BOSTON — John D. Clarke III, A.A.E., director and CEO of the Jacksonville Aviation Authority, is a man who likes to uncover new ideas — and develop them. Named the incoming chair of Airports Council International - North America at this year’s annual event held here, Clark sees the air service crisis doing to airports what the meteoric rise in fuel prices have done to the airlines; that is, force U.S. airports to rethink their business model. He also says the U.S. could work more in unison with its ACI-NA partner, Canada. At Jacksonville, they’re looking into a unique airport contracting arrangement with the private sector, while pursuing a spaceport at Cecil Field, just one component of a massive development effort there. His is not an airport system that is sitting idly by.
Clark has worked at airports in Detroit, Sacramento, and Fresno, and currently oversees Jacksonville International and GA relievers Craig, Herlong, and Cecil Field. The latter is the former Cecil Naval Air Station.
During the ACI-NA event, Clark sat with AIRPORT BUSINESS to discuss his airport and issues facing the marketplace. Here is an edited transcript ...
AIRPORT BUSINESS: How is your air service holding up?
Clark: Like many airports in the U.S. we are experiencing a reduction in capacity, somewhere around 9.5 percent. That seems to be holding throughout the year, looking at the projections. Passenger-wise, we will probably end the year 2 percent down. That just really means higher load factors.
AB: At JIA you’ve been busy on terminal redevelopment.
Clark: We’ve opened up the brand new Concourse A; the old Concourse A has been torn down. We opened one side of the new A in May; we had to do the demolition and finish the apron work, and that will all be finished by November 1. And at that time, a new C will open. We will then actually close B and rebuild the ramp area.
AB: Basically, you’re rebuilding the airport.
Clark: We are, piece by piece.
The good news about the timing of it is, because there’s been a shrinkage in the passenger traffic and the capacity, it allows us to close B and tear it down. By closing it down we will save on operating costs – somewhere between $300,000 and a half million dollars a year. That’s a direct benefit to the airlines as well, because they won’t have to pay for it.
AB: While it’s hard to predict what’s going to happen with FAA reauthorization at this point due to the election, how optimistic are you that an increase in the passenger facility fee cap will happen?
Clark: I think once we get to a bill that we’ll see it. The trick is getting to a bill.
I probably differ with my colleagues in this respect: It’s very hard to say that you want the freedom to run your airports and to make financial decisions and to control your environment on the one hand, but on the other hand you’re saying I need your financial support to make this work.
I’m not familiar with any scenarios where, when you are receiving funds, that you can really expect to be independent. If it were left up to me, my bigger push would be to see funding put in place for the NextGen air traffic system. I think that airports do have enough entrepreneurialism to be able to figure out how to manage costs and create revenue opportunity.
Like the high fuel prices are going to force financial discipline to the airlines, the lack of federal funding will force a certain level of discipline to airports. The long-term growth is going to be in our ability to manage air traffic; we’ve got to really figure that one out.
AB: In talking with ACI-NA president Greg Principato, he suggests that you’re a good person to have coming in as chair because you like to explore new ideas, new challenges.
Clark: One of the things that I’ve done is to travel literally around the world to get better ideas. Outside of the United States, especially in Europe, they really capitalize on the commercial activities and opportunities. We don’t want to create a commercial clutter in our airport, but we think we have the opportunity to enhance the non-aviation revenues by increasing the value and opportunity in our retail. But we’re not going to just jump into it.
When you look at some of these other airports – the BAAs, the Macquaries, the Fraports – they have done a very good job in capturing the commercial opportunities within an airport. The challenge is to not put so much in that you begin to cannibalize.
Toward that end, we are exploring the possibilities of taking the operations of Jacksonville International Airport and creating a 25-year master concessionaire operation, where we would allow a private company to come in and manage that airport. It would be a way of speeding up the process and immediately importing the expertise to do it.
AB: You’re talking about concessions?
Clark: I’m talking about everything except for airfield operations. It’s not privatization; but it is trying to figure out if we can get a balance between what the private sector seems to do better than what we can do. At the same time, we have to maintain control of the environment. We don’t want to give up any ownership.
It would be a master lease agreement. They would do the airline negotiations; we would be the body above that would approve. The private sector would do the capital investments; take over the operation of the terminal; the parking garages; the hotels; the ground transportation.
AB: Is it basically contract management?
Clark: The difference between this and contract management is that we would not pay them to do it. They would in fact pay us. Just like a concessionaire in the terminal would pay a percentage.
We’re exploring how that works. The board has put together an ad hoc committee to do all the due diligence.
AB: You had a relationship with Fraport at one point. Is it ongoing?
Clark: Correct. We haven’t done any revenue or enterprising ventures recently, but we still do a management exchange program. They’ve come over and discussed with us the concession model; we’ve visited with Macquarie; with FAA.
It’s not a Pittsburgh/BAA; it’s not an Indianapolis management agreement. It’s taking the best of all of those models and blending them so that we maintain the sponsorship of the airport, the overall regulatory responsibility; but we allow the day-to-day operational aspects to be undertaken by a private company.
Two things we see in that: One is, it would produce cash into the airport system, which we can then put into Cecil Field, which we acquired in 1999 through BRAC. That’s been a big focus — how we can put the necessary infrastructure in place at Cecil Field to really realize the potential of that airport.
AB: And that includes a spaceport?
Clark: We hope to get our license in December. We have gone through the environmental assessment process; we’ve gone through the cost/benefit analysis; so we’re hoping we’ll see an approval from FAA in December; the latest, January.
We recently announced that Alenia, a subsidiary of Finmecannica, will build the C-27J aircraft at Cecil Field. [Alenia North America is a unit of Italian defense contractor Finmecannica SpA.] We also completed an overall development plan which includes non-aviation and aeronautical development. We did a solicitation and have three developing companies that have responded.
AB: A theme at this year’s ACI has been that, long term, growth is expected in the global airline industry. The message is, don’t abandon your capital programs.
Clark: While I fundamentally believe that we will see a time when passenger traffic will grow again, I can’t say when that will be and what it will look like. There is something to be said for being somewhat patient because the capital program that you have in place was based on a set of circumstances that are very different than they are today. My position would be, this probably would be a good time to take a timeout and reassess where you need to be. That’s the position we’ve taken.
We really don’t know where this thing is going to shake out. I would proceed with some level of caution.
