PORTLAND INTERNATIONAL AIRPORT UPDATE

TO: PDX Community Advisory Committee

FROM: Vince Granato, Chief Operating Officer

DATE: January 23, 2019

BUSINESS UPDATE

Airport Activity

More than 64,000 travelers passed through Portland International Airport on each of the peak travel days (Dec. 20, 21 and 26) between Dec. 17 and Jan. 1. In total, PDX served more than 928,000 passengers during the holiday travel period.

PDX finished the year with 19.9M passengers, up 4.2% over calendar year 2017 serving approximately 802K more passengers or an average of 2,200 more passengers a day than 2017. We expect the growth rate to moderate in 2019 to around two percent.

Cargo volumes also grew 272,123 tons in calendar year 2018, up 4.5% compared to 2017. UPS contributed strongly to this growth with an 8% increase in freight volumes.

Additional Air Service Updates Sun Country Airlines announced the addition of three new seasonal routes from PDX to Nashville, Tennessee, St. Louis and San Antonio. These routes bring Sun Country’s total nonstop offerings from Portland to nine, which also includes San Francisco, Las Vegas, Phoenix, Honolulu, , Minneapolis/St. Paul and Palm Springs, .

Horizon will initiate three new flights to Paine Field in Everett, WA. starting February 11th offering Seattle area travelers another option.

Delta’s service to London will restart on May 9th and be daily this year compared to 4x/week in 2018.

Condor’s service to Frankfurt will restart on May 5th and the carrier plans to bring on an additional flight during the peak summer season, to 5x/week from 4x/week.

Airport Concessions/Properties

Rental Car Lease Agreement At the November Commission Meeting, the Port Commission approved the new rental car lease agreement. The 20-year lease agreement with the rental car companies

represents two years of discussions and negotiations between the Port and the rental car companies. The following 12 brands will be represented at PDX under the five new agreements:  Enterprise Rent-A-Car, National , Alamo Rent- A -Car and Enterprise Car Sharing – operated by the Enterprise Group;  Hertz Car Rental and – operated by Hertz;  , Budget Car Rental, and – operated by ABCR;  Dollar Rent A Car – operated by Todd; and  Rent a Car – operated by Sixt.

Collectively, these brands represent over 99% of the existing rental car market at PDX.

2019 Concessions Request for Proposals A Request for Proposals (RFP) will be issued at the end of this month to fill concessions spaces in the Concourse E Extension and the upcoming Concourse B Remodel projects. The Concourse E Extension will include ten concessions spaces overall, three of which have already been leased to Starbucks, Stumptown Roasters, and Your Northwest Travel Mart. The other seven spaces – three retail locations and four food & beverage locations – will be awarded through the RFP. The Concourse B Remodel project will include one food and beverage location and one coffee location, also awarded through the 2019 RFP. Leases resulting from the RFP will be executed this summer, and the Concourse E locations will immediately begin design work for an opening in June 2020 along with the extension. Concourse B locations will pause for about seven months, and then begin design work for an opening in early 2021 along with the remodeled facility.

As in previous concessions RFPs, there will be a significant focus on local brands, small business opportunities and Quality Employer Plans. A Quality Employer Plan is required in every proposal and weighted at 25% of the overall scoring. Successful proposers will then have their plans attached to the resulting leases and will be committed to maintaining the plans as proposed. The locations in this RFP are all brand new, and therefore not displacing any current concessions or their employees.

As part of its Diversity, Equity, and Inclusion Plan, Concessions Development is implementing a new approach for the design work requirements in this RFP. Typically, proposers are required to submit architectural renderings, which can cost up to $20K to assemble. The 2019 RFP will omit this requirement and ask only for design vision and intent instead. This approach does not come without some risk to the Port, but the Concessions team is confident that they can work through the challenges and still achieve design goals consistent with the program. Eliminating this requirement will lower the barriers to entry for small businesses and expand the opportunity to include more proposers. As result, the Port expects this RFP to be highly competitive.

Waffle Window and Cubo Food Carts

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Waffle Window joined the PDX food cart program on December 20, opening their fourth location in town. The family- owned and operated cart is dishing out their infamous sweet and savory waffles with extended morning hours, as well as a variety of chicken and waffle sandwiches, mac & cheese, BBQ, salads, and more.

In early February, El Cubo De Cuba will open in the PDX Food Cart Program, serving authentic Cuban comfort food as PDX’s first ever Cuban concept. The menu will include Cuban bowls and hot-pressed sandwiches with tropical twists like plantains, mangos, Mojo sauce and Caribbean spices. Cubo is owned and operated by a Havana born-and- raised Cuban man and an American woman who started the business as a very popular food cart in 2010 and expanded into a Hawthorne brick and mortar in 2013.

PLANNING AND CONSTRUCTION UPDATE

PDXNext Program PDXNext is the name given to a series of projects designed to meet the growing needs of the people and airlines using the airport – employees and travelers alike. The PDXNext program contains more than 20 projects occurring now through 2025.

Terminal Balancing (TBAL) Terminal Balancing, the six-gate extension of Concourse E, continues to take shape. With the utility tunnel and concrete slab complete, workers have been busy erecting structural steel and the “skeleton” of the Concourse E extension has begun to emerge. Sloping wall and roof line bents are complete for the initial section of the building closest to existing Concourse E. Work on the north apron and south of the building between the security fence and Airport Way continues. The water line across Airport Way was tied into the line at the extension in mid-December.

Parking and Consolidated Rental Car Facility (PACR) Enabling work on the Parking Additions and Consolidated Rental Cars (PACR) project continues. The new 82nd U-turn to return to the terminal opened Oct. 23. The Port worked with Portland Bureau of Transportation staff to optimize the timing of the traffic signals to improve the performance of all segments of the intersection. The Port received quite a bit of feedback on this traffic change. The modifications to the signal have addressed most concerns and traffic is flowing smoothly even during peak times.

Port Commission approved JE Dunn’s contract amendment for the Guaranteed Maximum Price for the completion of the entire PACR project at November’s Port Commission Meeting. Expansion of the Port HQ employee lot and other enabling work continues. Construction work on the new exit plaza is underway.

Quick-Turnaround (QTA) Demo With the new Quick Turnaround (QTA) Facility open and operating since last March, the rental car industry has initiated a project required in their current agreement to demolish the former QTA. Demolition is complete. Demolition was required for the new Rental

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Car Center that will be built next to the PACR project on the site, which will house rental car customer service areas on the bottom floor, and airport police and operations functions on levels above.

On Dec. 5, a demolition crew broke a water line, which shut off all water to the airport’s terminal for several hours. Operations and customer service teams jumped into action in the terminal to attend to passenger needs; maintenance staff worked with contractors outside to bring the water back on line as quickly as possible.

Perhaps it goes without saying, but not having water in the terminal is problematic. This incident pointed out opportunities for even better communication and coordination as we continue to progress with multiple construction projects, each having the potential to impact the same critical systems at the airport.

Terminal Core Redevelopment (TCORE) The schematic design documents were completed for the main TCORE project area in December. These will be the basis of an updated cost estimate scheduled for delivery the end of February 2019. The design team will be progressing with the site utility and roof design over the next few months as the overall budget and scope is finalized. The design of the new roof over the terminal is a much-discussed topic on the TCORE project. The project's architects are drawing inspiration from the natural world as inspiration for the shape of the roof’s structure. The roof’s form will also be shaped by the need to direct water, create space and access daylight.

Designers are keeping environmental goals top of mind. Those environmental goals include the commitments to net zero carbon and net zero energy. Key opportunity areas include sourcing material and how the space is heated and cooled.

As part of TCORE, we’re closing Concourse A and modifying and expanding Concourse B. We will relocate Horizon operations to the end of Concourse C which will allow for the early abandonment of Concourse A. This will allow construction activities on Concourse-B extension to occur and be isolated from passenger processing and travel. When construction begins on Concourse B later this fall, Horizon will move operations to the end of the C Concourse, which steers travelers away from the construction area and provides more shopping and dining options than are currently available on Concourse A. The relocation of Horizon operations to Concourse C is currently scheduled for October 2019 so that it avoids the peak travel season at PDX.

The Hoffman/Skanska team continues to develop and review schedules to determine early enabling project opportunities and potential tenant impacts. The Concourse B work is progressing through 90% design; the remodeled and expanded Concourse B is expected to open in early 2021.

Communications We plan to roll out new PDXNext creative guidelines in early spring. These guidelines will include a new voice and visual identity to ensure traveler, employee and influencer

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communications are clear, compelling and consistent across all Port and partner channels.

This summer, in partnership with Alaska Airlines, we will also launch an integrated marketing campaign to celebrate the benefits of closing terminal A, and starting work on B.

Equitable Access Following up on the conversations we had with a variety of experts in the community to ensure that equitable access and targeted universal design are integrated into TCORE, we conducted a series of meetings with airport front-line staff to gather their perspectives and see what challenges they notice passengers encountering through the travel process.

These meetings with roadway management staff, maintenances staff, police and fire, operations staff, concessions managers, airline station managers and wheelchair providers took place last fall. The final meeting with rental car managers is being scheduled soon.

The final report from the PDX Access outreach efforts throughout 2018 is due in early spring. We will share the results of that outreach with the CAC.

SUSTAINABILITY UPDATE

Social Equity Nearly one year ago, Port commissioners approved our social equity policy, directing staff to establish a framework that integrates these considerations and goals into our decision-making processes. At our January Commission meeting, Port Commission reviewed the Port’s consolidated equity plan, which consists of three goals, intended outcomes, strategies and metrics.

Over the past year, about 50 percent of employees – along with three Port commissioners – completed implicit bias training. More than 90 employees, 25+ external stakeholders and 14 internal facilitators participated in workshops that led to the creation of 18 division/department social equity work plans with clear goals, outcomes and metrics. Our consolidated equity plan, recently approved by the executive team, combines the common themes from these 18 plans in service of three goals: Goal 1: Increased business participation from and access to job opportunities for underserved communities Goal 2: The Port is regarded as an equitable, inclusive, and welcoming place to work

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Goal 3: The Port cultivates and engages in learnings that influence equity awareness in our regions and industry.

By the end of this fiscal year, tracking mechanisms will be in place to measure our progress and the consolidated plan, metrics and performance will be shared publicly on our external website.

Port Sponsors Seven Friends of Trees Plantings As part of our environmental commitment to increasing the urban tree canopy, the Port has sponsored seven Friends of Trees neighborhood plantings in the region, in Hillsboro, the Columbia Children’s Arboretum, West Vancouver, East Portland, the Columbia Slough and Rockwood in Gresham.

The first tree planting was on Saturday, January 12 at the Portland Children’s Arboretum. It was a beautiful day and we had a great turn-out to get the planting season started. Please come join us at a future event.

Energy Energy Trust of Oregon recently awarded the Port with their Best of the Best Savings: Highest Gas Savings award. This award went to our energy management team for their work in reduced energy consumption.

Preliminary results for 2018 show a savings of 47,943 therm or about three percent of PDX’s annual natural gas usage – that’s the equivalent of reducing more than 250 metric tons of greenhouse gas emissions and enough to power more than 30 homes for a year.

Partnering with OSU to Protect PDX from Seismic Risk In response to the likelihood of a Cascadia Subduction Zone earthquake, the Port is partnering with Oregon State University's College of Engineering to conduct blast testing to evaluate the seismic performance of the soils underneath PDX runways. The results of this testing will be used to provide a more accurate and cost-effective design to protect PDX runways from seismic damage. This partnership is part of a larger effort to address seismic resilience at PDX and develop a long-term strategy for response and recovery.

OTHER

Federal Government Shut Down Impacts PDX The continued federal government shut down has a range of impacts on PDX from construction permitting to operations. The Port is grateful to all those federal safety and security employees who are continuing to work without pay so that PDX can continue to provide a high level of service to our passengers. The following are a few updates related to the shut-down:

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 PDX Transportation Security Administration and Customs and Border Protection have not experienced excessive callouts as other airports have around the country.  This past Saturday was the first payday where officers received no pay. While we are not experiencing excessive callouts currently, we are keeping watch over the next few days.  Port Operations is prepared with additional contract staff should callouts cause severe operational impacts.  The Port has provided an “appreciation” table with food and various snacks to all employees in the terminal.  US Bank is providing short term loans to federal workers in need.

While the TSA has received many offers of support, they must operate under their statutory limitations. TSA's Office of General Counsel has explained that federal salaries cannot be paid for by anyone other than the federal government (citing 18 U.S.C. 209). Furthermore, Transportation Security Officers (TSO’s) cannot accept gifts while working on the security line or accept tips or cash, which some travelers have offered. TSA General Counsel is reviewing all offers of support, such as no or low-cost loans. They review each individually but cautioned that to be eligible, these offers cannot come from a TSA-regulated entity (such as an airport or air carrier) and must be open to all federal employees, not a select group.

First Woman to Lead the Oregon National Guard's Air Component Donna Prigmore assumed command of the operation of two fighter wings stationed in Oregon during a ceremony at the Anderson Readiness Center in Salem on January 5th. She replaces Brig. Gen. James R. Kriesel, who will deploy in support of joint operations in Africa. Prigmore was promoted in August to the rank of brigadier general. The Air Component Commander leads the 173rd and 142nd Fighter Wings, special tactics and air control squadrons and more than 2,400 military and civilian personnel. In her new role, Prigmore will lead the groups that are part of the North American Aerospace Defense Command's defensive response and missions of emergency response, relief and recovery operations in Oregon.

Nick Atwell's Star Rises on Small Screen One of our own will get a turn in the spotlight next week with the debut of the Smithsonian Channel's Bird vs. Plane: Miracle on the Hudson. The one-hour show follows US Airways' Flight 1549, which was about two minutes into its 2009 journey from LaGuardia Airport to Charlotte, North Carolina when bird strikes to both engines crippled the plane. What results is an emergency landing on the Hudson River. Follow Port employee Nick Atwell and a team of forensic ornithologists in this show to learn about the work being conducted to solve the bird strike problem.

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Real ID Did you know that your Oregon driver's license doesn't meet federal standards intended to tighten security at airports and federal buildings? Twenty-six states have already complied with the Real ID Act. TSA will require a Real ID or passport to fly by October 2020. Real ID designation on Oregon drivers licenses and Real ID cards will be available from DMV beginning in July 2020.

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