Let's All Work Together

Airport Business checks in with Gregory Principato as he steps down as president of ACI-NA, with advice that the more aviation industry works together the better off we’ll be


We did an economic impact study a year ago, to show the economic impact that airports have in the United States. At the same time, A4A did their own economic impact study and their numbers were similar to ours. But when I asked them to work with ACI-NA to jointly message this to the Department of Commerce and others, they did not respond to the idea. I think that’s a shame. The entire aviation industry needs to get together. Yes we have some differences among us but we agree on most things so let’s come together and present a unified front.

 

What needs to happen to get airports the financing they need to update their infrastructure?

Right now we have an out-of-date financing framework and an out-of-date governance framework.

Everywhere you turn, there is a constraint, with federal grant programs coming down and debt piling up. In order to globally compete U.S. airports need the ability to generate their own resources as airports around the world do.

A lot of airport investment comes from bonds, which is debt, and U.S. airports are carrying about $150 billion in debt. Even with the low cost of capital and their excellent credit ratings, that makes them vulnerable.

If you travel to places like Dubai and others, a lot of the financing comes from passenger user fees, similar to the U.S. passenger facility charges (PFC) mechanism. In Dubai, however, there is no cap on it. The PFC there is $20. In Canada there is no cap either, and on average its $20. I am not saying U.S. airports should raise these fees to $20 immediately; most of them won’t go up much at all. But currently there is a federal limit on the amount that can be charged. Rather than the U.S. government making that decision, the airport and its local governing body should determine that amount.

It’s time to give airports the financial freedom to generate the resources they need and use the PFC mechanism for the benefit of passengers and the community. But in order to best use this financial freedom, airports need to work more closely with airlines. They need to say: Here’s our capital plan. What do you think? How can we work together on this? And, ultimately, if an airport and an airline want to work together to put a project in place, and finance it a certain way, the federal government should have nothing to say about it as long as there is full disclosure.

 

What’s ACI-NA’s stance on privatization?

ACI’s position has always been if an airport wants to privatize, it should be allowed to, and if it doesn’t want to it shouldn’t have to. When I arrived at ACI-NA, the intellectual momentum in the U.S. industry was going in the direction of privatization. Now that intellectual momentum has stopped. There are still people interested in it as a concept. But if you look around the world, a growing number of airports are run on some kind of private concession and a more business-like model.

The United States has a pilot program for privatization but it’s proved very hard to participate largely because of the requirement for 65 percent of the airlines to approve filing the application. We need a better program for privatization. The San Juan project is a good development, but I’m not sure how much effect it will have on mainland airports. If Chicago-Midway was to have privatized a few years ago, and the Mayor had held up a check for $2.5 billion, I think a lot of other mayors around the country would have said: ‘Maybe we should get a piece of that.’ It would have really opened the program up. We will have to see what happens with the current Chicago-Midway proposal underway at FAA.

 

Why the renewed emphasis on customer service and the passenger experience in today’s airports?

It used to be if there was a delay or canceled flight, the airlines would take pretty good care of you. Now if the delay was due to weather or air traffic control issues, and the regulations don’t require the airlines to provide assistance to passengers, they don’t. But the customer still has to be taken care of so airports have had to step in to fill the gaps, especially at large connecting hubs where passengers can experience long delays during severe weather events.

For many people, traveling is a daunting experience. You spend a lot of time in the aluminum tube. When you’re in the tube, it’s just a tube with seats, but when you get to the building and all it has to offer is a hot dog stand, it makes the travel experience even worse. Today you get a real sense of the community when you arrive at the airport, with local restaurants and amenities providing a great experience for the travelers … and it makes them want to come back. If you’re the airport operator, you recognize people have a choice and you want people to want to come back … and that’s why you invest in improving the passenger experience.

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