Birchwood Airport Master Plan Update:Financial Assessment andMaintenance Cost GenerationProject No. CFAPT00354/AIP 3-02-0034-008-2018Prepared for:Alaska Department of Transportation & Public FacilitiesCentral Region4111 Aviation AvenueAnchorage, Alaska 99519May 2021Prepared by:Northern Economics, Inc.800 E Dimond Blvd Ste 3-300Anchorage, Alaska 99515On behalf of:HDL Engineering Consultants, LLC3335 Arctic BoulevardAnchorage, Alaska 99503

The preparation of this document as supported in part with financial assistance through the AirportImprovement Program from the Federal Aviation Administration (AIP Grant Number 3-02-0034008-2018) as provided under Title 49 USC Section 47104. The contents do not necessarily reflectthe official views or policy of the FAA. Acceptance of this report by the FAA does not in any wayconstitute a commitment on the part of the United States to participate in any development depictedtherein, nor does it indicate that the proposed development is environmentally acceptable inaccordance with the appropriate public laws.Birchwood Airport Master Plan Update: Socioeconomic Evaluation

Table of ContentsIntroduction .1Airport Revenues and Expenditures .1Other Factors Affecting Operations and Operating Costs .2Benchmarking with Comparable Facilities .3References .5Birchwood Airport Master Plan Update: Financial Assessment and Maintenance Cost Generationi Page

List of AbbreviationsDOT&PF . Alaska Department of Transportation and Public FacilitiesFAA. Federal Aviation AdministrationFY . fiscal yearM&O .Maintenance and OperationsTAF .Terminal Area ForecastBirchwood Airport Master Plan Update: Financial Assessment and Maintenance Cost Generationii P a g e

INTRODUCTIONThis report analyzes operating costs and their driving factors at the Birchwood Airport. It thenbenchmarks the airport’s operating costs against two airports of similar size in the region: WasillaAirport and Soldotna Airport. This provides an initial assessment of the Birchwood Airport’sfinancial condition. More detailed information will be included in the upcoming Financial Plan.The information in this report comes from the Alaska Department of Transportation and PublicFacilities (DOT&PF), other component reports of this Birchwood Airport Master Plan Update,and the financial statements and published aviation forecasts of comparable airports. Informationfrom these sources is available on an annual basis and does not include shorter periods of time,which limits an analysis of maintenance costs to an annual basis.The information about Birchwood Airport includes only a portion of the income and expense datarelated to rural airport operations for DOT&PF. It does not reflect federal funds received for capitalor maintenance grants; federal funds received from the Air Carrier Compliance program; thestate’s share of capital and maintenance project grants; managerial expenses by Commissioner,Deputy Commissioner, Statewide Aviation staff; nor administrative costs incurred by Division ofAdministrative Services (Budget, Finance, IT, appeals functions), Statewide Aviation Leasing,Right-of-Way, Planning, Design and Engineering Services, and Construction. Through FY 2017,it does not reflect expenses for the rural airport facilities component building costs such as repairs,electricity and heating fuel, or other utilities for buildings, but it does include maintenance andoperating (M&O) costs such as personnel; utilities; and fuel for equipment, runway lights, andsome buildings such as heated storage. For FY 2018–2020, it does include both M&O and facilitycosts such as personnel; utilities; and fuel for equipment, runway lights, building repairs,electricity, and heating (DOT&PF 2021).AIRPORT REVENUES AND EXPENDITURESThe Birchwood Airport has had an operating profit over the last six years. Table 2.1 comparesrevenues and expenses associated with the airport for fiscal year (FY) 2015–2020.Table 2.1 Birchwood Airport Revenues, Expenses, and Operating Profits, , FY 2015–2020Fiscal YearRevenueExpensesOperating 23.10Source: DOT&PF (2021)The Birchwood Airport generates revenues from several sources. In order of greatest to least,revenues in FY 2020 came from land use (70% of total revenue), assigned aircraft tie-downs andtransient parking (25%), application and process fees (3%), fuel dispensing permits (2%), andinterest and late fees ( 1%). Revenues have grown rapidly from FY 2017 to FY 2020, increasingBirchwood Airport Master Plan Update: Financial Assessment and Maintenance Cost Generation1 Page

36.5% over that period. The increase has largely been driven by land use revenues. Table 2.2provides total revenues for FY 2015-2016 and detailed revenues for FY 2017–2020.Table 2.2 Birchwood Airport Revenue Detail, , FY 2015–2020Fiscal YearAssigned Aircraft st/LateFeesApplication/Process FeesLand UseTotal 832.14Source: DOT&PF (2021)Birchwood Airport generates expenses from several sources. Historically, expenses have beencategories such as personal services, services, and commodities, in that order of magnitude. Whilepersonal services have been the largest category of spending at the airport, they constitute a smallershare than other airports (see Section 4) due to Birchwood Airport being unmanned. In FY 2020,the new categories of facilities and capital outlay costs accounted for 70% of expenses. Personalservices (19% of the total), services (7%), and commodities (4%) costs were all lower than hasbeen typical for the airport in recent years.Expenses at Birchwood Airport are shown in Table 2.3. Facilities costs are included for FY 2018–2020, causing an increase in the baseline expenses at the airport relative to prior years. In FY 2020,additional capital outlay and facilities expenses resulted in higher total expenses for a year in whichexpenses would have otherwise been lower due to less spending in other categories.Table 2.3 Birchwood Airport Expense Detail, , FY 2015–2020Fiscal YearPersonal 5,429.71Capital OutlayFacilitiesTotal 2.7825,207.0578,147.96147,209.04Source: DOT&PF (2021)Other than seasonal variations in the type and amount of operating expenses required for airportoperations (e.g., heating and snow removal costs during the winter), insufficient information isavailable to determine daily or quarterly variations in the operating costs at the airport at this time.OTHER FACTORS AFFECTING OPERATIONS AND OPERATING COSTSStakeholder interviews provided feedback on the airport’s operations, limitations, and futureimprovements. This section summarizes the findings of those interviews with a focus on thefinancial implications.Birchwood Airport Master Plan Update: Financial Assessment and Maintenance Cost Generation2 Page

Stakeholders noted that the state keeps surfaces clear of snow, with minimal impact to pilots’operating days. From a financial perspective, this level of service results in higher snow removalcosts but has supported the number of operations and therefore the revenues received from users.The uncontrolled airspace and easy access to the airport were considered by many stakeholders tobe strong positives. Financially, this drives the airport’s operations and user revenues.The lack of onsite DOT&PF presence was mentioned as a negative when there are operations ormanagement issues at the airport. The personnel cost savings from not maintaining a presence atthe airport could have minor negative impacts on revenues to the extent that aircraft operations areaffected.Many pilots indicated interest in more tie-downs, electric outlets near the tie-downs, and hangarspace. Others would like to see more designated parking spaces. These improvements wouldrequire capital investments and increase operating expenses, offset by an increase in user revenues.Pilots asked for a new taxiway between E and G. This improvement would require a capitalinvestment and would increase maintenance costs. It could potentially improve congestion andresult in increased revenues from users.Stakeholders and the study team also noted several needed maintenance and capital improvements,including repainting of pavement markings, replacement and upgrades of lighting, repaving ofexisting surfaces, additional connecting taxiways, and adjustment of perimeter fencing. Theseimprovements would require a combination of capital investment and maintenance spending.The Financial Plan will provide a more detailed analysis of the costs associated with improvementsconsidered in the Birchwood Airport Master Plan.BENCHMARKING WITH COMPARABLE FACILITIESThis section presents a high-level benchmarking exercise used to compare Birchwood Airport’soperating costs with the city-owned airports in Wasilla and Soldotna.The Federal Aviation Administration’s (FAA) Terminal Area Forecast (TAF) was used as the basisfor a screening-level comparison of airports in the region for benchmarking. Using the latest TAF(FAA 2020), the Wasilla and Soldotna airports appeared to be suitable comparisons.After that initial screening, the benchmarking analysis uses operations and based aircraft countsfor each airport. Birchwood data is based on actual counts conducted in 2020, while publishedforecasts were used for Soldotna and Wasilla. Table 4.2 presents these counts of operations andbased aircraft at these airports.Birchwood Airport Master Plan Update: Financial Assessment and Maintenance Cost Generation3 Page

Table 4.2 Estimated Operations and Based Aircraft at Birchwood, Soldotna, and Wasilla Airports, 2020AirportTotal OperationsBased 42,660168Source: HDL Engineering Consultants, LLC (2017), HDL Engineering Consultants, LLC (2021), Wince-CorthellBryson and Aries Consultants Ltd. (2017), and Northern Economics Inc. analysisNote: Wasilla estimates are a straight-line interpolation of actual 2016 counts and 2021 projections.Wasilla has more than 4.0 times the number of operations as Birchwood, but only 55% of the basedaircraft. Soldotna has 2.0 times the number of operations as Birchwood, though its based aircraftcount is likewise 55% of Birchwood’s. Compared to Soldotna and Wasilla, the operating cost peraircraft operation at Birchwood ( 14.35) is approximately 2 times the cost of Soldotna and 4 timesthe cost of Wasilla. The operating cost per based aircraft at Birchwood ( 477.95) is 54% that ofSoldotna and 37% that of Wasilla. Table 4.3 summarizes the operating expenses at each of theairports.Table 4.3 Comparison of Operating Costs at Selected Airports, 2020 EstimatesBirchwoodSoldotna Municipal AirportWasilla Municipal AirportOperating ExpensesWages and ,430103,355105,71242,2971,83980,605Total Operating Expenses147,209149,848214,392Aircraft OperationsBased Aircraft10,25930821,10016942,660168Aircraft Operations14.357.105.03Based Aircraft477.95886.671,276.14133,787Comparison MetricsTotal Operating Expenses per Metric ( )Source: City of Soldotna (2021), City of Wasilla (2021), HDL Engineering Consultants, LLC (2017), HDLEngineering Consultants, LLC (2021), Wince-Corthell-Bryson and Aries Consultants Ltd. (2017), and NorthernEconomics Inc. analysisBirchwood Airport Master Plan Update: Financial Assessment and Maintenance Cost Generation4 Page

REFERENCESCity of Soldotna. 2021. Comprehensive Annual Financial Report for Fiscal Year Ended June 30,2020. t?id 15161. January 25,2021.City of Wasilla. 2021. Comprehensive Annual Financial Report for Fiscal Year Ended June 30,2020. cument?id 23719. January27, 2021.DOT&PF. 2021. Birchwood Airport revenue and expenses data from ALDER report, provided bye-mail from DOT&PF Aviation Leasing. February 22, 2021.FAA. 2020. Terminal Area Forecast (TAF). February 10, 2020.HDL Engineering Consultants. 2017. Wasilla Airport ALP Update Aviation Forecast. Preparedfor the City of Wasilla. cument?id 22546. April 2017.HDL Engineering Consultants. 2021. Birchwood Airport Layout Plan Update Aviation ActivityForecast. Prepared for DOT&PF. February 2021.Wince-Corthell-Bryson and Aries Consultants Ltd. 2017. Soldotna Municipal Airport Master PlanUpdate Final Report. Prepared for the City of Soldotna. December 2017.Birchwood Airport Master Plan Update: Financial Assessment and Maintenance Cost Generation5 Page

The preparation of this document as supported in part with financial assi stance through the Airport Improvement Program from the Federal Aviati on Administration (AIP Grant Number 3-02-0034-008-2018) as provided under Title 49 USC Section 47104. The contents do not nec