It's All About Business

ab: A year ago you completed a new use agreement with the airlines at DFW. What can you tell us about the agreement and the process?

Fegan: It’s a ten-year agreement and would be characterized as a hybrid. The non-airline revenues go into a certain fund; once they exceed $60 million, anything above we share with the airlines — 75 percent to the airlines, 25 percent to us. That $60 million is used for capital projects on the airport; anything above that $60 million requires airline approval through an MII [majority-in-interest clause].

As part of the use agreement we got a $1.9 billion capital improvement program approved for the four terminals; and another $250 million for non-terminal related projects. And we believe that within the next couple of days we’ll get another $250 million approved — for example, the new parking structure for Terminal A.

ab: Anything to say about negotiating with the airlines, versus ten, 20, or 30 years ago?

Fegan: Actually, our first use agreement lasted 35 years. It worked just fine. This one was designed to give us some more control of some capital. In the past we had a discretionary fund of about $8 million a year; everything else required airline approval, including some major maintenance.

It wasn’t the worst process I’ve been through; it was reasonable.

ab: A hot topic with DOT and the general media today is airliners that get stuck waiting on airfields due to extreme events, such as the October snowstorm in the Northeast that saw Hartford get an onslaught of airliner diversions. What do you see as the airport’s responsibility in such events?

Fegan: The word responsibility may not be the right word. We’re in the business of delivering facilities and services to our customers, and our customers are both the passengers as well as the airlines. We do feel a responsibility if an airline is struggling because of inclement weather or some irregular operation. We have reached out to the airlines on a number of occasions.

As people get diverted we monitor and attain information on all the flights perched to come into DFW. As time goes on, we will intervene if we have to.

We bought a bus and an automated jet bridge/stairway and we can offload people and take them right into the airport. We’ve also created some additional spare gates at one terminal; if every other gate is full, there are the spare gates available. We have a concessions irregular operations plan where we notify all the concessionaires; they agree to stay late and will stay open until all the customers are gone. We’ve had many nights where several hundred people spent the night in the terminals; we have cots and provisions — baby formula; diapers.

ab: What’s it like running a U.S. hub airport today versus 30 years ago, and what can we learn from new facilities that have emerged internationally?

Fegan: Over the years it’s gone from more of an operational exercise to more of a business operation. It’s a complex environment with a lot of different stakeholders. Twenty years ago airlines made all the decisions; today, it’s more of an equal partnership. The airlines have off-loaded a lot of their operational responsibilities to airports and we have embraced them.

I think over the years many international airports have learned from us and have taken it to another level altogether. We had a delegation just return from Singapore and they were talking about how incredible the concession program was and all the innovation that they saw in services to the concessionaires. Fly to Beijing or Incheon or Hong Kong and they have beautiful facilities.

It’s kind of a situation where the country, the airline, and the airport have come together and decided to do something fantastic from a strategic perspective to attract business to their part of the world. The international airports have done a fantastic job of pushing the envelope.

ab: If you had an audience of airport managers sitting in front of you right now, what one thing might you want to make sure you tell them?