Airport Magazine June/July 2010 by Airport Magazine

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CONCESSION

PLANNING TO SURVIVE THE DOWNTURN

NextGen: When, Why and How NW Florida Beaches Airport Opens Strategies For A Safety Management System

Building a great airport experience starts with building a great airport. New Doha International Airport in Doha, Qatar, will begin serving 24 million passengers and moving 750,000 tons of cargo annually in 2012. During the design and construction process, Burns & McDonnell is helping the owners meet the needs of their tenants and operators. When construction is complete, our expert assistance will have contributed to a winning outcome for every stakeholder.

Building the Great Airpor t Experience Construction and reconstruction of airport facilities, whether terminals, hangars or control towers, are the ultimate challenges in building a great airport experience. Managing design details and tracking varied stakeholder requirements — programmatic and operational — are skills Burns & McDonnell engineers, architects, construction professionals and consultants have developed since the earliest days of commercial airports.

Great Airport Experiences — Every Flight, Every Traveler, Every Time For more information, contact: Randy D. Pope, PE 816-822-3231 rpope@burnsmcd.com

9400 Ward Parkway Kansas City, MO 64114 Phone: 816-333-9400 aviation@burnsmcd.com

Engineering, Architecture, Construction, Environmental and Consulting Solutions Atlanta • Chicago • Dallas-Fort Worth • Denver • Houston • Kansas City, Mo. • Miami • New England • Phoenix • San Diego • St. Louis Chattanooga, Tenn. • Minneapolis-St. Paul • New York • O’Fallon, Ill. • Omaha, Neb. • San Francisco • Washington, D.C. • Wichita, Kan.

editor’scorner

n this issue, Airport Magazine continues its coverage of the airport concessions business with an update on this important market sector by Ann F. Ferraguto, principal of AirProjects, Inc., based in Alexandria, Va. Also, we are pleased to offer two articles on FAA’s Next Generation Air Transportation System, or NextGen, the planned transformation of the radar-based air traffic control system of today to a satellite-based system of the future. Susan Baer, director of aviation for the Port Authority of New York & New Jersey, writes of industry’s support of NextGen, while Victoria Cox, FAA senior vice president for NextGen and operations planning, describes how airports will benefit from NextGen. Other features in this issue highlight the just-opened Northwest Florida Beaches International; how the merging of airport technologies can improve security; how airports can save money and prevent litigation while undertaking large capital projects; and how to structure implementation strategies for a safety management system. In addition, new AAAE Chair Jim Bennett, A.A.E., describes his goals for the association in the coming 12 months, and AAAE President Charles Barclay offers a commentary on “Confusing Sin Taxes and Fixed Costs.” And there is still more: UpFront provides a roundup on AAAE and member airport happenings; Billboard summarizes recent airport statistics; MarketScan offers a statistical view of the proposed Continental-United merger; IndustryMetrics considers “Airports and High Speed Rail: Competitors or Complements”; and AirporTech updates the status of EMAS. We thank our advertisers in this issue: Astronics DME Corp., Burns & McDonnell, Delta Airport Consultants, E-Verify, Impact Recovery Systems, Oshkosh, Ricondo & Associates, RS&H and Siemens. We appreciate the support of these companies, which help to make our magazine possible. Please support them in return. Special features of the Airport Magazine Web site (www. airportmagazine.net) allow readers around the globe to access the current issue, as well as research an archives section that provides access to all issues for the past three years. A full-color interactive flip book for each issue allows readers to print out articles. And, of course, our subscribers and all AAAE members receive printed copies as well. Please keep reading, and send me an e-mail at barbara.cook@ aaae.org with any ideas you have for articles that would be helpful for your airport or company. Sincerely,

Editor

Barbara Cook barbara.cook@aaae.org Publisher

Joan Lowden Executive Editor

Ellen P. horton E d i t o r - A t - La r g e

SEAN BRODERICK NEWS Editor

Holly Ackerman A r t De s i g n

Unconformity, LLC G r ap h i c De s i g ne r

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601 Madison Street, Suite 400 Alexandria, VA 22314 (703) 824-0500, Ext. 133 Fax: (703) 820-1395 Internet Address: www.airportmagazine.net Send editorial materials/press releases to: magazine@aaae.org Airport Magazine is published bimonthly by the AAAE Service Corporation Inc., a wholly owned subsidiary of the American Association of Airport Executives, and the Airport Research and Development Foundation. Subscription price for AAAE members is included in the annual dues. U.S. subscription rate to non-members is $50 for one year. International rate for non-members is $100. Single copy price is $12. Copyright 2010 by AAAE. All rights reserved. Statements of fact and opinion are the responsibility of the authors and do not necessarily reflect the views of AAAE or any of its members or officers. POSTMASTER Send address changes to: Airport Magazine 601 Madison Street, Suite 400 Alexandria, VA 22314

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Barbara Cook

AirportMagazine.net | June/July 2010

Volume 22/Number 3 | June/July 2010

e d i t o r i a l a d v i s o r y BO A RD A i r p o r t Me m b e r s William G. Barkhauer, Morristown, New Jersey MARK GALE, Philadelphia, Pennsylvania Jim Johnson, Odessa, Florida James L. Morasch, Pasco, Washington Timothy K. O’Donnell, Fort Wayne, Indiana Robert P. Olislagers, Englewood, Colorado Torrance Richardson, Fort Wayne, Indiana Elaine Roberts, Columbus, Ohio

C o r p o r a t e Me m b e r s Bill Hogan, Reynolds, Smith and Hills STACY L. HOLLOWELL, Siemens One, Inc. Brian Lacey, Delaware North Companies Randy Pope, Burns & McDonnell Laura Samuels, Hudson Group

A A A E BO A RD O F DIR E CTORS Chair James E. Bennett, Abu Dhabi First Vice Chair

Kelly L. Johnson, Bentonville, Arkansas Se c o n d V i c e C h a i r Bruce E. Carter, Moline, Illinois Se c r e t a r y / T r ea s u r e r

Mark P. Brewer , Manchester, New Hampshire s e c o n d Pa s t C h a i r Jim P. Elwood, Aspen, Colorado

Cover Feature

Departments

Airport Concession Planning | 14

Upfront 5

More Critical Than Ever

Board of DirectorS

News Briefs

Executive View

AirporTech 35

Features Confusing Sin Taxes And Fixed Costs | 13

Commentary By AAAE President Charles M. Barclay

FBR 37 Retail Briefs

MarketScan 40 Industry Metrics

Billboard 44

DANETTE M. BEWLEY, Reno, Nevada TOMMY W. BIBB, Nashville, Tennessee JEFF L. BILYEU, Angleton, Texas BENJAMIN R. DECOSTA, Atlanta, Georgia ROD A. DINGER, Redding, California TIMOTHY DOLL, Eugene, Oregon LINDA G. FRANKL, Columbus, Ohio MARK GALE, Philadelphia, Pennsylvania STACY L. HOLLOWELL, Carrollton, Texas KIM W. HOPPER, Portsmouth, New Hampshire MARK D. KRANENBURG, Oklahoma City, Oklahoma WILLIAM MARRISON, Knoxville, Tennessee TODD McNAMEE, Camarillo, California JEFFREY A. MULDER, Tulsa, Oklahoma CARL D. NEWMAN, Phoenix, Arizona

Next Generation Air Transportation System (NextGen) | 18 National Alliance Supports NextGen What Will NextGen Do For Airports?

Northwest Florida Beaches International | 24 Newest Commercial Airport Opens

THOMAS M. RAFTER, Hammonton, New Jersey

Coming In Airport Magazine

BRIAN P. REED, Jacksonville, Florida TORRANCE A. RICHARDSON, Fort Wayne, Indiana ROBERT F. SELIG, Lansing, Michigan DAVID R. ULANE, Aspen, Colorado

August/September: Environmental: Complying With Green Standards Noise Mitigation Transportation Research Board Projects Airfield Lighting

C h ap t e r P r e s i d en t s LUIS E. ELGUEZABAL, San Angelo, Texas WILLIAM F. MARRISON, Knoxville, Tennessee STEPHEN E. KORTA, Hartford, Connecticut SHAWN SCHROEDER, Springfield, Missouri TODD L. McNAMEE, Camarillo, California JOHN S. KINNEY, Denver, Colorado P o l i c y Re v i ew C o m m i t t ee BONNIE A. ALLIN, Tucson, Arizona

Safety Management Systems (SMS) | 27 Implementation Strategies

October/November: Aircraft Rescue and Fire Fighting Security Access Control Baggage/Passenger Screening Ground Transportation

Large Capital Projects | 30

ROSEMARIE ANDOLINO, Chicago, Illinois WILLIAM G. BARKHAUER, Morristown, New Jersey KRYS T. BART, Reno, Nevada THELLA F. BOWENS, San Diego, California LARRY D. COX, Memphis, Tennessee ALFONSO DENSON, Birmingham, Alabama KEVIN A. DILLON, Warwick, Rhode Island THOMAS E. GREER, Monterey, California GARY L. JOHNSON, Stillwater, Oklahoma

How To Save Money And Prevent Litigation

JAMES A. KOSLOSKY, Grand Rapids, Michigan LYNN F. KUSY, Mesa, Arizona JAMES L. MORASCH, Pasco, Washington ERIN M. O’DONNELL, Chicago, Illinois

Security Technology | 33

BRADLEY D. PENROD, Pittsburgh, Pennsylvania ELAINE ROBERTS, Columbus, Ohio

Creating New Efficiencies

RICKY D. SMITH, Cleveland, Ohio MARK VANLOH, Kansas City, Missouri

AAAE Annual Conference Sponsor Appreciation | 39

AirportMagazine.net | June/July 2010

Cover Design: Zev Remba

Unconformity, LLC

PAUL WIEDEFELD, Baltimore, Maryland P r e s i d en t Charles M. Barclay, Alexandria, Virginia

upfront

James Bennett, A.A.E., Elected AAAE Chair James Bennett, A.A.E., CEO of the Abu Dhabi Airports Co., took office May 19 as AAAE’s chair for 2010-2011.

Ben DeCosta, A.A.E., Atlanta, Ga.; Rod Dinger, A.A.E., Redding, Calif.; Linda Frankl, A.A.E., Columbus, Ohio; Stacy Hollowell, Carrollton, Texas; Kim Hopper, A.A.E., Portsmouth, N.H.; Mark Kranenburg, A.A.E., Oklahoma City, Okla.; Jeffrey Mulder, A.A.E., Tulsa, Okla.; Thomas Rafter, A.A.E., Hammonton, N.J.; Brian Reed, Jacksonville, Fla.; Robert Selig, A.A.E., Lansing, Mich.; and David Ulane, A.A.E., Aspen, Colo.

Senate Confirms John Pistole To Lead TSA

The association’s membership also elected other members of the Executive Committee and Board of Directors during the 82nd Annual AAAE Conference and Exposition, which was held May 16-19 in Dallas/ Fort Worth. Kelly Johnson, A.A.E., Bentonville, Ark., was elected first vice chair; Bruce Carter, A.A.E., Moline, Ill., was elected second vice chair; and Mark Brewer, A.A.E., Manchester, N.H., was elected secretary/treasurer. John Duval, A.A.E., Beverly, Mass., is AAAE’s first past chair; and Jim Elwood, A.A.E., Aspen, Colo., is second past chair. Newly elected to the board for 2010-2011 are: Timothy Doll, A.A.E., Eugene, Ore.; Mark Gale, A.A.E., Philadelphia, Pa.; William Marrison, A.A.E., Knoxville, Tenn.; Todd McNamee, A.A.E., Camarillo, Calif.; Carl Newman, A.A.E., Phoenix, Ariz.; and Torrance Richardson, A.A.E., Fort Wayne, Ind. Other members on the board are: Danette Bewley, A.A.E., Reno, Nev.; Tommy Bibb, A.A.E., Nashville, Tenn.; Jeff Bilyeu, Angleton, Texas;

The Senate on June 25 confirmed John Pistole to serve as TSA administrator. Pistole’s prior position was deputy director of the FBI, a position he had held since October 2004. Pistole also worked in the FBI’s counterterrorism division, beginning in 2002 as deputy assistant director for operations, then as assistant director for counterterrorism, and later as executive assistant director for counterterrorism and counterintelligence. Pistole began his career as a special agent with the FBI in 1983. He served in the Minneapolis and New York divisions before being promoted to a supervisor in the agency’s Organized Crime Section at FBI headquarters. Pistole later served as a field supervisor of a White-Collar Crime and Civil Rights Squad in Indianapolis, and then as assistant special agent in charge in Boston. Prior to joining the FBI, Pistole practiced law for two years.

FAA Awards $4.4 Billion In NextGen Contracts FAA has awarded separate Next Generation Air Transportation System (NextGen) contracts to Boeing, General Dynamics and ITT. The three contracts total as much as $4.4 billion

over 10 years and will require the companies to perform work “that will demonstrate NextGen procedures in real time on a large scale within the current air traffic system,” the agency said. The contracts, like one for $280 million awarded recently to CSSI, Inc., are part of System Engineering 2020 (SE2020), FAA said. Two more contracts are expected under SE2020, which has a ceiling of $7 billion, making it the largest set of awards in FAA history, according to the agency. Boeing, General Dynamics and ITT will conduct large-scale demonstrations, including the use of aircraft as flying laboratories, to determine how NextGen concepts, procedures and technologies can be integrated into the current system. FAA said it will work with the companies to develop and demonstrate new procedures in four dimensions, adding the element of time to the current three-dimensional profile of an aircraft’s latitude, longitude and altitude. All of the SE2020 contracts are designed to encourage the participation of small businesses. Of the subcontractors that will team with Boeing, General Dynamics and ITT, 12 are small businesses, six are owned by women and two are owned by disabled veterans, FAA said. SE2020 represents an innovative contracting vehicle that streamlines NextGen funding from across FAA, allowing work to be completed in an efficient and cost effective manner, the agency said.

Detroit Metro Explores Wind Technology The Wayne County Airport Authority (WCAA) has debuted its $75,000 investment in technology to explore using wind power to supplement Detroit Metro’s power supply. The airport installed six turbines, AirportMagazine.net | June/July 2010

Photo from Metropolitan Washington Airports Authority

News Briefs Karin Glasgow has been named as chief of stakeholder affairs for Transportation Sector Network Management (TSNM) Commercial Aviation at TSA, effective immediately, Doug Hofsass, deputy assistant administrator for TSNM at TSA, announced. Glasgow has been serving as branch chief of stakeholder affairs for commercial airlines. In her expanded role, she will be working directly with commercial airports, as well. Glasgow has been with the TSA policy and stakeholder office since 2005 and in previous roles has worked closely with AAAE on stakeholder outreach and collaboration. … Genelle Allen, Wayne County Airport Authority executive vice president, has been named the authority’s interim CEO, effective July 1. Allen will assume the position from Lester Robinson, who has served as CEO since the authority’s inception in 2002 and as Wayne County director of airports since 2000. Allen joined the authority in 2002 as senior vice president for procurement and strategy management. She previously served as supervisory assistant corporation counsel for Wayne County. … Former AAAE Chair Krys Bart, A.A.E., president and CEO of the Reno-Tahoe Airport Authority, has been named one of Nevada’s Most Influential Citizens by the Nevada Business Journal. The Journal cited Bart’s efforts in maintaining passenger counts and flights during the economic downturn. The magazine also noted that Reno-Tahoe International has been recognized by the Air Transport Research Society as one of the top five most efficient airports in North America twice in the past three years. … The city of San Antonio Aviation Department has named Ellen Erenbaum as assistant aviation director, effective June 7, 2010. As an assistant aviation director, Erenbaum will oversee the finance and administration division. She previously served as assistant director of finance for the Houston Airport System. ... TSA announced that Amy Williams has been named federal security director (FSD) at Dallas Love Field Airport. In this role, Williams will oversee all TSA security operations at the airport, as well as at Tyler Pounds Regional, East Texas Regional and Wichita Falls Municipal airports, all in Texas. A 6

AirportMagazine.net | June/July 2010

The three Washington, D.C., area airports have a significant role in the Honor Flight program that brings World War II veterans to the nation’s capital to visit the World War II Memorial. This year Dulles International and Reagan National together will welcome 75 flights, carrying nearly 7,000 veterans, with water arches provided by the airport fire department and flag-waving airport employees and passengers showing appreciation for their service. Shown are arrivals in March at Reagan Washington National being greeted with cheers and American flags.

manufactured in Michigan for Windspire Energy, to harness wind energy at lower wind speeds (4.5 5 mph).

WCAA and local Windspire distributor Southern Exposure Renewable Energy Co. have begun a beta-testing process during which the performance of this new technology will be measured and evaluated to determine the practicality of further implementing it both at Detroit Metro and in other, similar environments worldwide. WCAA said the new turbines

represent just the latest investment in the airport authority’s ongoing effort to explore and implement sustainable operational practices, including the use of alternative energy sources to reduce its environmental impact and offset the airport’s carbon footprint. The authority’s environmental and infrastructure groups currently are evaluating a number of additional environmental initiatives, including installing technologies involving solar/photovoltaic energy, green roofs and gray-water recycling.

FAA Accepts Application For Privatization Program FAA said it has accepted the preliminary application for Gwinnett County Briscoe Field (Ga.) Airport to participate in the airport privatization pilot program. A general aviation reliever airport, Briscoe Field is located 37 miles northeast of Atlanta and is owned by Gwinnett County. The airport had

upfront

83,458 aircraft operations and 236 based aircraft for the most recent 12-month reporting period ended March 2009. The 1996 FAA Reauthorization Act established a demonstration program authorizing the agency to permit up to five public airport sponsors to sell or lease an airport, and to exempt the sponsor from certain federal requirements that could otherwise make privatization impractical. At least one airport in the pilot program must be a general aviation airport and no more than one large hub air carrier airport may participate. Under the pilot program, general aviation airports may be leased or sold, while an air carrier airport may only be leased. Congress established the airport privatization program to explore privatization as a means of generating access to sources of private capital for airport improvement and development. Under the pilot program, the private operator of an air carrier airport may receive AIP entitlement and discretionary grants, collect PFCs and charge reasonable fees. However, unless approved by 65 percent of air carriers at the airport, the private operator may not increase air carrier rates and charges at a rate that exceeds the consumer price index. Private operators of general aviation airports can receive AIP discretionary grants. Airports participating in the pilot program are subject to the same federal oversight as other publicuse airports. According to FAA, the city of Chicago is in the process of selecting a private operator for Midway Airport and has until July 31, 2010, to submit a new timetable for completing the application process. In September 2009, FAA accepted the city of New Orleans’ preliminary application for Louis Armstrong New Orleans International, a medium hub airport. The city is in the process of

seeking a private operator for the airport. In December 2009, FAA accepted the preliminary application for Luis Munoz Marín International in San Juan, Puerto Rico. The airport is preparing a request for proposal.

Lambert To Begin Major Terminal Renovation Lambert-St. Louis International in the fall will begin a $50 million interior renovation program. The two-year plan is aimed at upgrading passenger services and airport operations in the airport’s Terminal 1, and to implement new design features in Concourses A and C. The renovation will begin in the A and C Concourses, which serve a majority of Lambert’s airlines. The interior roof structure of the concourses and all metal surfaces (doors, columns and air supply ducts) will be painted to coordinate with new tile flooring, new ceilings and a more efficient circular pendant lighting system, the airport said. Other improvements in Terminal 1 include new ticket counters and terrazzo flooring on the upper level; an upgraded C Concourse checkpoint to accommodate new passenger screening equipment; addition of an atrium to connect the ticketing and

lower levels; and new signage and directories. Prior to the start of construction, Lambert will move gate operations for AirTran, Frontier, Cape Air and Midwest Airlines to the C Concourse. This aspect of the project will give

the passengers on these airlines more convenient access to restaurants and retail shops, airport officials said. The airport has committed a total of $70 million for all projects in the renovation program, which began in 2008. The first phase of construction, which totaled $20 million, included installation of a new baggage system in Terminal 1 and the interior restoration of the terminal’s domed ceilings.

Los Angeles Terminal Achieves LEED Silver The recently completed $737 million renovation of Los Angeles International’s Tom Bradley International Terminal has achieved Leadership in Energy and Environmental DesignExisting Building (LEED-EB) Silver certification from the U.S. Green Building Council. According to Los Angeles World Airports (LAWA), the certification is the first for a renovation project at a U.S. airport. The Silver certification recognizes AirportMagazine.net | June/July 2010

upfront

the project’s efforts at maximizing operational efficiency while minimizing environmental impacts. The renovation achieved 20 percent energy savings and 24 percent water conservation with hundreds of thousands of dollars in annual savings expected in the future, LAWA said. For electricity use alone, reductions are expected to be 5.3 million kilowatt hours for annual savings of $570,872. In addition, more than 75 percent of construction and demolition waste was recycled or salvaged. Approximately 60 percent of the terminal’s 1 million-square-foot interior was renovated and 45,000 square feet of new space was added to house the inline baggage screening facility.

without expanding runways. The Metropolitan Transportation Commission, the Association of Bay Area Governments and the San Francisco Bay Conservation and Development Commission said they are exploring possibilities for balancing the demand among the region’s three major airports, such as modifying times of heavy airline traffic, increasing average aircraft size, implementing new air traffic control technologies to improve operations during poor weather, serving some passengers by high-speed rail, and using smaller general aviation and federal/military airports in and outside the Bay area region. The study will be completed in early 2011. For more information, visit www.regionalairportstudy.com.

FAA Issues LOI For O’Hare Modernization

DOT Convenes New Aviation Panel

FAA has issued a Letter of Intent (LOI) to provide $410 million toward funding the completion of the Chicago O’Hare Modernization Program (OMP). The funding will be used for construction of three projects: new Runway 9C-27C, new Runway 10R28L and the extension of Runway 9R-27L, officials said. When the OMP is completed, O’Hare will have eight runways. Flight delays will be reduced from more than 20 minutes to less than six minutes, and capacity for an additional 300,000 flights a year will be added, according to officials.

Bay Area Studies Ways To Distribute Air Traffic With the number of air passengers traveling through the San Francisco Bay area expected to increase from 60 million to 100 million by 2035, planners said they are reviewing ways of accommodating the demand 8

AirportMagazine.net | June/July 2010

and solutions. The committee is scheduled to meet five times during the coming year to develop its recommendations. During the opening safety discussion, Susan Baer, director of the aviation department, Port Authority of New York & New Jersey, stressed that human factors are the key to improving aviation safety. In a discussion about workforce issues, Thella Bowens, AAAE Policy Review Committee member and president and CEO of the San Diego County Regional Airport Authority, stated that airports need to develop a workforce of entrepreneurs. During the financing discussion, the airport representatives emphasized the need to adjust the PFC.

Correction and Update

During the proofing process, an error was introduced in John Ostrom’s article “Airport Wildlife Management, DOT Secretary Ray LaHood addressed The Road Taken” in the April/ the opening session of the Future of May issue of Airport Magazine that Aviation Advisory Committee with changed his term “Canada goose” to the directive that panel members “Canadian goose.” We regret help to ensure “that the U.S. aviation the error. industry remains vital, competitive, An update to Ostrom’s article sustainable and safe.” illustrates the importance of The committee, established in collecting remains from a wildlife April, grew out of a forum hosted strike. A photo in the article showed last year by LaHood on the future of the damage to an Embraer 145 that the U.S. aviation industry. The comwas struck by Canada geese as mittee is charged with providing reported by the flight crew. information, advice and recommendaAfter the aircraft landed safely at tions to the secretary on ensuring the Minneapolis-St. Paul International, competitiveness of the U.S. aviation airside operations staff collected industry and its capability to address remains from the strike and sent them the evolving transportation needs, into the Smithsonian Institution for challenges and opportunities of the identification. U.S. and global economy. Within two weeks, the bird that DOT said the committee will focus had caused significant damage to principally on five areas: ensuring the leading edge of the aircraft was aviation safety, ensuring a worldidentified correctly as a Tundra class aviation workforce, balancing Swan instead of the originally the industry’s competitiveness reported Canada goose. With this new and viability, securing stable information, airport staff now can funding for aviation systems, and more accurately focus their efforts on addressing environmental challenges the new problem species. A

ExecutiveView

The Year Ahead For AAAE By James E. Bennett, A.A.E. AAAE Chair

want to thank the membership of AAAE for giving me the opportunity to serve as your Chair this year. I am both honored and humbled by the opportunity, and I hope that I will be able to serve the needs of the membership successfully throughout my term. The challenges facing our industry continue as aviation attempts to recover from the past two and one-half years of unprecedented economic turmoil that has resulted in sharp declines in all sectors of the aviation community. During this most difficult period, AAAE has been served extremely well through the leadership of my predecessor and past Chair John Duval, A.A.E. John did a great job working with AAAE members to tackle some of these very tough issues. I congratulate him on a successful year.

A First For AAAE This year will be a first for AAAE, as I move on to my new position as chief executive officer of the Abu Dhabi Airports Co. My year as Chair will be the first time an executive from a non-U.S. airport has been Chair of AAAE, as well as the first time a National Director — AAAE Board positions created to recognize the increased mobility inherent in airport management careers — has moved into the Chair of the organization. These firsts reflect the change that is occurring in our industry and the fact that our business is truly global, as air transportation 10

AirportMagazine.net | June/July 2010

has made the world smaller and access to the global economy ever so more important for all communities both small and large. This diversification and globalization of our industry is something that I encourage each of you to embrace as AAAE continues its role of preparing professionals for a future in the airport business.

‘Next Gen’ Leaders Much has been written about NextGen and how critical it is to the success of the aviation industry. Well, I want each of us in the coming year to focus on a different type of “next gen.” I want us to focus on identifying the next generation of AAAE leaders, and how we get them involved in our association so that we are better positioned to be successful in the future. AAAE members come from airports of all sizes from all around the world. That is what makes AAAE a strong and successful association. As an accredited airport executive since January 1987, I know that our association is dedicated to the professional development of the men and women in our industry. But we need to reach out to all segments of the population and create a culture within the association that invites participation and opportunities for all. AAAE only will be successful in the future if the membership and leadership of the association and its chapters reflect the diversity of the community we are serving. We have to diversify AAAE by airport size, geographic location, gender and ethnicity. This is my challenge to myself, as well as to each of you, as we look for the next gen of leaders in AAAE. One of the other changes that is occurring and that we need to embrace is the way that environmental sustainability of our aviation industry is viewed. We need to work aggressively within our various AAAE committees to assist airports in developing guidelines for sustainability. Sustainability is not just about reducing our carbon footprint. It is about designing our facilities to be more environmentally friendly and reducing our overall impact on the air quality, water quality, resources consumption and noise associated with airports. There is no one size fits all when it comes to sustainability. I challenge the AAAE Environmental Services Committee to make sustainability a priority this

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ExecutiveView year. I also want to recognize one of our members, Rosie Andolino, commissioner of aviation for the city of Chicago and a member of AAAE’s Policy Review Committee, for her leadership in advancing the cause of sustainability guidelines for airports.

AAAE Priorities As we move forward in these uncertain times, safety and security will remain the number one priority for our membership. We welcome the opportunity to work with TSA as it aggressively rolls out its new advanced imaging technology (AIT) to airport checkpoints this year. While these machines offer a new level of security for the air transportation system, we need to make sure TSA closely coordinates their installation with the local airport operator to ensure the least amount of disruption possible to the security screening process. AIT machines occupy considerably more space and have lower throughput than traditional

magnetometers, which will cause varying impacts on the screening process at airports across the nation. I am confident that if TSA works together with airport operators, this transition to the new technology will go well with minimum disruption to the passengers we both strive to serve and protect. Last, I would like to take a minute to recognize the AAAE staff. Our association would not be the success it is today without the leadership of Chip Barclay and the entire AAAE team. Just as our airports have undergone a tremendous amount of stress during the past two and one-half years, so has AAAE. The staff all kicked in to help AAAE weather the same economic storm that each of us faced. They continued to excel at their jobs and worked toward the continued success of AAAE. I want to personally thank them for everything they do for us, the members, and express how much I am looking forward to working with them in the coming year. A

ground traffic control

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Commentary

Confusing ‘Sin Taxes’ And Fixed Costs By Charles M. Barclay AAAE President

he airline industry has used every opportunity in Washington recently to claim that it is so overtaxed by government that the effect is worse than so-called “sin taxes” on tobacco and alcohol. The claim goes that this federal “over-taxation” amounts to the same treatment for airlines as for producers of goods of which the government wants to discourage consumption.

Attention-Getter The airline industry uses a $300 fare and calculates, accurately, the impact of the federal ticket tax, flight segment fees, airport passenger facility charges (PFCs) and a federal security surcharge to show more than $64 on the $300 sample fare, or 21 percent. The airlines claim the total of these charges amounts to virtually punitive treatment of the industry. The accusation is useful as a political and media attention-getter, but it just doesn’t reflect the real facts, and it isn’t an argument up to the standards of an important industry with real problems that deserve attention. Most of the airlines’ calculation is made up of fees charged for facilities and services other industries consider fixed costs for plant and production lines. Local airport PFCs can only be used for capital aeronautical improvements at airports served by the airlines, or the airlines’ equivalent of other industries’ “plant.” The federal ticket tax and segment fee go almost entirely to running FAA and the air traffic control (ATC) system, the airlines’ equivalent of other industries’ “production line,” and a grant program that also is restricted to federally approved, aeronautical development at airports (more plant). The latter program does help to fund a “system” of airports in the United States, including smaller airports that some airlines object to funding, but the total amount going to airports that aren’t used by the airlines amounts to less than $2 per ticket (less than 1 percent of their sample ticket). There is absolutely nothing about paying for the cost of capital facilities and services the airlines need to operate that is the equivalent of “sin taxes.” If the airlines built and operated their own airports and air traffic control system and still paid 21 percent in special taxes that went into the U.S. Treasury and local governments’ general funds, they would have a point, but they don’t.

There is absolutely nothing about paying for the cost of capital facilities and services the airlines need to operate that is the equivalent of “sin taxes.” I have enormous respect for the men and women who run our nation’s airlines in one of the toughest, most competitive businesses in history. But one of the few places they enjoy an advantage over other industries is precisely in the area of fixed capital costs for plant and production lines. Most businesses have to buy their own land, build plants, install production lines, and do it all with their own up-front capital, before they can hope to produce a product or service. These other industries then can hope to start earning back their fixed, capital costs while also trying to make an operating profit. But in the airline business, local governments provide the plant (airports) and the federal government provides the production line (ATC) — both at cost, without profit, and using tax-exempt financing as an added bonus. And, the airlines only have to pay for these fixed costs incrementally as they get each customer, through the ticket tax and PFC mechanisms, rather than in total, up-front, like fixed costs in other industries.

Legitimate Debates There are certainly legitimate debates about how much plant and production line costs are necessary from the airlines’ perspective, as well as how much control they should or should not exercise over these facilities in a deregulated industry. The airlines also have very legitimate, fundamental arguments about government regulation and legislative restrictions that have been part of a cumulative effect of forces negating adequate return on capital for the entire industry over extended periods. There are some solid arguments to be made about governments’ roles by the very smart and talented people who run our nation’s airlines. Trying to claim that the fixed costs of capital facilities provided by governments at favorable terms and required to run their business are the equivalent of sin taxes isn’t one of them. A AirportMagazine.net | June/July 2010

CONCESSIONS

Airport Concession Planning: More Critical than Ever By Ann F. Ferraguto

iven the recent economic downturn and the often double-digit declines experienced at many airports in terms of passengers and concession sales, it is timely to review the essential elements of a successful airport concession program. Ideally, this is a program that not only can thrive in good times but also

can survive a downturn. Those that are the most fit will survive. The key is to create a fit, stable program that will continue to stay aloft even in turbulent skies.

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Space Allocation Space matters. Airports that have more space per passenger allocated to concessions have concession programs that generate higher sales per passenger. So, why donâ&#x20AC;&#x2122;t all airports have large amounts of space dedicated to retail and food service? There are several reasons. First, many airports have space constraints due to older terminals and concourses. Some airport operators with newer facilities have cut their capital investment costs by downsizing the concession space in the terminal. For those airport operators that have achieved the optimal space allocation, however, the concession revenue has helped to pay for the additional space. Among the airports researched for this article, the top third of them based on sales per enplanement allocated 23 percent more space per passenger than those airports in the bottom third of the study. Further, they generated 23 percent higher concession sales per enplanement, yielding additional non-airline revenue. On average, the top 30 airports allocated more than 9 square feet per 1,000 enplanements to non-duty free retail and food service concessions. The top third allocated slightly more, approximately 9.3 square feet per 1,000 enplanements, and the bottom third allocated an average of only 7.6 square feet per 1,000 enplanements.

Concession Mix In addition to allocating the right amount of space to the concession program, it is critical for airports to achieve the right concession mix to optimize sales, revenue and customer service. While allocating the majority of the concession program to food service might leave the airportâ&#x20AC;&#x2122;s customersâ&#x20AC;&#x2122; stomachs full, they still may leave

empty-handed in the gift area. The research showed that the majority of airports with the highest sales per enplanement also had the highest specialty retail sales per enplanement. The specialty retail components in the concession programs often are driving the increased sales and revenue through impulse purchases, which take advantage of passengersâ&#x20AC;&#x2122; dwell time at the airport. It also is interesting to note that a high-achieving retail segment in a concession program cannot be achieved through convenience retail or newsstands alone. Among the airports with the highest retail sales per enplanement, the majority had the highest specialty retail sales, not convenience retail sales.

National vs. Local Brands Do national brands really matter? Can they actually have an impact on concession sales? Based on the research conducted, the answer is yes. Among the top 30 airports reviewed, an average of approximately 58 percent of the food service concepts offered were national brands. On average, the airport concession programs generating the highest food service sales per enplanement also offered the highest percentage of nationally branded food service concepts, as opposed to local or generic brands. The top one-third of these airports offered approximately 14 percent more national brands in their programs and generated about 26 percent higher food service sales per enplanement than those in the bottom third of the airports researched. Those programs yielding the highest sales per enplanement had an average of approximately 63 percent national brands, while the airports researched with the lowest sales per enplanement had only about 55 percent nationally branded food service concepts. The same principle regarding national brands applies to specialty retail. On average among the top 30 airports, only 44 percent of the specialty concepts were national brands. However, among the top 10 airports, 54 percent of the specialty retail concepts were national brands. These same airports had sales per enplanement that were more than 150 percent higher than the sales at the airports in the bottom third in terms of specialty retail sales per enplanement. On average, the airports in the bottom one-third had national brands for fewer than 40 percent of their specialty retail concepts. Interestingly, the national brand principle does not seem to apply when it comes to convenience retail (newsstands). For the purposes of this article, a nationally branded newsstand is considered to be one that has a nationally or internationally recognized brand name associated with it, such as the name of a major media network or newspaper. First, there is significantly less branding associated with newsstands. Many times, the name of the store is associated with the operator or themed for the city or region in which the airport is located. The concession programs with the highest convenience retail sales per enplanement did not have convenience/newsstand concepts with national names. In fact, fewer than 4 percent of the top convenience retail programs based on sales per AirportMagazine.net | JUNE/JULY 2010

Denver’s Small Business Initiative Pays Off Denver International’s initiative in 2008 to jump-start small business participation in its lineup of concessionaires proved successful enough that leases have been extended for the three original companies. The airport teamed up with the Denver Office of Economic Development (OED) for the project, with the airport investing $1.5 million for the initial buildout of the spaces on level five of Jeppesen Terminal. The buildout of the space, known as the Terminal Marketplace, provided three turn-key operations, including a small seating area in front of the location. Officials anticipated that the three initial spaces would act as incubators to allow these businesses to expand into larger concession spaces in the future. Proposing companies were required to be certified by the city as small business enterprise concessions. The initial term for each of the three selected businesses was two years, with three additional one-year options if the concessionaire met certain benchmarks annually, such as operating consistently within the requirements of the concession agreement. The three companies that inaugurated Terminal Marketplace were Amore Fiori Flowers & Gifts Shop, CofTea Shop and Vertical Mile Market. Vertical Mile Market, which brought in nearly $500,000 Denver’s Terminal Marketplace

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in revenue during the nine months of 2008 that it was open, and more than $700,000 during all of 2009, offers an assortment of pre-packaged snack items. Through the airport’s RFP process, the owner subsequently won a second location: Bella, a high-end cosmetic and personal care concession, which is located on Concourse B. Amore Fiori Flowers & Gifts earned nearly $170,000 during the nine months of 2008 and boosted that total to more than $225,000 last year. The shop offers merchandise ranging from vintage-style hats to boutique-style perfumes and toiletries. The CofTea Shop nearly doubled its revenue in 2009 over 2008, with last year’s total topping $400,000. The shop sells a selection of cookies, muffins and other sweets made with organic ingredients, as well as coffee and tea. Shop owner Zach McNeal praised airport officials for the opportunity to break into the market. “For us as a locally owned small business, the first time in an airport has been a very valuable experience in learning about airport concession operations,” he explained. “Denver International and the city and county of Denver should be commended for the idea of the Marketplace to give us a jump-start on airport operations.” McNeal expressed enthusiasm for the idea of expanding his operation in the airport. “We are small spuds but hoping to be big potatoes,” he said.

enplanement had nationally recognized names associated with the names of the newsstands or convenience stores. This result is not to say that some of the individual newsstand operators are not nationally recognized. This is just a strict interpretation of a national brand and an attempt to identify whether the national/international name enhances sales. While it is clear that national brands are important, this is not to say that developing a program based solely on national brands would be even better. Studies also have shown that airport concession programs with a good mix of national and local brands tend to be the most successful. Strong local brands are an important part of any concession program and can enhance the sense of place for a concession program and terminal. Strong local brands mixed with a significant number of national brands as described above should be optimal.

Other Key Factors In addition to space allocation, mix and brands, there are other key factors that clearly impact the success of a concession program. Two of the most important factors are location and operations.

Location. The application of the main concession-planning principles to locate concessions is even more important during tougher economic times. Adhering to these principles will help the concession program survive in a downturn and thrive in good times. n Concentrate the concessions in malls, streets and clusters within the terminals and concourses. This principle is especially important for specialty retail and to maximize impulse purchases. n Locate the majority of the concessions airside, but do not neglect landside locations. Landside concessions are important for the visitor and employee segments of the airport market. At least two-thirds of the space allocated for a concession program is typically airside among the programs generating the highest sales per enplanement. n Specialty retail needs other specialty retail. Isolated specialty retail units do not generate sales as high as those that are clustered. n Maintain views and proximity between food service and retail concessions. n Locate some concessions downstream, as there will always be passengers who will not venture back to

the main concession clusters, or who have limited time but still need concession amenities. n When planning a new terminal, concourse or terminal renovation, consider concessions very early in the process, starting at the programming phase of the project. If concessions are planned properly up front, they will not have to be retrofitted â&#x20AC;&#x201D; a process that often results in awkward, expensive, less profitable space that lacks adequate utilities. Anchor the program with key tenants, concepts or even important airport facilities such as restrooms. Take advantage of typical passenger flows and work with them, not against them. Trying to make passengers take a circuitous route through a concession area can be difficult.

Operations. Operational issues often are exacerbated or more visible during tough economic times, and concessions with operational flaws fall to the bottom. People spending their money expect more and want to pay less. Operational efficiencies and customer service become even more paramount. Following are some of the most important operational aspects of concessions that must be addressed and perfected to ensure that a concept can survive in both good and bad times. n Customer service. The customer must feel valued and important. Cutting staff to the bare bones is not a valid response in a downturn. Maintaining the capability to satisfactorily meet the customersâ&#x20AC;&#x2122; needs and maximize sales is the key. n Speed of service. Providing a service or product for a time-constrained customer is critical at an airport. Losing sales due to long queues during downturns should not be an option. n Inventory. Ensuring that the right products are available for purchase is of the utmost importance. Figure out how to do just-in-time deliveries if necessary, but Continued on page 38 AirportMagazine.net | JUNE/JULY 2010

NEXTGEN

National Alliance Supports

Advancement Of NextGen Initiative By Susan M. Baer

bout 15 months ago, my predecessor at the Port Authority of New York & New Jersey, Bill DeCota, spearheaded the creation of the National Alliance to Advance NextGen — a coalition of business, civic, and aviation travel industry leaders who are concerned about air traffic delays and want to do something about them. FAA’s Next Generation Air Transportation System, known as NextGen, is a total upgrade of the national airspace system, including its airports, using 21st century technologies to ensure future safety, capacity and environmental needs are met. Sadly, Bill passed away suddenly last September. But the work he started continues in earnest. One of my mandates is to remain committed to the cause and advocate for relief from delays and congestion while we all work toward finding ways to increase capacity for every air traveler in the country. Many of us grapple with this issue every moment of our professional lives. But even an outsider understands that delays plague the U.S. air traffic control system, especially in the New York City metropolitan region. The reason is fairly obvious. The airports operated by the Port Authority of New York & New Jersey in this region — Kennedy International (JFK), Newark Liberty International, LaGuardia and Teterboro — share the same airspace. Each day, they combine to generate 4,100 flights within a 15-mile radius of the Statue of Liberty. Given their close prox18

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imity, these four airports function as one from an airspace perspective, so it’s no surprise that they consistently are ranked among the most delayed in the country. Reducing delays has driven our agenda as much as anything. It’s important to our customers, our business partners and our economy. And because studies have shown that up to 75 percent of delays across the country originate at one of the New York area airports, we believe it’s important to the entire country. In many ways, NextGen holds the key, but the answer is not always technology. We need operational and procedural changes, too, and sometimes these are even more elusive than equipage. The bottom line is that aircraft delays pose a huge threat to our economy, and they result in staggering losses: more than $9 billion in U.S. productivity is lost annually due to flight delays; the cost to our region alone is $2.6 billion a year. As demand for air travel has risen, FAA continues to advance research, but the implementation of solutions that would have helped to mitigate delays has not kept pace. However, we now are starting to see real action. Elements of NextGen already are in place or are being tested around the country, from Alaska to the Gulf of Mexico, in Louisville and Philadelphia, and in our backyard, too. The port authority is working with Continental, Honeywell and FAA to launch a ground-based augmentation system at Newark Liberty to allow planes to fly more precise paths. Eventually this will allow airlines to fly planes closer together and to land more aircraft without compromising safety. At the port authority, we’re investing hundreds of millions of dollars to make a difference. If it’s in our purview, we’re doing something about it.

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At JFK, for instance, we’re currentThese graphics depict every flight path, totalling about 4,100, that took place at Teterboro, ly reconstructing our three-mile-long Newark, LaGuardia and JFK on April 29, 2010. At left, green-colored paths are below 4,000 bay runway, which also will provide feet; yellow are 4,000-6,000; red above 6,000. At right, arrivals are blue, departures green. a number of additional benefits as at JFK, Newark Liberty and LaGuardia. part of a comprehensive delay-reduction program. This All of our delay-reduction initiatives on the ground includes new access points on taxiways near the runway will deliver incremental improvements. However, FAA and three high-speed exits to improve aircraft queuing, and DOT ultimately are the most critical players in helpenable swifter departures, and allow easier access from ing to reduce delays, because the fundamental problem taxiways to terminal gates. Ultimately, the work will save is the continued use of 1950s-era radar-based equipment time on the ground for every passenger at JFK. Who can’t when what we really need is widespread use of 21st-cenuse more time? The bay runway project also includes new infrastruc- tury satellite systems. There’s still a lot more to do, and NextGen is fundature to enable the use of future navigational aids. With grant funding from FAA, we’ve undertaken work at JFK mental to all our efforts. But NextGen won’t be cheap. for up to 11 runway access projects. Many will be com- Total FAA spending over the first 10 years is expected to range from $8 billion-$10 billion, and estimates through pleted in 2010 along with the bay runway reconstruc2025 range from $15 billion-$22 billion. And that’s just tion project. the cost to the federal government. It doesn’t include the Last summer, we brought Airport Surface Detection Equipment–Model X (ASDE-X) online at JFK, from touch- cost to equip aircraft or modify airports. Twenty-two billion dollars sounds like a big number, down to the gate, and what a difference it has made. We and it is. But let’s give that number some perspective. worked with FAA on this project, which works like a Our three major commercial airports — JFK, Newark Global Positioning System by pinpointing the exact locaLiberty and LaGuardia — currently are capped with tion of all aircraft. The information is used to manage an operational limitation on the number of aircraft swifter movement of aircraft between the terminals and movements per hour for 16 hours of the day. It’s the runways. ASDE-X saves more than $10 million annually equivalent of a “no vacancy” sign, because every year in aircraft operating costs and value of passenger time, that those caps are in place, someone is left behind. and this system also should help us monitor aircraft so Someone who wanted to make the trip into or out of that they don’t run afoul of DOT’s new tarmac delay rule. We also extended taxiways at JFK to improve departure the New York region can’t, because, essentially, there is no room at the inn. procedures on Runway 22-Right, cutting takeoff times by Our estimates say that if there is no material up to two and one-half minutes for every departing flight improvement in the congestion and delay situation and equating to more than $82 million in annual savings. in the New York region by 2025, we will be leaving And we constructed a new taxiway hold pad to create behind some 40 million “someones” — the equivalent more efficient queuing and sequencing procedures for Runway 4-Left departures, reducing delays there by about of the 2009 passenger traffic at Washington’s Dulles International and Reagan National airports combined. a minute per operation, for an annual savings of nearly And the cumulative loss of economic activity that $24 million. those 40 million passengers would have brought over We’ve also done airside work at Newark Liberty, the next 15 years is far more than $22 billion. In fact, where we widened 32 fillets to enable more effiit’s closer to $130 billion. cient operations, and we are scheduled to widen six So the cost of inaction is too great, and that’s where the more. We even purchased an airport in 2007, Stewart International in New York’s mid-Hudson Valley, in part National Alliance to Advance NextGen can be an important player by urging the federal government to move quickly to create capacity for our customers in the northern reaches of the region while helping to ease congestion Continued on page 23 20

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GREEN BUILDINGS NEXTGEN

What Will NextGen

Do for Airports?

(Above) Interior of the newly opened FBO building at Greenville-Spartanburg International and (left) exterior view.

By Victoria Cox

ver the next decade, air traffic operations are expected to increase about 2 percent per year. This increase in demand will put pressure on our nationâ&#x20AC;&#x2122;s airports to provide additional capacity but in a safe, efficient and environmentally responsible manner. NextGen technologies and procedures, along with infrastructure construction and improvements, will provide the tools needed to make this happen. NextGen is the planned evolution of the nationâ&#x20AC;&#x2122;s airspace from a ground-based system of air traffic

control (ATC) to a satellite-based system of air traffic management. It focuses on allowing airports the flexibility to deal with changing demand without investment in costly infrastructure that may not be required on a continuing basis, or to meet demand in locations where new pavement is not feasible.

NextGen Procedures Performance-based navigation (PBN) procedures can increase airport capacity by offering more efficient arrival and departure paths. Two types of PBN are area navigation (RNAV) and required AirportMagazine.net | JUNE/JULY 2010

navigation performance (RNP). RNAV provides an aircraft with the ability to navigate from point to point, using Global Positioning System (GPS) technology. RNP will be used at specific locations where extra precision is needed for aircraft navigation — such as approaches to airports with challenging terrain or congested metroplex areas where precise navigation is needed to de-conflict arrival and departure routes for multiple airports in close proximity. NextGen envisions the use of RNAV nearly everywhere and RNP only where needed. On departure, an aircraft will be able to use multiple available departure paths with the flexibility afforded by RNAV. This is already the case at Hartsfield-Jackson Atlanta International and Dallas/Fort Worth International where standard instrument departures based on RNAV are in use. Delta saved more than $100 million in three years in fuel with basic RNAV departures that streamline departure routings. This resulted in carbon emissions reductions of 6,700 tons per year. And that’s not all that’s involved in improving operations at airports. Tailored arrivals and optimized profile descents (OPDs), which also are referred to as continuous descent approaches (CDAs), mean aircraft will stay at cruise levels much longer and then descend at near idle power. OPDs will reduce fuel burn while also cutting down on noise and emissions over local communities. At Los Angeles International, for example, 300 to 400 OPDs are being flown each day. Each one saves 25 gallons of fuel and reduces the amount of level flying during approach by 26 percent. Another important initiative to improve efficiency is closely spaced parallel runway operations (CSPO). Typically, such runways can be used for simultaneous arrivals and departures in visual flight conditions. However, in low visibility, capacity is dramatically cut. So that reduced visibility doesn’t slash runway capacity, several efforts are underway. The use of RNAV and RNP, staggered approaches, and multilateration technology for more precise tracking of aircraft on parallel approaches is being explored. The benefits of NextGen add up, and many initiatives such as CSPO are aimed at increasing capacity with existing infrastructure rather than requiring that airports invest in new runway construction.

Surface Benefits Some of the key benefits NextGen will bring to the table are on the surface side of the equation. This is where many larger airports already are reaping tangible benefits with better situational awareness, not only for pilots and controllers, but for everyone working on the airfield and at traffic management centers. Improved situational awareness can support collaborative decision-making and help stakeholders to make better decisions and reduce taxi times. Improved surface situational awareness is achieved 22

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today using Airport Surface Detection Equipment– Model X (ASDE-X). Of the airports that have ASDE-X, those with data distribution units allow air traffic controllers, traffic managers, airline operations centers and airport operators — anyone who subscribes to the data and a data display — to view movement of aircraft vehicles on the airport surface, including the ramp areas if sensors are placed there. Surface management demonstrations using shared ASDE-X data at New York’s Kennedy International and Memphis International airports demonstrated that taxi times can be reduced on average from two to four minutes. Tracking aircraft more accurately on the surface also will be of interest to many airport managers for business reasons. Once an airport operator can identify aircraft and obtain a location on the ramp or a runway, correct billing will be facilitated for landing and parking fees. NextGen already is benefiting smaller airports in many ways. For example, at airports that do not have an Instrument Landing System (ILS) or comparable procedure, Wide Area Augmentation System (WAAS) localizer performance with vertical guidance (LPV) procedures can provide precision approaches — to near Category 1 ILS minimums. As of January of this year, FAA has published 1,929 LPV approaches serving 1,023 airports, including 1,127 LPV approaches to non-ILS runways. Other than approach and runway lighting, WAAS/LPV does not require radio navigation aids on the ground, such as a localizer antenna for ILS. A key enabler for NextGen at airports is the Airport Geographic Information System (AGIS) program. AGIS surveys are being conducted to provide detailed geospatial data about airports. The data will be used for new LPV approaches, including obstruction analyses, as well as electronic notices to airmen and flight deck airport moving maps. The central database for airport GIS data enhances sharing of both safety-critical data, such as runway end points or the location of navigational aids, and non-safety-critical data, such as the location of a building on the airfield. In addition to providing users with current airport data, it will improve airport planning efforts with more efficient reviews of airport layout plan updates.

ADS-B System Just as airports have depended primarily on ILS for precision approaches, they also have depended on radar for decades as the primary tool used by ATC to track aircraft in the air and on the ground. But not all airports are equipped with radar for surveillance. That’s where the new Automatic Dependent Surveillance-Broadcast (ADS-B) system will help many airports. ADS-B allows aircraft or other vehicles or obstacles to broadcast a message on a regular basis, which includes their position. Other aircraft or systems can receive this information for use in a wide variety of applications In NextGen, ADS-B is intended to be

the primary surveillance system that will provide more precision than radar. ADS-B has been demonstrating initial operating capability (IOC) in various regions of the country, with IOC being achieved inLouisville, Ky., in the Gulf of Mexico in 2009 and in Philadelphia and Juneau earlier this year. The ADS-B program is expected to be approved for operational service later this year. Aircraft will need to have ADS-B “out” avionics installed to transmit their GPS position to FAA and other aircraft. This capability will be mandated by FAA in a final rule due to be issued this year. Aircraft operators will have until 2020 to comply. Nearly 800 ADS-B ground stations should be installed and operational by 2013 under the contract that the ADS-B service provider, ITT, has with FAA. Beyond the baseline ADS-B program, there is the opportunity for airports not currently served by radar to partner with FAA to obtain surveillance services when an appropriate safety or benefits case can be made. Where ADS-B is not practical, such as in challenging mountainous terrain, Wide Area Multilateration (WAM) can be used for air traffic control surveillance. The Colorado DOT began using a new WAM system in 2009 to provide ATC surveillance for four airports where the use of ground-based radars is impractical and too expensive. The lack of surveillance required these airports to operate on the “one in-one out” rule, and about 75 aircraft were

delayed each day during the winter when trying to reach these remote airports near popular ski areas. Now traffic can flow more freely without these delays. New airport infrastructure will continue to play an important role in increasing capacity. However, the greatest benefits will come from integrated airport planning and terminal airspace redesign projects that deliver new airport infrastructure served by NextGen PBN capabilities. Airport technology systems will need to be optimized to integrate NextGen tools into everyday operations, supporting active airport participation in surface management via collaborative decision-making with air traffic control and airlines. Airports will need to balance surface, gate and terminal capacity with the improved runway capacity enabled by NextGen. In addition to NextGen ATC improvements, airport managers need also to think about the impact of NextGen upgrades on landside facilities and related operations. It’s time to think about NextGen as a whole, including the terminal building and the apron. Both sides need to be in sync. We are talking curb-to-curb, and airport managers should begin to think in terms of multi-modal transportation, including connections by rail or mass transit. In the end, NextGen is all about letting U.S. airports accommodate future growth. A Victoria Cox is FAA senior vice president for NextGen and operations planning. For more information on NextGen, go to www.faa.gov/nextgen.

ALLIANCE SUPPORTS Nextgen Continued from page 20

and decisively to implement NextGen. The alliance has had some early success, and it’s a credit to the collective efforts of so many people. Through April, nearly 650 organizations have joined us, and if yours hasn’t, we urge you to do so by visiting www.panynj.gov/NextGenNow. It costs nothing in time and money, but there is a major cost if we don’t join in bigger numbers to demand action. Our voices are being heard. We asked for funding to be increased, and we got it. The President’s budget includes a request for $1.1 billion in NextGen funding for 2011 — a 30 percent increase. We also asked for the implementation to be accelerated, because our customers can’t wait until 2018 for relief. FAA has responded, and in March issued the NextGen Implementation Plan, a thoughtful roadmap including a short- and long-term plan for NextGen. We also argued that the technology should be deployed where it can have the greatest impact. Juneau, which suffers from inadequate radar coverage, soon will be welcoming an en-route tracking system. Moreover, at a recent meeting with FAA Administrator Randy Babbitt and representatives from several major airlines that oper-

ate in our region, Randy told the group that plans continue to advance, and that he is committed to deploying NextGen technology and procedures in the New York region “where you get the biggest bang for your buck.” We need to remain diligent, because there’s a lot of competition for federal dollars. We need to let Congress and the administration know at every opportunity that the “invisible highway” on which aircraft navigate no longer can be ignored. We need collectively to keep the pressure on to deliver real benefits within the next five years and ensure that as existing technology and equipment are fully leveraged, FAA also takes the lead in complementing this progress with the appropriate policies, procedures and training and initially deploys them to regions that produce the greatest amount of benefit. Less than a year ago, Bill DeCota wrote in these pages, “We need NextGen now, not two decades from now.” The message becomes more urgent every day. A Susan M. Baer is director of aviation for the Port Authority of New York & New Jersey. She may be reached at sbaer@panynj.gov. AirportMagazine.net | JUNE/JULY 2010

AIRPORTS

America’s Newest, Greenest

Commercial Airport: Photos supplied by Northwest Florida Beaches International.

Northwest Florida Beaches International

By Randy Curtis, A.A.E.

elcome to Northwest Florida Beaches International, the first international airport to be built in the U.S. in more than a decade. Our new $318 million airport, located in West Bay, near Panama City and Panama City Beach, Fla., officially opened for business on May 23, 2010. It’s been an incredible journey: from 1996, when 24

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the airport authority began exploring options to extend Panama City-Bay County International’s 4,600-foot runway, to today’s new airport that features a 10,000-foot runway, modern terminal building and new service by low-fare carrier Southwest. Along the way, the airport authority faced numerous challenges. But we successfully navigated our way by staying true to our mission and

Now, with Southwest’s two new daily nonstop flights to Nashville, Houston, Orlando and Baltimore-Washington, and Delta’s introduction of widebody jets, Beaches International will serve as a gateway to Northwest Florida and its world-famous beaches. But first, a quick look back to how it all began. The original Panama City-Bay County Airport was built in 1946. By 1996, the airport authority began exploring runway extension alternatives. Lengthening the runway into the St. Andrew’s Bay or a nearby neighborhood both were deemed unworkable. As a result, in 1998 the airport authority began to consider the possibility of relocating the airport to a new site and approached The St. Joe Co., Northwest Florida’s largest private landowner, about relocating the airport to St. Joe property. By 2001, with support from FAA and the Florida DOT, the airport authority settled on property in West Bay owned by St. Joe as the best site for relocating the airport. One of the singular aspects of the relocation project was the use of Florida’s innovative sector planning process by the airport authority, the Bay County Commission and St. Joe. The process allowed for the development of a largescale, long-term land use plan for 75,000 acres, with the new Beaches International site as the plan’s centerpiece. Moreover, the plan also includes more than 41,000 acres identified as conservation land. After undergoing rigorous environmental and financial studies and overcoming several legal challenges, the airport in 2007 received the last necessary approval for the new facility. Construction began in December 2007.

‘Greenest’ U.S. Airport

building important and lasting partnerships with federal agencies, state government, the airline industry and the local community. When the airport authority set out to build a new airport, the mission was to bring low-cost air service to the region and to build an economic development platform for future job creation. Mission accomplished on both scores.

As passengers fly into the new Beaches International, they view our new 10,000-foot runway and terminal complex surrounded by pine flatwoods and wetlands. The airport authority developed detailed plans for wetlands mitigation, wildlife management, stormwater management and wastewater treatment that greatly exceed minimum requirements set by Florida law. To help protect the environment, future development around the airport, including property owned by St. Joe, will be clustered. Instead of piecemeal development of small land parcels scattered as part of the state AirportMagazine.net | JUNE/JULY 2010

requirements to mitigate all of the proposed developments, the sector plan calls for huge areas of conservation lands, which will protect watersheds that feed into the ecologically diverse St. Andrew’s Bay. Meanwhile, the new airport terminal and property, built to strict environmental standards, is perhaps the “greenest” airport in the nation. The airport passenger terminal has been designed and built to Silver Leadership in Energy and Environmental Design (LEED) certification standards, and we hope to receive the official LEED certification later this year.

Local Color Northwest Florida Beaches International’s 125,000-square-foot terminal building reflects the region’s architecture and environment. The exterior of the building features a metal roof and a teal green stucco finish. The passenger drop-off and pick-up lanes are protected by a sloping roof supported by large, exposed wood beams. Upon entering the terminal, passengers are greeted by a welcoming “beach” feel. The walls display aqua green accents, while the floor is blue terrazzo. Two huge columns are covered with small mosaic blue tiles. Walls on either side of the stairs and escalator leading to the second-floor gate area are covered with a blue, wavy material designed to resemble waves on the nearby Gulf of Mexico. Airline ticket counters are topped with black granite. The front of each counter is a translucent sheet of plastic, backed by seashells. The entrance to the restaurant has the same clear material featuring seagrass. The new airport also includes the latest in baggage handling equipment. Last year, TSA awarded the airport $4 million for the acquisition of a new checked baggage inspection sys26

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tem. The grant also will be used for subsequent modifications needed for TSA to install an explosives detection system. Perhaps one of the biggest wins for the new airport arrived in December 2009 when Southwest announced it would serve the airport. The Southwest announcement was followed in February by Delta’s statement that it would operate two of its 11 daily flights to the new airport with 142-passenger MD-88 jets. Delta had operated only 50-seat CRJ-200 regional jets at the old Panama CityBay County Airport.

Development Opportunities Now that the airport is open for business, the airport authority and The St. Joe Co. will focus on attracting companies for greenfield “inside the fence” development opportunities. To help market its commercial and industrial property, the airport authority has hired Jones Lang LaSalle, a global real estate services firm, to target air freight carriers, manufacturers, distributors and other aviation-related users. Meanwhile, The St. Joe Co. recently announced the launch of VentureCrossings Enterprise Centre adjacent to the airport. VentureCrossings, a large retail, hotel and industrial development, encompasses the first 1,000 acres to be developed by the company within the 75,000-acre West Bay Sector Plan. VentureCrossings includes approximately 100 acres designated for retail, office and hotel uses; 300 acres for light industrial uses; and 600 acres for manufacturing, distribu-

tion and logistics companies seeking “through the fence” access to the new airport’s 10,000-foot runway.

Lessons Learned Looking back on the past decade, I believe we attained success by operating as transparently as possible and building strong partnerships. Obviously, The St. Joe Co. gave the project a tremendous boost by donating the 4,000 acres to the airport authority for the development of the new airport. We also decided early on in the process to partner with, rather than push against, the various federal and state regulatory agencies that held approval authority. We worked closely with the Florida Department of Environmental Protection, Army Corps of Engineers and FAA every step of the way to ensure that we were proceeding properly. Very early in the planning process, we invited the entire community to participate in numerous visioning sessions to make sure we were delivering a project that best met the community’s desires. With Northwest Florida Beaches International now serving the aviation needs of the region, we can reflect on this incredible accomplishment and prepare ourselves for the future growth of the airport and Northwest Florida. A Randy Curtis, A.A.E., is executive director of Northwest Florida Beaches International. He may be reached at rcurtis@pcairport.com. Earlier articles in Airport Magazine on the relocation of the airport may be found in the April/May 2009 and August/September 2008 issues. For current news on the airport, visit the blog at www.newpcairport.com.

SAFETY MANAGEMENT

Implementation Strategies for a

Safety Management System By Joanne Landry

f you’re an airport manager, you’ve probably heard about Safety Management Systems (SMS) and FAA’s upcoming Notice of Proposed Rulemaking (NPRM). At AAAE’s May 2010 Annual Conference and Exposition in Dallas/Fort Worth, FAA confirmed that the NPRM will be released later this year. Fortunately, as with all FAA NPRMs, the program will be deployed over a period of time to allow for integration. As a reminder, AC 150/5200-37 defines SMS as “the formal, top-down business-like approach to managing safety risk. It includes systematic procedures, practices and policies for the management of safety (including safety risk management, safety policy, safety assurance and safety promotion).” More simply stated, SMS is comprised of the four elements: policy, risk, assurance and promotion. At the core of SMS are the risk and assurance elements. Risk, which includes hazard identification and risk assessments (where probability and severity of hazards are evaluated), works hand in hand with the assurance element through quality assurance (audits) and quality control (inspections) to ensure continuous improvement is achieved. Policy provides the oversight and management commitment, as well as program objectives and goals that are measured through quality assurance

audits. Promotion, comprised of safety culture and training, supports the core elements through human factors, awareness and education. As airports anticipate the future of integrating these four SMS elements into their operations, there are numerous ways to prepare. In fact, some airports already have started developing their SMS programs (San Antonio, Jacksonville, SeattleTacoma, Detroit and Atlanta, among others) as part of FAA’s SMS pilot studies conducted over the last two years. The knowledge, best practices and lessons learned from these pilots are the primary source of information for this article.

Part 139 and SMS One of the most compelling findings from the SMS pilot studies is that airports already are collecting data and performing some aspects of the four SMS elements through the Part 139 Certification of Airports program as listed below: n Airport certification manual development and deployment n Staff training and documentation n Recordkeeping and reporting n Self-inspection program (Part 139 inspections) n Wildlife hazard management n FOD control programs n Construction safety AirportMagazine.net | JUNE/JULY 2010

nE mergency response/airport emergency plan n Aircraft rescue and fire fighting n Airport condition reporting and notification n Pavement management n Markings, signs and lighting n Snow and ice control n Handling and storing of hazardous substances and materials Today, FAA’s oversight focuses on the movement area, but airports man-

age the entire airside (movement and non-movement areas) to ensure safety through programs such as FOD control, wildlife, pavement, lighting and snow removal. However, the safety information collected from these programs is used in a reactive way, not in a preventive manner. SMS focuses on the ability to recognize, document and prioritize hazards or risks that exist within the airport’s operations to mitigate or

Examples of a Part 139 Program Gap Assessment Survey

How to Begin The first step in developing an SMS is to conduct a gap analysis. Fundamentally this means reviewing and documenting existing airport

Part 139 Program

SMS Element and Actions

People

Process

Staff training and documentation

Promotion  Identify airport staff training needs (root cause, accident incident investigation, human factors, etc.)  Develop an initial and recurring training program  Develop an orientation training program for tenants

 Who is trained?  Who trains staff and by what methods?  Who manages training?  Who is accountable for reporting?

 How are staff notified of their status or course requirements  How are certifications manag controlled?  How is status reported to FAA

FOD program

Assurance  Launch an airport-wide FOD program  Integrate tenant programs  Assign FOD inspections to airport staff  Create a FOD committee

 Who manages FOD?  Are tenants involved?  Who is responsible for ramp and baggage areas?

 How are FOD issues reported  Is there a FOD inspection pro

Assurance  Expand inspections to the ramp  Expand inspections to the baggage area  Collect and trend information as part of a hazard analysis program

 Who conducts the inspections?  Who signs off on inspections?  Who is accountable for findings and mitigations?

 How is inspection information collected?  How do ops and maintenanc together to mitigate findings?  How is information reported?

Accident/ incident investigation

Risk  Use root cause analysis for investigations  Assess human factors as part of investigations  Ask staff and tenants to report near misses  Determine hazards associated with the accident/incident

 Who conducts investigations?  What sort of training does the staff have?  Who is responsible for collecting information?  Who manages insurance claims?  Who is responsible for fines and citations?

 How are accidents and incide reported?  How do ops staff and risk sta together to reduce liabilities a claims?  How do tenants raise safety c  How does maintenance help safety issues?

Lease and license agreements/ rules and regulations

Policy  Develop a safety policy that integrates with existing license agreements  Ensure legal reviews the policy  Distribute the policy airport-wide

 Who manages agreements?  Who manages rules and regulations?  Who enforces agreements?

 How are agreements negotia tenants?  How frequently are agreemen updated?

Self-inspection program

eliminate potential incidents, accidents or catastrophes. The awareness that comes from an SMS can lead to improved management decisions and risk avoidance strategies/mitigations and a better understanding of trends that focus on the root cause of a problem.

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operations with regard to people, processes and systems and then determining what’s missing to support the four SMS elements. A thorough evaluation of this information will allow airports to gain a head start on the SMS program before the NPRM is released, and more importantly, it makes good business sense to understand where opportunities and gaps exist within the organization before launching an SMS program.

their training ments? anaged and

o FAA?

Systems  Where is the training documentation collected, stored or filed?  What software (if any) is being used, and can it be expanded to include new training?

ported? n program?

 Is FOD data collected and, if so, in what format?  Are tenants willing to share their FOD data?

mation

 What data is collected?  Is the data collected electronically, and, if so, can the software system be expanded to include other areas such as the ramp?

nance work ings? rted?

ncidents

sk staff work ties and

fety concerns? help resolve

gotiated with

ements

 Is accident and incident data stored electronically?  Are near misses recorded?  Does the data include personal information such as name and SSN?  Is the data shared between multiple departments (ops and risk)?

 How is tenant information collected or stored?  How are changes to information made and how frequently?

Planning and Deployment Once the gap analysis is completed, a detailed scope of work can be developed to guide the SMS implementation project. The scope typically includes information regarding staff, budgets, timelines and tasks. Most importantly, the project should be assigned to a designated staff member or outside consultant to ensure proper project management and controls. The following are a few tips for SMS project planning and deployment:

being met, and if not, modify the plan to reflect changes and lessons learned.

Test. Check to ensure that each significant task completed meets initial program objectives. If the task has not met project goals, determine the root cause and revise future deployments to align with findings. Handover to Operations. Transition

projects and budgets (including AIP) and establish reasonable goals and milestones to develop a schedule that is achievable.

the project to operations for ongoing management. Ensure that all documentation, such as standard operating procedures, is easily accessible and usable. Allow for a transition period to provide guidance to operations staff. Obviously, project scopes, budgets and timelines will vary at each airport, but an SMS implementation project can be successful, if adequate planning and resource management are considered prior to getting started. As airports prepare for SMS to be mandated, a considerable amount of preparatory work can be completed prior to issuance of the NPRM. A gap analysis that focuses on existing airport operations and takes into account the people, processes and systems that support Part 139 will provide airport management with an understanding of operational readiness and deficiencies that can be leveraged to develop a detailed scope of work. Project planning for SMS implementation will take into account these gap findings and result in a more thorough and realistic timeline and budget. The gap analysis and project planning can be conducted prior to the NPRM without significant risk to the ultimate program implementation because the information will allow for airports to make better and more informed decisions on how to integrate SMS into their operations. A

Deploy. Approach the project deploy-

Joanne Landry is principal of Landry

Plan. Review the gap analysis and identify how many staff should be involved and who should lead the effort. Determine the departments that will need to be involved (operations, maintenance, risk, health and safety, properties, planning and others) and obtain commitments for project participation. Design. Decide which of the four elements can be accomplished first. Perhaps extending self inspections and FOD control programs to the ramp and baggage areas will be easier than developing new training programs. Maybe an upcoming construction project will provide an ideal opportunity to test the proposed hazard and risk assessment program.

Systems. Determine whether existing software or database applications can be expanded to include data needs for the SMS. Allocate a budget for new software or the integration/ expansion of existing systems to meet data and reporting requirements. Schedule/Budget. Evaluate current

ment in incremental steps and welldefined tasks. Ensure milestones are

Consultants LLC. She may be reached at joanne@landryconsultants.com. AirportMagazine.net | JUNE/JULY 2010

Large

How to Save Money and Prevent Litigation: Boston Logan Terminal A Provides a Model

Capital Projects

By David Y. Bannard

Clear documentation and open communication can prevent expensive delays and litigation in large airport construction projects. Taking the time to negotiate agreements that reflect a shared understanding of the goals of a project and the responsibilities of each party will save time, money and trouble in the long run. An excellent example of this is the construction of Terminal A at Boston Logan International. The original Terminal A at Logan airport was completed in 1970, and by the late 1990s it was in need of replacement.To replace Terminal A, the Massachusetts Port Authority (Massport), the owner of Logan airport, partnered with Delta Air Lines. Before any work was done on the project, however, a small team of negotiators from Delta and Massport spent many hours carefully negotiating the documentation that would govern the project. Terminal A was completed ahead of schedule and under budget â&#x20AC;&#x201D; despite Delta filing for bankruptcy protection before final completion of the project. And there was no construction litigation generated by the project. How was this unusual feat achieved? The following are among the main reasons: 30

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nD ocumentation that clearly allocated responsibilities n A shared understanding of the goals of the project and of the relevant documentation n Regular communication among dedicated onsite staff representing each of the stakeholders n Incentives for achieving goals coupled with penalties for failure to perform

Documentation The foundational element of this successful project was the negotiation of clear, well-understood agreements, including a development agreement, lease and a guaranteed maximum price (GMP) construction contract. Although these negotiations

LEGAL ASPECTS OF CONSTRUCTION

underlying requirements for the project that expedited the redesign process. Delta entered into a GMP contract with construction services company Skanska USA for delivery of the project that required Delta, Skanska and the major subcontractors to meet no less than weekly to coordinate the work. The GMP contract also helped to ensure compliance with federal grant requirements and helped to coordinate the project with airport operations and other work at the airport.

All photos supplied by Massport

Shared Understanding took considerable effort, the result was a shared understanding of the scope of the project and of the responsibilities of the various parties. This upfront work ultimately saved a significant amount of time and money. Massport and Delta painstakingly developed design guidelines that represented their mutually understood minimum acceptable standards for the project and that addressed review and approval of plans, specifications, schedule and costs, and change orders. They included a detailed description of the project that included the overall concept â&#x20AC;&#x201D; a main terminal and satellite facility joined by an underground walkway â&#x20AC;&#x201D; and more mundane matters such as minimum restroom requirements and ticket counter positions. The guidelines also included certain assumptions that were to be taken into account in developing the design, such as load factors, and the percentages of passengers seated and standing in holdrooms. In addition, they specified materials standards and requirements for elements as varied as airside pavement, sustainability and concessions space. Finally, the design guidelines provided for a design review process. When the lease was signed on Aug. 16, 2001, the design of Terminal A was fairly well developed. After the tragic events of Sept. 11, however, the project underwent a radical redesign both to incorporate additional security features and reduce costs. The design guidelines provided a flexible, shared vision of the

A second critical element was the partiesâ&#x20AC;&#x2122; shared understanding of their roles and responsibilities. The parties spent a significant amount of time considering the elements of the project and negotiating documentation that allocated their roles and responsibilities, as well as the risks and the rewards. By working through these issues and reducing them to writing, the parties ensured that their vision for the new Terminal A would be realized. In many large projects, once construction is underway the underlying contracts often are ignored. In the case of the Terminal A project, however, the opposite was true. All senior members of the construction team carried reduced-size copies of the GMP contract with them. Frequently, when a dispute arose, the team members would refer to the contract to resolve the matter. In addition, counsel often attended the weekly coordination meetings. When disputes were brought to those meetings, they generally were resolved promptly. The primary stakeholders developed a familiarity with the agreements that allowed them to refer to the applicable provisions and resolve disputed matters promptly. This led to a much smoother project and helped avoid any post-construction litigation.

Consistent Communication A third critical element was regular communication among the stakeholders. Massport and Delta each AirportMagazine.net | JUNE/JULY 2010

appointed a project manager who served as the central point of contact for all major issues. Skanska appointed both an overall project leader and managers for each of five sub-projects. The project managers met informally almost every day, in addition to the formal weekly meetings mandated by the GMP contract. Through the daily meetings, the project managers developed a level of comfort and trust that allowed them to resolve differences informally but effectively. Minor problems were addressed promptly and not left to fester, and larger problems were identified and resolved among the parties without resorting to time-consuming arbitration or litigation.

Risk and Reward Finally, the fourth crucial element that led to an on-time, below-budget project delivery was a GMP contract that combined both “carrots” and “sticks.” In addition to Skanska’s GMP fee, Delta agreed to pay additional lump sum incentive payments for satisfactory completion of elements of the project on or before certain milestones. These lump sum payments totaled nearly $400 million. Further, the contract provided that the work had to reach completion within a specified number of days from the notice to proceed, 32

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and allowed slippage only for specified events that were beyond the control and not the fault of Skanska. It also provided for assessing penalties against Skanska for failure to complete the project within the contractual timeframe. This structure created a powerful incentive for Skanska to meet the contract’s schedule requirements. Skanska staffed the project from the start in a manner designed to qualify for the incentives, and Skanska earned each one. Nevertheless, the project came in under budget, due in part to an efficient use of forces and little or no increased costs due to delays.

Lessons Learned The agreements that were negotiated relating to the redevelopment of Terminal A saved the parties involved time and money, even though the negotiating process itself was lengthy and complex. By identifying the parties’ concerns, understanding the details of the project, working through the details and allocating risks and responsibilities clearly, the parties were able either to foresee and reach agreement on the issues of importance, or to establish a clear process for resolving later issues as they arose. But a carefully drafted agreement

will not achieve the goals of timely and cost-effective project delivery if nobody pays attention to it. All parties engaged in the project became very familiar with the governing documents, and through a process of shared understanding and open and frequent communication, differences were resolved informally and in a timely manner. Finally, the agreements were structured to create incentives that aligned with each of the parties’ goals — resulting in shared objectives and a project delivered ahead of schedule and under budget. What is the take-away from the Terminal A project? Take the time to carefully and clearly document the parties’ understanding before commencing the work, but provide for flexibility within that framework; ensure that everyone involved in the project understands what has been agreed upon; maintain continuous communication throughout the project; and craft a structure that aligns all parties’ goals. By taking the time up front, significant time and money can be saved in the long run. A David Y. Bannard is a partner with Foley & Lardner LLP. He is the former deputy chief legal counsel of the Massachusetts Port Authority, during which time he oversaw the negotiation, financing and development of several terminal construction projects. He may be reached at dbannard@foley.com.

SECURITY

Convergence of Technologies Creates New Efficiencies By Lori Beckman, A.A.E.

ith the threat of terrorism a continuing reality for the U.S., airports need to do their best to stay vigilant, alert and effective. In these challenging times, airports need to maintain a high level of

security within their limited resources. Dwindling budgets and staff, higher costs and increasing demands for revenue require them to do more with less. Sometimes, airports have to be magicians.

One strategy for an airport to be magical is to find a way to integrate or converge the multiple systems it must manage, such as physical access control systems (PACS), communications, life-safety, intrusion detection, paging and others. Various airport departments bought all of these great systems and at the same time increased the burden on those who are charged with operating them.

Most of these systems are stand-alone and require operators to monitor multiple computers and screens to try to keep up with all the information that is provided. These systems have reporting capabilities, but what do you do with the information, and is it even used to its full potential? I recommend beginning with a cost-benefit analysis of the airportâ&#x20AC;&#x2122;s current systems, includAirportMagazine.net | JUNE/JULY 2010

A communications center is a great place to look at convergence, since systems are available that allow an operator to receive multiple alarms on one system/monitor and manage employee access cancellations at the same time. ing examining the full potential of a system compared with how it is actually used. It is most likely that you will find cost savings in operations, including staffing. Airports should not discount the possibility of converging systems, even in these tight budget times. Forward thinking and actions will pay off now and when the next budget crisis occurs. In addition to the cost-benefit analysis, airports should benchmark their systems against the systems of other airports to compare notes before making any permanent changes. Some very creative convergent business ideas are out there that can be used at any size airport. Creativity requires considering doing things differently, perhaps with different people, different technology or with a different process than you may have used in the past. A great example of a convergent business practice is the AAAEsponsored Biometric Airport Security Identification Consortium (BASIC), which involves airports nationwide

working together to be proactive. BASIC uses existing resources to create a biometric credentialing program that ultimately meets government credentialing standards and reduces the burden financially for an airport to move forward with biometrics implementation. The BASIC concept of operations has helped airports to make decisions that are reasonable and prudent for their specific facility in preparation for the future. Many organizations have developed separate technology and process silos over time. Convergence can help to move processes horizontally through the silos and make all silos more efficient and cost effective and, ultimately, convergence may break down the silos entirely. Technology has advanced greatly in the last two years, and opportunities exist to converge systems efficiently and at a lower cost than can be imagined. The goals of convergence should be: n Increased efficiencies n Cost effectiveness/reduction

n I ncreased security with system integration n Increased productivity among airport staff regardless of airport size A communications center is a great place to look at convergence, since systems are available that allow an operator to receive multiple alarms on one system/monitor and manage employee access cancellations at the same time. One entry can result in cancellation messages to multiple systems such as security, parking and fueling, and, if the person involved is an airport employee, potentially notify the human resources and IT departments as well. Airport size doesn’t matter; convergence applies to airports of all sizes. A smaller airport may not think of itself as a candidate. However, the last few years have shown me that smaller airports do have a lot of the same issues as the big airports. In most cases, they don’t have the staff or the budget to address all the issues. Convergence of technologies —PACS, CCTV, alarm monitoring systems and others—can provide instant notifications via devices such as PDAs and allow issues to be resolved remotely. Convergence not only makes an airport more efficient overall, but also allows operations to cross through silos where they exist, and enables staff to be more efficient than ever before. A Lori Beckman, A.A.E., is president of Aviation Security Consulting Inc. and a partner in Beckman and Bryan, LLC. She may be reached at lbeckman@avsec.biz.

AirportMagazine.net | JUNE/JULY 2010

Airportech

Tests, Alaska Installation Show EMAS Holds Up In Cold By Sean Broderick

n-service experience in Alaska combined with data gleaned from a series of controlled tests indicates that cold weather environments don’t mean higher maintenance costs for the newest generation of engineered materials arrestor systems (EMAS). Manufacturer ESCO upgraded its runway end arrestor bed system several years ago, adding new features designed to cut down on maintenance costs (which, unlike the initial purchase, are not AIP eligible). Among the changes are new, dyed plastic covers that don’t need re-painting, and a new sealant system using tape and rubber membranes between the concrete blocks. Besides cutting down on overall maintenance, the changes were designed to keep degradation-causing moisture out of the concrete blocks. One of the first installation sites for the new EMASMAX system was Alaska’s Cordova Municipal Airport, which was expected to give the new system a big early test. After nearly three years on the ground, the system is doing its job — and not draining the airport’s maintenance budget.

Mother Nature

cost.” One of the main reasons: the demonstrated maintenance costs.

FAA Test The experience in Alaska is bolstered by recently released results from an FAA-funded test. FAA used the Army Corps of Engineers Cold Regions Research and Engineering Laboratory (CRREL) in Hanover, N.H., to put an EMASMAX system through temperature fluctuation cycles to test the blocks’ resistance to humidity and temperature changes. CRREL’s report on the test gave EMAS high

FAA funded testing to determine how an EMAS would hold up when exposed to cold weather, regular temperature fluctuations and moisture over a long period of time.

“It’s been excellent,” said Cordova Airport Manager Jack Stevenson. “There have been no issues.” Stevenson noted that the airport does not remove snow from the EMAS, but rather lets Mother Nature do the work. The new plastic cover and between-block seals are holding up, keeping the melting snow out of the blocks. “We leave the snow on there, and it has not been an issue at all,” he said. Cordova is experiencing one nagging problem, Stevenson said: birds. It seems the tape is a tempting target, and birds, especially ravens, are poking holes in the sealant. The airport recently re-taped the bed and sprayed goose repellent, but the system was hole-free for only about a month. Having the new EMAS perform well in Alaska is significant for ESCO. Before the Cordova system was installed, there was significant skepticism that the old EMAS would hold up in the Alaskan environment. In 2005, Juneau’s airport board called EMAS “an unacceptable and unworkable alternative” for runway safety area upgrades at the airport “in its present form and at its present

marks. “Overall, the large-scale test showed the EMAS system tolerated the cold cycling well with little change in punch strength,” the report said. “The moisture present in the seams appeared not to have deteriorated the EMAS over the length of this cycling, but there was a significant amount of frost found during the cold inspections at the bed teardown.” The report added that the seam tapes “performed well in the cold, with a tensile strength increase.” EMAS systems, which so far have “saved” six aircraft, are installed at 32 airports worldwide, including 30 U.S. airports. Editor’s Note: FAA on May 28 issued an updated EMAS Fact Sheet, which may be viewed at http://www.faa.gov/news/fact_sheets/news_ story.cfm?newsId=6279.

Sean Broderick is AAAE’s staff vice president-external communications. He may be reached at sean.broderick@aaae.org.

AirportMagazine.net | June/July 2010

83RD ANNUAL AAAE

CONFERENCE AND EXPOSITION

Hosted by Hartsfield-Jackson Atlanta International Airport

May 15-18, 2011 Atlanta, Georgia Georgia World Congress Center Omni Hotel at CNN Center www.AAAE.org/annual2011 For registration details, contact the AAAE Meetings Department: aaaemeetings@aaae.org For exhibit and sponsorship details, contact the AAAE Sales and Marketing Department: aaaemarketingteam@aaae.org (703) 824-0504

FoodBeverageRetail

Retail Briefs

Delaware North Unveils New Airport Retail And Dining Concepts

The Chicago Department of Aviation selected Westfield Concessions Management II LLC to design, redevelop and operate the concessions program for International Terminal 5 at O’Hare International. The proposal provides for a complete re-design of the terminal’s concessions program to include new food and beverage, news and gifts, specialty retail and duty-free locations. Westfield will bear all design and construction costs. The enhanced concessions program will feature local, national and international brands. Separately, the Chicago Department of Aviation recently welcomed Sprigs, a new concept in contemporary airport dining, to the lineup at Midway International. The restaurant, built with sustainable design elements, including recycled bamboo, is a contemporary salad concept on Concourse B that offers a variety of healthy choices. … HDS Retail North America announced the extension of its retail contract with Montreal-Trudeau International Airport. HDS currently operates 16 locations featuring brands such as RELAY, Virgin, Mexx, Brookstone, Artizan, Van Houtte café, Mini-Marche and Découvrir un Pays. The new agreement is expected to generate close to $200 million in revenue over the term of the extension. … BAA Cleveland, developer of the Airmall has opened two new units on Concourse D, as part of its upgrade of concessions at Cleveland Hopkins International Airport. Obrycki’s Crab House and Seafood Restaurant is a Maryland original that offers freshly prepared seafood, including crab cakes, crab soup, hot crab dip and other items featured on the establishment’s menu. The restaurant is operated by CRC Cleveland. Sbarro offers homemade Italian cuisine and features a specialty coffee station. The restaurant is operated by Seven Hills. … HMSHost has added a Varsity Grill & Sports Bar to El Paso International’s new food and beverage concessions program. Varsity Grill is located post-security on Concourse A with décor that features local college and university sports teams. Customers can watch sporting events and news on flat screen TVs while enjoying fresh deli sandwiches and salads, appetizers and soups, along with beer, wine and premium cocktails. Later this year, 12th Fairway Bar & Grill, a full-service restaurant, will join the dining options at El Paso International. The menu includes a selection of breakfast, lunch and dinner items. … Wireless Giant announced it has opened an authorized multicarrier BlackBerry from Wireless Giant retail store in B-C Connector at Philadelphia International. ... Asian cuisine is now available at Charlotte Douglas International Airport. Introduced by HMSHost Corp., Hissho Sushi’s Japanese sushi is prepared fresh daily and served at the newly renovated First in Flight Bar, located in the Main Terminal’s atrium. A

elaware North Companies Travel Hospitality Services reports it has taken steps over the past year to change the way travelers think about shopping and dining in the nation’s airports. Delaware North, under the leadership of division President Matt King and a new business development team, has built upon its Gateway Concept and announced a series of strategic alliances designed to improve the passenger experience. The Gateway Concept is designed to bring the sights and sounds of the host city to the passengers traveling through the airport. “By selecting local, regional and national brands that enable airports to reflect their communities, we’re offering travelers the chance to begin — and end — their visits in unique and interesting ways,” King said. Some of the latest airport concession services offered by Delaware North Travel Hospitality include: • Pink’s Hot Dogs. A Hollywood legend since 1939, the restaurant will open in Los Angeles International’s Bradley International Terminal in summer 2010. • Sports Illustrated. Featuring SI-branded products and merchandise from local professional and college sports teams, this store is located at Detroit Metropolitan Wayne County Airport. • Boulder Beer Tap House. Boulder Beer Co., Colorado’s first microbrewery, has a location in Denver International’s main terminal. • Anchor Bar. Travelers to Buffalo Niagara International Airport can sample Buffalo chicken wings from their local birthplace in downtown Buffalo. The company said it hopes to improve the customer experience through the introduction of more iconic national brands and unique local and regional concepts in dining and shopping at airports. A

AirportMagazine.net | June/July 2010

CONCESSION PLANNING Continued from page 17

be sure the products are available and look abundant. nP ricing. Reasonable prices and good value for money are incredibly important when people have less money to spend or are worried that they could soon have less. Impulse sales become both more critical to the operator and less likely on the part of the consumer. Selling techniques and fair prices are essential for success. n Quality. Although extravagant purchases may become less prevalent during downturns, people are still willing to pay for quality when they do make a purchase. Those operators skimping on quality will become readily apparent and suffer the consequences. n Cleanliness. There is never an excuse for a lack of cleanliness in a concession. Fewer customers should make the cleaning process easier. A limited number of customers may notice even more, making attention to detail critical. Surviving and even thriving during a downturn

is possible. It takes proactive planning, successful implementation and follow-through. You do not want to be in a reactionary mode during tough economic times â&#x20AC;&#x201D; you want to be prepared fully for any event in advance. Adhering to key planning principles and getting the mix and concepts right for the airport customers will ensure survival and, ideally, make any turbulent skies feel a lot less rough. A Supporting data for this article included concession data from the top 30 North American airports based on sales per enplaned passenger (including all non-duty free retail and food service sales). Sales per enplaned passenger, space allocation, and the inclusion of nationally branded concepts in a concession mix were researched and analyzed. Ann Ferraguto is a principal with AirProjects, Inc., a retail and management consulting firm specializing in airports. She may be reached at annf@airprojects.net.

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IndustryMetrics

Airports And High-Speed Rail: Competitors Or Complements By Steve A. Steckler

f you want to get from Barcelona to Madrid, you can fly, but you won’t have much company. The 190-mph, high-speed rail service inaugurated in February 2008 between the two cities has slashed the airlines’ market share from 84 percent before rail to 32 percent afterward and driven airfares down to as low as $55 each way. This route had been by far the busiest air travel city pair in Spain and equivalent in service level to the Washington, D.C.-New York and Los AngelesSan Francisco shuttles. No more. In France, most air travelers based in Lyon now take the high-speed TGV train to its Charles de Gaulle Airport station when flying to destinations outside of France rather than originating at the Lyon airport. Meanwhile, Air France has stopped flying between Paris and Brussels, and Lufthansa has stopped flying between Cologne and Frankfurt, all because of new high-speed rail links between the cities. Is this the future of intercity travel in the U.S.?

Signal To Airports In January 2010, President Obama announced $8 billion in federal grants to improve rail passenger service, most of which went to high-speed rail (HSR) projects in three regions: California, Florida and Chicago/Midwest. Those systems and others are expected to receive another $2.5 billion next year and probably billions more in the years thereafter. This is in addition to Amrak’s annual subsidy of about $2.8 billion. In contrast, recent AIP grants for fiscal year 2010 totaled about $3.5 billion. California’s proposed high-speed rail network.

Although aviation and passenger rail do not compete for funds within the same federal budget line item, there is no doubt that they compete for the attention of the President and Congress and their discretionary largess, as well as for the limited pool of state and local matching dollars. Moreover, as the Obama Administration seeks, for environmental reasons, to increase the price of carbon-based fuels and subsidize the development and consumption of non-carbon power, federal energy policy seems destined to make air travel ever more expensive relative to electric-powered anything, including passenger trains. Naturally, this begs the question of whether American airports and high-speed rail will compete for passengers, to which the European and Asian experiences answer a definite “yes,” at least for flights of less than 400 miles between high-density city pairs. However, for longer trips and on certain segments of the new high-speed rail networks, airports and rail likely are to be complementary components of a European-like transportation system, including the sharing of terminals and even airline flight codes. Is this enough common ground for them to play together nicely?

Reversing A Slide Historically, competition among transportation modes in the U.S. has been pretty one-sided with the exception of freight rail and trucking, which still battle for market share and bragging rights as to which is least subsidized by the taxpayer. Trains wiped out covered wagons and canal barges in the mid-1800s, and only heavy subsidies, crowded roads and limited downtown parking have kept mass transit alive in its century-long battle against the automobile. From the Great Depression through the 1950s, increasing car ownership and more than $100 billion in new roads decimated passenger rail’s share of intercity travel. By 1955, passenger railroads were losing nearly $6 billion a year (in 2010 dollars). The Pullman Co. declared bankruptcy in 1969, followed by the Northeast region’s main passenger carrier, the Penn Central Railroad, in 1970. Train travelers who had not taken to their cars were picked off by fastgrowing airlines. Enter Amtrak, which came to be supported by AirportMagazine.net | June/July 2010

Images supplied by California High-Spreed Rail Authority

billions of dollars in new capital and operating subsidies after its inception in 1971. The carrier served about 20 million travelers annually through most of the next three decades, rising to 28 million passengers as oil prices peaked in 2007. Amtrak now functions on a federal subsidy of about $3 billion per year, or roughly $120 per passenger trip, not including state subsidies and below-cost usage of freight rails on most of its routes. Critics of these subsidies argue that air travel, by contrast, is self-financing, with any subsidies provided by airline ticket and fuel taxes on the travel itself.

Texas HSR In 1989, the Texas state legislature created the Texas High Speed Rail Authority. At the time, the authority and its Florida counterpart were hoping to build the largest infrastructure projects in U.S. history since the national highway system. Both authorities solicited and received credible technical proposals from private rail developers and train manufacturers, events that provoked a brief wave of public enthusiasm, as well as the first whiffs of aviation-HSR modal competition Southwest lobbied ferociously against the plan, using all of its growing political muscle in Texas to hobble the authority’s efforts and prevent construction funding and permitting concessions by the state. At the time, and before Southwest began its major expansion push and addition of longer-haul routes, the Texas Triangle between Dallas, San Antonio and Houston accounted for a significant share of the airline’s revenues. Southwest and other airlines still have good reason to worry. In Japan, Shinkansen highspeed trains have reduced domestic air travel to a fraction of what was projected before the system’s build-out. In China, the government is spending several times more on its HSR network than airports, and it expects that its newest trains 42

AirportMagazine.net | June/July 2010

— which are designed to go faster than any in the world — will be the preferred travel mode for trips of up to 1,000 miles, or more. In Europe, the extension and interconnection of national high-speed rail networks has led to roughly a halving of regional city-pair air enplanements each time a new city is connected, almost regardless of competing airfares. And, as average train speeds increase toward 200 mph and beyond, the competitive range of HSR with aviation increases almost proportionately.

Intermodal Thinking By far the most ambitious HSR projects in America are in California and Florida. Plans for both states envision spending a combined $60 billion over the next 20 years to connect their respective population centers and smaller cities along the way. However, there are important differences between the two states when it comes to HSR’s potential impact on aviation. For example, California has relatively greater population clustering and enough distance between its Los Angeles and San Francisco megaplexes to support an efficient and well-entrenched air service market, although these same factors and the sheer number of population centers in between also help high-speed rail. The modal competition there could be fierce. By comparison with California, Florida has relatively lower density, with a costly and relatively inefficient internal air service network despite years of rapid growth. Indeed, Florida was the first state to be targeted by emerging very light jet air taxi services. All this would seem to make HSR a natural savior for the Florida traveler, especially since its flat terrain, lower labor costs and absence of earthquakes translate into lower per-mile construction costs, which are the primary drivers of ticket prices. However, most

IndustryMetrics intercity trips in Florida are between population centers in the southern half of the state, so modal competition there may be less about air travel and more about whether people can be coaxed out of their cars, which come in mighty handy at both ends of the journey. Ironically, both states plan to integrate at least a few airports into the new rail networks. In European cities, several co-located air/rail terminals have led airlines and the HSR companies occasionally to code share. This allows travelers to use both modes on a single ticket. The most

famous of these intermodal nexuses is at Paris’s Charles de Gaulle Airport, which includes an intercity high-speed rail station and Paris subway station in its multi-layered Terminal 2 complex. This 21st century “mega-terminal” allows an international traveler to arrive at the airport and go almost anywhere in France without a car. Taking a cue from Paris, Florida’s $2.5 billion Phase I network from Orlando to Tampa will originate at Orlando International and then pass through Walt Disney World on its 85-mile trip to downtown Tampa. Florida’s second segment will link at least one other airport into the HSR system. Similarly, the $43 billion Phase I of California’s system will originate in San Francisco and include a station near San Francisco International. It also will include a link from downtown Los Angeles to LA/Palmdale Regional, thus fulfilling Los Angeles Mayor Antonio Villaraigosa’s dream of making Palmdale Regional a new focal point of Los Angeles World Airport’s four-airport system expansion.

their nation’s HSR networks, the most vulnerable American airports will be those in medium-sized cities and in larger rail-connected cities with significant regional O&D traffic. At those airports, commuter planes soon may become extinct except to connect points just beyond the reach of the rail network. Such impacts could be felt as early as 2018 and sharply amplified if Congress passes a substantial carbon tax in the interim. Moreover, some airports may even find themselves absorbed into huge state multi-modal authorities that aggregate and allocate funds among high-speed passenger rail, airports, roads and mass transit. Indeed, there is talk on Capitol Hill of future federal transportation legislation that would encourage precisely that. Whether these impending changes are a good thing depends upon how one feels about comparative subsidies and environmental impacts among transportation modes. Indeed, there is a strong case to be made for simply incorporating “externalities” such as greenhouse gas pollution and national security into the price of carbon fuels, and then letting consumers (in the face of $8 per gallon fuel prices) rather than the federal government decide the outcome. Otherwise, the winner may end up being the mode in which you can skip security lines, chat on your cell phone, and sit undisturbed and unbuckled in your subsidized seat. At least until the train arrives at the airport. A Steve Steckler is chairman of Infrastructure Management Group (IMG). He may be reached at ssteckler@imggroup.com. IMG is the chief financial advisor to the California High Speed Rail Authority, as well as the financial advisor to numerous airports, including many of those that will be impacted by high-speed rail.

Vulnerable Airports Like Lyon in France and other cities around the world that lie within AirportMagazine.net | June/July 2010

assengers by airport traffic for April 2010

Airport

2010

2009

% Change

Austin (Texas)-Bergstrom International

692,995

670,491

+3.4

Bradley (Conn.) International

464,448

488,096

-4.8

15,318

18,191

-15.8

Chicago/Rockford (Ill.) International Cincinnati/Northern Kentucky

684,152

939,951

-27.2

Denver International

4,077,549

3,941,539

+3.5

Fort Lauderdale/Hollywood (Fla.)

1,970,121

1,901,886

+3.6

99,680

+7.0

Harrisburg (Pa.) International

106,632

Houston Bush Intercontinental Kansas City (Mo.) International

3,231,685

3,274,446

-1.3

794,969

772,004

+3.0 +0.03

Los Angeles International

4,642,856

4,641,468

Miami International

2,949,100

2,902,841

+1.6

832,641

609,560

+36.6

General Mitchell International (Wis.) New Orleans International Phoenix Sky Harbor International Port Columbus International Portland (Ore.) International

358,332

350,587

+ 2.2

3,305,001

3,290,532

+0.4

529,496

525,223

+0.8

1,011,290

1,015,716

-0.4 +5.8

Quad City (Ill.) International

76,156

71,994

Raleigh-Durham (N.C.) Intâ&#x20AC;&#x2122;l

755,209

772,424

-2.2

Reno-Tahoe (Nev.) International

309,533

304,829

+1.5

Richmond (Va.) International

284,218

282,739

+0.5

San Antonio (Texas) International

674,969

657,343

+2.7

Savannah (Ga.)/Hilton Head Intâ&#x20AC;&#x2122;l

151,877

158,680

-4.3

54,030

57,049

-5.3

813,329

849,815

-4.3

South Bend (Ind.) Regional Southwest Florida International Domestic and International Fares Airlines Reporting Corporation

09 Domestic Fares 09 International Fares 10 Domestic Fares 10 International Fares

left

The New Orleans Aviation Board has approved the sale of $53.7 million of PFC bond financing to support ongoing terminal modernization at Louis Armstrong New Orleans International. The proceeds of the bonds will be used for Concourse D extension, interior and exterior terminal improvements and an inline baggage screening system. The improvements are part of a $417 million capital improvement program to modernize the airport. Construction of the Concourse D extension and interior and exterior improvements began this spring and are expected to be completed by late summer 2011, the airport said. The Lee County Port Authority May 6 broke ground for the new general aviation complex at Page Field General Aviation Airport in Fort Myers, Fla. The new GA terminal will replace the existing facility. The new complex includes a two-story, 22,613-square-foot terminal building, a 24,000-square-foot multi-use hangar, a new fuel farm, a parking lot, new entrance roadway and native landscaping. The estimated total economic impact will be $28 million and construction activities alone will support 300 jobs. The total project cost is $16.2 million and has a planned 401-day construction schedule, airport officials said. The final piece of structural steel on April 13 was placed in the new 1.2 million-squarefoot Maynard H. Jackson Jr. International Terminal at Hartsfield-Jackson Atlanta International. Construction on the terminal began in summer 2008 and is scheduled to be complete in spring 2012. The international terminal will have 12 gates, nine security checkpoint lanes for international departing passengers and six recheck lanes for domestic connecting passengers. This will eliminate the need for Atlanta-bound international passengers to recheck bags after clearing customs.

Yellow-10 Domestic Gree- 10 International

uildout

Grey- 09 Domestic Black- 09 International

Dollars in Billions

AIRPORTBILLBOARD

Jan.

Feb.

Mar.

Apr.

May

June July

AirportMagazine.net | June/July 2010

Aug

Sept

Oct.

Nov.

Dec.

Palm Springs (Calif.) International recently broke ground for a new air traffic control tower. American Recovery and Reinvestment Act funding totaling $13.9 million will pay for construction of a 150-foot-tall tower and 7,000-square-foot base building. The total project cost will be $24.5 million. FAA said it expects to begin using the tower in 2013. A

corporateoutlook

Investing in Customer Service to Increase Revenues By Joseph DiDomizio

here is a saying as old as retailing itself: when business is slow, paint the store. It’s an optimistic maxim that has taken on new meaning in recent years. Of course, the advice is not about painting stores. It’s about investing during hard times in a wide range of initiatives — all aimed at the customer. Specifically, it’s about making the most of the customer interaction in order to get cash registers ringing again and ensuring revenue growth for our landlords. Last year, when business travel took a nosedive, the concourses and terminals of the world’s airports fell eerily quiet. The customers we did see were spending less. Travel retailers were faced with a choice. We could cut staff, operating hours and other corners to weather the slowdown. Or we could “paint the store,” that is, invest in the business.

Increase Spend

contributed to the overall improvement. Most important, unlike other airport concessionaires that resorted to widespread layoffs or cutting salaries and benefits, Hudson and other smart retailers chose to invest in their most important resource — people. At Hudson, we ramped up our involvement with the boutique customer service training company that custom designs training modules for our associates. They created scripting that led associates through the entire sales transaction — from the moment the customer arrived in the store and was greeted by the associate, through the sale itself, and on to the finish, what to say when the customer left to catch his or her flight.

Converting browsers into buyers, passengers into purchasers, and cashiers into sales staff is not easy or free.

Retailers who chose the investment route reported results that were truly remarkable. For example, even with air traffic down 15 percent-20 percent, the Hudson Group operations team still managed to increase customer spend per transaction by 7.4 percent. This magnitude of increase in customer spend is substantial, especially when you consider that our transaction numbers run into the millions. How was it accomplished? It was all fundamentals. First, we created value through better sizing options on snacks and other items. We increased special offers and other promotional activity. And we offered customers exciting new, name-brand merchandise, giving them a reason to spend. Second, we became far better at upselling customers. There were many suggestive selling initiatives at the point of sale put in place in 2009 … on water, books, specialty retail, even the pastries we sell in our cafes. With coaching and training throughout the year, Hudson associates in more than 450 newsstands became adept at the Hudson version of McDonald’s’ “Do you want fries with that?” — asking each customer if he or she would be interested in an additional purchase: a bottle of water, a bag of chips, and so forth. All of these initiatives were successful, and all of them

Traveler’s Friend

To continue the momentum into the new year, we declared 2010 “The Year of the Customer.” The company’s overall goal this year is to live up to what one of our customers called us on the social networking site Twitter: The Traveler’s Best Friend. I often tell our management team that profit is the product of ideology. Hudson Group’s customer service ideology historically has been defined operationally: we open early, close late and remain open to serve the traveling public on holidays and during bad weather. We aim to keep our stores sparkling clean, beautiful, accessible and fully stocked with the merchandise that customers want and need. The demands of travel retail today require that we expand on that ideology to include a desire to remain the best friend of every traveler who enters our stores. Converting browsers into buyers, passengers into purchasers, and cashiers into sales staff is not easy or free. It takes training, hard work and commitment to achieve dramatic increases in sales per transaction. But in the end, it proves what can be done when you “paint the store” — focus on a goal and execute it. A

Joseph DiDomizio is president and CEO of Hudson Group.

AirportMagazine.net | June/July 2010

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