Draft EUG Master Plan Update, February 2010

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CHAPTER 5 FINANCIAL FEASIBILITY ANALYSIS 8. Sensitivity Analyses This section of the financial feasibility analysis considers the impact of alternative financial assumptions on the capital plan contemplated herein. A scan of the aviation industry as of the date of publication of this study reveals that The United States Congress has yet to enact legislation to reauthorize “Vision 100 – Century of Aviation Reauthorization Act”; therefore, FAA’s ability to issue AIP grants to airport sponsors is limited. Moreover, the price of crude oil has reached unprecedented levels creating economic uncertainty and further pressuring both the commercial airline industry as well as general aviation providers/aircraft owners to keep aviation a viable and solvent industry. As the result of the mounting pressure the cost of fuel is placing on the commercial aviation industry, additional consolidation is anticipated which could affect the ability of the Airport to complete the capital plan as presented. Despite these concerns, several potential indicators and policy changes could bolster the airport’s ability to sustain momentum and accomplish the recommended projects contained in this plan. The first is a change in the PFC program; the second includes reductions in airport activity; and the third explores the Airport’s ability to generate additional revenue using surplus properties. 8.1 Changes in PFC Program Although Congress has yet to finalize action on FAA AIP Reauthorization legislation, it is generally believed that when it does the current PFC level of $4.50 per passenger will be increased to $7.00 per passenger. Such a measure would prove invaluable to the Airport, as this action would translate into the ability to undertake key terminal expansion and renovation projects based more on a pay-as-you-go basis Table 5-11 rather than rely solely on PFC-backed debt financing. provides a summary of estimated PFC collections with a $7.00 per passenger fee along with anticipated PFC expenditures. With the higher PFC in place, the Airport could reduce the amount of debt it would need to issue for the Terminal Phase II – Airport Administration/Baggage project by $6.0 million and fund from cash both phases of the Concourse C expansion projects scheduled for 2014 and 2023 respectively. Finally, with a $7.00 PFC, the Airport could cease collections for all projects contained in this plan in FY 2020. 8.2 Changes in Airport Activity In terms of the impact of a decline in aviation activity occurring as the result of current economic conditions, the Airport is poised to be rather resilient and capable of absorbing these impacts. A broad sensitivity analysis was applied to the passenger forecast contained in this plan whereby a 10 percent decrease in passenger enplanements occurs in FY 2009 followed by an additional 5 percent reduction in FY 2010. Thereafter, a compounded annual growth rate of 2 percent was applied for the remainder of the Table 5-12 forecast. depicts the impact of such a reduction in passenger activity on forecasted FAA entitlement and PFC funds for the period FY 2009-2016. 5-32 Eugene Airport Master Plan Update (February 2010)