Time To Get Local

ATLANTA — Kelly Johnson, A.A.E., director at the Northwest Arkansas Regional Airport, was named the incoming chair of the American Association of Airport Executives during its recent annual meeting here.

During the event, she sat with airport business to discuss issues facing the airport industry. Following are edited excerpts ...

ab: First, what’s the news from Northwest Arkansas Regional?

Johnson: We’re really busy. We have an eleven-gate concourse under construction. We are getting ready to open it in late August, early September; 54,000-square feet; eleven loading bridges. We took advantage of the fact that the contractors weren’t real busy and got excellent bids. We’re being able to get this done without needing to build any of the capital costs into the airlines’ rates and charges. So, they’re thrilled with it.

We have a brand new beverage/news/gift program, awarded to Paradies. We have a motel RFP on the street; we have an engineering RFP on the street; and our parking contract is up this winter. It’s a big year for us.

ab: What’s the total cost of your current capital development program?

Johnson: We’re just finishing up a $40 million alternate landing surface project. We’re starting the engineering for the runway reconstruction; that’s a $30-40 million project. The terminal complex is a little over $21 million. The investment in the food/beverage program is about $2.5 million. A pretty good sized program for an airport our size right now.

The FAA lined up for $10 million for the next three years for the runway reconstruction. And the concourse is being done with entitlement funds and airport funds.

ab: What are your thoughts on the ongoing saga of FAA Reauthorization?

Johnson: I never get tired talking about it because it’s really important to everybody. The fact that we’re looking at an Airport Improvement Program at the President’s request of $2.4 billion, basically disengaging the large and medium hub airports, in lieu of giving them a PFC [passenger facility charge] increase — that’s the wrong program. This money comes from a trust fund; it’s not something we’re looking to general funds to pay for. If you don’t use the airport system, you’re not paying for the airport system.

That’s another big point for us: PFCs are local revenue. And the government should step out of the role of dictating to local communities what they need to be doing to facilitate their needs with local revenue. De-federalize as much as we can and put this back at the local level.

ab: There’s also a heightened discussion in D.C. over the possible elimination of the Essential Air Service (EAS) program. Any comment?

Johnson: EAS is really interesting for me. I have pros and cons. I personally think EAS, maybe not in this bill but in the next bill, is in trouble. When you look at the return on a cost/benefit ratio, I think it’s going to get a lot more of a deeper look going forward.

One of the first things you look at from a business perspective is access. If you cut that off there’s a result that may be disproportionate. But there are some airports that could probably graduate from the program.

It probably is time to give it a look.

ab: There are some, including FAA’s Kate Lang, who suggest it’s time to rethink U.S. airports and their role in the system. Would you agree?

Johnson: I think it’s imperative that we rethink everything aviation. I think there may be a point in the not too distant future where we see AIP go away. So we have to start taking a new look at the way we finance our capital projects; we don’t need to depend on handouts from anybody.

Something outside the box is, give the taxes back to the communities where they’re generated and let them deal with their capital. I don’t think we’ll ever get to that point because of the revenue diversion issue. We really do need those revenue protections in place; but conversely, I don’t think we can continue to count on a program, during a massive economic crisis, to be there for us for time immemorial. There will be cuts; some will be painful. We just need, as an industry, to get ahead of this.

ab: How would you characterize the impact airline consolidation is having on your market and the system?

Johnson: I understand the economies of scale through consolidation and it can make sense. We actually wrote letters in favor of the Northwest/Delta merger, even though it cost my airport money because it gave up space.

The one thing we are concerned about is pricing. We’re in a primarily business market, even though a small market; a small hub. A premium on the business air passenger is charged routinely. It’s a concern for us.

ab: As we rethink airports, does privatization have a role?

Johnson: I think the private sector has an opportunity to play a large role. Privatization may well be in our future; much more aggressively than we’ve seen in the past. Communities don’t have the money to step up and pay the capital.

It’s going to be interesting to see what happens to the Branson airport and how that plays out. Cities are sitting on assets while trying to take care of their retirement obligations; I won’t be the least bit surprised to see more communities trying to spin off that aviation asset.

If they completely sold that asset it would be a whole separate kettle of fish.

ab: It sounds as though funding is hot on your radar.

Johnson: It’s at the top of my list. We have to come up with new and creative ways to come up with those revenues. And also coming up with new partnering opportunities; I think more public/private opportunities are going to be in our future. Otherwise, we’re not going to be able to get the job done.

ab: Where’s your barometer when it comes to TSA and security?

Johnson: My favorite subject. The Pistole administration understands that they need to have a more collaborative relationship; they can’t be so dictatorial. When they come up with a mandate, there is a cost associated with that mandate. That recognition has to be there. I think we’re seeing more opening to talk about these things.

I think technology is something TSA needs to continue to put in the forefront.

We can’t continue to treat every passenger as though they are the bad guy. Be vetted and be done with it. I don’t want to be patted down in front of my staff and it’s happened. I had the privilege of being on the no-fly list for a few months. Kelly Johnson is a very common name.

ab: A group of managers recently formed a new association for general aviation airports. Do you have any thoughts on that initiative?

Johnson: GA certainly makes up the largest number of airports in the system and are very important to us. It’s going to be difficult to generate any revenues [for the association] to have a substantial impact on the Hill. And it brings to life that we as an organization can be more attentive to the GA community.

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