1. Air Service Development Navigating Through Turbulent Times 1 Houston Association of Realtors September 2012

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3. Agenda Evolution of Air Service (past +/- 15 years) Jet Fuel’s Impact on Air Service Houston Air Service Development Houston Airport System (HAS) Real Estate 3

4. Evolution of Air Service in U.S. <2001 2008 Present 4

5. Three Airline Types Ultra-Low Cost CarrierLow Cost CarrierLegacy Carrier Fully decouple productHybrid modelBusiness traffic focus Single fleet type Multiple fleet types Minimal infrastructureGrowing infrastructure to meet hybrid model Infrastructure to meet multiple client base Examples 5

6. United Airlines (United – Continental) Atlantic Immunized Joint Venture Air Canada Lufthansa Pacific Immunized Joint Venture All Nippon Airways Continental Airlines Newark Houston Cleveland Mega Carriers Systems 6

7. Airlines Highest Cost Jet Fuel Price 7

8. New Technologies Impact on ASD Composite materials – Interior – Exterior B787 A380 / B747-8 B737 MAX / A320 NEO Pratt & Whitney geared turbofan 8

9. Hobby International 9

10. ASD Top Targets Passenger Service Asia Europe Cargo Service Asia Europe South America 10

11. IAH-DFW IAH-ORD IAH-LAS Starts: Sep-12 IAH-LOS Started: Nov-11 IAH-ACC-LOS Started: Oct-11 IAH-MAN Started: Mar-12 IAH-IST Starts: Apr-13 IAH-DOH Started: Nov-11 Cargo A Few Recent Wins IAH-MIA-MAO- VCP-GIG-BOG- BAQ-IAH Starts: Sep-12 11

12. HAS Real Estate Houston Airport properties – Intercontinental Airport Houston – Hobby Airport – Ellington Airport – West Side environment mitigation (Katy area) 12

13. Regulatory Oversight 13

14. Most Common Question #1 How can I buy or sell airport property? – No direct sales Offer to other city departments Offer to other governmental agencies Issue a bid invitation – Not very common 14

15. Most Common Question #2 Can I get a 99 year lease? – Lease term maximum is 40 years Must be approved by City Council – Required to be fare market value – City charter requires city property appraisals 15

16. Most Common Question #3 Airport Concessions / Restaurants / Retails – Currently full – Request for Proposal (RFP) process 16

17. Ellington Pipeline Corridor Neighboring pipeline corridor is at capacity HAS is creating and managing a new 50-foot wide, non- exclusive pipeline corridor along SH- 3 to accommodate market needs Common carrier pipelines destined for Gulf Coast refineries may locate within this corridor 17

18. Thank You 18