PASSUR Pulse: Earlier Revenue Recognition and Faster Cash Collection

The Pulse Report

Informing Airport Finance Professionals

In This Issue

Faster Cash Collection Discussed at the User Conference

Earlier Revenue Recognition

Airline Support for Automation and Standardization of Landing Fees

Tip: Using Your New Access to Departure Reports

"In today's environment, our constituents want to be assured of two things above all: that we are managing the airport's finances prudently and shrewdly, and that we are ensuring the safest and most cost effective operation for our customers."

Steve Grossman, Director, Oakland International Airport

APRIL 2009

Welcome to the April 2009 edition of the PASSURŽ Pulse™ Airport Finance eNewsletter created exclusively for the PASSUR Pulse community.

This month's issue is dedicated to main topics and take-aways from our annual Landing Fee Management User Conference, held last month at DFW. Earlier revenue recognition and faster cash collection were at the top of the list, and of course are more relevant than ever in this economy. Airline support for more automation, standardization and simplification in landing fee management was another "aha! moment" (coming as it did from a top 5 US carrier attending!). And finally, innovative uses of the PASSUR data was another leading topic.

Thanks for reading. As always, if you have ideas or questions, please send them over to me, Ron Dunsky, at rondunsky@passur.com.

Faster Cash Collection Discussed at the User Conference

Airports have found that using PASSUR Pulse allows them to bill 45 to 60 days earlier than before - even when their Use and Lease agreements allow carriers anywhere from 5 to 20 days to pay (that's because airports can shave off all the lag-time at the front-end, before bills go out). The biggest benefit:the ability to collect cash faster from airport users.

This allows airports to recognize a significant financial benefit, in two different areas:

Collect more interest on cash deposits.
Save on interest payments on short term loans (commercial paper) used for operational cash flow.

Airports using the system agreed:

DEN says that the ability to bill faster means that they are getting paid weeks earlier than before.
OAK has seen its traffic decrease by double digits year-over-year. Even during this challenging time, they have turned to PASSUR Pulse to help ensure that cash is collected more quickly, and it was a major reason they signed on recently.

PASSUR has developed an online calculator to demonstrate the financial effect of these different scenarios. To run your own airport's numbers through it, and to learn more about how PASSUR Pulse can help you, contact Evan Danto at evan.j.danto@passur.com.

PASSUR Pulse User Conference on the Importance of Earlier Revenue Recognition

only helps strengthen balance sheets, but makes financial planning easier and more accurate (fewer surprises and adjustments)!

Because of the much greater lead time in knowing exactly how much the airport will be collecting for the month in landing fees, airports are booking their revenue sooner and the books can be closed.

Some of the attendees at the annual PASSUR Landing Fee Management User Conference dinner, Dallas Fort Worth, March 21st

Airline Support for Landing Fee Automation and Standardization

One of the highlights of the user conference was the Q & A session conducted by representatives of a major US carrier's financial group, who answered questions about how they manage their landing fee program and how their philosophy meshes with the direction PASSUR airports are going in.

Generally, there seems to be a very good fit between the carrier's approach of centralization and automation of the landing fee process, and the moves PASSUR Pulse airports are making in that same vein. Some of the main points to emerge from this discussion were:

Automation and standardization: airlines would support a move toward a single standard of data supporting all their operational activities at all the airports where they operate, as well as a common platform to process all activity-based fees, which would facilitate centralization and automation (and hence accuracy and labor savings).

Large carriers who are generally good reporters of activity can be confident that all players are being held to account and paying their fair share, ensuring the larger players are not subsidizing other users of the facility.

Smaller carriers and itinerant users are relieved of an added set of reporting and administrative requirements, and the playing field is leveled with the "big boys" (same data, same process).

Tip: Using Departure Data

All PASSUR Pulse users now have access to detailed departure data reports, which open up new opportunities for revenue management, planning and analysis, including:

Remain Overnight (RON): tail-in/tail-out data shows the "dwell time" of each aircraft on the airfield, supporting the calculation of fees connected to aircraft "parking."
Gate Usage: tail-in//tail-out, when combined with the gate statistics available in Pulse, allow for a gate dwell-time report, to track fees and/or minimum usage commitments per gate.
Runway Utilization: reports on runways usage, to support maintenance and rehabilitation funding requests, normal maintenance budget planning, and new runway studies, all require both arrival AND departure statistics, which are now available.