DISTRIBUTION DATE: September 12, 2007      FOR RELEASE UPON RECEIPT

TAA BOARD APPROVES $91 MILLION BUDGET:
CAPITAL IMPROVEMENT PROGRAMS

     Operating revenues are projected to increase $2.6 million or 6.3%. This strong revenue growth is due partially to continued increases in commercial airline flight activity and passenger traffic that are resulting in an increase of appx. $730,000 in airline charges and fees for use of the passenger terminal. Concession revenues are projected to increase $1.8 million or 11.6% due to passenger growth, as well as several program initiatives that enhance passenger comfort and convenience. Parking revenue is expected to increase appx. $900,000 due to the addition of premium priced covered parking lots.

     Food and beverage revenue is expected to increase appx. $385,000 as a result of the continued success of the new program begun by OTG Management in 2006. In addition, a new rental car concession agreement that went into effect August 1, 2007 will provide nearly a $600,000 increase in privilege fees.

     Operating expenses are projected to rise $2 million or 6.7%. Personnel expenses account for an increase of $1.3 million, with a significant portion due to increases in contribution rates required by the Arizona State Retirement System and the Arizona Public Safety Personnel Retirement System, as well as an increase in group medical insurance of $205,000, nearly 15%.

     Debt service will increase appx. $920,000 or 8.2%, primarily reflecting costs for the ongoing concourse renovation project that are not funded by the existing $4.50 Passenger Facility Charge (PFC).

     The landing fee rate, paid by the commercial carriers that operate at TIA, will be $1.51 per thousand pounds of landed weight, an increase of 11 cents over the FY2007 rate. By agreement with the signatory airlines doing business at the airport, this fee provides the additional revenue, not provided by other airport system revenues, which are required to match expenses. Signatory airline landing fees will produce $4.1 million of revenue for the FY2008 budget.

     Despite the increase in the landing fee rate, TAA continues through management of expenses, responsible increases in non-airline rates, and proactive concession programs to keep airline costs down, which is allowing TAA to reduce the Cost Per Enplaned passengers (CPE) to under $6.00, at $5.96 for FY2008. This compares favorably to the actual FY2006 CPE of $6.01. CPE is an accepted industry benchmark that reflects airlines’ total cost of airport rates and charges, including landing fees. Moody’s and Fitch have recognized that TAA’s portion of operating revenues from passenger airlines of 27% is low in the industry and a financial strength.

     The TAA board also approved Capital Improvement Programs for FY2008 and FY2009. Included in the operating budget is federal and state grant funding of $26.6 million for the FY2008 Capital Improvement Program (CIP), an increase of $18.9 million over FY2007; and Passenger Facility Charges, which are budgeted at $8.2 million and are committed to pay for TIA’s previously completed Terminal Expansion and ongoing Concourse Renovation Projects.

     The FY2008 CIP, totaling appx. $32 million, includes a variety of improvements at TIA, the largest of which is $12.2 million for expansion of the passenger aircraft parking apron east of the terminal to address capacity issues.

     Completion of the Sound Insulation Project will be funded with $11.1 million. The sound insulation program is an element of TAA’s adopted Part 150 Noise Program and the referenced project will fund acoustical treatment of approximately 325 additional homes in areas surrounding TIA.

     Projects planned for Ryan Airfield include several runway lighting projects, replacement of runway signage, and perimeter security fencing and roadway design.

     The FY2009 CIP totals appx. $19.5 million, of which $13.1 million will be funded by federal and state grants. Major projects include a total of $5.3 million for infrastructure development for two new TIA general aviation areas, $3 million to begin design of gate expansion on the east concourse, $1.4 million for acquisition of land in one of TIA’s runway protection zones, and appx. $6.3 million in various Ryan Airfield projects, including taxiway and runway improvements, and construction of perimeter roadways and security fencing.

     ###

Attachment: TAA FY2008 and FY 2009 Capital Improvement Program