Infrastructure Week 2019: 20th Century Airports in a 21st Century World

Today marks the official start to Infrastructure Week 2019, the long-celebrated week each year when the infrastructure community comes together and engages in a broad conversation about the importance of modern infrastructure.  For us, every week is Infrastructure Week (we’re not the first ones to make that joke and we won’t be the last…), but we’re proud to join in and represent airports in such an important dialogue this week.

As part of our participation in Infrastructure Week, ACI-NA will continue to amplify our important message about the need to invest in America’s aging airports.  Beginning today, passengers in airports will have the opportunity to hear directly from ACI-NA on the benefits of an improved and modernized airport system.  Watch by clicking below.

We couldn’t think of a better way to get our message in front of those who stand to benefit the most from the improved passenger experience, increased airline competition and lower airfares, and enhanced safety and security that will come when we meet the nearly $130 billion in infrastructure needs of America’s airports over the next five years.

We are proud to count CNN Airport Network as a valued ACI-NA member and an active participant in our Beyond the Runway Coalition.  CNN Airport Network’s tremendous support for our industry is greatly appreciated as we ramp up our efforts to engage in a broad conversation about the importance of modern airports to local communities.

For the latest on Infrastructure Week, visit the Centerlines NOW blog or following along on social media using #InfrastructureWeek #BuildForTomorrow.

Checked Facts: Airports Are Not Taxpayer Funded

Benjamin Franklin said there are only two certainties in life: death and taxes.  If there’s one more thing we can be certain of on April 15, it’s the airlines continuing to spread misinformation about how America’s airports are funded.

It is common misconception that airports are funded with taxpayer dollars.  In reality, infrastructure projects at airports in the United States are funded through three key mechanisms: federal grants through the FAA’s Airport Improvement Program (AIP), the Passenger Facility Charge (PFC) local user fee, and tenant rents and fees.

No matter how many times the airlines repeat it, the PFC is not tax. The PFC is a local user fee that airports rely on to repair aging facilities, improve aviation safety, improve the passenger experience, create more airline competition to lower airfares, and accommodate rising demand.  With nearly $130 billion in infrastructure needs over the next five years, the PFC is the cheapest and most sustainable option available.

Here’s why:  The PFC empowers those who know the most about the local airport needs, infrastructure investments, and safety upgrades to make the best decisions for the airport while balancing the passenger’s interests. The PFC is collected locally and, unlike other aviation-related fees and taxes, stays local. It never gets passed to Washington, D.C. The PFC is the only funding tool that maximizes this kind of critical local control.  The airlines’ erroneous “tax” argument doesn’t hold water.

Today’s modern conservative movement is diverse and often fractious, so it can be hard to find unanimity on almost any issue. But when it comes to support for the PFC, conservative think tanks and advocacy groups speak with a clear voice in support of this quintessential user fee.

The Competitive Enterprise Institute, FreedomWorks, Heritage Foundation, Heritage Action, Reason Foundation, Council for Citizens Against Government Waste, Taxpayer Protection Alliance, and Citizen Outreach are some of the leading anti-tax and free market organizations that agree the PFC is a local user fee.

User fees represent a better way to pay for infrastructure. Under this system, the people who actually use the airport bear the burden of upkeep and modernization. That is the most fair and equitable way to fund it – passengers who don’t use the airport will never be asked to pay for it. Americans certainly deserve to keep as much of their hard-earned money as possible.  How else would they be able to pay all those exorbitant airline bag fees?

BNA Is Ever-Expanding

By Douglas E. Kreulen, A.A.E., President and CEO, Metropolitan Nashville Airport Authority

Nashville is on fire – there really is no other way to describe it. Always a great place to live, the city is now receiving an unprecedented level of attention from all across the country and beyond. National Geographic Traveller U.K. included Nashville on its “Cool List,” Business Insider named Nashville as one of the “33 Trips Everyone Should Take in the U.S. in 2018,” Forbes “The 20 Happiest Cities to Work in Right Now” list included Nashville, and the lists and accolades just go on and on. The word is out, and the world is coming here to see for themselves. In fact, according to recent U.S. Census estimates, 94 people are moving to Nashville every single day.

As aviation industry professionals, you know how this type of popularity and growth can put major demands on transportation facilities. The challenge is to anticipate and address those demands so as to best serve the aviation needs of the community.

The story of passenger growth at Nashville International Airport (BNA) has followed an irregular path. Nashville’s current terminal opened in 1987, built to accommodate the hub then-operated by American Airlines. Driven by that hub activity, BNA grew to serve more than 10 million passengers by 1992, though only 15 percent of which were origin and destination travelers. In the next year, however, American began reducing operations at BNA and ultimately “de-hubbed” from our airport, causing a steady decline in overall passenger traffic. As it turned out, the high water mark of 1992 would remain the passenger record at BNA for the next 21 years.

But the city and region continued to prosper, solid and steady, and passenger traffic grew likewise. With the end of the recession in 2009, Nashville boomed and growth surged, along with steep increases in air travel. Since then, we’ve been on a tear. By 2013, BNA finally surpassed that 1992 passenger record, and we would add an additional million passengers or more in each of the following five years, reflecting annual growth rates as high as 11 percent. Most recently, in our Fiscal Year 2018, BNA surpassed 14.9 million passengers, a ten percent increase, with nearly 90 percent origin and destination traffic.

This torrid growth required a response. Today’s passenger numbers are years ahead of the forecast found in our last master plan. It was clear to our Board of Commissioners and executive team that expansion plans needed to be finalized – and accelerated – to accommodate the region’s aviation needs.

So in 2016, after additional passenger analysis and forecasting, research and planning, we launched BNA Vision, our dynamic growth and expansion plan for Nashville International Airport. Upon its completion in 2023, BNA Vision will include a parking and transportation center, a new Concourse D, an expanded central terminal, an airport administration building, a possible hotel and transit connection, and a state-of-the-art International Arrivals Facility, among other features.

This billion-dollar project will be completed in phases, as to limit inconvenience and allow the airport to continue all operations. Current projects under construction include a terminal garage and transportation center; a second garage with an airport administrative office complex on top; Concourse D and ticketing wing expansion; and a terminal apron and taxilane expansion to accommodate the construction of our future International Arrivals Facility.

Our focus is on expanding and renovating BNA, and we’re working at a swift pace to add more than 500,000 square feet to our terminal. But the cranes and construction only tell half the story. Expansion for us also means adding air service to make certain we are taking Nashvillians to as many places as we can in the world while also bringing the world to Nashville.

In May of this year, transatlantic service returned to BNA after a 20-year hiatus. The long sought-after and highly anticipated service to London’s Heathrow Airport via British Airways was largely made possible thanks to the support from our community, business leaders, state and city officials and our Board of Commissioners. This new services truly opens Nashville up to the world with Heathrow serving as a gateway to so much of Europe and Asia. As our airport grows, and as Music City expands its increasingly recognized brand, we anticipate adding more international service to meet local demands and that of travelers worldwide.

And while we bring these dramatic changes to our airport facilities, it is vital that we maintain the sense of place and top-notch customer service our travelers expect. Nashville is truly a unique city – from the extraordinary food scene to the live music day and night for which we’re known. It is important to us that the moment you step foot off that plane you know you’re in Music City. This is top-of-mind with every decision we make during construction – the warm and welcoming vibe, the concession offerings, and especially the music. Our live music in the terminal program recently celebrated its 30th anniversary and touts more than 700 performances a year in six performance areas throughout the terminal, and we plan to add more. Nashville is southern hospitality at its best, and we want to make sure those values remain embodied in our approach to customer service.

So we’ve taken on a big challenge – expand the airport while maintaining that “Nashville feel.” We’re confident we will accomplish our goals thanks to the thousands of our hardworking colleagues and partners from all over Middle Tennessee. These are the people who make the aviation industry go. The people who show up every day, arriving before the sun rises and working until long after it sets, to open our storefronts and music stages, provide passenger safety and make sure our baggage systems are running while tackling so many other tasks necessary to make a modern airport function. Because of their commitment and dedication, we know the best days at BNA are in front of us.

And in this fashion, we’ll provide our world-class city with the world-class airport it deserves.

Crowd listening to a speaker at ACI-NA’s 2017 Annual Conference

Cheers to 70 Years: The Best Is Yet to Come

By: Kevin M. Burke, President and CEO, ACI-NA

2018 represents a great milestone for Airports Council International-North America as we celebrate our seventieth anniversary as the Voice of Airports in North America. Anniversaries like this provide a great opportunity to reflect on our past, celebrate our present and look ahead to the future.

As you know, air travel – and the world – has transformed immensely over the last seventy years. And our industry’s evolution along with it hasn’t always been easy or certain. That’s one of the chief reasons ACI-NA exists.

Then in a post-war world with a growing economy, air travel was increasingly accessible to the masses. As we entered the golden age of travel, airports faced many of the same challenges we see today, including burdensome government regulation, infrastructure and investment needs, and airline decision making.

Realizing that there was power in the collective, nineteen founding members convened in New York in 1948 to establish a body that would bring airports together in addressing the challenges and issues of an evolving aviation industry.  From there, our journey took off as the Airport Operators Council.

Looking back, this industry has overcome significant hardships and setbacks. From economic ebbs and flows to airline industry deregulation and airline consolidation to the September 11, 2001 attacks, this industry has always had to be nimble and responsive to the challenge of the day.

Your association has had to be nimble too. In the past seventy years, our name has changed from Airport Operators Council to Airport Operators Council International, and now to Airports Council International-North America in an effort to make room for our ever growing U.S. and Canadian membership and global connections.

While the issues of the past may sound familiar today, so much has changed. Today, airports operate more as businesses than they ever have before.  They are becoming cities unto themselves.

The current landscape presents many unique challenges that require solutions. Today’s airports are not your father or grandfather’s airport. We are seeing a change in the way technology affects air transportation across the world.

Meeting the demands of passenger and cargo growth has never been more important. Our airports must have the ability to modernize as they seek to accommodate rapid growth in passenger and cargo traffic. In the United States alone, airports need nearly $100 billion in infrastructure upgrades and maintenance in order to remain competitive with airports across the globe.

Solving today’s challenges are essential in order to lay the foundation for the future. As such, airports around the world are actively working to enhance competition, create efficiencies through technology, and improve the passenger experience.

There used to be more than thirty airlines that no longer exist because of airline consolidation. The future of the airport industry is at stake without an economic climate that fosters airline competition and choice.

Competition has many benefits in our industry, which can be enhanced through more air service routes and more airline choices. In order to ensure communities in North America remain connected to the global marketplace, we are actively working to make certain our industry – airports and airlines – are as competitive as they can be. Our work in this important area will only grow in the years ahead.

Technology will also be a large part of an overall improved and seamless passenger experience. Today, easiness is synonymous with technology. What new technologies can we use to our benefit? Biometrics is speeding up the boarding process for certain flights, and in a just a few years, all flights may be boarded with the scan of a face.

It’s clear that we must focus on enhancing the passenger experience for a successful future. But these challenges are too big for anyone to handle alone. And that’s where your association comes in.

Members always tell me the real value of ACI-NA comes through our ability to advance airport priorities in Washington and Ottawa, provide essential industry intelligence by keeping the pulse of the issues impacting airport operations, and foster industry collaboration by creating a forum to develop and exchange best practices.  The rich history of advocating for policies and services that strengthen airports will continue as we reflect on our accomplishments and look beyond the horizon.

ACI-NA is only as strong as its members and their active engagement. Our team is proud of the members we serve because of the profound and positive impact they have on local communities across North America. Thank you for your leadership.

Today, as we celebrate our seventieth year with a strong membership and transnational – even global with the establishment of ACI World in 1992 – reach, we recognize that there are obstacles still to overcome. We’re not done yet. We’re just getting started.

Here’s to the next seventy years.

Meet the Member: Rep. Jeff Denham

ACI-NA President and CEO Kevin M. Burke recently caught up with Rep. Jeff Denham, a member of the House Transportation and Infrastructure Committee, to talk about prospects for an infrastructure bill in Congress.

ACI-NA Celebrates 2018 Infrastructure Week at TPA

Infrastructure Week, a week-long celebration of the vast network that supports – and moves – the U.S. economy, is taking place this week. ACI-NA’s Airport Infrastructure Needs Study details that U.S. airports have nearly $100 billion in infrastructure needs through 2021 to accommodate growth in passenger and cargo activity, rehabilitate existing facilities and support aircraft innovation.

For Infrastructure Week 2018, Tampa International Airport hosted ACI-NA and Building America’s Future (BAF) along with members of the Tampa Congressional delegation for an event focused on the need for airport infrastructure investment. This video highlights the lawmakers and industry leaders who called for robust infrastructure investment during the event.

Silver Tsunami: Will Your Airport Sink or Swim?

By Sandy Smith

All it takes is one look around anywhere employees are gathered to see it: the unmistakable sea of silver hair. The workforce in airports – as in every industry – is graying. Some call it a “silver tsunami” and the wave of retirements coming could sink many an enterprise.

The youngest Baby Boomers turn 54 in 2018 – meaning we’re only about a third of the way through this large generation hitting the typical retirement age of 65.

For some airports, that is creating something of a talent drain. However, others have been preparing for this moment and have already come up with a plan – such as WCAA, the authority which manages Detroit Metropolitan Airport (DTW) and Willow Run Airport (YIP).

“We expected this and have been working toward being prepared as much as we can,” said Mary Mullally, deputy director of HR Organizational Development. That has led to a multiyear

refocusing on learning, leadership and, ultimately, succession plans throughout the organization.

The same issue is hitting consultants, too, said Brian Conlee of Conlee Consulting. And the retirements come at a time when airport development is growing significantly, causing a “shortage of mid-level candidates. When the economic conditions took a downturn, it scared a lot of the talent away from the industry.”

For those in all aspects of the industry, a succession plan can help combat one of the reasons people leave. “In most cases, people will leave an organization at the second tier for two reasons,” said Timothy McNamara, managing partner at Odgers Berndtson, LLC, an international executive search firm. “One is economic. The other is promotional opportunity. What’s my future going to be? What’s going to be my level of responsibilities? What is the likelihood of me being considered when there is a next C-level role opening up?”

GENERATION GAP

One of the biggest hurdles in succession plans comes due to significant demographic issues. As Baby Boomers plan to retire, the next generation – Gen X – is significantly smaller and can’t fill all the roles. Many of those standing in line ready to move up are Millennials – those born between 1981 and 1997.

While Millennials are often knocked as challenging in the workforce – they want constant feedback and responsibility well beyond their experience, most studies show – Mario Rodriguez, executive director of the Indianapolis Airport Authority, sees it differently. “They are, bar none, the most talented and influential generation that this country has ever had,” he said. “If they get really excited about something, things happen.

Millennials are more likely to question the status quo and move the needle.”

At IAA, that has meant creating an ascension plan. “It boils down to having our Baby Boomers provide the sort of wisdom that they’ve gathered over the years,” Rodriguez said.

That is paying off at IAA, where a leadership development program starts early, before the talent has been hired.

“We’re recruiting for drive and talent, not experience anymore,” Rodriguez said. “I can train.”

Seeing a career path is paramount to keeping them. IAA’s leadership development program moves Millennials into different careers where “they get a chance to have their voices heard. They get to work on things they wouldn’t normally get to work on.

Instead of molding Millennials to what to them and modeled this organization in response.”

That has meant offering free and fast WiFi for travelers, something the Millennial staff insisted was necessary. It also has meant allowing rideshares and electric vehicles. IAA also has a large electric bus fleet and significant solar panel array – both designed to boost bona fides among environmentally conscious Millennials. “In a place that you wouldn’t think would be very focused on the environment, we focus on sustainability because we have a large group of Millennial employees who feel very deeply about it.”

So if IAA is being transformed by its young workers, won’t it just be prime recruiting ground? Rodriguez sees that it can work regardless. On the one hand, creating the right work environment is likely to build loyalty. On the other, “if we’re able to build that entity that people recruit from instead of us recruiting from other people, we’ve actually done our job and created an immense value for our community at large. If we retain talent here in Indianapolis, or if we bring in organization in Indianapolis, we’re still building public value.”

SIZING UP THE NEED

If you’re not looking at your current roster to assess who is ready to move up, understand that others probably are.

“I have quite a few clients who are more than willing to look at talent ready for the next move, where maybe at their current firm, there’s a logjam at the positions and not much room for upward mobility,” Conlee said.

Of course, as a public entity, airports don’t usually have the luxury of creating positions that allow people to step up while waiting for that logjam to break. And they likely can’t create a position for a strong outside candidate.

“Barring a major reorg, airports have a chartered structure to live with,” said Grice Whiteley, principal at Grice Group, LLC. “Due to budgets and risk aversion they don’t just spontaneously hire people permanently – no matter how great of a talent they may be – without some political and professional consequences for everyone. Having good recruiting tools and good networking certainly gives airports a competitive edge, which they all desperately need.”

Whiteley’s clients are most often in the private sector where “they can be a little more flexible and adaptable and scoop people up and find a position for them.”

No succession plan is perfect and, yes, there will be times when training is invested in someone who takes another job.

“People tend to move out to move up,” Whiteley said. “The machinery chugs along and the person you were grooming is leaving to go to another airport, even if you hired them specifically to groom them. It’s an unavoidable process. There are some airports that are more agile to adapt and hang on to people.”

Even those who get succession planning right still have to endure those times when the next best leader chooses to leave. “Career moving is going to happen because of life,” Whiteley said. “They have kids or get married or need to move closer to parents. It’s not anything you can predict. I don’t know if there’s anybody who has a perfect model.”

But there are issues that the industry must address – and one is a lack of ability to move to the CEO role internally, McNamara said. “A huge percentage of CEO roles are filled by external candidates, by searches that are required to be conducted because the CEO leaves. Very few are based on internal promotions. You have to ask yourself why. For the most part, CEO and other C-level changes are event driven.

It’s not based on a strategy.”

A STRATEGIC DECISION

Strategy is absolutely the place to start with succession planning, says Mario Diaz, Aviation Director for the Houston Airport System. “It’s not about moving people, but setting a strategy.

What does the airport need to do to be successful? Once you have your strategy down, then you start looking at people who are able to deliver on that strategy.”

He believes that every manager should identify one or two individuals who have the potential to replace that manager. “And yes, it is ‘replace you.’

Someone needs to replace me. I know that I could walk out of here tomorrow and could say, ‘Any one of these two or three people could do the job.’ You have to expect that at every level of the organization.”

The names submitted for consideration should go to an executive team that includes a human resources representative and other chief officers. “You bring those managers in and review the individuals that they’ve recommended. You look at resumes and performance, the things they have accomplished and why that manager thinks they are a good candidate.”

If the successors are chosen, then it is up to the executive team to make sure that “they get the development and attention they need to move forward and be successful,” Diaz said. “Once you identify those people, you make good on the promise that these would be the individuals to move up. It’s easy in the formulation. It’s in the execution where it gets difficult.”

In Houston, Diaz oversees two international airports—George Bush Intercontinental and William P. Hobby— as well as the much smaller Ellington.

“I’ve worked in airports of all sizes and this strategy can be used at any size organization,” he said. “If you’re in a smaller airport, the strategy is probably less complicated.”

And this is where it comes back to knowing the long-range plan.

People identified for leadership— particularly those groomed for senior level positions—should be trained in all aspects of the operation.

“Everyone understands operations, the international rules and regulations, and border protection. But how many people really know how the business makes money? How to go out and call on an airline to land a new route? What capital development is all about? If

there’s an opportunity to move up, you have to make sure they’re ready.”

He believes the role of CEO includes training those next leaders. “You can’t just call in a consultant and say, ‘Put in a succession plan.’ You have to think it through.”

Leaders also have to “make tough calls about individuals,” Diaz said.

“Sometimes one of the hardest things is to recognize that you’re looking at the resume of an individual who doesn’t have a lot of opportunity to move up.

That’s going to be a tough conversation to say, ‘You don’t seem to have the skillsets. You may want to go back to school.’ Even in those circumstances, you have to realize that everyone has value. Help them with what they want to accomplish to the extent that you can.”

TRAINING: AN IMPORTANT STEP

Succession planning is about far more than simply putting a name next to a position. It’s about making sure the person identified as a likely successor is ready when the role opens up. And it

means being honest about their hard and soft skills.

“You have to assess the management assets that you have,” McNamara said.

“You’ll have to make the tough decisions about people who fit your strategy and those that don’t. Then you have to also provide the resources to the CEO and management team to provide training and coaching to those individuals that you want to bring along. At the end of the day, these investments are still going to cost a lot of money. If you don’t invest in assessment and training and leadership development, ultimately, you’ll have to pay for that anyhow through additional hiring and the cost associated with organizational turmoil and instability.”

Investing in a new educational platform isn’t always the obvious first step in succession planning. But Mullally said the WCAA saw it as necessary, but just the first step. Collective bargaining agreements had to incorporate a pay-for-performance model.

“The notion of doing development training with the benefit of a bonus has been really successful,” Mullally said.

“We’ve seen an increase in engagement in our program every year.”

With the performance piece of the puzzle in place, it was time to build in the succession plan. And at WCAA, it’s a two-way street. The tool allows employees to post their resumes and to express interest in jobs that are opening or future jobs that may come along. “They can see where they match and where they don’t match,” Mullally said. “They can fill the gap with their development plan and pursue their bonus.”

Managers evaluated employees on succession metrics, including career preferences and what development is needed in the next one to two or three to five years. “The manager is able to rate each employee on their interest in advancement, their interest and capabilities and their succession readiness timeline,” Mullally said.

“We also have them identify the team’s impact of loss and probability of loss.” That latter aspect touches on identifying those who are planning to retire. “We’re able to identify critical roles throughout the organization, not just for our leadership team. We wanted this to be enterprise-wide, to really prepare for succession at all levels.”

And it is paying off. In 2014, when the program launched, 28.6 percent of employees were identified as ready for the next level in a year or two, while 71.4 percent expressed interest. By 2017, 48.9 percent were deemed ready for promotion in the next one to two years, while 82 percent expressed interest.

“This was not intended to pre-select someone for another job,” Mullally said. “It was to focus on where we want to develop employees based on their interest and their current capabilities.

This data is helping to close the gap.”

It also helps that managers are more proactively expressing interest in their careers, she said. “It was unheard of before, for a manager to say, ‘What do you want to do next?’ Now, it opens the conversation. The fact that we are backing this up with the pay-for-performance program provides reinforcement that this is important to the organization, that we want to see them develop and be interested in their own careers.”

While the program was intended to be used throughout the organization, early on it revealed a high probability of loss in senior leadership. That meant a need to develop leaders quickly. A Leadership Academy was launched. Those who participate in the academy network throughout the organization and produce a Capstone team project.

It has allowed the authority to test the talents in tackling issues such as what to do with surplus food. The Leadership Academy’s proposal was so innovative, it earned a state grant.

A related program, a Supervisor Institute, also was launched. It works similarly, but is more streamlined. The robust training program is key to succession planning, Mullally believes.

“That was our vision from the beginning. When we started to implement the learning platform, we knew it had to support succession planning. We had that as our end game, but knew we couldn’t do it without the foundation of learning and performance.”