2017 Year In Review by Blue Grass Airport

Exceptionally Kentucky.

Exclusively

Blue Grass.

Scenic horse farms, stone fences and the unmatched spirit of the Bluegrass. It all begins at LEX as we welcome the world and showcase the beauty of the region to more than 1.3 million passengers annually. From Kentuckyâ&#x20AC;&#x2122;s exclusive production and inventory of 95 percent of the worldâ&#x20AC;&#x2122;s bourbon to our exceptional love of collegiate athletics, the region inspires many design aspects of the airport and the services provided to our guests and local community. The best of the Bluegrass region begins at LEX. Experience it for yourself!

2017 REVIEW YEAR IN

Exceptionally Kentucky.

Exclusively

Blue Grass.

Eric Frankl (left) and Larry Deener (right)

As Central Kentuckians, we are proud of where we live, and it is important to us that Blue Grass Airport reflects that community pride.

Blue Grass Airport

2017 YEAR IN REVIEW

From Our Leadership sell bourbon to our guests; we focused on the distillery experience starting with a storefront that celebrates the industry. Our partner in this operation built a wall of various barrels from more than 30 distillers in the Bluegrass Region. Stop by and take a selfie in front of your favorite distiller’s barrel. (It’s okay, everyone else does it!)

As Central Kentuckians, we are proud of where we live, and it is important to us that Blue Grass Airport reflects that community pride. While this 2017 Year in Review outlines specific accomplishments, we take this opportunity to comment on how the airport celebrates the uniqueness of the Bluegrass Region and our strong sense of place.

We are certainly proud of the handsome appearance of our facilities, but it’s not enough to simply reflect our community visually. We want our visitors to feel special, too. We have a guest services team who pride themselves on our region’s gracious hospitality—uncommon in the hustle and bustle of many airports. Whether we are serving guests in our executive business lounge—The Club at Blue Grass—or creating “wow” moments with sweet treats for families traveling at Halloween, our goal is to show how much we care! We hope this is always evident in how our staff treats you.

So what makes Blue Grass Airport special? Walk through the terminal, and you will begin to see. We have incorporated a number of features inspired by one of our signature industries—Thoroughbred horse breeding and racing. The flooring in the baggage claim area reflects the patterns and racing colors seen on jockey silks. The terrazzo floor outside of the TSA security checkpoint illustrates the pedigrees of prominent Thoroughbred horses. The horse farm theme extends beyond the terminal building. We have also replicated the look of the area’s iconic horse barns in the recent construction of general aviation hangars. While enjoying a day at Keeneland, you can look across the way and see what appear to be horse barns but are actually aircraft storage hangars.

Blue Grass Airport is just one part of what makes Lexington special. We love our community, and we love the airport that serves it. We hope you do, too.

In addition to celebrating our equine heritage, this year we added another purely Kentucky industry to our passenger terminal—bourbon! We were pleased to partner with Cork and Barrel to open a new retail store that provides a wide selection of Kentucky bourbons from our local distilleries so that visitors can conveniently take home a bottle—sealed, of course! We didn’t just set out to

Blue Grass Airport

Larry C. Deener Board Chair Eric J. Frankl, A.A.E. Executive Director

2017 YEAR IN REVIEW

Lexington-Fayette Urban County Airport Board The airport board was chaired by Larry Deener from 2015-2017, and in the coming year, Mr. Deener will rotate off the board and Van Alford, Jr. will serve as the new chairman. Additionally, in 2018, Doris Benson and Kelley Sloane will conclude their respective two terms on the airport board. The airport team is thankful for their boundless enthusiasm and energy that has helped shape the airport into what it is today.

Like many commercial service airports in the United States, Blue Grass Airport is owned by an independent unit of local government and is operated by a governing board. Its 10 volunteer members are appointed by the mayor and confirmed by the Lexington-Fayette Urban County Council. Members serve a four-year term and are eligible to be reappointed for a second four-year term. The airport board provides oversight through its committees, which focus on setting standards of excellence by supporting the airportâ&#x20AC;&#x2122;s vision of being a responsive and essential link in the vibrancy of the Bluegrass Region.

Larry C. Deener Chair

W.V. Alford, Jr. Vice Chair

Doris Benson Secretary

Elizabeth Woodward Treasurer

Ronnie Bastin

James Coles

Garyen Denning

Richard Moloney

Don Mosier

Kelley Sloane

Special Recognition Congratulations to Chair Larry Deener for being named Kentucky Commercial Service Airport Board Member of the Year by the Kentucky Aviation Association and Kentucky Department of Aviation. Mr. Deener has served on the airport board for almost eight years. Professionally, he is a partner at the law firm of Landrum & Shouse, LLP.

Blue Grass Airport

2017 YEAR IN REVIEW

Financial Highlights During 2017, the airport staff continued to strengthen its financial sustainability and focused on initiatives including:

Blue Grass Airport is committed to fiscal responsibility, efficient operations and strategic management of its investments. The airport prides itself on prudently managing its expenses and adhering to fiscally conservative policies while always placing the utmost importance on the safety and security of its passengers.

• Increasing operating revenues while containing costs in order to help retain and attract new air service for our community; • Maximizing capital grant revenue in conjunction with our capital asset program; • Building the airport’s reserves with the goal of achieving 365 days of unrestricted cash on hand; • Maximizing the airport’s investment returns by taking an active approach to cash management; • Finalizing agreements with transportation network companies such as Uber and Lyft that allow the airport to create and monitor an incremental revenue stream.

The airport strives to achieve public accountability through open board meetings, an audited financial statement completed annually by external auditors, an internal auditor function and a comprehensive strategic planning process that focuses on long-term needs and development. Because of this commitment to operate like a business, the airport is self-sufficient. All operating expenses are funded by the airport’s own revenues, ensuring that no local tax dollars subsidize operations. 2017 Gross Operating Revenue

2017 Gross Operating EXPENSE

$17,922 (in 000s)

$12,456 (in 000s)

$1,397

$608

Concession

$377

$450

Professional $428 Services

Advertising

General Aviation

$547

Insurance

$358

Marketing

Supplies & Equipment

$2,563

Car Rental

$634 Other

$162

$294

Training & Travel

Other

$6,690 Airline

$6,981

Salaries & Benefits

$1,165 Utilities

$5,920

$1,804

Parking

Maintenance & Supplies

Blue Grass Airport

2017 YEAR IN REVIEW

Facts & Figures: Destination LEX Total Passengers

1,316,847 Enplanements: 661,296 | Deplanements: 655,551

Regional Impact

3,478 Jobs

Regional Impact

$370 Million Output

$104 Million Payroll

Top 10 Destinations 1 Orlando (Sanford), FL 2 Punta Gorda, FL 3 Ft. Lauderdale, FL 4 St. Petersburg/ Clearwater, FL 5 Atlanta, GA

6 Chicago (Oâ&#x20AC;&#x2122;Hare), IL 7 Washington, D.C. (Reagan National) 8 Dallas/Ft. Worth, TX 9 Philadelphia, PA 10 New York (LaGuardia), NY

Airline Market Share United Airlines

Allegiant Air

$1,165

11%

20%

Utilities

41%

Delta Air Lines

28% American Airlines

Horse Transport

669

To/From Lexington

Connectivity from LEX

17 Non-stop Destinations

Minneapolis (Seasonal)

662 one-stop domestic connections 213 one-stop international connections

Chicago

Detroit

New York

Newark

Philadelphia Washington, DC

Lexington Charlotte Atlanta

Myrtle Beach (Seasonal)

Savannah/Hilton Head (Seasonal)

Dallas

Orlando Sanford

Houston Tampa Bay Punta Gorda/ Ft. Myers

Ft. Lauderdale

Blue Grass Airport

2017 YEAR IN REVIEW

Exceptional Momentum General Aviation Hangars To accommodate an ever-growing demand for aircraft storage, the airport broke ground for additional hangars on the west side of the airport property alongside Runway 9-27. Architecturally, these new buildings adhere to an appealing style reflective of the region’s equine barns. The hangars will balance the needs of airplane owners while maintaining the aesthetics of the region.

As a growing airport, our momentum is focused on building new facilities to support operations that serve the traveling public. In 2017, several significant multi-year improvement projects continued to progress. Upcoming completion dates are scheduled in 2018 and beyond. Taxiway Safety Enhancement Program Work continues on the airport’s multi-year program to enhance operational safety on the airfield and improve the efficiency of aircraft movement. While the primary emphasis of this program focuses on the realignment of the main taxiway and additional connectivity for general aviation aircraft, the project also incorporated the relocation of the airport’s snow removal equipment complex in 2015 as well as the upcoming relocation of the airport’s public safety facility. The relocation of these two facilities will make the necessary enhancements to the taxiways possible.

WestLEX General Aviation Campus Along with additional hangars on the west side, the airport is constructing a facility that will provide general aviation services to hangar tenants in this location. The facility will include a large bay for aircraft maintenance as well as an indoor lounge area, conference room, flight planning office and a staff dedicated to providing services for the general aviation community. Open year-round, WestLEX will provide a great venue for hangar tenants to interact with airport staff and receive exceptional service.

Baggage Handling System Plans are underway for Blue Grass Airport to replace its baggage handling system. The system is located behindthe-scenes and is an important factor in ensuring that baggage is collected, screened and delivered to the appropriate location to meet passenger flights. This complex system connects the airline ticket counters to the Transportation Security Administration screening area and the final collection point for baggage to be loaded onto the airplane.

Blue Grass Airport

Rental Car Service Facilities Construction of modern rental car service facilities are underway and have an expected completion of summer 2018. These important service facilities provide rental car partners with a dedicated on-airport location to fuel and wash their fleets and service vehicles for their customers. Airport passengers are currently served by the following companies: Alamo, Avis, Budget, Dollar, Enterprise, Hertz and National.

2017 YEAR IN REVIEW

Exceptional Connectivity Collegiate Athletics The airport continues to serve Kentuckyâ&#x20AC;&#x2122;s collegiate athletics programs, especially during football and basketball season. The airport not only serves as the gateway for visiting teams, but also for athletic team and fan charters heading to out-of-state games. For fan charters, Blue Grass Airport makes a special effort to ensure a Big Blue experience, often by distributing pompoms and snacks for the flight.

Traveling for business or leisure continues to get easier when flying to and from central Kentucky. With 17 nonstop destinations, Blue Grass Airport offers more air service than many communities of similar size. Record Growth Four Consecutive Years With an all-time high number of destinations, Blue Grass Airport experienced yet another year of record enplanements in 2017. As the primary air transportation provider for the region, Blue Grass Airport saw a total of 1,316,847 passengers. A portion of this growth can be attributed to additional flights to Savannah/Hilton Head, non-stop daily service to Newark Liberty International Airport and larger, more comfortable aircraft flying to many destinations. Strong Airline Partnerships To maintain and improve air service, the airportâ&#x20AC;&#x2122;s leadership team meets with airlines throughout the year to discuss existing service and potential new destinations. During one-on-one meetings with the airlines, the airport has an opportunity to express the needs of business and leisure travelers in the region. In addition to meeting with airlines that already serve Lexington, the airport engages with new airlines to determine potential partnerships.

General Aviation General or private aviation continues to be a significant component of the total operations at Blue Grass Airport. With more than 75 hangars on airport property and approximately 48,500 general aviation flights per year, the airport team continuously seeks to enhance its facilities and services to meet the needs of those flying privately. The airport is pleased to partner with fixed-base operator TAC Air, which offers award-winning ground services and a beautiful terminal for both customers and pilots. These facilities will soon be complemented with an airport-operated service facility on the west side of the property along Runway 9-27.

Larger Aircraft, More Comfort As the airline industry moves toward using larger, more efficient airplanes, Blue Grass Airport passengers have benefited from a two-class cabin on many flights. Firstclass options are now available on flights to cities including Atlanta, Charlotte, Chicago, Dallas, Detroit, Minneapolis, New York and Washington, D.C.

Blue Grass Airport

2017 YEAR IN REVIEW

Blue Grass Airport

2017 YEAR IN REVIEW

Exceptional Safety Standards is designed to test the capabilities of airport and community emergency response staff in the event of an aviation emergency. The exercise included a simulated aircraft accident during which all staff and agencies responded to the scene as if it were an actual emergency.

Blue Grass Airport is dedicated to the highest safety standards and is committed to providing a secure airport. To ensure compliance with its rigorous safety requirements, the Federal Aviation Administration inspects the airport, its airfield, facilities, equipment and emergency drill response annually.

Welcome, Mr. Vice President Blue Grass Airport received dignitaries as Vice President Mike Pence and U.S. Representatives Andy Barr and Brett Guthrie arrived in Lexington in July to meet with local business owners regarding health care initiatives. Airport staff worked closely with the U.S. Secret Service and the Vice President’s staff to ensure the safe and efficient arrival and departure of Air Force Two.

Aircraft Rescue Firefighting Training Designated as one of the country’s regional training centers, Blue Grass Airport’s Aircraft Rescue Firefighting Training Center provides training techniques to airport staff and emergency responders. The $5 million facility allows teams from around the country to fulfill their training requirements via computer-controlled aircraft simulations that utilize propane as a safe, environmentally-friendly fuel source. During 2017, Blue Grass Airport trained more than 530 emergency responders.

Family Assistance Program In August, the airport partnered with the National Transportation Safety Board to host a special training session for airport and airline staff as well as more than 30 emergency response agencies. Emergency responders learned how best to assist disaster victims and their families following an aviation accident. Training focused on communications and services. New TSA Screening Procedures The Transportation Security Administration implemented enhanced carry-on baggage screening procedures in October. The new procedures require travelers to place all electronics larger than a cell phone in bins for x-ray screening. This is a part of TSA’s continuous efforts to stay ahead of evolving threats to the transportation system.

Emergency Preparedness A full-scale training exercise was conducted at Blue Grass Airport in April. Approximately 300 people from 20 emergency agencies participated in the exercise, which

Blue Grass Airport

2017 YEAR IN REVIEW

Blue Grass Airport

2017 YEAR IN REVIEW

Blue Grass Airport

2017 YEAR IN REVIEW

Exclusively Blue Grass American Airlines Hospitality Congratulations to the American Airlines team at LEX for receiving the Customer Cup award for excellent customer service. For the third time in two years, this team of 30 has been recognized for their dedication to safety, customer service and teamwork. American also supplemented its quality service this year with a new baggage assistance counter for customers.

At Blue Grass Airport, we realize our customers have choices, and we strive to make sure LEX is everyone’s first choice when making travel arrangements. With modern facilities that reflect our region and excellent customer conveniences, we continue to enhance the passenger experience and share the best of the Bluegrass. Bring Home a Taste of Kentucky Blue Grass Airport welcomed local retailer Cork & Barrel as its partner in showcasing the region’s bourbon heritage to visitors from around the world. Conveniently located beyond the security checkpoint, travelers can shop bourbon, fine wines, bourbon-themed apparel and culinary products before their flight. Because of Cork & Barrel’s relationship with master distillers, passengers can select single barrel and one-of-a-kind small batch bourbons not available elsewhere. Open daily, all bourbon is cleared for carry-on. From barrel to boarding, your spirits are good to go!

Urban League Recognition The airport staff was extremely proud to be recognized as the Corporate Champion of Diversity at the 49th annual Urban League of Lexington-Fayette County Empowerment Dinner. This diversity award was presented to the airport for its history of promoting a culture of diversity, particularly in procurement and the significant inclusion of minority vendors.

Parking Made Simple Passengers can now experience the benefits of technology by downloading the airport’s new pay-by-phone app—Arrivio—which can be used in the airport parking areas. This convenience allows passengers to exit the airport more quickly and arrive home sooner. Just download the app, scan the QR code on the parking ticket dispenser upon entering the lot and then scan again when you leave. Your credit card on file will be charged and a receipt will be emailed to you. It’s as simple as that!

Giving Back The airport takes great pride in its ability to give back to the region. Approximately four times annually, Blue Grass Airport supports and serves as the host location for Honor Flight Kentucky. This organization provides complimentary trips for military veterans to visit the Washington, D.C. memorials built in their honor. Throughout the year, the airport also supports other organizations including the American Red Cross, Aviation Museum of Kentucky, Bluegrass Hospitality Association, Commerce Lexington, Eastern Kentucky University, Kentucky Aviation Association and Kentuckians for Better Transportation. Airport leaders also serve on the boards of industry and public service organizations in the community.

Leveraging Technology Passengers can now enjoy the speed of the airport’s new fiber optic internet system upgrade. Guests using the public Wi-Fi system will experience a significant boost in speed and performance. As always, this is a complimentary service for our passengers and guests.

Blue Grass Airport

2017 YEAR IN REVIEW

4000 Terminal Drive, Suite 206 Lexington, KY 40510-9607 859.425.3100 bluegrassairport.com

Photos provided by Bill Straus Photography, Envoy Air, Faron Collins, Jamie Helm Morgan and Stephen May.