1

Air Service DevelopmentNavigating Through Turbulent Times

Houston Association of RealtorsSeptember 2012

2

Safe Harbor StatementThis is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor. This is just a bunch of words in a very small font put up here to be a precursor to an attempt at humor.

3

Agenda• Evolution of Air Service (past +/- 15 years)

• Jet Fuel’s Impact on Air Service

• Houston Air Service Development

• Houston Airport System (HAS) Real Estate

4

Evolution of Air Service in U.S.

<2001

2008

Present

5

Three Airline TypesUltra-Low Cost

CarrierLow Cost Carrier Legacy Carrier

Fully decouple product Hybrid model Business traffic focus

Single fleet type Single fleet type Multiple fleet types

Minimal infrastructure Growing infrastructure to meet hybrid model

Infrastructure to meet multiple client base

Examples

6

United Airlines (United – Continental)Atlantic Immunized Joint Venture• Air Canada• LufthansaPacific Immunized Joint Venture• All Nippon Airways

Continental Airlines• Newark• Houston• Cleveland

Mega Carriers Systems

7

Airlines Highest Cost

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

2012

2011

2010

Dollars

Per

Gallon

Sources:US Energy Information Agency

2011 peakApr 08, 2011

$3.38

Sept to Sept, change, 6.9%

Sept 18, 2012$3.18

2012 PeakFeb 24, 2012

$3.33

Jet Fuel Price

8

New Technologies Impact on ASD

• Composite materials

– Interior

– Exterior

• B787

• A380 / B747-8

• B737 MAX / A320 NEO

Pratt & Whitney geared turbofan

9

Hobby International

10

ASD Top Targets

Passenger Service• Asia• Europe

Cargo Service• Asia• Europe• South

America

11

IAH-DFWIAH-ORDIAH-LASStarts: Sep-12

IAH-LOSStarted: Nov-11

IAH-ACC-LOSStarted: Oct-11

IAH-MANStarted: Mar-12

IAH-ISTStarts: Apr-13

IAH-DOHStarted: Nov-11

Cargo

A Few Recent Wins

IAH-MIA-MAO-VCP-GIG-BOG-BAQ-IAHStarts: Sep-12

12

HAS Real Estate• Houston Airport properties

– Intercontinental Airport Houston

– Hobby Airport

– Ellington Airport

– West Side environment mitigation (Katy area)

13

Regulatory Oversight

14

Most Common Question #1• How can I buy or sell

airport property?

– No direct sales

• Offer to other city departments

• Offer to other governmental agencies

• Issue a bid invitation

– Not very common

15

Most Common Question #2• Can I get a 99 year lease?

– Lease term maximum is 40 years• Must be approved by City Council

– Required to be fare market value– City charter requires city property appraisals

16

Most Common Question #3

• Airport Concessions / Restaurants / Retails

– Currently full

– Request for Proposal (RFP) process

17

Ellington Pipeline Corridor• Neighboring pipeline corridor

is at capacity

• HAS is creating and managing a new 50-foot wide, non-exclusive pipeline corridor along SH- 3 to accommodate market needs

• Common carrier pipelines destined for Gulf Coast refineries may locate within this corridor

18

Thank You