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Home My WebLink AboutMINUTES - 10282003 - C24 57 Z/ TO: BOARD OF SUPERVISORS ---------- °� onr FROM: MAURICE M. SHIU, PUBLIC WORKS DIRECTOR Costa DATE: OCTOBER.28, 2003 County spa covx'� SUBJECT: Contra Costa Airports — Accept Phase I Byron. Airport Air Cargo Feasibility and Rules Analysis Final Report,Airport Improvement Program(AIP)Project No.3-06-0008-10,Byron Area. SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION I. Recommended Action: ACCEPT the Phase I Air Cargo Feasibility and Rules Analysis Final Report from the Public Works Director for the Byron Airport's Airport Improvement Program (AIP)Project No. 3-06-0008-10. Byron area. (100%Airport Enterprise Fund) (District III) 11. FINANCIAL IMPACT: There is no impact on the General Fund(100%Airport Enterprise Fund). i Continued on Attachment: X SIGNATURE: - —RECOMMENDATION OF COUNTY ADMINISTRATOR _RECOMMENDATION OF BOARD COMMITTEE 'APPROVE –OTHER SIGNATURE (S)-." ACTION OF BO N OCTOBER 28, 200,4PPROVED AS RECOMMENDED=_OTHER VOTE OF SUPERVISORS I hereby certify that this is a true and correct copy of an action xx UNANIMOUS(ABSENT NONE ) taken and entered on the minutes of the Board of Supervisors on AYES: NOES: the date shown. ABSENT: ABSTAIN: G:parcelc.bos.doc ATTESTED: OCTOBER 28, 2003 Board Orders\parcek.bos.doc JOHN SWEETEN,Clerk of the Board of Supervisors and County Orig.I3iv: Public Works(Airports Division) Administrator Contact: Beth Lee,Phone(925)646-5722 cc: County Administrator Auditor-Controller By Deputy Community Development Public Works Director Public Works Accounting Federal Aviation Administration SUBJECT: Contra Costa Airports — Accept Phase I Byron Airport Air Cargo Feasibility and Rules Analysis Final Report,Airport Improvement Program(AIP)Project No.3-06-0008-10,Byron Area. DATE: October 28, 2003 PAGE: 2 111. REASONS FOR RECOMMENDATION/BACKGROUND: On September 25, 2001, Contra Costa County was awarded a Federal Aviation Administration (FAA) Airport Improvement Project(AIP) grant in the amount of$315,000. The grant was awarded to update the existing Byron Airport Master Plan and create an Airport Business Plan. After the grant was awarded, significant interest was expressed on exploring the feasibility of Byron Airport becoming an air cargo facility and identifying specific rules. On December 17, 2002, Contra Costa County entered into a contract with Leigh Fisher Associates to perform the air cargo feasibility analysis and, upon completion, the master plan for the Byron Airport. On May 20, 2003, the Board of Supervisors accepted the status report of the feasibility analysis, directed staff to proceed with the master plan process and to give a status report to the East County Municipal Advisory Committees and Cities. Staff gave a status report to the East County Municipal Advisory Committee and Cities on May 31,2003.As also requested,staff is submitting the final feasibility analysis to the Board for its consideration prior to initiating Phase II of the master plan process. LEIGH FISHER ASSOCIATES Consultants to Airport Manugentent Final Report Phase I Byron Airport Air Cargo Feasibility and Roles Assessment Prepared for Contra Costa bounty October 2003 Final Report Phase I Byron Airport Air Cargo Feasibility and Roles Assessment Prepared for Contra Costa County October 2003 ...................................... ....... ............................................................................ . ..... ................ ..............-.1.1,..................... ........... ..................I.,.,........................ ..................... ............. - -.---_---_--- - - - -- - - -_' � CONTENTS Page 1 I. Executive .—_~`—.—^...~~—....—.—..—.--~---.—_--_—. Kevand __—.--.—~---..----..~—.—.---. / ^ ~ 2 z�cdOnPlan.—....—..—_..._—^.._—^.—.—..--....-.—,^.._._._—._.—. Z. Introduction and Study Overrievv................................................................... 5 3. EconomicTrends .,^~^'—'-~------'~~'''~-`^—'—'—'' 6 Historical Regional and Projected Regional Economic Trends..................................... 6 Population ^'''~—^'--'~--^-- - Employment........................................................................................................ A Estate Trends..-.—.^....—.,,^^...—.`^.......^..._.--...—... 10 Conclusions Regional ^,._.~,_..,,_..__...~,^__,..,._,.,,._...^._,_.,..—~....._.—. 11 4. General Aviation Conditions............................................................................ 12 General Aviation Demand Region........................... .— ......... ........................ 12 Regional General Aviation Trends....................... ........................... ............... 13 {` Y�ai (��`(�enters —_.....—^--~^.^.._..—.,..—.—.. 14 - Forecasts ofAviation —.—_—.—..--~^~—..-..—...... 15 Regional Regional Axdaƒb}n Facility Demand.............................. .................................. 16 5. Air Cmr�nD�arlo�z��o�Sazn�zt.._.—...—~.—....—.---.—.--...--...... 17 Objectives and Approach.- _,~__._'.,,,.,._.,._,__—.. .................. 17 dustry Overview '`~'''--~—^^~—'—'^~~~~--.—.......—.... 17 CargoAir Cargo Growth Trends ...-..—'..--.--....-.—.,..,._....------ 24 Regional Air Cargo Market ~'''^--'—^--`--~—'^—''-~--^^—''`'~'—'-'-- 29 Byron C�r�DIodeu�al...—_.^,—....^.--.—.-.'~—..^.—.—.--'—..—. 39 _/__ __^ " 6. Potential Other Roles.......................................................................................... 40 GeneralAviation........................ ......... .............................................................. 40 SpecialtyAviation...... .... ............... ................................................................... 41 Commercial....,...................................................,................................................. 42 7. Conclusion and Next Stepm---..—.—~----.—.—.-----.----.—. 45 DemandConclusions................................... .......................................... ........... 45 BLIC512 TABLES Page I Historical Population........................................................................................ 8 2 Historical Non Agricultural Employment..................................................... 9 3 Forecast Population and Employment........................................................... 9 4 Historical Manufacturing Real Estate Market Data ..................................... 10 5 Historical and Projected Warehouse Real Estate Market Data................... 11 6 General Aviation Activity................................................................................ 13 7 General Aviation Activity................................................................................ 15 8 Forecast of Regional General Aviation Activity (a)...............................--... 16 9 Air Cargo Carrier Types and Their Business Characteristics ..................... 20 10 Recent Monthly Cargo Data............................................................................ 26 11 Independent Cargo Growth Forecasts........................................................... 28 12 Leading San Francisco Bay Area Manufacturers.......................................... 32 13 Top 10 Export Countries from California Based on Dollar Value.............. 33 14 Comparative Airport Data Total Enplaned and Deplaned Cargo............. 34 15 Comparative Airport Data Carrier Breakdown............................................ 35 RUC512 ............................ ...................o.,..—�a................... ...... .......... ........................... ...... ..................... ........................................ . ........ .................... . ....... ................... , FIGURES - �=- IRegional Population........................................................... .............................. 7 2 General Aviation Demand Region.................................................................. 12 3 Dell Computer Corporation Supply Chain................................................... Ig 4 Air Cargo Services and Service Providers..................................................... 21 5 Recent Ton-Miles..................................................................... 25 8 Historical U.S. Cargo Trsffic.—......—.—..—..~—...^—,.`-----.....—.. 27 7 Air Cargo Demand Region .—..—.—..--..~'..—.—...._....,...,..'..._..... 30 8 San Francisco Area Shippers 31 9 Northern California UPS Sort Locations........................................................ 37 lO Airborne ExpressRegional Activity.......................... ............................. ...... 30 xoca2 1 BYRON AIRPORT MASTER PLAN PHASE 1 BYRON AIRPORT AIR CARGO FEASIBILITY AND ROLES 1. EXECUTIVE SUMMARY This Executive Summary summarizes key findings and conclusions for the Phase 1 Byron Air Cargo Feasibility and Roles Assessment,a preliminary assessment of potential airport roles for Byron Airport. Byron Airport,located in eastern Contra Costa County,is a candidate to accommodate growing aviation demand in the greater San Francisco Bay Area. The preliminary assessment was primarily focused on opportunities for air cargo activity,but also considered other airport develop- ment opportunities,including development of the existing level of general aviation activity. The development of the Airport,together with economic and infrastructure development of the surrounding area,should be regarded as a collaborative regional effort,involving counties, cities,and other relevant regional organizations. The scope of the preliminary assessment, as presented in the following sections, includes analysis of regional economic trends; general aviation conditions;air cargo market assessment and opportunities;and potential other roles. Key Findings and Conclusions • Cargo development at Byron Airport would be expected to follow a development cycle. - Large air cargo aircraft operations are unlikely in the next 10 to 15 years, and likely Airport activities in the short-term will result from trucking activity and the Airport's relationship to other airports; and - Feeder (or propeller) aircraft represent the most likely source of initial air cargo activity and incremental growth at the Airport,building on trucking activity. • Regional economic trends will likely support aviation growth. The east- ern section of Contra Costa County, in which the Airport is located,has experienced growth in residential and industrial development as popula- tion and business activity force new development outside more developed areas of the East Bay (specifically,Alameda County). This trend is expected to continue in the long-term. Diversified regional development,including office,light industrial,warehousing and logistical, and residential develop- ment would likely facilitate economic and aeronautical growth. 8UC512 _..............._................................................................................... _...................................................................................................................................................._........... __-----........ ........_ .................................................................... .... _......... ........_ ........ __.... _._.. --- ......... .......... ........................................................................................_. .._.... .._..... _....... _... 2 • The Bay Area's general aviation market has a long--term need for facilities. Corporate aviation has been and is expected to be one of the fastest growing general aviation market segments,and is expected to spur demand for aircraft hangar storage and for the fixed base operators that support such corporate activity. • The major factors that will affect the potential development of air cargo and general aviation are external to the Airport. - There is currently a low concentration of"cargo-generating"business and a low concentration of population and business relevant to general aviation,surrounding the Airport;and - Improvements of the regional road and highway network would be needed. • Developments on-Airport could support and enhance regional development and the potential for air cargo and general aviation. - Incremental development of general aviation and specialty aviation activity at Byron Airport would attract and facilitate aviation support services useful to potential air cargo feeder operators; and - Incremental development of nonaeronautical property at Byron Airport would assist in generating sufficient local business activity that could support air cargo development,including office and light industrial parks and distribution centers. Action Plan As discussed,air cargo and general aviation development at the Airport will require a combination of(1) favorable external factors and (2) on-Airport development. This section organizes these growth drivers into a summary action plan,recognizing that a regional collaborative effort would assess various growth.drivers such as surrounding industry,air cargo carrier facility requirements and airport facilities growth to progress air cargo, general aviation,and other aviation development. Regional organizations should strategically plan for the key growth drivers that are considered most important to provide the desired level and diversity of development for the Airport and surrounding area. This section summarizes key actions—and required external events—in a generally sequential order. It should be noted. that there is uncertainty particularly related to the timing of market-related events in this development process. This process is in three overall phases: (i.) Planning; (2) Market Action; and (3) Facility Development. Planning and Market Action are principally driven by Airport management actions BUC512 3 and Facility Development is principally driven by the market response to the Plan- ning and Market Action Phases. The sequence of events generally supports the current expectation that general aviation would be the first likely development area, followed by nonaeronautical property and then air cargo development. There may be overlap between certain actions;for example,promoting general aviation activity may involve facilities construction where appropriate. • Planning. Develop an Airport Master Plan appropriate for future general aviation development, including: - Identify and reserve land for corporate general aviation hangar and fixed base operator development; - Identify and reserve land for specialty aviation(e.g., aircraft maintenance, such as aircraft avionics,power plant and interior maintenance,or a corporate jet maintenance base); - Identify and reserve land for nonaeronautical development; - Identify and reserve land for airside and landside air cargo facilities; - Plan airfield requirements for expected air cargo aircraft and expanded general aviation use; and - Identify other facilities requirements, especially ground access. • Market Action. A regional collaborative effort, led by the County would promote general aviation,air cargo and other Airport development including: - Consider means to attract and incentivize aircraft owners and facility operators to transfer operations from other regional general aviation airports. Airport management should look to develop a base of general aviation operators----including fixed base and specialty aviation operators— as "anchor" tenants to attract other related aviation operators. Also, recrea- tional and training general aviation users should be attracted in order to increase operations and thereby the need for general aviation support facilities; - Implement a long-term nonaeronautical property development plan. Consider use of a real estate developer to conduct market research and then to market and develop nonaeronautical property; and - Implement a long-term air cargo development plan. Establish relation- ship with regional shippers and air cargo airlines (including relevant feeder airlines),advising of Airport facilities,cost structure,regional economic and road development. BUC512 4 - Undertake economic development activities to generate increased local business attractive to air cargo operators; - Develop plans to reduce regional transportation constraints; and - Consider potential for rapid transit extensions to the Airport. • Facility Development. This phase has the risk that expected demand may not occur consistent with the level of facilities; it is recommended that a phased approach be used,where facilities can be constructed to cater for short-term demand,which is likely to be more tangible and realizable. A strong public/private sector partnership is recommended to maximize investment opportunities for the private sector and reduce the investment requirement by local government. Specific facilities recommendations and phasing alternatives will be developed as part of the master plan. BUC512 5 2. INTRODUCTION AND STUDY OVERVIEW Leigh Fisher Associates was retained by Contra Costa County to conduct the Phase 1 Byron Airport Air Cargo Feasibility and Roles Assessment(the preliminary assessment), an analysis of potential airport roles for Byron Airport, as a foundation for an updated Master Plan for Byron Airport. Byron Airport is located in eastern Contra Costa County, and is a candidate to accommodate growing aviation demand in the greater San Francisco Bay Area. The preliminary assessment was primarily focused on opportunities for air cargo activity,but also considered other airport development opportunities. The scope of the preliminary assessment, as presented in the following sections, is summarized as follows: 1. Regional economic trends 2. General aviation conditions 3. Air cargo market assessment and opportunities 4. Potential other roles 5. Conclusions and next steps RUC512 6 3. REGIONAL ECONOMIC TRENDS This pr.elirninary assessment considers air cargo,general aviation and non- aeronautical development at the Airport. In developing assumptions pertaining to these types of development,it is useful to consider: 1. Regional trends in population and employment,which influence the general demand for aviation services. 2. Regional trends in the industrial (particularly light industrial/manufacturing and warehousing)real estate markets,given that general real estate demand trends will impact the demand for non-aeronautical facilities at the Airport. Historical and Projected Regional Economic Trends The Airport is located in the Oakland metropolitan statistical area (MSA),which comprises Alameda and Contra Costa counties,but both San Joaquin and Stanislaus counties,to the west,are also relevant. The Livermore Valley area,located just south of the Airport and which contains the cities of Livermore,Dublin, Pleasanton and Tracy,has historically been mostly suburban and rural in character but in more recent years is urbanizing at a rapid rate. Population Regional population data are illustrated on Figure 1,where each dot represents 500 people. As shown,population concentrations occur in the existing major urban areas and along freeways. Compared to Alameda and west Contra Costa County, east Contra Costa County is lightly populated. Table 1 summarizes historical population.growth,which shows that those counties with a lower population concentration(Contra Costa,San Joaquin and Stanislaus)have had higher historical growth rates than the more densely populated Alameda County,or California. This trend is expected to continue;as shown in Table 3,population growth through 2020 is projected to be significantly higher in these more lightly populated counties,in which the Airport is located. BUC512 7 Figure 1 REGIONAL POPULATION UAW �, r Y471,dt'N 0 J z , ♦ � � r'� down a ��"' ��'., a t "'' i � za i � ,� N st . ..r e.a.s, ...y yX� •t .�.' SioCf(FOn .. � 0irnpplitan I : SAN .(,%ONTRA \, \ � " JGAfdU1N u , ' -',r.OSTl4Byron Munict at x sstyref, + i "VG tUuhi / odes Y J • A L A;M ED A j / O City-cmti, r', ° STANISLAUS �m SAN \� .� N TA C L A F.A g x8e MATE 0. -5..: :AC ED I `, tt\ 'mak. `• ^ \ Y. f N Note: Each dot represents 500 people. 5 0 5 10 Graphic Scale In Mlles i BUC512 8 Table 1 HISTORICAL.POPULATION Byron Airport Region,California and the United States Average Population annual (thousands) change Region 2990 2001 1990-2001 Alameda County 2,277 1,463 1.2%fl Contra Costa County 804 965 1.7% San Joaquin County 481 579 1.7%n Stanislaus County 372 458 L99% Total 2,932 3,464 1.5% California 29,758 34,385 1.3% United States 248,791 298,867 1.2% Source: California Department of Finance and U.S.Census Bureau. Employment As shown in Table 2,Contra Costa County experienced historical employment growth from 1990 to 2001 at a rate similar to the average for the region. The data in Table 3 indicate that Contra Costa County is expected to realize more employment growth in the future---2002 to 2020—than the ether counties in the region. This indicates potential for aviation demand at the airports in Contra Costa County. sucs1a 9 3 Table 2 HISTORICAL NON AGRICULTURAL EMPLOYMENT I Byron Airport Region,California and the United States , Average Non-Agricultural annual Employment change Region 1990 2001 1990-2001 Alameda County 596,400 718,700 1.7% Contra Costa County 282,900 340,000 1.7% San Joaquin County 152,700 191,700 2.1% Stanislaus County 117,500 149,600 2_2% Total 1,149,500 1,400,000 1.8% California(a) -- -- 2.1% i United States -- -- 1.7% (a) Data for the state of California available from 1993 to 2001 only. Source: Department of Labor,Bureau of Labor Statistics, Employment and Earnings,Available online at http://www.bis.gov/sae/(state and local)and http://www.bls.gov/ces/ (national) Table 3 FORECAST POPULATION AND EMPLOYMENT Byron Airport Region Forecast total increase 2002-2020 3 Area Population Employment Alameda County 17% 26% Contra Costa County 27% 41% San Joaquin County 33% 30% Stanislaus County 40% 370% Total 25% 33% I 4 Source: National Planning Association,Data Services Inc., 2002 edition. BUC512 10 Regional Real Estate Trends The key types of commercial real estate relevant to potential commercial development at the Airport include: • Manufacturing/light industrial • Warehouse Consistent with regional population and employment growth,commercial real estate development has moved eastwards from the Bay Area (such as western Alameda County) into Contra Costa,San Joaquin and Stanislaus counties. In general,commercial real estate demand growth,as measured by rental rate and property absorption levels,increased in the Bay Area and the Airport Region through 2000,and then declined between 2001 and 2003,principally as a result of the regional economic downturn. At present,the immediate outlook is uncertain, but the consensus from available data is that real estate demand is expected to increase within the next 3 years. Manufacturing. Data provided by BT Commercial's Bay Area Manufacturing Report indicates that manufacturing facility vacancy rates have continued to rise through 2003 while rental rates continue to fall,consistent with the regional eco- nomic downturn. Historical data on vacancy rate, total inventory, and average rental rate for the East Bay market are shown in Table 4. Table 4 HISTORICAL MANUFACTURING REAL ESTATE MARKET DATA East Bay 1999 2000 2001 2002 2003(a) Vacancy rate 2.70/o 2.2% 3.9% 5.2% 6.0% Inventory(b) 2,553 2,114 3,831 5,151 5,913 Average rental rate $1.18 $0.91 $0.20 $0.56 $0.52 (a) Year to date through 2nd quarter. (b) 1n thousands of square feet. Source: BT Commercial,Bay Area Manufacturing Report,2Q-03. For.Bast Bay 1-80/1-880 N corridor,comprising the cities of Richmond,Berkeley, Emeryville,Oakland,San Leandro,Hayward,Union City,Newark, Fremont and Livermore. avcs7z 11 Warehouse. Data provided by BT Commercial's Bay Area Warehouse Report shows that,consistent with manufacturing real estate trends,historical warehouse vacancy rates increased through 2002, as a result of the regional economic downturn. Historical average rental rate data,presented in Table 5, shows a decline between 2000 and 2003. Real estate demand was projected at the time of this report to increase from.2002 onwards,as shown by increased vacancy rates,notwithstanding increased inventory. Table 5 HISTORICAL AND PROJECTED WAREHOUSE REAL ESTATE MARKET DATA East Say Historical Projected 1999 2000 2001 2002 2007 Vacancy rate(a) 6.7% 6.4% 9.1% 10.1% 7.5% Inventory 109,500 111,700 112,800 1.13,700 1.19,300 Average rental rate(b) $0.41 $0.54 $0.46 $€1.39 n.a. i Note: Inventory data displayed in thousands of square feet. Sources: (a) Property&Portfolio Research,Inc,East Bay Warehouse Market Report (obtained online at www.ppr-research.com on 2/17/03). Actual through 2001. (b) BT Commercial,Bay Area Warehouse Report,2Q-03. For East Bay � I-80/I-880 N corridor,comprising the cities of Richmond, Berkeley,Emeryville,Oakland,San Leandro,Hayward,union City,Newark,Fremont and Livermore. Comparable data for Modesto and Stockton were unavailable. Recovery in the absorption of warehousing and manufacturing /light industrial park space is tied to recovery of activity in the general office and industrial markets in California and.in the nation. As these markets are expected to regain strength through the remainder of 2003,business/industrial parks will likely begin to experience higher absorption and lower vacancy rates accordingly. Conclusions Key conclusions regarding economic and business trends and real estate demand in the Area include: 1. The eastern section of Contra Costa County, in which the Airport is located, has experienced growth in residential and industrial development as population and business activity force new development outside more developed areas of the East Bay (specifically,Alameda County); BUC5]2 12 2. Industrial property vacancy rates were high between 2001 and 2003 but are expected to reduce consistent with the recovery of the national and regional economy; 5. In the short-term (at least the next 5 years),given the relatively low density of population and business activity in the immediate vicinity (i.e., one-hour driving time) of the Airport,such growth would not likely lead to significant additional levels of commercial aviation activity at the Airport; 4. In the long-term,the historical shift in Bay Area population, economic and business activity into the East Bay will likely continue,and will likely benefit aeronautical and nonaeronautical development at the Airport. 4. GENERAL AVIATION CONDITIONS General Aviation Demand Region Figure 2 summarizes the general aviation demand region,which comprises Alameda, Contra Costa,San Joaquin and Stanislaus counties. It was assumed, given the pres- ence of other general aviation airports in the region, together with a need for airfield proximity by most general aviation users,that the main demand for general aviation facilities would came from users within a one-hour drivetime from the Airport. Figure 2 GENERAL AVIATION DEMAND REGION imp, Ar � l �¢ •:•i�b7Y.Y,aR:�"" s r+wi ,�.�is, ., r: yam. Y e '.' �+iMYihN'�'' 'thiels• •' AWnlNpat�.• •• eYn10Y• ••�•�• �t ryl /f MunleiPel r ';;County :t is i.F:i A i \ 2 � CnvmgtlmatUfrom By.. m �.5 4 3.5 P 3.5 ] ly G.Phlc Stele h MN. m HUGSi2 13 Regional General Aviation Trends Regional airports are defined as Byron,Concord Buchanan Field, Hayward Executive, Livermore Municipal,Modesto City-County,Oakland International, Stockton Metropolitan,and Tracy Municipal airports,and are shown in Figure 2. Historical Aviation Activity. General aviation activity data for 2000 at regional airports are presented in Table 6. In 2000, general aviation aircraft activity at Byron Airport comprised approximately 61,000 operations and 120 based aircraft. Table 6 GENERAL AVIATION ACTIVITY Selected Regional Airports 2000 GA Based Airport operations aircraft i Byron Airport 61,000 120 Concord Buchanan Field 213,656 579 Hayward Executive 170,240 456 Livermore Municipal 235,265 547 Modesto City-County 71,546 176 Oakland International 283,324 370 Stockton Metropolitan 73,258 229 Tracy Municipal 55,382 120 Total 1,128,671 2,582 Note: General aviation operations only(excludes air taxi,commuter,and military operations). Sources: Byron Airport: Contra Costa County Airports Land Use Comprehensive Plan, December 2000. Other airports: FAA,Office of Aviation Policy and Plans(APO),Terminal Area Forecast(TAF),2001. BUC512 "`. __...................................................................... ...................................................................................................................................................................................................................................................................................................................... ........................................................................................................... _......_...... ._...... _.. ..._.... __.._ _...... __................................................. .................. _ _........... . __.._. 14 Corporate Activity. Local industry commentators have indicated that corpo- rate activity has increased significantly in the 1990s, as a result of companies using in-house aviation departments,increased chartering of corporate aircraft by local corporations, and growth in fractional ownership programs. In addition, the events of September 11,2001,have increased demand for corporate flights due to the perceived increase in safety and the avoidance of security-related delays at larger airports. Flight Training. Flight schools that have developed flight training facilities in the area include American Flyers(Hayward) and Sierra Academy of Aeronautics (Oakland). Fixed Base Operators (FBOs). There has not been significant development of FBOs in recent years at area airports,and the current market is highly competitive. Major regional FBOs include Hayward jet Center (Hayward), Kaiser Air (Oakland), Concord jet, Pacific States Aviation and Sterling Aviation(Concord),Sky Trek Aviation (Modesto), Stockton jet Center (Stockton) and Trajen Flight Support (Hayward). Comparative Major GA Centers Table 7 summarizes historical general aviation activity in comparison with historical population for selected major Metropolitan Statistical Areas (MSAs) in the United States. According to the FAA,the general aviation demand region for the Airport (which includes Alameda,Contra Costa,San Joaquin,and Stanislaus Counties)had 1,172,456 general aviation operations and 2,710 based aircraft in 2000. The number of general aviation aircraft operations in the Byron General Aviation Demand Region is comparable to that at certain major MSAs such as Phoenix and Houston, lower than MSAs such as Dallas, and higher than MSAs such as Denver and Kansas City. This is reflective of factors such as MSA size(here measured in terms of population) and the relative importance of general aviation to the local economy. For example,Phoenix (a major flight training center) and Boise (the largest MSA in a relatively rural region of the U.S.)have the highest level of general aviation opera- tions relative to MSA population. The western portion of the Byron General Aviation Demand Region (which includes Alameda and Contra Costa Counties) also has an extremely high level of general aviation operations relative to population, reflective of major general aviation airports such as Concord, Livermore and Oakland. BIJC512 15 Table 7 GENERAL AVIATION ACTIVITY Selected Metropoli 16 Table 8 FORECAST OF REGIONAL GENERAL AVIATION ACTIVITY(a) Average annual Historical Projected change 2000 2010 2000-2010 Aircraft operations 1,128,671 1,222,958 0.8% Based aircraft 2,582 2,888 1'.l% Notes: General aviation operations only(excludes air taxi,commuter,and military operations). (a) The region comprises those airports listed in Table 6. Source: PAA,Office of Aviation Policy and Plans(APO),Terminal Area Forecast(TAP),2001. Regional Aviation Facility Demand Interviews with airport management in the area indicated that the following trends were relevant: • Corporate aviation has historically been one of the fastest growing general aviation market segments,and this trend is expected to continue in the long-term. In particular, demand for box hangars appropriate for corporate aviation has been very strong. The high growth in the corporate aviation will likely cause some displacement of corporate flight activity from San Francisco,San Jose and Oakland International airports to other regional general aviation airports. • There has been and will continue to be,interest in FBO development at regional airports,particularly if this is associated with growth in corporate aviation storage. The recent economic downturn has reportedly reduced this interest but the long-term strength of the corporate aviation market is likely to encourage this growth. Also,specialty aviation (e.g., aircraft avionics companies maintaining flight instruments and communications systems) services are likely to continue to grow,providing niche services that complement FBOs. • Air taxi activity,while generally a small percentage of regional aircraft operations,has grown steadily,partly as a result of increased demand for B�;csaz 17 aviation service that would avoid regional traffic congestions and security- related inconveniences associated with travel at San Francisco,San Jose and Oakland International airports,which is expected to continue to grow. • Population.increases in the demand region and security concerns have assisted growth in corporate aviation and (at Stockton only) commercial passenger service. There has been significant population growth in the Byron area, and this would likely increase aviation activity growth in the long-term. « Flight school activity has not grown significantly, as a result of the economic downturn,recent increases in aviation fuel prices, difficulties in the airline industry,and security concerns. The growth outlook in the short-term is limited. • Recreational flying has been similarly affected by the regional economic downturn and increased fuel prices,and the growth outlook is tied to the local economy. Demand for T hangars is generally strong,although there is a significant amount of tie-down space available. • Certain regional airports are considering or planning to open business parks on airport property, such as at Stockton Metropolitan Airport. 5. AIR CARGO MARKET ASSESSMENT Objectives and Approach The objective of this preliminary assessment is to determine regional air cargo demand,the competitive landscape of the airports in the area, and the viability of the Airport accommodating cargo activity in the future. We approached this work by conducting interviews with the managers of manufacturing companies,air cargo airlines, trucking companies,and logistics providers at the local,regional, and national levels as well as acquiring cargo industry data through airport records, governmental data, and Leigh Fisher Associates' proprietary data and models. The following section provides: (1) an overview of air cargo industry trends, (2) an analysis of the local cargo market with regard to recent economic conditions,the new (and proposed) security requirements, and air cargo industry consolidation, and (3) conclusions regarding the implications for demand for airport cargo facilities at the Airport. Cargo Industry Overview The cargo industry is an integral element of global world trade, and as such is sub- ject to the same dynamic conditions as overall world economic and trade conditions. 13UC512 18 To assist in the understanding of the market forces that affect air cargo demand in the region and at the Airport,the following industry overview covers (1) the eco- nomic basis for cargo demand, (2) the air cargo industry structure,and (3) the implications of new cargo security requirements. Economic Basis for Cargo Demand. Fundamentally, air cargo is a subset of world trade,which is directly related to world economic growth. Economic global- ization and associated growth in world trade has produced substantial historical growth in U.S. air cargo (average annual growth rate of 7.2% over the last 20 years according to the American Transport Association),particularly with the rapid growth of high-value technology industries during the 1990's. Evolution of business and consumer models emphasizing speed of delivery has led the fastest-growing segment of the air cargo industry,the express and 2nd day delivery market. This historical growth in U.S. air cargo has resulted in expansion of the capacity of the industry,in terms of companies,services,aircraft, and cargo facilities. While there has been an increasing trend to the use of ground transportation for short- haul cargo shipments,it is still expected that there will be long-term growth in air cargo activity associated with economic globalization and expansion. Many of the world's leading companies (manufacturers,high-tech producers, and telecommunica- tion and information systems providers)have developed sophisticated worldwide networks. Regional offices and manufacturing plants have been developed and sites located to reduce system costs and increase customer service---accommodated through air transportation and sophisticated inventory management. The use of airfreight is a key element of corporate strategy to maximize competitive advantage while controlling total distribution costs. Companies that produce medi- cal instruments, computer component parts (integrated circuit boards,processors, memory chips),and other high-value products have little choice but to use air cargo services to maintain supply-chain velocity and keep rapidly developing products in the mainstream of dynamic industries. The use of airfreight is a key element of corporate strategy to maximize competitive advantage while controlling total distribution costs. Companies that produce medi- cal instruments,computer component parts (integrated circuit boards,processors, memory chips),and other high-value products have little choice but to use air cargo services to maintain supply-chain velocity and keep rapidly developing products in the mainstream of dynamic industries. Companies like Hewlett-Packard,Dell Computer, and other manufacturing companies have focused on incorporating many critical manufacturing functions in competitive wage regions around the world, and air transportation provides the only consistent and reliable transportation option to seamlessly link these corporate locations. aucsiz .9 One of the best examples of how a major company utilizes expedited transportation is Dell Computer's manufacturing process. Component parts may be initially acquired from one continent,assembled on another,and finally sold on a third. Figure 3 illustrates the multiple component parts,and where they are manufactured, that are included in the production of a single Dell computer. Other major manu- facturers like Hewlett Packard,Nokia, and Sony have very similar logistics networks and require worldwide inventory strategies. Companies such as Dell and Hewlett Packard do not source parts of this nature until a customer has ordered a computer with specific features. Therefore,it is not just the products and their marketing teams competing against each other,but also Dell's supply chain competing with that of Hewlett Packard. The implication of this growing trend is that many of the major manufacturers and shippers will require more direct shipping to points of origination and consumption. Some shipping managers have mentioned the need to buildup inventory at critical distribution centers to insulate their companies from transportation stoppages such as those experienced following the events of September 11, 2001. However, it is expected that the economic advantages of an efficient supply chain will continue to influence the use of air cargo. Figure 3 DELL COMPUTER CORPORATION SUPPLY CHAIN Ra �a IN ° aL r FAANG � S SOtJt113lard a air� r��r` �a� t� 4 q.3��`��ae�` .a�''�� rs✓ 3 E � �y � �"�`_� ��' £=Say'c�},�2 a ,�*�� i�s .su:rf ;"• �` � S5 ,t� i.. 01 Pram JAPAN J S t ran-,a... + ' ' 4^rl11f4A cM NE3ba Power SNpPtylrlvataLabet y r " " , . f ,�to !! t1 e.qp.�{1 .... ..--.I{.y...:. ttU •!��t.lM 3 923 1 ,3' TA�+fYit.3 F V;d4o U'atef tRla747ar$ r'� Nafviork IkI-=om Mtora�rocaa sora ntbl M riIt'fi06 LhW GoahBan Frwate Labet M XIGO a . .• Keyboard-Keytronle 3 3 MALAYSIA' FIapPY PftVIoSorey a SINGAPORE ! S051 Gard.Adapt1 ,.(•"+'+ Dlsk.Drtvaa-�Yeatertt DigitaE BUC5t2 20 Air Cargo Industry Structure. The U.S. air cargo industry is a diverse collec- tion of companies and services,With differing business strategies,market roles, and ability to respond to changes in the economic and operating environment. The following discussion describes the key participants,their respective customer base, networks that enable Worldwide globalization,and the various types of modal competition that exists Within the industry. Table 9 provides a summary of the different types of cargo airlines and their associated cargo capacities. Table 9 AIR CARGO CARRIER TYRES AND THEIR BUSINESS CHARACTERISTICS Air cargo carrier Desired airport types Characteristics Illustrative carriers Customers characteristics Belly Baggage holds of Delta,Continental, Wholesale, Passenger airport passenger aircraft US Airways mail,retail Mixed Baggage holds of Northwest,United, Wholesale, Passenger airport passenger aircraft and Lufthansa,EVA mail,retail main decks of all-cargo aircraft Integrated Main decks of FedEx,UPS,DHL Retail Airport near all-cargo aircraft population All-cargo Main decks of Challenge Air Cargo, Wholesale Airport near all-cargo aircraft Cargolux,Evergreen population In addition to the various air cargo carriers summarized on Table 9, there are other operators that participate in the transportation of cargo,including freight forwarders and motor carriers. Figure 4 presents an illustration of the services provided by the various types of operator,and depicts how these key components conduct business as they transport cargo from the shipper to consignee. BUC512 21 Figure 4 j AIR CARGO SERVICES AND SERVICE PROVIDERS 1 I=d liiaprai8d- Ndrs�tnt�gratad Airline Stirrer ) FaY �(6) �btav6riiar ta) Otredt(d) Carrier (Fat3Ex,UPS,D4) (Eagle USA,Emery.USPS) :. {Circa,t5anzas f';K UA,D (Ysilmtl Fro ht, cargo 6,191.1(Shipper) Pickup Integrated Integreted (ntegMed 6urFer FN . Road Feeder ' Mon. aForenrdenv Carrier m' Airpot3aSo- A3rpdrt cerrietd Air Cantor Air Carrier Air Carr�r ArCurter motor Mot" T,10ertatlon Carrier Carrier Cteardfat e'and iMeg vdad Intagratad indopandem independent ndepanda d fntagtated tntla D''o Very CrMer ForawrcMr Ageni(d} Agent(d) Agent{d) Carrie, cargo Ago�n dj t r Cargo 0"tin.00n{Conelgnee) i, LEGEND U.S.Domestic Market only i Notes: (a) Integrated carriers are all-cargo air carriers that own and operate all the equipment and services necessary to provide complete door-to-door customer services. (b) Integrated forwarders are companies that provide all the services necessary to provide complete door-to-door customer services,typically using air carriers for airport-to-alport transportation, (c) Non-integrated forwarders are companies that consolidate freight and arrange l complete transportation services using air carriers for airport-to-airport transportation and other comparies for pickup and/or clearance and delivery. (d)Independent agents are comparies providing only cargo clearance and/or delivery Source: services to air carriers and non-integrated forwarders. Leigh Fisher Associates,September 2003. The Integrated Carriers. The integrated carriers (Airborne Express,BAX Global,DHL Worldwide Express,Emery Worldwide,FedEx, and United Parcel Service)have been rapidly increasing their domestic and international market share over the past decade with their sophisticated transportation networks and multiple service offerings. Sophisticated sorting equipment, closed-loop business strategies, and precisely choreographed networks of local stations and regional sorting hubs ensure the delivery of shipments to virtually every address in the domestic U.S. overnight and all worldwide destinations in two days. These companies will continue to grow in size and resultant customer base as their expansion plans (operational networks, facilities, worldwide affiliates, and acquisitions) are implemented. sUcsr z 22 However,while delivery speed and reliability—two qualities that air express pos- sesses in abundance– are prized by business and consumers more than ever before, other modes of transport are increasingly providing them at a cost below what is compensatory for pure air networks. The savings from ground transportation can be substantial,in some instances 10 to 12 times cheaper than air transportation. For this reason,every major U.S. integrated carrier has invested heavily in the develop- ment of time-definite regional and transcontinental surface distribution networks. For example,FedEx recently acquired American Freightways and Caliber Group (RPS and Caliber Logistics), two of the largest independent trucking companies in the United States and UPS continues to expand its Logistics group with additional infrastructure investments. These investments were made well in advance of September 11,2001 and, in fact,helped to insulate these companies from experienc- ing even more severe service disruptions during the recent worldwide economic volatility. Freight Forwarding Community. Typically,freight forwarders are intermedi- aries that link shippers with freight carriers (airlines,trucking companies,railroads, ocean carriers) without owning the actual means of transport. Freight forwarders attempt to (1) consolidate shipments from multiple customers and (2) leverage their larger volumes with the transportation providers to lower the carriers' rates for transport. Forwarders are a vital component of the air cargo industry because they can organize freight transportation more efficiently and cost-effectively than end- customers themselves, and they take responsibility for organizing and monitoring door-to-door delivery. Finally,by pooling traffic from multiple shippers, the forward- ing community helps produce smoother and more predictable demand patterns for the airlines,which is a main reason why this community is so vital to the industry. The forwarders'profit is derived primarily from the spread between what the shipper pays to the forwarder and what the forwarder pays to the carrier. The more space purchased,the lower the forwarder's "buy" rate;because forwarders do not own aircraft they must deliver high volumes to obtain the best rates. As multiple shipments are gathered for similar destinations (regional or city specific), the for- warder attempts to leverage its buying power with the airlines by creating large consolidations (multiple pallets, containers, etc.). As a result, the freight forwarding community is strongly attracted to the cargo capacity in the belly space of widebody passenger aircraft on international routes at airports that serve international gateway cities. At passenger gateways,international freight forwarders (such as Danzas, Expeditors International, and Kuehne &Nagel)have more opportunities for large consolidations as well as multiple carrier options from which to choose to transfer those large shipments. Carriers that concentrate aircraft capacity at large gateways often negotiate competitively priced guaranteed cargo space contracts with the freight forwarding corporate offices and therefore attract volumes of cargo activity from across the country. BUC512 23 Notwithstanding the rapid growth in activity by integrated carriers in the U.S., the freight forwarding community is responsible for over three-quarters of the world's international freight shipments and plays an important role in niche and regional domestic U.S. cargo activity. The freight forwarding community relies on the wide range of destinations and the lower cost capacity on passenger aircraft to handle daily shipments as well as the main deck capacity of the freighter aircraft to accom- modate larger consolidations and outsized shipments. This relationship has become even more important as the cargo capacity in the belly holds of passenger airlines has become somewhat"unreliable" due to schedule reductions from financial performance,political unrest in the Middle East (e.g.,Operation Iraqi Freedom), and medical outbreaks in Asia (e.g.,SARS). Cargo Security Requirements. New security standards imposed by the federal government following September 11,2001,have already had a significant impact on passenger and cargo transportation. While much of the focus is on the processing of passengers and their baggage,the pending restrictions on cargo operations are also significant. Ensuring that cargo is safe—that it does not contain explosives or bio- logical or chemical agents--takes time,and makes it more difficult to coordinate shipments on the tightly scheduled operations of passenger aircraft. Prior to September 11, there was already a shift in cargo market share from passenger aircraft to cargo aircraft,with the rapid expansion of integrated carriers like FedEx and UPS,but following September 11 the rate of changeover has accelerated. Existing and potential elements of the new security regime include: 1. The "known-shipper regime"which currently requires air carriers to verify and validate airway bills and other paperwork,to recognize the company who is tendering freight, and to be able to verify that the particular shipper has been in business for a sustained period of time. The all-cargo and integrated carriers are being required to maintain more detailed records and screen shippers,but not to the extent of the passenger airlines. 2. A possible requirement for quarantine of belly freight for up to 24 hours,for scanning and depressurization. The more likely security requirement that will increase total transit times is the 24-hour customs rule. Already in place in the vessel movement industry, this requirement would require shipments to have manifests generated 24-hours ahead of transportation. 3. A possible requirement for belly freight to be opened at the airport and inspected, encouraging the use of freighter aircraft to avoid the process. Security concerns have affected airmail as well as air freight. There has been a total restriction on mail over 16 ounces being placed in the bellies of the passenger aircraft. This alone has significantly affected mail volumes (upwards of 20%). In BUC512 ------------------ -----_-------------------- ---------_.._ ...-...-... .._.__...-- -......... ......... ......... ......... ......... ......... ......... ......_. ......... ......... ._...... ......... ......... ............................................................................................................................................................................................................................................................................................................................ 24 addition,and outside of newly imposed security requirements,FedEx's contract with the United States Postal Service (USPS) has been fully implemented and FedEx now carries a vast majority of the express product for USPS. This development has impacted the total mail volumes previously carried by other airlines. Although the existing and potentially new security regulations described above would make it more difficult or less convenient to use the belly space of passenger aircraft for air cargo,two considerations are important to note: (1) there is consid- erable uncertainty regarding the final form of any new security regulations, as well as the duration,and (2) there will continue to be belly cargo space available on passenger airline aircraft, and strong incentives to adapt to changing conditions in order to generate revenue from air cargo. However, depending on how arduous the new security regulations, airports that cater more towards the efficient transfer of cargo with all-cargo freighter aircraft,could realize serious attention from carriers such as FedEx and UPS. Air Cargo Growth Trends Notwithstanding the recent declines in activity since late 2000,air cargo has been a growth industry for the past several decades. In the following section,the implica- tions of recent events are assessed in relation to the expected long-term growth trends in the industry. Recent Cargo Activity. The confluence of the worldwide economic recession, the threat of terrorism and the implications from the events of September 11,2001, the recent SARS scare in Asia,and the current financial condition of the aviation industry as a whole has resulted in a short-term reduction in air tonnage levels. However,recent results (see Figure 5) show that a resumption in long-term national and worldwide economic growth,with a resulting increase in cargo demand and the need for airport cargo facilities,is already at hand. Worldwide cargo activity grew at 6.2% and 7.1%in 1999 and 2000, respectively, but declined 5.9% during 2001. This decline was the result of the simultaneous U.S. economic slowdown,the collapse of the "technology bubble", and the tragic events of September 11,2001. BUC5?2 25 As indicated in Figure 5,signs of recovery have emerged in late 2002 and 2003, largely stemmed by trade between the U.S. and Asia, as well as domestic U.S. traffic. Specifically, data from the American Transport Association (ATA) indicate that in 2002, total worldwide cargo ton miles grew 3.7%over 2001 totals and early 2003 data show similar results with a leveling-out effect overall. Figure 5 RECENT TREND—CARGO TON-MILES 25%i 2000` 2001' 2002 2003 t 20 .................. ,... .. . ...._I... ........_..,..... ...................... 's ......;:. 1 t i L C 0 t � 1 � j 1 i i t ' t t E i 7 z m L � _15 .... �.;._....... ....... .;. i d i i i r a t. ei 25 .....s , ,. .r.... ....,... �. t _33%_ ��`' ,A ro� ro� ro�o tro d` b i�,C. F rorooro �� J®�. rororo ,a `��. a$�t• ro�,o �qm ` � ym� ,ao 3 5eQ @° � H U ra Source: American Transport Association Table 10 presents data on monthly cargo activity from January 2002 to February 2003, along with the percentage increase/decrease from the previous year. Of note, the precipitous drop in mail volumes is due in part to the recent security regulations of mail on passenger aircraft as well as the FedEx contract. (FedEx is contracted to transport the more time-sensitive,higher yielding U.S. Postal Service mail volumes and the remaining mail is being transported by truck.) 6UC512 26 Table 10 RECENT MONTHLY CARGO DATA Worldwide Totals Freight Mail Total 2002 January 1,579,535 (2.7°1x) 119,916 (45.9x1,) 1,699,451 (7.9%) Feb 1,563,245 (4.5°1x) 109,002 (42.7°/x) 1,672,247 (8.5°1x) Mar 1,841,165 (3.4°1x) 126,895 (41.2°/x) 1,968,061 (7.2%) Apr 1,763,927 5.5% 114,6822 (43.3x10) 1,878,610 0.2% May 1,868,564 5.6% 113,857 (43.9x10) 1,982,421 0.5% Jun 1,863,548 6.9x1° 105,664 (44.7%) 1,969,212 1.8% Jul 1,834,571 11,1% 97,720 (46.9°1x) 1,932,291 5.3% Aug 1,882,340 7.9% 92,058 (48.7°(x) 1,974,398 16% Sep 1,827,305 20.5% 84,292 7.1% 1,911,597 19.9% Oct 2,157,375 20.4% 99,798 (4.3x/2) 2,257,172 19.0% Nov 1,975,496 15.2% 107,881 (1.4%) 2,083,377 14.2x/0 Dec 1,795,929 8.3x1° 133,281 8.9x1° 1.,929,210 8.4% Total 21,953,001 7.5% 1,305,046 (34.8%) 23,258,047 3.7x/0 2003 Jan 1,700,639 7.7% 115,682 (3.5°1x) 1,816,321 6.9% Feb 1,645,488 5.3% 100,336 (8.0°1x) 1,745,824 4.4% Mar 1,907,449 3.6x1° 110,041 (13.3°/x) 2,017,490 2.5% Apr 1,794,564 1.7x/0 118,893 3.710 1,913,458 1.9% May 1,813,705 (2.9x10) 113,505 (0.3°1x) 1,927,211 (2.8x1%) Jun 1,776,842 (4.7ix) 100,822 (4.6x1%) 1,877,663 (4.6°1x) Source: American Transport Association. Historically, there have also been periods of decline in cargo activity associated with economic recession and events such as the first Gulf War. Figure 6 shows the long- term trend in U.S. cargo traffic from 1970-2002. As shown,temporary periods of decline have historically been followed by resumption of growth,and the cargo industry has continued to produce growth over the long-term. AUC512 27 Figure 6 HISTORICAL U.S.CARGO TRAFFIC 25,000 ------- ------------ ------- 20,000 ----- -------- ------- ------ ...... ---------- 15,000 ......._---------- -------- 0 yr 0 10,000 ....................... ------ 5,000 ............ ............ ....... ------ 0 00 Year Economic Recession Source: Air Transport Association of America,February 2002. L Growth Outlook. Projected economic recovery should, over the next several years, counter both the air cargo industry downturn,which began toward the end of 2000,and the added burden from collapses in the heavily air-cargo-dependent information and telecommunications technology sectors. Independent forecasts prepared by the Federal Aviation Administration (FAA) and the major aircraft manufacturers (Airbus and Boeing) indicate long-term growth rates of between 5.0% and 6.4%per year for the cargo industry,based primarily on anticipated underlying worldwide economic growth. These forecasts, summarized on Table 11, were prepared with the recent economic slowdown, airline financial condition, and implications of the events of September 11,2001,taken into account. RUC512 28 Each of these forecasts also calls for an expansion in the use of freighter activity through their forecast period. In order to accommodate both cargo activity and freighter aircraft operations increases,airport cargo facilities will require proper development plans and timing of execution. Table 11 INDEPENDENT CARO©GROWTH FORECASTS Forecast period Annual growth rate Airbus(a) 2002-2022 5.5% Boeing(b) 2001-2021 6.4% FAA(c) 2003-2014 5.0% (a) 2002 Global Market Forecast. i (b) 2002 Market Outlook (c) FAA Forecast,2003-2014. Summary. Key points regarding the long-term growth outlook for air cargo include: 1. Historically,air trade,in terms of both value and tonnage,has grown rapidly as aircraft take market share from slower modes such as ships. As air freight tonnage represents only approximately one percent of intercon- tinental trade tonnage,even relatively minor movements in market share translate into significant air freight growth. The continued worldwide globalization is expected to continue to be accommodated through air transportation—resulting in a continual absorption of market share from the shipping industry. 2. It is expected that there will be a resumption of global economic growth and therefore demand for cargo services. Recent air cargo tonnage results show that the recovery has already begun and is likely to continue. 3. In the long-term,it is expected that economic growth will be more impor- tant than the localized events such as Operation Iraqi Freedom, SARS outbreak,or events of September 11 in determining levels of cargo activity and demand for airport cargo facilities. BUC512 29 4. There are many possible changes in segments of the cargo market. Segments such as integrated and all-cargo may grow more than belly. However,because of its competitively priced cargo capacity,relative to main-deck freighter, the cargo capacity that exists on passenger flights will always be attractive and utilized by the air cargo industry. Regional Air Cargo Market Air Cargo Demand Region. Figure 7 summarizes the Byron air cargo demand region, together with a drivetime radius analysis. It was assumed that the main demand for air cargo service would come from shippers and receivers within Contra Costa County,plus the three surrounding counties of Alameda, San Joaquin and Stanislaus (the four-county area) that are already using existing air cargo airports. Additionally,given the extensive use of trucking,the air cargo study region would also extend to cover major regional shipper concentrations (as will be discussed later in Section 4), in locations such as Sacramento,San Jose and Stockton,who could potentially use air cargo services at the Airport. As shown,Byron lies within an hour of other major regional communities that would have demand for air cargo service. The San Francisco Bay Area cargo market is one of the leading high-tech (develop- ment and production)markets in the United States along with Austin,Texas, Boston, Massachusetts, and Northern Virginia. The Bay Area's concentration of companies that lead and shape the world's computer and information and technol- ogy industry will continue to generate air-eligible products, and importantly, require the transportation of cargo activity. Much of the Bay Area's cargo production is generated by the base of companies that are associated as the world's leaders and have locations throughout the region as shown in Figure 8. In Table 12,specific companies, their plant locations, the number of employees,and the type of air-eligible goods that they produce are listed. These companies have a large part in California's trade with international countries— Table 13 illustrates the top ten trading partners with California and as expected,half are Asian countries. BUC512 34 Figure 7 AIR CARGO DEMAND REGION NAPA sY ( � MEN TO AMAD!R 37 / Y', Pa' ... v. za � ,I ,\ 6 STANISLAI%. J i MATEDN?`A CLARA LEGEND N Driving time tolfrom Byron 0-i hour 1-2 hours 5 0 5 10 2-3 hours Graphic Scale in Miles BUC512 31 Figure 8 SAN FRANCISCO AREA SHIPPERS POLO j i � 1 M I SONOMA MAPA � . 'SRnta:'Rc1q 1, � SACRAMENTO iAMAbOR , MARIN r, COSTA w CONTRA SAN OAOUIN � ,r RKY y rb � _ 44,QfNUbn ALAMEDA r *F a 7 3At1 SANTA CLARA t� MATED `00 d4tSRCEf1 SANTA n q CRUZ i LEGEND ' San F GiS60 Arca Shippos EMPIOVaus: p t: >2000 500-M 20f•459 450.200 .. 404.149 BUC512 32 Table 12 LEADING SAN FRANCISCO SAY AREA MANUFACTURERS Air-Eligible Products March 2003 Compal Name Eniployees C Product Descrijtion Applied Materials 10,000 Santa Clara Wafer fabrication systems&services Apple Computer 10,000 Cupertino Computer products&technology Cisco Systems 9,000 San Jose Internetworking systems,LAN&WAN networks Hewlett-Packard 8,000 Roseville Computer systems&peripherals Lockheed Martin 7,000 Sunnyvale Missiles,space systems&commercial satellites Solectron 6,700 Milpitas Manufacturing services to electronics OEMs Intel 5,709 Santa Clara Semiconductors,computer chips,motherboards National Semiconductor 5,100 Santa Clara Semiconductors&integrated circuits United Motor Manuf. 5,000 Fremont Automobiles&trucks IBM 51900 San Jose Electronic data processing systems Hewlett-Packard 4,000 Cupertino Printers,computer systems,networking products Loral Space& Designs&manufactures communications& Communications 4,000 Palo Alto meteorological satellites Compaq 3,500 Cupertino Computer peripherals&terminals Sun Microsystems 3,500 Palo Alto Computer workstations/hardware/software Advanced Micro Devices 3,100 Sunnyvale Integrated circuits and microprocessors Agilent Technologies 3,000 Santa Clara Test/measurement equipment;electronic comp. J D S UniPhase 3,000 San Jose Fiber optic isolators,couplers,controllers Intel 2,600 Folsom Semiconductors,microcomputer chips Nortel Networks 2,500 Santa Clara Data networking products,high-speed routers Sonv Electronics 2,500 San Jose Computers&peripheral products LSI Logic Corp 2,400 Milpitas Semiconductors&microprocessors Agilent Technology 2,000 Santa Clara Electronic tests&measurements components Hewlett-Packard 2,000 Palo Alto Computer systems&peripherals Lucent Technologies 2,000 Alameda Telecommunications equipment Levi Strauss&Co 2,000 San Fran. Apparel(Levi,Dockers&Slates) :KLA-Tencor Corp 2,000 San Jose Semiconductors&measurement equipment Read-Rite Corp 2,000 Fremont Recording heads and head stack assemblies Internet Security Corp 1,994 Foster City Computer security equipment Acuson Corp 1,800 Mtn View Medical diagnostic ultrasound imaging equip, Chiron Corp 1,800 Emeryville Pharmaceuticals for cancer/infectious diseases Varian Medical Systems 1,710 Palo Alto Healthcare systems&equipment Levi Strauss&Co 1,600 San Fran. Men,women&children clothing manufacturer Network Appliance lnc 1,600 Sunnyvale Network data storage appliances Smart Modular Tech. 1,500 Fremont Computer memory modules&PC cards Bayer Corp 1,500 Berkeley Biological&biotechnology derived drugs Philips Semiconductors 1,500 Sunnyvale Integrated circuits&discrete semiconductors Aerojet 1,509 Sacramento Aerospace defense structures&propulsion sys. KLA-Tencor Corp 1,500 Milpitas Wafer,data analysis,and electron beam tech. Applied Biosystems 1,590 Foster City Biotechnological&analytical instruments Sanmina 1,500 Santa Clara Printed circuit boards Nortel Networks 1,400 Santa Clara Communications equipment Lam Research Corp 1,400 Fremont Wafer fabrication equipment Integrated Device Tech. 1,325 Santa Clara Semiconductor,networking devices,SRAMs BFJC512 33 Table 13 TOP 10 EXPORT COUNTRIES FROM CALIFORNIA BASED ON DOLLAR VALUE (US$million) Rank Country 2001 1 Mexico $1.6,348.1 2 Japan 14,635.1 i 3 Canada 11,816.0 i 4 Taiwan 5,664.5 5 United Kingdom 5,588.8 6 Korea,South 5,034.9 7 China 4,676.1 8 Germany 4,657.4 9 Netherlands 4,318.2 1.0 Singapore 4,226.8 Source: U.S. Department of Commerce, International Trade ; Administration,Office of Trade and Economic Analysis. While there is a strong base of cargo activity in the Bay Area,most of it has an international focus and therefore is almost exclusively attracted to the established passenger gateways that accommodate larger passenger aircraft (passenger airlines sell cargo belly-capacity at dramatically reduced rates compared to all-cargo freighter capacity) or accommodated by the integrated carriers (FedEx,UPS,Airborne Express, DHL) at their established airports and sorting centers throughout the region. Regional Airport Competition. The Bay Area/Northern California region is home to four large airports---San Francisco,Oakland,Sacramento and San Jose International airports----and one all-cargo airport,Mather Airport in Sacramento. Each one of these airports has distinctly different markets and therefore has different strengths and weaknesses in the cargo market. In Table 14,Sart Francisco and Oakland international airports combine to make-up almost 90% of the Bay Area's cargo market. BUC512 34 Table 14 COMPARATIVE AIRPORT DATA TOTAL ENPLANED AND DEPLANED CARGO 2002 Percent of Airport 2002 Regional Total Oakland (OAK) 634,643 42.6% San Francisco(SFO) 589,730 35.5 San Jose(SJC) 140,152 9.4 Sacramento 126,700 8.5 International(SMF) 70,642 4.7 Mather(MHR) 56,058 3.8 Total 1,491,225 100.0% Source: Airports Council International Worldwide Traffic Report. Inside the competitive airport cargo data,however,the international/domestic breakdown,as well as the concentration of air carrier capacity and service at each airport,provides insight into the strengths/weaknesses of each airport. As indicated in Table 15,San Francisco International.Airport and its wide array of international carriers will be the focal point of international cargo traffic in the Bay Area for the foreseeable future. Oakland,San Jose, and Sacramento international airports rely extremely heavily on one or two carriers for cargo capacity and these airports have very little (if any)international cargo capacity. Management at Oakland has indicated that a loose organization of international carriers (from.San Francisco) has approached them requesting information regarding cost of operations,expansion capabilities,and even gate availability. However,breaking away from the domestic feed that San Francisco International Airport generates seems extremely unlikely for international carriers. In addition,the cargo community (the freight forwarders, specifically)has commented that it would be extremely difficult to split operations between San Francisco International Airport and another area airport. The South San Francisco area is home to dozens of the international freight forwarders and their consolidation warehouses and as long as belly capacity remains an integral part of the international cargo market,San Francisco International Airport's position as the leading international cargo airport in the Bay Area is secure. The potential capacity of regional airports to accommodate fixture growth in air cargo demand is a complex issue. For example, the use of large freighter aircraft at off-peak times can increase the cargo capacity of an airport without significantly impacting overall airport capacity utilization. However,given the general capacity constraints at BUC51z 35 Table 15 COMPARATIVE AIRPORT DATA CARRIER BREAKDOWN 2002 Airport/Carrier Cargo totals 2002 percent of total Oakland(OAK) FedEx 454,404 71.6% UPS 116,774 18.4 Other cargo carriers 52,041 8.2 Passenger carriers 11,424 1.8 Subtotal 634,643 100.0% E San Francisco(SFO) United Airlines 75,485 12.8% j FedEx 60,152 10.2 DHL 35,384 6.0 American Airlines 30,666 5.2 Japan Airlines 30,076 5.1 EVA Air 24,769 4.2 Nippon Cargo Airlines 22,999 3.9 Korean Air 20,641 3.5 r Other 143,969 24.4 Subtotal 589,730 100.0% I San Jose(SJC) American Airlines 56,481 40.3% ' FedEx 43,868 31.3 Other 39,803 28.4 Subtotal 140,152 100.0% i i 3 Sacramento E International(SMF) 66,567 55.8% FedEx 55,003 82.6(a) Mather(MI-1R) 61,805 44.2% UPS 33,650 54.4(a) Airborne Express 16,857 27.3(a) Subtotal 128,372 100.0% i (a) Percentage is Airport total. Source: Airports Council International and airport records i i i BUC512 36 the airports in Oakland,San Francisco,and San Jose,most industry analysts believe that it will be more challenging for these airports to experience continued growth in cargo activity as compared to less congested airports such as those in Sacramento. The domestic and regional cargo market is less defined and has potentially more flexibility in the airports that accommodate its activity. The integrated carriers have made tremendous advancements in the U.S. domestic cargo market over the past decade and the recent financial/economic turbulence experienced by the passenger carriers has further strengthened their importance. The rapid development of sophisticated transportation networks directly correlates with the recent advance- ments of these companies—the core components in their networks are the regional hub(s),and the ability to efficiently serve a vast area through these strategically located facilities,as well as a growing fleet of trucks,delivery vans,and.other surface vehicles. The success of the next-day,and to a lesser degree the second-day,service that these companies offer,relies on the precise choreography of the regional hub facilities. These facilities fulfill distinctive roles---furnishing an intra-regional"'bleed-off' from the respective national sort hubs; growth potential for their entire system in terms of sorting and processing capacity;and a launch point for international shipments. While a large number of aircraft serve the regional hubs,these facilities also attract a tremendous volume of trucks. Companies like UPS and FedEx parlay this conflu- ence of transportation service into superior regional coverage around these strategic facilities. Whenever possible,trucks are utilized (truck service is approximately 13 times less expensive than aircraft activity) to deliver regional deliveries and espe- cially in the immediate area around the regional hubs,truck coverage is dominant. In northern California,Oakland International Airport is home to one of FedEx's regional hubs--much of the region is covered through this facility. The ability of the existing integrated carrier sort and delivery systems to serve the region's cargo needs is paramount to determining the viability of the smaller regional airports,including Byron Airport. To best serve its local customers,integrated carriers strategically locate sort facilities near areas of high population and customer densities while still maintaining critical airport connectivity. The ultimate goal is to provide the customer with the latest possible drop-off time while still maintaining aircraft/truck schedules and delivery commitments. Figure 9 illustrates the main UPS sort locations in the northern California area---they are located where the company can respond to the greatest amount of customers while minimizing transportation time and cost. The integrated carriers have incredibly complex programs that determine these locations--ultimately this is their livelihood and will be as precise as possible. Figure 10 provides an example of how the integrated carriers connect the larger airports in the region with the smaller markets. As indicated,Airborne Express operates larger aircraft into both Oakland International Airport and Mather Airport 13UC512 37 Figure 9 NORTHERN CALIFORNIA UPS SORT LOCATIONS � t 1 NAPA 1 , z I J, i SAvH frNx AUA1?{7R 0 AN / rKAM 01, v \ ncord t'�anan Field ,s i Stockton _ I <.., etropo[itan �. za irport S A;,r N'THA ti A0OfIN GSTA -' Byron s ppTra��rr r Modesto .; ®Munici at City-County; yward (.+.�L[vermara Alrport AK w MunicipaI ; �' a Ave \46.1rt 33 10 ose j i f ) wTA;.ISIFUS 7r1N A LAR AN _ t 4," BU'U5U 38 Figure 10 AIRBORNE EXPRESS REGIONAL ACTIVITY 7. GLrNN 3 / L % I-C208 r I. •� 1 Y+J9A Ity tLAKE #`) j . J5 1-0208 ,-------- ---- • ` PL/S '�.,-.� ,� 1 .• ria.v (_ � /-`, s Sotto 1 i NA PA t/ v Mather .r' i S S vi � \ iw; YrAlS. y.. .•`�.- ry � E.'�_5 r�:J `.�.. _ -„" /„}l. .757E t. a f re #n#n Field a c3 t MatrepogF#n CONTRA t+.$7A �\ J „0 A DUiINj Modesto #y1Y#rd livermare C ty my � L ecutiv# Murrielpel I 1 a 10 Air -�- 0 Truck ' S 7 / � BUC-912 39 in Sacramento. For some of the outlying markets such as Chico and Yuba City, smaller feeder aircraft (indicted by red arrows) are dispatched (after a small sort at Mather Airport) to deliver overnight packages. However,for the area in between Oakland and Sacramento,including Byron,the carrier sends multiple trucks (indicted by black arrows) to deliver the freight. Ultimately,Airborne Express has determined that the package volume in Byron,Concord,and Stockton does not warrant direct aircraft service and that the more economical delivery method meets service standards of those customers in the local area. Byron Airport Cargo Potential In the future,as cargo demand grows in the region, the highway infrastructure in and around the Airport will become a focus of attention. The future roadway conditions,including number of lanes and speed limits, dictate how well customer- shipping demands can be addressed which creates a dynamic situation for the Airport and its future economic development. If no future highway improvements take place and population and cargo demand grow in and around the Airport, truck movements will become much more difficult and therefore future feeder flights, such as those to Chico that were previously discussed,may develop. However,in order to attract additional consumers and their associated cargo and shipping needs, significant highway development is required. Unfortunately,this creates a serious "which-comes-first" scenario. Regardless of the highway concerns,the Airport is not expected to experience any jet aircraft to accommodate cargo activity in the foreseeable future. As mentioned, the amount of large airport competition,concentration of regional population and consumer demand, and the highway infrastructure development in the Bay Area will restrict significant cargo development at the Airport. Future demand includes feeder aircraft, and the Airport is well developed to accommodate that type of aircraft activity. In the scenario where aircraft activity does occur,the overriding constraints on ultimate development is the service area that can be covered from the Airport without seriously overlapping the service that will occur at regional competitors including Oakland,Sacramento, and even Stockton airports. As indicated in Figure 8,trucks leaving Byron Airport would effectively serve the 30-minute to 1-hour coverage area without experiencing overlap,which the carrier's sophisticated networks minimize. The conclusions regarding potential cargo demand at the Airport are summarized as follows: 1. The primary opportunities for the Airport will be related to the local market service network, including the Airport's relationship to other airports, and trucking activity. RLiC512 40 2. Feeder (or propeller) aircraft represent the most likely source of initial air cargo activity and incremental growth at the Airport,building on trucking activity. 1 The Airport currently has the capability to accommodate the most likely near-term cargo activity(e.g., feeder aircraft). 4. In the longer-term,local economic development and associated infrastruc- ture development will be the key factors in determining the role of the Airport in serving regional cargo demand. 5. POTENTIAL OTHER ROLES The objective of this section is to identify potential other roles for the Airport. These include a range of roles common to general aviation airports that could be developed: • General aviation.,an existing role, • Specialty aviation,a new role that may be attracted by available facilities and general aviation growth;and • Commercial,a new role that could be attracted more by surrounding business activity and population growth,but which may find an airport location valuable. General Aviation Continued demand for general aviation facilities at the Airport may be expected for the following reasons. • At:many of the existing general aviation airports in the general aviation demand region,there is constrained supply and restrictions on use of aircraft storage facilities; • At many of the existing general aviation airports in the general aviation demand region, there are airspace operating restrictions related to proximity to Oakland International Airport; • The Airport is located in what is considered to be a relatively high economic growth region of the general aviation demand region; and • There is an outlook of continued demand for aviation facilities, given strong socioeconomic,business and real estate demand drivers in the East lay. BUCS12 41 Corporate. The Airport's suitability as a corporate aviation center is currently limited by (1) the lack of airfield and support facilities and (2)the lack of local demand drivers—particularly proximity to population and businesses. In the longer-term,particularly as the general aviation demand region grows in terms of general aviation activity and economic activity, demand for corporate aviation facilities could be expected to expand. This could be expected to be reflected in incremental increases in demand for general aviation aircraft hangars and FBO facilities. Accommodating this potential demand is likely to require improvements to the facilities and services at the Airport. Air Taxi. The Airport's suitability as an air taxi center is currently limited by the same factors as corporate aviation,and would have similar longer-term growth drivers. Air taxi operators "supplement" the services provided by scheduled airlines,and it is possible that the Airport could serve as a base of operations for air taxi operators interested in (1) accessing the business market of the East Bay, and (2)avoiding the congestion of other airports in the region. However, as with poten- tial cargo demand,Airport access and drivetimes would be a major factor in this potential development. Recreational and Training. Nearly all general aviation activity at the Airport is recreational,with specific activities including parachuting, gliding, and ultra-light aircraft operations. Recreational activity has greater short-term development poten- tial,notwithstanding the slower overall growth of this sector,given that the facilities and available space at the Airport are currently appropriate for that type of activity. Recreational and training activity is not typically as sensitive to the "business" con- siderations of other sectors of aviation—e.g., average drivetime during the weekday peak hours. As such,the more remote location of the Airport could be a greater advantage for recreational activity than for business activity. Specialty Aviation The following aviation categories are potential Airport users. There may be opportunity to locate a facility that is not dependent on aviation activity generated solely at the Airport,but for which a Bay Area location, together with space availability,may be desirable. Fractional Jet. Fractional business jets have been a major factor in corporate aviation market development and have significant requirements for basing,mainte- nance and management facilities. It is unlikely that in the short-tern, that fractional jet facilities could be developed at the Airport,given the distance of the Airport from significant population and business centers. However, over the longer-term, this may be a market opportunity for the Airport. As congestion increases at major airports in the Bay Area, alternatives will become increasingly attractive. BUC512 42 Maintenance,Repair and Overhaul. Maintenance,Repair and Overhaul (MRO)activity is a segment of the aviation industry that makes significant use of aviation facilities,but which is currently affected by the economic downturn, fleet consolidation and airline industry contraction. Exceptions to this include MRO facilities for growing sectors within the aviation industry,such as regional jet main- tenance facilities. It is unlikely that in the short-to medium-term, that MRO facilities could be developed at the Airport. Most commercial airline MRO facilities are located at airports with commercial airline service. Government. Government functions,particularly aviation-related police,fire and paramilitary,have a requirement for aviation facilities that allow a secure lot. Airports with government facilities include Modesto (Stanislaus County Sheriff), Hayward (East Bay Regional Police District Police Helicopter Unit) and Santa Rasa (California Department of Forestry and Fire Protection). These functions are not evenly spread over airports,but rather are placed in particular locations based on a variety of factors including location relative to mission needs and attractiveness of space and leasing terms. In most cases the basing of government functions is more of a community service than a revenue generator. Specialty Maintenance. Specialty maintenance functions,such as avionics and aircraft interior maintenance usually support more general FBO maintenance activity. Given their specialized nature,they are not necessarily dependent upon on-Airport general aviation activity. Any airport,including Byron Airport,is a candidate for a specialty maintenance operation. However,for this reason,there is significant com- petition to locate these operations. In many cases,local communities and/or airport sponsors are willing to"give away" much of the airport revenue benefit in order to attract specialty maintenance and generate new jobs in the local community. Commercial As discussed in the section on real estate trends,real estate development has been significant in the Livermore Valley area. There is value to commercial organizations associated with proximity to a general aviation airport,including existing road and aviation infrastructure. Also,local commercial development would likely assist the overall strategy of encouraging air cargo development. Airpark. Airparks are a small but growing trend,responding to the value of co-locating businesses (usually on non-airport land)with "through-the-fence" access BUCS12 43 to the airport. While airparks often serve general aviation functions (e.g., a corpo- rate jet base), the off-Airport business concept is closer to that of a nonaeronautical commercial function. The key benefits of an Airpark are: • Sale of fee simple land would allow airpark property owners to benefit both from the potential appreciation of the property, and the ability to depreciate any capital expenditures; A major disadvantage of the most common arrangements for aircraft stor- age at publicly owned GA airports—hangar leases or lease of unimproved ground,on which hangars are built by the lessee—is that the lessee has no ability to invest in the property,or if any investments are made (such as construction of a hangar),such facilities would revert to the airport at the end of the lease. Airport leases are commonly up to 30 years (although terms of up to 50 years have been evidenced),and such lease durations are often unattractive to commercial companies if there is an alternative to purchase property outright; • Use of off-airport airpark property with through-the-fence airport access would have minimal restrictions on the user and significantly higher flexibility in aviation and nonaviation uses for the property than would be the case with a typical on-airport aircraft storage lease; For many airport leases,notwithstanding the ability to store the aircraft, there are usually restrictions on associated aviation activities such as con- ducting maintenance and storing fuel, and a prohibition on nonaviation activities such as storing vehicles and nonaviation equipment; • Airpark property allows the highest degree of aircraft and business co-location, whereby an owner can lease,maintain and fuel an aircraft in the immediate vicinity,rather than at a separate on-Airport hangar; • While any airport is subject to applicable federal and local regulations,a privately owned airport is not subject to public enterprise policies and decision-making processes. In particular,the approval process required at public airports from the Federal Aviation Administration (FAA) for "through- the-fence" access is understood to be subject to extensive oversight; • Taxiway access to the airfield ("through the fence" access); • Fee simple ownership of parcels in the Airpark; and • The ability to construct off-airport hangars, fuel storage and other aviation facilities. 6UCS12 44 Examples of other airparks include: 1. Scottsdale Airport,Phoenix,Arizona. The airpark at Scottsdale Airport was opened in 1984 and initially comprised 400 acres,which achieved an approximately 30%occupancy rate in the 1980s. The site was expanded to 2,300 acres by 1997 and since then has achieved an 85% occupancy rate. In 2002, there were approximately 640 based aircraft at the airport,of which it was estimated that over 100 are business jets. 4f these 640 based aircraft, approximately 120 are aircraft based in airpark lots with taxiway access. Properties that use airport access pay anzival fees of$600 gate access, a $420 based airplane fee and$0.05 fuel flowage fee. Key factors associated with Scottsdale's growth include: — The significant economic growth of the Phoenix MSA in the 1980s and 1990s; — Use of mixed commercial and light industrial development; and -- The strong GA environment present in Arizona. 2. Bedford County Airport Industrial Authority,Bedford County, Pennsylvania. Land is offered for sale by the Bedford County Development Association. The airpark at Bedford County Airport was opened in 1998 and comprises 142 acres,which achieved an approximately 0%occupancy rate shortly after opening and which has not increased significantly since then. The airpark does not charge any premium for the land and competes with other business parks. Key uses include light manufacturing and office space. 3. Bountiful-Skypark Airport,Salt Lake City, Utah. The privately owned airpark at Skypark Airport was opened in 1996,offers land for sale with taxiway access to the Airport, and comprises 80 acres,which have since achieved an approximately 80%occupancy. An annual access fee of $,250 per acre is charged. About 70%of the businesses at the Airport are light industrial and aerospace related. 4. Springfield Airpark,Springfield,Ohio. The 191-acre Springfield Airpark, owned by the City of Springfield and offering land for sale,was opened in 1999 and achieved an approximately 16%occupancy rate by 2001. The airpark does not offer through-the-fence access and not charge a premium or access fee for airpark use,competing with other business parks. Key uses include light manufacturing. 5. Airpark Business Center, Hollister, California. This 90-acre private devel- opment (with a further 150 acres being added by other developers in the near future) offers land for sale and has just started marketing, and expects to charge a premium of between$2 and $4 per acre sold for lots with airport access. BUC512 45 Nonaeronautical Commercial Roles. Nonaeronautical roles for the Airport could include roles such as a distribution center and light industrial/business park. As discussed earlier,the Airport Region—for example in Livermore and Dublin— has experienced growth in commercial real estate and notwithstanding the recent regional and national economic downturn.,such growth would be expected to resume. Certain regional airports,such as Stockton,have developed on-airport business parks. tockton's Airmetro Business Park is located within a designated Enterprise Zone and Foreign Trade,Zone,and includes distribution,supply, warehouse and manufacturing tenants. 7. CONCLUSION AND NEXT STEPS Demand Conclusions General conclusions regarding the potential future role of Byron Airport can be summarized as follows: 1. There is potential for the Airport to accommodate regional air cargo demand,but in the near-term this is likely to be limited to feeder aircraft service. Local economic development and infrastructure development will be key determinants of the "pace" of potential cargo demand at the Airport. 2. It is likely that there will continue to be increased demand for "traditional" general aviation activity at the Airport. 3. It is possible that the Airport could attract more specialized general aviation activity,but this would be dependent on both (a)marketing efforts and (b)regional economic development. BUC512