Making Sanford Fly

July 8, 2000

Making Sanford Fly

Public-private partnership is better equipped for air service development

By John F. Infanger, Editorial Director

July 2000

SANFORD, FL — Converting a military base to compete with a major airport like Orlando International is not easy business. In the case of Orlando Sanford International Airport, initial success brought new challenges — facilities that could not handle the growth, and a competitor that did not take losing business quietly. Today, officials say, Sanford is better prepared and better equipped to compete, and the dynamics of the region signal opportunity for both Orlando air carrier airports.

In 1995, Sanford moved some 48,000 passengers through its new terminal building. In 1999, the volume was 1.2 million, and movements are up 25 percent for the first quarter of this year. Growth, however, had been slowed after an initial burst of traffic generated by international charter carriers, mostly from the United Kingdom. In fact, the numbers decreased some 25 percent to bring passenger movements below one million. Two primary reasons: Orlando International was able to lure back Britannia and Caledonian airlines, and the Sanford terminal — built to accommodate 500,000 passengers annually — was quickly taxed beyond capacity.

Explains Larry Gouldthorpe, A.A.E., managing director of Orlando Sanford International, Inc. (OSI), the private company charged with air service development, "In some ways, we were victims of our own success. The facilities were strained when handling that level of traffic. So, we've added ticket counters; put in more seating upstairs. Facility changes needed to be made and I don't think the carriers that left felt that they could wait for the improvements."

Officials here are optimistic that expansion and upgraded facilities will create an airport capable of handling 3 million passengers a year. And, the airport today has more solid economic footing, having penned 7-year agreements with Airtours Interna-tional, First Choice Holidays, and Unijet Travel/Air 2000.

In April, OSI signed on Aeromexico charters for a three-month trial run, according to Gouldthorpe, marking the airport's entry into the Latin and South American markets.

And, in what has brought about a major redirection for the airport, Pan American Airways began offering in late 1999 domestic scheduled service. Success with Pan Am and renewed interest from other low-cost carriers has led to a $25 million, 7-gate domestic gate expansion that broke ground in January and is expected to be occupied later this year.

"Our belief is that there's a lot of growth ahead of us still," says Gould-thorpe. "The biggest change is that there is now this emerging domestic market that is developing.

"It's not just the tourism market; there's sort of a shifting dynamic that's occurring in Central Florida. Seminole County north of Orlando is just booming, and there's a huge economic development effort that's going on within seven miles of this airport — corporate relocations, e-businesses, technology companies. It looks to me like there's going to be a terrific demand for business travel in this market."

The initiative at Sanford Interna-tional is a joint venture between the public Sanford Airport Authority and TBI, the parent company of OSI. The authority operates the airport with Victor White, A.A.E., as executive director, and OSI is charged with developing and servicing air carrier business.

Explains White, "When the city decided they wanted to get into the airline business, we couldn't very easily raise the capital necessary to fund the tremendous physical plant improvements. So we searched for a business partner, which we found in TBI. That allowed us to put together a financing package for a $50 million passenger terminal and now a $30 million domestic facility expansion.

"We also wanted a business partner that had worldwide clout and recognition with the international airlines. TBI, because of their running airports around the world, had those connections. It's really allowed us to do things we could never have done on our own." Along with its affiliates, TBI, which acquired Airport Group International last year, manages airports at Burbank, CA, and Albany, NY, as well as Terminal 3 at Toronto Pearson International and the International Terminal at Atlanta Hartsfield. It also owns airports in Europe, including ones at Belfast and Cardiff, Wales, according to Gould-thorpe. "The company is adaptable enough to play any one of a number of roles," he says.

At Sanford, OSI operates under two agreements. On the international side, OSI has ownership in the facility under a 30-year lease, and has authority to negotiate air carrier agreements on its own. On the domestic side, OSI has a 30-year management contract to operate the terminal and must get Authority approval on all air carrier contracts.

Says Gouldthorpe, "We don't control the airport; the Authority still controls this facility and they exercise a lot of autonomy. We're an instrument, a tool, for them to use. Do we have a say in how it's run? Yes, we do, but we approach that in a partnership light."

As with the international terminal, OSI is a vested partner in the new domestic wing. TBI is paying $10 million of the construction tab — $7.5 million paid up front and the remainder spread out over five years.

Gouldthorpe says there's still plenty of opportunity for air service development, in Canada, south of the U.S., and in Europe. "There's still plenty of room for growth among the U.K. carriers," he explains. "This summer our U.K. traffic will be up about ten percent with the new arrival of JMC Airlines (formerly Caledonian Airways and Flying Colours Airlines) in April, and an upgrade in equipment to A-330s by our existing carriers. On the (European) Continent, we have a lot of interest from charter carriers who are looking for cost efficiencies, and in fact we're negotiating with a couple of them right now.

"Canada is an opportunity as well. Significant amounts of charter activity comes out of Canada, and it would be complementary in terms of when the aircraft would arrive and depart."