FOR IMMEDIATE RELEASE
September 8, 2014
State of the Industry
“A New Vision for Airports”
Remarks by Kevin M. Burke
President and CEO
Airports Council International – North America
2014 ACI-NA Annual Conference and Exhibition
September 8, 2014 │ Atlanta, GA
As Prepared for Delivery
Introduction
Welcome to Atlanta for the 2014 Airports Council International – North America (ACI-NA) Annual Conference and Exhibition.
I am very excited to be with you today for my first ACI-NA Annual Conference. I have had the great opportunity to meet some of you during member visits, ACI-NA events, or in telephone conversations. For many of you, though, this is the first time we have met. So, it’s great to meet you. I hope to meet many more of you in person over the next few days as our conference unfolds and as I visit more airports in the United States and Canada this fall.
I am an aviation outsider. When the ACI-NA Board of Directors appointed me president and CEO, they were not looking for an aviation expert. They were looking for an association executive with extensive experience moving priorities forward and achieving results for ACI-NA’s members. With more than 30 years of experience helping industries navigate complicated political landscapes, I am so glad they chose me to fill this critical leadership role.
This morning, I would like to share with you some of what you can expect from me as your association leader, including listening skills, long-range thinking, improved member services through the development of tools and resources, and effective advocacy in Washington and Ottawa. I am also going to challenge you to assume even more leadership in your association as we strive to achieve the goals you have set for us in 2015 and beyond.
Listening to Member Needs
When I joined ACI-NA in January, I immediately left for a whirlwind tour to more than 30 North American airports. I met with airports of every size. As someone who had experienced airports only as a passenger, it was important for me to take a deep dive and learn directly from you about your needs and challenges. It is imperative for us to understand what’s important to you so we can help you achieve the solutions that work for your airport. “What keeps you up at night?” is the single most important question I will ever ask a member.
When I have asked this question during my airport tours, you have explained to me just how complex airports operations can be. I am continually amazed by the time, effort, planning, energy, and resources it requires to provide such valuable services to your local communities. As a frequent traveler, I must admit I took these services for granted. Gaining such an intimate knowledge of airport operations has significantly changed my perspective.
Unfortunately, far too many travelers do not share the same appreciation we have for airports as part of a global transportation infrastructure system. And, sadly, too many elected and public officials are unaware of the substantial challenges you overcome daily, involving safety, airport financing, customs and border services, security, and more. At ACI-NA, we will tell your good story and affect positive change for you and the passengers who stream through your terminals daily.
Last month, we asked North American airport directors a few concise questions to help us better identify individual member challenges. Nearly 45 percent of the airport directors who responded indicated air service development is the single biggest challenge facing their airports right now. We also asked airport directors to look five years into the future. Nearly 40 percent of airport directors again identified air service as the single biggest challenge they expect to face over the next five years.
Maintaining and developing relationships with airline partners is an essential function for everyone in this room. But rapid consolidation across the airline industry has presented significant challenges for airports of every size and every location. Today, just four airlines control about 80 percent of the U.S. air travel market. In Canada, the top three airlines control more than 60 percent of the Canadian travel market. Airlines are continually scrutinizing the profitability of every route, and even a proven, profitable route may be scuttled in favor of one that makes more money. It is all too common for airlines to eliminate service to destinations or reduce the frequency of flights as they continue to tweak their networks. This has been a source of increasing frustration, especially for small and mid-sized airports. Communities that have become reliant on flights to stay connected to family and customers wake up finding commonly traveled routes phased out or reduced.
As air service challenges continue to weigh on the minds of airport directors across North America, ACI-NA is responding to member needs through our reimagined JumpStart® program set to launch next summer. You told us we needed to shake up this meeting to better serve you, and we have. By increasing industry access to airline partners through a reconfigured JumpStart®, we can help ensure you make more business connections and receive more value through your ACI-NA membership.
Looking Beyond the Horizon
Trade associations like ACI-NA are only effective when professional staff work collaboratively with members to overcome the most significant burdens members face when competing in the market. Our success depends on our keen ability to help airports navigate immediate or unexpected political, economic, and operational challenges as they arise. Thankfully, ACI-NA has one of the most experienced and proficient professional teams of any trade association around.
It is also essential that we help airports plan for vibrant futures, but I am talking about more than your latest ten-year master plan. Today’s significant political, economic, and operational challenges have long-term implications for airports and travelers. The decisions policymakers make today will impact the next generation of airports and their ability to keep up with evolving innovation, increasing global competition, and the needs of local communities. With an upcoming U.S. Federal Aviation Administration (FAA) reauthorization, the implementation of NextGen, the review of the Canada Transportation Act, an increasing regulatory burden, and new developments in environmental policy, we must constantly be aware of the next set of challenges that might impact your airport operations.
Thankfully, ACI-NA has an important resource when it comes to anticipating emerging issues. ACI-NA’s World Business Partners and Associate Members bring great expertise to many of the issues we are working on today and the issues we need to consider tomorrow. Our Associate Members are eager to help ACI-NA and its members regain our position as industry thought leaders on every issue imaginable, including new technology, building design, and sustainability, and I look forward to working more closely with them.
Long-term planning is not a new concept. Airports have been doing it for years. But other industry stakeholders are adopting long-term strategy development. Among others, our airline partners are shifting perspective and implementing new approaches and ideas about cost reduction, fleet planning, capacity, and global alliances. We must anticipate their next move and have solutions ready so that our relationships are fruitful and productive. We must be aware of how our airline partners think and how that impacts our operations, capital needs, and our ability to keep our communities connected to the global marketplace.
Providing Members with Resources
Airports are complex eco-systems with many moving – and flying – parts. There are important considerations around every corner and at the end of every runway. ACI-NA has specific programs in place to assist airport teams with key intelligence to help inform decision making related to security, safety, financial management, legal issues, operations, commercial management, information technology, environmental issues, marketing, cargo management, and more. We are also in the process of developing even more responsive programs, including online webinar programs, to maximize your time and return even more member value to you.
Some airport officials may know about a small segment of ACI-NA’s resources. But many are not fully aware of everything ACI-NA is able to offer. We are going to fix that in two ways.
First, we are becoming more collaborative across organizational lines at ACI-NA, and are drawing on expertise from many of our committees on specific issues. A good example is the approach we have taken to the ride-booking phenomenon that is spreading to airports throughout North America like wildfire. Companies such as Uber and Lyft are aggressively challenging traditional airport ground transportation models, policies, and regulations. We established a cross-functional task force comprised of experts on commercial management, finance, legal affairs, and operations to develop a deeper understanding of this vexing challenge and issues of passenger safety, customer experience, operations, and revenue. The task force has been hard at work preparing guidance for airport operations to consider. We are excited to share our results in the coming weeks.
Second, we will make our airport leaders more aware of the resources and initiatives developed and undertaken by ACI-NA, other regions, and ACI World, so that you can decide those which benefit you and your staffs the most. One essential role ACI-NA can play is to help level the playing field as you deal with industry parties that operate at airports throughout North America. Ample member networking and specialized programs will help enable you to learn from the experiences of your colleagues at home and around the globe.
Advocating for Member Priorities
The airport of the future will be determined by the legislative, regulatory, and political successes we are able to achieve today. In Canada and the United States, ACI-NA will continue moving forward on many important issues, including aviation policy, security, and passenger facilitation.
We are actively promoting the interests of Canadian airports, especially as the Government of Canada prepares to review the Canada Transportation Act. The review, which will likely lead to policy recommendations related to airport governance, ownership, the National Airports System, and the Canadian Air Transport Security Authority in 2015, has already drawn the attention of Canadian airport directors working through our Canadian Airports Council.
Given the airlines’ focus on international flights, increasing the efficiency of processing international arriving passengers remains a key focus for our members. We continue to support expanding the use of Automated Passport Control (APC) kiosks for Canadian and U.S. airports. Additionally, we look forward to working with our Canadian members, Canada Border Services Agency, and U.S. Customs and Border Protection to bring APC benefits to passengers’ smartphones through the use of Mobile Passport Control (MPC) in Canada after successful deployment in the United States.
Unfortunately, the Government of Canada’s continued fiscal restraint is causing challenges for airports through increased wait times for security screening. In some cases, the costs for security and border services that are the responsibility of the government have been offloaded onto Canadian airports – a phenomenon that is emerging in the United States as well. We will continue to work toward reasonable solutions with effective representation before the government in partnership with the airlines.
In the United States, ACI-NA is focused squarely on the much-anticipated FAA reauthorization set for next fall. For U.S. airports, FAA reauthorization represents the most significant opportunity to modernize the way we finance airport infrastructure projects as we determine what our airports will look like in 2020 and beyond. In just 387 days, the current FAA reauthorization will expire, bringing great uncertainty to U.S. airports.
Let me state with unmistakable clarity: Airports agree the best way to bring airport financing into alignment with the goals and demands of 21st century travelers is to keep the Airport Improvement Program (AIP) fully funded and adjust the Passenger Facility Charge (PFC) user fee to $8.50, and to index the PFC user fee so it adjusts with inflation.
And despite recent cuts in federal funding, AIP continues to offer airports needed support for essential infrastructure repairs and improvements. The PFC user fee, which has not been adjusted since 2000, remains significantly undervalued. Some might say a modest adjustment in the PFC user fee from $4.50 to $8.50 will thwart ticket sales and drive up air fares. That argument does not hold water given the facts. We have seen increases in airline fares and the proliferation of ancillary fees, while enplanements have continued to grow. In looking at all the options available to us, the PFC user fee still remains the most affordable and most efficient option for meeting airport capital needs.
Airports have a great economic impact, but our impact will diminish without a sustained funding source. In our newest economic impact study released earlier this morning, we found airports in the United States directly employ more than 1.1 million workers. When you consider the ripple effect caused by airport-related activities, you find that airports are pillars of economic strength in the face of a still-challenging economic environment. In fact, U.S. airports help support more than six percent of the entire U.S. workforce and contribute more than $1.1 trillion dollars to our national GDP.
Airports in the United States have done much with little, but they are at a breaking point. Many airports are simply tapped out, and going to the debt markets for additional bond funding is not an option. Sadly, travelers can expect airport conditions to deteriorate even more if passenger growth trends continue without any relief. Unfortunately, the current political climate makes it difficult to achieve these goals. That is why ACI-NA is approaching next year’s FAA reauthorization with a fresh perspective.
Through aggressive advocacy, effective public relations, and coalition building, ACI-NA is poised to secure a successful FAA reauthorization. We have constructed an ambitious 535-seat advocacy strategy and have already begun to implement it. Our strategy will provide us many opportunities to state our case and achieve results in the U.S. House of Representatives and the Senate. Our ability to build a broad coalition of traditional allies and non-traditional stakeholders is just one of many essential components to our overall strategy. Already we have made tremendous progress on Capitol Hill, but much more work remains to be done.
Conclusion
In order for us to communicate our industry’s positive story effectively, we must rethink our old ways. We must be willing to step out of our comfort zone to move your priorities forward. We must remain focused on delivering results to you, our members. That is my pledge to you.
In my visits to North American airports and in phone conversations with airport directors, I am often asked the same question. “What separates ACI-NA from all the other aviation trade associations out there?” The answer is simple: ACI-NA is the authoritative voice of airports across Canada and the United States. We are unrivaled in our support for North American airports and their leadership position in the global aviation system. At the same time, we understand that we can learn new strategies and innovative approaches to be even more effective for you.
From where I sit as your president and CEO, airports represent a powerful industry with immense potential influence. It is my job to help you harness that influence and create an environment that allows your airport the opportunity to thrive in every area of operation. But, I cannot do this alone.
I need you to come along with us on this crusade. I am excited about bringing you new and innovative options to make your case with local and national policymakers in both the United States and Canada. And we are committed to working side-by-side with you to look beyond the horizon and achieve great success that benefits travelers and advances our dynamic industry.
Thank you.
