Purpose of Document The intent of this document is to provide a detailed handover of all analysis and materials relating to regulatory gap studies on General.

General Aviation Implementation Support (GAIS)
Booz & Company Beijing, 25 September 2009 General Aviation Implementation Support (GAIS) General Aviation Airport Module (Revised) 1st Revision: October, 2010 Final Revision: October, 2011 This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

Purpose of Document The intent of this document is to provide a detailed handover of all analysis and materials relating to regulatory gap studies on General Aviation Airport Module as part of deliverables for General Aviation Implementation Support (GAIS) project funded by the US Trade Development Administration (USTDA) The study focuses on drawing general aviation (GA) regulatory experience and insights from the U.S. because: The U.S. has the most established and successful GA industry with a mature regulatory system that increases GA capacity and efficiency while maintaining safety ACP is an U.S. organization with its members consisting of FAA and key GA aircraft and equipment manufacturers with global presence. ACP member firms are best able to share GA regulatory, management, technological and operational experiences from the U.S. Analysis has been conducted and completed by Booz & Company with active contribution from Civil Aviation Administration of China (CAAC), Development Research Center of the State Council (DRC), Aviation Industry Corporation of China (AVIC), ACP members and other key stakeholders For further information please contact: Mr. Paul Fiduccia Mr. Frank Yu Mr. Kevin Wu Dr. Edward Tse Mr. Yang Guang Mr. Timothy Wong Booz & Company

This is one of the seven sets of deliverables developed for ACP GAIS project
ACP General Aviation Implementation Support (GAIS) List of Deliverables Executive Summary 1 2 3 4 5 6 Safety Module General Aviation Airport Module Airworthiness Module Flight Standards Module Operators Module GA Associations Module Main Module GA Safety Regulation GA Airport Regulations Airworthiness Regulations Flight Standards Regulations Regulatory Constraints for Operators Roles of GA Associations Safety Oversight Organizational Structure GA Airport Planning & Design Type and Production Certifications Mechanics GA Aircraft Ownership Case Studies Sub - Module Safety Performance Measurement GA Airport Funding Aircraft Registration and Certification Pilots GA Operating Cost Safety culture and promotion Booz & Company

In China, GA refers to all civil aircrafts activities other than public aircraft transportation activities NON EXHAUSTIVE Definition of General Aviation Three Main Categories of General Aviation Flight Activities* China: General Aviation refers to all civil aircrafts activities other than public aircraft transportation activities. Including flight operations associated with industrial, agricultural, forestry, fishery and construction, and other purpose operations such as medical and sanitation, emergency rescue, Meteorological sounding, ocean monitoring, scientific experiments, education and training, culture and sports etc. General Aviation Public Service Economic Construction Consumer Aviation Agriculture Aerial Photography Training and Sports Forestry Mine Exploration Tourism FAA: General aviation (GA) refers to all flights other than military and scheduled airline flights, both private and commercial. Meteorology Petroleum Services Business Travel Disaster Relief Others2 Private Use ICAO: General aviation comprises all aircraft that are not operated by commercial aviation or by the military. Others1 Non scheduled commercial operations3 (*) CAAC categorization (1) Others include aircraft seeding, pest control, farming and emergency rescue (2) Others include remote sensing, power line services and industrial associated applications (3) Non scheduled commercial operations include air taxi and air charter operations Source: Committee of General Aviation Specialist of China Aviation Industrial Base (CAIB), CAAC and Booz Allen analysis Booz & Company

9 Airports is an essential infrastructure to enable and support GA development Number of Airports by Usage and Certification (as of 31 December 2008) In the U.S. majority of airports are private use airports and non-Part 139 certified public use airports that serve GA (i.e. 98% of the total 19,653 civil airports in the U.S.) In China, the total number of general aviation airports and temporary take-off and landing locations was 398 (69 general aviation airports and 329 temporary take-off and landing locations) (end 2007 statistics) However, temporary landing facilities do not contribute to the growth of GA as they do not promote investment and long term use. Fully capable, permanent GA airport infrastructure is required Based on U.S. experience, for larger GA sector the following is needed: Government financial support for GA is primarily for GA airport development improvement China current programs on commercial airport improvement should also include ability of GA to use those improved or newly added airports Commercial airports have to accept GA traffic at the same time commercial operation are conducted Commercial airports need GA facilities such as FBOs, fuels and aircraft services Civil public use Part 139 560 Civil public use Non-Part 139Civil public use Non-Part 139 4,642 3% 24% Total Civil Private Use AirportsTotal Civil Private Use Airports 14,451 Large number of non-Part 139 and private use airports 74% 19,653 ∑ Number of Airports by Type Stolports 82 Gliderports 35 Balloonports 14 Seaplane bases 503 Ultralight flightparks 139 1% 3% Heliports 5,568 0% 28% 0% Large number of heliports 0% Airports 13,589 This includes 277 military airports 68% Source: FAA Fact Book 2008, Booz & Company analysis 19,930 ∑ Booz & Company

U.S. has a policy and regulatory system that encourages GA airport infrastructure development critical to enable and support GA growth GA Airport Infrastructure Regulatory Difference (Summary) GARA I benchmark study identified that airport and airspace are two critical infrastructure that enable GA growth Primary Airports Airports Serving Scheduled Airlines Commercial Service Airports Public -use airports All permanent GA airport development need to seek approval and be Part 139 certified Reliever Airports Temporary landing facilities do not contribute to the growth of GA as they do not promote investment and long term use General Aviation Airports General Aviation Airports Other Private-use airports Temporary Landing Strips No 14CFR Part 139 certification required Privately owned and used airports are not regulated as they only may be used for slow and simple aircraft for which the requirements for safe operation are only a clear landing area do not justify resources for providing oversight China lacks appropriate policy and regulations to enable and encourage GA airport development No private-use GA airports Underdeveloped GA airport infrastructure to enable GA growth Source: Booz & Company analysis Booz & Company

China (CAAC) Observations
Summary of observations and recommendations for Module 2: GA Airport (1/2) Module 2: GA Airport Key Areas U.S. (FAA) Observations China (CAAC) Observations Recommendations GA Airport Policy and Regulations The U.S. has a integrated civil aviation airport planning approach at federal, regional, state and local government levels including GA airports In the U.S. majority of airports are private use airports and non Part 139 certified public use airports GA airports and heliports are exempted from Part 139 certification but they are: obligated to meet certain design requirements if receiving federal funds subject to licensing requirements imposed in respective states Airport Improvement Program (AIP) is a federal level grant program that funds planning and development of public-use (either publicly or privately owned airports included in the NPIAS in the U.S. Two third of AIP funding goes into small airports (GA airports) Current airport policy and regulations mainly target at airports serving scheduled air carriers GA airport is not included in the national airport development strategic plan No regulations and guidance materials to guide private sector airport development and approval process No CAAC national funding policies for GA airport development There is no exemption on registration and compliance resulting in too stringent requirements for GA airports The planning approval process is onerous even for temporary landing strip serving light aircraft There is no policy on charges/ fees for airport related charges (e.g. airport facility and airspace usage charges) Develop regulations and guidance materials for GA airport development (both government or private driven investment) Integrate GA airport planning and development into future national airport system planning process Simplify the current GA airport planning and approval process, shorten approval lead time and produce guiding materials Conduct feasibility study on a dedicated funds for GA airport development Develop policies to guide airport usage fees for GA operation to encourage the growth of GA by minimizing charges Booz & Company

China (CAAC) Observations
Summary of observations and recommendations for Module 2: GA Airport (2/2) Module 2: GA Airport Key Areas U.S. (FAA) Observations China (CAAC) Observations Recommendations GA Airport Design FAA has established comprehensive airport engineering, design, and construction standards through issuance of series 150 advisory circulars AC 150/ provides general design standards and recommendations for all airports AC 150/ Heliport Design provides standards for heliport design and development in the U.S., including General aviation heliports Transport heliports Hospital heliports China has guidance materials on GA airport and heliport design Ground Equipment of General Aviation Aerodrome standards dates back to 1999 and need review to meet needs of different GA applications Current CAAC Technical Standards for Flying Area of Civil Heliport does not prescribe specific requirements by applications Develop GA airport design requirements that align with different segments (temporary landing strips, heliport, flying clubs etc.) and applications Booz & Company

Executive summary GA airport regulations GA airport planning and design GA airport funding Appendix
Booz & Company

GA Airport Module aims to identify policy and regulatory improvement opportunities to support GA infrastructure development The overall objective of GA Airport Module is to identify policy and regulatory improvement opportunities to support development of new general aviation airports and improve existing infrastructure in China The scope of the module includes conducting regulatory difference analysis between the U.S. and China GA airport system, and recommend improvement measures in the following areas: Overall GA airport policy and regulations GA airport planning and design GA airport funding Booz & Company

Airport Management Philosophies Pure Business Enterprise Model
China has positioned airports as a public-use infrastructure that must be co-funded by the government and operational revenues Airport Management Philosophies Free public facilities at the government expense Financially supported by a general tax levies and revenue Government is obliged to provide airport services if not provide by private interests Viewed as a profit making venture Should be self-sustaining and unsupported by local tax funds Must adopt a fee and rate structure that would assist in recovering revenues Pure Welfare Model （公益性） Pure Business Enterprise Model (营利性) Public-Use Model （公共性） The State Council has enforced a revised “Civil Airport Management Regulations” in July 2009 The regulations clearly defined airports as a “public-use” infrastructure which has a combination of both pure welfare and profit driven business characteristics The requirements for airport development and operation management (such as decision making, budgeting, supporting airport operations, and collection of revenue) reflect the defined positioning should reflect that management philosophy adopted Source: CAAC, Booz & Company analysis Booz & Company

P This is similar to the U.S. where about three quarter of GA airports in the U.S are subsidized based on a survey conducted FAA Center of excellence for General Aviation Research (CGAR) General Aviation Airport Funding Strategies Study Proportion of Subsidized Airports Proportion of Different Types of Subsidized Airport Subsidized only for CIP Non-subsidized (1) 26% Subsidized only for operation 10% 66% Subsidized for both Operation and CIP 74% Subsidized (2) Sample Size = 588 GA airports in the U.S. in different regions 1) Non-subsidized GA Airport - Airport with ability to generate adequate revenue to cover all normal expenses for its operation, administration, and maintenance, and for the local share of federal and/or state funded capital improvement projects (matching funds) 2) Subsidized GA Airport - All others Source: Embry Riddles CGAR Research, Booz & Company analysis Booz & Company

In China the States Council decrees and civil aviation regulations regulate civil airport development and construction universally Civil Aviation Regulations Decrees by the State Councils 民用机场管理条例 (civil airport management regulations) 《关于建设机场和合用机场审批程序的若干规定》的通知 (Approval procedures for civilian and joint civilian/military airport development/construction) Planning and Development CCAR-158 民用机场建设管理规定 (civil airport development management) Design and Construction CCAR-165 民航专业工程质量监督管理规定 (Civil aviation engineering project quality management rules) 国务院、中央军委关于保护机场净空的规定 (Navigable airspace protection requirements) CCAR-97FS-R1 航空器机场运行最低标准的制定与实施规定 (Minimum standards for aircraft operating at airports) CCAR-97FS-R2 中国民用航空总局关于修订《航空器机场运行最低标准的制定与实施规定》的决定 (revision of CCAR-97FS-R1) CCAR-139CA-R1 民用机场使用许可规定 (civil airport certification) CCAR-137CA-R2 民用机场专用设备使用管理规定 (civil airport equipage management) CCAR-139-II 民用运输机场应急救援规则 (Emergency and rescue procedures for civil airports) CCAR-140 民用机场运行安全管理规定 (Safety management system for civil airports) CCAR-252FS 民用机场和民用航空器内禁止吸烟的规定 (Non-smoking requirements for airports and aircraft) CCAR-331SB-R1 民用机场航空器活动区道路交通安全管理规则 (Road safety within civil airport) 国务院、中央军委关于加强机场地面安全措施的通知 (Enhance ground safety and security at airports) 国务院、中央军委《关于军民合用机场使用管理的若干暂行规定》的通知 (Management of joint military and civil airports) Operation Booz & Company

Key Issues Related to China General Aviation Airport Regulations
Current policy and regulatory systems have several gaps that constrain the development of GA airport infrastructure in China CHINA Key Issues Related to China General Aviation Airport Regulations Regulations Key Issues Identified Impact Planning Civil Airport Management Regulations (new version issued on 30 April 2009) There are no regulations covering specifically GA airports and private airport development CCAR 158 requirements primarily target at the needs of airports serving scheduled commercial airlines There is also no emphasis on national GA airport system development plan No distinction for small GA airports (including landing strips) from large commercial airports Undermined the importance and roles of GA airports in emergency situations National Civil Airport Plan 11th five year plan GA airport is not included in the national airport development strategic plan No system approach towards long term GA airport development planning CCAR-158: Civil Airport Construction Regulation No regulations to guide private sector airport development and approval process Regulations more applicable to government funded public transport airport development They are too restrictive to stimulate GA airport development Application for approval of private airport development is almost impossible as relevant regulations do not exist The development of GA airports is restricted Regulation on Airport Construction Approval Process Need Multiple Stakeholder Approval: CAAC, Local Government, NDRC, Military The design and development process follows the model of public transport airport process Time consuming process Planning approval usually requires 2 years Design - China has guidance materials on GA airport and heliport design Ground Equipment of General Aviation Aerodrome standards dates back to 1999 and need review to meet GA needs Current CAAC Technical Standards for Flying Area of Civil Heliport does not prescribe specific requirements by applications Lack of guidance on GA airport design for different applications Over restrictive requirements Operation CCAR-139CA-R1: Civil Airport Certification No exemption of airport certification. In the U.S. privately owned and used airports are not regulated as they only may be used for slow and simple aircraft for which the requirements for safe operation are only a clear landing area do not justify resources for providing oversight No distinction between commercial / GA / Landing areas Cannot provide appropriate airport certification 1 2 3 Booz & Company

System Based Approach to Airport Planning in the U.S.
1 Planning The U.S. has a system based airport planning approach at federal, regional, state and local government levels including GA airports U.S. System Based Approach to Airport Planning in the U.S. FEDERAL REGIONAL STATE STATE/LOCAL National Plan of Integrated Airport System (NPIAS) Identifies airports that are eligible for federal funding and estimates the amount of funding required to meet the needs Regional Aviation System Plan Guides development of airports in different states State Transportation Plan Guides development of the state transportation system (aviation, land transport etc.) State Law Provides authorities and sets requirements for local planning LOCAL STATE Comprehensive Plan Determines where growth occurs State Aviation System Plan Guides development of the state air transportation system LOCAL The NPIAS and state/local aviation master Plans include GA airports receiving government funding Development Regulation/Zoning Determines how growth occurs LOCAL Airport Master Plan & Airport Layout Plan Guides future development of the airport: identifies needed improvement projects LOCAL Permitting Process A formal process for ensuring that individual projects follow requirements set out in development regulations and guiding principles set our in the comprehensive plan Communications and critical decision flow FAA AC150/5070-6B Airport Master Plan provide guidance on the preparation of master plans Source: Booz & Company analysis Booz & Company

1 Planning NPIAS identifies airports that are significant to national air transportation and estimates the infrastructure development needs Description of NPIAS (National Plan of Integrated Airport System) Background of NPIAS Purpose of NPIAS Contents/Requirements of NPIAS The Federal Airport Act of 1946 established the requirement for the formulation and annual revision of the five-year National Airport Plan (NAP) The requirements for the plan has been developed and revised for several times during the past 60 years Section of Title 49 of U.S.C. directs the Secretary of Transportation to maintain a plan (NPIAS) for developing public-use airports in the United States The NPIAS is used by Federal Aviation Administration (FAA) management in administering the AIP. It supports the FAA’s goals identified in the Flight Plan for safety and capacity by identifying the specific airport improvements that will contribute to achievement of those goals The plan shall include the type and estimated cost of eligible airport development necessary: to provide a safe, efficient, and integrated system of public-use airports adequate to anticipate and meet the needs of civil aeronautics to meet the national defense requirements to meet identified needs of the United States Postal Service The plan shall consider the needs of each segment of civil aviation and the relationship of each airport to: the rest of the transportation system in the particular area forecasted technological developments in aeronautics forecasted developments in other modes of intercity transportation General aviation airports are part of NPIAS Source: NPIAS, Booz & Company analysis Booz & Company

1 Planning In China Civil Airport Management Regulations have not placed due emphasis on the GA airport development CHINA The State Council’s Civil Airport Management Regulations Section Restrictive Regulations Comments 2 This regulation is applicable to civil aviation airport planning, construction, operation, management and other activities. Civil aviation airport includes air carrier and general aviation airports Is temporary take-off and landing point also covered? The regulations are silent on the GA airport development by private sectors 14 Planning and development of general aviation airports shall follow requirements as stipulated by the states The most relevant regulation is CCAR 158 Civil Airport Development Management Regulations However, the regulations are more suited for airports serving scheduled airlines 32 Section 32: In case of emergency, public transport airports should coordinate with local government, air traffic management bureau, and civil aviation administration for disaster relief Roles that GA airports during emergency situations are not explicitly mentioned GA airport development should also serve national emergency response needs There are no regulations covering specifically GA airports and private airport development CCAR 158 requirements primarily target at the needs of airports serving scheduled commercial airlines There is also no emphasis on national GA airport system development plan As the result, GA airports have not been featured in both National Civil Airport Development Plan and 11th Five Year Plan Source: Civil Airport Management Regulations, Booz & Company analysis Booz & Company

1 Planning CCAR 158 requirements target primarily at public transport airports and are restrictive to encourage GA airport development CHINA CCAR 158 Civil Airport Development Management Regulations Section 73 of CCAR 158 stipulates that the same planning and development requirements are applicable to GA airports CCAR 158 requirements are more applicable to government funded public transport airport development in accordance with National Civil Airport Master Plan. They are too restrictive to stimulate GA airport development Section Regulations for public transport airports Comments on Relevance to GA airports 10 The initial selected airport sites should be applied by provincial government Need to be finally approved by CAAC The regulations should allow applications by developers/ managing organization for selected GA airport category with the approval from local government The approval process for GA airport can be delegated to regional CAAC office 11, 12 and 14 Planning requirements: Planning should be done by certified institutions 2 to 3 comparable planning options required Planning horizon of 10 years for the short-term and 30 years for the long-term For simple GA airports (and temporary landing areas) these requirements are restrictive For selected GA airport category, CAAC should evaluate a more appropriate planning requirements 15 The detailed requirement of overall plan is totally designed for public airport. e.g. terminal and fuel supply A section dedicated to GA airports should be drafted (see comments on Section 11, 12 and 14 above) Section Regulations for public transport airports Comments on Relevance to GA airports 2 The requirements are applicable to the planning and construction of newly build, rebuild and extend civil airports. Civil airports include public transport airport and GA airport No mentioning of private GA airport development and temporary landing areas 4 For public transport airports: The planning and construction shall follow the national civil airport development plan and processes There is no master planning approach for GA airports to guide development GA airports development by private sectors should be exempted from this requirement unless it receives government funding 9 There needs to be 2 to 3 candidate sites for each airport These requirements may be waived for temporary landing areas or simple GA airports Source: CCAR 158, Booz & Company analysis Booz & Company

1 Planning The airport planning and development approval process in China is time consuming as compared to the U.S. Process of Airport Planning and Development Approval in China Process of Airport Planning and Development Approval in California Local Government (Province Equivalent) Applicants Local Department of Transport (or Aeronautical Bureau) FAA Airport Construction Plan Application Submit “Site Approval Form” with some other required items Application Regional Aviation Administration Primary Examination CAAC Check whether the application is complete in 10 working days Process the application Review and Approve Examination NDRC Approval Notice FAA when the applicants get the approval State Council Repeated for all 3 planning phases File Notification to FAA Approval of Airport Construction Plan Military Time Usually 2 year, at least 1.5 years Time Min: 15 workings days, Mean: 30 working days; Max: 45 working days The process is repeated for all three phases: Airport site selection, preliminary feasibility study, final feasibility study Source: CCAR 158, California Department of Transport, Booz & Company analysis Booz & Company

Official Document Issuing Entity
1 Planning The planning approval process is onerous even for temporary landing strip serving light aircraft CHINA EXAMPLE Zhejiang Hengdian GA Temporary Landing Area Approval Process and Timeline No. Official Document Issuing Entity Title Issuance Date 1 Shanghai ShiShiDai Airport Design Institution Site selection report for Zhejiang Hengdian GA Temporary Landing Area February 2002 2 Bureau of Geology and Mineral Resources of Dongyang City Impact of Hengdian airport site selection on mineral resources 1 February 2002 3 Zhejiang Government (issued to Nanjing Air Force) Relocation of Dongyang Hengdian Temporary Landing Area 1 September 2002 4 Air Force of the People's Liberation Army (Issued to Provincial Government and Nanjing Airport) Approval for Relocation of Dongyang Hengdian Temporary Landing Area 26 September 2003 5 Zhejiang Huatong GA Company Proof of Fuel Supply 5 November 2003 6 Zhejiang Provincial Government Notice issued by Zhejiang Provincial Government 2 February 2003 7 CAAC Zhejiang Office Support of Construction of Dongyang Temporary Landing Area 3 August 2005 8 Zhejiang Provincial Department of Land Resources Land Use Assessment of Zhejiang Dongyang Hengdian Temporary Landing Area 30 April 2006 9 Dongyang Telecommunication (Hengdian Branch) Line Condition at Hengdian Airport Location - 10 Hengdian Town Local Government Agreement for Relocation 10 July 2006 11 Environmental Bureau of Dongyang City Environmental Assessment Report for Zhejiang Province Dongyang Hengdian Temporary Landing Area Relocation Project September 2006 From Site Selection to Approval form Military ≈ 19 months Support from CAAC ≈ 21 months Other Approvals ≈ 13 months Temporary landing facilities do not contribute to the growth of GA as they do not promote investment and long term use Project Background Applicant: Hengdian Group Fleet: 10 units of Y5, 2nits of Y12, 2 units of Haiyan 650C Investment: RMB 44.5 million Scope: Runway (non precision 600m), taxiway, hangar, office building and provisions for future facilities Source: Zhejiang Construction Information Port, Booz & Company analysis Booz & Company

2 Design FAA has established comprehensive airport engineering, design, and construction standards through issuance of series 150 advisory circulars FAA Airport Engineering, Airport Design, and Airport Construction Standards Item Reference Airport Design AC 150/ Airport Drainage AC 150/5320-5 Airport Layout Plans AC 150/5070-6 Airport Lighting - Runway/Taxiway AC 150/ Airport Lighting - Runway Centerline Airport Lighting - Radio Control Airport Marking AC 150/5340-1 Airport Master Plans Airport Signage AC 150/ Airport Terminal Facilities AC 150/ Apron AC 150/ (Appendix 5) ARFF Building AC 150/ ARFF Equipment - DEVS AC 150/ ARFF Equipment - Clothing AC 150/ ARFF Training Facility AC 150/ ARFF Vehicle - Small Dual Agent ARFF Vehicle Item Reference ARFF Water Supply AC 150/5220-4 AWOS AC 150/ Beacons AC 150/ Compass Calibration Pad AC 150/ (Appendix 4) Construction Standards AC 150/ Deicing Facilities AC 150/ Disability Access to Airports AC 150/ EMAS Arresting System AC 150/ Fuel Storage AC 150/5230-4 Heliport Design AC 150/5390-2 Landfills AC 150/ Land and Hold Short Lighting Marking of Airport Vehicles AC 150/5210-5 Operational Safety - Construction AC 150/5370-2 PAPI AC 150/ Passenger Lift for the Impaired AC 150/ Pavement Design AC 150/5320-6 Pavement Management System AC 150/5380-7 REIL Item Reference Runway Length Requirements AC 150/5325-4 Runway Surface Monitors AC 150/ Runway Thresholds AC 150/ (Appendix 2) Segmented Circle AC 150/5340-5 SMGCS AC 150/ Snow Removal Operations SRE Buildings AC 150/ SRE Equipment AC 150/ State Standards for Non-primary Airports AC 150/ VASI Wildlife Attractants AC 150/ Wind Analysis AC 150/ (Appendix 1) Wind Cones Wind Cones - Supplemental Windrose AC 150/ (Appendices 1, 11) Source: FAA Booz & Company

Key Elements covered by Airport Design Advisory Circular
2 Design AC 150/ provides general design standards and recommendations for all airports FAA Key Elements covered by Airport Design Advisory Circular AC 150/ Airport Design Airport Geometry Surface Gradient and Line of Sight Runway Design Site Requirements for Navaid and ATC Facilities Taxiway and Taxilane Design Runway and Taxiway Bridges The Effects and Treatment of Jet Blast Purpose: The advisory circular contains the Federal Aviation Administration’s (FAA) standards and recommendations for airport design Applicability: The standards and recommendations contained in this advisory circular are recommended by the FAA for use in the design of civil airports For airport projects receiving Federal grant-in-aid assistance, the use of these standards is mandatory At certificated airports, the standards and recommendations may be used to satisfy specific requirements of FAR Part 139, Certification and Operations: Landing Airports Serving Certain Air Carriers, Subpart D. Core Wind Analysis Runway and Sitting Requirements Airport Reference Point Compass Calibration Pad Small Airport Building, Airplane Parking and Tiedowns Runway Design Rationale Taxiway and Taxilane Design Rationale Taxiway Fillet Design Computer Program Airplane Data Declared Distance Appendix Source: FAA Airport Design Advisory Circular AC150/ , Booz & Company analysis Booz & Company

2 Design AC 150/ Heliport Design provides standards for heliport design and development in the U.S. FAA Why Is the Construction of Heliports Important Descriptions of AC 150/ Heliport Design The modern helicopter is one of the most versatile transportation vehicles known to man The helicopter has the capability of providing a wide variety of important services to any community that integrates this aircraft into its local transportation system In addition to their service in the transportation of people, helicopters have proven to be useful to their communities in the following ways: Disaster Relief. Air Ambulance Services Police Services Moving High-Value Assets The most effective way for a community to realize the benefits of helicopter services is by developing or permitting the development of places where helicopters can land and take off This advisory circular (AC) provides recommendations for heliport design and describes acceptable requirements to develop a heliport, including: General aviation heliports Transport heliports Hospital heliports This AC applies to anyone who is proposing to construct, activate or deactivate a heliport This AC is not mandatory and does not constitute a regulation except when Federal funds are specifically dedicated for heliport construction Source: AC 150/ Heliport Design, Booz & Company analysis Booz & Company

2 Design China has implemented standards for airport design and construction under GB and MH document series NON EXHAUSTED Number Title National Standards GB/T 民用航空运输机场应急救护设备配备 (Civil Airport emergency aid equipment) GB/T 通用航空机场设备设施 (Ground equipment of general aviation aerodrome) Civil Aviation Standards MH/T 民用航空运输机场消防站消防装备配备 (Air transport airport fire fighting station) MH 民用航空运输机场安全防范监控系统技术规范 (Air transport airport security provisions) MH/T 民用航空运输机场安全检查信息管理系统技术规范 (Air transport airport security information system management) MH/T 民用航空运输机场安全保卫设施建设标准 (Air transport airport security provisions construction standards) MH/T 民用航空运输机场消防站装备配备 (Air transport airport fire fighting station facility) MH/T 机场道面除冰防冰液 (De-icing agents for airport runway) MH/T 机场跑道摩擦系数测试车使用技术规范 (Airport runway friction coefficient test vehicle) MH/T 旅客登机桥 (Aero bridge) MH/T 机场升降式高杆灯 (Airport lighting) MH/T 滑行引导标记牌 (Signage for taxiway) MH/T 民用机场信息集成系统技术规范 (Integrated information system for airport) MH/T 机场飞行区草地建植技术要求 (Technical requirements for grassplot construction by aerodrome movement area) MH 民用直升机场飞行场地技术标准 MH 民用机场特种车辆、专用设备配备 (Civil airport special vehicles and specialized equipment) MH/T 民用航空机场塔台空中交通管制设备 (Air traffic management equipment for civil airport tower) MH/T 民用机场候机楼广播用语规范 (Airport terminal broadcasting standards) Booz & Company

Ground Equipment of General Aviation Aerodrome
2 Design Ground Equipment of General Aviation Aerodrome is the main guidance materials on GA airport design Ground Equipment of General Aviation Aerodrome Applicability Ground equipment of general aviation aerodrome GB/T was issued by General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) in 1999, with participation/inputs from CAAC The standard stipulates minimum equipage recommendations for GA airports serving fixed wing aircraft, helicopters It aims to enhance the standard management of GA airports, ensure flight safety and improve the quality and efficiency of aerial work It does not cover broader GA airport design standard requirements for other GA applications (e.g. flying clubs, gliders, balloons etc.) Source: Ground Equipment of General Aviation Aerodrome, Booz & Company analysis Booz & Company

Classification for GA Airports
2 Design The standard classifies GA airport into different types and set different requirements Classification for GA Airports Main Requirements GA Airport for Fixed-Wing Aircrafts Permanent GA airport Fixed, based and long-term Temporary GA airport Seasonally or emergency Main technical indicators of flight zone Runway Runway shoulder Runway Strip Taxiway Parking Apron Visual air navigation aid Indicator sign Flight zone surface mark Lights Fire fighting device Communication Navigation Equipment Meteorological Observation Equipments Auxiliary Equipments Surface level Heliports The heliport on the ground or water Elevated Heliports The heliport on top of high buildings Helideck The heliport on the offshore building Heliports Source: Ground Equipment of General Aviation Aerodrome, Booz & Company analysis Booz & Company

Civil Heliport Technical Standards
2 Design Current CAAC Technical Standards for Flying Area of Civil Heliport does not prescribe specific requirements by applications Civil Heliport Technical Standards Applicability This standard is applicable to heliport technical standards It is not applicable to the landing area requirements for helicopters conducting aerial works at remote areas Unlike FAA’s AC 150/ Heliport Design, it does not stipulates requirements for heliports by application GA heliports transport heliports hospital heliports Booz & Company

3 Operation FAA only requires airports serving air carrier operations to obtain airport operating certificates under Part 139 certification Airports that Must be Certificated Under 14 CFR Part 139 Airport Operating Certificates (AOC) 14 CFR Part 139 requires FAA to issue airport operating certificates to airports that: Serve scheduled and unscheduled air carrier aircraft with more than 30 seats Serve scheduled air carrier operations in aircraft with more than 9 seats but less than 31 seats; and The FAA Administrator requires to have a certificate Compliance with 14 CFR Part 139 is mandatory for airports serve air carrier operations covered by the regulation Airport Operating Certificates serve to ensure safety in air transportation 14 CFR Part 139 establishes 18 areas of safety standards (e.g. runway surfaces, training requirements for aircraft rescue and fire fighting personnel, development of an airport emergency plan and a wildlife hazard management plan) To obtain a certificate, an airport must agree to certain operational and safety standards/ requirements (depending on the size of the airport and the type of flights available) FAA can issue certain exemptions to airports that serve few passengers yearly and for which some requirements might create a financial hardship Note: Scheduled Operation — any common carriage passenger-carrying operation for compensation or hire conducted by an air carrier for which the air carrier or its representatives offers in advance the departure location, departure time, and arrival location. It does not include any operation that is conducted as a supplemental operation under 14 CFR Part 121 or public charter operations under 14 CFR Part 380; Unscheduled Operation — any common carriage passenger-carrying operation for compensation or hire, using aircraft designed for at least 31 passenger seats, conducted by an air carrier for which the departure time, departure location, and arrival location are specifically negotiated with the customer or the customer's representative. This includes any passenger-carrying supplemental operation conducted under 14 CFR Part 121 and any passenger-carrying public charter operation conducted under 14 CFR Part 380 Source: FAA, Booz & Company analysis Booz & Company

Airports Exempted from Part 139
Operation GA airports and heliports are exempted from Part 139 certification but obligated to meet contractual obligations if receiving federal funds Airports Exempted from Part 139 Does not apply to GA airports because they do not serve air carrier operations ( unscheduled operations of air carrier aircraft with more than 30 seats and scheduled operations of air carrier aircraft with 10 to 30 seats) Operators of general aviation airports that accept Federal grant funds or the transfer of Federal property for airport purposes must agree to contractual obligations under FAA Airport Compliance Program These obligations require the recipients to maintain and operate their facilities safely and efficiently and in accordance with specified conditions. The obligations may include use of airport revenue, proper maintenance and operation of airport facilities, protection of approaches, land use compliance and others as agreed While FAA does not certificate general aviation airports under the revised Part 139, the regulation contains many safety procedures and practices FAA recommends for use at all airports GA Airports Alaskan Airports Does not apply to Alaskan airports that: Do not serve air carrier aircraft with more than 30 seats; or During time periods when the airport is not serving air carrier aircraft with more than 30 seats Heliports are not required to be certificated under Part 139 because: Heliports typically are used by general aviation operators and serve very few air carrier operations There are very few helicopters that can seat more than nine passengers, and fewer still are used for scheduled passenger operations While certification is not required, FAA encourages heliport operators to follow Advisory Circular (AC) 150/5390-2, Heliport Design (or obligated to comply with AC 150/ if they receive federal grants) Heliport Note: In addition to the above GA airports and heliports, airports serving scheduled air carrier operations only by reason of being designated as an alternate airport as well as airports operated by the United States (such as military bases) are also exempted from Part 139 certification Source: FAA, Booz & Company analysis Booz & Company

Virginia States Airport Licensing Requirements
3 Operation Though exempted from Part 139 certification GA airports are subject to licensing requirements imposed in respective states (1/2) U.S. EXAMPLE Virginia States Airport Licensing Requirements Public-use Airport Public-use airports are licensed for several reasons, including a requirement that they have sufficient financial responsibility to adequately protect public safety and investment The Public-use Airport License is issued in two parts, Part 1 is a formal certificate, and Part 2 provides information concerning runway configuration, length and width Licensing of private-use airport, heliport or landing area within five miles of a public-use airport is mandatory It is a one-time process designed to provide public review (to be conducted by Virginia Department of Aviation) of an individual's desire to build or locate a private-use airport on private property, to ensure no conflict with airspace of public use facility FAA’s approval of airspace is part of the review process There is no fee charged to license a private-use airport, and owners of other private-use airports are only required to register their airports with the Department of Aviation Private-use Airports Within Five-Miles of a Public-use Airport Private-use airports not within five miles of public-use airports Owners of private-use airports not within five miles of a public-use airport are only required to register their airports with the Department. Source: Booz & Company analysis Booz & Company

CCAR Part 139 Airport Certification Summary of Requirements
Operation Unlike the U.S. currently there is no exemption on registration and compliance resulting in too stringent requirements for GA airports CCAR Part 139 Airport Certification Section Summary of Requirements Chapter 1 Section 2 This regulation applies to civil airports which includes air carrier and GA airports Chapter 2 Section 1 Certification requirements The airport operator should be a legal person in PRC; The management of airport should have appropriate experiences; The capital structure of airport should follow relative national regulations; The airport organization and management system is well established There are appropriate provisions of flight zone, terminal zone, working zone, facilities and staff Provisions of necessary air traffic service, flight information service, communication and navigation surveillance, aeronautical meteorology in accordance with ATMB requirements with corresponding operation management process in place Approved flight procedure and minimum operation standard Safeguard facility and staffs that follows PRC civil airport security regulation Appropriate proposal, facilities and staffs for emergency response management Safety management system that meets the airport operation requirements Other basic requirements by CAAC 1 1 No exemption on airport certification No clear definition of temporary landing area and its requirements 2 CAAC needs to provide a clear definitions of “other basic requirements” All the requirements should be listed clearly in the regulation 2 (Items in red are not applicable to GA airports) Source: CCAR 139 CA-R1, Booz & Company analysis Booz & Company

GA Airport Funding In the U.S. public-use airports that serve civil aviation are eligible for Federal Airport Improvement Program funding Types of Airports and Airport Activities Definition of Airport Categories Airport Classification Hub Type: Percentage of Annual Passenger Boardings Common Name Commercial Service: Publicly owned airports that have at least 2,500 passenger boardings each calendar year and receive scheduled passenger service Primary: Have more than 10,000 passenger boardings each year Large: 1% or more Large Hub Medium: At least 0.25% but less than 1% Medium Hub Small: At least 0.05% but less than 0.25% Small Hub Non-hub (1): More than 10,000, But less than 0.05% Nonhub Primary Non-primary Non-hub: At least 2,500, and no more than 10,000 Nonprimary Commercial Service Noprimary (Except Commercial Service) Reliever (2) General Aviation (3) Other than Passenger Classification Cargo Service The only airports, or portions thereof, eligible for AIP funding are public use airports that serve civil aviation (and must be included in the NPIAS) A public-use airport is an airport open to the public that also meets the following criteria: Publicly owned, or Privately owned but designated by FAA as a reliever, or Privately owned but having scheduled service and at least 2,500 annual enplanements Note: 1) Nonhub airports - locations having less than 0.05 percent of the U.S. passengers, including any nonprimary commercial service airport, are statutorily defined as nonhub airports. 2) Reliever airports are airports designated by the FAA to relieve congestion at Commercial Service Airports and to provide improved general aviation access to the overall community 3) The remaining airport, while not specifically defined in Title 49 USC, are commonly described as General Aviation Airports. Source: FAA, Booz & Company analysis Booz & Company

GA Airport Funding Department of Transport of different states also provide aid programs and loans to support GA airport development CALIFORNIA EXAMPLE Main State Aid Programs for Airports in California Local Airport Loan Program Annual Credit Grant Provides a $10,000 per year entitlement to eligible publicly-owned, public-use airports for expenditure at the sponsor’s discretion The Local Airport Loan Account is a revolving fund that was initiated with seed money from the Aeronautics Account. As principal and interest payments are returned to the Loan Account, additional loans can be provided to airports To be eligible for the loan, the airport must be owned by an eligible public agency (e.g., a city, county or airport district) Loans are available for revenue generating projects such as hangers and fueling facilities Loans can be made for airport development projects also Finally, loans can be made to assist the sponsor with the local match for an AIP Project Generally, the term of a loan will vary between 8 and 17 years depending upon the amount of the loan Assist General Aviation (GA) airports in meeting the local match for federal Airport Improvement Program (AIP) grants The state grant is 2.5% of the AIP amount. Eligible projects must benefit GA and be included in the Capitol Improvement Program (CIP) element of the California Aviation System Plan AIP Matching Grant Acquisition and Development (A&D) grants are for eligible projects subject to programming and allocation by the CTC An airport land use commission (ALUC) can receive funding to either prepare or update a comprehensive land use plan (CLUP) Acquisition and Development (A&D) Grants The sole funding source for these grants is excise tax revenues on general aviation (GA) gasoline (18¢ per gallon) and for jet fuel (2¢ per gallon) Source: California Department of Transportation, Booz & Company analysis Booz & Company

GA Airport Funding GA airports in the U.S. exploit different revenue sources by imposing charges to their fund development and operation Operating rental/ lease revenue sources Hangar rental Hangar land lease Passenger terminal building structured lease Airport operational income revenue sources Aircraft landing fees Aircraft parking/ tie down fees Airport Equipment Use Fees Motor Vehicle Parking Revenue Fuel sales/ flowage fee revenue Non-aeronautic revenue sources Business Parks Golf course Vehicle parking Car dealers Rental car agencies Campground/RV parking Agricultural Lease Mineral rights Field sports Special activities and events catering to both aviation and non-aeronautical interests Typical Sources of Airport Revenues Initiatives to Increase Revenue of GA Airports Surveyed (Sample Size: 588 GA Airports) % of respondents Build More T-hangarsBuild More T-hangarsBuild More T-hangars Raise Hangars Rental RatesRaise Hangars Rental RatesRaise Hangars Rental RatesRaise Hangars Rental Rates Raise fuel prices or flowage feeRaise fuel prices or flowage feeRaise fuel prices or flowage feeRaise fuel prices or flowage feeRaise fuel prices or flowage feeRaise fuel prices or flowage fee Develop more land for real estate (aviation related)Develop more land for real estate (aviation related)Develop more land for real estate (aviation related)Develop more land for real estate (aviation related)Develop more land for real estate (aviation related)Develop more land for real estate (aviation related)Develop more land for real estate (aviation related) Build more corporate hangarsBuild more corporate hangarsBuild more corporate hangarsBuild more corporate hangars Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related) Other Hangar is the main revenue generating initiative Source: Embry Riddles CGAR Research, Booz & Company analysis Booz & Company

GA Airport Funding The U.S. Department of Transport sets policy on airport fees to safeguard the interest of air carriers and other aeronautical users U.S. EXAMPLE Principles Applicable to Airport Rates and Charges In general, the Department of Transportation relies upon airport proprietors, aeronautical users, and the market and institutional arrangements within which they operate, to ensure compliance with applicable legal requirements. Direct Federal intervention will be available, however, where needed. Local Negotiation and Resolution Fair and Reasonable Fees Rates, fees, rentals, landing fees, and other service charges (‘‘fees’’) imposed on aeronautical users for aeronautical use of airport facilities (‘‘aeronautical fees’’) must be fair and reasonable Federal law does not require a single approach to airport rate-setting Prohibition on Unjust Discrimination Aeronautical fees may not unjustly discriminate against aeronautical users or user groups The airport proprietor must apply a consistent methodology in establishing fees for comparable aeronautical users of the airport. Requirement to be Financially Self-Sustaining Airport proprietors must maintain a fee and rental structure that in the circumstances of the airport makes the airport as financially self-sustaining as possible Requirements Governing Revenue Application and Use In accordance with relevant Federal statutory provisions governing the use airport revenue, airport proprietors may expend revenue generated by the airport only for statutorily allowable purposes Source: RIN 2120–AF90 Policy Regarding Airport Rates and Charges, Booz & Company analysis Booz & Company

Applicability of Airport Development Fund
GA Airport Funding China has established a national fund for civil airport development but it should be extended to cover GA airports Specific Civil Aviation Fund for Airport Construction Public Civil Airports are important infrastructure of public benefits and serve the development of national wealth and society The fund will focus on safety facilities, non-developed area, and middle to small size airports The source of fund is the fee of civil airport construction charged from the passengers Applicability of Airport Development Fund It covers public transport airport only New airport Project: new civil airport, military and civil airport expansion Existing airports: there are six categories covering the construction and maintenance work of airport facilities Others: Other construction projects that represent the activities of the government and other lost of fixed assets of airport due to natural disaster Mainly address the needs of public transport airport Source: Specific Civil Aviation Fund for Airport Construction, Booz & Company analysis Booz & Company

GA Operator Interview Findings
GA Airport Funding In China, some operating costs are not very transparent and difficult to capture thus fee related policies are essential GA Operator Interview Findings AIRSPACE “We have canceled our Aircraft Management function due to it is very difficult to apply for the airspace usage - you’ll need relationship with the military” PENSION COST “After restructuring, some of the GA companies carry heavy burdens on giving out pensions to a large group of people” AVIATION GAS “Its difficult to get aviation gas in China - we sometimes go to the military office to get gas” AIRPORT “Most of the GA companies needs to share airport facilities with air carrier - the usage control of the airport is limited - hence aircraft utilization rate is low resulting in relative high costs” Source: Interview findings Booz & Company

GA Airport Regulations
We recommend six initiatives that will help develop and improve current GA airports in China Key Areas Key Recommendations Expected Benefits 1 1.1 Develop regulations or guidance materials for GA airport development (both government or private driven investment) Develop GA airport design requirements that align with different segments (temporary landing strips, heliport, flying clubs etc.) and applications Clearer regulatory requirements with regard to GA airport development Avoid oversized or over equipped GA airports GA Airport Regulations 1.2 2 GA Airport Planning 2.1 Integrate GA airport planning and development into future national airport system planning process Simplify the current GA airport planning and approval process, shorten approval lead time and produce guiding materials System approach to national GA airport development plan Shorter lead time for GA airport development approval 2.2 3 3.1 Conduct feasibility study on a dedicated funds for GA airport development Develop policies to guide airport and airspace usage fees for GA operation Adequate funds to support GA development Fair and equitable usage fees for GA operators and users GA Airport Funding 3.2 Source: Booz & Company analysis Booz & Company

1.1 We have also drawn up high level descriptions of necessary tasks for each of the recommended initiatives Initiative 1.1: Develop Regulations or Guidance Materials for GA Airport Development Initiative Key Objectives Develop regulations or guidance materials for GA airport development Establish systemic regulatory system to support GA airport development Provide guidance materials to help on any possible obstacles during the GA airport development Task 1: GA Airport Regulatory System Task 2: Develop or Improve Regulations Task 3: Develop Guidance Materials Refer to FAA airport regulatory system or China public airport regulatory system Identify the required regulations for GA airport development Refer to FAA regulations if the identified required regulations are missing in China Develop appropriate regulations for GA Study the regulations that need to be improved identified in task1 and find the development needs Improve these regulations Refer to the advisory circulars of FAA that are relevant to airport development Draft the GA airport development guidance material Stakeholders to be Consulted Expected Benefits Next Steps/Follow-up NDRC Regional/local government Military ACP and GA airport operators Clearer regulatory requirements with regard to GA airport development Set up steering committees/work groups for each task Draft detailed scope and work plan Booz & Company

1.2 It is necessary to develop GA airport design requirements that align with different segments and applications Initiative 1.2: Develop GA Airport Design Requirements That Align With Different Segments and Applications Initiative Key Objectives Develop GA airport design requirements that align with different segments (temporary landing strips, heliport, flying clubs etc.) and applications Understand the different needs for different GA segments and applications Provide the GA airport design requirements for different segments Task 1: Understand Needs for Airport Task 2: Develop Airport Design Requirements Segment GA activities appropriately into different segmentations and applications Study the specific needs for airports of different segments and applications Understand different needs for different segments and applications of GA airports Refer to FAA’s airport design requirements for different segments and applications of GA activities Based on understanding for different needs for airports and FAA’s example, develop airport minimum design requirements Public Rotorcraft Recreational, etc. Stakeholders to be Consulted Expected Benefits Next Steps/Follow-up GA airports operators CAAC Standardization Administration Avoid oversized or over equipped GA airports Set up steering committees/work groups for each task Draft detailed scope and work plan Booz & Company

2.1 CAAC needs to implement a system based approach towards GA airport planning and development Initiative 2.1: Integrate GA Airport Planning and Development into Future National Airport System Planning Initiative Key Objectives Integrate GA airport planning and development into future national airport system planning process Provide clear national GA airports development plan Promote GA airport development Task 1: Understand Current Status Task 2: Differentiate GA Airports Task 3: Integrate GA Airport Planning Study current GA airport status including distributions, ownership, operation and financial situations in China Identify the role and responsibilities that GA airports should take in the future (e.g. transportation, public duties, medical and emergency/ disaster relief functions) Based on the identified roles and responsibilities that GA should take in task 1, identify the differences between GA airports and public airports Identify the development needs based on current status and capability for GA airports Based on different roles that public airports and GA airports should take, set the development target for each sectors Develop the overall airport planning including both GA airports and public transport airports Stakeholders to be Consulted Expected Benefits Next Steps/Follow-up GA airports operators CAAC Regional Aviation Administrations Local Government System approach to national GA airport development plan Set up steering committees/work groups for each task Draft detailed scope and work plan Booz & Company

2.2 Simplifying the current GA airport planning and approval process will improve effectiveness and efficiency Initiative 2.2:Simplify the Current GA Airport Planning and Approval Process Initiative Key Objectives Simplify the current GA airport planning and approval process, shorten approval lead time and produce guiding materials Clarify ad define approval requirements and process for general aviation airports Provide guidelines on minimum design standards for general aviation airport planning, development, construction and operation Define registration and certification requirements for GA airports Task 1: GA Airport Development Approval Task 2: GA Airport Approval Materials Nil Work with stakeholders to clarify and define approval requirement for GA airport development Regional/ local government investment Private sector investment Conversion of military airports Classification and usage of GA airports Document processes and procedures Issue public consultation Consolidate and prepare a clear guidance material on GA airport planning, develop and construction approval processes and related administrative requirements Nil Stakeholders to be Consulted Expected Benefits Next Steps/Follow-up NDRC Regional/local government Military ACP and GA airport operators Shorter lead time for GA airport development approval Set up steering committees/work groups for each task Draft detailed scope and work plan Booz & Company

3.1 The feasibility of a dedicated funds to support GA airport development will be able to meet long term needs Initiative 3.1:Conduct Feasibility Study of a Dedicated Funds for GA Airport Development Initiative Key Objectives Conduct feasibility study on a dedicated fund for GA airport development Clarify the needs for a dedicated fund for GA airport development Generate reliable capital sources for GA airport development fund Study the feasibility for a dedicated fund for GA airport development Task 1: Define the needs for the funds Task 2: Find the reliable capital sources Task 3: Conduct Feasibility Study Work with GA airports operators to understand current airport operations and financial status Define how much it needs and what is the best way to fund GA airport Work with the management of current civil airport fund to see whether it is possible to share the fund for GA airports development Refer to FAA’s practice to establish the fund from some specific airport related tax Consolidate the information gained Follow the standard process to conduct feasibility study for approval for GA airport fund Stakeholders to be Consulted Expected Benefits Next Steps/Follow-up GA airport operators CAAC Tax Bureau Management of Civil Airport Fund Adequate funds to support GA development Set up steering committees/work groups for each task Draft detailed scope and work plan Booz & Company

3.2 Fair and equitable usage fees for GA operators and users help GA industry develop healthily Initiative 3.2:Develop Policies to Guide Airport Usage Fees for GA Operation Initiative Key Objectives Develop policies to guide airport usage fees for GA operation Provide airport and GA operator a clear guidance on airport usage fees Help GA airports secure operating revenue Help GA airport achieve self-financing Task 1: Understand the Cost Structure Task 2: Develop Guidance Conduct a survey to understand the cost components and levels for GA airport usage charges Work with selected GA airport operators to understand the cost structure of airport operation Benchmark with the cost structure of GA airports in the U.S. Based on the baseline information collected, work with relevant government authorities e.g. NDRC and military policy to develop the principles and guidelines for airport and airspace usage fees for GA operations Conduct public consultation Finalize the policy to guide airport and airspace usage fee for GA operation Stakeholders to be Consulted Expected Benefits Next Steps/Follow-up GA operators GA airport operators Military CAAC Fair and equitable usage fees for GA operators and users Set up steering committees/work groups for each task Draft detailed scope and work plan Booz & Company

Booz & Company

The U.S. has developed a very large number of airport infrastructure including GA airports
Number of Existing Airports by Ownership and Use in the NPIAS Classifications and Definitions of Airports in NPIAS Airport Type Definitions Primary Airports Commercial service airports that have more than 10,000 annual passenger enplanements (also referred to as boarding) Primary airports are grouped into four categories: large, medium, and small hubs and non-hub airports Commercial Service Airports Commercial service airports are defined as public airports receiving scheduled passenger service and having 2,500 or more enplaned passengers per year Commercial service airports that have from 2,500 to 10,000 annual passenger enplanements are categorized as nonprimary commercial service airports Reliever Airports Reliever airports are high-capacity general aviation airports in major metropolitan areas General Aviation Airports (those qualified for NPIAS) Airports that do not have scheduled commercial aviation service They account for enough activity (having usually at least 10 locally based aircraft) and are at least 20 miles from the nearest NPIAS airport 19,815 Total U.S. Airports 5,190 Open to Public 14,625 Closed to Public 4,150 Public Owned 1,040 Private Owned 3,411 NPIAS Airport (Of the 5,190 existing public use airports, 65% are NPIAS) 3,356 Existing 3,254 Public Owned 102 Private Owned 383 Primary 139 Commercial Service 270 Reliever 2,564 General Aviation 562 are certificated for air carrier operation (non GA) Source: NPIAS, Booz & Company analysis Booz & Company

The U.S. Federal Government has set guiding principles for the development of the national airport system EXTRACTED FROM NPIAS The airport system envisioned in the first National Airport Plan in 1946, when civil aviation was in its infancy, has been developed and nurtured by close cooperation with airport sponsors including Federal, State, and local agencies. The general principles guiding Federal involvement have remained largely unchanged; the airport system should have the following attributes to meet the demand for air transportation: Airports should be safe and efficient, located at optimum sites, and developed and maintained to appropriate standards Airports should be affordable to both users and Government, relying primarily on user fees and placing minimal burden on the general revenues of the local, State, and Federal governments Airports should be flexible and expandable, able to meet increased demand and to accommodate new aircraft types Airports should be permanent, with assurance that they will remain open for aeronautical use over the long term Airports should be compatible with surrounding communities, maintaining a balance between the needs of aviation and the requirements of residents in neighboring areas Airports should be developed in concert with improvements to the air traffic control system and technological advancements The airport system should support national objectives for defense, emergency readiness, and postal delivery The airport system should be extensive, providing as many people as possible with convenient access to air transportation, typically by having most of the population within 20 miles of a NPIAS airport The airport system should help air transportation contribute to a productive national economy and international competitiveness Source: NPIAS Booz & Company

FAA has put in place a regulatory system governing planning, development, operation and management of airports FAA Regulatory System for Airports Certification, Development and Operation 14 CFR Part 139 requires FAA to issue airport operating certificates to airports that Serve scheduled and unscheduled air carrier aircraft with more than 30 seats; Server scheduled air carrier operations in aircraft with more than 9 seats but less than 31 seats; and The FAA Administrator requires to have a certificate. This Part does not apply to airports at which air carrier passenger operations are conducted only because the airport has been designated as an alternate airport. Airport Related Regulations There is a specific subchapter in FAR for airport: Subchapter F - Airport Planning and Development related (including funding) Part 150 Airport Noise Compatibility Planning Part 151 Federal Aid to Airports Part 152 Airport Aid Program Part 156 State Block Grant pilot program Part 77 Objects Affecting Navigable Airspace Operation related Part 153 Airport Operations Part 155 Release of Airport Property from Surplus Property Disposal Restrictions Part 157 Notice of Construction, Alteration, Activation, and Deactivation of Airports Part 158 Passenger Facility Charges Part 161 Notice and Approval of Airport Noise and Access Restrictions Part 169 Expenditure of Federal Funds for Nonmilitary Airports or Air Navigation Facilities Thereon Source: FAA, Booz & Company analysis Booz & Company

Airport Related Regulations and Guidance Development and Planning
These FAR regulations are supplemented by guidance materials and local government requirements Non-Exhaustive Airport Related Regulations and Guidance Development and Planning Land Acquisition Land Use Obstructions FAA Order C, Airport Improvement Program Handbook FAA Advisory Circular 150/5070-6B, Airport Master Plans FAA Advisory Circular 150/5070-7, The Airport System Planning Process FAA Advisory Circular 150/ D Architectural, Engineering and Planning Consultant Services for Airport Grant Projects FAA Advisory Circular 150/ , Airport Design FAA Advisory Circular 150/ A, Hazardous Wildlife Attractants On or Near Airports FAA Order B, Land Acquisition and Relocation for Airport Projects FAA Advisory Circular 150/ , Land Acquisition and Relocation Assistance for Airport Improvement Program Assisted Projects FAA, Land Use Compatibility and Airports: A Guide for Effective Land Use Planning Local government airport zoning regulations restricting the height of structures and objects of natural growth and otherwise regulating the use of property in the vicinity of an airport, e.g. Airport Zoning Act and Ordinance Building Codes Housing Codes 14 C.F.R. Part 77 (Objects affecting navigable airspace) FAA, Land Use Compatibility and Airports: A Guide for Effective Land Use Planning Source: Booz & Company analysis Booz & Company

FAA provides oversight of airports through 3 key programs supported by standards and guidance materials Key FAA Airport Programs Relevant to General Aviation 1 2 3 Airport Compliance Airport Safety & Certification Environmental Program Airport sponsors agree to certain obligations when they accept Federal grant funds or Federal property transfers for airport purposes. The FAA enforces these obligations through its Airport Compliance Program GA airports receiving Federal grant funds are subject to the compliance requirements The Airport Safety Program addresses general aviation airport safety, runway safety, airports certificated under 14 Code of Federal Regulations Part 139, and the Airport Safety Data Program, which makes airport information available to the public. The program deals with the following issues: Airshows Open or Close an Airport or Runway Part 139 Certification Reducing Runway Incursions Runway Safety Program Safety Management Systems (SMS) Signs and Marking Wildlife Hazard Mitigation The Airport Environmental Program helps airports implement the National Environmental Policy Act (NEPA) and other Federal environmental laws and regulations The program focuses on: Airport Air Quality Voluntary Airport Low Emissions Program (VALE) Airport Noise (Part 150 and Part 161) Compatible Land Use Environmental Records of Decision Acquiring Land for Airports and Relocation Assistance Wildlife Hazard Mitigation Supplemented by engineering, design and construction standards and guidance materials (planning, design, operation, funding and fees) Source: FAA, Booz & Company analysis Booz & Company

Primary Objectives of Airport Compliance Program
1 Airport compliance program The FAA’s Airport Compliance Program aims to protect the public interest and the federal investment in public use airports Primary Objectives of Airport Compliance Program The primary objectives of the FAA’s Airport Compliance Program are to: ensure that the U.S. has a system of safe and properly maintained public-use airports operated according to the airport owners’ federal obligations safeguard the public’s investment in civil aviation The program is designed to specifically achieve the following: Educate the FAA’s “customers”, i.e. airport owners and users. Promote dispute resolution through an informal process using CFR 14 Part 13.1 or/and alternative dispute resolution, also called AD Eliminate duplication by distinguishing between the functions of local, regional, and national FAA offices Speed decision-making. Enforce agreements when necessary Source: AOPA, FAA, Booz & Company analysis Booz & Company

Key Elements of Airport Compliance Program
1 Airport compliance program FAA enforces contractual obligations for all airports receiving federal grant funds under a grant assurance Key Elements of Airport Compliance Program A Grant assurance is the obligations that airport owners and sponsors must agree to if they accept funds from FAA-administered airport financial assistance programs These obligations require the recipients to maintain and operate their facilities safely and efficiently and in accordance with specified conditions The obligations may include use of airport revenue, proper maintenance and operation of airport facilities, protection of approaches, land use compliance and others as agreed Grant Assurance Airport Sponsor Assurance Airport Financial Reporting Program Complaints (Part 13 & 16) A B C B Airports are obligated file the following financial reports to FAA annually The payments the airport makes to governmental entities, the services the airport performs for governmental entities, and the land and facilities the airport provides to such entities Airport revenues, expenses, and other financial information C Anyone concerned about an airport's compliance with the obligations under contract (Grant Assurances) may file: informal complaints with FAA in accordance with 14 CFR Part 13 Investigative and Enforcement Procedures; formal complaints with FAA in accordance with14 CFR Part 16 Rules of Practice for Federally-Assisted Airport Enforcement Proceedings Source: FAA, Booz & Company analysis Booz & Company

Process to address an airport compliance problem or dispute
1 Airport compliance program FAA has put in place a process to provide oversight on airport compliance under FAA Order A Process to address an airport compliance problem or dispute FAA notification and initial investigation Handled at the FAA Region and Airport District Office (ADO) level Guidelines are provided in the Airport Compliance Handbook, informal dispute resolution Handled at the regional or local FAA level FAA requires both the complainant and airport owner to try to resolve the dispute informally first FAA Investigative and Enforcement Procedures (14 CFR § 13.1) and Alternative Dispute Resolution (ADR) are applicable Formal enforcement procedures Handled primarily at the FAA’s headquarters in Washington, DC It happens when all attempts to solve the compliance problem informally Formal complaint under FAR Part 16 must be filed FAA Rules of Practice for Federally- Assisted Airport Proceedings (14 CFR, Part 16) applies The guidelines for operating the Airport Compliance Program are documented n FAA Order A, Airport Compliance Requirements, also known as the Airport Compliance Handbook Source: AOPA, FAA, Booz & Company analysis Booz & Company

2 Airport safety program Part 139 certification is the key safety program that mandates airports serving air carrier operations to obtain airport operating certificates Airports that Must be Certificated Under 14 CFR Part 139 Airport Operating Certificates (AOC) 14 CFR Part 139 requires FAA to issue airport operating certificates to airports that: Serve scheduled and unscheduled air carrier aircraft with more than 30 seats Serve scheduled air carrier operations in aircraft with more than 9 seats but less than 31 seats; and The FAA Administrator requires to have a certificate Compliance with 14 CFR Part 139 is mandatory for airports serve air carrier operations covered by the regulation Airport Operating Certificates serve to ensure safety in air transportation 14 CFR Part 139 establishes 18 areas of safety standards (e.g. runway surfaces, training requirements for aircraft rescue and fire fighting personnel, development of an airport emergency plan and a wildlife hazard management plan) To obtain a certificate, an airport must agree to certain operational and safety standards/ requirements (depending on the size of the airport and the type of flights available) FAA can issue certain exemptions to airports that serve few passengers yearly and for which some requirements might create a financial hardship Note: Scheduled Operation — any common carriage passenger-carrying operation for compensation or hire conducted by an air carrier for which the air carrier or its representatives offers in advance the departure location, departure time, and arrival location. It does not include any operation that is conducted as a supplemental operation under 14 CFR Part 121 or public charter operations under 14 CFR Part 380; Unscheduled Operation — any common carriage passenger-carrying operation for compensation or hire, using aircraft designed for at least 31 passenger seats, conducted by an air carrier for which the departure time, departure location, and arrival location are specifically negotiated with the customer or the customer's representative. This includes any passenger-carrying supplemental operation conducted under 14 CFR Part 121 and any passenger-carrying public charter operation conducted under 14 CFR Part 380 Source: FAA, Booz & Company analysis Booz & Company

Airports Exempted from Part 139
2 Airport safety program GA airports and heliports are exempted from Part 139 certification but obligated to meet compliance requirements if receiving federal funds Airports Exempted from Part 139 Does not apply to GA airports because they do not serve air carrier operations ( unscheduled operations of air carrier aircraft with more than 30 seats and scheduled operations of air carrier aircraft with 10 to 30 seats) Operators of general aviation airports that accept Federal grant funds or the transfer of Federal property for airport purposes must agree to contractual obligations under FAA Airport Compliance Program While FAA does not certificate general aviation airports under the revised Part 139, the regulation contains many safety procedures and practices FAA recommends for use at all airports GA Airports Alaskan Airports Does not apply to Alaskan airports that: Do not serve air carrier aircraft with more than 30 seats; or During time periods when the airport is not serving air carrier aircraft with more than 30 seats Heliports are not required to be certificated under Part 139 because: Heliports typically are used by general aviation operators and serve very few air carrier operations There are very few helicopters that can seat more than nine passengers, and fewer still are used for scheduled passenger operations While certification is not required, FAA encourages heliport operators to follow Advisory Circular (AC) 150/5390-2, Heliport Design (or obligated to comply with AC 150/ if they receive federal grants) Heliport Note: In addition to the above GA airports and heliports, airports serving scheduled air carrier operations only by reason of being designated as an alternate airport as well as airports operated by the United States (such as military bases) are also exempted from Part 139 certification Source: FAA, Booz & Company analysis Booz & Company

Virginia States Airport Licensing Requirements
2 Airport safety program Though exempted from Part 139 certification GA airports are subject to licensing requirements imposed in respective states (1/2) U.S. EXAMPLE Virginia States Airport Licensing Requirements Public-use Airport Public-use airports are licensed for several reasons, including a requirement that they have sufficient financial responsibility to adequately protect public safety and investment The Public-use Airport License is issued in two parts, Part 1 is a formal certificate, and Part 2 provides information concerning runway configuration, length and width Licensing of private-use airport, heliport or landing area within five miles of a public-use airport is mandatory It is a one-time process designed to provide public review (to be conducted by Virginia Department of Aviation) of an individual's desire to build or locate a private-use airport on private property, to ensure no conflict with airspace of public use facility FAA’s approval of airspace is part of the review process There is no fee charged to license a private-use airport, and owners of other private-use airports are only required to register their airports with the Department of Aviation Private-use Airports Within Five-Miles of a Public-use Airport Private-use airports not within five miles of public-use airports Owners of private-use airports not within five miles of a public-use airport are only required to register their airports with the Department. Source: Booz & Company analysis Booz & Company

California Airport Licensing
2 Airport safety program Though exempted from Part 139 certification GA airports are subject to licensing requirements imposed respective states (2/2) U.S. EXAMPLE California Airport Licensing Permit Requirements Exemption Permit Requirements No person may hold an airport open for use, unless otherwise exempted, without first applying for and obtaining an appropriate permit or authorization as required by the Department. No aircraft takeoff or landing may be made at a site that is not permitted, exempted, or authorized in accordance with these regulations. A separate heliport permit is not required for a designated heliport located within the boundaries of a permitted airport if the heliport meets heliport design standards as described in Article 4 of these regulations. Agricultural airports; Seaplane landing sites; Personal-use airports in unincorporated areas which meet the requirements of Article 5 of these regulations; Any airport which has heretofore been established and which is currently being used pursuant to exemption granted under previous regulations of the Department. Such airports shall continue to be exempt, provided the use and conditions pertaining to such exemption continue to be met. Such airports shall be marked in accordance with Section 3560(e) of these regulations; Heliports established on offshore oil platforms; Temporary helicopter landing sites that are not within 1000 feet of the boundary of a public or private school maintaining kindergarten classes or any classes in grades 1 through 12; Emergency medical services (EMS) landing sites; and Emergency use facilities. Within 10 working days after receipt of an application for a permit or temporary airport authorization, the Department shall notify the person applying in writing if the application is incomplete. An incomplete application cannot be processed. A complete application will initiate the permitting or authorization process. The Department's time periods for processing any complete application or notification per Section 3534(c) of these regulations from receipt to the final decision regarding issuance or denial of a permit or authorization are as follows (1) minimum time: 15 working days; (2) median time: 30 working days; (3) maximum time: 45 working days, depending on proceedings/outcome of a public hearing or other problems. Booz & Company

2 Airport safety program Airport developers and owners have to notify FAA in accordance with Part 157 requirements for construction, alteration, activation and deactivation of airports Purpose of Part 157 Notice of Construction, Alteration, Activation and Deactivation Who Must File? This notification serves as the basis for evaluating the effects of the proposed action on the safe and efficient use of airspace by aircraft and the safety of persons and property on the ground These effects include but are not limited to: Evaluating the effects the proposed action would have on existing or proposed traffic patterns of neighboring airports, The effect the proposed action would have on the existing airspace structure and projected programs of the FAA the effects that existing or proposed objects (on file with the FAA) within the affected area would have on the airport proposal Notification allows the FAA to identify potential aeronautical hazards in advance thus preventing or minimizing the adverse impacts to the safe and efficient use of navigable airspace Each person who intends to accomplish any of the following actions must notify the FAA. Construct or otherwise establish a new airport or activate an airport Construct, realign, alter, or activate any runway or other aircraft landing or takeoff area of an airport Deactivate, discontinue using, or abandon an airport or any landing or takeoff area of an airport for a period of one year or more. Construct, realign, alter, activate, deactivate or discontinue using a taxiway associated with a landing or takeoff area on a public-use airport Change the status of an airport from private use or from public use to another status Change any traffic pattern or traffic pattern altitude or direction Change status from Instrument Flight Rules (IFR) to Visual Flight Rules (VFR) or vice versa Source: FAA, Booz & Company analysis Booz & Company

FAA’s Future SMS Rulemaking Considerations
2 Airport safety program Besides airport certification the implementation of airport safety management system is another FAA’s airport safety initiative Key Milestones of Airport Safety Management System (SMS) Promotion and Implementation in the U.S. FAA’s Future SMS Rulemaking Considerations Planned Nov 2005 Feb 2007 April 2007 Sept 2007 Spring 2009 Late 2009 Consider the benefits and costs of the rule and tailor the rule to impose the minimum burden and costs necessary for effective implementation Consider whether the requirement should apply to all certificated airports or only to airports above a certain activity level Consider, for airports subject to an SMS requirement, how SMS program elements would apply to airports of different sizes and resource Acknowledge the existing requirements of 14 CFR Part 139 and avoid duplication of safety programs Consider the appropriate degree of FAA oversight of individual SMS plans by FAA airport certification safety inspectors Review SMS training needs for FAA employees and airport operators ICAO AP-SMS Mandate ICAO amended Annex 14, Volume I (Airport Design and Operations) Member States to have certificated international airports establish an airport SMS (AP-SMS) Pilot Study FAA proposed to implement to not only meet ICAO requirements but complement Part 139 certification Launched SMS pilot study participation guide SMS Guidebook SMS Guidebook for Airport Safety Management Systems (Project Overview) - Guidebook providing practical guidance on the implementation of an airport SMS AC 150/ FAA Introduced the concept of a SMS for airport operators through this advisory circular ACRP SMS Overview ACRP Report 1, Safety Management Systems for Airports, Volume 1: Overview Rulemaking FAA plans to issue a notice of proposed rulemaking (NPRM) about SMS and request public comment Source: FAA, Booz & Company analysis Booz & Company

WSDOT Pilot’s Guide to Washington Airports
2 Airport safety program Production of GA airport guides for pilots is a useful initiative to promote airport safety WSDOT Pilot’s Guide to Washington Airports Discussion Washington State Department of Transportation (WSDOT) Aviation is responsible for furthering the public interest and aviation progress by providing for the protection and promotion of safety in aviation The publication of a convenient and useful directory of public airports and related facilities is regarded by the Division to serve both the public interest and the promotion of aviation safety The publication provides information related to the 16 WSDOT state owned and operated emergency/recreation Airports Source: WSDOT, Booz & Company analysis Booz & Company

Main Focus of Airport Environmental Program
3 Airport environmental program FAA’s Airport Environmental Program helps airports implement the NEPA and other Federal environmental laws and regulations Main Focus of Airport Environmental Program Main Environmental Policies & Guidance for Airports National policies National Environmental Policy Act (NEPA) Clean Air Act CEQ Regulations Implementing NEPA DOT Order C, Procedures for Considering Environmental Impacts FAA policies and regulations FAA Order E Environmental Impacts: Policies and Procedures FAA Order B, National Environmental Policy Act (NEPA) Implementing Instructions for Airport Actions 14 CFR part 150, Airport Noise Compatibility Planning FA Advisory Circulars and guidance documents (e.g. best practices) Regional Policy and Procedure Memorandums Compatible Land Use Airport Noise Airport Air Quality Environmental Impact Study Management Wildlife Hazard Mitigation Source: FAA, Booz & Company analysis Booz & Company

3 Airport environmental program The Desk Reference summarizes NEPA and other laws that must be complied before FAA may approve actions to support airport development FAA Environmental Desk Reference for Airport Actions Airport Projects that Require Environmental Review Order B refers to Federal environmental requirements outside NEPA as “special purpose laws.” The Order states that, besides NEPA, FAA must comply with those laws before FAA may approve a proposed Federal actions to support airport development projects The Environmental Desk Reference for Airport Actions summarizes applicable special purpose laws in one location for convenience and quick reference It helps FAA integrate the compliance of NEPA and applicable special purpose laws to the fullest extent possible It includes information addressing environmental impact evaluation methodology (and alternatives where appropriate) and mitigation measures The Desk Reference addresses the 23 environmental impact categories New Airport Development Project Airports that receive Federal Grant (AIP) Use of Passenger Facility Charge (PFC) Funding Acquire Land or Land Release Some Part 150 Measures Air Traffic Control Procedures Airport Layout Plan Updates Source: FAA, Booz & Company analysis Booz & Company

In China the States Council decrees and civil aviation regulations regulate civil airport development and construction universally Civil Aviation Regulations Decrees by the State Councils 民用机场管理条例 (civil airport management regulations) 《关于建设机场和合用机场审批程序的若干规定》的通知 (Approval procedures for civilian and joint civilian/military airport development/construction) Planning and Development CCAR-158 民用机场建设管理规定 (civil airport development management) Design and Construction CCAR-165 民航专业工程质量监督管理规定 (Civil aviation engineering project quality management rules) 国务院、中央军委关于保护机场净空的规定 (Navigable airspace protection requirements) CCAR-97FS-R1 航空器机场运行最低标准的制定与实施规定 (Minimum standards for aircraft operating at airports) CCAR-97FS-R2 中国民用航空总局关于修订《航空器机场运行最低标准的制定与实施规定》的决定 (revision of CCAR-97FS-R1) CCAR-139CA-R1 民用机场使用许可规定 (civil airport certification) CCAR-137CA-R2 民用机场专用设备使用管理规定 (civil airport equipage management) CCAR-139-II 民用运输机场应急救援规则 (Emergency and rescue procedures for civil airports) CCAR-140 民用机场运行安全管理规定 (Safety management system for civil airports) CCAR-252FS 民用机场和民用航空器内禁止吸烟的规定 (Non-smoking requirements for airports and aircraft) CCAR-331SB-R1 民用机场航空器活动区道路交通安全管理规则 (Road safety within civil airport) 国务院、中央军委关于加强机场地面安全措施的通知 (Enhance ground safety and security at airports) 国务院、中央军委《关于军民合用机场使用管理的若干暂行规定》的通知 (Management of joint military and civil airports) Operation China does not make distinction between civil airports serving air carrier and GA operation No regulations exist for private airport development Regulations applicable to large civil airports are also imposed on general aviation airports In addition, as military has control over airspace, airport development needs approval from the military Booz & Company

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System Based Approach to Airport Planning in the U.S.
The U.S. has a system based airport planning approach at federal, regional, state and local government levels System Based Approach to Airport Planning in the U.S. 1 2 FEDERAL REGIONAL STATE STATE/LOCAL National Plan of Integrated Airport System (NPIAS) Identifies airports that are eligible for federal funding and estimates the amount of funding required to meet the needs Regional Aviation System Plan Guides development of airports in different states State Transportation Plan Guides development of the state transportation system (aviation, land transport etc.) State Law Provides authorities and sets requirements for local planning LOCAL 3 STATE Comprehensive Plan Determines where growth occurs State Aviation System Plan Guides development of the state air transportation system LOCAL Development Regulation/Zoning Determines how growth occurs LOCAL 4 Airport Master Plan & Airport Layout Plan Guides future development of the airport: identifies needed improvement projects LOCAL Communications and critical decision flow Permitting Process A formal process for ensuring that individual projects follow requirements set out in development regulations and guiding principles set our in the comprehensive plan 5 FAA AC150/5070-6B Airport Master Plan provide guidance on the preparation of master plans Source: Booz & Company analysis Booz & Company

1 Federal government level NPIAS identifies airports that are significant to national air transportation and estimates the infrastructure development needs Description of NPIAS (National Plan of Integrated Airport System) Background of NPIAS Purpose of NPIAS Contents/Requirements of NPIAS The Federal Airport Act of 1946 established the requirement for the formulation and annual revision of the five-year National Airport Plan (NAP) The requirements for the plan has been developed and revised for several times during the past 60 years Section of Title 49 of U.S.C. directs the Secretary of Transportation to maintain a plan (NPIAS) for developing public-use airports in the United States The NPIAS is used by Federal Aviation Administration (FAA) management in administering the AIP. It supports the FAA’s goals identified in the Flight Plan for safety and capacity by identifying the specific airport improvements that will contribute to achievement of those goals The plan shall include the type and estimated cost of eligible airport development necessary: to provide a safe, efficient, and integrated system of public-use airports adequate to anticipate and meet the needs of civil aeronautics to meet the national defense requirements to meet identified needs of the United States Postal Service The plan shall consider the needs of each segment of civil aviation and the relationship of each airport to: the rest of the transportation system in the particular area forecasted technological developments in aeronautics forecasted developments in other modes of intercity transportation Source: NPIAS, Booz & Company analysis Booz & Company

1 Federal government level NPIAS identifies six key factors to gauge the level of airport system performance in order to help establish development needs Six Key Factors to Gauge Airport System Performance Capacity Ensure adequate airport capacity (through adequate runway and taxiways capacity, air traffic control management, congestion management etc.) with little or no delay Improve airport safety through certification, implementing safety management system Improve aircraft movement operations on the airport surface and reduce the number of runway incursions Safety To produce the maximum benefit to the flying public Ensure limited financial and human resources are used most productively Minimize airport related impact on airport-related impacts on noise, air, and other environmental concerns Key focus areas are noise, air quality, water purity, and most recently, climate change Environment Pavement condition Ensure that not less than 93 percent of runways at airports in the NPIAS are maintained in good or fair condition Surface accessibility Make air transportation as convenient and accessible as possible Link airport with public transportation to improve the convenience and reliability of airport surface access and to enhance air quality. Financial performance Report financial data annually, including revenue and expense information to enable understanding of airport finance to formulate an appropriate national aviation funding policy Source: National Plan of Integrated Airport Systems ( ), Booz & Company analysis Booz & Company

Objectives of the General Aviation Regional Airport System Plan
2 Regional level FAA may complement state airport system plans by developing regional airport system plan as appropriate EXAMPLE Objectives of the General Aviation Regional Airport System Plan (Southwest Region) The plan is intended to complement state system plans The main objectives of the plan are as follows: Identify improvements at GA airports that will allow aircraft to safely operate in lower visibility conditions (NextGen initiative) Identify system performance targets to improve safety, capacity (access) and efficiency Communicate the current performance of the general aviation airport system, Improve the overall performance (level-of-service) of the GA system by developing and implementing programs, supporting capital development, and identifying resources to meet the targets Booz & Company

Airport Leveling/ Grouping System for Southwest Region
2 Regional level Leveling of airport types is necessary to allow comparison and evaluation performance of similar airports in different states EXAMPLE Airport Leveling/ Grouping System for Southwest Region Comments Airports are divided into four groups or Levels using: Based aircraft Type of based aircraft FAA’s Service Level designation: General Aviation (GA), Reliever (R), Commercial Service (CS) and Primary (P) States within the region use their own categorization systems based on differing criteria As each State classification system supports its unique needs and cannot be mapped into to a single system Leveling allows similar airports to be evaluated and compared to identify a level-of-service for similar airports General Aviation with 100 or more based aircraft Commercial Service or Reliever 50 or more based aircraft 5 or more based jet aircraft (any service level) Level I General Aviation with 50 or more based aircraft Commercial Service or Reliever with 10 or more based aircraft 1 or more based jet aircraft (any service level) Level II Level III General Aviation with 10 or more based aircraft Level IV General Aviation with less than 10 based aircraft Booz & Company

Key Features of State Aviation System Plan
3 State government level State Aviation System Plan provides a macro level guidance for airport development within the state and inputs into NPIAS Background Key Features of State Aviation System Plan In the past, many states did not conduct scientific or comprehensive airport planning or surveys To remedy this, congress included a section in the Airport & Airway Development Act of 1970 which allocated 1% of the development money toward funding comprehensive studies at the state level State Aviation System plan includes specific programs to support commerce and economic growth aviation needs and programs intended to improve capacity and enhance safety consistent with the Federal mission State plans are usually updated every 5 years or so Plans also include smaller 10, 15 and 20 year planning horizons Major features of state airport plans: Detailed listing of actions by the class of airport and type of improvement Land acquisition for airport expansion or development of a new airport Pavement repairs for runways/taxiways, apron, roads, parking areas Lighting Landing and navigation aids Building construction to include terminals, hangars, administrative facilities Source: AOPA’s Guide for Airport Advocates, Booz & Company analysis Booz & Company

Purpose of the Georgia Aviation System Plan
3 State government level Georgia Aviation System Plan is an example of state level plan that aim to identify long term aviation needs in Georgia CASE STUDY Purpose of the Georgia Aviation System Plan The purpose of the Georgia Aviation System Plan is to provide a key decision making document and guidance for: Identifying airports and related facilities that are needed to promote aviation in Georgia Determining current deficiencies in the Georgia Aviation System Recommending facilities and services that are needed for each airport to comply with its identified system role Identifying areas of Georgia where new, replacement, or upgraded airport facilities are needed to meet target performance objectives for operational capacity and accessibility Source: Georgia Department of Transportation, Booz & Company analysis Booz & Company

3 State government level Airports in Georgia is stratified into three levels to reflect their roles in the aviation system CASE STUDY Airports in Georgia Stratification of Airports in Georgia Level I Minimum standard GA airport Level II Business airport of local impact Level III Business airport of regional impact Accommodating aircraft types All single-engine Some twin engine GA aircraft All business and personal use single and twin-engine GA A broad range of corporate/ business jet fleet Commercial aircraft A variety of business and corporate jet aircraft Minimum runway objective 4000 feet 5000 feet 5500 feet Operation aids Non-precision instrument approach Precision instrument approach Source: Georgia Aviation System Plan, Booz & Company analysis Booz & Company

3 State government level For each of three functional airport level minimum requirements of facilities and services were established for airside… CASE STUDY Minimum Requirements of Facilities and Services at Airports in Georgia Facilities Level I Minimum standard GA airport Level II Business airport of local impact Level III Business airport of regional impact Airside Facilities Runway Length 4000 feet 5000 feet 5500 feet Runway Width 75 feet 100 feet Taxiways Full parallel desirable; turnarounds at each end minimum objective Full parallel Lighting Systems MIRL and MITL HIRL for precision approaches and commercial service airports; MITL and approach lights Approach Non-Precision Precision NAVAIDs/ Visual Aids Rotating beacon, segmented circle and wind cone, PAPI’s and other aids as required for non-precision approach Same as Level I and II but for precision approach Weather Reporting AWOS or ASOS desirable AWOS or ASOS Ground Communications Public telephone; GCO as needed Public telephone, GCO Airfield Signage Not specified Runway hold position signs, location and guidance signs Fencing Operations area at a minimum; entire airport desirable Entire airport Classify airports to reflect their roles in the overall aviation system Source: Georgia Aviation System Plan, Booz & Company analysis Booz & Company

… as well as general aviation and service related areas
3 State government level … as well as general aviation and service related areas CASE STUDY Minimum Requirements of Facilities and Services at Airports in Georgia Facilities Level I Minimum standard GA airport Level II Business airport of local impact Level III Business airport of regional impact General Aviation Facilities Hangared Aircraft Storage 60% of based aircraft fleet 70% of based aircraft fleet Apron Parking/ Storage 40% of based aircraft fleet plus an additional 25% for transient aircraft 40% of based aircraft fleet plus an additional 50% for transient aircraft 30% of based aircraft fleet plus an additional 75% for transient aircraft Terminal/ Administration 750 square feet enclosed space for public use with restrooms 1500 square feet minimum of public use space including restrooms, conference area and pilots’ lounge 2500 square feet minimum of public use space including restrooms, conference area and pilots’ lounge Auto Parking One space for each based aircraft plus an additional 25% for visitors/ employees One space for each based aircraft plus an additional 50% for visitors/ employees Services Fuel AvGas and/or jet fuel as required AvGas and/or jet fuel FBO Limited Service Full Service Maintenance Limited/ Full Service Rental Cars Available Classify airports to reflect their roles in the overall aviation system Source: Georgia Aviation System Plan, Booz & Company analysis Booz & Company

Descriptions of Performance Measures Facilities and Services
3 State government level Goals and targets for future system performance provided the foundation for subsequent system recommendations System Goals Descriptions of Performance Measures Provide adequate operational capacity to be lower than FAA’s critical demand/capacity trigger point of 60 percent (i.e. operational demand reaches 60 percent or more of the airport’s calculated airfield operating capacity) to alleviate future delay Capacity Goal Performance Measure To provide an airport system that can support current and future demand Capacity To provide an airport system that meets applicable design standards Standards To provide an airport system that can respond to foreseen and unforeseen changes Flexibility To provide an airport system that is accessible from both the air and the ground Accessibility To provide an airport system that meets established facility and service objectives Facilities Ability to meet or to comply with three facility standards - separation standard between their primary runway centerline and any full or partial parallel taxiway centerline; dimensions of runway safety areas (RSA) on each end of their primary runway; a standard pavement condition index (PCI) rating of 70 or greater for their primary runway Standards Flexibility Have the flexibility to meet foreseen and unforeseen changes in aviation demand (planning update every 10 (Level I) to 15 years (Level II and III) Must be accessible within 30 minutes drive of all areas of the State (Level I) and within a 45-minute drive time of all areas of the State and a 60–minute drive time for commercial service airports (Level III) Accessibility Facilities and Services Comply with the specific facilities and services desirable for each airport depending on the types of aviation demand and activity Source: Georgia Aviation System Plan, Booz & Company analysis Booz & Company

4 Local government level Local airport master plan provides guidance for future development of local planning that will satisfy aviation demands Key Consideration for Compatible with Airport Master Plan Key Features of Local Planning The Environment Should provide a graphic presentation of the ultimate development of the airport and include anticipated development and use of the land adjacent to the airport Establish a schedule of priorities and phasing for implementation of the various improvements proposed in the plan Present the pertinent background data used to develop the master plan Includes assumption, forecasts and data used to create the plan Describe the various alternative concepts which were considered and rejected when developing the master plan and describe why they were rejected Provide a concise descriptive report which clearly explains the master plan so it can be understood by all of the constituents The Community Development Other modes of Transportation Other Airports Source: FAA, Booz & Company analysis Booz & Company

5 Guidance of master plans FAA AC150/5070-6B Airport Master Plan provides guidance for the preparation of master plans for airports including GA airports Structure of the AC 150/5070-6B Key Features of AC150/5070-6B Airport Master Plan Part I – The Process of Preparing Master Plan Studies Key Elements of Master Plan Pre-planning, Public Involvement, Environmental Considerations, Existing Conditions, Aviation Forecasts, Facility Requirements, Alternatives Development and Evaluation, Airport Layout Plans, Facilities Implementation Plan, Financial Feasibility Analysis Products of the master planning process A technical report, A summary report, An Airport Layout Plan Drawing Set, A web page, Public Information Kit Master Plan Review by the FAA The FAA reviews all elements of the master plan to ensure that sound planning techniques have been applied FAA only approves the following elements of airport master plans: forecast of demand, airport layout plan Provides an introduction to the Advisory Circular, an overview of master plan studies, and a summary of the pre-planning process Part II – Elements of Master Plan Studies Provides a detailed discussion of the various elements of master plan studies, including the components of master plan technical reports and the plan drawings that accompany them Source: AC150/5070-6B Airport Master Plan, Booz & Company analysis Booz & Company

FAA has established comprehensive engineering, design, and construction standards for airport equipment, facilities, and structures FAA Airport Engineering, Airport Design, and Airport Construction Standards Item Reference Airport Design AC 150/ Airport Drainage AC 150/5320-5 Airport Layout Plans AC 150/5070-6 Airport Lighting - Runway/Taxiway AC 150/ Airport Lighting - Runway Centerline Airport Lighting - Radio Control Airport Marking AC 150/5340-1 Airport Master Plans Airport Signage AC 150/ Airport Terminal Facilities AC 150/ Apron AC 150/ (Appendix 5) ARFF Building AC 150/ ARFF Equipment - DEVS AC 150/ ARFF Equipment - Clothing AC 150/ ARFF Training Facility AC 150/ ARFF Vehicle - Small Dual Agent ARFF Vehicle Item Reference ARFF Water Supply AC 150/5220-4 AWOS AC 150/ Beacons AC 150/ Compass Calibration Pad AC 150/ (Appendix 4) Construction Standards AC 150/ Deicing Facilities AC 150/ Disability Access to Airports AC 150/ EMAS Arresting System AC 150/ Fuel Storage AC 150/5230-4 Heliport Design AC 150/5390-2 Landfills AC 150/ Land and Hold Short Lighting Marking of Airport Vehicles AC 150/5210-5 Operational Safety - Construction AC 150/5370-2 PAPI AC 150/ Passenger Lift for the Impaired AC 150/ Pavement Design AC 150/5320-6 Pavement Management System AC 150/5380-7 REIL Item Reference Runway Length Requirements AC 150/5325-4 Runway Surface Monitors AC 150/ Runway Thresholds AC 150/ (Appendix 2) Segmented Circle AC 150/5340-5 SMGCS AC 150/ Snow Removal Operations SRE Buildings AC 150/ SRE Equipment AC 150/ State Standards for Non-primary Airports AC 150/ VASI Wildlife Attractants AC 150/ Wind Analysis AC 150/ (Appendix 1) Wind Cones Wind Cones - Supplemental Windrose AC 150/ (Appendices 1, 11) Source: FAA Booz & Company

Key Elements covered by Airport Design Advisory Circular
AC 150/ provides general design standards and recommendations for all airports Key Elements covered by Airport Design Advisory Circular AC 150/ Airport Design Airport Geometry Surface Gradient and Line of Sight Runway Design Site Requirements for Navaid and ATC Facilities Taxiway and Taxilane Design Runway and Taxiway Bridges The Effects and Treatment of Jet Blast Purpose: The advisory circular contains the Federal Aviation Administration’s (FAA) standards and recommendations for airport design Applicability: The standards and recommendations contained in this advisory circular are recommended by the FAA for use in the design of civil airports For airport projects receiving Federal grant-in-aid assistance, the use of these standards is mandatory At certificated airports, the standards and recommendations may be used to satisfy specific requirements of FAR Part 139, Certification and Operations: Landing Airports Serving Certain Air Carriers, Subpart D. Core Wind Analysis Runway and Sitting Requirements Airport Reference Point Compass Calibration Pad Small Airport Building, Airplane Parking and Tiedowns Runway Design Rationale Taxiway and Taxilane Design Rationale Taxiway Fillet Design Computer Program Airplane Data Declared Distance Appendix Source: FAA Airport Design Advisory Circular AC150/ , Booz & Company analysis Booz & Company

AC 150/5390-2 Heliport Design provides standards for heliport design and development in the U.S.
Why Is the Construction of Heliports Important Descriptions of AC 150/ Heliport Design The modern helicopter is one of the most versatile transportation vehicles known to man The helicopter has the capability of providing a wide variety of important services to any community that integrates this aircraft into its local transportation system In addition to their service in the transportation of people, helicopters have proven to be useful to their communities in the following ways: Disaster Relief. Air Ambulance Services Police Services Moving High-Value Assets The most effective way for a community to realize the benefits of helicopter services is by developing or permitting the development of places where helicopters can land and take off This advisory circular (AC) provides recommendations for heliport design and describes acceptable requirements to develop a heliport, including: General aviation heliports Transport heliports Hospital heliports This AC applies to anyone who is proposing to construct, activate or deactivate a heliport This AC is not mandatory and does not constitute a regulation except when Federal funds are specifically dedicated for heliport construction Source: AC 150/ Heliport Design, Booz & Company analysis Booz & Company

Different states will issue more specific requirements for airport construction and licensing
ALABAMA STATE Alabama Department Of Transportation Aeronautics Bureau Administrative Code Chapter Procedure and Requirements for Construction and Licensing of Airports License Categories and Requirements License Categories and Requirements Public Use Private Use Design standards for airport construction Advisory Circular 150/ ,Airport Design shall be adopted in entirety Exemptions from licensing and inspection requirements Airports owned or controlled by the Federal government Personal-Use airports (restricted landing area on private property, designated for the use of the property owner and his, or her immediate family) FAA Certificated Airports Airport that is publicly or privately owned and is open to the general flying public with no restrictions An airport shall meet without exception: the minimum standards of effective runway length of 2000 feet and a primary surface width of 250 feet minimum usable runway width of 60 feet (for hard surface runways) and 60 feet (for turf or sod runways) Airport that is used primarily by the licensee but available for use by others upon specific invitation of the licensee An airport shall meet without exception: the minimum standards of effective runway length of 1800 feet The minimum usable runway width of 60 feet (for hard surface runways) and 60 feet (for turf or sod runways) A holder of a private airport license cannot advertise in a newspaper or other publication that all airplane owners or certain aircraft type owners are invited to be the licensee's guest at this private airport Source: Alabama Department Of Transportation, Booz & Company analysis Booz & Company

FAA also provides guidance on the development of minimum standards for commercial aeronautical activities at federally obligated airports AC150/ Minimum Standards for Commercial Aeronautical Activities Factors to consider when developing minimum standards The FAA objective in recommending the development of minimum standards at federal obligated airports serves to: promote safety in all airport activities protect airport users from unlicensed and unauthorized products and services maintain and enhance the availability of adequate services for all airport users promote the orderly development of airport land, and ensure efficiency of operations The Advisory Circular (AC): addresses FAA’s policy on minimum standards provides guidance on developing effective minimum standards provides guidance for self-service operations and self-service rules and regulation of other aeronautical activities The AC does not address requirements imposed on non-aeronautical entities, which are usually addressed as part of the airport’s contracts, leases, rules and regulations, and/or local laws Overarching principle Nature of the aero-nautical activity Minimum standards should be tailored to the specific aeronautical activity and the airport to which they are to be applied Ope-rating enviro-ment What type of airport is at issue? Is it a large airport or a small rural airport? Will the airport provide service to only small GA aircraft or will it serve high performance aircraft and air taxi operators as well? How much space will be required for each aeronautical activity? What type of documentation will business applicants be required to present as evidence of financial stability and good credit? To what extent will each type of aeronautical activity be required to demonstrate compliance with sanitation, health, and safety codes? What requirements will be imposed regarding minimum insurance coverage and indemnity provisions? Is each minimum standard relevant to the aeronautical activity for which it is to be applied (e.g. fuel sale, personnel requirements, flight training, MRO, fractional ownership, recreational aircraft etc.) Source: AC 150/5190-7, Booz & Company analysis Booz & Company

Owners or sponsors of GA airports then prepare detailed minimum standards for products, services and facilities EXAMPLE City of Phoenix Aviation Department Rules & Regulations Minimum Standards – Fixed Base Operators (FBOs) at Phoenix Deer Valley Airport (DVT) Minimum Standards for FBO at Phoenix Deer Valley Airport These Minimum Standards govern Fixed Base Operators at Phoenix Deer Valley Airport (DVT) The purpose of these Minimum Standards for FBOs is to encourage, promote, and ensure: the delivery of high quality General Aviation products, services, and facilities to DVT users the design and development of quality General Aviation Improvements and facilities at DVT safety and security the economic health of DVT General Aviation Businesses the orderly development of DVT property It sets minimum requirements for scope of activity such as aviation fuels and lubricants, passenger, crew, and aircraft ground services, support, and amenities, aircraft maintenance, aircraft storage, flight training Source: City of Phoenix Aviation Department, Booz & Company analysis Booz & Company

Booz & Company

Two polarized management philosophies impact the approach to financing of airport development and operation Airport Management Philosophies Free public facilities at the government expense Financially supported by a general tax levies and revenue Government is obliged to provide airport services if not provide by private interests Viewed as a profit making venture Should be self-sustaining and unsupported by local tax funds Must adopt a fee and rate structure that would assist in recovering revenues Business Enterprise Model （营利性） Welfare Model (公益性） What should be the Management Philosophy for GA Airports? Source: Kittitas County Public Works, Booz & Company analysis Booz & Company

Government Grants Debt Financing Operating Revenue In the U.S. public-use airports rely on government grants, debt financing and revenue from operations as sources of funding “Airports should be affordable to both users and Government, relying primarily on user fees and placing minimal burden on the general revenues of the local, State, and Federal governments” NPIAS Government Grants Debt Financing Operating Revenue Government grants Federal grant State grant Local grant Debt financing - tax exempt bonds Private (third party) financing Revenue sources Hangar Fuel Sales Ground lease Landing fee others Note: NPIAS = National Plan of Integrated Airport Systems Source: Booz & Company analysis Booz & Company

P Government Grants Debt Financing Operating Revenue Almost three quarter of GA airports in the U.S are subsidized for based on a survey conducted FAA Center of excellence for General Aviation Research (CGAR) General Aviation Airport Funding Strategies Study Proportion of Subsidized Airports Proportion of Different Types of Subsidized Airport Subsidized only for CIP Non-subsidized (1) 26% Subsidized only for operation 10% 66% Subsidized for both Operation and CIP 74% Subsidized (2) Sample Size = 588 GA airports in the U.S. in different regions 1) Non-subsidized GA Airport - Airport with ability to generate adequate revenue to cover all normal expenses for its operation, administration, and maintenance, and for the local share of federal and/or state funded capital improvement projects (matching funds) 2) Subsidized GA Airport - All others Source: Embry Riddles CGAR Research, Booz & Company analysis Booz & Company

x Government Grants Debt Financing Operating Revenue AIP is a federal level grant program that funds planning and development of airports included in the NPIAS in the U.S. Overview of Airport Improvement Program (AIP) Source of Finance for Airport & Airway Trust Fund (AATF) (FY2003) The AIP provides grants to public agencies — and, in some cases, to private owners and entities -- for the planning and development of public-use airports that are included in the National Plan of Integrated Airport Systems (NPIAS) For large and medium primary hub airports, the grant covers 75 percent of eligible costs (or 80 percent for noise program implementation). For small primary, reliever, and general aviation airports, the grant covers 95 percent of eligible costs AIP is awarded by FAA AIP is funded through Airport & Airway Trust Fund General Aviation Fuel Tax Passenger Ticket Tax at Rural AirportsPassenger Ticket Tax at Rural Airports Frequent Flyer Tax Waybill Domestic Freight and MailWaybill Domestic Freight and Mail 1% 2% Commercial Fuel TaxCommercial Fuel Tax 2% International Departure and Arrival TaxesInternational Departure and Arrival TaxesInternational Departure and Arrival TaxesInternational Departure and Arrival Taxes Domestic Passenger Ticket TaxDomestic Passenger Ticket TaxDomestic Passenger Ticket Tax 49% 20% Domestic Passenger Flight SegmentDomestic Passenger Flight Segment Note: General Aviation Fuel Tax: Aviation Gasoline – 19.3￠ Per Gallon, Jet Fuel – 21.8￠ Per Gallon Source: FAA Order C Airport Improvement Program Handbook, Booz & Company analysis Booz & Company

Government Grants Debt Financing Operating Revenue Only public-use airports that serve civil aviation are eligible for AIP funding Types of Airports and Airport Activities Definition of Airport Categories Airport Classification Hub Type: Percentage of Annual Passenger Boardings Common Name Commercial Service: Publicly owned airports that have at least 2,500 passenger boardings each calendar year and receive scheduled passenger service Primary: Have more than 10,000 passenger boardings each year Large: 1% or more Large Hub Medium: At least 0.25% but less than 1% Medium Hub Small: At least 0.05% but less than 0.25% Small Hub Non-hub (1): More than 10,000, But less than 0.05% Nonhub Primary Non-primary Non-hub: At least 2,500, and no more than 10,000 Nonprimary Commercial Service Noprimary (Except Commercial Service) Reliever (2) General Aviation (3) Other than Passenger Classification Cargo Service The only airports, or portions thereof, eligible for AIP funding are public use airports that serve civil aviation (and must be included in the NPIAS) A public-use airport is an airport open to the public that also meets the following criteria: Publicly owned, or Privately owned but designated by FAA as a reliever, or Privately owned but having scheduled service and at least 2,500 annual enplanements Note: 1) Nonhub airports - locations having less than 0.05 percent of the U.S. passengers, including any nonprimary commercial service airport, are statutorily defined as nonhub airports. 2) Reliever airports are airports designated by the FAA to relieve congestion at Commercial Service Airports and to provide improved general aviation access to the overall community 3) The remaining airport, while not specifically defined in Title 49 USC, are commonly described as General Aviation Airports. Source: FAA, Booz & Company analysis Booz & Company

Sponsor Eligibility for Receiving AIP Grants
Government Grants Debt Financing Operating Revenue Eligibility to receive funds under the AIP is contingent upon the type of sponsor, the type of activity… Sponsor Eligibility for Receiving AIP Grants Type of Sponsor Type of Activities Planning agencies An agency engages in area-wide planning for the areas in which the grant assistance is to be used System planning Public agencies A public agency means a state, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, the Government of the Northern Mariana Islands, and Guam or any agency of them; a municipality or other political subdivisions; or a tax-supported organization; or an Indian tribe or pueblo Owning Airports Airport master planning; Noise compatibility planning; Noise program implementation projects; and Airport development projects Not owning airports Airport master planning to obtain necessary agreements and FAA site approval to acquire existing airports or develop a new airport Compatible land use planning in areas around a large or medium hub provided the airport has not submitted a Part 150 program to the FAA Noise program implementation where such projects are for educational/medical buildings within the noise impact area at a public airport and the compatible land use projects Acquisition of existing airports or development of a new airport Private airport owners may be an individual, a partnership, corporation, etc., that owns a public-use airport used or intended to be used for public purposes that is a reliever airport or an airport that has at least 2,500 passenger boardings each year and receives scheduled passenger aircraft service Airport master planning Noise compatibility planning Noise program implementation projects. Planning agencies; Public agencies owning airports; Certain public agencies not owning airports (as defined in Paragraph 207); and Certain private airport owners/operators (as defined in Paragraph 208). Source: FAA Order C Airport Improvement Program Handbook, Booz & Company analysis Booz & Company

… as well the type of projects for which funds are sought
Government Grants Debt Financing Operating Revenue … as well the type of projects for which funds are sought Typical Examples of Eligible and Ineligible Projects Discussion Eligible Projects Ineligible Projects Runway construction/rehabilitation Maintenance equipment and vehicles Taxiway construction/rehabilitation Office and office equipment Apron construction/rehabilitation Fuel farms Airfield lighting Landscaping Airfield signage Artworks Airfield drainage Aircraft hangars Land acquisition Industrial park development Weather observation stations (AWOS) Marketing plans NAVAIDs such as REILs and PAPIs Training Planning studies Improvements for commercial enterprises Environmental studies General aviation terminal buildings Safety area improvements Automobile parking lots Airport layout plans (ALPs) Maintenance or repairs of buildings Access roads only located on airport property Removing, lowering, moving, marking, and lighting hazards Glycol Recovery Trucks/Glycol Vacuum Trucks Eligible projects include those improvements related to enhancing airport safety, capacity, security, and environmental concerns In general, sponsors can use AIP funds on most airfield capital improvements or repairs except those for terminals, hangars, and non-aviation development Any professional services that are necessary for eligible projects — such as planning, surveying, and design — are eligible as is runway, taxiway, and apron pavement maintenance. Aviation demand at the airport must justify the projects, which must also meet Federal environmental and procurement requirements. Projects related to airport operations and revenue-generating improvements are typically not eligible for funding. Operational costs — such as salaries, maintenance services, equipment, and supplies — are also not eligible for AIP grants Source: AIP, Booz & Company analysis Booz & Company

Government Grants Debt Financing Operating Revenue Laws such as AIR-21 Act has been passed to ensure that adequate AIP funds are allocated to meet GA airport development needs Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR-21) General Aviation Entitlement Grants The general aviation entitlement grants allow up to $150,000 annually, or one-fifth of development costs shown in the latest published National Plan of Integrated Airport Systems (NPIAS),whichever is less, to be allocated to GA, reliever, and non-primary commercial service airports (referred to collectively as general aviation airports) A GAO study in 2003 revealed that as of the end of fiscal year 2002, general aviation airports had accepted general aviation entitlement grants totaling $201 million of the almost $269 million (about 75 percent) made available by FAA in fiscal year 2001 The total available GA entitlement grants of $269 million was approximately 9% of the total AIP funds of $3.14 billion in fiscal year 2001 Directed funding to general aviation airports as part of the FAA Airport Improvement Program (AIP) Restructured the apportionment of state aviation grant funds by including entitlements for individual nonprimary airports (referred to as general aviation entitlement grants) Source: GAO General Aviation Entitlement Grants, Booz & Company analysis Booz & Company

Government Grants Debt Financing Operating Revenue Meanwhile FAA continues to improve the effectiveness of AIP program to benefit GA airports and commercial airports more Proposed Reform to AIP that Will Impact GA Airports (Fact Sheet on Airport Financing Proposals, 2007) More rational structure for General Aviation Airports and Small Commercial Airports, while preserving their access to essential AIP funds… … and changes to AIP eligibility rules to help airports be more self sufficient Proposed program changes target AIP spending to airports most dependent on AIP Make the GA airport entitlement work better for secondary and reliever airports, which have larger airfields with more complex geometry by creating a tiered structure Restructuring the small airport fund as a fixed percentage of AIP discretionary funds Establishing a minimum state apportionment amount of $300 million and are changing the method of calculating it that is independent of GA entitlements GA airports can use their entitlements to buy self-service fuel pumps on a stand-alone basis. Today, AIP can be used only to install an entire fuel-farm system GA airports can use their entitlements to rehabilitate hangars and terminals. Today, the entitlements can only be used to build replacement hangars, even if a rehab would be cheaper. Source: Fact Sheet on Airport Financing Proposals 2007, Booz & Company analysis Booz & Company

l Government Grants Debt Financing Operating Revenue State governments’ airport aid programs supplement federal initiatives to help preservation of airports WASHINGTON EXAMPLE Breakdown of Available Airport Funding in Washington (FY , in US$) WSDOT Airport Aid Grant Program State contributed 7% of total airport grants Washington State Department of Transportation (WSDOT) Airport Aid Grant Program focuses on preservation of airports WSDOT's grant program is funded through: An 11-cent-per gallon fee on aviation fuel Aircraft registration fees Any municipality or federally recognized tribe that owns an airport that is open and available for public use can apply WSDOT’s Local Airport Aid Grant Program funds projects in the areas of: Pavement Safety Maintenance Security Planning The maximum amount WSDOT Aviation can award to an individual sponsor in a single grant is $250,000. WSDOT requires a minimum local match of 5%. Local matches can be in cash or in-kind volunteer labor and materials During the first round of biennium grants, WSDOT awarded $900,000 to 35 airport for 41 different projects Federal State Local Total Areas of Projects that WSDOT Airport Grant Program Awarded Maintenance, planning and othersMaintenance, planning and others Security Safety 5% 9% 3% Source: Washington State Department of Transportation, Booz & Company analysis 87% Pavement Booz & Company

Government Grants Debt Financing Operating Revenue In California the Department of Transport provides both aid programs and loans for GA airports CALIFORNIA EXAMPLE Main State Aid Programs for Airports in California Local Airport Loan Program Annual Credit Grant Provides a $10,000 per year entitlement to eligible publicly-owned, public-use airports for expenditure at the sponsor’s discretion The Local Airport Loan Account is a revolving fund that was initiated with seed money from the Aeronautics Account. As principal and interest payments are returned to the Loan Account, additional loans can be provided to airports To be eligible for the loan, the airport must be owned by an eligible public agency (e.g., a city, county or airport district) Loans are available for revenue generating projects such as hangers and fueling facilities Loans can be made for airport development projects also Finally, loans can be made to assist the sponsor with the local match for an AIP Project Generally, the term of a loan will vary between 8 and 17 years depending upon the amount of the loan Assist General Aviation (GA) airports in meeting the local match for federal Airport Improvement Program (AIP) grants The state grant is 2.5% of the AIP amount. Eligible projects must benefit GA and be included in the Capitol Improvement Program (CIP) element of the California Aviation System Plan AIP Matching Grant Acquisition and Development (A&D) grants are for eligible projects subject to programming and allocation by the CTC An airport land use commission (ALUC) can receive funding to either prepare or update a comprehensive land use plan (CLUP) Acquisition and Development (A&D) Grants The sole funding source for these grants is excise tax revenues on general aviation (GA) gasoline (18¢ per gallon) and for jet fuel (2¢ per gallon) Source: California Department of Transportation, Booz & Company analysis Booz & Company

Government Grants Debt Financing Operating Revenue In addition to grants, tax-exempt bond issued by a city, county, state, or airport authority to support airport development Common Bonds to Finance Airport Development in the U.S. General Obligation Bonds Issuance of bonds by the government (states, municipalities etc.) for the purpose of financing large public work developing including airports A principal advantage of G.O. Bonds is that they can be issued at a lower interest rate than other types of bonds or commercial loans at a rate of two to five percent. G.O. Bonds are generally financed for a period of 10 to 15 years Revenue Bonds are generally issued by government entities with statute authority such as a state or local government and includes an airport authority Revenue Bonds do not generally require voter approval and can be issued for a period of 25 to 30 years, resulting in lower monthly payments General Airport Revenue Bonds (GARB) are revenue bonds issued to finance a specific revenue generating project, and unless backed by third party guarantees, are generally secured solely by the revenue generated from the specific development project Revenue Bonds Industrial Development Bonds (IDB) and Exempt Facility Bonds IDBs are a specific type of revenue bond ideally suited for small general aviation airports Securities are issued by a governing entity to finance facilities which are then leased to a private entity or user at a rental equal to the debt service of the bond and for a term equal to the maturity of the securities These bonds are tax exempt only if they are not designed to generate revenue and serve the public good, such as runways and taxiways, or those facilities servicing aircraft or the transferring of passengers Source: Kittitas County Public Works, Booz & Company analysis Booz & Company

Government Grants Debt Financing Operating Revenue GA airports in the U.S. exploit different revenue sources to fund development and operation Operating rental/ lease revenue sources Hangar rental Hangar land lease Passenger terminal building structured lease Airport operational income revenue sources Aircraft landing fees Aircraft parking/ tie down fees Airport Equipment Use Fees Motor Vehicle Parking Revenue Fuel sales/ flowage fee revenue Non-aeronautic revenue sources Business Parks Golf course Vehicle parking Car dealers Rental car agencies Campground/RV parking Agricultural Lease Mineral rights Field sports Special activities and events catering to both aviation and non-aeronautical interests Typical Sources of Airport Revenues Initiatives to Increase Revenue of GA Airports Surveyed (Sample Size: 588 GA Airports) % of respondents Build More T-hangarsBuild More T-hangarsBuild More T-hangars Raise Hangars Rental RatesRaise Hangars Rental RatesRaise Hangars Rental RatesRaise Hangars Rental Rates Raise fuel prices or flowage feeRaise fuel prices or flowage feeRaise fuel prices or flowage feeRaise fuel prices or flowage feeRaise fuel prices or flowage feeRaise fuel prices or flowage fee Develop more land for real estate (aviation related)Develop more land for real estate (aviation related)Develop more land for real estate (aviation related)Develop more land for real estate (aviation related)Develop more land for real estate (aviation related)Develop more land for real estate (aviation related)Develop more land for real estate (aviation related) Build more corporate hangarsBuild more corporate hangarsBuild more corporate hangarsBuild more corporate hangars Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related)Develop more land for real estate (non-aviation related) Other Hangar is the main revenue generating initiative Source: Embry Riddles CGAR Research, Booz & Company analysis Booz & Company

Port of Portland - Hillsboro Airport
Government Grants Debt Financing Operating Revenue As an example the Port of Portland has developed a four-part approach to achieving financial self-sufficiency for its GA airports Port of Portland - Hillsboro Airport The Port of Portland is committed to maintaining a quality general aviation program as a viable part of its aviation system. To do so, the Port's General Aviation airports must be financially self-sufficient. The Port has developed a four-part approach to achieving financial self-sufficiency for its general aviation airports. Four-part Approach to Achieving Financial Self-Sufficiency for General Aviation Airports Control operational and capital costs Rely heavily on the development of non-airside land Keep the airside property lease rates in alignment with the local market Develop new revenue sources, e.g. landing fees Source: Company information, Booz & Company analysis Booz & Company

Government Grants Debt Financing Operating Revenue The U.S. Department of Transport sets policy on airport fees to safeguard the interest of air carriers and other aeronautical users Principles Applicable to Airport Rates and Charges In general, the Department of Transportation relies upon airport proprietors, aeronautical users, and the market and institutional arrangements within which they operate, to ensure compliance with applicable legal requirements. Direct Federal intervention will be available, however, where needed. Local Negotiation and Resolution Fair and Reasonable Fees Rates, fees, rentals, landing fees, and other service charges (‘‘fees’’) imposed on aeronautical users for aeronautical use of airport facilities (‘‘aeronautical fees’’) must be fair and reasonable Federal law does not require a single approach to airport rate-setting Prohibition on Unjust Discrimination Aeronautical fees may not unjustly discriminate against aeronautical users or user groups The airport proprietor must apply a consistent methodology in establishing fees for comparable aeronautical users of the airport. Requirement to be Financially Self-Sustaining Airport proprietors must maintain a fee and rental structure that in the circumstances of the airport makes the airport as financially self-sustaining as possible Requirements Governing Revenue Application and Use In accordance with relevant Federal statutory provisions governing the use airport revenue, airport proprietors may expend revenue generated by the airport only for statutorily allowable purposes Source: RIN 2120–AF90 Policy Regarding Airport Rates and Charges, Booz & Company analysis Booz & Company

Booz & Company

Large GA Airports - Definitions and Location Requirements
Definition of Large GA Airports Location Requirements Large number of based GA aircraft: 200+ Large number of GA operations: 300 ops/day Two Fixed Base Operators (FBO), full service Terminal facilities for commercial operators (and domestic or regional airlines) Operations 24-hour/365 day Complete GA aircraft servicing capability Good “ground side” access: roads, parking Near factories, high tech centers, hotels, restaurants Near local tourism, museums, schools Land available for GA business expansion, industrial park Good road access and parking, easy public access 4 km x 4 km land: permanent noise buffer and obstacle clear zones (no tall towers) Room for minimum runway 1000 meters (sea level standard conditions), airport area permits extension to 2,000 meters No tall buildings near airport: zoning that is enforced Clear approaches: no power lines, smoke stacks, towers Not a noise sensitive area: no schools, hospitals, or residential areas under flight paths near the airport Hard, stable ground under runways, taxiways, and buildings Not in foggy, low-lying area – generally VFR conditions Booz & Company

Large GA Airports - Airport Capabilities
Service Facilities Runway 1- 2,000 m, parallel taxiway: lighted Helicopter landing area on a ramp or taxiway ASOS/AWOS (automated weather reports) VASI/PAPI (visual glide path guidance) Low-minimums instrument approach (70 m ceiling x 1000 m vis – ILS or SBAS GNSS) Individual hangars and community hangars Large tie-down space for small airplanes FBO: flight planning charts/computer (weather), flight plan filing; sales of charts, pilot supplies and gifts, bathrooms, waiting area, vending machines, tea and snacks Rooms for meetings, CAAC safety seminars Family-friendly (simple security, restaurant) Private pilot training (testing) and flying club Simulators and instruction rooms Fuel/oil: avgas (100 Low-Lead) and Jet A Including automated self-service avgas Aviation oil for piston and turbine engines Aircraft sales, rental, and service center Variety of GA aircraft for sale and rental Airframe, engine, and avionics Maintenance, repair, parts Aircraft cleaning Support strong GA companies Booz & Company

Purpose of Document The intent of this document is to provide a detailed handover of all analysis and materials relating to regulatory gap studies on General.

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Purpose of Document The intent of this document is to provide a detailed handover of all analysis and materials relating to regulatory gap studies on General.

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