Airport Execs Meet in Philly

July 23, 2009
The business of airlines, an onerous ARFF proposal, service opportunities top agenda

PHILADELPHIA — With attendance down 20 percent or more, this year’s annual Conference & Exposition hosted by the American Association of Airport Executives was easily the most subdued meeting of airports in years — call it a sign of the times. Yet, the industry faces many pressing issues, from FAA and system reauthorization to the business of airlines to a proposal requiring increased aircraft rescue and firefighting (ARFF) requirements that airports argue would cost billions with little or no impact on safety. Other issues topping this year’s agenda included a growing interest by some airports to get into providing ground services for airlines as well as new technologies coming to the industry.

Representing the new Obama Administration was John Porcari, U.S. deputy secretary for the Department of Transportation, who expressed support for a “strong” FAA reauthorization bill. On the issue of slot controls at New York’s airports, which DOT has backed away from, he says, “Together we need to figure out how to go forward.”

Adds Porcari, “The other knot we’re untangling right now is NextGen. We have to demonstrate success; we know that NextGen is not moving fast enough.”

Meanwhile, the issue of Federal Aviation Administration and system funding, in limbo for two years, appears to have gained momentum, evidenced by the passage by the U.S. House of H.R. 915, the FAA Reauthorization Act of 2009. The bill would raise the cap on passenger facility charges (PFCs) from $4.50 to $7, for which airports have lobbied hard. It would also fund the Airport Improvement Program with an average of $4 billion annually over four years. The Senate is not expected to act on the bill until after the August recess, say officials.

A major concern for airports in the House bill is a proposal pushed heavily by the firefighters union to impose new requirements on facilities and staffing for ARFF. A recent report from the Airport Cooperative Research Program says implementation of the new standards would cost airports some $4 billion to implement, and $1 billion annually to maintain.

Sam Whitehorn, a consultant who spent some 15 years as a Senate staffer, notably with the Aviation Subcommittee, says the ARFF proposal is the result of pressure from labor unions.
“The dilemma is, labor has a lot of weight right now in the Senate,” says Whitehorn. “You need to know they have an enormous amount of clout.”

Catherine ‘Kate’ M. Lang, FAA’s Acting Associate Administrator for Airports, calls the ARFF proposal “troublesome” for both airports and FAA and adds that there will be “absolute consequences” if the proposal is embraced by the Senate.

U.S. Airlines: a broken model
The challenges facing U.S. air carriers were highlighted by way of keynote presentations by Southwest Airlines CEO Gary Kelly and US Airways CEO Doug Parker.

“This is a broken business,” says Parker. “I’m here to tell you, it will not and cannot continue.”

Parker calls the U.S. airline business a “fragmented industry,” one with too many airport hubs and too much capacity. He says he welcomes the merger of Delta and Northwest, and expects that one answer to the future of the domestic airline business will be more consolidation.

Kelly at Southwest says there are three hot buttons on his priority list: 1) attaining optimum flight paths via the NextGen air traffic management system, now under development; 2) finding viable alternative fuels for use in airliners; and 3) a fleet of more efficient aircraft than are currently in the marketplace.

Says Kelly, “I think the economics have fundamentally changed in the last decade.” He says the airlines’ operating structures have “flipped” due to volatility of the oil market and the cost per departure has “skyrocketed.”

Southwest remains interested in expanding its route structure, says Kelly, but that will likely come at the expense of others — a redirection of resources. The airline also is looking at international opportunities, initially via code share agreements in Canada, Mexico, and the Caribbean.

An interest in ground ops
“There has been a lot of change in the last few years regarding airports providing ground services for carriers, but there is still a lot to do,” says Edward Jacob, regional director of operations for American Eagle Airlines.

Jacob, who worked for more than 20 years with Aer Lingus providing services for other airlines, says airports have taken an active approach to this concept, and are coming together to find cost-effective solutions to ground handling challenges.

American Eagle ground handling has expanded its role, servicing other airlines, even in cities that are not on the carrier’s route map. According to Jacob, customers include Allegiant, Continental, Continental Express, Delta Connection, Horizon, Jet Blue, Midwest Airlines, and others. It’s also providing ground handling services in Canada and the Caribbean.

“We want to go after more and more ground handling, and to do it for other carriers as well,” says Jacob.

Because some of the carriers really don’t want to be seen being handled by American Airlines, explains Jacob, at airports American Eagle serves, “We have taken the carrier logo off of our uniforms and replaced it with Eagle Ground Handling identification.”

With more than 4,000 employees serving 1,500 departures for several airlines, American Eagle is now providing ground handling service at more than 100 locations, and is the largest regional airline in the ground handling business, says Jacob.

“We will provide ground handling at any location and at any sized airport; American Eagle does not have to fly there. We will handle it in partnership with the airport, for the airport, or for the airline,” he says.

“In addition to providing ground handling services, we are also providing ground handling training programs. We provide safety and consulting services for ground support, and can provide ground security coordinator training, or any of the regulatory or non-regulatory training related to ground support operations.

“We are looking at a great big sandbox out there, and we just want to know who wants to play.”

Jacob says the company will tailor to individual airport requirements, building on the strengths of each operator, airline, and airport. The company is also willing to get into any service which is needed by the airport or airline in relation to ground support. One thing he finds that isn’t particularly done well, says Jacob, is jet bridge maintenance, which Eagle Ground Handling can do.

American Eagle personnel are also currently servicing ticket counters, and assisting at boarding gates. According to Jacob, the company can do the ground handling and other services for less cost than the carriers can do it themselves.

Gary Cyr, director of aviation at Springfield-Branson National Airport, says the airport saw 80-100 charters flying into the airport in the late ‘90s each year, and the airlines who were doing ground handling for those charters decided to get out of the handling business. The airport began providing handling services in 2002.

“We could then handle those aircraft ourselves, or let that charter business go,” says Cyr. “We chose the former. As a result of that, we put together a program, starting from the ground up, to handle aircraft.

“Ground handling is a cost center for us at the airport,” says Cyr, “And we track those costs. We try to maintain our mark-up at about an18-20 percent window of profit.

“My cost per enplaned passenger is $4.97; we believe the ground handling has been an incentive to bring in air service, and we look to take on more ground handling.”

John DeCoster, senior VP of Trillion Aviation, worked for Northwest Airlines before getting into the consulting business. Also a former airport director, DeCoster says ground handling can be done successfully with a variety of different models; there is no one size fits all.

When determining how many turns per day an airport can handle, or makes sense, DeCoster says it really depends on the airline and the kind of contractual relationship that exists.

“There is certainly a lot of turmoil in the industry right now,” says DeCoster. “There is kind of a hodge-podge of things out there right now when it comes to ground handling: Regional Handling Services was formed in the merger between Delta and Northwest; United has appoximately15 contractors; and US Airways has nearly the same thing.

“There is a window that airports can absolutely capitalize on right now in looking at different ways to provide service, but I think that window is going to close. The airlines are under pressure, with costs being their primary concern.”

“They’re down to pilots, flight attendants, and airplanes; you have to have them; facilities ... you have to have them — kind of, sort of.

“With the technology changes that have occurred, they have started to open up their eyes; the airlines can’t afford any more ‘bricks and mortar.’ They don’t have a lot of things they can go back and look at in their cost structure, but handling is definitely one of them.”

DeCoster says that if airport operators are serious about getting into ground handling, whether its above wing, below wing, or services like deicing and scheduled services, “You have to recognize that the window to approach the carriers will probably be closing, because they will find a cheaper way to deliver the service; and once they lock into that cheaper way, with the cost pressures airlines are dealing with, you will probably not get them to move away from that cheaper way.”

“In talking with a lot of airlines, as I do on a regular basis, you find their average handling cost is somewhere between $400-700 per turn,” says DeCoster. “They have to find a different way to deliver that product. As you get into it, there are ways in getting some of these products down to the $250-300 range, depending on the distribution of airlines and flights.”

He says that providing ground handling allows airports to control their own destiny, and now is the time, with fuel costs rising again, and passenger revenues down, airlines are looking for non-traditional ways of doing things; and ground handling is definitely one of them.

“There are opportunities out there for public/private partnerships,” explains DeCoster. “By this I mean, the airline could supply the GSE, the airport could own or control the service, with various levels of revenue sharing. Not only can these relationships be made, I think it is key to its success.”

Bruce Carter, director of aviation at the Quad City (IL) International Airport, is also the chair of the Aviation Ground Services Association, an affiliate of AAAE. The association has 46 members from airports and companies that are showing interest in providing ground handling services, and see this as the future to maintaining and enhancing air service, says Carter.

“More and more airports are getting into this because they are watching what carriers like Allegiant and AirTran are doing with their service in going into smaller communities,” relates Carter.

Air Cargo Security
In 2007, President Bush approved legislation implementing recommendations from the 9/11 Commission, explains Edward Kelly, general manager for cargo, transportation sector network management for TSA. The legislation mandates 100 percent screening of cargo by August 2010. It also requires TSA to screen cargo transported on passenger aircraft and provide a level of security that is commensurate with checked baggage.

“Screening commensurate with baggage means that cargo has to be screened at the piece level,” says Kelly. “You can’t screen skids of cargo; you need to break them down and screen the individual pieces.”

According to Kelly, when looking at the supply chain for cargo, about 12 percent of all cargo moves on passenger planes. Currently, freight moving on passenger aircraft has to be from known shippers, and the majority of cargo generally goes through a freight forwarder, or indirect air carrier, and then is pushed to the airline, where the airline actually does the screening.
In the future, says Kelly, “We think we are going to change that model, and will introduce a certified cargo screening program, where a shipper can act as a screening facility. We also want to introduce ISFs, or independent screening facilities, which will probably be located in or around an airport.

“Chain of custody is key to this whole program. The idea behind that is once the freight is secure, we have to make sure there is a handoff of that secure freight along the supply chain-from the shipper to the forwarder, and forwarder to the airline, so we know the freight hasn’t been tampered with.

Participation in the program is voluntary, relates Kelly. The only regulated parties today are the airlines and the freight forwarders.

Who can become a certified screening facility? Virtually anyone, says Kelly. Examples include shipping facilities, warehouses, distribution centers, freight forwarding facilities, and independent third party screening facilities. There are four components of the certified screening program, explains Kelly:

  • Facility security, which must be done in a secure designated screening area and must have limited access control.
  • Personnel security — anyone who touches the freight has to go through a security threat assessment and background check.
  • Employee training.
  • Access control and constant physical monitoring of the facility.

Kelly says certified screeners must follow chain of custody requirements. “We want to make sure freight is secure from the time it is inspected and sealed to the time it gets to the airport. In this program, this is probably the link that needs the most attention because there are many hands handling the freight throughout its journey, and we have to make sure that the freight remains secure at all times as it goes through the supply chain,” says Kelly.

Yvette Rose, senior vice president for the Cargo Airline Association, says the Certified Cargo Screening Program (CCSP) is important because shippers, freight forwarders, and indirect air carriers can all apply to become a CCSP.

According to Rose, there is also talk in the airport community about becoming an independent cargo screening facility (ICSF).

“What the Cargo Airline Association has been doing is supporting TSA and industry partners in ensuring incentives for participation in the CCSP,” says Rose. “The airlines are not going to be able to do the screening alone; that is how bottlenecks happen at the airport. We need to push this back in the supply chain as far as possible.

“The shippers make the most sense assuming that they can retain the chain of custody through the process flow. They may be looking for a way to receive funding for this; the technology and resources to screen cargo can be expensive, and it is possible to look to airports to partner with regarding becoming an independent cargo screening facility. There are opportunities for partnerships or joint ventures in this area.”

TSA Technology update
Aaron Batt, acting deputy assistant administrator of operational process and technology for TSA, says the agency currently has a bid open for advance technology (AT) x-ray units, and the goal is to deploy AT’s to all airports by the end of calendar year 2010. The ATs are capable of giving security multiple projection x-rays for checkpoint screening.

Batt says risk is the primary driving factor when determining where the ATs will be distributed. “Our intelligence office reports to us what airports are at the most risk,” says Batt. “Other factors include space constraints, and same type equipment considerations at airports.”

According to Batt, there are some 400 bottled liquid scanners in the field, and there are plans to award a contract in September for the procurement of more advanced bottled liquid scanners. If that procurement goes as scheduled, says Batt, TSA would deploy about 650 units within the first two quarters of fiscal year 2010.

Next generation explosive trace devices (ETD) are also currently in use in the field today for both checked baggage and security checkpoints. “With the Recovery Act, we have plans to buy 500 more units this fiscal year,” says Batt.

“Our long-term goal is a systems approach; one piece of equipment that can do everything. Today, we have deployed a lot of equipment that do many different things.”

Batt relates that TSA’s goal with shoe scanners is to put out an RFP during the next calendar year, and to test and evaluate technologies in order to decide on a procurement plan.
Another category of equipment that TSA is going to be piloting at the end of this calendar year is exit lane breech control systems, says Batt.

Regarding whole body imaging systems, TSA currently has 40 units deployed in airport environments.

“We have 16 locations where we are using them in primary screening locations, and 13 in the secondary position,” says Batt. “Obviously there are some privacy concerns; we are working to get to an auto-assist capability so that we can solve those problems quicker.”

Today there are some 20 locations where there is electronic boarding pass scanning capabilities, explains Batt. “We are currently working on advancing this technology to the credential authentication technology and boarding pass screening systems (CATBPS),” says Batt. “We will be deploying this technology very shortly and hopefully piloting at three locations. We want to have a contract award for this technology by September, and our goal is to deploy some 800 of the units by the end of calendar year 2010.

“We are very invested in this business, and continue to invest millions of dollars each year on the development of new products,” says Neil Bloomfield, American aviation sales and government sales representative for GE Security.

GE’s newest explosive trace technology is the CTX9800, which received TSA certification earlier this year, says Bloomfield. The system includes a new data acquisition system and detection capabilities that far exceed those of earlier generations of the unit, which are currently scanning baggage at airports today.

“We have also improved the design of the gantry as well as the speed at which baggage can be processed. We have replaced active curtains with passive curtains, making the machine more reliable, and have built a new graphic user interface so that we can manipulate the view of the bag, making the machine more effective,” says Bloomfield.

“Our objective is to make this machine as fast as possible. We were recently certified at a throughput of 654 bags per hour. This machine is actually designed for a throughput of 725 bags per hour. The next step is to further invest in this product, and somewhere towards the back end of this year, we believe we will have a solution to scan more than 1,000 bags per hour.”

GE Security is also developing a handheld shoe-scanning device. According to Bloomfield, the company has developed a continuous walk-through shoe-scanning device which is currently being tested by TSA.

One on One with Incoming AAAE Chair John Duval

The incoming chair of the American Association of Airport Executives, John K. Duval, A.A.E., has had an interesting ride in his career, starting out as a parking attendant at the Massachusetts Port Authority, from which he retired in 2007 as deputy director of aviation operations. Today he serves as director of operations, planning, and development for the Beverly Municipal Airport located some 12 miles north of Boston.

In the interim, Duval earned his MBA from Northeastern University, got his private pilot’s certificate (and is current), and has been appointed to various assignments that include the DOT’s aviation rulemaking advisory committee; the Airport Cooperative Research Program (ACRP); and president of the AAAE Northeast Chapter. He’s also a chapter in the book Reclaiming the Sky, which documents the efforts of various people who were forced to react to the events of 9/11.

During AAAE’s annual convention in Philadelphia, Duval sat with AIRPORT BUSINESS to discuss his airport and the issues facing the airport industry. Following are edited excerpts ...

AIRPORT BUSINESS: One of the hottest issues at this year’s meeting is the proposed expansion of aircraft rescue and firefighting requirements for airports, as proposed in the recently passed House FAA reauthorization bill. Your thoughts?

Duval: When I heard about that ARFF issue a year ago, sitting on the oversight committee for ACRP, we came up with the idea that we could use the ACRP process to get an independent consultant to look at this issue and provide us with some data. We all knew this was going to be expensive, and we all believed that it really wasn’t going to significantly change the safety aspects of operating an airport. Airports are safe now.

We were successful in getting ACRP to donate a chunk of money and we did a quick response project where we put together an RFP and hired GRA to study this issue and to provide what I like to call a cost/benefit analysis. I’ve read the interim report; they went back ten years and looked at every fatal aircraft accident in the Continental U.S. and they determined that we would not have saved one life or one aircraft had these regulations been in place.

The other thing the research shows is how much it’s going to cost. The bottom line is it’s going to cost [up to] $5 billion in the first year, with $4 billion being in infrastructure and $1 billion annually after that in operating costs. And you’re spending that $5 billion in the first year for no benefit.

I’m completely shocked that this has gained so much momentum, but I’m afraid we’re not going to win it. I’m not optimistic that logic is going to prevail.

AB: And it’s basically a jobs issue, correct?

Duval: Certainly, it’s the firefighters union that is behind it. I don’t think I need to say any more.

AB: One of your personal hot buttons is disaster response and personnel training, based on your post-9/11 experience. How does that apply to the airport you oversee now?

Duval: I just ran a two-day disaster exercise program for the airport. It hadn’t been done before. With my background in airport operations, it’s the right thing to do, though it’s not required for general aviation airports. We had four cities involved; four police departments; four fire departments. The politicians came out as well.

We’ve done some things like giving a fire department a radio to the control tower so that they can talk directly; and, setting up some standard operating procedures. For example, the police said to me during this drill, if we come out to the airport at night when the control tower was closed and had a suspicious person that we were following, can we just drive out onto the field?

They don’t have any means of communicating with anyone on how they go out there. We’re working through the standard operating procedures to allow them to be able to do their jobs and keep it safe for the people using the airport.

AB: At Boston Logan, you and Chief Bob Donahue were heavily involved with the concept of interoperability, bringing together various agencies involved with disaster response. Are there lessons to apply here?

Duval: We talked a lot about interoperability with Beverly and neighboring towns because they don’t really have a good ability to talk with each other.

I read a very interesting book called 102 Minutes, which is how long it took from the time the first plane hit until the South Tower fell. It goes through in detail everything that happened and follows the lives of people who were in the building and of people who were responding. What you see from reading that book is that there were a lot of things that could have been done better in terms of communicating. We took that message to heart at Logan and worked hard to improve interoperability.

AB: You’re working with Tom Murphy, author of Reclaiming the Sky, who also heads up the Human Resiliency Institute at Fordham University. What’s the goal of that initiative?

Duval: I’ve seen airports across the country laying people off for perhaps the first time in their histories. It’s interesting to note that we’re decreasing staff but our workload isn’t going down. We still have to provide the same level of safety and security and customer service.

But we have to do it with a smaller workforce, and the stresses that that puts on the people that are there can be incredible. When you have a delay, the opportunity to get on the next flight is diminishing; it might be the next day before you can get on a flight. There aren’t empty seats and there aren’t as many flights.

What that does is place stress on the passengers. That comes out on the employees and they have to deal with it. So, where does this go? How do you fix it?

Potentially, the solution is in this program that I’m trying to put together with Fordham University; it’s a partnership that we’re creating between AAAE and Fordham that’s aimed at employee productivity. One of the ways it addressed productivity is through resiliency — employees need to be resilient.

How do you measure productivity? How do you measure the success of the program? What are the benchmarks that we can use to measure this? If this program is going to work we have to be able to prove to people that it works.