The Southwest Perspective

A candid Bob Montgomery on air service, airport finances, privatization, and more.

DALLAS — He’s 51 and has been working for Southwest Airlines since he started on the ramp at Lubbock, at a time when the carrier operated five airplanes. Today Bob Montgomery heads up properties out of Southwest’s headquarters, located just outside the fence at Love Field. He’s a popular speaker on the conference circuit, as much for his candor as his good ol’ boy demeanor. He’s genuine — a la the Herb Kelleher mold. And he’s got definite opinions on the airline and airport industry of 2008, about capital development, finances, privatization, and rates and charges.

Montgomery relates that he got into properties almost by happenstance in 1984 — he was the first person to hold the job. Since that time, much in the industry has changed, notably the relationship between airlines and airports and the roles each plays.

“It’s been a heckuva ride,” he says with a chuckle.

As we sit for an interview, he’s talking of how proud he is of the redevelopment efforts at Chicago’s Midway Airport, in which he played a central role. And, oh, by the way, Southwest is holding a press conference in Denver as we speak to announce a major route expansion at DIA, an airport to which the carrier only recently returned.

The vice president of properties shared his insights into just about everything airports and airlines. Here’s an edited excerpt ...

AIRPORT BUSINESS: How was the industry different in 1984 when you first got into properties?

Montgomery: The old network carriers were still very strong and still had very active property staffs, because prior to deregulation it was very common for the airlines to own and develop and do projects.

We were still pretty much around Texas. The first two cities I opened up were St. Louis and Chicago, in 1984. We had just expanded into Los Angeles and San Francisco; we had Phoenix.

AB: In terms of leases and your expectations, what’s the mood of the market versus 1984?

Montgomery: I would say there are two big differences. One is the level of independence that airports have today. The mindset in 1984 was, we have to get agreement with the carriers or nothing can be done. Historically that had been true. The major financial markets really required airline leases and airline agreements, and typically longer term, before they would agree to fund major capital developments.

Whereas today, because of a lot of the compensatory rate methodologies, airports have their own war chest, if you will. They have substantial retained earnings, and the financial markets really respond to the strength of the local market, as opposed to the strength of the individual airlines that are serving it.

History has played a part in that too, just because of the major bankruptcies starting with Braniff in the late ‘70s. The markets saw that there was a backfill of sorts into many of those marketplaces, and that they could issue bonds just based on the strength of the individual marketplace. That’s one of the big differences, their ability to finance things.

AB: And the second difference?

Montgomery: The second is the amount of joint planning that goes on. In 1984, the Air Transport Association had regional offices around the country that were staffed with really good engineers and good flight ops people. And the carriers had in their facilities departments people capable of designing and implementing major airport improvement programs. They could design airfields on a napkin.

Those people would meet on a regular basis with airports to develop their ongoing capital plans, to look at what they’re submitting into the NPIAS, to try and troubleshoot with them the terminal development master plans. In the late ‘80s in a big cost-cutting move, ATA closed those offices.

Now, most cities rarely involve the carriers in any significant way in master planning until they’ve already established the political consensus. That’s led to conflict and disagreement over what projects need doing.

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