Lift Is Not the Issue

June 8, 2001

Lift is not the issue

More planes bring growth; keeping the airspace, infrastructure in step is the challenge

By John F. Infanger, Editorial Director

June 2001

The state of the industry is good, as is the mood. Yet, there is a hesitation that is pervasive among those in the airport and aviation service sectors. The goal is to implement important — and contested — changes while continuing to ride the strength of a recession-free economy. We are at a watershed. Survey Results - An Industry Sampler

AIRPORT BUSINESS and Smith Business Solutions, Inc., of Hackettstown, NJ, recently surveyed airports and airport-based businesses. Charts here and on the cover are taken from that data. Below, surveyor Leigh Smith offers a few observations ...

• Airport closure: Is it a non-issue? It’s ranked last in concerns by both airports and FBOs. Economic climate and insurance costs/availability are top issues.
• Insurance coverage is a concern to FBOs, regardless of revenues or employee base. Availabil-ity of insurance is an issue for smaller FBOs, with $250K or less in revenues. As one might expect, flight schools are particularly worried about availability of insurance.
• Economic climate is a universal issue, although avionics shops and aircraft dealers seem to be particularly worried.
• Although we hear much about noise issues at smaller airports, noise abatement is a greater issue at larger airports.
• Experimental aircraft are based at roughly one-half of the airports reporting. What does this mean to airport safety, given the number of "norad" experimentals?
• Over half of FBOs responding pump fuel.

One signal of change is Norman Mineta, who in January took over as head of the U.S. Department of Transportation and, in line, the Federal Aviation Administration. As a U.S. Congressman, Mineta earned a reputation as a legislator who recognized the importance of aviation to the nation, and frequently promoted its cause. His message to date is that under his watch FAA will be able to do what many believe it cannot: modernize the nation’s air traffic control system. It is an effort that has seen millions in taxpayer dollars wasted chasing technology.
Under his watch, he also expects we will have made significant strides, using AIR-21 monies, toward expanding our airport infrastructure, helped along by his initiative to streamline the approval processes. We are now able to fund the runways; getting them built in a timely manner is the next critical element — a priority at today’s DOT/FAA.
That message was reiterated by FAA Administrator Jane Garvey at the annual meeting in New Orleans of the American Association of Airport Executives. Garvey told airport managers that not only will runways be built more expeditiously, but the associated navaids (ILS, etc.) will be up and running at the same time.
At New Orleans, Garvey also said that FAA will soon release its proposal to replace what is today called the "slottery" at New York’s LaGuardia Airport (LGA). FAA and the Port Authority of New York & New Jersey implemented the lottery in an attempt to accommodate the deluge of access requests by airlines following the removal of slots. Intended as a temporary resolution to a long-term problem, the lottery expires this September.
A primary reason Congress lifted the slots at LGA and other major airports was to ensure access to/from smaller communities. Those routes, however, are inherently served by smaller aircraft, confounding the congestion challenge at LaGuardia. At AAAE, Garvey told attendees, "We are very cognizant of the issue of access to smaller communities, as is Congress."
Looking to the future, Garvey says FAA will soon release an "evolution plan" that will discuss agency strategies for the nation’s airspace and aviation infrastructure. It remains a national system, she relates, and local issues come with the territory. "We will never have local consensus," she says, suggesting that leadership at the national and local level is a critical element in resolving local disputes.
Also at New Orleans, Ed Bolen, president of the General Aviation Manufacturers Association, told attendees that the general/business aviation sector has grown to a $9 billion a year business. "A strong economy lifts all operations," he says. Much of that strength for business aviation has come from fractionals, which Bolen says account for 15 percent of the business and 30 percent of new business aircraft orders.
As much of industry changes, so is the fractional segment, with the announcement that United Airlines is entering the fold (see page 14). Besides the business implications, the United move will have repercussions on issues such as flight & duty time and access to major airports.
Meanwhile, survey results show a majority of managers optimistic about business prospects, assuming key challenges can be overcome.

Practical Ideas for Airports

William A. Fife, P.E., director of aviation services for DMJM+Harris, says the industry needs to listen more, particularly to each other. Each year he holds Peer Review Group meetings at airports to do just that. Here, he offers some "practical" insights.

• Invite ADA advocates to be a part of early and ongoing planning when designing or improving a facility. "We have to remember that our airports are for everybody," he says.
• When designing facilities, don’t let architects and designers steal the show. Bring in reps from tenants, operations, and maintenance. For terminal re-tailers, this is a common issue.
• Regarding technology, have a specialty systems integrator to tie in fire alarms, security, fiber optics, gates, etc.
• When studying capacity, don’t overlook the impact on infrastructure off-airport.
• The most consistent problem he hears about: restroom design.

United Airlines enters fractional market; hints at potential reform of FBO industry
ELK GROVE VILLAGE, IL — The ultimate irony, of course, may be if United Airlines is successful in beating business aviation at its own game, particularly if it helps to reshape the aviation service business along the way. Yet, that is the underlying — or perhaps overriding — message from the man tagged to take the carrier on just such a quest, Stuart I. Oran. His business card still reads Senior Vice Presi-dent, International, but Oran says he and his company are quite committed to the corporate aircraft fractional ownership program after some 20 months of due diligence on the marketplace and its users. Along the way, it hired McLean, VA-based consulting firm Booz, Allen & Hamilton, Inc., says Oran, to help define the opportunity, which United sees as huge.
And, Oran is quick to point out that it is not the carrier’s intent to beat business aviation at serving the high-end user, but rather a matter of becoming one of the players. "We concluded that business aviation made sense for us, since we’ve been in the business of transporting people for 75 years," says Oran. United’s look into the market uncovered that the 3,000 to 4,000 "shareholders" currently in the fractional market were only scratching the surface of the potential market, according to Oran. "The potential in the U.S. is probably in the 60,000 to 80,000 range in today’s environment," he says. "The amount of growth opportunity for fractional participants is hugely in excess of the capability to produce airplanes." Oran points to Executive Jet as the blueprint for operating a fractional program, particularly as it relates to building the infrastructure necessary to operate efficiently and to customer expectations. "Some of the existing players," he says, "have in fact outgrown their own infrastructure." During a conversation, it is infrastructure to which Oran keeps coming back, stressing that a major air carrier like United has tenure in scheduling, coordination of a vast fleet, personnel, training, safety — and at much greater numbers. Explains Oran, "We think we’re going to be able to bring that operational and technological excellence to the table. "Some of the existing (fractional) carriers have grown quickly in order to meet the demands of the people who want to fly business aircraft, and they have not had the experience of moving the infrastructure satisfactorily with it. "As a player entering the market at this particular point in time, we have the advantage of being able to learn from their mistakes, which are understandable, and to keep the infrastructure up." Oran says United will fly both under Part 91 and 135 regulations, and supports the industry initiative pending DOT approval for a new regulation, Part 91-Subpart K. Just as Executive Jet and other fractional programs have had a positive effect on the business of fixed base operations and other service companies, Oran sees United becoming a major customer. "I think the FBOs will find that we will be outstanding partners. In the fractional business, we will approach our FBO relationships as partnering opportunities. We will obviously be a significant participant." Oran adds that United may be able to help the service sector become more efficient and effective, and make the coordination between carrier and FBO operate more smoothly. "We believe quite strongly that we have the technology and capability to fundamentally change the way business is done," he says. "Particularly in the fractional industry where, from an FBO’s perspective, there are similarities to commercial." — JFI