ch=8 Airport Financial Management

 AIRPORT FINANCIAL MANAGEMENT
 

Large amount of financial resources are required to operate, maintain, and improve A/Ps property, infrastructure, and labor. Such resources are arranged through a number of strategies available to airport management.

 With each source of funding available to A/Ps, come rules and policies that determine which strategy A/P management may employ to cover a portion of the A/P’s cost burdens. 
In this chapter we discuss about.

1. AIRPORT EXPENSES
2. AIRPORT FINANCIAL ACCOUNTING
3. Operating Expenses
4. OPERATING REVENUES
5. Planning and Administering  an Operating Budget
6. BUDGET APPROPRIATION
7. PRIVATE INVESTMENT

                 1-AIRPORT EXPENSES

A/P expenses fall into two types

(a) Operation and Maintenance Costs 
     

 Operation and Maintenance  costs consist of those expenses that occur on a regular basis and are required to maintain the current ops at the A/P. Such expenses typically include wages and salary of A/P employees, costs of utilities such as power, water, and telecommunications, and a broad range of regularly needed supplies.

(b) Capital Improvement Expenses 
         

 Capital Improvement Expenses  are very large, periodic expenses which contribute to A/P infrastructure improvement or expansion. Capital improvement expenses include the costs of major construction projects such as airfield and terminal expansion, the acquisition of major utilities such as air rescue and fire fighting vehicles, and the purchase of land for future expansion 

 

   2-AIRPORT FINANCIAL ACCOUNTING
 

•   Revenues from operations of the Airport are used to cover the airport O&M expenses
•   Financial accounting is employed to manage the balance of operating revenues and expenses.
•   A/P accounting involves the accumulation, communication, and interpretation of economic data relating to the financial position of an A/P and the results of its ops for decision-making purposes.
•   A/P accounting differs from accounting procedures found in business firms because A/P differ considerably in terms of goals, size, and operational characteristics. As such, it is difficult to derive a unified accounting system that can be used by all A/Ps.
•   System tailored to the needs of a large commercial A/P might be impractical for a small GA A/P or vice versa as A/Ps have different definitions of what elements constitute operating and non-operating revenues and expenses and sources of funds for A/P development.

            3-Operating Expenses 

Operating expenses can be divided into four major groupings

1. AIRFIELD AREA
2. TERMINAL
3. HANGARS/CARGO/OTHER BUILDINGS & GROUNDS
4. GENERAL AND ADMINISTRATIVE EXPENSES

1-AIRFIELD AREA EXPENSES 

• O&M expenses associated with the airfield area include: 
• R/Ws, T/Ws, apron areas, A/C parking areas, & A/F light sys maint
• Service on airport equipment
• Maintenance on fire equipment and airport service roads
• Utilities (electricity) for the airfield.

2-TERMINAL EXPENSES

• O&M expenses associated with the terminal include:
• Buildings and grounds—maintenance and custodial services
• Improvements to the land and landscaping
• Loading bridges and gates—maintenance and custodial services
• Concession facilities and services
• Observation facilities—maintenance and custodial services
• Passenger, employee, and tenant parking facilities
• Utilities (electricity, air-conditioning and heating, and water)
• Waste disposal —maintenance.
• Equipment (air-conditioning, heating, baggage handling)—maint

3-HANGARS, CARGO FACILITIES,  OTHER BUILDINGS, & GROUNDS EXPENSES 

• O&M expenses include:
• Buildings and grounds—maintenance and custodial services
• Improvements to the land and landscaping
• Employee parking—maintenance
• Access roadways—maintenance
• Utilities (electricity, air-conditioning and heating, and water)
• Waste disposal —maintenance

4-GENERAL & ADMINISTRATIVE EXPENSES

• General and administrative expenses include:-
• Payroll expenses for the maint, ops, and admin staff of the A/P
• Other operating expenses for materials and supplies
• Non-operating expenses including the payment of interest on outstanding debt, contributions to govt bodies, and other miscellaneous expenses

LIABILITY INSURANCE

•   Large % of A/P expenses are derived from insurance to cover various areas of liability
•   A/Ps and their tenants have the same general type & degree of liability exposure as the operator of most public premises
•   People sustain injuries from obstructions, automobiles are damaged when struck by A/P service vehicles on the A/P premises. Claims from such accidents can be for large amounts
•   But claims from A/C accidents are huge. The passangers might be killed or severely injured and expensive A/C damaged or destroyed, not to mention injury to other persons or other types of property at or near an A/P

  Liability in such instances can stem from

•        Defect in the surface of the Runway
•        Failure of A/P mgt to mark obstructions properly
•        Failure to send out the necessary warnings and to close the

 A/P when it is not in usable condition

• A/P operators require that all tenants purchase their own insurance as appropriate for their particular circumstances and with certain min limits of liability
• Generally, A/P operator is included as an additional insured under the tenant’s insurance coverage; however, this does not relieve the A/P operator from securing its own liability protection under a separate policy

               4-OPERATING REVENUES
 

A/P operating revenues can be divided into five major groupings 

1. AIRFIELD AREA
2. TERMINAL AREA CONCESSIONS
3. AIRLINE LEASED AREAS
4. OTHER LEASED AREAS
5. OTHER OPERATING REVENUE

1-AIRFIELD AREA

•  A/F or air side of the A/P produces revenues from sources that are directly related to the operation of A/C:
• Landing fees for scheduled and unscheduled airlines, itinerant A/C, military or govt A/C
• A/C parking charges in hangars, paved and unpaved areas
• Fuel flowage fees from fuel suppliers

2-TERMINAL AERA CONCESSIONS

• Terminal concessions include all of the nonairline users of the terminal area:
• Food & beverage concessions (restaurants, snack bars, lounges)
• Travel services & facilities (lockers, flight insurance, restrooms, car rentals, and telephones)
• Specialty stores & shops (boutiques, newsstands, banks, gift shops, clothing stores, duty-free shops)
• Personal services (beauty and barber shops, shoeshine stands)
• Amusements (video arcades, movie and TV rooms)
• Display advertising
• Outside terminal concessions (parking, ground transport, hotels)

3-AIRLINE LEASED AREAS 

include revenue derived from the air carriers for

• Ground equipment rentals
• Cargo terminals
• Office rentals
• Ticket counters
• Hangars
• Operations
• Maintenance facilities

4-OTHER LEASED AREAS

  All of the remaining leased areas at A/P that produce revenue are brought together under other leased areas such as

•  Freight forwarders
•  Fixed-base operators
•  Governmental units
•  Businesses in the A/P industrial area

5-OTHER  OPERATING REVENUE 

• Includes revenues from

  Operation of distribution systems for public utilities, such as electricity

  Contract work performed for tenants

•   A/Ps also generate non-operating revenues, including

                  Interest earned on investments in governmental securities

  Local taxes

  Subsidies or grants-in-aid

  Selling or leasing of properties owned by A/P but not related to A/P ops

•   Magnitude of non-operating income can differ considerably between A/P

5-Planning and Administering an Operating Budget 

• Planning an operating budget is an integral part of A/P financial management.
• Every A/P must make short-term decisions about the allocation and scheduling of its limited resources over many competing uses.
•   It must make long-term decisions about rates of expansion of capital improvements and funding sources

          Both short-term and long-term decisions require planning

           BUDGET APPROPRIATION

• Once A/P decide a plan of action for the future, these plans are incorporated into a written financial budget. 
•   Budgets are simply the planned amounts needed to operate and maintain the A/P during a definite period of time such as a year.
•   Budgets cover major capital expenditures such as R/W resurfacing, R/W construction and for operating expenses during the planning period.
•   Real expenses incurred during the year are a measure of the actual performance.
•   Difference between actual expenses and the budgeted amount is called a variance.
• Variance measures the efficiency of the department.

A/Ps  operate under one of three different forms of budget appropriation

1. LUMP SUM APPROPRIATIONS
2. APPROPRIATION BY ACTIVITY
3. LINE-ITEM BUDGETING

1-Lump Sum Appropriation

• Is the simplest form of budget and generally only utilized by small GA A/Ps
•  No specific restrictions as to how money should be spent
•  Only the total expenditure for the period is fixed
•  This is the most flexible form of budgeting

2-Appropriation by Activity
 

• Appropriated expenses are planned according to major work area or activity with no further detailed breakdown.
•   Appropriation by activity enables mgt to establish capital and operating expense. budgets for particular areas such as airside facilities, terminal building area, and so forth
•   It also permits flexibility in responding to changing conditions.

3-Line-Item Budget

• Line-item budget is the most detailed form of budgeting, used quite extensively at the large commercial airports.
•  Numerical codes are established for each operating and capital expense item.
• Budgets are established for each item and often adjusted to take into consideration changes in volume of activity.
• For example, as the number of passenger enplanements changes, budgets for the terminal building maintenance can be adjusted accordingly.

6-ADMINISTERING AN OPERATING BUDGET 

•   In drawing up a budget, the first step involve an estimate of revenues from all sources for the coming year.
•   Next step is to establish budgets for the various areas of responsibility.
•   When budgets are being investigated, predetermined, and integrated, the department managers who must live within the budgets are consulted about the amount of money available and help draw up budgets for their departments for the coming period
•   Actual expenses are then checked against budgeted expenses during the period that the budgets are in effect.
•   Managers are supplied with figures of actual expenses so that they can compare them with budgeted expenses and investigate variances.
•   Financial and operational relationship between A/P operator and the air carriers is defined in legally binding agreements that specify how the risks and responsibilities of running the A/P are to be shared.
•   Contracts known as A/P use agreements, establish the terms and conditions governing the air carriers’ use of the A/P.
•   Term airport use agreement is used commonly to include both legal contracts for the air carriers’ use of A/F facilities and leases for use of terminal facilities. At many A/Ps, both are combined in a single document.
•   Airport use agreements also specify the methods for calculating rates air carriers must pay for use of A/P facilities and services; and they identify the air carriers’ rights and privileges, sometimes including the right to approve or disapprove any major proposed A/P capital development projects.

REVENUE STRATEGIES AT COMMERCIAL AIRPORTS

• Financial and operational relationship between A/P operator and the air carriers is defined in legally binding agreements that specify how the risks and responsibilities of running the A/P are to be shared
• Contracts known as A/P use agreements, establish the terms and conditions governing the air carriers’ use of the A/P
•   Term airport use agreement is used commonly to include both legal contracts for the air carriers’ use of A/F facilities and leases for use of terminal facilities. At many A/Ps, both are combined in a single document
•   Airport use agreements also specify the methods for calculating rates air carriers must pay for use of A/P facilities and services; and they identify the air carriers’ rights and privileges, sometimes including the right to approve or disapprove any major proposed A/P capital development projects.

Although financial management practices differ greatly among commercial A/P, the A/P-airline relationship at major A/Ps takes one of two very different forms, with important implications for A/P pricing and investment 

Residual Cost Approach.     
         under which one or more air carriers collectively assume significant financial risk by agreeing to pay any costs of running the A/P that are not allocated to other users or covered by all other sources of revenue

Compensatory Cost Approach.     
                   under which the A/P operator assumes the major financial risk of running the A/P and charges the air carriers fees and rental rates set so as to recover the actual costs of the facilities and services that they use.

AIRPORT FUNDING
 

Although the burdens of managing A/P finances to cover the costs of an A/P’s operating and maintenance budget have increased in recent years, the significantly greater costs associated with moderate to major construction and technology improvements that define capital improvement projects have historically been far beyond that of any revenues generated.

As a result, A/Ps have relied on three alternative sources of funding to cover capital improvement costs

1. FEDERAL AND STATE GRANT PROGRAMS
2. BOND ISSUES
3. PRIVATE INVESTMENT

1-GRANT PROGRAM 

 

• Since the post–World War II, federal govt has provided grant programs from which owners of public-use A/Ps could acquire funds for A/P development
• These funds were provided without responsibility for paying any monies back to the govt, and thus have been known as grant-in-aid programs.

2-STATE GRANT PROGRAMS

• In addition to federal funding, many individual states in the nation offer grant programs for A/P capital improvements.
• These sources are found within state Departments of Transportation, funded from the general tax base of the state, state user fees on highway tolls, automobile and other vehicle registrations, and fuel taxes.
• State and local funding is offered either as supplemental funding to federal grants, or as primary funding for A/P and/or A/P projects not eligible for funding through other funding program.

AIRPORT FINANCING

•  Largest source of funding for capital improvements at A/Ps has been through bond financing.
•  Role of bond financing in overall investment differs greatly according to an A/P’s size and type of air traffic served.
•  In terms of total dollar volume of bond sales, large and medium A/Ps are most prominent in the bond market.
•  Of the total amount of municipal debt sold for A/P purposes during the last two decades, 90% was for large and medium A/Ps, in contrast to only 9% for small commercial A/Ps.
•  G/A A/Ps accounted for a little more than 1% of total A/P bond sales.

PRIVATE INVESTMENT
 

• In many instances, particularly internationally, A/P capital projects have been funded by private investment
•   Many of these investments are focused on the construction of terminal and ground access facilities such as passenger and cargo terminal buildings, rental car facilities, and aircraft service facilities
•   Fewer private investments have been made on the construction of airfield facilities
•  
•   Many such investments are made either through public-private partnerships or complete privatization. Privatization can be structured in a number of ways.

PRIVATE INVESTMENT

Privatization can be structured in a number of ways

1. Build, Operate, and Transfer (BOT) Contracts
2. Lease, build, and operate (LBO) agreements
3. Full Privatization

1-Build, Operate, and Transfer (BOT) Contracts

•   Under a build, operate, and transfer (BOT) contract, private investment is used to construct and operate a facility for a period defined in the terms of the contract
•   At the end of the contract period, the ownership of the facility is transferred to the airport owner.

2-Lease, build, and operate (LBO) agreements

•   Lease arrangement allows a govt entity to get benefits associated with complete privatization without losing control over the A/P assets.
•   In a long-term lease (20 to 40 years), govt allows the private sector company to build and manage an A/P facility, while leasing the property and facility from the A/P.
•   Private builder/operator has much of the authority over the facility, including operations, strategic decisions, and development.
•   In addition to a lease payment, the govt is able to capture the efficiencies and innovation of the private sector.

3-Full Privatization

•  Final form of A/P privatization is the sale of the entire A/P or partial interest in the A/P
•  This form of privatization is prominent.
•  Under the terms of complete sale, govt gives up all rights of ownership to private entity; however, govt maintains its regulatory authority.    

In this chapter

                     A/P=    Airport

                    Ops=   Operation

                    O/M=   Operation & maintenance

                    R/w=    Runway

Ch=9 ECONOMIC, POLITICAL, & SOCIAL ROLE OF AIRPORTS

                         ECONOMIC, POLITICAL, & SOCIAL

                                                      ROLE OF AIRPORTS

Airport management must assume responsibility for leading the A/P in positively contributing to the local economy, maintaining good working relations with the A/P’s users and surrounding community while minimizing the impacts that A/P have on the surrounding natural environment.

 

Transpiration Role

 

 

                                

                                 Relations
 

(1) A/P-AIRLINE RELATIONS

•         From the airlines’ perspective, each A/P is a point in a route system for the loading and transfer of passengers and freight

•         -In order to operate efficiently, air carriers need certain facilities at each A/P

•         - These requirements are not static; they change with traffic demand, economic conditions, and the competitive climate

•         A/P operators  focus on accommodating interests of  number of users at a single location

•         - Changes in the way individual airlines operate might put pressures on the A/P’s resources, requiring major capital expenditures or making a facility obsolete

•         - A/P operators must be concerned with the efficient use of landside facilities that are of little concern to the carriers

•         Despite their different perspectives, both have common interest in making A/P successful economic enterprise

•      A/Ps and carriers have formalized their relationship through A/P use agreements

•        These agreements establish methods for setting fees and charges for use of the A/P by air carriers

•        Terms of a use agreement can differ, from short-term monthly/yearly arrangements to long-term leases of 25 years or more

•        Within the context of these use agreements, carriers negotiate with the A/P to get the specific A/P resources they need for day-to-day ops.

(2) A/P-CONCESSIONAIRE RELATIONS 

Concession Agreement

•         A/P extends to a firm the privilege of conducting business on A/P property in exchange for payment of a min annual fee or a %age of the revenues, whichever is greater

Management Contract

•         Some A/Ps prefer to retain a larger share of revenues for themselves and employ an alternative arrangement called a management contract, under which a firm is hired to operate a particular service on behalf of the A/P. Gross revenues are collected by the A/P mgt, & pays firm for operating expenses plus either a flat mgt fee or a %age of revenues

At few A/Ps, A/P operator’s share of parking and car rental fees represents the largest revenue source from the terminal area—and in some cases, larger than revenue from air carrier landing fees.

(b) A/P-CONC RELATIONS FIXED BASE OPERATOR 

•      FBO provides services for A/P users lacking facilities of their own, primarily to general aviation

•        FBO sells fuel and operates facilities for A/C service, repair, & maintenance

•        FBO also handle the leasing of hangars and rental of short-term A/C parking facilities

•        Agreements between A/Ps and FBOs differ because in some cases, FBO constructs and develops its own facilities on A/P property; in other cases, FBO manages facilities belonging to the A/P 

Other Tenants

A/P authorities serve as landlord to other tenants such as 

 

These firms might lease space from the A/P operator, or they might build their own facilities on the A/P property.

•        Relationship between A/P mgt and these facilities is a true landlord-tenant relationship

•        A/P mgt leases the land, and associated facilities, based either on market-appraised land values, or %age of revenues earned from the property, or both

•        It is the responsibility of A/P mgt to maintain fruitful relationships with all tenants, by ensuring reasonable lease fees, contract terms, and an overall mix of tenants that meet the needs of the A/P and the public it serves

(3) A/P-GENERAL AVIATION RELATIONS 

•      General aviation is a different group as at any A/P, the GA A/C are owned & operated by a variety of individuals and orgns

•        Because of the variety of ownership & diversity of A/C type and use, long-term agreements between the A/P and GA users are not customary

•        GA users often lease A/P facilities, especially storage space such as hangars and tie downs, but the relationship is usually that of landlord and tenant

•        Although general aviation activities make up about half the A/C ops at

ATC-towered A/Ps, the average utilization of each A/C is much lower than that of commercial A/C

•        Only a small number, usually those operated by large corporations and flight schools, are used as intensively as commercial A/C

•        Chief needs of general aviation are parking and storage space, along with facilities for fuel, maintenance, and repair

  Whereas an air carrier might occupy a gate for an hour to load passengers & fuel, a general aviation user might need to park an A/C for a day or more

ENVIRONMENTAL IMPACTS OF AIRPORTS

•      Presence of an A/P, like any large industrial complex, impacts the community and surrounding natural environment in a negative manner

•        Effects are result of activity at A/P which has both A/C & ground vehicles (travel to & from A/P)

•        As such, it’s important for A/P mgt to understand the

•        Types of environmental impacts associated with A/P activity

•        Rules and regulations that govern environmental impact activity

•        Political strategies that are available to A/P mgt to satisfy the needs of the surrounding community while maintaining A/P ops

ENVIRONMENTAL IMPACTS OF AIRPORTS 

 

AIRPORT NOISE IMPACTS

•      Most significant environmental impact associated with A/P is that of the noise that emanates from A/C movements to and from the A/P

•        Noise disturbs sleep, interferes with conversation, and detracts from the enjoyable use of property

•        There is increasing evidence that high exposure to noise has adverse psychological and physiological effects

•        People repeatedly exposed to loud noises might exhibit high stress levels, nervous tension, and inability to concentrate

•      Due to increase in noise impacts, FAA adopted regulations on noise levels emitted from jet engines and encouraged the use of quieter A/C

•        FAR Part 150—Airport Noise Compatibility Planning establishes system for measuring aviation noise in the community & provides info about the land uses that are normally compatible with various levels of noise exposure

 

METHODS OF MEASURING OF A/C NOISE 

FAR Part 150 defines several methods, which are used to measure A/C noise and its effect on a community

•         Level of sound can be measured objectively, but noise (unwanted sound) is a very subjective matter,

•         - because human ear is more sensitive to some frequencies than others

•         -  because the degree of annoyance associated with a noise can be influenced by psychological factors such as the hearer’s attitude or the type of activity in which she or he is engage

Techniques to measure single events in units 

•         dBA (A-weighted sound level in decibels) or

•         EPNdB (Effective Perceived Noise Decibels)

•         These measure the levels of noise in objective terms, giving extra weight to those sound frequencies that are most annoying to the human ear

MEASUREMENT OF NOISE

FAA has established dBA as the single-event unit and the Ldn system as the standard measure of cumulative noise exposure to be used by A/Ps in the preparation of noise abatement studies
 

•         - Annoyance owes not only to intensity of a single event, but also to the cumulative effects of exposure to noise throughout the day

•         - Methods to measure this effect objectively include aggregating single-event measures to give a cumulative noise profile by means of such techniques as

•     Noise Exposure Forecast (NEF)         
•      Community Noise Equivalent Level (CNEL)
•      Day/Night Average Sound Level (Ldn)

MEASUREMENT OF NOISE

•      Ldn noise levels are calculated by

•       Considering the loudness of any one single A/C operation

•       Altitude and flight path of the A/C at the location of the noise measurement

•       Number of such events that occur throughout the day and the number of such events that occur at night (10:00 P.M & 7:00 A.M)

Ldn system places additional emphasis on the noise burden of night ops on a community by adding 10 dB to the measured loudness reading of any ops occurring during night hours

•      FAA has suggested  guidelines for determining land uses that are compatible with a given Ldn level

•        Residential uses should be located in areas below 65 Ldn

•        Parking, transportation facilities, mining/extraction, & similar activities are the most compatible in high noise impact areas (Ldn 80 to 85 or more)

•        FAA suggests noise contour map be created to identify locations surrounding an A/P where different noise levels exist

•        Map is created by collecting noise data around A/P vicinity, then processing data through use of  noise contour modeling software program

  FAA’s software, Integrated Noise Model (INM), is one such program 

 

AIR QUALITY
 

•      A/C engine emission constitutes less than 1 % of the total air pollutants in city area but its environmental impact cannot be overlooked in development of A/P master plan

•        Federal regulations concerning air quality date back to the Clean Air Act of 1970, established to protect the nation’s air quality and protect the public’s health

 

•        Act recognizes five major pollutants requiring emissions regulation

•        Sulfur dioxide (SO2)

•        Suspended particulate matter

•        Nitrogen oxide (NOx)

•        Carbon monoxide (CO)

•        Volatile organic compounds such as hazardous asbestos

•        Majority of emissions that contribute to pollution in air quality around A/P are from A/C engines & ground vehicles operating both on and to and from the A/P property 
 

Reduction of Air Quality Impacts from Airports

•      Associated with raising the efficiency of A/P ops

For example, more efficient A/C taxi ops, which minimize the total time and distance A/C are burning fuel on A/P property, will reduce the volume of pollutants from engine operations

•       Use of mass transit systems, rather than private automobiles for travel to and from A/P property, by passengers and employees, will contribute to reduced emissions generated from automobile use 

WATER QUALITY

•        Airport can be a major contributor to water pollution if suitable treatment facilities for A/P wastes are not provided

•        Sources of water pollution are domestic sewage from A/P facilities, industrial wastes such as fuel spills, and high temperature water degradation from various power plants at the A/P

•        In addition, runoff from deicing ops contributes to the collection of pollutants in the surrounding water table

•      In 1977, Congress passed the Clean Water Act as an amendment to the 1972 Federal Water Pollution Control Act

•        Act authorized the issuance of regulations to prevent discharges of pollutants into navigable and non-navigable waterways, rivers, streams, and creeks

•        In accordance with the Clean Water Act, A/Ps are required to prevent the discharge of any contaminated runoff into any drainage system that empties into these water sources unless a specific permit is obtained by the Environmental Protection Agency or other authorized body 

HAZARDOUS WASTE EMISSIONS
 

•      Environmental Protection Agency defines waste as any solid, liquid, or contained gaseous material that is no longer used, and is either recycled, thrown away, or stored until enough is accumulated to treat or be disposed in another manner

•        Hazardous wastes are those that can cause injury or death to people or animals, or damage or pollute land, air, or water

•        Waste may also be considered hazardous if it exhibits any of four characteristics:

•       Ignitability

•       Corrosiveness

•       Reactivity

•       Toxicity

•      A/Ps are sources of various emissions that may be considered hazardous waste, including fuel, deicing & other liquid runoff, used oil, corroded electric components, chemicals, paints, solvents, lavatory waste

•        A/Ps that accumulate hazardous waste must provide storage containment units that prevent the release of waste into the surrounding environment

•        Hazardous waste may be stored on A/P property only temporarily, typically for no longer than 180 days, before it must be disposed of in a certified location off-site, or properly treated

 

EXTERNALIZES
 

•      A/P mgt should also be concerned with the environmental impacts that occur as a result of ops from other sources, as an indirect result of an airport’s presence. These impacts are known as externalities

•        One example of an externality would be the environmental impacts resulting from the operation of a factory, which had been located in a region near the A/P simply because of the A/P presence

•        Another example includes the increase of automobile traffic in the vicinity of the A/P, created as a result of the operation of hotels, restaurants, gas stations, and other facilities that tend to appear near A/Ps

•      Although these activities are hardly the responsibility of the A/P manager and the A/P manager does not have any authority over the operation of these activities, the A/P operator typically is charged with these environmental issues in the form of externalities

  Careful and strategic negotiations with local facility operators, as well as with the local metropolitan planning organizations, may help manage external activity, which in turn may lead to the reduction in external environmental impacts