The first session Thursday highlights the current airport insurance market and its emerging trends of domestic liability, property, and professional coverage/employment practices liability.

John Geisen, Senior Vice President, AON Risk Services Central Inc., provided a review of the aerospace insurance market with a focus on airport market capacity and the outlook for 2012. The airport and air traffic control sectors ended 2011 with a 7 percent premium reduction much as they did in the past three years. This continued softening is driven by surplus capacity. Geisen is predicting that 2011 could be the bottom and prices in the sector might start to rise if passenger numbers recover but all evidence suggests a flat 2012.

On the property market, Richard Terlecki, Area Senior Vice President, Arthur J. Gallagher Risk Management Services, delivered some bad news. There were 12 losses that exceeded $1 billion in 2011 with a total of $70 billion catastrophe losses in just the first half which was the second worst in history. On top of the losses, interest rates are at historic low which translates to low investment returns. All this means that insurers are being forced to reassess exposures which would lead to reduced capacity on the property side.

In contrast to the liability market, there is relatively limited underwriting capacity for public officials’ liability, according to Simon P. R. Hodge, Managing Director of Wells Fargo. Finite number of insurance carriers restricts competition with pricing and terms driven by broader Directors & Officers and Errors & Omissions insurance markets. There remain significant opportunities, however, to enhance coverage quality.

Granted that your airport does purchase business interruption coverage, the first thing all three speakers mentioned was read your policy.  As a number one rule of risk managers, never assume; read the fine prints – know the definitions as they may be defined differently in your policy.  Swift mentioned, know your return time objective – understand when you need to have your business back up and running, and build your strategy in accordance to it.  Additionally, know the return point objective – how much data can you afford to lose before the point of no return.

Do you have property insurance that goes with your business interruption coverage?  Well even so, there are many points to consider.  If you have water damage coverage for your property, does that coverage cover mold damages as well – know the exclusions of the coverage and once again read your policy.  For your equipment, are they all covered or just the high value dollar items?  As a risk manager purchasing such coverage, do consider that every small dollar value item not on the balance sheet can add up exponentially.

As mentioned by Gardner, for a business interruption claims, talk to your insurers, your assessors, and peers right away.  Understand the situation that you are in.  Document, document, document as there will be large discussions amongst the risk managers and the Insurers of what the income loss is as a result of business interruption; the documentations will come in handy.  Lastly, if you need help, hire or ask for help.  Include additional professional fee in your business interruption coverage to ensure you can hire help when you need it.  Nothing is worse than to be in a troubled situation where you lack the knowledge or experience, and you have no resources to go to.  The risk managers and all the risk professionals here at the Risk Management Conference are here to help.

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!

Bannard also highlighted the urgent need for legislative remedies that will enable airports to limit the disclosure of the data and protect those involved from excessive liability exposure.  ACI-NA has been actively pursuing such legislation in Washington.

Airports Council International – North America’s (ACI-NA) Commissioners’ Committee accepted the Scholarship Review Committee’s recommendation to award scholarships of $2,500 each to two aviation students, at the ACI-NA Commissioners’ Committee meeting in San Diego, California. Recipients include Cameron McGillicuddy, a student at Western Michigan University’s College of Aviation in Battle Creek, Michigan and Andrew Roybal, a student at the University of North Dakota in Grand Forks, North Dakota.

“The Commissioners’ Committee is proud to honor these students for their academic excellence and leadership,” said Jim Trout, Chair of ACI-NA’s Commissioners’ Committee and Commissioner of the Flathead Municipal Airport Authority. “This scholarship program recognizes the importance of the highly specialized education necessary to fill the multi-disciplined role of being a professional airport administrator or airport operator. We felt that these two dedicated students represent the future of the aviation industry, and the Committee is confident that they will provide a positive influence throughout their careers.”

The Commissioners’ Committee Scholarship is designed to encourage and promote excellence in the educational areas necessary for effective airport management or operation. The ACI-NA Commissioners’ Committee has awarded more than 40 scholarships totaling $120,000 to students within the past 18 years.

ACI-NA Commissioners established the Scholarship Fund in October 1993 to recognize students with high academic achievement who are working toward a career in airport management or airport operations. The scholarship program recognizes the importance of the highly specialized education necessary for an individual to receive to fill the extremely complex and multi-disciplined role of being a professional airport administrator or airport operator.

To effectively run today’s modern aviation facilities an airport manager or airport operator must have high levels of management, operational and accounting skills coupled with some aviation experience.

Details on the Fall 2011 scholarship winners follow:

Cameron McGillicuddy attends Western Michigan’s College of Aviation and is pursuing a Bachelor’s of Science in Aviation Science and Administration, as well as a Minor in Communications. McGillicuddy interns at Kalamazoo/Battle Creek International Airport and has helped with the airport’s harmonization effort as they transferred terminals earlier this year. He has also volunteered with Air Traffic Controllers at Gerald R. Ford International Airport. McGillicuddy’s ultimate career goals include, being in a challenging aviation position where he can make a difference and remain involved beyond the requirements of a nine-to-five position.

Andrew Roybal is a student at the University of North Dakota where he is pursuing a combined B.B.A. / M.B.A. degree in Airport Management. Roybal aspires to one day manage a major airport and is barreling full steam ahead towards that goal. He is a native of Denver, Colorado and is very interested in working at Denver International Airport, citing its uniqueness in airport size and ownership structure as a great challenge and opportunity for an aspiring airport director.

According to Smelkinson, equity market continues to exhibit high volatility and U.S. Treasury continues to be safe heaven not withstanding ratings downgrade of U.S. credit rating. Opinions differ as to whether the U.S. economy is heading for “double dip” or “soft landing.” Since 2008, corporate, household and bank balance sheets have grown stronger.

The municipal bond market sees reduction in new issue money by 34 percent to date this year. New money issuance represents 50 percent as opposed to last year’s 64 percent. Interest rate remains low at last year’s comparable level. Tax-exempt bond markets have been extremely volatile. Cheapness of municipal bond has led some issuers to use taxable rather than tax-exempt bonds as lower cost alternatives. Outflows from municipal bond funds have moderated and funds across all segments see inflow. Tax-exempt credit spreads have remained constant over the last year. Tax-exempt yield curve has flattened in the long-end of the curve. Medium term funds are now the focus and see significant inflow as investors look for higher yields.

Jason Simmons updated the audience on the airport bond market. Issuance spiked in 2010 driven by low interest rates and the AMT holiday and 2011 has seen issuance fall to the lowest level in several years. 2010 issuance was spread among the three most common rating categories, i.e. Aa3, A1, and A2, while issuance in 2011 was primarily in A1 category. 2010 issuance was primarily new money as many airports issued debt to take advantage of the low interest rate environment and the AMT holiday. 2011 issuance has been dominated by refunding activity with new money issuance comprised primarily of $1 billion for Chicago O’Hare. 2010 issuance was primarily not subject to AMT due to the AMT holiday whereas 2011 issuance has mostly been AMT, with the majority of the Non-AMT issued by Chicago O’Hare.

“A meeting of the minds”

“You learn something new every day”

“Change is good”

“Many hands make light work” …

I could go on but I think you get the point.  These familiar idioms are just some that come to mind when describing the joint sessions of the Operations and Technical Affairs and Environmental Affairs Committees this afternoon. After a day and a half of meeting separately, our groups got the chance to come together today and discuss issues of mutual concern, view these topics from a different perspective, and encourage communication and cooperation between the two groups.  Environmental affairs and operations professionals aren’t necessarily focused on the same set of priorities on a daily basis.  But there is a lot of overlap, and it really shows in our members’ enthusiasm for these joint sessions.

The first joint session focused on Airport Sustainability and featured speakers from both committees.  Sustainability is not just the purview of environmental managers. Airport planners, maintenance, and operations professionals are integral to implementing sustainability practices and environmental management systems.  You can’t put in solar panels on the roof of an airport parking garage or terminal without the close coordination between environmental managers and operations and planning experts.

In our second joint session, Ops/Tech Chairman Sam Sleiman (MassPort) moderated a diverse panel of environmental committee members, Willis Reinsurance, Corps of Engineers and ACI-World staff.  Despite viewing climate change risks and adaptation through different lenses, they all had one thing in common: a desire to protect airports from climate change risks.

Kicking off the panel, Sleiman admitted that he used to be a climate change skeptic, but now believes “climate change is the greatest challenge of our generation”.   He pointed out the tremendous potential impacts of climate change on airports, which will affect both coastal and land-locked airports, including sea-level rise, extreme weather events, water and fuel shortages and growth restrictions to name a few.  Thinking about all these potential challenges, it is more important than ever to break down organizational silos and work together in order meet these challenges head-on and protect our industry.  After all, there is no ‘I’ in ‘team’, and if all else fails, having a team is essential so you can blame ‘the other guy’!

To kick the weekend off nearly 170 Commissioners and ACI-NA Board Members gathered yesterday evening, at the University Club in downtown San Diego, for the annual Board and Commissioners Diner.  A big THANK YOU to Austin Commercial, Republic Parking System, RS&H and CH2MHill for sponsoring last night’s dinner.  The Commissioners were especially delighted to have Robert Gleason, Board Chair of the San Diego County Regional Airport Authority, in attendance to welcome attendees.

In addition to last night’s dinner, this morning the Commissioners Committee elected Herb Hilliard, Memphis Shelby County Airport Authority, as the 2011-2012 ACI-NA Commissioners Committee Chair.  Also elected to the Executive Committee were Sylvia Stewart, Vice-Chair, Jackson Municipal Airport Authority; Doug Smith, Second Vice-Chair, Greenville/Spartanburg Airport Commission; Shirley James, Treasurer, Savannah Airport Commission; and Christine Stoneman, At-Large, Victoria Airport Authority.  Congratulations to these new Executive Committee members.

Additionally, the Commissioners Committee unanimously accepted the Scholarship Review Committee’s recommendation to award scholarships of $2,500 each to two aviation collegiate students. Recipients include Cameron McGillicuddy, a student at Western Michigan University’s College of Aviation in Battle Creek and Andrew Roybal, a student at the University of North Dakota in Grand Forks. The Commissioners’ Committee is proud to honor these students for their academic excellence and leadership. These dedicated students represent the future of the aviation industry, and the Committee is confident that they will provide a positive influence throughout their careers.

Finally the Commissioners Committee reflected on the recent passing of Committee Vice-Chair, Charlie Lombardo.  In Charlie’s memory, a 60 second moment of silence was observed during this morning’s Committee meeting.  Charlie was an incredible advocate for the Bob Hobe Airport and served as both a Commissioner and Board Chair, representing the city of Burbank, for the Burbank/Glendale/Pasadena Airport Authority for nearly 13 years. Charlie was also an instrumental member of the ACI-NA Commissioners Committee and Executive Committee leadership team.

ACRP staffer Marci Greenberger provided an overview of ongoing, recently completed, and new ACRP projects, highlighting the heavy emphasis of the 2012 program on airport operations and maintenance topics, many of which are of particular interest to the Committee.  She also highlighted several recently completed ACRP reports, including Report 51, Risk Assessment Method to Support Modification of Airfield Separation Standards and Report 52, Wayfinding and Signing Guidelines for Airport Terminals and Landside.  Both reports provide excellent guidance to airports, the FAA, and other stakeholders.  (These reports as well as information regarding ongoing and proposed ACRP projects are available on ACRP’s website–http://www.trb.org/ACRP/ACRP.aspx. ACRP reports are now posted to the ACI-NA website on the day of their publication.)

Bill Dunlay, Pam Keidel-Adams, and Jim Harding then provide briefings on specific ACRP projects.  Bill and Pam discussed ongoing Project 03-17, in which they are developing updated airfield capacity modeling methods and guidance; Jim discussed the aforementioned Report 52.

Presentations from the session will be posted to ACI-NA’s website when we return from San Diego.

ACI-NA’s Chris Oswald and Channon Hanna provided updated the committee on ACI-NA recent staff activities including the extensive comments ACI-NA filed regarding FAA Safety Management System rules and implementation guidance and our efforts to redefine the way airport capital improvement projects are funded.  Oswald also discussed parallel activities that are underway within the Canadian Airports Council’s Operations, Safety, and Technical Affairs and Planning, Development & Infrastructure committees and within ACI World’s Safety & Technical Standing Committee.

Representatives from the Ops/Tech’s five Working Groups—Safety & Operations, Maintenance & Facilities, Construction & Project Delivery, Airport Planning, and NextGen—were also on hand to discuss their recent activities, work plans for 2012, and need for passionate volunteers.  (By the way, if you’re interested in joining one or more of these Working Groups, please contact me at coswald@aci-na.org).  In these discussions, the Construction & Project Delivery Working Group announced that its updated Guidebook for Airport Project Delivery Systems will be released in November (stay tuned to ACI-NA’s website for more information) and the Airport Planning Working Group provided an overview of their upcoming Airport Planning & NEPA Workshop which will be taking place from Dec.r 5-7 in Atlanta. It’s a great workshop.

We capped off the day with our always popular Airport/World Business Partner Roundtable, where airports and the consulting community share their recent experiences, and innovative solutions to planning, capital development, operations, and maintenance challenges.

See everyone tomorrow for more good sessions, including a half-day of joint sessions with the Environmental Affairs Committee.

Our panelists:

• Francine Kerner, Chief Counsel, Transportation Security Administration, a frequent guest speaker at ACI-NA’s Legal Committee meetings;
• Joanne M. Halley Office of Associate Chief Counsel, U.S. Customs and Border Protection, Los Angeles Office;
• Professor Chris Guzelian, who teaches Constitutional Law at Thomas Jefferson School of Law in San Diego.

The title of the session is fairly comprehensive in explaining what the panelists will be discussing. In addition to a discussion of these issues from a TSA security checkpoint perspective, we will also have the opportunity to compare and contrast how Customs and Border Protection operations addresses these issues. We will also have an academic perspective on Constitutional rights of privacy concerning airport security.

In all seriousness, today has been an exciting day with a lot of great information shared between our members and presenters.  One of the perennial favorites is the information sharing session, which is an open discussion forum for members to talk about current projects at their airports, share best practices, and offer advice (or sympathy) to colleagues facing the varied environmental challenges in this industry. Typically topics raised in this session turn into full panel discussions at our next conference.

Another great session today was the presentation by Chris Straub from Argus Consulting on airport fuel hydrant systems.  With my limited knowledge of fuel hydrant systems, I found this session to be very educational regarding the engineering involved in building and maintaining hydrant systems as well as the applicable federal regulations.

The bottom line as far as hydrant systems go is to get educated on the type of fueling system your airport has, the location of the infrastructure (to avoid damaging the underground components during construction projects), and potential regulatory requirements coming down the, well theoretical pipeline!  If you would like to learn more about hydrant systems, or any other topic discussed at the Environmental Affairs pre-conference seminar, please visit our website to view speakers’ presentations which will be posted by the end of next week.

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.