Aircraft Hangar Construction Guide Part II.

Paul Blake

I – Hangar Construction

In Part II you will learn the scope of this hangar development by exploring alternative approaches and estimating the financial impact of each one. You will analyze conditions, stakeholder analysis, seek out the key decision makers and create a formal business plan.

When you arrive at the right approach you will produce a SWOT analysis (see right).

Exploring The Options

Theres a number of approaches to aircraft hangar construction. Each has it’s advantages and disadvantages so you will need to consider the options to determine which is best.

We believe there are 3 main choices:

  • Private company snaps up the land on a twenty something year lease, and rents the hangars to tenants.
  • Private developer snaps up the land on a twenty something year lease, and rents the hangars to tenants.
  • Airport owns the aircraft hangars and rents them to tenants.

Advantages Of
Private Ownership vs. Airport Ownership:

Private Company or Developer Airport Owner
No outside investment required. Strong demand.
No owner management required. High flow of revenue.
Deal with one person. Build to your own specification.
No occupancy risks. You can ensure compliance with laws and airport rules.

Disadvantages Of
Private Ownership vs. Airport Ownership:

Private Company or Developer Airport Owner
Limited control over lease or rent increases. Airport owner management oversight required.
Asset depreciation. Potentially the highest capital cost.
Managing hangar waiting lists can be problematic. Maintenance costs come from airport budgets.

Generating Money

Generating money is the primary goal for any General Aviation Airport, so having the airport owner fund, build and manage a hangar project is frequently the best approach. If the owner is not supportive, then finding a private source for funding, construction, and operation will be the most attractive alternative.  The key will be your financial analysis.

Financial Impact

After exploring the alternative approaches, it is critical to assess the financial impact of each on the airport’s operation. Take the past financial history of the airport’s operation, include the impact of the new hangars, and project the result.

You will need to get budget-type estimates for the various alternatives you reviewed in the prior step. Look into revenue, operating expenses, and capital costs/loan obligation payments. Remember to include an estimate of increased fuel sales revenue (and the other miscellaneous items that would increase) based on the number of aircraft based at the airport. A cost-effective source for such information can be obtained from prior projects at your airport or neighboring air- ports, adjusted for inflation and differences in scope. Use an airport consultant or engineering contractor to generate budget type estimates.

Once you have gathered the pertinent information, run the financial projections out at least 10 years, applying inflation-based adjustments for operating expenses and revenues. During this 10- year period, you likely will see that existing loans may be fully paid off, generating the potential for increased positive cash flow and other benefits. These are all important to document in the final business plan as justification for the project.

SWOT Analysis of Aircraft Hangar Construction

The purpose of determining the project’s strengths, weaknesses, opportunities, and threats (SWOT) is to uncover the impact that your hangar project will have on the airport’s stakeholders. It is helpful to have a group of project proponents working together on the SWOT analysis and inter- viewing key decision makers or stakeholders—this can uncover potential issues more quickly than doing it alone. Typically, you will discover things that you can use to your advantage or issues that you can address in the early stages of project planning to limit their possible negative impact.

Once you have completed the SWOT analysis, you will have a better idea of where to focus your energy as you start persuading the decision makers and other stakeholders to become supportive of the project. If you are fortunate, you might not have many worries in this regard, but it is best to be forearmed.

Strengths Weakness
History of success Airport director has limited experience.
Waiting list of aircraft hangar’s is full. Tenant resistance.
Support of the local people, city and county. Lack of owner support.
FAA funding is available. Neighbors are resisting.
Opportunities Threats
Provides increased revenue for the airport. Obstacles from current tenants..
More satisfied airport customers. Community resistance.
Increased airport business opportunities. Airport funding is managed by congress.
Transport improvements. Developer has conflicting interests.

Boundary Conditions

These are nothing more than the givens surrounding the project. They set what is in bound and what is out of bound. In any project there will be constraints that you won’t be able to change or modify. Finding these during your planning stage will save you time and money down .

  • FAA and State funding
  • Architectural designs need review and approval.
  • City must endorse project plan and contract awards.
  • Lease agreements must be negotiated with some current airport tenants.
  • Neighbors must be included in communication.
  • Airport restrictions on hangar design.
  • Owner won’t provide any source of funding (so it must be self funded).

With the boundary conditions identified, you might find more issues that need to be con- sidered as you put together the business plan and deal with stakeholders during project exe- cution. It is key to determine who will be the decision maker, from whom or what group

you will need approvals, and whether this will change at various points during the project.

Conduct Stakeholder Analysis

A stakeholder is any person or group who has an interest in or will be impacted by the hangar project. Once you have identified the stakeholders you should determine their level of support. This will help you manage the level of acceptance and commitment for your project because strong allies can influence those who show little support.

Keep in mind that the stakeholder analysis likely will change over time as issues are addressed or new stakeholders are identified.

Create a Business Plan

Even if you don’t face all of the issues explained in this guide or need to create an elaborate business plan for your key decision makers, you still should go through these steps. A business plan will assist you throughout the project and will help it run more efficiently.