One on One: Mike Boyd

Michael Boyd, president of Boyd Group International based in Evergreen, CO is well known for his brash analytical approach to airline and airport issues. He was one of the first to foresee the onslaught of regional jets into the U.S. market, and one of the first to predict their retrenching in a volatile oil market. He is often critical of the Federal Aviation Administration, notably its pursuit of the NextGen air traffic control modernization program. AIRPORT BUSINESS recently discussed an array of issues with Boyd, at a time when the U.S. Congress was passing its economic stimulus package.

Boyd Group International offers consulting services to airports, airlines, aircraft manufacturers and financial institutions. Boyd’s personal background includes positions with American Airlines, Braniff International, Bar Harbor Airlines, and start-up American International Airways.

Following are edited excerpts of our recent interview ...

AIRPORT BUSINESS: It would seem that your company’s services are in demand these days, particularly in helping airports with air service development.

Boyd: It’s worked out that way. It’s amazing where [airline] cuts are coming and cuts are not coming.

Knock on wood, but this recession thing is doing good for us. We are just buried and that’s good, and we want to stay that way.

AB: Much of the U.S. approach to aviation centers around system planning. Yet, one has to ask, how do you plan a system when we have economic chaos and volatility in the oil market?

Boyd: If we’re talking about infrastructure planning, there’s nothing on the horizon. Everybody is worshipping NextGen; when you look at it, NextGen is OldGen. It’s not going to fix the problem; it’s the wrong direction to go. It’s just computerizing old technology.

So, we have that to deal with, and we have a new Secretary of Transportation who doesn’t know anything about transportation, so we’ll have more of the same. From that perspective, we don’t have any long-term plan.

Then you have the issue of airports. I think what organizations like ACI and AAAE need to do is a major mailing campaign to every airline executive — just a postcard that says, ‘Reminder: Airports cost money.’ And that means we’re going to have spend some money keeping up the infrastructure we have now, which is not being done.

AB: What are your thoughts on the Congressional stimulus package?

Boyd: Now, I looked at the stimulus package as much as anyone else and the problem you’ve got is that none of it is going to encourage air travel. None of it is really going to go to improving our airport and airway infrastructure like we need to. And none of it is going to fix the lack of direction we have. So, bottom line, I think the stimulus package is over here, our current problems are over there, and never the twain will meet.

AB: Much is being made of the stimulus bill providing $1-3 billion for aviation infrastructure. Yet, on the surface it appears that it’s all semantics, because that’s money that would have been in the Airport Improvement Program anyway. True?

Boyd: Exactly; and $3 billion — hell, you spend almost double that building one airport. The $3 billion isn’t going to go a whole lot of places. How do you use it? Where do you use it? Obviously, it’s needed; no one is going to argue that. There really isn’t a plan for it.

AB: What do you think of the current way investment priorities are set via the National Plan of Integrated Airport Systems (NPIAS)? Is there a better way?

Boyd: I can’t think of a better one, to be honest. I don’t think it’s perfect. We’ve looked at it. Like discretionary funding — it’s a disgusting program. It’s a disgusting system in which we have to go beg, and your Congressman is bigger than mine.

I’ve looked at it and I can’t find something better. The problem is that the funding mechanism is herky-jerk. Actually, Amtrak is more sure of its funding that aviation is. Amtrak gets its money so we can rumble empty passenger trains through the Dakotas late at night, running late anyway.

As far as funding goes and how it is dispersed I don’t have a better way than how we’re doing it now. You have to look at everything; you can’t just allocate money to airports equally around the country because it will be wasted then. You have to allocate scarce dollars based upon need, and the need has to be demonstrated. And demonstrating the need means you have to crawl to Congress.

AB: As you talk with airports, are you finding that there are specific needs or concerns that aren’t being addressed — for example, do they see a need to expand the Essential Air Service (EAS) program?

Boyd: The intent of EAS is valid; the application of EAS is an embarrassment. We have legitimate places where essential air service funds are being used — for example, Joplin, MO, which is rebuilding air service. Or Wolf Point, MT, where you can’t get there from here unless you have EAS. The problem is that EAS is pork.

Another thing is that most places losing services are EAS points where DOT can’t find an operator who wants to fly it. The real issue here is, a lot of these EAS points shouldn’t be.

Pueblo, CO — you can drive 45 minutes to Colorado Springs. Why are we wasting money supporting airplanes there, that nobody gets on anyway?

AB: As you know, privatization has not made a strong foothold in the U.S. airport market. However, Branson, MO is getting ready to open a privately funded commercial airport this year. Do you see a growing role for private dollars at airports in the future?

Boyd: Great idea; anybody who wants to spend a couple hundred million dollars building anything — that’s economic impact; that’s jobs. It’s great.

Now, will that turn [Branson] into the low-fare capital of Missouri? Not on a bet. They haven’t announced, nor should they, what compensation AirTran is going to get for flying there. But I endorse building stuff like that; it doesn’t mean it’s going to be economically viable.

Keep in mind, Atlantic City, which is really Vegas of the East, has a hard time convincing airlines to fly there. There aren’t a lot of people on the East or West Coasts who want to fly to Branson to hear country & western music.

AB: But regarding the concept, do you foresee a greater role for private money at U.S. airports?

Boyd: Well, let’s split the two. Somebody building an airport from scratch with private dollars, I don’t see that going anywhere. But situations like selling off airports to BAA or Ferrovial or Macquarie, there might be some future in that. You can make the argument that we shouldn’t have that infrastructure in private hands. But take a look at how efficiently some publicly run airports have been managed — anybody could do a better job.

Monetizing infrastructure is a trend or a buzzword in a lot of states — monetizing the Henry Hudson Parkway; Midway Airport.

AB: Midway is an interesting deal in that it is a very constrained airport with no room for new growth. How do the private investors get a return on their up-front investment?

Boyd: Southwest is the dominant entity there. Southwest is not going to grow it because they can’t grow it too much further. So how do you get the money to keep it running and fix the leaky roofs? You’ve got to raise rates.

If it’s done properly and it’s completely privatized in terms of the management, that’s a lot of downtown jobs they’re not going to be able to give away every election time.

It is going to be interesting because that’s not a growth airport — it’s a mile square in the middle of Archie Bunker’s neighborhood, and that’s the good news.

AB: Regarding the merger of Delta and Northwest, there is concern that it will have an impact on gates at various airports and on rates and charges. Atlanta is currently getting resistance from Delta on its lease renegotiations. Your thoughts?

Boyd: Delta would be taking the same position with or without the merger as far as Atlanta goes. You’re supposed to fight. This is the normal saber-rattling that goes on. It’s the give and take across the table. I’m not worried about that.

The problem with mergers is it takes away, in this case, one brand. But that brand has been gone because the two carriers have code-shared for years. And there’s virtually no overlap to speak of.

AB: As a major critic of FAA’s NextGen ATC modernization plan, what do you see as the answer?

Boyd: I think we have to take a whole new approach. We’ve just started revising our 1994 study on free flight — real free flight, which is a whole new technology. You can use all the sky, instead of the 4 or 5 percent we use today.

The problem I have with Nextgen is it’s a fraud … it is not on time or on budget. It’s a lie. All they’ve done is reschedule it.

What we need is a complete free flight system where every airplane takes a trajectory that it needs to take based upon winds, the strategy of the airline, load, and all the rest of those things. Use all the sky; it can be done with the same controllers we have now. It’s a system we have to pursue. What we’re pursuing now isn’t going to work; unfortunately,
we have Congress and consumer gadflies all talking about how we must fund NextGen. They wouldn’t know NextGen from the new menu at Taco Bell.

AB: Then there’s the topic of slot auctions at New York’s airports, which just about everybody in the industry seems to oppose. Bad idea?

Boyd: It’s truly showing once again how inept the DOT was under George Bush. How do you do slot auctions, and that’s going to increase competition? How do you do slot auctions at Newark and say it’s going to help the consumer, when it takes the one hub you have there and makes it weaker? How are you going to sell slots to people and say that’s going to reduce delays, when the real delays have nothing to do with the airlines themselves?

Mary Peters was a very nice person; she rides motorcycles; she’s a cool lady and all that. But she shouldn’t have been in that job.

The slot auctions were something somebody dreamed up and the airlines are right — it wouldn’t have done anything except mess things up.

It’s my hope Secretary [Ray] LaHood has a more enlightened approach to it. The problem is LaHood doesn’t have a lot of aviation background. He’ll take his cues from the people at the top in the DOT. He has to, and that’s not good.

AB: The Chicago press has suggested that Mayor Daley may be the beneficiary of stimulus package dollars because of President Obama’s ties to the city; in particular, for the O’Hare Modernization Program. Do you think that’s valid?

Boyd: I think that would absolutely be the case. How he pumps it — there’s back door, side doors, and the front door — he’ll use all of them. But that’s his political base; I’m not necessarily saying it’s wrong. O’Hare is an important entity for not only Chicago but for American and United.

He could also pump some money into that wasted concept of Peotone, which is a giant jobs project; you’ve got [Rep.] Jesse Jackson, Jr. behind it, and Obama is in the White House. We may see money wanted thrown in that direction over the next couple of years.

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