Tucson Airport Authority: year in review ...

              Tucson Airport Authority Year in Review 2006



TUCSON INTERNATIONAL AIRPORT C E L E B R AT I N G NONSTOP SERVICE TO 19 DESTINATIONS



EXECUTIVE E XE C U TI V E LETTER



M A N A G I N G CHANGE: LEADING THE WAY T O S U C C E S S



Bonnie A. Allin, TAA President/CEO, and Robert A. Elliott, Chairman of the Board, in front of the Heric Sculpture



Letter from the President

The Tucson Airport Authority celebrated significant milestones in 2006:

 Tucson International Airport was named Airport of the Year by



 The overlay of the main runway, and adjacent taxiway, at Tucson



International was completed in just over 30 days. The $12 million project represented a major investment in the airfield to support our airline partners and other airfield users.

 At Ryan Airfield we wrapped up a $750,000 project to install high-



the Arizona Department of Transportation.

 JetBlue Airways initiated nonstop service to New York/Kennedy



efficiency LED lighting that can be controlled by pilots, after hours, further reducing light pollution and energy consumption.

 The first hangar in TIA's new general aviation complex opened



bringing to 11 the lineup of commercial carriers serving the Tucson community.

 United Airlines launched daily nonstop service to Washington DC/Dulles.  Southwest added Tucson to the first group of through flights to



and Million Air announced plans for a groundbreaking in early 2007.

 Cherokee Cababroke ground for construction of 15 new hangars



totaling 36,000 sq.ft. at Ryan Airfield.

 TAA managed, once again, to secure a large amount of funding  over



Dallas Love Field after revisions to the Wright Amendment Legislation were signed into law.

 TAA and its airline partners agreed to a two-year extension of their



$11 million  from federal and state grants in an extremely competitive process for limited dollars.

 TAA's strong financial position and future prospects were recognized



Airline Use Agreement through 2008.

 Airline traffic broke another record, finishing the fiscal year with



a 4.6% increase in passengers at 4,227,788. Aircraft operations, at both TIA and Ryan, increased 3% and 6.3% respectively.

 OTG Management was awarded an eight-year contract to handle



with an upgrade to A1 from A2 on its outstanding senior lien revenue bonds by Moody's and Fitch's assignment of a positive ratings outlook on all of TAA's senior and subordinate lien debt. While this is only a partial list of activity, it is a very tangible record of success. The TAA leadership is committed to providing facilities that optimize our position as a primary economic hub for the region. As the community's connection to the world, the TAA membership and staff recognize that creating, planning and maintaining the infrastructure and improvements to fuel this economic engine are critical for a successful and profitable future. Change is inevitable. Success is conditioned upon our response to it.



food and beverage operations in the TIA terminal. The exciting new variety of options for airport customers and employees has already resulted in significant increases in revenue.

 Paradies/Desert House was awarded a contract extension to upgrade



and renovate its gift and news shops in the terminal.

 Covered parking was introduced at TIA's Park`N Save Economy lot,



offering customers an amenity not previously available.

 Work began on the next phase of terminal improvements with the



award of a contract to Sundt Construction for a $31 million renovation of the concourses at TIA. $35 million in subordinate lien airport revenue bonds were issued to finance the project.



Bonnie A. Allin, A.A.E., President/CEO



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TUCSON AIRPORT AUTHORITY | 2006 Year in Review



LEADERSHIP LEADERSHIP



2006 Board of Directors pictured from left to right: Robert A. Elliott, Chairman; Richard F. Imwalle, Chairman-Elect; Raymond Bernal, Director; Edwin L. Biggers, Assistant Secretary; Darryl B. Dobras, Treasurer; James S. Pignatelli, Secretary; Timothy J. Prouty, Assistant Treasurer; Rubin Salter, Jr., Director; Christopher Sheafe, Director



New Members Thomas E. Chestnut, President/CEO, Chestnut Construction Corporation Michael W. Franks, President, Seaver Franks Architects Robert Johnston, Three-Star General, Retired, U.S. Marine Corps Terri Mitchell, Vice President, IBM Joice A. Tinsley, Senior Vice President, Chase Deceased Howard Selby, Paul Jones TAA Councils Airport Information & Education; Arizona Public Safety Personnel Retirement Board; Art; Audit; Budget & Finance; Executive; Insurance; LEPAC; Long-range Planning; Marketing and Air Service Development; Nominating; Operations; Policy; Public Safety; Strategic Issues



At the Arizona Airports Association annual meeting, TIA was presented with the Arizona Department of Transportation Airport of the Year Award.



Tucson Airport Authority Mission

The mission of the Tucson Airport Authority is to promote aviation and foster economic development by strategically planning, developing and operating the most effective and efficient airport system for southern Arizona.

LEADERSHIP



AVIAT ION (COMMERCIAL AND INDUSTRIAL)



 Develop funding sources for infrastructure.  Construct infrastructure to all remaining (including redeveloped)



commercial and industrial areas.

 Work with existing tenants to enhance facilities and identify and grow jobs.  Actively pursue new businesses to relocate to TIA and Ryan, working



with community partners as appropriate.

 Implement Marketing Plan.

R ETAIL CONCESSIONS AND PASSENGER AMENITIES



Created in 1948 by Arizona State Charter, the Authority is composed of 115 Pima County residents who represent a broad range of civic and business interests and expertise. Led by a nine-member board of directors that sets policy for the operation of both TIA and Ryan Airfield, the TAA board and membership, together with staff, develop strategic initiatives to support the mission.



 Complete concessions and amenities master plan to identify available



space and new business ideas.

 Enhance existing services and facilities.  Monitor customer preferences and benchmark with other



comparable facilities.



Vision Statement

Develop, operate, and maintain the best professionally run aviation facilities providing our region with outstanding services to our customers, fiscally prudent management, exceptional economic development, and a highly productive and satisfied workforce that provides a positive first and last impression of TAA and our region. TAA will achieve this through effective leadership of its professional staff and vigorous management of resources as outlined in the Corporate Philosophy.

AIR SERVICE



 Implement Marketing Plan.

RYAN AIRFIELD



   



Explore additional funding for infrastructure. Extend infrastructure to new areas. Improve products and services to customers. Actively add businesses to support airport users.

COM M UNIT Y RELATIONS



 Ensure long-term viability of TAA through long-term prudent fiscal



planning and management.

 Continue long-term capital development plans and implementation.  Spur business development that contributes to community growth     



 Continue to add/enhance commercial passenger services.  Pursue continued growth of air cargo with the goal of adding



sorting facilities.

 Continue to serve as catalyst working with community partners



to develop support for air service.

 Implement non-aviation Marketing Plan.



and well-being. Develop effective strategies to extend lease. Execute EPA/environmental mandates. Assume the lead on aviation issues in region, state, and nation. Ensure adequate facilities to support region. Be proactive in setting of policy and legislation.



TUCSON AIRPORT AUTHORITY | 2006 Year in Review



3



AIRLINES



G O I N G MORE P L A C E S

CALGARY



SEATTLE TACOMA



AIRLINES SERVING TIA Aerolitoral Alaska American Continental Delta/SkyWest Frontier JetBlue Northwest Southwest US Airways United/Lufthansa

SAN FRANCISCO

SAN JOSE MONTEREY FRESNO SACRAMENTO OAKLAND MEDFORD PORTLAND



SPOKANE GREAT FALLS



BILLINGS



MINNEAPOLIS ST. PAUL



SALT LAKE CITY

OMAHA



CHICAGO

PITTSBURGH



NEW YORK CIT NEWARK

BALTIMORE



DENVER

KANSAS CITY



WASHINGTON DC



NORFOLK



LAS VEGAS

ONTARIO



LOS ANGELES

PALM SPRINGS



CHARLOTTE



SAN DIEGO



ALBUQUERQUE PHOENIX



OKLAHOMA CITY



MEMPHIS



ATLANTA DALLAS



TUCSON

HERMOSILLO

LOS MOCHIS SAN JOSE DEL CABO GUADALAJARA PUERTO VALLARTA



EL PASO



AUSTIN



HOUSTON

LAREDO



TAMPA ST. PETERSBURG FORT LAUDERDALE



11 Airlines, 72 daily nonstops to 19 destinations with direct (single plane) service to 28 cities and connections around the world. Passenger traffic broke another record with 4,227,788 passengers in FY06, compared to 4,041,309 the prior year, a 4.6% increase.



Global Access: New York. DC. Newark.

Tucson Makes the BlueTeam! JetBlue began nonstop service to New York September 28. JetBlue's first venture in Tucson, the 156-seat A-320 departs Tucson at 11:30 p.m., arriving in New York at 7:15 a.m. United started nonstop service to Washington DC through Dulles International Airport October 31 flying a 120-seat Airbus A-319. Departing Tucson at 9:35 a.m. and arriving in Washington at 3:40 p.m., the flight is timed to support business travelers and to connect to United's bank of international departures from DC. This is the only nonstop service to Washington DC from Tucson. Continental announced the return of daily Newark nonstop service beginning December 15. The airline intends to operate the flight continuously throughout the year rather than as holiday and peak season service. Continental will operate the 124-seat Boeing 737 on the route. As a result of further capacity-cutting measures related to its bankruptcy filing, Delta decreased its nonstop Atlanta service from three to two daily nonstop departures. Northwest maintained its existing service level between Tucson and Minneapolis. US Airways increased daily capacity between Tucson and Phoenix by replacing one of its daily 86-seat CR9s with a 124-seat A-319. Frontier upgraded its Tucson-Denver service in August by replacing its 70-seat regional jets with 114-seat Airbus A-318s. Each seat features a personal LCD video monitor and DirecTV with 24 channels of live satellite television. Southwest added through-service to Dallas via Albuquerque with the revision of the Wright Amendment, eliminating the need for the purchase of two separate tickets. The low-cost carrier announced it will add a sixth flight to Los Angeles March 11, 2007.



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TUCSON AIRPORT AUTHORITY | 2006 Year in Review



AIRLINES



TIA Airline Partners: Frontier, US Airways, Continental, and Southwest



Where Do You Want to Go

Capitalizing on the popularity of online travel trends, TAA's air service web site, www.airtucson.com, is an all-in-one travel portal for Tucson based and bound travelers. Boasting 20,000 monthly unique visitors and 6,700 opt-in Fare Finder Alert subscribers, the site continues to market Tucson's best air fares and air service throughout the community and the globe.



Carol Phillips Named TAA Director of Marketing

Carol Phillips was named the Director of Marketing responsible for the development and implementation of all of TAA's marketing activities including the promotion of commercial air service and business development opportunities for both aviation and non-aviation businesses at TIA and Ryan Airfield. The founder of www.airtucson. com, the airport's flagship tool for promoting the use of TIA's airline services to the Tucson traveler, Ms. Phillips moved to Tucson in 2004 from Corpus Christi, Texas, where she was Director of Marketing and Communications for the Corpus Christi Convention and Visitors Bureau.



2006 Flight Schedule Summary

N O N S T O P D ESTI N ATI O N S

Albuquerque Atlanta Chicago O'Hare Chicago Midway Dallas/Ft. Worth Denver Hermosillo Houston Bush Las Vegas Los Angeles Minneapolis Newark New York JFK Phoenix Salt Lake City San Diego San Francisco Seattle/Tacoma Washington Dulles



AIRLINE/DAILY DE PA RTUR ES

Southwest (2) Delta (2) American (3) Southwest (1) American (8) Frontier (2) United (4) Aerolitoral (1) Continental (4) US Airways (2) Southwest (6) Southwest (5) United (5) Northwest (1) Continental (1) JetBlue (1) United (1) US Airways (10) Delta (4) Southwest (3) United (1) Alaska (1) United (1)



Alex Kovach Named Regional Examiner for Southwest Chapter of AAAE

The American Association of Airport Executives selected Alex Kovach, A.A.E., as the Southwest Regional Examiner. In this capacity Mr. Kovach will conduct examinations for the Executive Membership (Accredited Airport Executive) and report findings to the AAAE Board of Directors. He will also read and grade management papers and participate in the final interview for Executive Candidates for the A.A.E. designation awarded by the American Association of Airport Executives. Mr. Kovach joined TAA in 2002.



Pictured from left to right: Alex Kovach, TAA Director of Air Service Research & Development Carol Phillips, Director of Marketing



TUCSON AIRPORT AUTHORITY | 2006 Year in Review



5



CONSTRUCTION



A D D I N G NEW SPACES



Baskin Robbins and Ike's Coffee



Additional security requirements mean spending more time at airports, and in 2006 visitors had more food and shopping, not to mention waiting options.



Shopping

Paradies News & Gift Shops completed renovations to the east concourse gift shop and opened a new PGA Tour Shop near Gate 14. They also opened a news/gift shop adjacent to the United Airlines ticket counter.



Hanging Out: Welcome Lounges

Welcome Lounges opened in baggage claim for meeters and greeters waiting on arriving passengers. Distractions include: Ike's Coffee Bars; free wi-fi; Flight Information Display monitors; Flight Tracker; closedcircuit TV monitors; and periodic live performing artists.



Good Eats

OTG Management, selected to operate the Food and Beverage concessions at TIA, began an immediate makeover of airport facilities in July and by Thanksgiving opened:

 Ike's Coffee Bars at the end of both concourses and in



TIA: 2007

Sundt Construction got the green light for the $30.9 million concourse renovation, scheduled for completion in December 2007. That work includes:

 Reconfiguring the security checkpoints by installing a glass wall



baggage claim.

 Baskin Robbins and Cibo Express Gourmet Market at the base of



the central escalator to the third floor.

 Food courts on both concourses featuring:



EAST  Taco Bron; Arizona Sports Grill; Boar's Head Deli; Cheeburger Cheeburger; Cibo Express Gourmet Market. WEST  Sky Asian Bistro; Carmella's Kitchen; Boar's Head Deli; Cibo Express Gourmet Market.

 Opening February 2007: Jet Rock Bar and Grill on the third floor.



to route arriving passengers directly to baggage claim and directing meeters and greeters downstairs.

 Relocation of U.S. Customs and Border Protection commercial



passenger facility for international arrivals and departures to the east concourse.

 Adding new restrooms; ticket counters; ceiling, wall and carpet



finishes; and expanding the free wireless Internet system.



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TUCSON AIRPORT AUTHORITY | 2006 Year in Review



CONSTRUCTION



Arizona Sports Grill and Paradies Desert News/Gifts



TIA Terminal Map

Ike's

A6 A8 A4



Paradies/

T H I R D LEVEL



Desert House Jet Rock Coming in February



PGA Golf Shop Ike's

B4 B6 B8 B10



Paradies/Desert House



A9 A7 A5



A3 A2 B2 A1



B3 B11 B5 B7 B9



Cibo Market

CONCOURSE A



B1



Baskin Robbins Arizona Sports Grill Boar's Head Deli Cheeburger Taco Bron

est

ky W est



CONCOURSE B



Carmella's Kitchen

The Gallery



Cibo Market Boar's Head Deli Sky Asian Bistro Paradies

ted Uni



A R E A S UNDER RENOVATION New Remodeled Food Courts Newly Remodeled Gift Shops New Meeter/Greeter Areas New Coffee Cafes



Cibo Market

thw Sou

Del



ta/S



olito Aer



ra l Alas ka



Desert News/Gifts

U Co S Ai nt rw ine ay nt s/ al tB lue Je



on



tie



r



Am



er



ica



n



Fr



DE



PA



RT



E UR



S



RO



AD



WA



Y



B A G G A G E LEVEL



No



rth



we



st



Welcome Lounge



Welcome Lounge



East Baggage American Southwest Frontier Dollar

Alamo Hertz Av i s Budget National Enterprise



AZ Stagecoach



Ike's

A I RR



VA



LS



RO



AD



WA



Ike's

Y



West Baggage Alaska Continental Delta/SkyWest JetBlue Northwest United US Airways



To Rental Car Pick-up G R O U N D TRANSPORTATION & SHORT TERM PARKING



Key to Symbols Assist Restroom Baggage Claim Cash Machine Coffee/Snacks Elevator Escalator FedEx The Gallery Gifts/News Flight Insurance Information Lost & Found Mailbox/Stamps Rental Car Pick-up Restrooms Vending Machine United Parcel Service



TUCSON AIRPORT AUTHORITY | 2006 Year in Review



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TENANTS/ECONOMIC DEVELOPMENT



T U C S O N R E G I O N : A P L AY E R I N T H E GLOBAL M A R K E T P L A C E



United Parcel Service began flying out of TIA when they acquired Menlo-Emery. TAA's air cargo carriers flew 36,378 tons of freight during fiscal year 2006.



Tucson's Air Freight Carriers: Connecting Tucson to the World

AIR FREIGHT COMPANIES



TIA Trade Area: Southern Arizona and Beyond

Hitting the one million population mark, the region that comprises Tucson, South Tucson, Oro Valley, Marana, Sahuarita, and Pima County is attracting attention. Airlines are taking notice as are major corporations and retailers. TIA's trade area that includes the cities and counties of southern Arizona and northern Mexico looks to the airport not only for air service but other services and facilities as well.



Aerolitoral Air Cargo Transit American Airlines Continental Airlines Danzas AEI International/DHL Delta Air Lines Eagle Global Logistics FedEx Matheson Flight Extenders Northwest Air Cargo Southwest Airlines US Airways U.S. Postal Service United Airlines United Parcel Service Worldwide Flight Services



Bombardier Celebrates 30 Years at TIA

Bombardier celebrated their 30th anniversary at TIA and a 22-year extension of their lease with TAA in September. When Gates Learjet opened their facility on the west side of the airfield with an initial workforce of 150 employees  now 650  the plant was originally constructed with the purpose of new aircraft production and service. In 2005 Bombardier moved completions from the Tucson facility to Montreal and Wichita. However, the facility continues to operate as a service and refurbishment center enhancing and servicing Learjet, Challenger and Global aircraft, and as a maintenance facility for the CRJ 200, 700 and 900 regional jets. Bombardier acquired Gates Learjet in 1990 and changed the name of the company to Learjet Inc., a division of Bombardier Aerospace.



Learjet has the fifth longest tenure at TAA, after American, United, Raytheon and the Air National Guard. They occupy 178 acres with over 800,000 sq.ft. of hangar space capable of holding over 60 business and regional aircraft. 8

TUCSON AIRPORT AUTHORITY | 2006 Year in Review



TENANTS/ECONOMIC DEVELOPMENT



Fixed Base Operator Trajen Flight Support was acquired by Atlantic Aviation. They intend to build a 12,000 sq.ft. hangar adjacent to the facility they opened in September 2004.



General Aviation: An Important Player

With completion of the infrastructure for a new general aviation complex, the first hangar opened in late 2004 in the Campbell/ Valencia General Aviation Park. During 2006 two more 30-year land leases were executed in the park for 17,000 sq.ft. with an annual revenue of $13,500. In 2007 expect to see six hangars plus a 40,000 sq.ft. facility by the Million Air franchise.



TAA Commercial Tenants: Major Contributors to Tucson's Economic Well-being

2006 was a busy year. Leasing activity included:

 Six new land leases at TIA and Ryan totaling 343,600 sq.ft.



and generating nearly $75,000 annually.

 Two land lease renewals for 16,920 sq.ft. and producing



almost $6,500.

 Three new facility leases totaling 7,016 sq.ft. and generating



about $65,000.

 Three facility lease renewals that covered 7,430 sq.ft. with



rent of close to $52,000.

General Aviation Hangar Campbell/Valencia Ryan hosts visitors on the Metropolitan Pima Alliance Wild Ride.



Scott Driver Named to Head Flight Line

Scott Driver, Director of Ryan Airfield, was named Director of the TIA Flight Line. Mr. Driver will continue to oversee the operation of Ryan Airfield, but will also be responsible for fueling and other activity handled by the Flight Line. Mr. Driver moved to Tucson in 2003 from Santa Monica, California, where he was the General Manager of the American Flyers Fixed Base Operator at Santa Monica Municipal Airport. He is a licensed commercial pilot with multi-engine and instrument ratings and a licensed airframe and power plant mechanic.



Ryan Airfield Operations Up

Operations at Ryan Airfield jumped 6.25% to 181,765 due in large part to the continued growth of the International Airline Training Academy (IATA). With an enrollment exceeding 100, IATA has contracts with several Chinese airlines to provide single- and multiple-engine aircraft training. Also at Ryan, tenant Cherokee Cabacompleted construction of 15 hangars totaling 36,000 sq.ft. bringing to 50 the total number of hangars they have constructed at Ryan. Increased operations add impetus to TAA's proactive efforts to keep pace with infrastructure improvements. High-efficiency LED taxiway lights were installed this past year, along with Luma-Curve signs. After the tower closes at sunset, lights go out until needed by pilots who can activate them by radio control, reducing light pollution and energy consumption.



Scott Driver, Director of Ryan Airfield and Flight Line



TUCSON AIRPORT AUTHORITY | 2006 Year in Review



9



PLANNING



P L A N N I N G : CHARTING A COURSE F O R T H E F U T U R E



TIA Airline Partners: Northwest, American, Alaska and Delta



Identifying Revenue-Generating Opportunities

TAA believes in and supports a common economic vision and strategy that includes long-range planning. Planning for the future has been the cornerstone of a very successful operation that seeks to optimize the airport's revenue-generating potential. During 2006 TAA updated the TIA Land Use Plan to ensure that land is reserved to accommodate specific types of development. The TIA Land Use Plan, adopted in December 2004 as part of the Master Plan, focused primarily on the airfield and the terminal area. The Master Plan is a long-range planning tool that considers not only airfield improvements that will be required to support demand but future economic development as well. As TAA considers ways to increase revenue and develop additional business, the need to identify areas to accommodate various uses on all 8,240 acres is critical and consistent with TAA's proactive approach to business development. Formally designating this land by its highest and best use makes it easier to promote to prospects that support existing tenants like Raytheon, Bombardier and FlightSafety International as well as our airline partners.



FY 2006 Grants

FY 2006 Grants Reconstruct Runway 11L-29R Phase II Construct Taxiway G Sound Insulation Program Access Roadway and Fencing for Site Development Ryan Taxiway & Entrance Road Improvements Ryan Master Plan Update Total $ $ 7,500,575 907,500 1,098,178 516,749 950,000 350,000 11,323,002



TAA Scores $7.7 Million in Grants for 2007: Furthering Economic Development Initiatives

TAA aggressively pursues federal and state grant dollars, competing with the nation's other airports for these limited resources. An ambitious $16.5 million Capital Improvement Program (CIP) for FY07, an increase of $2.4 million over FY06, includes at TIA:

 $4.9 million to construct utility, taxiway and roadway infrastructure



Capitalizing on a Highly Successful Grant Program: 2006 Grants Total $11.3 Million

By September 2006 the Authority had received $8.65 million in federal grant dollars and $2.06 million from the State of Arizona. TAA's matching grant contribution was just over $600,000. Each year the Authority receives entitlement and discretionary grants through the FAA Airport Improvement Program. Matching dollars are provided by the State of Arizona Department of Transportation and TAA, each contributing about 4.5% of the total.



for a new aircraft maintenance and industrial site to further TAA's economic development initiatives.

 $2.1 million for the first phase of a multi-year program to reconstruct



the main terminal apron that includes replacing the existing concrete to accommodate today's heavier aircraft. At Ryan Airfield:

 Purchase of additional equipment for the control tower.  Construction of a 3.3 mile service road along the perimeter of the



airfield operations area.

 Installation of a lightning detection sensor on the Automated Weather



Observation System.



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TUCSON AIRPORT AUTHORITY | 2006 Year in Review



PLANNING



The main runway at TIA closed for 30 days for resurfacing. The $12 million project, funded primarily by federal and state grants, included new LED lighting and a backup generator.



Protecting Airport Neighbors and the Environment 24/7

Known in the industry for our proactive approach to environmental issues, TAA has been on the leading edge in the development of a comprehensive noise mitigation program as well as an environmental cleanup effort. In March 2006 TAA awarded a contract to the Ashton Company for the construction of treatment facilities in the area south of the Three Hangars which are part of the cleanup of the Volatile Organic Compound (VOC)-contaminated soils and groundwater. Work on this should be complete in early 2007. TAA has submitted a work plan to EPA for the final cleanup of polychlorinated biphenyl (PCB) contamination in certain areas in and around the Three Hangars. Cleanup activities will be complete by the middle of 2007. Also in 2007 TAA expects to close the old construction landfill located at Aero Park Blvd. and Nogales Highway and build a parking lot with drainage controls and fencing on the site. TAA's Residential Sound Insulation Program continues to insulate homes northwest of TIA including the replacement of exterior doors and windows with acoustically rated units and attic insulation, as well as ventilation and air conditioning systems. By the end of January 2007 sound remediation will be completed for 752 of the 1,411 homes that are registered for the Sound Insulation Program.



Jill Merrick Named Vice President

Jill Merrick was promoted to Vice President of the Tucson Airport Authority Planning and Development Division. She joined the Authority in 1997 as the Director of Planning and was named acting Vice President of Planning and Development earlier this year when Suzanne McLean, who formerly headed the division, announced her retirement in 2006. Ms. Merrick is a graduate of the Michigan Technological University with a degree in Civil Engineering.



Dennis Cady New Director of Planning

Dennis Cady joined TAA as the Director of Planning, responsible for planning and development issues, off-airport land use issues, and updates of the Master Plan for both Tucson International Airport and Ryan Airfield. A native of Tucson, before joining the Authority he worked as the Planning Manager and Principal Planner for the town of Queen Creek. He has also worked for the Pima County Planning Department and worked as the Planning Director for Pinal County.



Pictured from left to right: Jill Merrick, Vice President Planning and Development Dennis Cady, Director of Planning



Construction of Cleanup Facility on West Ramp at TIA



TUCSON AIRPORT AUTHORITY | 2006 Year in Review



11



FINANCIALS



F U E L I N G THE E C O N O M I C E N G I N E : WHERE DOES T H E MONEY C O M E F R O M 



Sources of Revenue



Concession Revenue $15 million Parking, Rental Car Fees, News & Gift, Food & Beverage



Passenger Airline Rates & Charges $12.6 million Terminal Rentals, Landing Fees, Security Fees



Cargo Airline Rates & Charges $800 thousand Land & Space Rental, Landing Fees



Federal & State Grants $13.5 million



Non-Airline Land & Space Rental $6.7 million Commercial & Industrial Areas



TAA raised the rates for close-in daily parking at TIA by $1 to $9 per day to encourage passengers to use the Park'N Save Economy lot. Record passenger growth has kept the close-in daily lot closed due to lack of spaces several times each week.



Passenger Facility Charges $5.5 million



TAA Parking Lots Generate 10% of Total Revenue

Other Operating Revenue $5.2 million Fuel Flowage, Customer Facility Charges



Four parking lots serve airport customers: Hourly in front of the terminal. 447 Spaces. Rates are $1 per  hour, $12/day. 10-minute grace period. Daily in front of the terminal. 918 Spaces. Rates are $1 per  hour for first hour then $1.50/hour, $9/day. 10-minute grace period.



General Aviation Fuel Sales $4.8 million



Interest Income $3.1 million



Park'N Save Economy lot at Tucson Blvd. and Corona. 5,342 Spaces. Rate is $4/day. First hour is free.

Reimbursed Services $2.3 million Project Costs, Utilities



Park'N Save covered parking (opened October 2005 adjacent to Park'N Save). 303 Spaces. Rates are $8/day April-September, $6/day October-March.

15% 20% 25%



0%



5%



10%



Phone & Go waiting lot. For people picking up arriving passengers. It is located on Airport Drive, just west of the TIA entrance.



With input from its partners, TAA projects income and expenses annually. In 2007 the Cost Per Enplaned Passenger is forecast to decrease to $5.85 from $6.03, a reflection of TAA's successful efforts to increase non-airline revenues and manage expenses in the face of tremendous passenger growth over the past two years.



TAA Issues $35 Million in Revenue Bonds

$35 million in Subordinate Lien Airport Revenue Bonds, Series 2006, will support the Concourse Renovation project at Tucson International Airport. Approximately 79% of the principal and interest payments on the bonds will be secured by passenger facility charges, and the remaining debt will be paid from net revenues. The estimated cost of the concourse renovation project is $30.9 million and includes modification of the security checkpoints to ease congestion; relocation of Customs and Border Protection for international arrivals; additional restrooms; reconfiguring the gates and hold rooms; and free wireless Internet access throughout the terminal. Moody's upgraded the senior lien revenue bond rating of TAA to A1 from A2 and assigned an A2 rating to the new $35 million subordinate lien bonds. Fitch assigned the bonds an A rating. Moody's gave the airport a stable outlook, while Fitch upgraded their rating outlook to positive from stable.



12



TUCSON AIRPORT AUTHORITY | 2006 Year in Review



FINANCIALS



Tucson International Airport



Dick Gruentzel Named Vice President

Richard Gruentzel was named Vice President Administration and Finance/CFO in 2006. Mr. Gruentzel joined TAA as Controller in 2004 and was named Senior Director of Finance in 2005. He is responsible for Property Leasing and Management, Business Development, Air Service Research and Development, Marketing, Human Relations, and Information Technologies and Telecommunications as well as Finance. He has over 20 years of experience in both public accounting and private industry. He was recently awarded the C.M., Certified Member, designation of the American Association of Airport Executives.

Richard Gruentzel, Vice President Administration and Finance/CFO



Tim Hoban, Director of IT&T



Tim Hoban Tapped as Director of IT&T

T im Hoban was promoted to Director of Information Technologies and Telecommunications. He joined TAA in 1996 and has been instrumental in the design, implementation and maintenance of many of the network, communications and Computerized Access Security Systems currently being used by TAA and airport tenants.



Melanie Pearce Hired as Controller

Melanie Pearce joined the TAA team as Controller and oversees the accounting side of Finance, including general ledger maintenance, financial statement preparation, payroll, accounts payable, accounts receivable, collections, and Flight Line accounting. Prior to joining TAA she held several financial management positions in Tucson. She is a graduate of the University of Arizona.

Melanie Pearce, Controller



TUCSON AIRPORT AUTHORITY | 2006 Year in Review



13



P E O PL E AN D COMMUNITY



W H O I S TAA



A New Generation of Leadership: Savvy. Smart. Specialists.



Pictured from left to right: Bonnie Allin, President/CEO; Dick Gruentzel, Vice President Administration and Finance/CFO; Jill Merrick, Vice President Planning and Development; Marjorie Perry, Senior Vice President and General Counsel; Tom Andrews, Vice President Operations Not pictured: Jill Casson Owen, Vice President Contracting Services, Associate General Counsel



What Are We

COMMITTED



While not officially in the job description, delivering a baby was a task TAA fire fighters managed just fine in October when baby Isis made it known she was ready to say hello. Her surprised mom, Lupe Betancourt, an airline employee and passenger onboard a US Airways flight, is the granddaughter of a TAA custodian.

COMPASSIONATE



Walter A. Burg, TAA President/ CEO, 1979-2002



Through the generosity of Authority members and employees as well as airport tenants, a scholarship to the University of Arizona is now available to TAA employees and dependents, created in memory of retired TAA President/CEO Wally Burg who died in November 2005.



Led by the TAA Police Department, airport employees raised over $4,000 for the annual Torch Run. They also gave back to the community through the Airport Employee Community Effort (AECE) program. In 2006 employees organized three blood drives; a diaper drive; adopted an airport-neighborhood school and provided school supplies; held a food drive and clothing drive; adopted at-risk families for Christmas; and continued as Reading Seed Coaches in local area schools. They also organized teams or participated in numerous charity events including: The Komen Foundation Race for the Cure; the American Cancer Society's Relay for Life; the St. Nicholas Backpack Project; the AVIVA Sew-A-Thon to make backpacks for children in the foster care system; and United Way Days of Caring.

CREATIVE



What to do with a retired fire truck Donate it! Airport fire engine #48 was delivered to the Pima Air Museum where the 1978 Oshkosh M4000, the very first of its kind built in the U.S., is displayed near the entrance. Powered by two V-8 diesel engines resting on an eight-wheel base and weighing in at 106,000 lbs., the "monster" truck carried 4,000 gallons of water, 500 gallons of concentrate and projected a 320' stream.

RESOURCEFUL



Hating to see unopened containers of personal products dumped in the trash, TAA employees set about collecting items prohibited at checkpoints in specially marked containers alerting passengers that products would be donated to charity. The Primavera Foundation picks up discarded items and distributes them.



TIA's retired fire truck donated to the Pima Air Museum.



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TUCSON AIRPORT AUTHORITY | 2006 Year in Review



P E O PL E AN D COMMUNITY



Holiday Entertainment at TIA



TIA's K-9 Corps reported for duty in April. Guaranteed to get a grin, Audi, Grom and Nicky are trained to detect explosives on airport property. Their mission, like ours, is to serve and protect airport customers seven days a week.



The Arts: Entertain, Educate, Enlighten

Super.Natural, the theme for the 2006 exhibit series at TIA, highlighted some of Tucson's artistic talent. Work displayed throughout the terminal included: Tucson Gems: Architects, Architecture, and Archives photos by Alcja Mann, drawings by Chandika Tazous and Chuck Albanese, photos courtesy of the Arizona Historical Society and University of Arizona Architectural Archives. Born in Fire: Afterlife of Agaves photographs by Steve Strom. Form to Formless: Flowers photographs by Steve Strom. Light Forms/Earth Forms photographs by Steve Strom from "Secrets from the Center of the World." Parks In Focus 49 framed photographs from the Udall Foundation. Celebrating Rodeo original paintings by Ted DeGrazia. Flap Acacia Alder, Mary Theresa Dietz, Phillip E. Lichtenham, Mishcka O'Connor, Robert J.V. Spittler, Sandra Sosnicki, Stephen Romaniello, Andrew Rush, Lisa Wahlraven, Mary Katherine Stillwell, Cris Coronel. Bloom Charles Burton, Jennifer Konrad, Mishcka O'Connor, Jesus Trujillo. Photo Finish photographs by Jon Howe, Carl Noggle, RJ Spittler, Peter Zylstra. Cosmos-Strings Attached paintings by Wayne Sumstine. Tucson Postcards vintage postcards on loan from the Etherton Gallery. A History of Native American Basketry from the Southwest Courtesy of Morning Star Traders. Vasqueros y Escaramuza Charra photographs by Pamela Reed.



On the Edge contemporary paintings by Grace Ciotti, Sahin Labarge, Douglas Leichter, Thomas Rossi, Howard Salmon, and Marti White. Images from the Sea of Cortez photographs by David Andres. Wrinkles in Time paperwork by Xinyu Zhang. Paperworks Barbara Brandel, Curt Dornberg, Carolyn Leigh, and C.J. Shane.



Heric Sculpture

The Journey, a sculpture by retired University of Arizona art instructor John Heric, was installed in January on the TIA entrance roadway. Constructed of steel, the piece rests on an amoebic-shaped base with a staircase leading to a pyramid resting on its side. Inset into the base is a model of a Universal city. Created in 1987-88, the 8'x17' piece has been on exhibit in Chicago, Indianapolis, Santa Fe and Tucson. A native of Reno, Nevada, Mr. Heric has a BFA from Arizona State University and an MFA from Southern Illinois University.



The Journey by John Heric



TUCSON AIRPORT AUTHORITY | 2006 Year in Review



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TUCSON AIRPORT AUTHORITY I n f o r m a t i o n Department



7005 South Plumer Avenue Tucson Arizona 85706 Telephone: 520-573-8100 www.tucsonairport.org www.airtucson.com



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