A time for great change

From airline economics to airport revenue sources, commercial aviation is changing

PITTSBURGH — While airports were convening here in September for the annual meeting of Airports Council International-North America, the merger of United and Continental was being finalized and Southwest’s proposed buyout of AirTran was announced. Both are signs of significant change occurring in the airline industry, which has signficant repercussions for U.S. airports. One thing that hadn’t changed was Capitol Hill’s inability to get long-term

FAA/industry reauthorization passed, and instead passing its 16th consecutive short-term continuing resolution. One hot topic: global integration of a new security regime.

On the subject of security ACI-NA president Greg Principato comments, “I have to give the Administration a lot of credit. After the Christmas bombing attempt, they had to move quickly. Beyond that, their entire M.O. has been that they want to collaborate; they want to harmonize. We were able to bring U.S. and global airports and arrange a meeting with Secretary Napolitano and [ACI World president] Angela Gittens in Africa in April. We have a good deal of cooperation now with DHS and their counterparts around the world with the airport community.
“The idea that we have to harmonize and be on the same page — I think that’s the right impulse. We’ll see at ICAO over the next couple of weeks whether it works or not.”

Prior to the conference, TSA Administrator John Pistole met with airports from ACI-North America and the ACI-Europe. “It was packed with discussion, questions, probing. It was an excellent way to put these things out front,” says Principato.

“There are some differences. The Europeans are under a mandate that by April 2011 to allow liquids and gels, regardless of size, to go through on certain flights. They’re struggling with how to comply with that. In the U.S. it’s more of a wait and see attitude to see if the technology will work or not.”

An overriding current that seemed to run through the show on the topic is that it is time to take a global, strategic, best practices approach toward aviation security — one that brings all stakeholders to the table.

Airports and airlines

Deborah Meehan, president and COO of SH&E, Inc., spoke candidly about the changing state of commercial aviation, and the new role airports play in the passenger travel experience.

“I believe we are far from an equilibrium,” says Meehan. “I think Southwest’s proposed acquisition of AirTran shows that people are still churning and burning, and thinking about who they are.

Meehan relates that there have been some rapid changes in the industry, and several months have passed since the industry was in the doldrums. “You feel a lot better now,” she remarks. “My message is: we are just simply not out of the woods.

“When I think about airports I think about three things: What you can do to make the passenger’s life better while at the airport; how you can generate more traffic; and how you can generate more non-aeronautical revenue so you can help your carriers serve the market.”

Carriers have been driving profitability by controlling capacity, explains Meehan. That is not what the carriers typically did in the past, she says. Meehan relates that the carriers have fought for marketshare for years; this year they decided they are not going to fight for marketshare, they’re going to fight for profitability.

“But that is coming at the expense of passenger comfort, traffic, etc.,” adds Meehan. Take Milwaukee for example — almost 20 percent growth, much of it attributed to AirTran. “Either the new Southwest decides to fight the battle against the Frontier/Republic people in Milwaukee, or they decide that it’s not strategic,” comments Meehan. “I think it could go either way.”

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