AAAE Follow Up: Nextgen Everything

DALLAS — Two keynote speakers at this year’s 82nd annual Conference & Exposition hosted by the American Association of Airport Executives were Federal Aviation Administration Administrator Randy Babbitt and former American Airlines CEO Robert Crandall. Both men stressed that airports and the aviation industry are living a period of dramatic change, brought on by technology and an altered global economy. Much of this year’s event — which was noticeably more upbeat compared to the past two years — in fact echoed those two themes. Meanwhile, the FAA’s Babbitt also chastised the airlines for scheduling practices at major congested airports, cautioning that a lack of common sense could offset many of the gains to be realized from NextGen.

Comments FAA Administrator Babbitt, “One thing I see an awful lot of is that NextGen has everyone focusing on satellite navigation — everybody’s looking up. I think that misses the point entirely about NextGen. It does change surveillance and navigation, but NextGen starts on the ground and it starts on the ground at the airport.”

Despite drops in air service activity due to the economic downturn, FAA still expects overall operations to rise some 20 percent by 2020, says Babbitt. “Without NextGen technologies and procedures, without infrastructure construction and improvements, we are in for some rough road ahead,” he says. “ Even with a dozen-and-a-half new runways and extensions over the last ten years, its still not enough. We need better surface management and better tools.

“NextGen is ... going to give you the flexibility to deal with changing demand without investment in costly infrastructure, or to meet demand in locations where new pavement is not feasible. And NextGen will ensure that these changes are made in an environmentally responsible manner.”

Technology installations related to NextGen are already having a significant impact at airports on the ground, helping reduce runway incursions and improving airfield communications, says Babbitt. And, he says, NextGen isn’t just about large airports and air traffic routing — small airports will benefit as well.

Explains Babbitt, “For those of you without radar, ADS-B is going to be huge. In NextGen, ADS-B is intended to become the primary surveillance system, providing more precision than radar. ADS-B has gone online already in various regions of the country like Louisville, the Gulf, Philadelphia, and Juneau.

“As we continue to roll out ADS-B and aircraft equipage starts to increase, surface monitoring will become available for airports, controllers, and pilots even at locations that don’t have ASDE-X [airport surface detection equipment]. Obviously, where we’re headed is the business case. Once an operator can identify aircraft and obtain a location on the ramp or a runway, correct billing will be facilitated for landing and parking fees.”

Yet, cautions Babbitt, all the infrastructure investment at airfields and the corresponding implementation of NextGen technologies will not see their benefits fully realized unless the air carriers begin improved coordination at congested airports.

“New runways and modernizing the system won’t get us where we need to be unless we commit to more sensible scheduling practices. We’re seeing scheduling practices in Atlanta, Chicago, and San Francisco that are exhibits A, B, and C of what not to do.

“This is a business where cooperation needs to be the order of the day. By and large, we’re sharing the same airports and the same airspace, the same technology and the same tools. If you don’t do your part to keep the system moving, the gridlock and delays will lie squarely at your feet which is where they belong.

“This is not higher order mathematics here. We shouldn’t invest time, energy and dollars for efficiency gains and delay reductions so that a schedule can be packed beyond what the system can handle. Thats two steps forward and three steps back.

“The FAA will not sit back and be the scapegoat in the future. We truly need additional transparency to the facts behind many of our delays.

“De-peaking is the answer here. Check the departure boards at our busiest airports, and you’ll see what I’m talking about. This is a cooperative effort, and all the parties involved need to take responsibility.”

Meanwhile, at his luncheon address, Crandall — considered the father of the hub and spoke system — talked of “the inevitability of change” that will be impacting airports. “We’re taxed in the years ahead ... taxed to be fast and flexible,” he comments.

Regarding today’s airline industry, Crandall says he expects the proposed United/Continental merger to happen, and airports should prepare for it.

He sees major carriers farming out more “unprofitable routes” to smaller airlines, but cautions that “I think that the regional carriers are facing some difficulty.”

Crandall also cautions airports to make sure they are involved in all discussions related to new tarmac delay and security regulations. Have airports, local law enforcement, TSA, and the airlines all coordinated their response roles when flights are delayed on the ground and need to return to the terminal? he asks. “Have your operations people been involved in those discussions?”

He also says that the slow economic growth globally will continue to have an impact on airline and airport operations. “What will you do if airlines continue to reduce capacity?” he asks.

“I think a new normal is on the way,” says Crandall, one that won’t be economically favorable to the purchase of airline tickets.

On the subject of security, Crandall questions whether the procedures that have been put in place to screen against terrorism are adequate. He “suspects”, he relates, that a coming devastating event will cause the U.S. to take a new look at its security practices.

Like Administrator Babbitt, Crandall emphasizes the impact of NextGen on airports. “The airports need to be an active participant” for the national plan for the resulting system, he says.

Economics

The theme of change was also a major part of a conference session presented by Wall Street analysts. Comments Guy Nagahama, senior vice president of municipal securities for Jefferies & Company, “When the recession was in full bloom, the market was essentially frozen.” He says that the recent alternative minimum tax relief for airports had an “explosion” effect in loosening up money for airports.

Nagahama tells airports that despite the AMT relief, the bond market has changed and airports will need to put a greater emphasis on selling their story on Wall Street.

He also relates that the ratings agencies have essentially taken a “negative posture” on the airport segment, which again heightens the need for airports to sell their financial story.

Adds Steven Steckler, chairman of IMG Capital LLC and who was involved in the financing of the new Panama City, FL airport, “Airports are on their own when it comes to financing.

“So it’s been a little challenging to find infrastructure financing.” A privatization movement could shake that up, he adds; however, FAA’s pilot program has proven unattractive to Wall Street because of its complexity and need for airline approval.

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