon for non-commercial self-fueling.
The fuel flowage fee is charged based on the number of gallons delivered to the fuel
storage facility.
2. Percentage of Gross Receipts Fee
Based on discussions with Airport management, AMCG understands the FBO lease
agreement includes a 12% fee for the gross receipts related to hangar and tiedown used
on the FBO's leased premises by transient customers.
3. Aeronautical Permit Fee
The Airport charges an aeronautical permit fee (i.e., lease development application fee)
of $1,000 for any development application, regardless of the type of activity.
4. Airport Access Fee
The Airport charges an airport access fee (i.e., access card fee) of $20.00 for a new or
replacement card without a renewal fee.
General Aviation Fee Study(Phase 1) 3
City of Denton, Denton Enterprise Airport (0512412024)
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!`.MCG INDUSTRY PRACTICES
III. INDUSTRY PRACTICES
Based on industry experience and supported by the information contained in AMCG's
proprietary industry database (which is utilized to track, monitor, and analyze general
aviation fee data and trends), AMCG has identified current industry practices for
establishing general aviation fees. A summary of these findings which, in AMCG's
opinion, are representative of current industry practices for establishing general aviation
fees is outlined in this section.
A. Fuel Flowage Fees
Commonality — Fuel flowage fees are currently the most common general aviation fee
implemented by airport sponsors.
Methodology —When a fuel flowage fee is charged by an airport sponsor, fueling entities
(both commercial and non-commercial) are typically required to collect and/or pay a fuel
flowage fee for each gallon of fuel sold or dispensed at the airport through a lease
agreement. Fuel flowage fees are typically paid on a "cents per gallon" basis and range
from $0.05 per gallon to $0.40 per gallon. Typically, airports served by air carriers exempt
these entities from fuel flowage fees since air carriers pay landing fees under agreement
with the airport sponsor. Also, government aircraft may be exempt from fuel flowage fees.
Collection — Fuel flowage fees are typically collected directly by the airport sponsor on a
monthly or annual basis.
B. Landing Fees
Commonality — Historically, landing fees have not been charged by airport sponsors to
general aviation aircraft operators. Due to advancements in technology, more airports are
beginning to charge landing fees as an alternative to, or in addition to, fuel flowage fees.
Methodology — When charged, landing/departure fees are commonly based on aircraft
weight and a "cents per 1,000 pounds" approach using historic airport costs and the gross
landed weight for all aircraft using the airport. In the alternative, landing/departure fees
can be charged in accordance with an established schedule (i.e., aircraft within
designated weight ranges pay the same fee) and a minimum fee may be specified. In
some cases, based aircraft and/or aircraft under a specified weight (e.g., 5,000 pounds
max gross landed weight) are exempt from landing/departure fees.
Collection — Landing fees may be collected directly by the airport sponsor, or the airport
sponsor may have an agreement with a commercial operator to collect and remit landing
fees. The agreement may allow the commercial operator to retain a portion of the landing
fees collected as compensation for services rendered by the commercial operator. The
amount retained is often referred to as an administrative fee.
General Aviation Fee Study(Phase 1) 4
City of Denton, Denton Enterprise Airport (0512412024)
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!`.MCG INDUSTRY PRACTICES
C. Aircraft Parking Fees
Commonality — Aircraft parking fees are typically charged for the use of airport sponsor
owned ramp areas for transient aircraft parking. While fees may be charged for day use,
most common fees are charged for overnight use.
Methodology — Typically, aircraft parking fees are charged in accordance with an
established schedule (i.e., aircraft within designated weight and/or size ranges pay the
same fee) and a minimum fee may be specified. In the alternative, aircraft parking fees
may be charged on a "cents per 1,000 pounds" approach and a minimum fee may be
specified.
Collection — Aircraft parking fees may be collected directly by the airport sponsor, or the
airport sponsor may have an agreement with a commercial operator to collect and remit
aircraft parking fees. The agreement may allow the commercial operator to retain a
portion of the aircraft parking fee collected as compensation for services rendered by the
commercial operator. The amount retained is often referred to as an administrative fee.
D. Percentage of Gross Receipts
Commonality — Over the years, a percentage of gross receipts fee has become less
common. In those instances where a percentage of gross receipts is charged, fuel sales
are typically exempt from inclusion, especially when fuel flowage fees are charged by the
airport sponsor. In addition, other general aviation sales (e.g., aircraft sales, parts, and
accessories) may also be exempt due to the product (as opposed to service) nature and
the high dollar amounts typically involved. According to the Airport Development
Acceleration Act (Anti-Head Tax Act) of 1973, a percentage of gross receipts cannot be
charged for aircraft charter activities since such activities are subject to a ticket or
segment tax.
Methodology — The amount of the fee and any exceptions or exemptions is typically
stipulated in the lease agreement between the airport sponsor and the commercial
operator.
Collection — Percentage of gross receipts fees are typically collected directly by the airport
sponsor on a monthly or annual basis.
General Aviation Fee Study(Phase 1) 5
City of Denton, Denton Enterprise Airport (0512412024)
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!`.MCG INDUSTRY PRACTICES
E. Aeronautical Permit Fees
Commonality — Historically, aeronautical permit fees have not been charged by airport
sponsors. However, these types of fees are becoming more common. When charged,
aeronautical permit fees are typically charged on a monthly or annual basis depending
on the type of aeronautical activity being conducted.
Methodology—Aeronautical permit fees are typically based on a flat amount that must be
paid to obtain a permit to operate a commercial business at the airport. The operating
permit typically expires on an annual basis, thus requiring aeronautical permit fees to be
paid annually for renewal.
Collection —Aeronautical permit fees are typically collected directly by the airport sponsor
on a monthly or annual basis.
F. Based Aircraft Fee
Commonality — Historically, based aircraft fees have not been charged by airport
sponsors to based aircraft. However, more airports are beginning to consider based
aircraft fees to augment landing fees if based aircraft are exempt from the landing fee.
Methodology—When charged, based aircraft fees are commonly charged on a "cents per
1,000 pounds" approach (similar to landing fees). In the alternative, based aircraft fees
can be charged in accordance with an established schedule (i.e., aircraft within
designated weight and/or size ranges pay the same fee).
Collection — Based aircraft fees may be collected directly by the airport sponsor, or the
airport sponsor may have an agreement with a commercial operator to collect and remit
based aircraft fees. The agreement may allow the commercial operator to retain a portion
of the based aircraft fees collected as compensation for services rendered by the
commercial operator. The amount retained is often referred to as an administrative fee.
G. Through-the-Fence Fee
Commonality — Historically, there has been significant variability in the basis and
implementation of through-the-fence fees charged by airport sponsors to aeronautical
users directly accessing the Airport through adjacent properties. However, in conjunction
with guidance from the FAA and Airport Cooperative Research Program (ACRP) Report
114 Guidebook for Through-the-Fence Operations, more airport sponsors are
reconsidering the basis and implementation of a through-the-fence fee.
Methodology — When charged, through-the-fence fees can be a monthly, annual, or a
payment per event, with the fee based on an appropriate rental rate if such property was
located on the airport.
Collection —Through-the-fence fees are typically collected directly by the airport sponsor
through a through-the-fence access agreement.
General Aviation Fee Study(Phase 1) 6
City of Denton, Denton Enterprise Airport (0512412024)
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!`.MCG INDUSTRY PRACTICES
H. Airport Access Fees
Commonality — Historically, airport access fees have not been charged by airport
sponsors to general aviation users. However, more airports are implementing security
measures and beginning to charge airport access fees.
Methodology — Typically, airport access fees are charged in accordance with an
established schedule on a monthly or annual basis. Depending on the approach and
infrastructure, the airport access fee may be charged for individual access (for an airport
badge, gate card, keys, or other instrument) or for vehicle access (vehicle permit or other
instrument).
Collection —Airport access fees are typically collected directly by the airport sponsor upon
issuance of the badge, gate card, keys, permit, and/or other instrument. Additionally,
airport access fees are typically collected on an annual basis.
General Aviation Fee Study(Phase 1) 7
City of Denton, Denton Enterprise Airport (0512412024)
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IL SIGNIFICANT FINDINGS
IV. SIGNIFICANT FINDINGS
Consistent with the project approach, general aviation fees at comparable and
competitive airports were analyzed.
A. Comparable Airports
The first step in identifying comparable airports is developing an accurate profile of the
Airport. The profile was developed based on data available from various sources,
including the FAA. The Airport profile provided the basis for establishing the criteria and
parameters for identifying comparable airports.
The selection of comparable airports was based on aeronautical activity and infrastructure
criteria including the following:
The Airport is utilized solely by the general aviation segment of the market. As such,
airports with significant air carrier operations were not considered comparable.
The Airport has 2 runways, one of which is 7,002 feet long. Airports with at least one
runway that is 5,000 feet or longer were considered comparable.
The Airport consists of 929 acres of land. Airports having total acreage between 600 and
1,350 acres were considered comparable.
The Airport is classified as a Reliver airport in the FAA NPIAS. As such, only Reliver
airports were considered comparable.
The Airport is classified as a National airport in the FAA General Aviation Airport Asset
Study. As such, only National airports were considered comparable.
The Airport does have a control tower and precision approach. As such, airports
with a control tower and a precision approach were considered comparable.
For the 12-month period ending December 31, 2023 (as reported by the FAA
Master Record 5010), general aviation itinerant operations at the Airport totaled
83,653. As such, the range for general aviation itinerant operations was
established at 40,000 to 120,000.
For the 12-month period ending December 31, 2023 (as reported by the FAA
Master Record 5010), total operations at the Airport totaled 196,034. As such, the
range for total operations was established at 90,000 to 300,000.
The number of based aircraft at the Airport as of December 31, 2023 (as reported
by the FAA Master Record 5010) was 420. As such, the range for based aircraft
was established at 200 to 600.
While a total of 10 airports were considered comparable to the Airport, rental rates and
usable information from 9 airports' were obtained and analyzed, as shown in Table 2.
1 Relevant and useable information was not available from Kissimmee Gateway Airport(ISM).
General Aviation Fee Study(Phase 1) 8
City of Denton, Denton Enterprise Airport (0512412024)
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N ILMCG SIGNIFICANT FINDINGS
Table 2—Comparable Airports Summary
Comparable Fuel Landing Aircraft Percentage Aeronautical Based Through Airport
Airports Flowage Fees Parking of Gross Permit Aircraft -the- Access
Fees Fees Receipts Fees Fees Fence Fees
Denton Enterprise Yes No No Yes2 Yes No No Yes
Airport
Chino Airport Yes No Yes Yes Yes No N/A Yes
Dallas Executive Yes No No No No No No No
Airport'
Orlando Executive No No No Yes Yes No No No
Airport
McKinney No No Yes Yes Yes No No Yes
National Airport 3
North Las Vegas Yes N/A Yes No Yes No No Yes
Airport*
Hillsboro Airport Yes Yes Yes No No No No No
San Marcos Yes No Yes Yes No No No No
Regional Air ort
Spirit of St. Louis No No No No No No No No
Airport
Tulsa Riverside Yes No N/A N/A Yes No N/A N/A
Airport
N/A indicates relevant and usable information was not available
*Denotes sponsor operated FBO
Significant findings follow (excluding the Airport):
➢ Fuel flowage fees
0 6 airports charge fuel flowage fees
o The fuel flowage fees range from $0.065 to $0.10 per gallon (a mean of
$0.085 per gallon)
➢ Landing fees
0 1 airport charges landing fees
o The landing fee is $3.68 per 1,000 pounds maximum gross landed weight
(MGLW)
➢ Aircraft parking fees
0 5 airports charge aircraft parking fees
0 1 of the 5 airports charge daily aircraft parking fees ranging from $5.00 to
$10.00 per day (a mean of$7.50 per day) depending on type of aircraft
➢ Percentage of gross receipts fee
0 4 airports charge percentage of gross receipts fees
o The percentage of gross receipts fees rang from 1.0% to 5.5%
➢ Aeronautical permit fees
o 5 airports charge aeronautical permit fees
2 Applies to FBO only
3 Identified as a competitive and comparable airport. Fees and related information will be included in the competitive
and comparable airport data which is reflective of the relative proximity and aeronautical comparability.
General Aviation Fee Study(Phase 1) 9
City of Denton, Denton Enterprise Airport (0512412024)
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MCGSIGNIFICANT FINDINGS
o The aeronautical permit fees range from $50.00 to $750.00 (a mean of
$325.00)
➢ Based Aircraft Fee
o No pertinent information obtained
➢ Through-the-Fence Fee
o No pertinent information obtained
➢ Airport access fees
0 3 airports charge airport access fees
o The airport access fees ranging from $25.00 to $50.00 (a mean of$38.00)
B. Competitive Airports
Typically, an airport is considered competitive if located in proximity to the Airport and
serves a similar market. Each airport identified is then compared to the Airport based on
(1) infrastructure and (2) available products, services, and facilities.
For the purposes of this study, airports within 45 nautical miles of the Airport were
identified as being potentially competitive airports. While a total of 9 airports were
considered competitive to the Airport, general aviation fees and related information from
9 competitive airports were obtained and analyzed, as shown in Table 3.
Table 3—Competitive Airports Summary
Competitive Fuel Landing Aircraft Percentage Aeronautical Based Through Airport
Airports Flowage Fees Parking of Gross Permit Aircraft -the- Access
Fees Fees Receipts Fees Fees Fence Fees
Denton Enterprise Yes No No Yes4 Yes No No Yes
Airport
Addison Airport Yes No No No No No Yes Yes
Arlington Yes No Yes N/A No No No No
Municipal Airport*
Dallas Executive Yes No No No No No No No
Airport
Fort Worth
Meacham Yes No Yes No No No No Yes
International
Airport
Fort Worth Spinks Yes N/A Yes No No No No Yes
Airport
Fort Worth Yes No Yes No No No Yes Yes
Alliance Airport
McKinney No No Yes Yes Yes No No Yes
National Airport*
Mesquite Metro Yes No Yes No Yes No No No
Airport*
North Texas Yes N/A Yes No No No No No
Regional Air ort
N/A indicates relevant and usable information was not available
*Denotes sponsor operated FBO
4 Applies to FBO only
General Aviation Fee Study(Phase 1) 10
City of Denton, Denton Enterprise Airport (0512412024)
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!`.MCG SIGNIFICANT FINDINGS
Significant findings follow (excluding the Airport):
➢ Fuel flowage fees
0 8 airports charge fuel flowage fees
o The fuel flowage fees rang from $0.07 to $0.35 per gallon (a mean of$0.21
per gallon)
➢ Landing fees
o No pertinent information obtained
➢ Aircraft parking fees
0 7 airports charge aircraft parking fees
o The aircraft parking fees rang from $40.00 to $2,250 dependent upon
aircraft weight
➢ Percentage of gross receipts fee
o 1 airport charges a percentage of gross receipts fee. The amount is
negotiated
➢ Aeronautical permit fee
0 2 airports charge an aeronautical permit fee.
o The aeronautical permit fees rang from $150 to $250.00 (a mean of
$200.00)
➢ Based Aircraft Fee
o No pertinent information obtained
➢ Through-the-Fence Fee
0 2 airports charge through-the-fence fees
0 1 airport charges a through-the-fence fees of $0.094 per square foot per
year for commercial aviation use, $881.68 per year for
recreational/incidental use and $352.00 per year for non-aeronautical use
0 1 airport charges a through-the-fence fee of $650 per month for general
aviation or small aircraft user
➢ Airport access fee
0 5 airports charge airport access fees
o The airport access fees rang from $20.00 to $40.00 (a mean of$26.50)
It is important to note that airports must consider numerous factors when considering
which fees to enact. These factors include but are not limited to: the financial ability of the
users to pay such fees, the current political climate, the airport sponsor's approach to
business operations, as well as the goals and vision of the airport. Each airport's unique
circumstances also contribute to the amount and type of fee charged. For example, an
airport that has a limited number of operations may not find it beneficial to charge landing
fees.
General Aviation Fee Study(Phase 1) 11
City of Denton, Denton Enterprise Airport (0512412024)
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nMCG RECOMMENDATIONS
V. RECOMMENDATIONS
A. Cost Center Approach
Regardless of the type of general aviation fees the City ultimately decides to implement,
AMCG suggests (consistent with a best practices approach) that the costs being incurred
by the City relating to the planning, development, operation (including maintenance and
repair), management, and marketing of the Airport that are not being covered by federal
or state Airport Improvement Programs (AIP) be identified and quantified to the greatest
extent possible.
This would include, but would not necessarily be limited to, the capital and operating costs
being incurred by the City (or portion thereof), as follows:
➢ Airport planning projects not funded through AIP,
➢ Airport development projects not funded through AIP,
➢ Airport vehicles and equipment not funded through AIP,
➢ Airport reserve accounts to provide funding for future planning and development
projects and vehicles and equipment that would not be eligible for AIP funding, and
➢ all other operating costs (e.g., personnel, insurance, utilities, etc.).
Once this is accomplished, general aviation revenues (including rents) should be
quantified, and all capital and operating costs should be deducted which results in the
cost recovery gap. Consistent with a best practices approach, the City should implement
a general aviation fee program designed to close the gap between general aviation
related revenues and the associated capital and operating costs.
If the general aviation fees necessary to close the gap are unreasonable or not within the
bounds of the market, AMCG recommends that an appropriate portion (or percentage) of
the gap should be targeted (cost recovery target).
B. Fees Recommended
1. Fuel Flowage Fee
AMCG recommends the City continue to charge a fuel flowage fee (i.e., aviation fuel
delivery fee) at the Airport and analyze existing agreements to ensure fuel flowage fee
payments are correct.
Generally, airport sponsors, aviation businesses, and aircraft operators believe a fuel
flowage fee is an acceptable way of recovering airport costs. In comparison to other fees,
fuel flowage fees are relatively easy to administer as fuel flowage fees are typically
collected and remitted (or paid directly) by the fueling entity (commercial and non-
commercial) to the airport sponsor.
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City of Denton, Denton Enterprise Airport (0512412024)
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!`.MCG RECOMMENDATIONS
The most significant downfall with charging fuel flowage fees is that only those aircraft
operators who purchase (or dispense) fuel at the airport pay the fuel flowage fee.
Therefore, aircraft operators who use the airport, but do not purchase (or dispense) fuel,
make no contribution to cover the airport costs through payment of fuel flowage fees.
Further, fuel flowage fees are typically paid on the honor system. In most cases, fueling
entities report fuel volumes without audit or there is no requirement to verify or reconcile
the amount of fuel sold (or dispensed) by a fueling entity with the amount of fuel delivered.
If the City continues charging a fuel flowage fee at the Airport, AMCG suggests fueling
entities continue to be required to pay this fee for all gallons delivered to the fuel storage
facility (as reported by the fuel supplier) as opposed to basing the fee based on gallons
sold (or dispensed).
AMCG recommends the City require fueling entities report all fuel purchased (by type),
delivered to the fuel storage facility (by type), and sold (or dispensed) at the Airport (by
type and category). This approach provides a mechanism for the City to reconcile the
gallons delivered with the gallons dispensed at the Airport.
Additionally, in the case of a discrepancy between the amount of fuel delivered to the fuel
storage facility and the amount of fuel sold (or dispensed) at the Airport, the greater
amount shall prevail and the fueling entities shall promptly pay all additional fees due the
City, plus annual interest on the unpaid balance at the maximum rate allowable by law
from the date originally due.
2. Landing Fee
AMCG recommends the City implement a landing fee at the Airport. AMCG believes a
landing fee provides the most equitable, cost-recovery, mechanism for the City and a
general aviation fee program which includes a landing fee is consistent with a best
practices approach. While a fuel flowage fee is only paid by those aircraft operators
purchasing (or dispensing) fuel at the Airport, the landing fee is paid by all aircraft
operators using the Airport.
AMCG suggests the landing fee be applicable to all aircraft operators (based and
transient) using the Airport. Additionally, AMCG suggests the landing fee apply to all
aircraft operators based on a "cents per 1,000 pounds" of MGLW approach (with an
established minimum fee) and paid on a per landing basis unless a different weight
classification is agreed to in writing by the City.
The City could collect landing fees directly from aircraft operators utilizing systems
available to record aircraft registration numbers which, in turn, can be used to generate
and send an invoice directly to the aircraft operator.
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City of Denton, Denton Enterprise Airport (0512412024)
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IL RECOMMENDATIONS
3. Percentage of Gross Receipts Fees
AMCG recommends the City continue to charge a percentage of gross receipts fee in
conjunction with the existing FBO lease agreement.
While this fee has become less common in the industry, the advantage of charging a
percentage of gross receipts fee is this provides the City with the opportunity to participate
in the success of the FBO (i.e., obtain a percentage of the revenue generated) without
taking any additional risk. As revenues increase, the payment to the City increases (i.e.,
the City participates in the upside). However, the inverse is also true in that as revenue
decreases, the payment to the City decreases. This fee can also be viewed as punitive
to successful business and could result in similarly situated aeronautical operators paying
significantly different fees.
However, the current operating environment of the Airport (i.e., one FBO) and the
structure of the percentage of gross receipts fee (i.e., transient hangar and tiedown only)
insulates the City and FBO from some of the downsides of the percentage of gross
receipts fee.
The City should conduct an annual audit of the FBO lease agreement to ensure the
percentage of gross receipts fee paid by the FBO is reflective of the transient hangar and
tiedown fees collected by the FBO.
4. Aeronautical Permit Fee
AMCG recommends the City expand the lease development application fee by
implementing an aeronautical permit fee. While the lease development application fee is
applicable to any development proposal, the aeronautical permit fee is based on the type
of aeronautical activity (commercial and non-commercial) being conducted at the Airport.
FBOs and Specialized Aviation Service Operators (SASOs) and operators providing
temporary or special activities at the Airport would be charged a commercial aeronautical
permit fee for engaging in commercial aeronautical activities at the Airport. A self-fueling
entity would be charged a non-commercial aeronautical permit fee for engaging in self-
fueling activities at the Airport.
5. Airport Access Fees
AMCG recommends the City expand the airport access fee at the Airport to include an
initial fee for issuance as well as an annual renewal fee.
Individuals approved for access to the Airport will be charged an airport access fee. The
access fee is charged based on the issuance of a gate card or key permitting access to
the airfield.
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City of Denton, Denton Enterprise Airport (0512412024)
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AMCG RECOMMENDATIONS
C. Fees Not Recommended
1. Aircraft Parking Fees
With regard to recovering the costs associated with the aircraft parking areas at the
Airport, AMCG believes that the City has two primary options, as follows:
➢ The City could lease the aircraft parking areas to commercial operators and/or
non-commercial tenants and charge market rent (Option 1).
➢ The City could allow transient aircraft to use aircraft parking areas and charge
a transient parking fee for such use (Option 2).
Based on a review of the current FBO lease agreement and historical lease practices,
AMCG understands the City has implemented Option 1 for all available aircraft parking
areas. As such, a separate aircraft parking fee is not necessary.
2. Based Aircraft Fee
AMCG does not recommend the City implement a based aircraft fee in conjunction with
the landing fee. If implemented, the based aircraft fee, applicable to all based aircraft at
the Airport, would be paid on an annual basis, rather than on a per landing basis.
However, given the significant variability in utilization of based aircraft, AMCG believes a
landing fee program applicable to based and transient aircraft is most appropriate.
3. Through-the-Fence Fee
AMCG understands through-the-fence activities are not occurring at the Airport. As such,
a through-the-fence fee is not necessary. However, if the City does allow future through-
the-fence access, AMCG recommends the through-the-fence access agreement and
related fee are based on an appropriate rental basis for all adjacent off-Airport property
with aeronautical-related access.
D. Adjustment of Fees
AMCG recommends the general aviation fees be reviewed annually based on the prior
year's financial statements and next year's budget for the Airport. Any deficits should be
carried forward and considered when updating the fees in the future and that any surplus
be: (1) used for non-AIP funded Airport planning or development projects (including
capital expenditures relating to non-AIP funded Airport improvements, vehicles, and
equipment), (2) set aside in reserve accounts for future non-AIP funded planning or
development projects, or (3) carried forward for consideration in establishing fees for the
following period.
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City of Denton, Denton Enterprise Airport (0512412024)
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!`.MCG RECOMMENDATIONS
Also, and equally important, general aviation fees should not be imbedded in future lease
agreements with commercial operators or non-commercial tenants. Conversely, general
aviation fees should be established in a separate general aviation fee schedule. AMCG
suggests a provision be included in all applicable lease agreements and lease
amendments to the effect of: "To recover the costs being incurred by the City relating to
the planning, development, operation (including maintenance and repair), management,
and marketing of the Airport (that are not being covered by federal or state AIP funds),
the lessee agrees to pay the aeronautical-related fees set forth in the Airport's General
Aviation Fee Schedule."
If it is necessary to include general aviation fees in a lease agreement, language should
be included in the lease agreement stipulating that the City may, at the City's discretion,
adjust general aviation fees from time to time and the lessee agrees to pay such general
aviation fees to help recover the costs incurred by the City relating to the planning,
development, operation (including maintenance and repair), management, and marketing
of the Airport (that are not being covered by federal or state AIP funds).
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City of Denton, Denton Enterprise Airport (0512412024)
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!`IL FEE CALCULATION
VI. FEES CALCULATION
A. Fees Selected
To be completed in Phase II.
B. Financial Analysis
To be completed in Phase II.
C. Establishment of Fees
To be completed in Phase II.
1. Fee Calculation Analysis
To be completed in Phase II.
2. Projected General Aviation Fee Revenue
To be completed in Phase II.
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City of Denton, Denton Enterprise Airport (0512412024)
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^.MCG GENERAL AVIATION FEE SCHEDULE
VII. GENERAL AVIATION FEE SCHEDULE
To be completed in Phase II.
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City of Denton, Denton Enterprise Airport (0512412024)