Working Through the Downturn

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

“What we look at positively are credit markets that aren’t nearly as good as they were two years ago, but are dramatically better than they were six months ago.”

Kellner points out that airports in general tend to be very thoughtful and strategic planners, and take a long-term view. “From an airport’s side, the lower the cost per passenger, the more likely [airlines] are to grow there,” says Kellner. “Hubs are built around people, and capacity is built around cost.

“The tradeoff is, how do we have that long-term plan and stay consistent in our investment but at the same time always watching our cost per enplaned passenger?”

Regarding passenger facility charges (PFCs), Kellner says [the company] is opposed to an increase in PFCs, “Not because we don’t think airports need more money; we are just very worried about getting the business stabilized, because PFCs will tend to add costs.” He goes on to say he clearly believes in the need for long-term investment on the airport side, stating the challenge on PFCs is that right now there is a huge stress on the system. “Every time you increase the PFC, you are going to have the impact of either slightly reduced growth or eliminated capacity.”

Kellner asks, “Where would I be more supportive in the investment of airports?

“We need to be growing because that’s also what drives the need for new facilities; at times when we are not growing, I am going to resist anything that’s going to drop our employment levels further.”

Speaking for airports, executive director of the Minneapolis-St. Paul Metropolitan Airports Commission Jeff Hamiel says he looks at the relationship between the airlines and airports as being a public-private partnership. He says airports find themselves as hybrid organizations.

“Thus it is a requirement for us to be tough negotiators because we have to make certain that we can negotiate revenues coming into the airport to support our continued obligation,” says Hamiel.

“I believe that the tension that exists between airlines and airports is not only important, but it’s healthy and appropriate. If there was not this tension, we probably would not be doing our jobs.”

Though battle is not necessary relates Hamiel; the airlines have a different focus and purpose in their existence than the airport management team does. For example, he says, airlines focus on profitability and shareholder equity; it’s a profit driven organization.

“Airports are not. Airports are public organizations that try, I believe, to provide high quality service to their communities as to generate economic vitality for the region,” remarks Hamiel.

NextGen is all about delay reduction, says ACI-NA’s vice president of safety and technical operations Chris Oswald.

“Certainly it’s about safety as well, and it’s about access to the system; but to justify the significance of the investment that’s required by airports and by the airlines and the GA community…we really need to see some type of monetary benefit,” relates Oswald.

“That really starts with delay reduction, and associated fuel burn reductions that go along with that.”

Many of the busiest airports are located in urban environments with limited ability to expand, explains Oswald. Therefore, enhancing the efficiency of current airport ‘footprints’ is essential. Airports need to look at ways to use technology to expand; that’s really what NextGen is about, he comments; the ultimate airport goal: to accommodate current and future aviation activity safely, efficiently, and conveniently in a cost-effective and environmentally responsible way.

“Airports need NextGen solutions tailored to their unique operational environments,” says Oswald. “NextGen is not one-size fits all.”

It is however, an evolutionary program. According to Oswald, with NextGen, we will see a gradual introduction of technologies. And in terms of capacity enhancement and operational reliability, while increasing capacity in good weather is great — reducing capacity ‘losses’ in poor weather may be even better, he says.

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