Gloucestershire Airport Business Plan -...

Appendix BGloucestershire Airport Business Plan

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-Questions and queries for Airport Board discussed at JASWG meeting 24 October 2007

7 Request Provide a clear table of existing and projected opening hours and the potential implications on ‘out of hours’ operations.

GAL Response The normal operating hours (local time) at Gloucestershire Airport as taken from our website are as follows:

Summer: Monday to Friday 0830 - 1930; Sat & Sun 0900 - 1930Winter: Monday to Friday 0830 - 1930; Sat & Sun 0900 – 1800

Flights can be sometimes accepted outside these hours, subject to the availability of Air Traffic Control (ATC) and Airport Fire Service staff, and subject to a surcharge. The majority of these flights take place within 2 hours of normal opening or closing time.

Some private flights are also permitted to operate on indemnity when the airport is closed. Private operators must complete the necessary paperwork and provide details of their Public Liability Insurance. These flights are only permitted between sunrise and sunset, and are subject to specified weather conditions, all such must be notified in advance to ATC. Repeat circuit flying is not permitted. Commercial and training flights are not permitted to operate when the airport is closed. Certain helicopter operators, normally connected with Police and Air Ambulance services are permitted to operate at any time, without prior notification.

This has been the basic pattern of hours for over 30 years. The most recent change was more than 10 years ago, when the Airport opened at 0730 and closed at 2000 during weekdays but restrictions on the Air Traffic Controller’s shift lengths and general lack of demand saw them change to the current arrangements.

There are no plans to extend these hours as part of the RSP. Analysis of the year-to-date ‘out of hours’ operations has been undertaken. The attached spreadsheet analyses out-of-hours flight between 29th September 2006 and 29th September 2007. During this period, there have been a total of 683 flights, although this includes some 70 flights related to the flooding rescue operations during the summer. Over 30% involve Air Ambulance and Police helicopters. The number of out-of-hours flights equates to less than 1% of total flights annually. Further analysis of out-of-hours flights show that the bulk of movements (92%) occur within one hour of published hours (see attached spreadsheet - OOH).

Our current manning levels allow sufficient flexibility to accommodate this volume of traffic, but anything above and beyond this is subject to staff availability and a surcharge to cover the overtime costs.


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8 Comment Provide comment on the suggestions that works could be concentrated on the Western end of the runway.The works to remove Bank View Farm and re-route the Entrance Road remain fundamental to the RSP.

The key limiting performance issue for 09 departures is the obstacle environment, not declared distances (page 10 refers). Similarly, although the Collision Risk Model (CRM) demonstrates a 'viable' Instrument Landing System (ILS) procedure in the current obstacle environment, failure to address the Variation (i.e. by removing the farm/controlling traffic) is extremely unlikely to be accepted by the Civil Aviation Authority (CAA), given the context in which the issues have been identified and addressed.

Whilst we accept the Mott Macdonald technical assessment of Runway 09 Declared Distances and agree with their findings that the ILS ‘Collision Risk Model’ demonstrates an acceptable level of safety, these theoretical scenarios do not address the fundamental issue in hand. The presence of Bank View Farm and vehicles on Bamfurlong Lane are the subject of a Variation to the CAA Licensing criteria. It is this, combined with the hazardous environment at the western end of the airfield that is the key safety issues the RSP seeks to address.

The CAA has stated that their policy is to seek to address Variations in all development projects. As an Aerodrome Licensee, it is difficult to justify and, therefore, accept a reduced level of safety. It is harder still to justify the case to the Regulatory Authority, particularly when the fundamental basis for the RSP has been to address the Variation up to this point.

9 Question One of the principle aims is to provide a better service to the community but given that the increase in traffic is likely to be training and the corporate market is the average member of the community likely to benefit.The benefits to the average community member are predominantly indirect, but significant to local prosperity. We strongly believe that the economic gain to the County is positive, (page 12 refers). Not only will the plans help to stimulate and sustain the growth of local businesses by opening up new markets and supply chains, it will further advance the County’s growing reputation and attractiveness to major commercial investors.

The Airport and the associated aviation-related businesses on site currently employ over 400 local people. Many of these jobs are of a skilled or professional nature. The Airport’s property portfolio, including the fully let Meteor Business Park, now employs over 1500 people.

In a region rich in aviation heritage and with strong aerospace industry connections, it is not surprising that recreational, private flying is a popular pastime. Aviation-related activities, such as pleasure flights, trial lessons etc. are immensely popular and a strong revenue source for the resident operators. Ancillary services, such as the café and pilot shop are well utilised by the public.


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The local benefits of General Aviation in the community are not always immediately obvious. The general public takes services, such as the Air Ambulance and Police helicopters, for granted and assumes that there will always be sufficient numbers of trained commercial pilots to fly them off on the holiday and business flights they generally associate with Airports. Everyday, high-street names and blue chip companies use corporate aviation, and Gloucestershire Airport, on a daily basis. In fact, the Department for Transport have forecast that with the growth of the short-break tourism market, regional airports are likely to continue this positive trend into the foreseeable future. Feedback from passengers has been entirely positive, with the time-saving benefits and convenience of local facility highlighted.

Prior to the introduction of the Isle of Man/Jersey/Belfast Scheduled Service between 2-3000 passengers per annum used the Airport. This figure will rise to over 5000 in the calendar year 2007 and is likely to exceed 14 000 in 2008. The success of the Manx2 services clearly indicates the demand for ‘niche’ routes from the Airport. This demonstrates the importance of air services for the regional tourism product, particularly in terms of bringing in high value tourism, business development and corporate relocation.

12 Request and clarify Provide a table of movements by category – training/corporate to provide both size of plane and number of passenger. Provide both existing levels and projections of movements which are then multiplied by fees to provide a backup paper to the income projection in the P&L

PrivateAir AmbulancePolicePositioningBAVAir/Sea RescueOtherCheltenham FestivalScheduled/CharterDiversions

Total(Total Police/Ams/SAR)

26778876659455216

94

683210

39%11%13%10%

9%7%8%2%1%1%

31%


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12 Request and clarify Provide a table of movements by category – training/corporate to provide both size of plane and number of passenger. Provide both existing levels and projections of movements which are then multiplied by fees to provide a backup paper to the income projection in the P&L

Movement TypeFIXED WINGTraining (D,G) 47115 52.75%Private (F) 11258 12.60%Commercial (ATX, AC, B, C, E, H, BAV) 3425 3.83%Military (J) 153 0.17%Overshoots (OS) 1799 2.01%

HELICOPTERTraining (D,G) 18544 20.76%Private (F) 4059 4.54%Commercial (ATX, AC, B, C, E, H, BAV) 2575 2.88%Military (J) 228 0.26%Overshoots (OS) 170 0.19%

Total fixed-wing 63750 71.37%Total rotary 25576 28.63%

TOTAL MOVEMENTS 89326

Training 73.50%Private 17.15%Commercial 6.72%Military 0.43%Overshoots 2.20%


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Movements

TrainingPrivateCommercialMilitaryOvershoots

15 Question Given CBC’s commitment to ensuring that climate change issues are recognised and monitored in future plans for the airport, will Gloucestershire Airport provide clear information on the existing carbon footprint of airport operations and how the RSP will increase or decrease carbon emissions? At a minimum, data is needed on the predicted increase in the number of flights that would result from implementing the proposals, with an estimate of the increased volume of fuel used and hence an estimated increase in CO2 emissions, based on DEFRA conversion factors. As shareholders, however, we would like to see the airport authority considering the impact of all activities at the airport on climate change and identifying measures to reduce carbon emissions in a quantifiable way.


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An independent survey carried out by the Cabinet Office & HM Treasury titled ‘The Economics of Climate Change’, reported that the UK generates 2% of global man made CO2, of which aviation accounts for just 0.1%. Further analysis indicates that Aviation’s global contribution to climate change is estimated to grow to around 5-6% by 2050 if radiative forcing is included (Stern, 2006). Although, it must be noted that the science on Radaitive Forcing is currently uncertain.

A detailed study of local air pollution concentrations has concluded that the proposed development of the airport will not compromise local air standards. During the financial year 2006/07, which has been one of our busiest, aircraft using Gloucestershire Airport consumed 2.1 million litres of fuel. By applying this figure to a Department for Environment Food and Rural Affairs conversion factor of 2.233 for AVGAS and 2.518 for JetA1, an indication of Gloucestershire Airport’s carbon footprint can be achieved.

Jet Fuel: 2.518 x 1.5 = 3.8 million kg of CO2

AVGAS: 2.233 x 0.6 = 1.3 million kg of CO2

The additional fuel sales predicted in the business case estimates that this will increase to approximately 3.2 million litres. Therefore, using the same calculation above, the predicted carbon footprint overall is likely to increase to 8 million kg of CO2. However, the conversion factors fail to recognise the considerable technological advances in more fuel efficient aircraft. A recent Air Transport Fact Group established in 2003 calculated that the fuel efficiency of aircraft has more than doubled in the past 40 years. Further research indicate that a further 50% improvement from the 2000 level, including up to 10% from Air Traffic Management efficiencies can be achieved by 2020.

The statistics below show, fuel sales at Gloucestershire Airport have reduced sequentially year on year, indicating that the more efficient engines and techniques used by today’s modern aircraft have helped reduce the impact of climate change.

2004/05 – 2,287,5692005/06 – 2,145,8682006/07 – 2,061,893

In addition, we need to consider these calculations as somewhat imprecise. Whilst the Airport acknowledges that climate change is a worldwide issue, CBC’s focus, in this context is, presumably more localised. The fuel sold at Gloucestershire Airport is not consumed wholly within the region. Aircraft generally spend a fraction of the airborne time in the vicinity of the Airport and normally less that 10 minutes taxiing before and after flight. This is referred to as the LTO (Landing/Take-off) cycle. During the cruise phase, emissions are generally much reduced


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and their impact depends on the altitude at which they are emitted. In view of these circumstances, the total environmental impact of the Airport’s aviation operations is very difficult to quantify. EU guidance and data on emissions from light aircraft is limited and, although the IPCC do have various methodologies for quantifying and assessing emissions from aircraft, the results will always be somewhat nebulous.

It is, perhaps, more helpful to consider several more familiar comparisons. It should also be noted that the 2.1 million litres of aviation fuel, is the equivalent to the fuel consumed on 650 yards of the adjacent part of the M5, 0.75 mile of the A40 to the South or just 2 miles of the Old Cheltenham Road alongside. Therefore, the contribution of Gloucestershire Airport to local CO2 emissions is negligible compared to that of motor vehicles on nearby roads (notably the M5 and A40), and local gas/electricity consumption. On a national scale, General aviation's total daily environmental impact is roughly the same as that of one jumbo jet in the first five hours of a transatlantic flight. Indeed, the entire fuel usage of the piston sector of general aviation in a year is equivalent to roughly 20 minutes of usage by the road transport sector.

More practical examples further contextualise the environmental impact. Compare a car journey between Gloucester and Leeds with a light aircraft flight. By road, the distance is 180 miles. Assuming an unrestricted journey with an average economy of 28mpg, a vehicle will consume 6.4 Gallons/ 24 litres of petrol. Applying the DEFRA conversion figures, this produces approximately 55kg of CO2. By air, the straight line distance is 130 miles. Assuming a wind affected cruising speed of 140mph, plus allowances for LTO cycle, and an hours’ engine running time, this journey will consume approx 30 litres of AVGAS, generating some 67Kg of CO2. Clearly the CO2 outputs are broadly similar, but the time saved on a return journey could be anywhere between 4 and 6 hours.

Gloucestershire Airport is fully committed to reducing the effects of global warming and understands the need to meet its environmental responsibilities. We have already identified areas where we can minimise our impact through technological and operational improvements, hence the RSP. We already help to minimise greenhouse gas emissions through the use of energy saving measures in the buildings and services within our control and improvements to aircraft operational procedures. We also understand that an important component of Government policy is the inclusion of aircraft emissions in the EU Emissions Trading Scheme. We fully support the emissions trading scheme and strongly believe that this is the most effective market mechanism for achieving improvements in the aviation industry.

It should also be borne in mind that the nine tenths of the Airport’s 400 acre site is covered in uncultivated grass. Free from pesticides and herbicides, grass is maintained at 6-8” length throughout the year, stimulating continuous growth and minimising rotting, which produces methane. This natural ‘carbon-sink’ adjacent to the M5/A40 interchange clearly has a positive ‘sequestration’ effect.


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The ‘Do nothing’ scenarios within the business plan, together with the numerous shareholder-commissioned reports over the years have all concluded that, without modest investment, the business will decline. In the long term, which could result in alternative land usage?

UK CO2 emissions by end user (2003)

Source: Sustainable Aviation and Climate Change Facts, 2006

16 Question How has the risk of a downturn in the demand for short haul flying, as a result of the possible introduction of carbon rationing, been included in future income projections for the airport?The long term sustainability of short-haul and, particularly, recreational air travel that has grown exponentially with the prevalence of so-called ‘Low Cost Carriers’ must be under threat.

It is acknowledged within the industry that air travel is seen as essential to business. Gloucestershire Airport’s core market will remain the business, corporate and training sectors. These essential services form the basis of the conservative income projections related to the RSP.

Specifically, business travel is driven by time. Even with the growth of e-technologies, the use of corporate aircraft is the only means by which this fundamental commodity can be delivered. The high-end corporate market is also at the cutting edge of emission reduction technologies. The new generation of business jets on offer use the most environmentally efficient engines. Whilst corporate aircraft will always be a carbon intensive method of travel, businesses have a clear economic incentive to save fuel and will undoubtedly pay a premium in the event of carbon rationing.


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16a Question Can you please describe the impact of non-determination of the planning application by Tewkesbury Borough Council, and include the financial consequences of a possible public inquiry.The main impact of non-determination of the applications by the Council is a delay in getting a decision and being able to move forward with implementing safety works. This obviously may have potential implications for the CAA’s consideration of the licence variations in the future. But it is important to note that the Council is restricted in being able to determine the RESA application until the objections from statutory consultees (EA and NE) are resolved. It would probably have to refuse the RESA application if it determined it in advance of this. By delaying, it does give the Airport a chance to move to a position where a positive decision is possible (although much depends on how Council members respond on the night to their officer’s recommendations). The other implication of non-determination is that it does allow the Airport to appeal now on this ground if it wishes to. This may save some time but would also miss out on the possibility of the Council approving some of the applications. As appeal decisions are currently taking over a year, it would be quicker overall if the Council were to approve the applications. We have however identified the possibility to submit fresh applications at no cost immediately after a non-determination appeal and let the Council determine these applications while awaiting an appeal (which could be withdrawn if any applications are approved). The cost of a public inquiry is likely to be high although difficult to estimate before we know what issues would need to be dealt with. A public inquiry is more likely than an Informal Hearing or Written Representations appeal process, because of the number of interested parties who may want to be involved. The Inquiry costs would largely involve fees for a barrister, and consultants’ fees for preparing and giving evidence (possibly on aviation/air safety, planning, highways, flood/drainage and ecology). The length of the inquiry could be more if any interested parties want to appear and give evidence. The overall cost would vary with the number and nature of issues, the extent of objections to be dealt with, the type of barrister used and who instructs the barrister. As a very rough guide, overall, a 10 day Inquiry might cost at least £50,000 and possibly up to £100,000.

18 Question What are the timings of the additional spend required from year 5. Include a table showing the costs and timescales – to including the £900,000 runway resurfacing of 09/27 and the £250.000 runway resurfacing necessary in Year 5 2010/11 how do these impact on projected costs. How do you propose to finance this? Is this inspected by the CAA?Every 11 months the runway is tested for its friction value and braking coefficient. This test, as required by the regulatory body, is published to all operators and inspected by the CAA during our annual inspection. These stringent tests provide an accurate assessment on the runway surface and help to determine its actual condition. Since 2004, the surveys have continued to show high friction and coefficient values, indicating that the surface is good, and with no signs of deterioration, the actual timing of the runway resurfacing project is difficult to determine. With an annual budget of £40,000 and a further £250,000 allocated in year 5 of the plan for runway


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repairs, this is likely to remain the case for some considerable time. A full resurfacing project can then be undertaken when the business can justify it, as the increase in income from doing the work will provide the capital.

20 Question Para 11.3 – Financial Forecasts. Where is the marketing cost projection? Is it included in the additional costs?A marketing/public relations budget is included P&L under overheads (Appendix A2) and equates to approximately £15,500 per annum.

21 Question Given the projection of Corporate home based jets from 1-3 (Yr 4-5) Is there sufficient hangarage space and if not what would the cost be? Where would it be and how far has this been explored? What are the planning issues and please assess the risks, which arise from a rejection of a planning application for more hangars?Sufficient hangarage space exists to accommodate the additional anticipated increases, although this will fill the remaining hangars. Outline planning permission exists on one plot, which is currently under negotiation. A detailed property development strategy was prepared in 2006, identifying a number of potential development sites within the South East Camp, adjacent to the Jet Fuel Testing Centre and Police Aviation Services.

The key planning issue is, of course, the Green Belt status of the land. Nevertheless, TBC have generally been supportive of Airport planning requests in the past, acknowledging that the Airports location, and continued success, ‘prevent’ alternative land uses and further Green Belt encroachment..

21 Clarify Clarify what is meant by potential property developmentAs detailed above, areas already identified have the potential to be developed.

P&L Request Include PWLB Loan terms (interest rate and period) – required footnote to P&LThe PWLB loan term is calculated at 4.35% over a 10 year period.

Gen 1 Request Provide executive summary – summarising key issues/ costs/ benefitsGloucestershire Airport performs an important role in providing key air services to the sub-region and is therefore an important transportation and economic resource; this is recognised in various policy and economic strategies for region and sub-region. As a General Aviation airport with a strong business aviation role, Gloucestershire Airport also contributes to the wider economy.

Looking first at the national context, in 2006, the Civil Aviation Authority (CAA) carried out two reviews in the General Aviation sector and its value to the UK economy. The reviews demonstrated that General Aviation (GA) is an important and integral part of the UK aviation sector and that it makes a significant contribution to the UK economy, both in terms of direct economic value (approximately £1.4 billion per annum) and numbers employed (11,600). This is equivalent to 8% of the total contribution of the UK’s commercial aviation sector as a whole.


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General Aviation airports within the country were identified as playing a vital role in the nation’s economy in many ways:

forming an essential element in the overall transport infrastructure bringing considerable economic benefits to an area in assisting the functioning of businesses and fostering

links with other parts of the country and Europe assisting services such as the public utilities, police and statutory undertakers (for survey work) and

medical services (for organ donations etc) assisting pilot training Without GA training sites, the national airlines would be struggling to find an adequate supply of pilots.

Turning to the Airport’s sub-regional role, the Airport is an important focus of aviation related employment activity in Gloucestershire. Within the Airport, the existing built up area known as South East Camp currently contains 40 firms, almost all of these are aviation related businesses. These support over 400 jobs including a range of highly skilled aircraft maintenance jobs. On the north side of the Airport is the Meteor Business Park, an industrial estate which is owned by the Airport Company. This is fully occupied and contains a range of companies, employing some 1,500 people, including large aviation-related firms such as Messier Dowty. The latter does not require runway access but has indicated it would like to make greater use of the Airport for business flights.

If the Airport were to close, there is no obvious site in the area with air access to which these firms which require close proximity to aviation facilities can relocate and still retain their staff. This effectively forms a small but important cluster of aviation related activity within Gloucestershire, indirectly supporting the aerospace sector which is one of the economic mainstays of the South West region.

The Airport also supports important services within the sub-region that are vital to the economy and to the operation of key public services. It provides a base for emergency services such as police helicopters, and for medical flights supporting hospitals in the area. The Airport’s pilot training facilities also supports operations at the region’s larger airports, helping ensure a supply of pilots for the growing number of commercial flights operating there. The aircraft maintenance operations and maintenance training facilities based at Gloucestershire Airport also support the aviation sector generally in the region, hence indirectly supporting its economy. Such facilities are valuable as they are increasingly unable to be accommodated at the larger commercial airports in the region, because of the growing pressure on runway slots and on operational airport land from commercial air operations.

In terms of serving the local business community, over 30 companies based in the area regularly use Gloucestershire Airport for corporate aircraft or air-taxi services. Almost all the 100 air taxi operators in the UK utilise this Airport to connect the Gloucestershire area to other parts of the UK and Europe not directly served by scheduled services. This is an increasingly important resource at a time when business linkages with Europe are


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increasing and firms seek quick transport links to business destinations. Government studies on business aviation confirm that such linkages help attract inward investment, provide flexibility, time savings and security for firms and support the retention of established businesses (DETR, 1999)

Independent assessments of the economic impact of the Airport on the surrounding area were carried out by consultants acting for Gloucestershire First in 2004, and separately by Gloucestershire University. (TRL, 2004)The main findings from this work were:

a. the Airport company and businesses based at and with operational links to the airport provide an important source of well-paid and skilled local employment

b. the Airport’s overall employment contribution (in 2004) was 345-430 jobs (Full Time Equivalent) but with planned development this could rise to 600-650 jobs

c. the Airport makes a significant contribution to local GVA, around £20 million at present, which could rise to £30 million, 0.7% of all GVA in the local impact area

d. the Airport makes a significant contribution to the local economy which would be lost by its closuree. establishment of regular and permanent passenger services (especially to London) could benefit

local companies and might result in some location/investment decisions by companies not currently located in the area, although the airport would be only one of a number of factors influencing such investments

f. direct services into the Airport would help in the development of the area’s tourism and in marketing short breaks

It is also significant that the Government White Paper on Air Transport recognises Gloucestershire Airport economic role, recognising that it plays an important local role in respect of business aviation, and fully supports the continuation of that role. Regional Guidance also emphasises the importance of the existing airports in the region and in supporting their development to serve air travel needs and helping reduce the effects of peripherality on the region’s economy. The Regional Economic Strategy also recognises the need for improvements to strategic air networks to enhance access to markets and help tackle peripherality.

It is clear from the above that Gloucestershire Airport performs an important transport and economic function within the County and sub-region, and that it has potential to accommodate some of the growing future air transport needs of the region. To be able to perform these roles effectively it needs to remove current operational constraints that limit its potential.

Government policy generally supports proposals to enable Airports to maintain and develop airport capacity, subject to any environmental impacts. Gloucestershire Airport is also recognised as an important asset to the region and the County in both transport and economic terms. The economic importance of small business aviation


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airports and Gloucestershire Airport in particular, is recognised, and planning policies at different levels support the continued role of these airports.

Gen 2 To be discussed The ‘substantial’ economic benefit to the local economy needs to be quantified with a strong business case for the predicted increase in terms of ‘new traffic’, business aircraft, local community/business use, corporate jets etc. Further details on the ‘loss of high market end traffic’ and a strong case on why this would return.We strongly believe that the economic gain to the County is positive, (page 12 refers). Not only will the plans to help to stimulate and sustain the growth of local businesses by opening up new markets and supply chains, but it will undoubtedly further advance the County’s growing reputation and attractiveness to major commercial investors.

The Eddington Report commissioned by the government has calculated that a 5 per cent reduction in travel time for all business and freight travel on the roads could generate around £2.5 billion of cost savings. The Government White Paper (2003), Department of the Environment Transport and Regions (1999) and findings from the Transport Research Laboratory (2004) and various Shareholder commissioned reports dating back some considerable time all conclude the viability of Gloucestershire Airport as an asset to the region that should be invested in.

A reduction in the declared distances will result in the loss of the high end executive market. This equates to approximately 1,350 movements annually, resulting in a loss of revenue of approximately £135,000 in landing fees and £200,000 in fuel sales. These home based operators Sorven Aviation (Falcon 900EX), Sporter Management (Citation X), Executive Aviation Services (3 x Citation Bravo), Eurojet Aviation (2 x Citation Excel, 3 x Citation Bravo) and Flight Partner (2 x Citation CJ) will be unable to operate effectively with the reduced distances and conceivably be forced to relocate.

Gen 3 Question Is your current management structure robust enough to meet future demands?The executive management structure has consistently delivered positive returns for the shareholders. The projected increases in business are small in operational terms and the existing business and safety management systems are constantly reviewed to ensure their suitability.

The Non-executive arrangements of the Board and Company’s Articles and Memoranda; however, can sometimes place burden and difficulty on the dynamic running of the business. The appointment of serving councillors inevitably gives rise to long-term instability and denies access to the relevant aviation and business expertise a small company requires, particularly when operating in a dynamic industry.

However, the management structure is commensurate with the level of operations and with the full support of the Board of Directors and Shareholders is robust enough to meet future demands.


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Gen 4 Question Could you please provide an assessment of the current rate of return for shareholders and the future rate of return following the completion of the project?

Rates of return - Five Year Plan

Return on Investment (pre interest profit as % of Capital Employed

2005/06 2006/07 2007/08 2008/09 2009/10 2010/110.33% 2.89% 1.12% 1.86% 9.22% 12.19%

Return on Shareholders Funds (Profit before Tax as % of Shareholders Funds)2005/06 2006/07 2007/08 2008/09 2009/10 2010/11

0.92% 9.12% 0.79% Nil 15.20% 24.80%

Return on Capital (Profit before Tax as % of Capital Employed (shareholders funds plus long term loans)

2005/06 2006/07 2007/08 2008/09 2009/10 2010/110.32% 3.14% 0.23% Nil 3.19% 5.02%

Gen 5 Question Should potential national proposals to tax aviation fuel or include aviation in carbon emissions trading materialise, what would the likely impacts be on the assumptions made in the business plan.With the idea of ‘eco-taxes’, where increased taxes on polluting activities such as flying are off-set by tax reductions elsewhere, being endorsed by the Conservatives, and Ruth Kelly pointing out that air transport should not be singled out as a special contributor to climate change, the impact is relatively small. These taxes will primarily affect the airlines and operators and not airports.

Responses to further questions to the airport following JASWG meeting 24 October 2007

Question 1Quantify actual business use locally, i.e. which businesses use the airport now and who has indicated that they would use us in the future

Gloucestershire Airport predominantly acts as a third party service provider to its clients. Whilst we deal directly with the aircraft operators and charter companies, our interaction with the actual business passengers is somewhat limited. Some business clients also value the degree of anonymity that


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corporate travel affords. Our response therefore, is somewhat limited: however, as highlighted during the meeting, various high profile businesses and Blue Chip companies such as M&S, Boots, Group 4 Securitas etc. already use the airport facility on a regular basis. With every indication that corporate travel and fractional ownership is increasing, this trend is likely to continue into the foreseeable future. We already have several businesses located at the airport specialising in this type of service and they have all indicated that, with the work complete, additional business will be generated.

In a local context, Messier-Dowty has indicated a very real demand to travel between their Headquarters in France. In a letter from their Managing Director, Grant Skinner, clearly indicates that the work would be to the benefits their wider travelling workforce.

Danfoss, a multinational Company, with a UK branch in the region used to operate their corporate Citation aircraft from the Airport, roughly twice per month. However, three years ago they upgraded their aircraft to a Dassualt Falcon model, similar to the aircraft that landed during the meeting. The operational restrictions of the current runway when carrying passengers forced them to operate the aircraft from Bristol instead. With the safety work implemented there is a strong likelihood that they will return.

European Skytime, a carbon neutral company, has several managed aircraft based in the London area and have said that with the work completed they too would base some of their fleet here, to service the demand from the local area. In fact, in a recent email from their Operations Director, they have highlighted several companies that are contracted to use their services (see list below). These on average fly between 6 and 30 times a year each. They regularly fly these clients to other parts of Europe but are often forced to use alternative airports due to the restrictions at Gloucestershire.

1. A Stroud based, privately owned energy company 2. 2 x Gloucester based multinationals 3. A London based financing company4. A Cheltenham Property Company 5. A Cheltenham based security firm 6. A publicly listed accommodation firm in Stroud 7. A Cheltenham based clothing company 8. A Stroud based construction firm 9. Along with several high net worth individuals

RGV Aviation Limited is currently negotiating with Cirrus aircraft, the top selling General Aviation aircraft manufacturer, which will bring the history of aircraft manufacture and back to Gloucestershire. RGV is already an authorised European service centre for these aircraft and this very real opportunity is likely to expand to include the Very Light Jet (VLJ) market if the runway safety work is completed.

The recent takeover of Cheltenham based Mira showers by Kohler Inc. was completed when their CEO arrived at the airport direct form the USA in their corporate aircraft, a Gulfstream 4.


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We also feel that Gloucestershire Airport played a part, albeit relatively small, in the decision process of General Electric in their acquisition of Smiths Aerospace and the future use of RAF Innsworth. It is believed that the locality of an airport that has the potential to accommodate corporate aircraft helped influence their decision, although this is unconfirmed. We therefore strongly believe that with the work completed it will attract further investment into the County.

Question 2Categorise aircraft movements into groups and clearly show how this relates to the business case

The full dataset presented in the previously supplied spreadsheet does not correlate directly with the notional forecasts shown in the Business Case because it is based on the actual breakdown of 2006 flights. Nevertheless, the data can be used to demonstrate the percentage revenue increases and the shift in types of traffic, before and after the project is completed.

To simplify the data, the following parameters have been applied. Aircraft have been grouped by Maximum Take Off Weight (MTOW) range in kilograms, as per the CAA statistical reporting criteria. These weight bands broadly coincide with the various types of flight taking place at the Airport. The number of flights is multiplied by a factored ‘landing fee’ based on current tonnage rates, with a nominal figure of £5 per landing applied to aircraft below 1750Kgs, reflecting the various discounts applied to ‘Club’ and ‘Private’ aircraft, which often carry out repetitive circuit training.

MTOW Band

Type of flight

Mvmts Current

Mvmts Post-RSP

Revenue Current

Revenue Post RSP

% mvmts

% revenue

0 - 750 Private 23752 25808 59380 64520 +9% +9%751 - 1750 Club 47195 46675 117987.5 116687.5 -1% -1%

1751 - 2730 Comm.Training 11127 11658 222597 244705 +5% +10%

2731 - 5700 Other 3779 3663 114624.5 118867 -3% +4%>5700 Business 1429 2047 143068 194249 +43% +36%

TOTAL 87282 89851 657657 739028.5 +3% +12%


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Movements

0

10000

20000

30000

40000

50000

0-750 751-1750 1751-2730 2731-5700 >5700

Aircraft Type

Mov

emen

ts

20062008

+9%

-1%

+5% -3% +43%


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Revenue

050000

100000150000200000250000300000

0-750 751-1750 1751-2730 2731-5700 >5700

Aircraft Type

£20062008+9%

-1%

+10%

+4%+36%

The key points to note are:

Whilst movements increase by 3%, revenue increases by 12% overall. Business traffic grows by 43%, yielding a 36% increase in revenue. Training flights, which will remain, by far the highest in terms of movements, decrease by 1% overall, but revenue from Commercial

Training, increases by 10% primarily from ILS Approach Training.

It should be noted that the revenue figures derived from the table above, do not fully reflect the discounts and differentials applied to various operators and take no account of fuel sales, the Company’s biggest revenue stream.


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Question 3Calculate the overall carbon footprint of the airport and develop a green policy of everything within our control.

The actual ‘carbon footprint’ Gloucestershire Airport produces is difficult to document accurately due the number of variables involved with the business. Whilst CO2 output data exists for modern aircraft, many simply arrive and depart relatively quickly from the Airport, producing a very small proportion of Greenhouse gases in the region. General Aviation aircraft predominantly operate at lower levels than commercial airliners, which when coupled with the volume and differing types of aircraft that can use the airfield, presents a very complex calculation, which at best can only be notional.

Nevertheless, the following calculations have been applied to the dataset used in the previous answers to demonstrate the minimal changes in CO2 emissions post-RSP.

MTOW (Kg) Band

Portion of flight spent in

region (Hr)Fuel use per

hour (ltr)DEFRA

conversionCO2 outputCurrent (mt)

CO2 outputPost RSP (mt)

0 - 750 0.5 7 2.223 184.80 200.80751 - 1750 1 30 2.223 3147.43 3112.76

1751 - 2730 0.3 60 2.223 445.24 466.482731 - 5700 0.3 200 2.516 570.48 552.97

>5700 0.25 400 2.516 359.54 515.03Total 4707.49 4848.03


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Local CO2 Emissions (Annual)

0.00

500.00

1000.00

1500.00

2000.00

2500.00

3000.00

3500.00

0-750 751-1750 1751-2730 2731-5700 >5700

Aircraft Type

C02

Ton

nes

BeforeAfter

Although the fuel sales are forecast to increase significantly after the Runway Safety Project is complete, this will obviously not be consumed solely within the region. The Business Plan anticipates attracting existing business flights from other regional Airports nearby. This, in itself, accounts for the bulk of the increased fuel sales and it should be borne in mind that the fuel would have been loaded at other Airports previously.

The removal of operational restrictions also enables aircraft departing from the Airport to carry increased fuel loads. This increases overall efficiency by negating the requirement for aircraft on longer flights to ‘tech stop’, en-route to uplift more fuel

Gloucestershire Airport is fully committed to reducing its greenhouse gas emissions and understands the need to meet its environmental responsibilities. We will develop a green policy and continue to play our own part in minimising greenhouse gas emissions through the use of energy saving measures in the buildings and services within our control, improvements to technical and aircraft operational procedures, extracting the most value out of resources and minimising waste produced. We will actively encourage our tenants, operators and business users to follow suit and we will work closely with the Consultative Committee in achieving this. In fact, we have already committed to working with the committee and operators in reducing noise pollution after consultation with our local community.


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In addition, a detailed ecological and wildlife constraints survey was carried out against our proposals. This, coupled with detailed and extensive cooperation with the Environment Agency, has resulted in a recommendation that the proposals will have a minimal impact on the environment.

We are committed to the UK aviation industry’s Sustainable Aviation Strategy, which sets out measures for aviation to minimise its impacts through technology and operational improvements. We are also prepared to issue a written undertaking by the Airport to reduce its carbon footprint wherever practicable and will actively encourage other business units to follow suit.

Question 4Provide information on our long term property development strategy.

Certain areas of the South East (SE) Camp (see attached site plan) were identified as potential development sites by the Airport Property Consultant, Nicholas Powell in January 2006.

The area comprising SE18, 20, 44 and 29 and the area around the existing main gate (subject to relocating the main gate so that it runs between SE34 and SE3) could be developed as one large site.

SE18 is held on a five year lease. However this is potentially going to be converted in to a longer term lease. It is, therefore important that flexibility is preserved.

SE20 is occupied by GAL Airport Maintenance team

SE29 is occupied on a lease until December 2007

The only reason why this whole site could not be developed immediately after 2007 is that SE44 is leased until 2028.

The area comprising SE12, 21 and 26, again this area could be developed as one large site.

SE12 owned by Gloucestershire Airport, and used purely for hangarage

SE21/26 is occupied on a lease until July 2014

The lessee of SE21/26 has on several occasions in the past expressed an interest in terminating the lease. However in recent months the lessee has sublet the premises for 5 years.


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SE3 – This site comprises the largest hangar on the airport (21,500 sq ft). This could be redeveloped in conjunction with the land immediately to the north, south and south west to provide a large facility. The airport is currently in control of this whole area save for the annual agreement in respect of half of the car park.

There is the potential for a low rise development south of the Control Tower and north of hangar SE48.

There is also the potential development of the site in the area immediately north of the Jet Test Centre. This land has recently been surrendered by a local farmer and is now occupied on an annual licence.

Question 5Calculate the predicted passenger throughput and actual capacity.

Although the business case is based primarily upon the corporate segment of the market, which always has and will remain the focus of the company, the business does have the capability to accept a relatively small increase in scheduled services. Therefore, and for the purposes of answering the question, the following calculations have been made using the Department for Transports Airport Security in Airport Design document (ASIAD).

A recent Mott McDonald report (2005) estimated a moderate annual passenger throughput of 9,360 per annum, rising by 50% annually. This equates to a single aircraft carrying 15 passengers on a return trip, six days per week. However, based upon the introduction of the Isle of Man service, historic data and a rising interest in the development of Gloucestershire Airport, the suggested maximum Terminal Busy Flow Rate equates as follows:

Ap = Available aircraft parking stands PIx = Maximum passengers per aircraft (Inbound) POx = Maximum passengers per aircraft (Outbound) P = Maximum Terminal Busy Flow Rate at any single time.

P = Ap x (PIx + POx)P = 5 x (19 + 19)P = 190

Assuming that all 5 aircraft arrived one after another, with full loads on both the inbound and outbound sectors then the maximum throughput at Gloucestershire Airport will be 190 passengers at any one time. However, by applying a realistic load factor of 60% across five different routes, utilising a 19 seat aircraft, the passenger throughput at any one time is 114 passengers. Due to business, and indeed leisure travellers, needs this is likely to take place in the morning and again during the evening, which equates to 228 passengers per day. Again estimating that these services will run Mon to Fri, this equates to 59,280 passengers a year.


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Terminal Busy Flow Rate 114

Daily throughput 228

Annual throughput 59,280

The terminal busy flow rate will also be used to analyse the space needed against the actual footprint of the main terminal and the mandatory equipment needed to screen travelling passengers. Bearing in mind, that only outbound passengers are screened, the terminal busy flow rate will be halved.

Gloucestershire Airport’s Main Terminal currently has a check-in area of 100m2. The space needed for queuing is a function of the maximum queue size and the layout of the queue. The equation below gives the number of passengers (QP) and area needed (QA) in metres squared, assuming a typical queue width of 1.2 metres.

Data required:SQ = Queue time standard (minutes)A = Space per passenger (metres2)Nx = Number of X-rays per queueC = Capacity of X-rayH = Number of hand baggage items per passengerfx = X-ray utilisation

Assumptions:SQ = 5 minutes (1st process – Initial check-in)

1 min (2nd process – Passport control)A = 1.0m2 with hold baggage (1st Process)

0.7m2 no hold baggage (2nd process)C = 600 pcs/hr

Length of queue – Passenger (QP)

Qp = Sq x 57 x Nx x C x fx 3600 x H


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Area of Queue – Metres2

QA QP x A

Gloucestershire Airport Queue Area calculation:A single queue feeding one X-ray machine; each passenger with hold baggage.

Length of queue in Passengers:QP = 5 x 57 x 2 x 600 x 0.9

3600 x 1.5

QP = 324000 = 57 passengers 5400

Queue Area:QA = 57 x 1.0 = 57m2

These calculations clearly indicate that although there is sufficient space available on paper, it assumes that all passengers are lined up in a regimented fashion and does not consider the use of trolleys or out of gauge luggage. Therefore the queue area has been calculated using both the 1st and 2nd process cumulating in a factor of 1.7m2. This results in a revised figure of 97m2, which although is still within the available footprint, does present a fairly tight squeeze.

Even though the calculations and current design of Gloucestershire Airport is satisfactory for both current and potential levels of operation, we do have the potential to make a very small adjustment to the adjacent hangar. This enables us to partition off a walkway within the hangar freeing up the existing arrivals area as additional space for departing passengers.

Question 6Revisit the calculations based upon the revised PWLB interest rate.


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In our initial response to this question, we had overlooked the fact that our budgetary calculations were based on a higher PWLB interest rate. We have always acknowledged that due to the timeframe involved there was a very real likelihood that the PWLB would increase. We had therefore anticipated this within the business case and as such the current interest rate is below our prediction.

Question 7 Revisit the calculations taking into account the additional costs as highlighted within the Mott MacDonald report.

7a. Additional £100,000 for traffic controlWe too were slightly taken aback by the Mott MacDonald estimate for traffic control and as such invited Coeval, a company specialising in traffic control and road safety for 20 years, to revisit the original quote of £65,000.

Taking into consideration the timescales involved, their revised quote was as follows

Equipment Supply £39,335Installation, Civils and Project Management £47,727Total costs £87,062

This revised figure also includes the very latest technology in height detection and traffic management systems. An opportunity also exists to use existing Airport power supplies and to carry out ‘soft’ trenching on current Airport land, adjacent to Bamfurlong Lane, thereby reducing civil costs.

7b. Increased contingency from 5% to 10%

We concur with the Mott MacDonald recommendation of a 10% contingency.

Therefore, by factoring these amendments into the project costs and assuming approval for the plans were received imminently, the revised total projects costs would be circa. £3,366,000. As it stands, this increase can be met be capital.

Question 8Are the capital costs shown in each year based upon the estimated cost at the time the costs are anticipated to be incurred?

Yes, the capital costs shown within the business case are based upon the estimated time the costs are anticipated to be incurred.


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Responses to questions raised at the CBC ASWG meeting on the 06 November 2007

Question 1 Categorise aircraft movements into groups and clearly show how this relates to the business case.

a. It must be appreciated that there are many aircraft types within each category and that weight does not automatically correspond to passenger capability or indeed size, for example the Falcon 900EX which is currently based here, has a MTOW of 20,640kg and has a passenger capacity of 8, whereas an ATR 42 used in the example below has a capacity of 46 passengers but only has a MTOW of 16,700kg. Therefore, for the purpose of this exercise, the figures below represent the aircraft with the largest passenger carrying capability in each category. It must also be understood that the aircraft that use Gloucestershire Airport will not actually change. What changes is the ability to carry effective payloads, i.e. full of passengers.

i. The maximum passengers in each capacity are:ii. The anticipated average number of passengers in each capacity:

MTOW BandMaximum number of

passengers

Anticipated average number of passengers

Average number of passengers without RSP

With CAA restrictions

0 – 750 2 2 2 2751 – 1750 6 6 6 6

1751 – 2730 6 6 6 62731 – 5700 19 19 19 8

> 5700 46 46 22 0

Note: The 46 seat aircraft in the over 5700 category is an ATR 42 which has operated from Gloucestershire Airport in the past. However, due to the restrictions highlighted within the business case, it was forced to operate at a reduced payload. The factors that determine the payload are calculated by the Captain and are based upon weather conditions, weight of actual load (including baggage) amount of fuel uploaded and a host of other variables.

b. The maximum take-off weight (MTOW) potentially of any aircraft taking off and landing is difficult to quantify, as detailed above. Therefore, for the purpose of this question we have presented an example based upon the largest aircraft that has visited Gloucestershire Airport in the past. This aircraft is a Gulfstream IV with a MTOW of 33,203kg and a maximum passenger capacity of 19.


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Question 2Calculate the overall carbon footprint of the airport and develop a green policy of everything within our control.

a. Gloucestershire Airport will aim to introduce a Green Policy, which specifically considers areas within our control, hopefully by early next year. The Board of Directors will also ensure that any executive decision made will consider the environment. We will continue working very closely with our industry colleagues in addressing a methodology of calculating aviation’s climate change emissions, as it is absolutely vital that there is a robust assessment and quantification not just of aviation’s contribution but that of other sources of climate change emissions too. Without this there is a danger that policy instruments may be ineffectively targeted.

b. As detailed in above, it is very difficult to provide an accurate calculation on the impact of additional services. This is also partly due to the inaccuracies of non-CO2 multipliers. We understand that these ‘multipliers’ based on the Radiative Forcing Index are a misapplication of science because they fail to account for the resident timescales of emissions. However, we are supporting the scientific community in efforts to improve the understanding of aircraft non-CO2 atmospheric effects.

Question 3Calculate the predicted passenger throughput and actual capacity.

Although difficult to quantify precisely, as there needs to be an actual demand for a service to be introduced, Gloucestershire Airport estimates that the increase in scheduled services will b-e a further three routes. This is based upon our knowledge of the industry, conversations with the current provider, feedback from passengers and available resources.

Responses to supplementary questions (including questions to EBI Overview & Scrutiny Committee)

1. Please clarify that both unscheduled and scheduled flight forecasts were used in the local air quality study (referred to in the business plan)

The difference between unscheduled or scheduled has no relevance on the air quality study. The study was carried out against our annual movements and not specific to any aircraft type. However, for clarity of the question, all types of movements were used, including aircraft types that are used for scheduled flights.

2. Please clarify as above for the noise modelling work


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The forecast figures were based on the anticipated business model which, as previously stated, includes aircraft types capable of scheduled services. Therefore, the small, turboprop aircraft, of the type used by Manx2 was factored in.

3. Please clarify that details of all forecast flights have been passed to TBC for consideration with the planning application

TBC have received a complete and full dataset of all relevant information pertaining to the Runway Safety Project, which includes the full 2006 movement data and all forecast flights.

4. Please provide the details of 2007 movements asap as the Manx flights have presumably not been included in the 2006 baseline data

All calculations are based upon movements, as per the mandatory reporting scheme (Calendar Year). Our movements for 2007 currently stand at 82 129 whereas the 2006 figure was reported as 88 533. The effect of the scheduled service is minimal, accounting for around 1 400 movements per annum (circa 1.5%). By way of comparison, almost 500 emergency flights were conducted by the military and Police, during the first week of the summer flooding.

5. Please confirm whether, based on your forecast of 3 additional scheduled flights bringing 12 extra flights a day and carrying potentially 46 passengers, you are considering a more intensive look at traffic impact

No. As detailed within the RSP, schedule services do not form part of the business model. This scenario was based on a request by the committee, despite our continual response that this does not form part of the business plan. It must also be remembered that opportunities for scheduled services are very limited from here due to the locality and low cost alternatives at Bristol and Birmingham.

Gloucestershire Airport has legal responsibilities as an Air Navigation Service Provider to safely manage the airspace over which it has authority. As such, we are governed by very stringent rules and regulations that must consider, monitor and report on the impact of traffic. These rules and regulations determine, to some extent, the operational ‘capacity’ of a licensed aerodrome, based upon opening hours, staffing levels, qualifications of ATC and a host of other complex variables. The post-RSP forecasts are robust and, more importantly, the Airport’s existing infrastructure is sufficient to comfortably accommodate this modest growth.

If, in the unlikely event, additional scheduled services were to commence at the rate forecast above, the effect of a 2% increase in traffic would still be minimal in operational and environmental terms.

In 1989, the Airport handled some 102 000 flights, including some 14 000 scheduled passengers, when Dublin and Jersey services were operational, with fewer operational staff than are currently employed. Changes to ATC staffing requirements, introduced by the CAA, have


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built considerable extra capacity and safeguards into the operation. Whilst movement rates are not expected to increase to these levels again, it should be apparent that the infrastructural investment the Airport has made since then are adequate for the forecasts.

Re questions raised to E&BI O and S committee, please confirm:

1. Given the potential increase schedule flights please confirm that airport opening hours will not alter from those already advised to the shareholders

There are no plans to extend these hours as part of the RSP.

2. The business plan makes no provision for approach lights for the ILS which are required to make it fully functional. The cost of acquiring land for and installing such lights is not accounted for in the business plan

300m of Approach Lighting will be provided, within the existing perimeter, rather than the recommended 420m. We actually identified this as a risk following the PRINCE2 process and as such contacted the CAA for their advice. We agreed with the CAA to accept reduced ‘visibility’ minima as a result of not installing the lights. As this was identified very early on in the RSP, our calculations are not affected. The operational effect is minimal (the visibility minima will increase from 600 to 800m) and will only effect aircraft approaching in conditions of fog.

3. How far outside the current airport perimeter the ILS approach lights would be sited if they were to be installed.

N/A

4. An ILS would concentrate all of the additional ILS training approaches (3200 pa according to the business plan), plus all the ILS dependent commercial/business traffic, onto the East/West runway which passes over Cheltenham.

Instrument approaches have only ever been available on the east/west runway. Currently, due to the prevailing winds in this part of the UK, about 70% of our commercial, business and training traffic already use Runway 27, approaching over Cheltenham. ILS, however, is far more accurate in azimuth and glidepath than the current non-precision approaches, minimising the environmental impacts. During the approach phase, aircraft are much quieter and fuel-efficient, often with engines at idle power, using their inertia to ‘glide’ towards the runway.

5. The increase in movements, noise and pollution that would be caused if an ILS is installed


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Noise and pollution is likely to decrease as a result of installing an ILS. Our current procedures have aircraft approaching the Airport in a ‘stepped approach’ method. This basically means that aircraft approaching the airport use a high power / low power sequence. With the introduction of an ILS a much quieter and more fuel efficient method can be adopted which will enable aircraft to glide, on low power, to a specific point on the airfield.

6. If the developments proceed then the usable length of runway, will be increased. This increase will be sufficient to be utilised by the larger jets that could be used for European services. Is the Airport Board likely to seek to attract such services to the airport?

Although the RSP is primarily to address safety concerns, it does actually present us with a more commercially viable asset. However, the aircraft types that currently use the Airport will not change significantly. What they can do is operate with better and more effective payloads. Most of our home based jets already provide a European, and indeed, an international service. However, they are restricted to small payloads making the journey that much more expensive. With the development plans approved, they can continue to provide this service to the business/leisure community, but with better payloads.

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