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?

Airports Gobble Up More of the National GDP

 

Every year, Thanksgiving brings an opportunity for American’s to celebrate and give thanks for what is most valuable to them. ACI-NA has always maintained that airports are valuable economic engines for their local communities and the nation. I’m thankful that still stands true today.

Our latest economic impact study finds that the 493 commercial airports in the U.S. have a collective national output of $1.4 trillion. That equates to a contribution of more than 7 percent to the GDP. What’s more, airports support a total of 11.5 million jobs and create a total payroll of $428 billion.

It’s clear airports are an important piece of the pie when it comes to our economy. But, these numbers also highlight the challenges facing our airports to meet the growing demands of the future.

Last year, more than 1.8 billion passengers arrived at and departed from U.S. airports.  So far, our airports are on pace to surpass last year’s numbers even as we embark on the busy holiday travel season.

Last week, TSA estimated 25 million passengers will travel through airports during the Thanksgiving travel period this year. That’s an increase of 5 percent from 2017.

With the number of passengers on the rise, our airports are at risk at falling. Airports have nearly $100 billion in significant infrastructure needs that threaten their ability to serve their passengers, grow their local economies, and create good paying jobs.

This economic impact study will serve as a staunch reminder to policymakers in local communities and Washington, DC that airports are valuable assets. In fact, it only helps us make our case that we must provide airports with the tools they need to make local infrastructure investment decisions.

I encourage you to join us in sharing the impact of your airport in your community with your policymakers and local partners.  As a collective voice, we can amplify the message that America’s airports need additional infrastructure investments to remain the powerful engines of economic growth they are.

Happy Thanksgiving!

 

Kevin M. Burke

President and CEO

Airports Council International – North America (ACI-NA)

 

Communities Left Behind and Airline Industry Consolidation: The Promise of Airline Deregulation Has Only Partially Been Fulfilled

To commemorate the 40th Anniversary of the enactment of the Airline Deregulation Act of 1978, championed by Dr. Alfred E. Kahn while serving as Chair of the Civil Aeronautics Board (CAB) under President Jimmy Carter, various industry experts were asked by the JDA Journal to comment on “whether the Airline Deregulation Act is meeting Dr. Kahn’s vision.” The following is the contribution by ACI-NA General Counsel Tom Devine.

 

The Airline Deregulation Act of 1978 has certainly provided benefits to consumers in many areas, as airlines and others often point out, but the promise of deregulation has not been fully realized, and many communities have been left behind.

Dr. Kahn assumed we could rely on market forces to supplant government regulation, but industry concentration is now higher than it was prior to deregulation, due to waves of industry consolidation in the past decade.  It is also likely that Dr. Kahn did not anticipate the advent and widespread use of ancillary airline fees (totaling more than $20 billion in 2017) that distort market signals.  Moreover, the paucity of viable new entrants and the dominant carriers’ reaction even to small-scale challenges from other carriers has meant that the market has not always been effective in curbing anti-competitive behavior of dominant airlines.  A distorted or constrained marketplace does not realize the benefits of true competition.

Competition also depends on access by airline competitors to necessary airport facilities, such as runways and terminals.  Preserving and enhancing competition was a key goal of Congress in 1990, when it restored, in a limited form, airports’ right to impose per-passenger fees to raise money for necessary airport capital improvements.  This was critical, because, while dominant hub carriers, for instance, were willing to finance improvements to benefit themselves, they were naturally reluctant to fund facilities that would enable competitors to gain access to the airport.  The PFC statute helped solve this dilemma and enhanced competition by explicitly (1) providing that airline agreements could not govern the imposition or use of PFCS and (2) precluding the leasing of PFC-funded gates on a long-term, exclusive use basis.

Unfortunately, the PFC was initially capped at $3 per passenger in 1990 and has only been raised once, 18 years ago, to $4.50.  The erosion of PFC purchasing power over the years–coupled with the fact that many airports’ PFC capacity is fully committed to pay off projects already constructed–thwarts airports’ ability today to fund the necessary infrastructure to provide for competitive entry.

While the ADA provided some mechanisms for addressing communities and consumers that have been disenfranchised, such as the Essential Air Service program, their effectiveness has proven to be limited.  Reduction in air service is the biggest concern of many of our non-hub, small hub, and medium hub airports throughout the country.  While airports are working diligently to take the self-help steps they can to induce, attract and retain air service, the tools and resources available to them are quite limited.

It is in everyone’s interests — airports, airlines, consumers, communities, businesses and the government, alike — to come up with creative and effective ways to ensure that small and medium-sized communities throughout the country have access to, and connectivity with, the national air transportation system and that there is effective competition throughout the system.  Airports currently produce $1.4 Trillion in economic activity.  Expanding access to the national network of vibrant aviation activity to underserved markets and ensuring true competition throughout the system will allow the economic and social benefits of Deregulation to be realized by all.

A version of this column originally appeared in JDA Journal on October 23, 2018. Read the full article, “40th Anniversary of the Airline Deregulation Act: Retrospectives from 7 Different Perspectives” >>

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.

What’s On Trend for 2019?

By Sandy Smith

As airports continue to focus on an improved customer experience, they are looking beyond and outside of the box to pinpoint areas that could use improvement – even though there might not be any obvious need for changes. Figuring out what travelers need – before they have figured it out themselves – is what sets airports apart and leads to an airport becoming an experience and adventure, not just a waypoint.

Getting travelers in and out smoothly and providing creature comforts can make or break a traveler’s perception of the airport, too. This important leg of the customer journey requires skilled service providers who bring unique services. These valuable partners can provide much needed services when there’s been a flight delay or a connection missed. And they might just employ the first human a traveler speaks to on their journey.

The coming year will see these service providers continue to grow in importance to the traveler experience. HMSHost and Uber – both Platinum Plus ACI-NA members – are more than ready for the task ahead and want to help you be ready as well.

Food & Beverage and Retail Morphing Into Immersive Experiences

HMSHost Shares Insights from the Front Lines

Recently Steve Johnson picked up the phone to hear a story from a happy customer.

It was her 10th wedding anniversary and her husband wanted to celebrate at his favorite restaurant. The restaurant, Wicker Park Seafood & Sushi, just happened to be one of HMSHost’s restaurants in Chicago’s O’Hare International Airport.

That story was just one more piece of evidence of the changing face of airport food. As President and CEO of HMSHost, Johnson has had a front row seat to see hot dogs and pizza give way to a true dining experience – if that’s what the traveler wants. As he looks at 2019, it is clear that the traveler is firmly in control and HMSHost and airports are there to ensure that they get what they want. Top of that list: feeling like they’re actually in the city in which the airport resides.

“If you’re looking at where we’re headed in restaurants and food and beverage, we’re focused on an immersive, cultural experience,” Johnson said. “Local brands were the beginning of this process, where you’re trying to create a sense of place, a local feel.”

Food is no longer about filling the tanks after a long day of traveling or grabbing a sandwich for the plane. It’s about creating a dining experience that is worth bragging about.

“If it’s not Instagrammable, it’s not important,” Johnson said. “If they can take a picture of a well-done particular plate, something that their friends would not be able to experience, then we’ve done something.”

The move toward local brands has brought an evolution in HMSHost, too. The company has gone from operating around 100 brands eight years ago to well over 320. Instead of having one restaurant and bar in every airport, it will bring in local name plates, local foods. But that has brought changes, too.

“It took a few years to figure out how to translate local brands to airports,” Johnson said. “It’s a completely different business. Your timeframes are really different. Menus and processes have to change. You go into a 400-square-foot kitchen compared to 2,000. We also found that some of the best local restaurants had no standards or recipes. We had to start from scratch.”

NEW MEANING OF LOCAL

Locally harvested has grown alongside the local branding, and that trend will continue to expand into the coming year. Johnson attributes that to millennials, who want to know where their food comes from. It is an aspect of the overall evolution to more healthy options in the airport.

“Millennials look at things differently and they’re driving some of these changes toward a clean diet with less processed food,” Johnson said. “You make a pizza differently today. It used to be that every pizza made in an airport was from frozen dough. Today, it’s wheat flour, procured locally and made and cooked the same day. It’s made the process more complicated, but certainly more enjoyable.”

These days, most meats, dairies and proteins are procured less than 100 miles from each airport, Johnson said. “It’s changed our supply chain, but for the better.”

TECHNOLOGY DEMANDS

While the move toward local has created opportunities for memorable dining experiences, it has presented HMSHost with a dilemma: integrating technology into its operations. Since it operates restaurants under brand names, customers might be somewhat confused. Take Starbucks, for instance. Outside the airport, the customer can use the Starbucks app to preorder a drink. Not so inside the airport. But Johnson is determined to fix that in 2019.

“Mobile order and pay is probably the biggest gap in what we have today,” Johnson said. “You could be sitting in your office and pull out your phone and book a flight, call an Uber, go through TSA and board with your phone. When you land, you book your hotel and call another Uber. You can check into your hotel room with your phone. In that traveler journey, the only thing you can’t do is order a meal.”

It is a huge hurdle with 2,000 restaurants and 320 brands. “We need to be able to connect to their app through our system,” he said. “That digital journey and handshake is quite complicated.”

The company pilot tested 10 Starbucks with mobile order and pay in 2018 and expects to expand that more fully in 2019.

“You can order your Frappuccino as you come through security. It will tell you your drink will be ready in 12 minutes. You’ll be able to walk up, grab your drink and go. That’s the piece that we want to replicate to as many of our locations throughout the airport as possible.”

It is just one more way that HMSHost is attempting to meet the needs of the traveling customer. It is a juggling act, to be sure. For every person who wants to eat healthy, there is one who wants a treat while traveling. For every person wanting to take a respite and linger over a meal, there is another who needs to grab something in those few minutes on a layover. For every person who wants to be left alone to work (and recharge their phones and spirits) at a restaurant, there is another who enjoys the community table where they can meet fellow travelers. Community tables, by the way, are proving popular. “We don’t build a restaurant without them anymore,” Johnson said. So too are electrical plugs and WiFi; both are essential in every new construction, Johnson said.

Ultimately, it is about giving “customers the choice to decide what’s important,” he said.

He anticipates that choice may be available within the restaurant, too. “I envision the future where you ask, ‘Would you like full service or self service?’ The customers will be in full control of their dining experiences and can leave at their leisure. They won’t be dependent upon anyone to bring the check or return the credit card.”

Smoothing out any bumps throughout the traveler’s day is one of the most important roles that HMSHost plays for its airport and airline partners, Johnson said.

“If you think of a customer’s journey, they have shown up an hour and a half ahead of time, stood in line for 15 minutes to check their bag, gone through TSA and stood another 10-15 minutes. They’re pretty frustrated by the time they get to us. We get the brunt of it sometimes. It’s our job to understand that we can make or break the airport experience.”

Ultimately, the world of airport food has changed dramatically and Johnson finds himself hearing more stories like the anniversary trip for airport sushi.

“When I got into this business 20 years ago, if I told someone I worked in the food business in airports, they would make a face and say, ‘Did you lose a bet?’ When I say that today, they get a gleam in their eye and tell me about a great restaurant in a certain city. It’s no longer a punishment to eat at the airport. It can be a great thrill.”

And it is one that HMSHost is pushing to continue into 2019.

 

Ground and Air Transportation Goals Coming Together

Alignment Is in Commitment to the Customer, Says Uber

While airports focus on creating a happy customer experience onsite, Uber is focused on getting travelers out of the airport. Those goals aren’t as opposing as it might seem.

“Uber and airports are aligned around our commitment to the customer,” said Marcus Womack, Uber’s Director of Product Management. “We believe Uber, airports and airlines can and should be working together to solve the points of friction throughout the passenger journey.”

And for good reason. “Simply, customers have come to expect to have the option to take an Uber or other app-based rides to and from the airport,” he said.

Airports, with their dependable passenger load, are equally as important to Uber drivers. That’s why Uber has focused on expanding its partnerships around the globe. Currently, the company is in 500 airports around the world.

Solving issues for passengers, drivers and airports is a significant goal for Uber in 2019.

IMPROVING THE CUSTOMER EXPERIENCE

Airports haven’t always kept up with this rapidly evolving transition to ridesharing. The result has brought frustration for travelers, especially as they arrive at their destination airport. “We know that a big pain point for passengers is they don’t know where to find the pickup point. Further, they might not know when to request their ride if they don’t trust the driver’s ETA. This is often a function of staging lot location, congestion on the roadways, or confusing decision points for drivers in getting to the correct pickup location. Partnering together, Uber and airports can address this challenge to elevate the customer experience.”

Uber will focus on three areas to improve the experience for travelers in the coming year, Womack said. “First, we want to make it easier to find the pickup point through better wayfinding and signage. Once at the pickup point we want to make finding your driver fast and efficient. And most importantly, we want to reduce customer waiting times throughout the process and make it a stress-free experience.”

There are benefits to airports as well, such as improved efficiency and a reduction in environmental footprint.

Recently, Uber partnered with several ACI-NA members to define standards for a TNC wayfinding icon and nomenclature at airports. The result of extensive survey data, the consortium distilled a clear, uncluttered icon showing a car and a map pin situated on smartphone screen, and identified “Ride App Pickup” as descriptive, simple, and neutral nomenclature. “We are actively working with airports now to implement this new standard,” Womack said.

Uber tools could help with airport traffic congestion, as well. The company has developed multiple programs that could speed passengers’ trips in and out of the airport. UberPOOL pairs travelers with others while Uber’s Rematch allows drivers who drop off a departing passenger to immediately find a passenger who just landed.

Driver satisfaction and ease is equally important to Uber, which has been working with airports to improve staging areas for its drivers, Womack said. “We want to make sure staging lots have appropriate facilities for drivers to rest, use the washroom, and even get a snack. Partnering with airports to provide these essentials is key.”

PARTNERSHIP POTENTIAL

Uber’s relationship with airports has had some bumps along the way, especially early in its disruptive launch. But the new Uber brings with it a “change in tone and culture” Womack said. Increasing partnership opportunities with airports is a goal. The company has organized a team focused solely on building those partnerships and creating new products to create that experience. It means more frequent conversations about how Uber can help “reduce congestion, participate in landside redevelopment projects to improve efficiency, and plan for the way our customers will want to travel in the future. We know airports plan in five- to 30-year cycles, and we’re eager to join the discussion on the evolution.”

Those are not just words. Already, Uber has named Toronto Pearson International Airport as its first Innovation Hub.

“Uber’s commitment is to configure the airport with the best and most appropriate technology available, utilizing YYZ – an airport where we recently launched peer-to-peer ridesharing – as a pilot for new products we’re building that decrease congestion, drive down wait times, and increase throughput,” Womack said.

Consider Uber just another form of transportation, a relationship not unlike that of the airline to the airport. “Think about how an airline operates with respect to branding, dedicated parts of the terminal to serve its customers, and its preferential or exclusive use gates,” Womack said. “In many cases what we seek isn’t all that different. Our ideal operating environment would include some level of (a) dedicated pickup zones, (b) elevated passenger experiences, (c) amenities for drivers, (d) active traffic management for pickup zones, and (e) reasonable pick up/drop off fees that reflect the cost of our operation to the airport and the value provided to customers.”

It is a two-way street, too. “We are thinking deeply about tomorrow’s travel experience and partnering with select airports throughout the world where we will invest significantly in operational excellence, best-in-class product technology, and an elevated passenger experience where you may find Uber lounges or other amenities to improve or at least de-stress the travel day.”

Uber’s new e-bike Jump showcases how much the company is expanding into all facets of transportation. “For riders, imagine a one-stop shop where you can figure out the best, most affordable transit option for you – whether that’s a car, public transportation, a bike, or some combination.”

SOLVING BIGGER CHALLENGES

Together, Uber and airports can solve bigger issues that extend well beyond the passenger pick-up and drop-off. Uber recently launched a pilot EV Champions Initiative program in seven cities – Austin, Los Angeles, Montreal, Sacramento, San Diego, San Francisco, and Seattle – to help drivers understand more about electronic vehicles. It includes new in-app features built specifically for EV drivers. “We hope to work with airports to help us scale our efforts in the EV space, particularly as it relates to fast-charging infrastructure,” Womack said.

Ultimately, Womack believes that some of the greatest challenges facing airports are shared by Uber. “We recognize how the major shifts in transportation are having an impact on airports and cities across the globe. We share the goal of creating a great customer experience while working through the challenges of congestion and operational efficiency, all while balancing cost. These are similar challenges Uber faces. We’re committed to working together to deliver products and services optimized for today’s infrastructure while partnering together for a future with transportation options optimized for the future airport.”

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.”