Working Through the Downturn

Airports meet in Austin after a year of unprecedented challenges to business models

AUSTIN — At this year’s 18th annual Conference & Exhibition hosted here by Airports Council International-North America, many had anticipated that Congress would have passed a long-term FAA/system reauthorization bill, thereby offering industry some direction. It hadn’t; yet, ACI-NA president Greg Principato relates that he sees a better than 50/50 chance that a final bill will come out of Capitol Hill by year-end. Meanwhile, other top items on the ACI-NA agenda included the ongoing airport/airline relationship; emerging technologies for airport operations; and, a progress report on the implementation of the NextGen air traffic control system.

Host city mayor Lee Leffingwell welcomed this year’s attendees by relating a few of Austin’s recent recognitions: ranked Austin number one on its list of top cities for a fresh start earlier this year; listed Austin as one of the best cities for a recession recovery; and the U.S. Bureau of Labor Statistics recently ranked Austin as the top U.S. city for job growth.

ACI World’s director general Angela Gittens followed Leffingwell’s remarks at the event’s opening session by giving recognition to Austin-Bergstrom Airport as the first airport in North America to receive the association’s Airport Service Quality (ASQ) Assured certificate. The ASQ Assured program benchmarks an airport’s service quality management system and the airport’s approach to industry best practice.

“Assessor’s found a new benchmark for excellence at Austin,” says Gittens. “In the 2008 ASQ survey of passenger satisfaction, Austin ranked in the top three in both the North American region and worldwide in their category of five to 15 million passenger airports.”

“There is no doubt that 2009 has been one of the most challenging times in aviation,” comments ACI-NA’s incoming chairman Hardy Acree, who is director of the Sacramento County Airport System.

“A number of services previously provided by airlines now fall to the airports. Gone are the good ol’ days when airports were just facilities.

“The need to ensure passenger safety and security is critical; and there is no compromising in neither of those areas.”

As airports struggle to provide passenger amenities and quality customer service while working through the economic crisis that has challenged many business models, Acree reminds that aviation is a source of civic and national pride bringing people and businesses together around the globe.

“Airports are critical to local communities as economic engines promoting business development, creating employment opportunities, generating local taxes, and promoting quality of life,” he remarks.

Yet, he also notes that the challenges airports face are many: the global recession has dampened the demand for air travel worldwide; international visitation to the U.S. and other markets has dropped dramatically; and it’s estimated that airlines worldwide will lose $9 billion for 2009.

“It is important to emphasize that throughout these difficult economic times, airports continue to maintain the highest level of passenger safety, security, and efficiency in operations,” says Acree.

“But in this current economy, we must prepare for the eventual return of traffic; and airports must take a long-term view by planning and maintaining capital programs to accommodate future growth.”

Airlines and airports:A tense dynamic
From an airline perspective, Continental chairman and CEO Larry Kellner says, “If you look at the economy today, we’re kind of bumping along the bottom. I’m worried that we could go deeper, but right now we seem to be seeing some stability.” Taking capacity out of the system has also helped work through the downturn, relates Kellner.

With regard to the financing markets, he comments, “We have seen a lot of healing there; in June the aircraft financing markets opened … what you find is that you can borrow a little less, so you get a lower loan to value rate, and the interest rate is a little higher.

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