A Desire to Move Forward

SAN ANTONIO — This spring 54-year old Frank R. Miller, A.A.E., was hired to head up the San Antonio airport system and oversee a $200 million terminal redevelopment program, among other projects. Recalling the interview process he experienced here he comments, “I sensed from them the desire to move forward with this project, get it done, and deal with customer service both during construction and as a long-term concern.” There are a host of projects underway at San Antonio International Airport besides the terminal, and the airport is in the midst of renegotiating its airline use and lease agreements and reassessing its other tenant leases. Comments Miller, “What I’m finding is there’s a lot to do here.”

The move to hire Miller followed an extended period of instability at the aviation director’s position, due to turnover. He explains, “What came across to me, recognizing that they hadn’t had an aviation person here at the airport in the number one position for quite some time, was that they wanted to get somebody with the experience in airports. I think the amount of construction experience I had with airports was something they were looking for as well.

“And it was clear to me during all of the various discussions and interviews I had that the city is very customer service oriented. They were very up front about wanting to know how I felt about customer service; what things I had done in the past.

“And bring in someone that had experience in basic aviation issues such as airline lease agreements and how you generate non-airline revenue to strengthen the financial position of the airport. It was a sense of let’s move forward and bring this airport along.”

San Antonio International is in the process of negotiating a new use and lease agreement with the airlines, which expires September 30. The decision was made to extend the existing lease a year in order to give staff an opportunity to really get into the negotiations with the carriers, says Miller, while waiting for the opening of the first phase of terminal development, Terminal B, which replaces the current Terminal 2.

Miller says another major focus is on non-airline revenue opportunities here. “There are some planning and development things that we’ll need to take a look at, other than the expansion program,” he explains.

“Basically, through these lease agreements we want to position the airport, to identify other leasing opportunities that can help us with our financial picture, and just to bring the staff together and let them know what my goals are for the airport.”

Central to his goals, adds Miller, is working with the community and the Chambers of Commerce in the San Antonio region, to be a core part of economic development initiatives.
“We need to look at how we can utilize Stinson Airport, which is our general aviation airport. Is there a way to move some of the current activity here over to Stinson, as a way of developing commercial opportunities here at the International Airport?,” he asks.

New terminal B
San Antonio International handles some 8.3 million passengers annually and has two terminals, 1 and 2. Upon the opening of the new Terminal B in November 2010, the existing Terminal 2 will be demolished.

A new central power plant is under construction, as is a central explosives detection screening system, which in time will service both terminals. Upon the opening of Terminal B, an assessment of Terminal 1 will be made in preparation of a total renovation, according to Miller, at which time Terminal 1 will be renamed Terminal A.

“We’re out right now with a request for proposals for Terminal B, which will come online in November,” relates Miller. “We have 12 concession areas in that terminal; three are news and gift; two specialty retail; seven are food and beverage.

“We want to look at concession opportunities that we may have in Terminal 1. We would like to come up with a plan to offer more in concessions pre-screening than what we have now.

“Then we’ll do a full evaluation of Terminal 1/A and identify exactly what we need to do, basement to roof. We’ll have a brand new terminal building — what’s our plan to bring Terminal 1/A to where it does complement what we’ll have with Terminal B?”

The new terminal will match the existing design and have eight gates. Overall, Miller terms the capital development project “very similar as far as terminal construction and basic operational conflicts that you have and how you manage an ongoing daily airport operation around the construction site, and how you try to coordinate the needs of construction with the realities of moving people around the area.”

The airport is directly accessible by Interstate 410, which too is undergoing a massive renovation.

Renegotiating leaseholds
Among the tasks ahead for Miller and his staff at the San Antonio International Airport are extending the east/west runway 1,000 feet; major drainage projects; upgrading airfield lighting; and, some taxiway extension projects that will then allow the airport to develop additional property on the airfield.

At the top of the list is renegotiating the current compensatory lease and use agreement that the city has with the air carriers. Explains Miller, “We just want the opportunity to take a look at how the rates and charges are structured. The intent is to financially position the airport to undertake certain capital projects that we would identify while being sensitive to what cost per enplanement is. That’s always the balancing act that we have to do.

“I think it will be more of a compensatory agreement.”

A trademark of San Antonio International Airport is its mix of aviation businesses, from special general aviation shops to major mod centers. And San Antonio has a long history with the U.S. Air Force, a major presence citywide.

Regarding non-airline tenants, Miller says he plans to do an evaluation of existing leases and airport policies, with a goal of standardization and increased revenue opportunities.
Says Miller, “We think there are opportunities to bring in other types of aviation activities. We are looking at the leases that we have now to make sure that we are generating the amount of revenue that we want to see from that.

“We know there’s some expansion that some tenants want to do. How can we provide that additional land for them? What is the airport willing and prepared to invest in order to create that environment where they will expand?

“I don’t think there’s been a very pro-active approach, as far as trying to market the airport for certain activities. We’ll take a look at that.

“We’re in a situation right now in which I think we need to take a look at our leasing program. Do we need to develop a new program and address issues such as how we proceed with rates and charges?

“We want to come to a standardized way of doing business. If we’re leasing bare ground, what’s that process? If we have someone here that has an investment and has a building, what’s the process for leasing the land?

“I want a leasing program where if someone comes to the airport and, regardless of the staff person they talk to, we know exactly what type of program we have and can provide that information to that prospective tenant and move forward to negotiate a lease.Not only for the international airport but for Stinson as well.”

Air service
Miller says that the new air service focus is on those cities to which there is no current non-stop service among the community’s top 20 destinations. Boston, Ft. Lauderdale, Oakland, and Seattle head up that list.

“We have some very good airlines in San Antonio,” says Miller. “What we really want to focus on is, with the airlines that we have today are there opportunities where they can step in and provide some service to fill some voids? Or, are there other airlines that aren’t serving San Antonio that we could bring in?”

Miller says that in time he expects to take a serious look at providing ground handling services for the air carriers, as a way to potentially increase service for passengers while decreasing costs to the airlines. It’s something he was giving a serious look to at Pensacola, he relates.

“I really look at it as an air service issue, and a way for the airport to maybe generate a little extra money for itself. I’ve had discussions with the airlines where I’ve told them I was in favor of doing ground handling.

“I want to look at it so that at the very least it’s break-even, with the ultimate goal of creating a positive cash flow. I think the airport has a responsibility to look at ways to continue to drive down the costs to the airlines.

“We need to start looking at what makes sense for us to provide? On the ground handling aspect, is it a way to speed up bags getting to the concourse while making it cheaper for the airlines? If you look at the European model, that’s done all the time. Are there ways that we can start to address customer service issues but at a cost that is attractive to the airlines?”