It is anticipated by many that 2007 will provide a watershed moment for the U.S. aviation industry. Everything is on the table: funding; the taxing structure; modernization of the air traffic control system. The leadership of Airports Council International-North America, at its annual fall meeting held here, positioned the current battle in Washington as the 'opportunity of a generation.' The incoming ACI-NA chair Frederick 'Rick' J. Piccolo, A.A.E. agrees. Of course, there are other on-airport issues as well. Airport Business sat with Piccolo during the ACI-NA meeting to get his insights on issues facing the industry.
Piccolo is president and CEO of the Sarasota Bradenton International Airport, which is operated by the Sarasota Manatee Airport Authority. To some, his airport is a microcosm of the market forces of the past decade — a dramatic decline in airline service, subsequently followed by a vigorous air service development campaign; and, a dramatic growth in business aviation. The air service initiative was helped by a grant from the Small Community Air Service Development (SCASD) program — Piccolo says his airport is the 'poster child' for how that program can be successful.
Following is an edited transcript of our interview ...
Airport Business: Would you relate the experience you've had at Sarasota in getting air service?
Piccolo: We were seeing a downturn in air service [after] 2000, partially related to the recession starting then, but more to the emergence of low-cost carriers. When you look at Florida as a dynamic, Southwest and AirTran really didn't enter the market in a big way until around 1995. It took about five years for that to begin affecting a lot of smaller airports in the region, as they consolidated at the bigger hubs. Tampa was bleeding a lot of traffic from us. Then 9/11 happened; that just exacerbated it.
It continued that way until we got the Small Community Air Service grant in 2004 and AirTran came in.
AB: Was that grant specifically targeted at marketing assistance?
Piccolo: No. It was a $1.5 million grant that was all a revenue guarantee for AirTran. The airport and the two counties combined to put up $1 million in advertising support. The airport put in $500,000 and each county $250,000. That really was the rebirth of the airport.
AirTran came in and was very successful. That spurred others to compete, both from a service standpoint and a pricing standpoint. Now, U.S. Airways has applied for a slot to DCA; JetBlue started service. Last year we had an 18 percent increase in passenger traffic. This year we're up 5-6 percent [though] the cutbacks that Delta has made in Florida have affected us.
AB: Of course, the SCASD program is all about attaining sustainable air service.
Piccolo: There have been ones where people have been skeptical because they say that when the grant goes away the air service goes away, which happens. I didn't feel that would happen in our case — the bleed that we had was about 1.6 million passengers to Tampa. If you capture a third of that bleed, that's a tremendous amount of traffic increase.
AB: Last spring, a level of interest meeting was held in Sarasota for airports that were looking at providing ground services, particularly as it relates to air service. Out of that meeting grew AAAE's new ground services association. Can you talk about those issues?
Piccolo: One of the issues that smaller airports face with air service is the ground handling issue. Either there's not enough business [or] you have a couple of ground handlers [but don't] have a critical mass where they can spread out the costs. You put these incentive packages together and [the airlines] say, your incentive package and your market are good, but your ground handling costs are so high that it tips that scale and I can't do the service.
There was enough interest generated that it was decided to put together a quick mini-conference to talk about it. That spurred more discussion. I don't think airports are saying we have to do it; but when you're stuck with no ground handler or its driving away traffic, we want to take a proactive role.
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