ACI-NA President and CEO Kevin M. Burke recent caught up with Rep. Sam Graves, a member of the House Transportation and Infrastructure Committee, to talk about his love of aviation and the prospects for an infrastructure bill in Congress.
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.
By Doug Newson, CEO, Charlottetown Airport Authority
Operated by the Charlottetown Airport Authority Inc. (CAA), the Charlottetown Airport (YYG) is located in Canada’s smallest province, Prince Edward Island (PEI), or as the locals like to call it, “The Island.” Although small in size – with a population of about 150,000 residents – thanks to the beautiful beaches, world-class golf and delicious culinary products, we are one of Canada’s most popular tourism destinations, attracting more than 1 million visitors each year. Being one of three entry points on to the Island, the airport’s importance to the province, and especially the tourism industry, is significant. So, by connecting Islanders to the world and the world to our Island, YYG is inspiring Island travel – at record levels.
PEI has seen four consecutive years of record tourism growth, which has resulted in record traffic levels for the Charlottetown Airport. In 2017, passenger traffic surpassed the 370,000 mark for the first time. This outdid our previous high by more than 15,000 passengers. In the past 10 years, passenger movements at our airport have increased by 57 percent. Our recent growth has been driven by significant capacity increases from our main airline partner, Air Canada.
In 2016, Air Canada introduced their leisure airline subsidiary, Air Canada Rouge, to our market, bringing Airbus 319 and 321 from Montreal and Toronto for the first time – a great product for our busy summer season as well as the meetings and conventions sector that thrives in the shoulder seasons on PEI. The Air Canada service is complemented by our other main airline partner, WestJet, that operates two 737 aircraft per day to Toronto in the peak summer season.
Over the past two years, CAA has been investing heavily in its airside infrastructure. In 2017, we completed our second year of a three-year, $25 million Runway Improvement Program – the largest infrastructure investment in CAA’s history. Already providing a $115 million economic impact to our province, this investment will drive further economic growth from YYG by creating jobs for Islanders while also improving our infrastructure and operational effectiveness.
The first phase of the program, which took place from 2016-2017, saw the addition of 2,000 feet to our 5,000-foot crosswind runway, 10-28.
The project consisted of earthwork, installation of a drainage culvert, gravel, asphalt, electrical upgrades, and the construction of two RESAs (runway end safety areas). This project progressed very well and produced some impressive numbers: 50,000 truckloads of earth were moved, 50,000 tonnes of gravel was spread, and 8,000 tonnes of asphalt laid. Expanding runway 10-28 gives us two 7,000-foot runways to significantly improve airport operations, flexibility and safety in different wind and weather conditions. It also means there will be no negative impact to Islanders and tourists in summer 2018, when major rehabilitation work is required on our main runway, forcing the closure of this runway for the entire peak tourism season.
As 2018 progresses, we are now into this final phase of the Runway Improvement Program, which consists of the rehabilitation of Runway 03-21 and connecting taxiways Alpha, Bravo and Charlie. Major components of the work are grading and drainage improvements, storm water replacement, electrical replacement and rehabilitation, and reconstruction of the pavement structure. The primary objective of this project is to ensure the continued safe operation of the Charlottetown Airport so that it can continue to capitalize on recent growth trends and drive economic value for our community.
As mentioned, tourism is a significant growth factor for our airport but with our growing numbers we also feel confident in saying we are proud to be the launch pad for Islanders’ adventures all over the world. This past year we thought we would celebrate that by asking Islanders to share their travel adventures and photos with us. The response was overwhelming. Hundreds of people submitted photos that capture the energy, inspiration, wonder and excitement of exploring a new destination. As an ode to our travelers, we’ve created a curated photo display in our departures lounge with a selection of 100 photos from nearly 30 countries that span every continent. We call it Just Go! The installation also features an interactive touch screen component that allows passengers to view more about the travelers and their stories. It’s a celebration of our customers, their travels and the adventures that inspire others to explore the world. They certainly inspire us in our work to help connect Islanders to the world. Our vision here at the Charlottetown Airport is simple.
We want to provide an exceptional passenger experience, with genuine Island hospitality. As we look to the future, we will never lose sight of this vision and continue to invest in our airport to meet the needs of our residents, visitors and those coming to our Island for business. New programs and services to enhance the passenger experience are on the horizon, as we understand the importance of maintaining and improving our services and facilities to inspire “Island” travel.
By Ricondo & Associates Inc.
The increasing use of electronic commerce (e-commerce) has changed the landscape of global retailing and is affecting activity at airports. The development of e-commerce includes retailing in airport terminals, but is more significantly related to an airport’s interaction with the business, logistics, and cargo networks that can provide competitive advantages to companies in, for example, assembly, sortation, regulation, speed, assurance, and cost of delivery. The widely anticipated growth of e-commerce worldwide presents significant opportunities for airport owners to recognize trends, support the e-commerce business network to the benefit of their tenants and their own financial results, and contribute to regional economic development.
Several overlaying developments contribute to the growth of e-commerce:
- Increasing concentration of the world’s population in urban areas with global connectivity, which increases the importance of the world’s airports in moving passengers and goods around the world.
- Increasing self-owned, single-person businesses, also frequently referred to as the “gig economy” or “on demand economy.”
- Technological advancements to enable globalized commerce.
LEADING E-COMMERCE MARKETS
There are varying estimates of e-commerce sales by country, but, in most cases, China is shown as the leader because of its very large population base and rapid adoption of technology.
E-COMMERCE GROWTH IN UNITED STATES
The United States is the second largest online market in the world (following China). Many U.S. retailers are investing in international operations, and many international e-retailers are investing in the U.S. market.
Online sales still represent a relatively small share of total retail sales in the United States (about 8 percent in 2016), but the online share has been increasingly rapidly. This illustrates the potential for significant future growth in e-commerce in the context of the very large overall U.S. retail market.
LOGISTICS AND DELIVERY ARE KEY TO E-COMMERCE
E-commerce, in most cases, replaces the experience of shopping at a brick-and-mortar store, and requires the delivery of goods to the purchaser. According to the U.S. National Retail Federation, about 60 percent of online sales in 2015 included free shipping.
Free shipping is a competitive advantage, but also a cost. Combined with increased demand for speed of delivery (2-day, 1-day, or same-day), shipping to individuals is a major logistical challenge central to the business offering.
National postal services have become more relevant with the rise of e-commerce because of their networks of local couriers and ability to deliver to individual residences. Delivery is more complex with cross-border trade—myriad issues exist, such as multiple operators, customs clearance, customer payment, taxes, and currency exchange challenges.
One area of interest for e-commerce is the potential for drones to deliver packages, and thereby solve one of the more costly and complex elements of e-commerce fulfillment. The potential for drones is particularly important for airport owners to consider because, if there is an alternative delivery method, questions arise regarding investment in airport facilities for more traditional air cargo and the potential airport role in supporting the use of drones for e-commerce delivery.
OPPORTUNITIES FOR AIRPORTS
Airport owners have multiple opportunities to participate in the growing e-commerce business.
Strategies need to be developed in accordance with the local setting—geographic location, economic fundamentals, and airport infrastructure. With the continued globalization of economic activity, and the associated increase in cross-border e-commerce, airports with established international gateway operations and networks of logistics businesses familiar with the intricacies of international trade will be well-positioned.
The Miami-Dade Aviation Department, operator of a system of airports in Miami-Dade County, Florida, has invested in strategic planning to leverage the combined (1) rapid growth in e-commerce, and (2) Miami’s unique position as an international center of commerce and air cargo for Latin America. A multifaceted approach to analysis and planning includes evaluating cargo infrastructure needs and the potential use of various airports in the system, and coordinating with stakeholders on-airport and in the community.
Recently, the Miami-Dade Aviation Department conducted a workshop with airlines, integrators, logistics providers, community economic development leaders, and others to discuss challenges, opportunities, and collaboration strategies related to e-commerce.
By Jimy Baynum
The idea of a “smart airport” may seem unobtainable. Occasionally, massive crowds, delays and various other touchpoints from check-in to the gate can affect airport visitors’ experiences and make it hard for them to imagine that they are in an intelligent environment. The problem lies in the fact that many airports, especially the nation’s largest airports, weren’t built to handle the current volume of traveler traffic, often exceeding their design limits by millions of travelers, according to Michael Taylor, director of J. D. Power’s airport practice.
Yet, airports have found ways to overcome infrastructure limits by working on the things they can influence. One way they have done so is by turning to a technology that is helping to create smarter, more efficient airports – the Internet of Things (IoT). But the value of IoT lies not in connectivity itself, but in the new information it can provide – and the actions you can take based on that information.
It’s no secret that data has the ability to transform a business and offer it greater opportunities for competitive advantage. It enables executives to measure results and performance and, therefore, manage more precisely than ever. It enables leaders to make better predictions and smarter decisions, as they can identify pain points and target more-effective interventions based on precise data, rather than gut and intuition. Companies that have transformed their business models to be data-driven have seen greater financial and operational success. In fact, companies in the top third of their industry that use data-driven decision-making were, on average, 5 percent more productive and 6 percent more profitable than their competitors. Airports have already applied IoT to improve check-in, security screening and the food, beverage and retail shopping experiences, so why not use it to improve cleaning operations?
Real-time data is a powerful change driver that enables better-informed and faster decision-making. When airport facility managers and their cleaning staff are empowered with real-time data about cleaning needs, the very logic for how cleaning can be done changes and operations are dramatically improved. It becomes possible to be proactive and do exactly what is needed when and where, and handling a complex facility like an airport is transformed into a fact-based science.
This is data-driven cleaning.
By knowing what issues need attention and where, staff’s time is not wasted on unnecessary work checking for issues, thereby improving overall efficiency. This time means cleaners can go the extra mile to ensure travelers have the best experience in an airport, with managers resting assured that
nothing has been neglected. This real-time information also provides airport decision-makers the ability to analyze the data over time to improve planning, purchasing and logistics.
Data-driven cleaning also enables higher quality facilities with no more empty bathroom dispensers and untidy gate waiting areas. By keeping airport facility managers well-informed of restroom or gate traffic, and alerting them exactly when and where issues arise, staff can proactively address a refill need for each restroom and dispenser. This ultimately helps reduce the number of complaints and creates a well-cared for environment that increases visitor satisfaction and cleaning staff productivity.
Leveraging data also reaffirms cleaning staff’s sense of purpose, helping to improve their engagement and well-being. Your people are your most important resource. Work feels meaningful when they know every task matters, as they know now that each stop they make makes a difference, meaning better control, less stress and a more balanced working situation.
While the cleaning industry has already seen a boom in technology, such as automated cleaning robots, in recent years, the latest shift toward data-driven cleaning is not about replacing humans with machines. Cleaning and facility management operations – particularly in airport facilities – are too complex and unpredictable for an automated machine to handle. This is why data driven cleaning becomes so important.
As MIT and Duke University researcher Mary Cummings writes, “As a team, the human and computer are far more powerful than either alone, especially under uncertainty.” <
Jimy Baynum is Director of Market Development, North America, Essity Professional Hygiene Business.
Airports Navigate the (R)Evolutionary Shift oF TNCs
By Nicole Nelson
Just beyond the busy holiday season, Eva Cheong recounted San Francisco International Airport’s particularly “rough Thanksgiving” in terms of bottlenecks in roadway congestion.
“When you would walk outside, every other car you would see had an Uber or a Lyft sticker on it,” SFO’s Associate Deputy Airport Director of Airport Services shared of the challenging day-to-day clogged curbside experience in late November 2017. “There are different camps, and the Transportation Network Companies are going to run into those because they are the newest player. But everybody looks to them to say, ‘It is all because of the TNCs.’”
Cheong is not pointing fingers, but readily admits TNCs have largely sparked a broader conversation about just how to reduce the overly crowded curbsides at SFO.
“TNCs have challenged us in terms of us trying to promote high occupancy vehicles and transit first because they’ve made it convenient and affordable for people to take a single vehicle to the airport.”
InterVISTAS Executive Vice President Peter Mandle said the TNC customer base at airports has expanded tremendously, not only in volume, but also with demographics in terms of age range and travel habits.
“As TNCs become more and more popular, the impacts of curbside congestion have become pronounced,” Mandle said. “People who used to use HOVs such as shared-ride vans or transit are now finding TNCs very attractive, and are using those to travel to and from the airport. And because they are transitioning from high occupancy vehicles to single-occupancy vehicles, they are adding to curbside congestion. That is a challenge at SFO, and it’s becoming a challenge at other airports over time.”
At Denver International Airport, Chief Commercial Officer Patrick Heck reports that explosive growth led to the establishment of an initial holding lot within the geofence when TNCs entered the market as a very small piece of ground transportation in 2014.
“The evolution was quick into a very similar story to taxis where we actually have a location where they wait to pick up passengers,” Heck said, noting that TNCs began to eclipse taxi usage in December 2015. “(TNCs) are now operating here and are actually a fairly sizable portion of the ground transportation we receive at the airport.”
After that space was quickly outgrown, the TNCs were moved to a larger location – a very big overflow parking lot – about six minutes away from the terminal.
Cross-country at Boston Logan International, CEO Tom Glynn is experiencing similar curbside concerns with daily passenger car traffic jumping from 9,000 drop offs pre-TNC, to the current tally of nearly 15,000 drop offs with the permitting of services including Uber and Lyft. But unlike Denver, Logan has few options in the way of infrastructural changes due to both the land and water constraints of the New England airport’s topography.
“We are on a postage stamp compared to other airports,” Glynn said, noting the very small footprint of only 1,700 usable acres. “We intend to add some parking spaces over time after a 28-year parking freeze. But in terms of TNCs and taxis, it is really reusing what we have and being creative.”
THE NEW NORM
From coast to coast and in between, the issue of curbside congestion is among a host of new realities that airports face when challenged with revolutionized technologies.
“We’ve addressed everything from the initial wayfinding and signage to what do you call them and how can you help passengers find them,” InterVISTAS Manager Stephanie Box said, noting a whole host of phrases that companies such as Lyft, Uber and Wingz use to describe their services, including ride sharing, ride pooling, ride sourcing and ride hailing. “Should pick-up and drop-off, for example, be in the same location? Obviously, the curbside is the most convenient, but then if it causes really bad congestion, you are impacting all of your other customers who are also trying to access the airport. So there is a trade off between balancing the operations and the customer experience for all passengers. Operationally the TNCs may not like having to be in the garage, and the customer has to walk across the street, but if traffic flow is improved then the wait time for all passengers ends up being lower.”
Beyond customer-centric themes, perhaps the airports’ most glaring issue pertains to money. While this evolution is merely in its infancy, TNCs and airports have already chartered a storied financial history.
Long before Uber and Lyft became household names, TNCs were making a big first impression on North American airports as the ground transportation realm became peppered with ride-sharing vehicles. This elicited a less than favorable response from airports as lost opportunity costs derived from fee-based traditional taxi and limo services were sorely missed and the less costly TNC vehicles stealthily captured the fares.
“The economics have changed as a result of TNCs disrupting the airport market because they offer, in a lot of places, cheaper fares for passengers,” observed LeighFisher Managing Director Jason Snowden, “and sometimes more convenient options than traditional forms of ground transportation.”
Popularity and politics persisted and the confluence of ever-increasing customer demand and lengthy negotiations has brought generalized acceptance and initial solutions to the more than 130 North American airports now offering TNC service.
Widespread use of geo-fencing within defined perimeters has enabled the delegation of fee payment to airports based upon TNC pick-ups and drop-offs and, in many cases, zones have been established for TNCs to share holding areas with other transportation operators.
While these initial issues have been largely hashed out, tension remains as airports poise to approach the next iterations in the evolution of TNCs.
“Airports obviously have a lot of local demands – and sometimes even political pressure – that is placed on them from policy makers,” Snowden said, noting that certain states have limited the rights of airports in terms of how they can separate charges for ground transportation including taxis, TNCs and other providers. “And TNCs have been pretty aggressive in terms of lobbying state and local politicians to, in their words, ‘protect the public interest’ by providing access to less costly and more convenient forms of ground transportation. And the public definitely does like the service.”
But airports, obviously, have a requirement to be as self-sustaining as possible to fund future capital.
“Traditional revenue centers such as parking and rental cars have been impacted dramatically,” Snowden continued. “If those areas aren’t profitable then obviously an airport can’t continue to invest in future infrastructure and make improvements for the general traveling public. So there is a little bit of tension in the industry right now as a result of the competing interests. Airport operators are doing what they can to try to increase fees, but in many cases they have been stepping them up rather gradually in comparison to the actual impact that TNCs have had in their market.”
THE ‘MILLION DOLLAR QUESTION’
SFO was among the first in North America to permit the locally based TNCs into their ground transportation marketplace where Cheong said Silicon Valley’s Uber, Lyft and Wingz have been experiencing explosive growth since Fall 2014.
“(TNCs) have pretty much taken over the bulk of our commercial ground transportation,” Cheong said, noting that the ride hailing services now constitute the largest group of commercial operators at SFO and are expected to soon take over private vehicles. “They have impacted just about everything. You can’t say they just took taxi customers or share-ride van customers. They took parking customers, too.”
Cheong explained that in some respects, revenues have increased when fares have been generated in lieu of a private transfer. Passengers who may have previously opted to take a private car to the airport, or had a family friend or someone drop them off are now generating a trip fee with TNCs. Alternatively, Cheong said SFO is starting to see the first signs of reduced parking entries and exits, too.
“I think there’s going to be a lot of talk,” Cheong said, calling this quandary the ‘million dollar question going forward’. “The new hubbub is how TNCs are impacting airport revenue streams, especially in the parking and rental car sections. Everybody is going to try to figure out ways to recover from that.”
Denver’s Heck said that despite passenger growth, parking revenues have stagnated around $170 million over the course of the past three years.
“Even after traffic has grown in high single digits, parking has remained flat,” Heck said, “So what that tells you is that the yield with the dollars per passenger are starting to come down from parking… You can’t 100 percent blame that on TNCs, but I think that is a big part of it.”
Cheong and Heck are among airport personnel working projections and starting to have conversations about how to offset such notable reductions. “Several airports are now looking at alternative fees, alternative business arrangements, and other methods or other revenue models in order to make sure they maintain their non-airline revenues,” InterVISTAS’ Mandle said, noting the importance of maintaining the airport infrastructure, supporting capital investments and providing an optimal customer experience. “I would say everything is on the table as we are at that infancy right at the initial stages in terms of what airports are doing.
They are exploring all sorts of options.”
According to LeighFisher’s Snowden, underlying business models and fee structures need to be revisited.
As he explains, a number of airports applied similar rates that taxis and limos had been assigned to the TNCs without considering the potential impact of TNCs.
“A couple of years ago, airports would have just used their normal ground transportation rates and fees and applied them to TNCs when TNCs entered the market,” Snowden explained of the reactionary measure to the initial disruption of the market.
“At the time, a lot of airports hadn’t really done a full cost recovery or ground transportation rate settings study to evaluate what the rates should be in light of TNC impacts.”
As airport rideshare usage continues its upward trajectory, the initial impacts of the TNC evolution are noticeable – by airports, by businesses and by individuals. “TNCs give passengers a lot of choices they didn’t have in the past,” explained Snowden.
For airports, more research is being done on the financial side, especially the rates for parking, rental cars and other forms of ground transportation that have been impacted by TNCs. “A few years ago, the median pick-up/drop-off fee for airport access would have been in the $2 to $3 range at large hub airports,” Snowden said. “Today, the median is in the $4 to $5 range and we expect it to continue increasing as airports reevaluate their business model and fee structures in light of TNC impacts.”
SFO’s Cheong said San Francisco has had a good track record in terms of rising concessions and ground transportation revenues while keeping the rate basis for the carriers down. But the airport is seeking innovative and fair ways to charge new entrants for access to the airport.
“I think we all just have to understand that this is more of a revolution,” SFO’s Cheong said, citing the constant need for airports to adapt and change. “With the TNCs themselves, it helped us to understand what their business model was and how they could fit in to how we do business here. But I think in the future, airports are going to have to look toward restructuring how we are doing our finances and our revenue generation if we expect to continue the way we have been.” “ACI-NA is helping to facilitate those conversations”, said Aneil Patel, ACI-NA’s Senior Director of Air Policy.
“Our Operations and Related Airport Revenues Working Group helps member airports exchange new information and ideas to address the evolving TNC challenge.”
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?”
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.”