AAAE Follow Up: Nextgen Everything

“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.