ACI-NA 1999 Priorities

Jan. 8, 1999

ACI_NA 1999 Priorities

Topping the list is working to create a less regulated, more business-oriented environment for airports, says David Plavin

BY John F. Infanger, editorial director

Januray / February 1999

ORLANDO, FL — Airports Council International - North America represents the interests of commercial airports and their sponsoring authorities out of its Washington, D.C. offices. During its recent annual convention in Orlando, ACI-NA president David Z. Plavin sat down with AIRPORT BUSINESS magazine to discuss issues facing the industry and his association's priorities in the coming year.

Following is an edited transcript of that interview.

AIRPORT BUSINESS: What do you see as your top priorities in near-term?

Plavin: The first priority is, if we can, to finally get folks to understand that airports are actually businesses, and it's time to stop making them walk around with a tin cup in their hands — whether it's to the Feds for AIP or PFCs or LOIs. It's a construct that's left over from regulation days, and it's hard to convince people of that. In an era when deregulation and privatization are fashionable, the notion of regularly increasing the regulations being laid on top of airports is fundamentally wrong. It puts the brakes on what could be an even more rapidly growing sector of the economy.

AB: Do you have any particular thoughts on the pilot program FAA is currently examining related to the privatization of airports?

Plavin: I guess I have two reactions to it. One, I don't think it's going to prove anything one way or another. It's not really a pilot program, because it doesn't really fundamentally change how airports are financed or run. Second, the only reason it's different and why anyone is paying attention to it, is because it's waived the one principle that we all think is important and that is you shouldn't be allowed to divert revenue.

I see the privatization program as basically a bribe to local officials to allow them to put a public asset in private hands. The way it's bribing them is by saying, even though in every other case we would never allow this, we're going to allow you to long-term lease or sell off your property, and then you can take the profits to use however you want to use it.

My sense of privatization is that there are situations and places where it makes sense, and we ought to make it possible to make it happen.

The question ought to be: Are there some things that the private sector does better, and, if there are, should we figure out a way to allow that to happen?

The notion that privatization is a panacea is a problem.

AB: Do we ever get to the point of actually selling an airport outright?

Plavin: I guess I'm not really sure why somebody needs to sell an airport.

The Canadians did a version in which they, in effect, have taken something that was run by the federal government (i.e., the airports) and created independent local companies. The only thing that makes them not fully private is they don't have equity or shareholders. They function as if they were private companies, but they're not for profit, so that means when they do earn net income they have to put it back into the company. I think it's a good model that would work well in the United States, and in some ways a more useful model than the notion of just selling off airports.

Ultimately, the public still has an interest in the airport and what happens to it. You want to make sure that the investment gets made and that it's being managed in the business interests of the community.

AB: One of the interesting things about the Canadian exercise is that, by way of the transfer, there is a justification process taking place for each airport in the system.

Plavin: Absolutely.

But what really underlies the decision that the Canadians have made is that they're saying, these are community enterprises, and they need to rise and fall with the community, and they're not any more monopolies or any less monopolies than the airlines that use them. And therefore you've got these two behemoths, the airport power and the airline power, that are at least equal to each other, and they fight it out the way any business does with any other supplier. Neither one of them has any more economic power; let it happen.

David Plavin

I think the fundamental problem with the U.S. system is the U.S. government doesn't want to accept that fact. They somehow feel that they need to protect the airlines. They're not protecting the consumers.

AB: An aviation wish list for 1999 for many in industry seems to include a long-term funding package much like highways received in 1998. Any way that can become a reality?

Plavin: It's clearly a commitment on the part of Rep. (Bud) Shuster to do that, and I think he means it.

I'm not sure it's going to be quite so easy. There really wasn't anyone opposing the implications of the highway transit bill; everyone was in favor of it. It's not that simple on the aviation side. There are a lot of people who, no matter what you do, are going to have a problem with it — the allocations aren't going to be favorable; the airlines don't like the PFCs; some won't want to take the trust fund off budget.

AB: Other priorities?

Plavin: It's the growing preoccupation with noise and air quality, and singling out airports as somehow the one thing that the environmentalists can get their arms around as a way of controlling it.

Airports are typically public entities and therefore are very attractive targets. The fact that airports have probably nothing reasonably to contribute to the discussion of emissions of aircraft engines doesn't stop them.

Another part of this is that this is an area of particular interest to ACI because there's this very different level of need, understanding, commitment in other parts of the world.

You've got the Europeans who've already crossed the threshhold and said, ’If this means we'll reduce the economic viability of our airports, then so be it. It's that important to us.'

At the other extreme you've got the Africans who are saying, ’Who the hell are you to tell us to get rid of the old airplanes? They're the only ones we can afford, which means if we have to get rid of the older airplanes, there's nothing we can do globally. If we can't fly our planes into Europe or the United States, you're basically cutting us off from the economies of the rest of the world.'