Monthly Archives: April 2012

Principato Addresses ‘Airport Cities’, Urges U.S. to Invest in Infrastructure

By Morgan Dye

Greg Principato, president of Airports Council International-North America (ACI-NA), today delivered the welcome address at the 2012 Airport Cities World Conference & Exhibition in Denver. The Airport Cities World Conference, now in its tenth year, is slated to bring together more than 800 airport delegates from 30 countries during the 2-day conference.

In his speech, Principato shared the highlights of ACI-NA’s recent economic impact study which found that U.S. airports are responsible for $1.2 trillion of economic activity and 10.5 million jobs. He emphasized, “Beyond what we can measure, the power of the United States as a 21st century economic power would simply be impossible without aviation and airports. But we are in danger, in this country, of taking that for granted.”

He went on to explain that the current aviation financing system is outdated and we are in need of a modern system for financing needed infrastructure. Referring to the recently passed FAA Reauthorization bill, Principato noted it “…not only keeps the lid on airports, but reduces federal support for infrastructure investment without providing recourse to airports and their communities to take their growth plans into their own hands.”

Principato laid out a challenge to the aviation community near the end of his remarks.  “Over the next three years we are prepared to work with airlines and others to construct a new modern system to build and upgrade infrastructure.  A system that gives airports and their communities the ability they need to invest in modern infrastructure, a system that permits our air transportation system, and the companies within it, to flourish, a system that positions our nation as a key linchpin in the global economy throughout the 21st century and beyond.”

“In short, we are talking about the need for a comprehensive aviation policy that addresses the needs of airlines, aviation infrastructure and airports,” Principato reiterated.

View Greg Principato’s full remarks at the 2012 Airport Cities World Conference & Exhibition.

FAA’s Kate Lang at ACI-NA’s Commissioners Conference

By Debby McElroy
The 2012 Airport Board Member & Commissioners Conference was held earlier this week in Pasadena.  Dan Feger, Victor Gil and the Burbank-Glendale-Pasadena Airport Authority team made sure everyone felt very welcome.  It’s a beautiful and historical city and we were treated to a wonderful evening at the Tournament House Wrigley Mansion on Monday night, learning not only the history of such a beautiful house but also about the Tournament of Roses Parade. For a parade geek like me, it was lots of fun.

But at the same time for many of us, the meeting was bittersweet because Charlie Lombardo, former airport commissioner from Burbank was not here. Charlie, who passed away suddenly last year, was a tireless advocate for his community and had long lobbied to bring the Commissioners meeting to his home airport. Even though not physically here, he was certainly in our memories and in our hearts.

An annual speaker at this conference is Kate Lang, FAA Deputy Associate Administration for Airports.  Lang is well respected and well-liked by the commissioners as they appreciate her candor and her passion for airports.  I know the airport board members and commissioners also appreciated her noting their contribution to the success of airports, stating “You are a crucial influence in your community” and “Thank you to the men and women who are the backbone of aviation development in this country.”

Lang spent a lot of time discussing the recently enacted FAA Modernization and Reform Act of 2012, which she termed “settling the family business” and ending “four-and-a-half-years of fits and starts of FAA programs.”  She highlighted the bill’s mandate that airports file emergency contingency plans with the Department of Transportation and called out ACI-NA’s Chris Oswald for his industry leadership on this issue, especially on data sharing; a key element for the success of integrating airport and airline plays.  Lang also highlighted the six workshops that ACRP is funding over the next few months, following publication of “The Guidebook For Irregular Operations (IROPS) Contingency Planning” in March. (Following Lang’s presentation at the conference, Stephanie Ward of Mead & Hunt discussed the handbook and provided the schedule for the workshops.)

Lang stressed “the AIP level is robust in an environment where agencies all over the federal government taking enormous cuts”.  (AIP’s annual authorization was cut to $3.315 billion through fiscal year 2015.) It is expected that the reductions will come from the discretionary account – resulting in a decline of about 20 percent on new start projects. “It is a flesh wound while others lost their heads,” she emphasized.

The good news is that “for the first time in almost five years we will administer only one AIP program and will be able to do multi-year grants”.  Everyone in the room remembered the difficulties from 23 extensions, forcing grants to be parceled out in small amounts disrupting construction of needed projects at airports throughout the United States. Lang made everyone smile when she said “we have the money right now” to help airports in those areas with a constrained construction season.

She also listed some other “good news” from the FAA bill including increasing the number of general aviation airports in the Military Airport Program from one to three. Additionally that small hubs with a passenger facility charge that transition to medium hub status would have a two-year buffer period before they have to forego a portion of their AIP grants. This was a provision that ACI-NA had both developed and championed and we agree it is of great importance to our smaller members.

Lang concluded her remarks by noting that “the bill that gives a steady course – so now we can focus on the opportunities and challenges ahead.” She provided some details from FAA’s 2012 Forecast including, no surprise to anyone, that large airports will continue to grow at a faster pace than smaller ones.  But potential issues of concern to the entire aviation community include the slow pace of the economic recovery, higher fuel prices, industry consolidation – which could result in less competition and higher fares, environmental concerns, and general uncertainty about taxes and the federal budget.

She also told conference attendees that in the recent Senate Appropriations Committee markup most FAA programs took  a cut except AIP.  ACI-NA lobbied hard to keep AIP at the maximum level allowed by law and we agree with Lang that this funding level shows the congressional confidence in this program as well as an appreciation of its importance for airports throughout the United States.

Lang concluded by noting that while aviation “is a volatile, cyclical industry,” making the “outlook pretty hard to call,” FAA is asking some important questions so the agency can be prepared for the future. These questions include:

  • How do we take safety to the next level in considering the wide range of airports? (Under the safety management system rulemaking FAA will have to balance economic reality and safety.)
  • How can FAA assist airports in raising non-aeronautical revenue?
  • How do we adjust rates and charges policy to increase the toolbox for incentives to promote expanding air service?  (The recent Las Vegas air service incentive program is a good example of creativity.)
  • How do we harness NextGen to make better use of existing airport infrastructure?
  • How can NextGen technology make airports safer and better neighbors?
  • How can FAA adjust our planning tools and environmental models to take into account the changes that come with stretching out airport construction projects?
  • How can we encourage airports to adopt new technologies and use alternative fuels?
  • How do we ensure airports of all sizes have the infrastructure they need to serve their communities?
  • How do we improve the connectivity and synergies of various modes of transportation?

Perhaps these will be the subjects of Lang’s speech next year at the 2013 Airport Board Members & Commissioners Conference hosted by the Gulfport-Biloxi International Airport?

Mergers And Consolidation Topic of Interest at ICAO Meeting

By Debby McElroy
Last week, the International Civil Aviation Organization convened an air transportation symposium, “Strategies and Tools for Sustainable Air Transport” in Montréal.  Speakers at the second session of the symposium, “Industry Trends, Mergers, Alliances and Consolidation” were Ian Wadsworth, chief commercial officer, Houston Airports System, Jan Brueckner, professor of economics, University of California; Don Wykoff, president, International Federation of Air Lines Pilots’ Associations; and Sharon Pinkerton, senior vice president, legislative and regulatory affairs, Airlines For America.

Brueckner was a proponent for consolidation, emphasizing that mergers are designed to increase profits; airline profits are critical for “the economic part” of sustainability for the aviation industry. He also argued that mergers and alliances are good for consumers and cited research on fares following the Delta Air Lines/Northwest Airlines merger, which showed increases of only about 5 percent.  He concluded his remarks by noting that the beneficial effects of mergers exceed the downsides of consolidation.

ALPA’s Wykoff noted that the airline industry had moved from struggling for survival to finding a system that is economically sustainable and allows effective competition. Capacity discipline is a key part of that strategy but he stated there is still more capacity that what is needed for the predicted increase in travel. In what seemed to me a U.S-centric presentation, Wykoff expressed concern about threats to economic stability from the large orders from Middle East airlines, which could lead to “capacity dumping,” the policies of “federal credit agencies,” and state airline subsidies.

A4A’s Pinkerton stressed that governments “should let (airline) consolidation happen,” especially since other components of the aviation supply chain (GDSs, engine manufacturers, caterers) have been permitted to merge, with the result being increased economic stability. She conceded that while some airports have been negatively affected by consolidation, “generally airports have benefited”, noting that all airports enjoy investment grade credit ratings.  Only one airline has such a rating.

Houston’s Wadsworth emphasized that the airline and airport communities have different goals, which can mean a different perspective on mergers.  Airlines, as private businesses, want to expand their network breath, increase their market power and eliminate redundancies.  Airports seek to grow air service, create competition to lower airfares and grow the market, diversify the airline customer base and support long term investment in infrastructure. He noted that it should be no surprise that Los Angeles Airport has the highest credit rating in part because it has no single dominant airline.

For Houston, which operates George Bush Intercontinental Airport and William P. Hobby Airport (as well as Ellington Airport), the United/Continental merger resulted in Bush Intercontinental changing from one of three hubs to one of eight hubs. While that adds challenges in terms of growing air service in general, the impact is most felt in the international area, especially for adding service to Asia which has been a focus of the Houston Airports System.

Wadsworth stressed that airline concentration is a threat to individual airports, especially those that recognize their long term future depends on growing international air service.  In this environment, airports need to be creative in meeting the economic and air service needs of their communities and aggressive in seeking new airline service.  Therefore, it should be no surprise that the Houston Airports System so strongly supports the proposed international service from Hobby by the merged Southwest Airlines/AirTran Airways. This competition will mean lower fares and economic growth for the Houston area.

The decision is now up to the 17-member Houston City Council.

Airports Well Represented at ICAO Meeting in Montreal

By Debby McElroy
This week I attended the International Civil Aviation Organization (ICAO) air transportation symposium, “Strategies and Tools for Sustainable Air Transport” in Montreal. The symposium provided a great opportunity for a worldwide perspective on a number of pressing aviation issues, including sustainability, financing aircraft and infrastructure, liberalization, new airline business models, and industry consolidation.  Additionally, the conference discussion and materials will assist in the preparation of the Sixth Worldwide Air Transportation Conference, which will be held at ICAO in March 2013.

Airports were well represented at the symposium, with the Montreal-based ACI World staff not only interacting with ICAO staff and the delegates but also promoting the benefits of membership and participation in the Airport Management Professional Accreditation Program.  Kudos to Dr. Rafeal Echevarne, ACI World’s Director of Economics and Programme Development, for putting together a great “one-pager” on “The Airport Business” which, along with ACI’s Quarterly Traffic Bulletin (Q4 2011), was included in materials distributed to all attendees. It was great to see “airport propaganda” in addition to the usual airline propaganda you always receive at these meetings.

ACI World Director General Angela Gittens did a fabulous job at the opening session. She joined ICAO Secretary Raymond Benjamin, IATA President & CEO Tony Tyler, Civil Air Navigational Services Organization Director ICAO Affairs Eugene Hoeven, and United Nations World Tourism Organization Representative Chris Lyle to set the stage for issues to be discussed during the symposium. Angela emphasized that governments throughout the world need “to give aviation permission to grow”, noting that local restrictions have led to operational restrictions at many airports. She stressed that airports focus on noise, emissions and water quality because these issues can prevent the construction of critical infrastructure.  ACI has identified at least $130 billion in planned airport expenditures over the next three years – a figure that is likely understated given incomplete data for infrastructure projects in China and the Middle East.

The overall tone of the opening discussion was very collegial – as you would expect at an international diplomatic gathering.  But Tony Tyler, in listing what IATA feels needs to be done for sustained airline profitability, advocated “regulation of monopoly providers”.  This is IATA’s euphemism for more regulation on airports and air navigation services providers.  Angela subtly responded to the remark, emphasizing that the majority of airports operate at a financial loss but their communities depend on them for growth and connectivity to the global economy. She also made the point that aviation is a system and ICAO should not favor one sector over the other; and that no sector can be ignored.

Ian Wadsworth, Chief Commercial Officer, Houston Airports System, represented airports on the Mergers, Alliances and Consolidation panel on Wednesday afternoon.  Joining him were Professor Jan Brueckner, University of California; Don Wykoff, International Federation of Air Lines Pilots’ Associations; and Sharon Pinkerton, Airlines For America.  More on that session in another blog.

Airports Going Greener to Better Serve Passengers and Their Communities

By Morgan Dye

In acknowledgment of the 42nd anniversary of Earth Day on April 22, Airports Council International-North America celebrated airport operators across the United States and Canada who are going above and beyond regulatory requirements to proactively reduce airport environmental impacts while maintaining their position of powerful economic engines in the local community.

“Aviation is the most environmentally effective and efficient way to move people and goods over distances. This Earth Day I am pleased to salute the environmental achievements of ACI-NA’s members that are working to improve that record by reducing airports’ environmental impacts,” said ACI-NA President Greg Principato.

“I am amazed at the innovations airports have adopted in the areas of energy efficiency, water conservation, recycling and alternative energy,” said Principato.  “Their forward-looking approach to infrastructure enhancement and environmental management ensure that airports can continue to meet the environmental as well as economic needs of their communities in a sustainable manner,” Principato concluded.

For a list of airport environmental achievements and initiatives over the last year, please click here.