PORT OF SEATTLE
MEMORANDUM
COMMISSION AGENDA
Item No.:
5j
ACTION ITEM
Date of Meeting:
June 14, 2011
DATE:
June 3, 2011
TO:
Tay Yoshitani, Chief Executive Officer
FROM:
James Jennings, Manager Aviation Properties
Krista Sadler, Manager ICT Program Office
SUBJECT:
Airline Activity Management Project – CIP #C800222
Amount of This Request:
$500,000
Source of Funds:
State and Local Taxes Paid:
$0
Total Project Cost:
$500,000
ACTION REQUESTED:
Request authorization for the Chief Executive Officer to approve all work and contracts,
including executing and amending any and all necessary contracts and service directives for the
Airline Activity Management Project in an amount not to exceed $500,000.
SYNOPSIS:
Approximately 48% of Seattle-Tacoma International Airport’s (Airport) aeronautical revenue,
$94.5 million, is derived from various airline activity fees, such as landing fees, gate usage, and
common-use ticket counters. Per the Signatory Lease and Operating Agreement (SLOA), most
of the activities on which the fees are generated are self-reported by the airlines themselves. If
any airline over or under reports their activity, it disrupts the equity to other airlines in the
distribution of airport costs. With current systems, it is impossible to fully ascertain the scale of
the inaccuracy problem, but over the past several years staff has identified several significant
discrepancies. In response to these concerns, the Port of Seattle Commission Audit Committee
has included airline activity reporting as a key area of focus in its 2010 and 2011 work plans.
This project includes the consolidation of airline activity information from Port of Seattle
systems to construct billing information for airline activity fees and the replacement of an aging
system critical for providing activity information to our airline partners and to the public as
necessary. Project costs are estimated to be $500,000. This project was included in the 2011
Capital Budget and Plan of Finance as a business plan prospective project within CIP #C800222,
Airline Activity Management.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
June 3, 2011
Page 2 of 7
BACKGROUND:
Across the nation airports frequently rely on airlines to report aircraft activity for billing
purposes. This is also the case with this Airport. Airline submitted activity reports are typically
reviewed by Airport staff prior to generating invoices, but the data is not always reliable or
readily available to ensure accuracy. Because of the inability of airports to collect their own
accurate data, and the often residual nature of airline/airport agreements where unrecovered fees
are simply redistributed in future rates and charges, airports have typically considered the
challenges to improve accuracy in this area difficult and financially inconsequential.
But with $94.5 million of the Airport’s revenue derived from these activity-based fees, and with
improvements in technology and an increased need for audit ability, staff believes improved
systems and processes are necessary to increase accuracy, improve management oversight, and
facilitate the Airport’s role in equitable treatment of airlines.
The following table shows the fees collected and the basis and source for those fees.
Fee
Basis
Current Source
Landing Fees
Landed Weight
Airlines
Joint User Area
Passenger Count
Airlines
Common Bag Makeup
Available Seating
Airlines
Ramp Tower
Landings
Airlines
Common Use Ticket Counter
Time used
Port of Seattle
Parking
Time at Gate
Airlines
Common Use Gate
Time at Gate and
aircraft seating capacity
Airlines
Cargo
Time at Gate and
Wingspan
Airlines
General Aviation Parking
Time on Ground
Port of Seattle
Tech Stop
Time on Ground
Airlines
The process of billing airline fees relies on several Port of Seattle systems including Flight
Information Management System (FIMS), Flight & Fleet, Landings Database\Airline Activity
Billing, Airport Statistics, PROPworks, and PeopleSoft. The integration of these systems to
create billing data is currently a manual effort, with the airlines sending in activity data via email
or fax to the Aviation Properties Billing Specialist, who then enters and reconciles the data,
forwards that information to Accounting and Financial Reporting (AFR), who then upload the
data to PROPworks and processes the invoices.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
June 3, 2011
Page 3 of 7
Critical Issues
There are two critical issues with the current airline activity management process.
The Airport’s cost recovery financial model currently relies on the accurate self-reporting of
airline activity. When even one airline over or under reports landings, landed weight,
parking, passenger counts, cargo, etc., it disrupts the equity to other airlines in the
distribution of Airport costs. A recent audit of 2008 and 2009 landing fees which is based on
self-reported number of landings and aircraft landed weight discovered a 2- year combined
revenue shortfall of $480,821. Because some airlines under reported and some over reported,
the actual inequity was much greater. Over the past several years there have been other
significant reporting discrepancies including:
o In the 1990’s, $3 million in Federal Inspection Services (FIS) activity was under-
reported
o In 2005, $470,000 in FIS activity was not reported
o In 2008, $710,000 in gate usage was over reported
In 2012, an audit of common use gate usage is being planned, and the Port of Seattle
Commission Audit Committee has included airline activity reporting as a key area of focus in
their work plan.
The Airport Statistics system was built eleven years ago in 2000. Because of its age, it is
difficult to maintain and make changes to as business processes evolve. In addition, the
system does not provide the flexibility to easily accommodate normal operations such as
adding a new airline or detail for Aviation Planning’s needs to respond to various requests
for information. Airport Statistics is available to the public through our Port of Seattle
website, and it is critical to continue to supply current, relevant information on aviation
activities.
PROJECT JUSTIFICATION:
With $94.5 million of Airport revenue derived from airline reported activity based fees, and a
gap in accuracy confirmed with preliminary audits, staff believes it is in the Port’s best interest to
take control of the collection of airline activity based data for invoicing. This will be done
through creating an integrated system using existing Port owned data sources instead of airline
provided reports, automating processes and improving the quality, accuracy and equity of airline
charges.
There are several important benefits as a result of the implementation of the Airline Activity
Management system.
Generating fees using information from automated data sources and an industry standard
fleet database will improve accuracy for all airlines. This is becoming more common among
large hub airports.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
June 3, 2011
Page 4 of 7
The aging Airline Statistics application is a critical system for communicating airport activity
to the public and our airline partners. This application must be replaced to ensure continued
transparency.
The Airline Portal, an externally facing web application, will be a valuable communication
and collaboration tool for uses outside of the Airline Activity Management system. While
the portal is mandatory for this project to replace the Airport Statistics System, collect
activity information, and distribute billing reports for review, it can also be used to
consolidate and distribute other information. The Airline Portal will be delivered using the
existing External SharePoint platform implemented earlier this year.
PROJECT STATEMENT AND OBJECTIVES:
Project Statement:
Consolidate airline activity from existing Port of Seattle systems to generate billing information
for invoices and activity reports for our airline partners and the public.
Project Objectives:
• Automate collection and use of all airline activity data
• Replace current invoicing/billing process with automated systems that use Port of Seattle
generated data where possible
• Upgrade aging technology to ensure continued availability of critical systems
PROJECT SCOPE OF WORK AND SCHEDULE:
Scope of Work:
This project will consolidate data from Port of Seattle systems to generate billing information for
65% of the revenue derived from airline activity including landings, ramp tower, common bag
make-up, and common-use ticket counters. Future phases of this project will further reduce the
Airport’s dependence on airline-reported activity.
The recommended solution includes the following components.
Airline Portal – This externally facing web application will allow airlines to enter activity
that cannot be collected through Port of Seattle systems such as passenger counts, trade
routes, cargo and airmail information. The secure portal can also be used to distribute airline
specific reports or communications.
Data Collection Interfaces – Data to produce automated, Port-initiated activity billing resides
in several different systems. This project will gather common gate usage from FIMS, landing
and fleet information from Flight & Fleet, Common-use ticket counter usage from
UltraCUSE system and other information from the Airline Portal needed to generate a
consolidated invoice for each airline.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
June 3, 2011
Page 5 of 7
Billing Reconciliation – After all data is collected, there will be an audit and reconciliation
process to be performed by a billing specialist. This tool will consolidate the airline activity
data collected, support data editing with the appropriate audit history, and apply billing rules
to generate billing data.
Airport Statistics – The current airport statistics systems include data entry, reports, and
billing file generation. With the new proposed system, the input function will be moved to
the Airline Portal and reports will be generated using data from Flight & Fleet, the common-
use passenger processing systems, and the Airline Portal databases. The project changes this
component from a full application to a simple collection of reports that will be available
internally and externally on our Port website.
Schedule:
Commission Approval
June 2011
Phase I Implementation - Airline Portal
May 2012
Phase II Implementation – Data Collection Interfaces,
Airport Statistics, Billing Reconciliation
November 2012
SLOA III Updates
May 2013
FINANCIAL IMPLICATIONS:
Budget/Authorization Summary:
Original Budget
$500,000
Budget Increase
$0
Revised Budget
$0
Previous Authorizations this CIP
$0
Current request for authorization
$500,000
Total Authorizations, including this request
$500,000
Remaining budget to be authorized
$0
Project Cost Breakdown:
Port of Seattle Labor or Contracted Services
$423,000
Sales tax
$0
Contingency – 20%
$77,000
Total
$500,000
Budget Status and Source of Funds:
Project costs are estimated to be $500,000. This project was included in the 2011-2015 capital
budget and plan of finance as a business plan prospective project within CIP #C800222, Airline
Activity Management. The source of funds is 100% Airport Development Fund.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
June 3, 2011
Page 6 of 7
Financial Analysis and Summary:
CIP Category
Renewal/Enhancement
Project Type
Technology
Risk adjusted Discount rate
7%
Key risk factors
N/A
Project cost for analysis
$500,000
Business Unit (BU)
Airport Business Development
Effect on business performance
N/A
IRR/NPV
N/A
CPE Impact
Less than $.01, but no change compared
to business plan forecast as this project
was included.
Lifecycle Cost and Savings:
This project is required to ensure equitable distribution of airline fees and the continued
transparency of airline activity to the public and our airline partners. There are no significant
savings from the completion of this project. Annual labor costs for system maintenance will
increase by $10,000 per year to a total of $20,000 and will be budgeted within the Information &
Communications Technology Department.
ECONOMIC IMPACTS AND BUSINESS PLAN OBJECTIVES:
Proceeding with this project improves the equitable distribution of airline fees for our airline
partners and ensures the continued availability of airline activity information for the public.
STRATEGIC OBJECTIVES:
This project supports the following Port’s strategic objectives:
Ensure Airport and Seaport vitality by creating a more equitable distribution of airline fees.
Enhance public understanding and support for the Port’s role in the region by ensuring the
continued availability of airline activity information for the public and our airline partners
Be a “high performance organization” by eliminating manual entry allowing Port staff to
concentrate on higher-value audit functions
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS:
The following alternatives were considered.
1. Develop an airline activity management system: Consolidate airline activity from existing
Port of Seattle systems to generate billing information for invoices and activity reports
for our airline partners and the public. This is the recommended alternative.
2. Procure an airline activity management system: While there are products available that
will collect airline activity and bill for landing fees, there are no products available that
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
June 3, 2011
Page 7 of 7
cover the other nine airline activity fees. This alternative would also require a separate
initiative to replace the aging Airline Statistics application. This is not the recommended
alternative.
3. Do nothing at this time: Airline fees would continue to be generated based on individual
airline provided activity. This alternative would not address the reporting errors that
cause an inequitable distribution of airline fees and the availability of airline activity
information is at risk due to aging technology. This is not the recommended alternative.
OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST:
None
PREVIOUS COMMISSION ACTION OR BRIEFING:
No previous Commission actions or briefings for CIP #C800222, Airline Activity Management.