Monday morning began with three former airline planners who now work as air service development consultants — Jamie Kogutek, Sixel, formerly of AirTran Airways; Mike Lopez, Seabury APG, formerly of Continental Airlines; and Zach Mensen, Intervistas , formerly of Delta Air Lines.  Each of the three had left a carrier in the last 18 months.

As ex-airline employees each shared information that they could not before. Their secrets:

• Keep up with what airlines are doing in terms of strategy
• Know if decisions are made top-down or bottom-up.  At some airlines new routes are ultimately a CEO decision. The new United is using old Continental methods.
• While building relationships is important, you need to follow an airline’s prescribed channels when trying to win a route.
• Deal with the planning team, but do maintain your relationships.
• Airports that survived Southwest’s cuts did so because they had good relationships. It becomes a lot harder to cancel routes or cut capacity when you have good relationships. It is the tie breaker.
• Some carriers appreciate JumpStart meetings with currently-served airports just to check-in, especially in this environment. But others cautioned to know your carrier’s attitude because don’t want to use JumpStart meetings as a relationship building session.
• Don’t bring the mayor.  Do get community decision-makers involved, but not necessarily at those first meetings. Keep the group small.
• Different carriers have different goals for different conferences. Delta tries to meet with each airport at least once a year. A conference meeting could take the place of a headquarters meeting.
• There are competitive reasons for adding routes. Stomp out the competition. Sometime a lot of those decisions come from higher up.
• Market share plays are to make sure your brand is standing at the end of the day. We are now nearing the end of the game with this game ship.
• There will still be a market for 50-seat regional jets. There are certain roles that they will be viable.
• Airport operating costs. It a part in the decision, but it is not a deal breaker.
• Airlines don’t care about total annual passengers. Airlines talk about emplacements, not passengers.
• How does you community relate to places in my network is a key variable. Or, to which Florida markets your community travels. What business in you town has an office in Atlanta or needs to connect in Atlanta?
• Use corporate sales data only if they would be traveling on my airline.
• An airport trying to forecasts my costs is a waste as I know my costs. If you do them, they need to be believable for your credibility.
• More important to use the data before the presentation not during the presentation.
• Find the things sticks out. Tell me something I don’t know.
• If costs are not right, it can have a negative impact on the meeting.
• How forgiving are you for data mistakes — as long as carrier’s name was correct.

This morning, currently-employed airline planners shared their advice on making JumpStart presentations. Presenting we’re Adam Green, Virgin America; Nicholas Haan, Southwest Airlines; and Mark Kopczak; Spirit Airlines.

• Worst JumpStart mistake:
• Green: One airport failed to provide requested, additional information — that airport was under serious consideration. The airline passed them over.
• Haan:  One airport promised an exciting opportunity but first it wanted us to lobby Congress to get them included into the service to D.C. zone.
• Kopczak: You need to tailor presentation. One airport copied data from one city pair pitch made to a different carrier — they changed the city but not the data. Be confident with your information. We do check them.
• What to include:
• Tells us what we don’t know about your community and how it would fit into our network.
• Spirit likes to see recent retail sales numbers because it’s tickets are impulse buys.
• Does your business community “jive” with the typical profile of a Virgin America passenger.
• Southwest does not read the presentations it takes back from JumpStart but instead adds the information to the files it has on each potential service community.
• All agree don’t give paper presentations to take back but rather give them a flash drive or e-mail it later.
• Know the airline’s strategy and business plan. Make sure the pitch is in line with the airline’s plans.
• Make sure the pitch matches the aircraft the carrier would likely fly on the route. Don’t do a forecast that is barely defensible for a small plane when the carrier usually doesn’t fly that aircraft.
• Don’t pitch a route on the basis if the new route is there then the community will naturally fly it.
• Layout costs upfront. Spirit will ask for it right away. We want to know the rates and charges.
• Be up front.  The airlines don’t like to be surprised with major projects that could impact their costs or their operations.
• Beyond the runway capacity the airlines don’t care about the airport terminal facilities, its concessions and  awards during the initial presentation. At this stage the economics of the community is more important.
• Route selection is not a competition or reality game show in that cities are competing against each other for the next aircraft. Airlines are looking for the best revenue opportunity.
• Incentives:
• Green: They are important to us.  Some airports get it and some do not. Long-term not important to strategy. But in the short-term they are. In a “bake-off” they have made a difference. Stress the partnership with the airport. You cannot make a market out of incentives, but it can make a launch.
• on our five year plan
• Work in part ships with community groups. The airport role, I understand needs to be neutral. Then the community group can take the lead to build relationships. The community are really invested because they want to be on the Southwest network.
• If your presentations mentions a community group, give examples of how it has worked with other carriers. These really good stories of earlier successes push it over the top when decisions are made.

“I’m waiting for courage
Cause I’m stuck
Limbo limbo limbo
Cause I’m stuck in limbo limbo
And I ain’t trying to be stuck no more!”

(JoJo “Limbo“)

It is time once again for a lesson in Washington math:

22 extensions + 14 day FAA Shutdown + 9 years since the last FAA bill became law + 6 extensions covering 2011 alone + 5 years without an authorization + 2 month average extension in 2011 divided by  the 6 days the House is in session in January + the 7 days Senate is in session for 7 days in January = Limbo

Limbo, according to the dictionary, means “a state of oblivion; a state in which somebody or something is neglected or is simply left in oblivion”. This neatly sums up the current state of affairs involving the Federal Aviation Administration reauthorization bill.

And, this state of affairs has got to end. ACI-NA President Greg Principato called on Congress in August at the end of the FAA shutdown and again last week to end the FAA’s stay in purgatory by passing a two-year extension of the FAA reauthorization upon their return to Washington later this month. Congress has more than enough practice passing FAA extensions – they accounted for 6 percent of the federal legislation signed into law last year!  Congress should pass a long term extension and study up on some other legislative issue.  I’m sure the highway folks are feeling a bit unloved and unwanted given that Congress has practically ignored them.  After all, eight extensions is a second date compared to 22 which is as good as being engaged.

Congress gives up nothing by passing a two-year extension. Any arguments members of congress make about the need to “keep the pressure on” simply don’t hold water. If the ups and downs and teetering on the edge of the first 22 extensions didn’t exert enough pressure; if shutting down the federal agency responsible for aviation safety for 14 days while allowing $300 million to slip into the pockets of the airlines instead of being added to the Aviation Trust Fund didn’t exert enough pressure, than a mere two years certainly isn’t going to matter.

Two years, however, gives airports stability and the ability to plan without having any impact on Congress’ ability to pass a final bill.  Although if we take history into account, it could be that two years is not long enough.

The funny thing is that the 112th Congress appeared to get off to a promising start with both the House and Senate passing FAA reauthorization legislation in the first months of the year. Few of us imagined we’d be stuck living through another Ground Hog Day scenario when it came to getting this bill done. Yet here we are in mid-December still without an FAA conference report.  Maybe 2011 was meant to test one of my mother’s favorite phrases “patience is a virtue” (though I’ve come to the sad conclusion that on this issue, mum was wrong ).  If that’s not bad enough, Congress continues to tease us with rumors that they have reached agreement on the reauthorization only to admit that the National Mediation Board (i.e. the Fed-Ex/UPS of 2011) language is holding things up.

In some ways the lack of a final FAA bill is simply the status quo after 22 extensions. In fact, it’s become a bit of a running joke inside the beltway. The folks who pen Politico’s Morning Transportation have been running a daily tally on the plight of the FAA reauthorization.  In Monday’s column the tally showed that there were 51 days remaining before the 22nd FAA extension expires and notes that 1,526 days have passed since the last FAA bill expired.

And don’t even get me started on the 14 day shutdown of the entire FAA in late July.  I’ve watched Congress do a lot of dumb things in my 26 years in this town (okay, I helped with a few of them, but in my defense, I was young and didn’t know any better). But who would have guessed (or bet $10,000) Congress would shut down the agency charged with aviation safety?  And if it hadn’t been for Transportation Secretary Ray LaHood’s shutting down construction on all the FAA tower projects, I’m convinced the shutdown would have lasted through August. I took the opportunity this past week to thank the secretary personally for his quick thinking and for taking a very loud, public stance in support of the agency.

So while I do understand that time is precious and should never be wished away, 2011 has been a frustrating, ulcer causing year with more stops and starts than a city bus route. So I am counting the days to 2012, not because I think Congress will suddenly come to their senses (though that is at the top of my list to Santa), but because I’m more than ready to see 2011 in the rear view mirror. After all, one can always hope for the future.

Airports Council International-North America (ACI-NA), which represents the owners and operators of airports throughout the United States, today commended the Department of Transportation and Federal Aviation Administration for convening today’s Flight Diversion Planning Forum.

Many of the suggestions developed by ACI-NA member airports factored prominently in the Forum’s discussion.  Airports made clear they must be empowered and more actively involved in the diversion planning process to ensure that passenger needs are to be met during irregular operations and tarmac delays. The need for better coordination and real-time information from airlines as early as possible in the diversion process was also stressed by airports.

“Improving the exchange of information and more integrated airline-airport contingency planning are important first steps and we look forward to working with airlines, DOT, FAA, Customs and Border Protection and other federal agencies to improve the system,” said Debby McElroy, ACI-NA Executive Vice President, Policy and External Affairs.

Last week in North Carolina, President Obama visited Asheville Regional Airport and called for more investment in U.S. airports. These are welcome words for business leaders in Asheville, and for those of us who have watched American airports lag in the global race to attract more business and jobs for our communities.

Solutions to our nation’s infrastructure needs often come down to two: federal action and funding.  For airports it’s somewhat different in that the U.S. government actually stands in the way of airports and local communities who want and need to finance infrastructure.

The airports of this country are held back because the federal government regulates the financial lives of airports through a Nixon-era legislative framework that pre-dates airline deregulation and has long since lost its relevance.

The largest source of funding for improvements to local airports still comes from fees directly charged at those local airports. You pay these fees, in the form of a passenger facility charge, every time you buy an airline ticket. Yet, the federal government still controls how those fees are collected and what they can be spent on.

America’s airports are not requesting a bailout or any special favors. We are simply asking for outdated, ineffective policies to be removed and for local communities to be given greater say over their own future.

As President Obama said Monday in Asheville, “There’s no reason why we should sit here and watch the best highways and the newest airports being built in China. We should be building them right here in the United States of America. Right here in North Carolina.”

We agree with the President. The federal government needs to free local airports to generate their own resources in their own communities. This will empower local leaders to plan and build aviation facilities with money that stays in the community, and is not sent to Washington.

We offer this postscript to the president’s speech: It’s time to set our airports free. Give us same tools in use all over the world and watch what we can do.

Gary London of the London Group Realty Advisors predicts that we are going to have to adjust to a “new normal” in terms of the overall economy. The historic “full employment” unemployment rate of 4 percent will likely rise to somewhere around 6 percent even after a recovery takes hold. The recent recession resulted in more than twice as many jobs lost as the previous two recessions combined. The changing demographics of the population will also have a dramatic impact on the macro economy. As the glut of baby boomers and generation-Yers age, their changing needs will significantly affect the market. London also predicts a shift in consumer behavior. The pre-recession consumption-based society we were all familiar with is likely gone for good as people’s behavior has been altered by the sheer shock of the recession.

David Dague, principal at ICF SH&E, discussed the situation from the aviation perspective. In 2010, carriers managed to control capacity and retain some pricing power. However, much of their profitability has come from an almost quadrupling of ancillary revenue over the last decade. While fuel costs have been creeping up in recent months, it has been a slow run-up which has allowed carriers to plan and adjust their capacity accordingly. Delta and United, two of the largest hub-carriers, show the largest capacity cuts in the fourth quarter of 2011, likely the result of the carriers rationalizing their hub strategies since their recent mergers with Northwest and Continental, respectively. Dague believes the changing patterns of air service of will continue, influenced by the Southwest/AirTran merger and any possible future consolidations, new aircraft creating new international air service opportunities and the continued pressure on small community air service.

The Downes Award is presented by ACI-NA to an individual who has demonstrated outstanding leadership in promoting the cause of airports and aviation throughout the local, national and worldwide communities. The award, which commemorates the three-time aviation director, is the highest honor given by ACI-NA.

As evidenced in the tribute video, Dunham has most certainly checked all of those boxes throughout his tenure in aviation engineering, management and sales.

After a career in the air force and a 10-year stint in aviation engineering and sales, Dunham was appointed Director of Aviation for Seattle-Tacoma International Airport. He then moved on to Deputy Executive Director for operations and administration of the Los Angeles Department of Airports, and finally was appointed Executive Director of Dallas/Ft. Worth International Airport.  Dunham now operates an aviation consulting and development business internationally.

Day discussed how important recent airspace redesign efforts and surface management implementation has been to Denver operations.  Stall and Roberts emphasized the opportunities that airports have to develop NextGen solutions in collaboration with the FAA and airlines.  ACI-NA continues to be very active in NextGen development and will be planning future sessions and encourages ACI-NA members and World Business Partners to join the NextGen Working Group.  Contact ACI-NA’s Chris Oswald for more information.

Airports Council International-North America (ACI-NA) President Greg Principato this morning recognized John Infanger, editorial director for Airport Business Magazine, for 25 years of service to the aviation community at the ACI-NA 20^th Annual Conference & Exhibition.

Statement of ACI-NA President Greg Principato:

“For 25 years, John Infanger has covered the airport and aviation industry with intelligence, integrity and energy.  He will, as good journalists do, ask tough questions and hold people accountable using the facts and their own words.  John is thorough and fair, laying out the facts for his readers, shedding light on complex aviation issues.  Whether you are an industry insider or lay person, you will be better informed about airports and aviation after reading John’s work.

ACI-NA is delighted to recognize and celebrate John’s quarter century of covering our industry and to wish him many, many more years of service to his many readers and admirers.”

The plaque presented to Infanger had the following inscription: “In recognition of 25 years as an aviation journalist whose articles continue to be required reading for everyone in the airport industry.”

During the “Are You Exposed” session this afternoon, Dom Nessi, Deputy Executive Director/Chief Information Officer of Los Angeles World Airports, provided compelling – and often frightening- information about how vulnerable today’s IT systems can be.  Airports are vulnerable to attacks to our network or wireless network, baggage systems and websites. Nessi noted the particular risk posed by the widespread use of USB sticks, where 10 percent are infected with a virus. I actually felt a bit vindicated when he also emphasized that smartphones aren’t so smart when it comes to malware, with the rapid roll out of new technology being too quick for current security standards, resulting in more and more breaches.

Nessi also covered an entirely new challenge for airports as they receive service from “eEnabled aircraft”, such as the Boeing 787 and Airbus 380. Emphasizing that “this is going to be a major new frontier”, he talked about the impact that an airport network being hacked could have on such sophisticated aircraft. I found it fascinating and a bit comforting that airlines operating the A380 keep a “sealed CD” so they can reload the necessary software inflight in the event of a catastrophic failure.

Michael Kalt, an attorney with San Diego based Wilson Turner Kosmo, addressed the exposure businesses face with the ever changing and expanding world of social media. When the question was posed “Can you disciple an employee because of comments made using social media?”, the answer was a definitive maybe. That is because so much depends on the individual circumstances, what is in your company policy and the applicable state as well as evolving federal law. The best defense is to stay informed and ensure your policy is up to date and reasonable. You can’t just say no, given the important role social media plays in most people’s lives.  (But not mine…)

The session was very educational in providing valuable information about cutting edge challenges airports face. Also, I learned a new term so I can better communicate with both the cool tech kids and the informed HR directors – “dooced”.   Never heard it?  Well, the Urban Dictionary defines “dooced” as to lose one’s job because of one’s website.  I can’t wait to use it the next time I play Scrabble- which I still play the old fashioned way; not on a computer!

It comes as no surprise that the North American air cargo industry is on an economic downslope despite signs of economic recovery.  While the media focuses on the attention of large cargo volume growth; if we look beyond the top tier airports, we come to realize that the picture is as bad as what the airports and consultants say.

Stated by Mike Webber, President of Webber Air Cargo and Dan Muscatello, Managing Director of Air Cargo for Landrum and Brown during the Air Cargo Committee Meeting in San Diego, the statement of free trade zone are all marketing pieces to divert attention from the reality of how bad air cargo traffic volume are.  Looking beyond the top cargo airports, those that are international gateways, Webber stated the double digit decline of cargo volume.

FedEx, UPS, and DHL, the world’s largest logistic integrators and domestic volume generator, trends supports this statement; if we look beyond the main headquarters (Memphis and Louisville), and start looking at the regional level (Dallas Fort Worth, Philadelphia, and Ontario), we notice the significant volume decline.

From a regional airport perspective beyond Miami, surrounding airports ie. Fort Lauderdale, Tampa, and Orlando declined 62 percent, 15 percent, and 50 percent, respectively.  This trend continues in all United State regions.  On the western front, Los Angeles captures a large majority of the Asian market; however, airports such as Seattle, Salt Lake City, and Portland have declines of 43 percent, 38 percent, and 33 percent respectively.

So what can we take away from this?  Myth of runway growth and aerotropolis are not key demand drivers for cargo growth.  Considering there is no such strategy as one size fits all, airports themselves need to seek innovative ways to draw forwarders and cargo freighters to operate at their airport.  Forwarders will continue to find ways to have their cargo shipped at the lowest cost, and if it means moving to truck or ocean shipping, then it will certainly come down to that.  If airport want cargo business, they will need to take a more proactive role or quite realistically sit by the hay side.

According to a joint presentation made by Matthew Cornelius of MWAA and Patrick Heck of Denver Airport, airlines look at all costs when evaluating airport cost. Route profitability analysis is a result of the analysis made by three functional departments, i.e. strategy/planning, revenue management, and finance. The airport properties group, which is the group airport managers mostly familiar with, is not included in discussions on route profitability.

In a separate presentation, Garfield Eaton of Ricondo explained the three components of airline costs at an airport. The first component is the airline rates and charges which typically include terminal rents, federal inspection fees, baggage system fees, landing fees, gate/apron fees and RON fees. The second component is the airport cost paid directly by airlines which include terminal special facility debt, terminal operating and maintenance charges, both capital and operating & maintenance charges for loading bridges, deicing costs and baggage consortium fees. The third component is what is typically being ignored – airline operating & delay costs which encompass total aircraft taxi time costs, enroute delay and gate delay costs, baggage systems and mishandled baggage cost, and passenger ticketing and bag check cost.  According to Eaton, this third component represents one of the largest airport costs to airlines. Factoring in airline operating and delay costs would allow comparison of “true” airport costs.

The Business Information Technology Committee jumped right into a “Hot Topic” session on passenger self-tagging.

Fortunately, an American Airlines representative was on hand to brief the committee on their self-tagging installation at Austin-Bergstrom International Airport.  American Airlines, in concert with the airport, opened the installation as one of three sites the TSA approved under a pilot program.  Although passenger self-tagging has been in place at many locations outside of the U.S., including Canada, this is a first for U.S. passengers.

After applying the tags, which are printed at a self-service kiosk, passengers take their bags to a counter where they are quickly scanned into the tracking system and placed on the luggage belt.  This process continues to empower passengers through self-service channels while streamlining the check-in process.

As noted above, American is one of three installations, the other being an Air Canada installation at Boston Logan and an Alaska Airlines installation in Redmond, OR.  TSA has expressed their enthusiasm for all three self-tagging trials and airports and airlines should be able to move forward with self-tagging, albeit with a minimum set of requirement, in the next six months.  The BIT Committee’s Passenger Self-Tagging/Common Bag Drop Working Group continues to track this initiative and invites any interested parties to join the group.

You won’t want to miss any of Sunday’s BIT Seminar sessions in Ballroom 6C.  Topics include enterprise asset management, cyber security, common use issues, and updates from outside of North American from ACI’s Airport IT Standing Committee.

Payment Card Industry Data Security Standard is a set of requirements for ensuring protection and security of credit cardholder data. The standard was developed by Visa International, American Express, Discover Financial Services, JCB International, and MasterCard Worldwide to facilitate the adoption of a consistent data security program on a global basis.

You might be a service provider. Do you provide a common use kiosk? Do you manage payments for any parking facilities? Do you provide systems to the airlines/merchants for their own use?

At Business Information Technology Pre-Conference Seminar the panel explored these standards and the impacts that an airport needs to consider when reviewing its credit data, retention polices and system that process credit card payment transitions.

San Jose International Airport obtained payment card compliance over a year ago, and briefed the committee on lessons learned. San Jose and Orlando echoed that compliance is not only an IT project; it must involve the executive management and various departments.  It is a continuous process of monitoring, assessments, quarterly scans and spot audits during the year.

Peter Maeder from IATA stressed the challenges airlines face with payment card standards. Airlines have their own sales channels, with airlines using outsourced websites and with the increase in ancillary services offered, payment card standards has become extremely difficult to manage data.

David Jividen with Barich concluded the session with reference to the rock band “Journey”. PCI compliance should be accepted with “Open Arms”, with a positive attitude that you “Don’t Stop Believin’ ” that you will achieve success.  “Be Good to Yourself” and begin “Just the Same Way” you would with any major project.  Assess the need, sell the cause, set the urgency, and build a plan to succeed.   Otherwise, if you ignore compliance thinking “I’ll Be Alright Without You”, you may find that “After the Fall” you must answer the question “Who’s Cryin’ Now?”

The BIT pre-conference continues tomorrow morning with sessions on Key to Successful Enterprise Asset Management and Airport Cyber Security.

Cargolux_B747-400F

Boeing’s Karen-Dix Colony noted that the new generation B787 and B747-8F—the first versions of which have just been delivered to launch customers ANA and Cargolux—will have impacts on airports, particularly with respect to aircraft parking positions.  Airbus’ Daniel Cohen-Nir discussed the status of the A350 program and made similar points with respect to the A350’s parking position requirements.  He also discussed the A380 program, noting the surprisingly good takeoff and landing performance of the aircraft.  Both presenters stressed the improved fuel efficiency, longer ranges, and reduced noise impacts associated with the new generation aircraft.

The committee’s second session focused on a topic of increasing importance in this challenging economic environment—how to make the right decision when assessing whether to maintain, rehabilitate, or rebuild existing airport facilities.  Joe Chang and Jeff Schulthess from Ricondo & Associates presented the results from their recent ACRP project on the topic while Joe Mahaz from EDI described how asset management systems can help airports make these decisions.  Sam Sleiman from Massport wrapped up the session with an airport perspective and described how Massport is using its asset management system to make rehab/replacement decisions.

Ops/Tech sessions continue this afternoon with Committee Working Group presentations, ACI-NA’s Washington Update, and the committees ever-popular Airport/World Business Partner Roundtable.  If you’re here with us in San Diego, stop by Room 6F and get technical.