2018 Annual Report 2 Contents Message from the Executive Director ............................................................................................................................ 4 Highlights & Passenger Feedback ................................................................................................................................... 5 Activity Report .................................................................................................................................................................. 6 U.S. Customs ....................................................................................................................................................................... 7 2018 Capital Investments ................................................................................................................................................. 8 2019 Capital Investments ................................................................................................................................................. 9 Income Statement & Budget ............................................................................................................................................ 10 Vision Rochester International Airport is the comprehensive, multimodal transportation choice for southeastern Minnesota and border regions of Wisconsin and Iowa. Mission To provide a sustainable community asset that places the customer first, acts with agility and accountability, is responsive to stakeholders, empowers staff, and embeds safety and security in all we do. Core Values Customer-first, Agility and Accountability, Responsive, Empowered, Safety and Security (RST CARES). 3 Message from the Executive Director 2018 was a record-setting year for Rochester International Airport. We reached an all-time high total passengers, surpassing the previous record set in 1977. We are incredibly grateful to the local community for choosing to support your airport! We are proud of our RST team for stepping up to serve more passengers than ever before. While it is important to celebrate this milestone, we also recognize it is simply a moment in time of our strategic growth efforts toward a fully developed aviation ecosystem. While air service capacity was flat in 2018, we were successful in filling more of the available seats. As air service recruitment remains a top priority, we regularly engage with our airline partners. We are optimistic the coming years will include new routes, increased frequencies and larger aircraft to serve our region. With increased utilization of RST, we need to remain focused on providing an excellent customer-first experience. We work with our partners in the terminal to meet the evolving needs of our customers and also collaborate with community partners to ensure a consistent experience for inbound visitors. Increased passenger traffic has resulted in increased operating revenues, yet our team worked hard to keep operating expenses reasonable. Due to the efforts of our team, RST has realized an operating surplus of over $1.4 million at year end. In 2018, we kicked off our Master Plan process. Set in a dynamic, ever-evolving region, we are carefully evaluating our needs at RST. Investment in our current infrastructure is critical, and we will undertake a massive runway safety improvement project in the near term. The ability to envision the future and make solid financially-sound decisions regarding upcoming needs is critically important. We had many reasons to celebrate in 2018. We will build upon our success in the coming years with the continued vision for RST as the comprehensive, multimodal transportation choice for southeastern Minnesota and border regions of Wisconsin and Iowa. Respectfully, John C. Reed A.A.E. Executive Director Rochester International Airport 4 Highlights & Passenger Feedback Everyone is nice and checking in and I travel a lot for work. RECORD YEAR security are easy! 2,328 Hands down, RST is I don’t live in Rochester, but I one of the travel to Rochester to fly out most 371,615 TSA PreCheck from. I’d much rather come enrollments streamlined here than other places! passengers sponsored airports by RST I’ve gone to. And I’ve never encountered such helpful and pleasant airport Very much appreciate $12K personnel. 28% the recent raised by Aviation changes Pathways to support increase in and improvements. aviation education passengers I now fly out sponsorships in of Rochester our region whenever I can! Great to see that more people are Best, fastest supporting the check-in, airport, along with a Friendliest Staff! greater 97 LOVE IT! range of I used to drive to 120 flights. Fly Local the cities to fly out. Hope to see more supporters Now I only fly community events attended positive changes out of RST!!! in the future. Bringing my husband from Raleigh, to go to Mayo Clinic, can be very stressful, but at I usually fly out 91 this airport of MSP, but not I can relax a little anymore!! I will hours volunteered as part because everyone is very change of the Caring Tails pet therapy helpful and nice! Thank you. program. Twelve teams visit my home passengers to create 18 airport memorable, positive to RST!! experiences at RST airline meetings 5 Activity Report Load Factor by Carrier & Route Market Share by Carrier Passengers 2009 - 2018 TRAFFIC 2017 2018 AIRLINE PASSENGERS Delta Air Lines 136,212 181,800 American Airlines 108,680 111,451 United Airlines 43,280 75,034 Charter Flights 2,662 3,330 TOTAL PASSENGERS 290,834 371,615 TOTAL CANCELLED FLIGHTS 62 58 AIR CARGO (POUNDS) 22,194,085 22,402,946 CONTROL TOWER OPERATIONS 39,063 43,054 6 U.S. Customs RST: A Global Point of Entry Rochester International Airport serves as a point of entry for international aircraft arriving in our region. International access for private aircraft is more critical than ever as the Destination Medical Center initiative expands. International access ensures our region will remain a global destination for those seeking world-class healthcare from around the world. International visitors typically have lengthy stays in our community, creating a large economic impact on not only medical but also the hospitality and retail industries. Customs Report 2017 2018 AIRCRAFT INBOUND Private: 151 107 Charter: 143 68 Passengers/Crew: 1,094 1,022 AIRCRAFT OUTBOUND Private: 145 133 Charter: 53 69 Passengers/Crew: 1,064 1,170 7 2018 Capital Investments ITEM FEDERAL STATE LOCAL TOTAL Master Plan $630,898 $70,100 $700,998 Speical Category II $1,683,741 $1,683,741 Instrument Approach Airfield Parking Lot Equipment $507,642 $507,642 Replacement/Upgrade Passenger Facility Charge Application $28,847 $28,847 Totals $630,898 $1,683,741 $606,589 $2,921,228 CAT II ILS Upgrade Equipment was installed to upgrade to a Special Authorization CAT II instrument landing system (ILS) on Runway 13/31. Future investment is required to complete the lighting system, upgrading further to a full CAT II ILS, improving operational reliability at RST. In its existing configuration, the Special Authorization CAT II supports the daily operations of the FedEx 757 and any aircraft with heads up displays. Master Plan RST embarked on a planning process to update its Master Plan, which serves as a roadmap for the Airport’s future development. An updated Master Plan also provides continuity for the Airport Board and Airport Leadership regarding management and development decisions. The purpose of the Master Plan is to prepare a detailed future facilities plan for needed improvements to accommodate anticipated aviation demands, along with a financial plan to support the implementation of the resulting long-term capital improvement program. 8 2019 Capital Investments ITEM FEDERAL STATE LOCAL TOTAL Fuel Farm Upgrades - Tank rehab, $280,000 $120,000 $400,000 pump replacement, power modifications & Jet A tank Passenger Boarding Bridge Addition $2,677,500 $297,500 $2,975,000 (Gate 5) Design for Rwy 2/20 Phase 1 of 3 $720,000 $80,000 $800,000 (middle 3,800 ft) Environmental assesment for $765,000 $85,000 $850,000 Rwy 2/20 project Totals $4,162,500 $280,000 $582,500 $5,025,000 Jet Bridge Addition Runway Safety Improvements A new passenger boarding bridge will be RST will undertake a multi-year runway safety acquired to accommodate the increased improvement project including the reconstruction commercial air traffic at RST. The new and extension of Runway 2/20. Design and bridge will be added to the upper level gate environmental analysis will begin in 2019. area near existing Gate 4. 9 Income Statement & Budget Rochester International Airport Financial Report December 31, 2018 YTD Actual Budgeted Actual 2017 Actual Net Income Net Income % of Net Income Cost Center Revenue Expense (Loss) (Loss) Budget (Loss) AIRFIELD $ 845,372 $ 406,546 $ 438,826 $ 398,970 110% $ 386,130 TERMINAL 1,959,046 $ 505,299 1,453,747 $ 1,252,166 116% $ 1,418,303 AERO (GA & FAA) 559,941 $ 84,827 475,114 $ 474,900 100% $ 435,605 NON AERO (LAND) 458,300 $ 59,724 398,576 $ 399,422 100% $ 390,323 PARKING 887,505 $ 26,203 861,301 $ 776,227 111% $ 641,756 ADMIN 444,858 $ 1,627,610 (1,182,752) $ (1,750,802) 68% $ (1,196,242) SECURITY 141,165 $ 128,518 12,647 $ (88,000) -14% $ (82,868) ARFF (MAINT & ARFF) 10,530 $ 1,435,798 (1,425,268) $ (1,339,922) 106% $ (1,229,376) CUSTOMS 34,132 156,536 (122,404) $ (177,000) 69% $ (161,634) CITY COMMITMENT $ 521,911 $ - $ 521,911 $ 522,500 100% $ 539,250 TOTAL ALL COST CENTERS $ 5,862,758 $ 4,431,060 $ 1,431,698 $ 468,461 $ 1,141,246