AirportBusiness Blogs

… made one wonder if the U.S. airline industry is setting itself up for the perfect storm. The flight from Dulles was on American through DFW; unfortunately, a very nasty thunderstorm forced the carrier to cancel a slew of flights. It took two hours in line to finally speak to an American agent to reschedule. There were two options, both the next day – one had several connections.

Next day on the flight home, a news story said that Delta would trim system capacity by 10 percent the remainder of this year, and American would cut back 7.5 percent. Other major carriers have been right in step with cutbacks. Of course, capacity cuts are a component of the carriers’ attempt to reach profitability in a catastrophic economic environment. The Air Transport Association reports that passenger revenue fell www.oagaviation.com), in June the U.S. airlines planned a 7 percent drop in flight volumes over one year ago.

When a weather event like the one in Dallas hits, the airlines work with each other to accommodate passengers and get them to their destinations (in my case, I wound up getting home on United through Denver). However, as the flight out of Dulles exemplifies, the options are being taken out of the system.

Consider … next January, a major cold front hits the Midwest with a blizzard and Dallas with an associated ice storm. In one day, hub airports in Milwaukee, Chicago, St. Louis, and Dallas are shut down – six major airports along with many feeder airports in the Central U.S. That’s a lot of people trying to get on an airline system that no longer has much excess capacity to accommodate them.

The airline industry dynamic has changed. At the recent AAAE convention, US Airways CEO Doug Parker told airports that the airline economic model is broken and a new one needs to be found. No one seems to know exactly what that model will look like, but a system that removes options for passengers could leave them with one alternative – not to fly at all.

Thanks for reading. jfi

… when it comes to customer service. Various discussions at last week’s AAAE annual meeting emphasized that the airport itself is becoming the new guardian of the ‘customer experience’. This goes beyond the Airport Ambassador assistance programs that have achieved a level of success at various facilities. We’re talking about customer service and the additional stress it can bring to airport employees, along with the potential impact on their productivity.

It was a topic which incoming AAAE chair John Duval wanted to emphasize during an interview with AIRPORT BUSINESS. He’s working with Tom Murphy and the Human Resiliency Institute (HRI) at Fordham University on creating productivity benchmarks, with the goal of starting a pilot program later this year which could lead to a formalized training program. The initiative has its roots in the growing pressure on airports to cater to customers, despite the fact that many airports have had to make staff cutbacks. And, the reduced capacity by airlines doesn’t ease the pressure; it increases it because more passengers are getting stranded for longer durations.

Murphy at HRI is the author of a terrific book entitled, Reclaiming the Skies, which chronicles the lives of various airport/aviation personnel who were put in the position of directly responding on 9/11. Along the way, he recognized that how people got through the tragedy while handling it (or not) differed, particularly how they could help others — and different people had different needs. He saw a parallel between the counseling required in that situation to what airports are undertaking as they deal with frustrated/irate customers who are riding an airline that, from their perspective, doesn’t really seem to care. He’s been putting on a course at JFK for awhile now.

During a discussion with him he made the statement: “If you don’t make it a service issue, you’re going to lose the industry.”

For many fixed base operators and other airport-based businesses, customer service has long been one of the primary roles of staff. It can be a strong competitive advantage. For airports, it is more a responsibility that has evolved in their direction (or, you could say, has been dropped into their laps).

This edition of our weekly expanded e-newsletter features a new department from a new content partner, ServiceElements, which has a history of success in helping airport-based businesses enhance their customer service programs. Check out the new ‘Customer Service Tip of the Week’ and feel free to let us know what you think, but more importantly to share what specific topics might be featured in future installments.

Thanks for reading. jfi

… tells AAAE attendees it’s time to move past beating each other up over costs and to seek common ground in a continuingly challenging market. “I’m not going to take time to hammer you about costs,” Kelly told airport managers who are in Philly this week for the annual meeting of the American Association of Airport Executives.

“I think Southwest Airlines is in good shape,” says Kelly, pointing out that the low-fare carrier has recorded 36 consecutive years of profitability. He reports that Southwest has $2.3 billion in cash on hand and “we’ve got very low levels of debt.” Yet, in a market that continues a downward slide, he has concerns. Kelly says that with very few exceptions airports are managing their costs well. The industry has very large problems, he adds, and airlines and airports need to seek new opportunities together.

He 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 in existence today.

Kelly says Southwest is the first airline to commit to installing the necessary equipment to make the carrier’s 737 fleet compatible with NextGen - a significant issue. He calls for a national energy policy that is “climate friendly” and reduces U.S. dependence on foreign oil. And, he wants aircraft manufacturers to advance their efforts to find new airframe and engine technologies. While the OEMs have made great strides on that score over the past two decades, says Kelly, there have been few significant advancements in recent years. “That was then and this is now,” he says.

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

One reality: fares will need to go up. Another is, “cost matters.”

Meanwhile, the economy remains the top challenge facing airlines and airports, says Kelly. And, because of the impact that a volatile oil market is having, the economics of the airline business has fundamentally changed in the past decade.

A point of order: During the follow-up Q&A, Kelly was asked about getting the airlines (the Air Transport Association) on board with airports’ opposition to an ARFF proposal in the recently passed U.S. House bill. It’s basically a union/jobs issue, one which could wind up costing airports billions — needlessly. Kelly evaded an answer (’We’ll look into it’). Krys Bart of Reno-Tahoe International Airport pointed out to Kelly that at her airport the figures show that the increased financial burden on her airport would mean a jump of $3 per enplaned passenger for the carriers. It got his attention; and left him silent.

Thanks for reading. jfi

… there are signs of direction from FAA on SMS, something which many in industry have been anticipating. The U.S., as a signatory state under ICAO, is charged with putting together regulation for safety management systems at airports and aviation businesses, something which is already in place in other countries, notably Canada. The direction has been slow in coming.

The National Air Transportation Association, which sponsors the annual charter summit, is actually ahead of the curve on SMS. It has been offering a comprehensive SMS training program for a couple of years. Airports, meanwhile, have been waiting for clear direction from FAA before implementing a program.

Don Arendt, manager at the Flight Standards SMS office of FAA, told the Part 135 carriers that a notice of proposed rulemaking (NPRM) is in the works. “We’re considering rulemaking at this time,” he says. First, however, FAA expects to issue an advance NPRM later this year to get industry’s input on SMS.

Other insights from Arendt …

There are four pillars of SMS: policy; safety risk management; safety assurance; and, safety promotion. These involve things like understanding the system, the environment; identifying hazardous conditions; assessing risk and risk control. Assurance focuses on “providing confidence” that quality requirements are being met, says Arendt.

He adds that despite recent criticism by some in Congress and the media that the agency may be “too cozy” with industry, SMS offers an example of a situation in which FAA and industry working closely together can be a good thing, to ensure safety. “Is anything ever enhanced by having a distant, adversarial relationship?” he questions.

Industry has accepted that SMS is coming, and speaking with operators and airports in Canada reveals that it’s more about documenting and officially managing processes and procedures which many may already have in place. It’s not about a revolution, but more about officially documenting what’s in place and having particular management taking on responsibility.

Thanks for reading. jfi

… or John Weikle’s next great adventure (or one-year wonder?) — Jet America. It was announced this week that the new ultra-low cost airline will begin serving mid-sized U.S. cities this summer. The question that must be asked is, are airports and communities across the country once again setting themselves up for disappointment when the new airline craters financially?

JetAmerica is the brainchild of Skybus founder Weikle. I’ve never met him, but he appears to have two strengths in particular: attracting investment dollars and getting attention with ridiculously low fares. At Skybus, it was $10 fares; with JetAmerica, it’s $9. One has to wonder how many of those $10 fare-paying passengers were left stranded when Skybus abruptly shut down operations last year.

JetAmerica is scheduled to launch operations on July 13, connecting places like Toledo, South Bend (IN), and Melbourne (FL) with Newark and Minneapolis. The carrier will operate 737-800s and initially will offer 34 non-stop flights per week. CEO Weikle, on the company’s website (www.JetAmerica.com), comments, “Our goal is to fly wherever JetAmerica can offer air fares of at least 40 percent less than competitors.” As with other low-cost airlines, the Jet America business model is based on flying routes to mostly secondary, underserved cities.

According to reports, the Lansing, South Bend, Melbourne, and Toledo airports are subsidizing JetAmerica with $1.4 million in grants in its first year, along with about $867,000 in waived airport fees and $1.1 million in marketing and advertising assistance. South Bend, Toledo and Melbourne apparently received their grants from the U.S. DOT’s Small Community Air Service Development Program. Started in 2002, the SCASD program has had its successes and failures in trying to help communities attract new air service. (The Boyd Group offers a good discussion of the SCASD program on its website, www.aviationplanning.com.)

Ultra-low cost carriers have had some degree of success globally – notably Ryanair in Europe. Perhaps this time Weikle’s enterprise will take hold, and not abruptly leave passengers and communities stranded. But it seems reasonable to question whether or not federal dollars should be used to facilitate a start-up operation. It may prove an interesting discussion to have one year from now.

Thanks for reading. jfi

… on whether or not its Part 161 study and application for a proposed curfew will be officially endorsed as a “complete application” by the agency. After years of study and analysis and more than $6 million spent by the Burbank-Glendale-Pasadena Airport Authority, the process has reached this point. Understand, FAA isn’t yet considering whether or not to approve the curfew; this is just getting an OK on the application. It was essentially approved in March by FAA, with an exception which has since been addressed by the authority.

Comments Bob Hope Airport executive director Dan Feger, “In terms of getting it deemed complete, I’m optimistic.” In terms of getting a final approval for the curfew, he says, “The FAA has sent us letters which would give you a pretty pessimistic picture of their willingness to grant a full curfew to the airport.” The airport seeks to impose a curfew for Stage 3 aircraft operations from 10 p.m. to 6:59 a.m. The effort to restrict Stage 3 operations is ground-breaking.

Federal Aviation Regulation Part 161 is the official vehicle for communities that want to have more control of their airports. (For background, look up Naples, FL.) Thing is, folks at FAA will tell you that Congress intentionally made it a strenuous exercise to discourage communities from wanting to impose local restrictions on an airport that is part of a system. The system is the mandate – Part 161 almost gets in the way. Yet, Naples got its ban on Stage 2s (via the courts).

Bob Hope Airport has a long history with noise and the surrounding communities, much of it focused on airline and military operations. It is in the midst of a ten-year agreement with the City of Burbank to not even discuss terminal expansion, a one-time hot button. Feger says that over time the terminal agreement, quieter aircraft in the fleet, and a noise insulation program have helped reduce anti-airport sentiment. He notes it wasn’t even on the political radar screen during last fall’s elections.

Yet, the neighbors remain concerned, says Feger. “If you listen to the members of the community, the bigger fear is growth at this airport,” he says. “The lesser fear is the known quantity of what they have today. The desire to achieve a curfew is as much or more driven by the future as it is by the present.”

The airport has had a successful voluntary curfew in place for years. It is not enough to appease the community, particularly with the growth of larger general aviation aircraft. Explains Feger, “The concern is that the voluntary curfew compliance rate is going to go down as well. There are a lot of aircraft that leave this airport right at 7 a.m. — the 7 o’clock push, as we call it. Over time if there’s a lot of growth here, you’ll see that is where the voluntary curfew will deteriorate, between 6 and 7 a.m. That’s the pressure here.”

(Look for the expanded interview with Dan Feger in the upcoming June issue of AIRPORT BUSINESS magazine.)

Thanks for reading. jfi

… in yet another example of how the industry is changing, and is indeed global. At a time when politicians are talking more and more of protectionism, this has to be a positive step. And it would seem that a nod of approval from the U.S. DOT on the AA/BA alliance will be as well.

This week, representatives from DFW, Manchester (U.K.), BWI, and Ft. Wayne International held a press conference in Washington, D.C. at the National Press Club to highlight their support for the alliance, under the auspices of the newly formed Airports Coalition for Alliance Benefits (ACAB). The ACAB is made up of some 75 U.S. and European airports. Following the press conference, the ACAB reps headed over to DOT headquarters to formally submit their comments, which supports the approval of transatlantic antitrust
immunity for the oneworld global airline alliance partners American Airlines and British Airways, along with Finnair, Iberia, and Royal Jordanian Airlines (RJ).

Interestingly, a lead story in the airline biz today is that Delta and Air France-KLM have inked a deal to combine two separate joint venture agreements into one to create a more integrated trans-Atlantic alliance that they say will generate $12 billion in annual revenue, according to AP reports. The airlines say they will share costs and revenues, coordinate branding at airports, and jointly pursue global advertising. In essence, it’s a consolidation of old agreements – Delta had a previous agreement with Air France; Northwest had one with KLM.

Perhaps the stats that stand out the most in the Delta/Air France-KLM deal: the joint venture represents some 25 percent of total trans-Atlantic capacity; and, the agreement means the carriers will operate more than 200 daily flights and offer about 50,000 seats per day.

Back to the AA/BA proposed alliance, ACAB says that the DOT approval “levels the playing field” – the Star and SkyTeam alliances already enjoy trans-Atlantic antitrust immunity. ACAB also maintains that the new alliance “will generate new economic activity through new routes and new connections. The resulting economic impact for communities worldwide is critical at this time of great uncertainty.”

Ironically, one of the biggest opponents of the new alliance is Virgin Atlantic president Richard Branson, who has stated that the AA/BA agreement would be “absolutely disastrous” for competitors. He reportedly sees it more as a merger of the carriers, which they deny. This from the man who perhaps more than any other has become the face of airline globalization.

Go figure.

Thanks for reading. jfi

… attendees were given an outline of a general aviation security training program being run by the Waukesha County Technical College (WCTC) in Pewaukee, WI. The program is being underwritten by a grant from the Department of Homeland Security, thus participation is free. Brian Dorow and Gus Moulas of WCTC say that their hands-on training sessions are booked through 2010, which has prompted the college to build an online program, available at www.generalaviationsecurity.com.

The goal of the program is two-fold: to educate first-responders about the logistics of a GA airfield and the potential threats and challenges therein; and, to educate anyone else – from airports to tenants to pilots to neighbors – about security awareness. Moulas says that WCTC is working closely with AOPA’s Airport Watch program.

The WCTC website offers GA airport operators the opportunity to assess the threat level at their facilities by plugging in various data such as number of based aircraft; types of operations (Part 91, 135, etc.); class of airspace; and potential targets near an airfield (for example, a stadium). That assessment helps to determine which of three levels of training offered by WCTC is most appropriate for an airport and its interested parties.

This is all about education. One concern, says Moulas, is that law enforcement officials do not make regular visits to their local general aviation airport. Educating them about the need can heighten security and also contain other potential crimes. First responders in a community may also be unfamiliar with the challenges an airfield can present. “Our first-responder course adds a skill set,” says Moulas.

Thanks for reading. jfi

… in an attempt to get the White House to recognize the importance of general aviation to their communities. In a conference call with the media on Wednesday, four of the 70 civic officials who signed the letter to President Obama outlined the critical role GA plays locally. The letter, dated April 22, has yet to draw an official response from Washington.

Comments Wichita mayor Carl Brewer, “We do know that our letter was presented to the President. At this point in time, we haven’t heard anything.” Brewer estimates that Wichita has lost some 9,000 jobs due to the economy and the negative press coming out of Washington regarding private aircraft.

Wednesday’s media initiative was coordinated by the Alliance for Aviation Across America (www.aviationacrossamerica.org) which seeks to educate the public and other government officials about the vital role of GA. Says the letter, “We call on you to help protect the 1.2 million good paying jobs and $150 billion per year in economic output created by GA. Mr. President, small and mid-size communities like ours need the manufacturing and service jobs which general aviation makes possible. Ready access to these airplanes provides a crucial lifeline to rural America, connecting farmers, charitable groups, and individuals with resources, tools, and business to national and world markets.”

It’s not unlike the letter sent to Obama in March by Jim Coyne, president of the National Air Transportation Association. That four-page effort has yet to draw an official response either.

What makes today’s announcement most significant is that it comes from mayors and other civic leaders – not aviation interests – and one would presume that their plea might be more apt to get the Administration’s attention. They shouldn’t hold their breath.

Yet, it was Coyne who may have stated the cause most poignantly: “It’s time to stop the populist demonizing. It’s time, instead, to support, if only with words, an outstanding American success story.”

Maybe the best way to get the President’s attention is to make all the general aviation workers members of the United Auto Workers. Then the feds can take control of Cessna, Hawker-Beechcraft, Piper and others to make sure no more jobs are lost.

Thanks for reading. jfi

… may be that the meeting was held at all, considering the state of the industry and what’s happening with meetings these days. Some 80-100 attendees heard that the economy will slog through 2009; the day for finding a replacement for low-lead avgas is upon us; and, communication between TSA and the industry may be on the road to improving; among other issues.

Some highlights …

• Dr. Bernard Weinstein, director for the center for economic development at the University of North Texas, says his worry for the economy today is the potential for commercial real estate defaults, a la the recent bankruptcy filing by a major mall developer. “That shoe is starting to fall,” he says. Dr. Weinstein says the U.S. is in for a “slow slog” back to economic health.
• Mike Chase, president of Chase & Associates, reports that some 2,800 of the 16,545 bizjets in the marketplace today are up for sale – some 17 percent.
• David L. Scheffler, a CPA and president of the Fairfield County (OH) Airport Authority, says his airport has seen little corporate aircraft activity since the Big 3 automakers made their infamous trek to the nation’s capital. “It’s like someone flipped a switch,” he comments.
• In fact, Bill Koch, president/CEO of charter operator Imaginaire and a former NATA chair, says the number one issue facing GA companies today is the perception of business aviation. There is hope, however, according to Andy Cebula, executive VP at AOPA, who reports that recent survey results of “influencers” on the perception of GA show that 68 percent have a favorable impression, and 53 percent see the industry as very important. There’s a “strong view” that GA airports are a positive force for communities, says Cebula.
• Cebula relates that AOPA had expected the environment to be the leading issue in 2009, until the economy tanked. Green regulations remain on the horizon, though, with 100LL a top target. He points out that several companies are currently working on an avgas alternative. Once one enters the market, the questions that will need to be answered concern how aircraft owners may need to modify their powerplants as well as how such a development will impact fixed base operators regarding storage/distribution.
• Then there’s the Transportation Security Administration, which caught the industry’s ire recently with its proposed Large Aircraft Security Program, which is currently undergoing a rethink. Craig Spence, VP of regulatory policy at AOPA, reports that TSA is in the process of collecting self-assessments of some 3,000 GA airports via the Internet. The intent is to get a baseline of data to use for future decisionmaking. His fear: “This will become the new noise.”
• Regarding TSA, a key criticism from industry reps is the ongoing veil of secrecy and lack of communication by the agency on initiatives from the LASP proposal to Security Directive 8-F to the Playbook program. AOPA’s Spence says that “alternatives are desperately needed” for smaller general aviation airports when it comes to security; he also says his association advocates a common form of identity credential industrywide. Lisa Piccione, senior VP at NBAA, calls on TSA to consider different levels of security for different categories of airport, much like FAA regulates Part 91 versus 135 versus 121.
• On the issue of TSA and its communication skills, the audience was introduced to Juan Barnes, recently appointed to be the first GA stakeholder liaison at the agency’s Office of General Aviation. His directive, says Barnes, is to communicate back to TSA the industry’s concerns and issues. At this meeting, he essentially told the attendees nothing – again under the cover of secrecy. One can only hope that the communication flows a bit more freely when he returns to headquarters.

Thanks for reading. jfi