Monthly Archives: September 2010

One-in-Three Chance for ‘Double-Dip’ Recession

By A.J. Muldoon
Mike Tretheway believes that even though it doesn’t feel like it, the industry is booming. IATA believes the industry will make $2.5 billion this year. However, the threat of a “W” recovery still remains. Dr. Tretheway believes the risk of a second dip is about 33 percent depending on how the Federal Reserve manages its efforts to guide the recovery. As far as fuel prices go, who knows? A consensus forecast of oil industry experts shows that oil will be around 100/bbl in 2016. However, if another oil cycle like happened in 2007 occurs, fuel could rise as high as $245/bbl further dampening prospects for growth.

Bill Swelbar believes that change is in the air and several of the drivers will be the global economy, fuel, China, and Middle Eastern carriers. Bill believes that one of the best things to ever happen to the industry was $145/bbl oil since it forced airlines to learn capacity discipline. This helped U.S. carriers weather the recession better than other regions. While IATA has predicted that the industry will be profitable in 2010, 2011 is not looking so good. Swelbar asks, if 2010 is as good as it gets, shouldn’t we be kinda bummed? Swelbar also sees a significant threat from Middle Eastern carriers which may significantly compete against alliance carriers. Just to throw a little fuel on the fire, Bill ended his presentation with a question: “if the airline industry is shrinking, should the airport system that serves it also shrink?”

FAA Will Write A Check, But Will We Be Able To Cash It?

By Chris Oswald
Frank and honest—certainly two words that define this morning’s Forum with the FAA.

The session—a perennial favorite at the ACI-NA Annual Conference & Exhibition, featured Kate Lang from the FAA Office of Airports, Hank Krakowski from the FAA Air Traffic Organization, and Nancy LoBue from the FAA Office of Policy, Planning and Environment and was moderated by Dave Edwards, Executive Director of Greenville-Spartanburg International Airport.

The session touched on a broad spectrum of topics, ranging from airport participation in NextGen to safety management systems (SMS) to the status of EPA deicing effluent limitation guidelines.

However, the heart of the discussion revolved around one central issue—the deplorable lack of robust, multiyear FAA reauthorization legislation.  At the same time, airports are facing increased regulatory and pseudo-regulatory burdens from the FAA in the form of safety management systems, new airport survey standards, NextGen funding needs, or new wildlife hazard management requirements.

Kate certainly understands airport operator concerns with respect to these new requirements and I believe her when she notes that the Office of Airports is “ready to write checks” to help airports meet them.  However, absent reauthorization and other changes to our system of funding airports in the US, I’m unsure how long we’ll be able to cash them.  Moreover, since many of these new requirements will bring with them ongoing operations and maintenance costs, the checks may not cover all our needs.

Clearly, ACI-NA and the FAA have our work cut out for us in the coming year to find creative ways to improve airport financial sustainability.  I’m looking forward to the challenge and I’m guessing Kate is too.

Uptick Continues in Canadian Traffic

By Daniel-Robert Gooch
As Canadian Airports Council Chairman Bill Restall reported to the ACI-NA board and media earlier this week, Canada is enjoying solid passenger traffic growth this year, particularly in recent summer months.

For the year through July, systemwide in Canada traffic is up 3.9% over the first seven months of 2009. During that period U.S. transborder and overseas numbers surpassed pre-crisis levels with 6.3% and 7.9% growth respectively over the same period in 2009.  Domestic passenger numbers for the first seven months indicate that this segment also has most likely surpassed pre-financial crisis levels.

In international travel, Canadians flying to the U.S. are largely responsible for the strong growth reported but U.S. residents flying into Canada is back in growth mode as well.  Overseas (non-U.S. international) visits to Canada remain flat, but the numbers of Canadians flying abroad have returned to the growth mode enjoyed before the financial crisis.

Among foreign visitors to Canada, the strongest growth numbers in overnight visits for the first seven months of 2010 have been in overnight visits from residents of Japan.  Overnight visits from France, Germany, Australia, the People’s Republic of China and South Korea also are up.

The biggest decline in foreign markets for tourists is in overnight visits from Mexico, which continues to be negatively impacted by a visit requirement introduced in 2009.  Overnight visits from the UK – Canada’s biggest source for overseas tourists – remain flat.

Four Airports Earn Top Environmental Honors

By Matt Griffin
Seattle-Tacoma International Airport, Portland International Airport, Southwest Florida International Airport and Buffalo Niagara International Airport were presented their 2010 Environmental Achievement Awards this afternoon at the Chairman’s Awards Luncheon.  The ACI-NA Environmental Achievement Awards were established in 1997 and has generated immense interest throughout the industry and has catalyzed numerous environmental programs at airports.  Please read below for information on each of the award winning projects.

Environmental Management Award Category:
The Seattle-Tacoma International Airport’s “Environmental Strategy Plan – A Vision for 2010 and Beyond” earned them the Environmental Management Award. Serving as a roadmap for achieving Seattle-Tacoma’s ecological conception, it provides a framework for annual planning, budgeting and accountability by identifying the measurable environmental outcomes that they would like to achieve by 2014. Since its completion in 2009, the Strategy Plan has provided the organization with a new and dramatically improved sense of focus for its environmental actions, and a blueprint for a more sustainable future. Seattle-Tacoma feels this plan is a linchpin for the success of its environmental program and can serve as a role model for other airports.

Outreach, Education and Community Involvement Award Category:
Portland International Airport won this year’s Outreach, Education and Community Involvement Award with its Airport Futures project. Airport Futures was a collaborative process involving the Port of Portland, the City of Portland and the Portland-Vancouver metropolitan community to create a long-range (through 2035) master plan for Portland International Airport and a city land-use plan governing the airport and its environs. A 3-year process, Airport Futures facilitated a public discussion about sustainable development that resulted in the identification of the community’s vision and values. The airport can now effectively integrate sustainability principles to its development plan in a manner that contributes to the long-term economic, environmental and social health of the region.

Mitigation Award Category:
The Mitigation Award went to Southwest Florida International Airport for their exceptional Wildlife Management Program. The airport utilizes various projects that analyze problematic habitats and species to develop specialized methods of prevention. The formation of a Hazardous Wildlife Working Group in 2005 improved communications between Environmental Compliance, Airport Operations and Airport Maintenance to assist in the implementation of new and innovative deterrence methods. And in March 2008, the airport initiated a Wildlife Hazard Assessment that used a unique methodology that broke down species into hazard guilds, assigning relative risk values to more effectively focus on specific airfield areas that attract the highest risk species

Special/Innovative Projects Award Category:
Buffalo Niagara International Airport is the second airport to win the Special/Innovative Projects Award for its Wetland Treatment of Glycol Contaminated Stormwater Program. An improved stormwater collection system captures concentrated deicing flows from all airport gates, stores it at a low point on the airport property and pumps it to the wetland treatment system. Though the treatment system utilizes natural wetland processes, it actually occurs within aerated gravel beds topped with mulch and plantings. These beds appear simply as a mowed field. The cells, four in all, are each about the size of a football field, 1.5 meters deep and lined with high-density polyethylene material. Here, using a number of unique features, the glycol is broken down in two to three days as it travels through the engineered wetland treatment system.

Meehan: AirTran-Southwest Merger Won’t Hurt Airports

By Tom Smith

The 33 airports currently served by AirTran will likely retain service once the proposed merger of AirTran with Southwest Airlines is completed.

SH&E President Deborah Meehan

During a presentation Tuesday morning to the 19th ACI-NA Annual Conference and Exhibition, SH&E’s Deborah Meehan said the 33 airports that don’t have overlapping service with Southwest should not be impacted. Those few routes between city-pairs now served by both carriers will be evaluated, she said.

While many of these cities are now smaller markets that Southwest has been entering, Meehan said for Southwest it is now “all about getting people to the grid.” Yet to be determined if Southwest will continue the hub-and-spoke system that AirTran has developed or re-arrange the system to model Southwest’s point-to-point network.

Many of these smaller markets are served by AirTran’s Boeing 717 fleet. Meehan sees Southwest accelerating the replacement of these smaller planes so that can continue to focus solely on the Boeing 737.

The one market that is in question, Meehan said, is Milwaukee where AirTran had been building a beachhead against Frontier Airlines (the former hometown Midwest Airlines) and Southwest is the third low-cost carrier now in the market.

With the merger, Southwest will gain its first international flights as it takes over AirTran’s Caribbean routes. It is likely that Southwest will again look to Canadian transborder route, she said, but it will probably grow it international service cautiously until it fully understands this part of the business. WestJet and Southwest were to have entered into a code-share arrangement this year but the two firms could not overcome the IT obstacles, she noted.

Once the merger is completed, Meehan predicts that the larger Southwest will have an impact on the services and fees charged by the network carriers forcing them to reduce their al chart service fee schedule. In an effort to compete more network carriers will drop the fee for the first piece of stowed luggage and will again provide a free light snack on their longer flights. The competition will force the network carriers to be more “creative” in the services they provide – and also charge for, she added.