Fall 2008
Consulting
A Quarterly Publication of the Airport Consultants Council
Turbulent Times Airport Consultants and Suppliers Also Feel the Economic Pinch By T.J. Schulz, ACC Staff
This has been an unprecedented summer of bad news for the aviation industry. Record level fuel prices, cut backs in air service at most airports, and an economy that appears to be in a recession — all of this has created unique challenges and
From all accounts it appears that the industry is in for a rough fl ight. While the price of oil has dropped from the record level of $147 per barrel in July, airlines are forecasting billions of dollars in lost revenues this year. Airports and communities have been impacted, with fl ight service trimmed by 10 percent or more. Some communities are losing air service altogether.
increased costs to run the fi rms’ business operations. Looking to the future, more severe impacts are expected unless the downturn rights itself. The survey also found that airlines, airports, consulting fi rms and suppliers have opportunities at this time to minimize the impacts, decrease costs and position themselves for future success.
The industries that serve the nation’s airports are also feeling the pinch.
The ACC survey confi rmed numerous aviation media reports: the drop in airline service has caused airports to scale back their capital projects. Virtually all respondents reported that airport projects have been delayed, downsized, or in some cases, cancelled.
ACC recently conducted a survey of its member consulting and supplier fi rms to ascertain how the economic downturn is expected to impact their businesses. Over 30 replied to the survey, ranging in size from sole proprietors to large companies with tens of thousands of employees. The results found that companies are already feeling the impacts from the increase in fuel prices and the drop in airline service. Project delays and cancellations are being exacerbated by
immediate fallout.
Cutbacks & Delays
Airline Service Most hard hit are the airports that have lost commercial service due to a carrier (or in some cases, multiple carriers) that have gone out of business. “Closure of one low-cost carrier resulted in several of our airport clients delaying and/or canceling planning projects that our fi rm See TURBULENT on page 16
page 4
page 6
page 10
KEEPING THE SERVICE — KNOW YOUR MARKET OR LOSE IT!
NOISE LAND REUSE: WHAT TO EXPECT FROM FAA’S NEW GUIDANCE
HIGHLIGHTS FROM THE ACC/ FAA/TSA SUMMER WORKSHOP SERIES
Executive Update
Uncertainty within Our Industry Michael J. DeVoy, P.E. RW Armstrong ACC 2008 Board of Governors Chair
If I were writing this update a year ago, I would have said our biggest concerns were the lack of an FAA reauthorization bill and the instability of the airlines. Today, these concerns are still at the forefront of the uncertainty in our industry and have been magnified.
capacity as compared to 2007. Industry analysts say that cuts of 20% are needed in flying capacity for airlines to remain competitive. This means a reduction in capacity at almost every domestic airport and likely a loss of all service for many of the smaller communities.
With an election on the horizon, the FAA reauthorization is now nearly a year past due with no resolution in sight. While short term continuing resolutions keep the FAA operating and keep pressure on Congress to pass a long term solution, working in the short term does not allow airports to implement capital improvement programs effectively or efficiently in a time when it is needed most.
I doubt that any of these facts are news to you. We have been hearing about these issues in the newspaper, trade magazines and conferences for some time now. Identifying the issues is one thing; doing something about it is another. Given the state of our industry, it is more important than ever for ACC to remain at the forefront of the interests of its membership. Some of the proactive measures currently underway include:
Once projected to be profitable in 2008, U.S. airlines continue to be in survival mode with record fuel prices being the primary culprit. Both American Airlines and Delta Airlines reported losses of over $1 billion in the second quarter of this year. Although merger talks have quieted (except for Delta and Northwest), it appears inevitable that we are going to have less airlines, either through consolidation or closure, and the airlines will continue to scale back their operations. Last year we were talking about capacity. USA Today has reported (through an interesting yet depressing interactive map) that airline schedules for November, 2008 show a 10% reduction in domestic
• Taking our message directly to congressional leadership and senior staff on Capitol Hill; • Keeping members abreast of congressional developments relating to FAA and TSA funding;
In addition, ACC has surveyed its membership to validate the impact of the economic downturn to the consulting and supplier industry. The results of this survey are presented in this issue of AirportConsulting. This information is vital in our discussions with Congress in regards to the importance of passing the FAA reauthorization bill. We want to continue to receive your thoughts and opinions on these issues. Please forward your input to ACC Vice President T.J. Schulz at TJS@ ACConline.org. Also, plan on attending the ACC Annual Conference November 10-12, 2008 where we will discuss these issues in detail. This is a must attend event. ACC is the Technical Expert Voice of Airport Development. Our members are the leaders that will shape the airports of the future. It is in tough times that this expertise is needed — not to survive, but to thrive.
• Collaborating with our partner airport organizations and other professional associations to present a unified voice on reauthorization issues; and • Utilizing our Globalization and International Affairs Committee to identify global opportunities for our members.
VanderBush Joins ACC Emily VanderBush has joined ACC as Coordinator of Membership and Marketing. Emily is a recent honors graduate of Vanguard University in Costa Mesa, California, with a B.A. in communications. With an expertise in public relations and marketing, she interned with U.S. Representative John Campbell and worked in the Marketing and Communications Department at Vanguard University. Please feel free to contact her with questions regarding ACC membership and marketing related matters at EmilyV@ACConline.org.
2
Consulting, Fall 2008
Table of Contents Fall 2008 …bringing experts together
Consulting
ACC 2008 Board of Governors CHAIR Michael J. DeVoy, P.E.
A Quarterly Publication of the Airport Consultants Council
RW Armstrong
VICE CHAIR Evan Futterman HNTB
SECRETARY/TREASURER Ronald L. Peckham, P.E.
C&S Companies
Cover Story
Inside This Issue
1
8–9
IMMEDIATE PAST CHAIR Brian P. Reed
Reynolds, Smith & Hills, Inc.
Turbulent Times — Airport Consultants and Suppliers Also Feel the Economic Pinch By T.J. Schulz, ACC Staff
BOARD OF GOVERNORS Michael R. Arnold ESA Airports
Courtney A. Beamon, P.E.
Special Feature
10 – 12 ACC Events Highlighted • Photo Review of ACC/FAA/ TSA Summer Workshop Series
Delta Airport Consultants, Inc.
Thomas B. Duffy
Safegate Airport Systems, Inc.
4–5
Michael K. Kluttz, P.E.
Keeping the Service — Know Your Market or Lose It!
• 2008 ACC Agency Best Practices Award
By Mead & Hunt Staff
Robert and Company
• 30th Annual ACC Conference & Exposition
Stephen M. Pelham
• Max Wolfe Notice & Scholarship
Reveal Imaging Technologies, Inc.
David G. Peshkin, P.E.
Applied Pavement Technology, Inc.
Susan Prediger CAGE Inc.
Terry A. Ruhl, P.E. CH2M HILL
Christer J. Wilkinson
DMJM H&N
Consultant Perspective 6–7
Noise Land Reuse: What to Expect From FAA’s New Guidance
Member Spotlights This issue highlights ACC Executive Member Unison Consulting, Inc. and ACC Associate Member NCR.
13
Out & About with ACC
14 – 15 ACC Members • New ACC Members
By Barry Molar, Unison Consulting, Inc.
• Call for Nominations Speas Awards
ACC Staff
• On the Move
Paula P. Hochstetler
• ACC Updates
• And the Winner Is
President
T.J. Schulz
Vice President
16 – 18 Cover Story
Sharon D. Brown
(continued from page one)
Director, Programs and Finance
Turbulent Times
Emily VanderBush
Coordinator, Marketing and Membership
John Reynolds
Administrative Assistant
AirportConsulting EDITOR T.J. Schulz
19
Spotlight ACC Institute More on the Research Front
20
After All... Facilitate Project Success Through Your E&O Policy
AirportConsulting is published quarterly. The next issue will be distributed in November. For advertising information, contact Emily VanderBush at 703-683-5900. Please send your feedback, comments or suggestions to the editor at: Airport Consultants Council, 908 King Street, Suite 100, Alexandria, VA 22314, or e-mail TJS@ACConline.org. ©2008, ACC www.ACConline.org
3
Special Feature
By Mead & Hunt Staff
Keeping the Service
Know Your Market or Lose It!
A
recent Energy Summit held in Washington D.C. included an airline panel discussion on the current state of the industry. One thing was clear: no air carrier has a business plan in place that can operate profitably at today’s crude oil prices. Discussions with planners from various airlines underscore that point, and the unprecedented rise in jet fuel cost has been the leading driver for recent capacity cuts.
The industry is in uncharted skies. Neither the airlines nor the airports they serve have experienced the current operating environment where no significant short-term relief is on the horizon. The only viable solution that airlines appear to have at this time is to cut back service, which sometimes means withdrawing from a community altogether. Understandably, anxiety levels are high as communities ask themselves, “are we next?” These communities can take steps to attract (or nowadays retain) air service by utilizing many of the same strategies that are used to attract new businesses.
Where is the Industry?
For the airlines, previous cost saving gains from improving operational efficiencies have been outpaced by increases in fuel costs. Fuel expense is now the airlines’ largest operating cost, surpassing labor. This increase has not been slight, but dramatic, and so far carriers have not been able to raise airfares quickly enough to cover the added operating cost. The Air Transport Association, in its Energy Issue Brief, states:
• At estimated 2008 jet-fuel consumption levels, every $1 increase per barrel adds $430 million in expense; • U.S. airlines are projected to spend $20 billion more on fuel this year than last, an increase equivalent to the acquisition of 286 new jets;
These record costs are having a direct impact on air service. An analysis of airline schedules at domestic airports reveals that capacity declined approximately six percent between June 2000 and June 2008. However, Chart 1 shows that non-hub airports were impacted far greater than large-hub airports. Looking forward, the pullback in scheduled service is expected to continue. As Table 1 indicates, overall domestic seats by November, 2008 will have declined by approximately nine percent compared to a year ago. CHART 1 As carriers cut back on the amount of flying and the number of available aircraft decrease, competition among communities for the remaining limited service has increased. Competition is particularly intense for the smaller communities hit hardest by service cutbacks. Many are unable to fill larger mainline-type aircraft, and the aircraft designed and available to serve those communities are becoming scarce (see Table 2). It is certainly clear that communities across the country are facing challenges never seen before. Yet, some are taking innovative steps to attract and retain service.
How Communities Can React
Source: Analysis of APDat schedules June 2008 and June 2000 and FAA definitions
Most communities and Economic Development Corporations are currently dealing with some loss in the level of air service or with complete loss of access to the national transportation system. They also understand the link between air service and economic development.
• U.S. airlines have pulled over 700 aircraft from service; • Since the end of 2007, 10 U.S. airlines have entered bankruptcy. Only two of these are still operating; and • Nearly 100 airports have lost, or are slated to loose, all scheduled service in 2008.
4
Consulting, Fall 2008
Before reacting to their situation, the localities must fi rst understand what is going on in the industry and pay particular attention to their local market’s exposure level to rising fuel costs and capacity reductions. Acquiring quality information about the local air service market is critical. An in-depth market evaluation can provide better understanding and give airports and communities
a report card on their current air service and how it is performing.
tions or the removal of air service entirely.
Incentives
With this information communities can then get a sense of what realistically can be expected and done. They must also understand that air service development or expansion in the current environment can best be described as air service retention.
As communities are forced to become competitive for air service, they need to be aggressive with their air service development efforts. More and more, communities are fi nding the need to fund their own air service incentive programs. First, there must be agreement within the community that air service is an economic development necessity. The locality should view it no differently than recruiting new businesses to the area, which are often
Therefore, communities should not stand by idly and await the bad news — fortune favors the prepared! Identify and fi x performance problems before they turn into service reduc-
TABLE 1
November Seats/Week (M) 2007
2008
% CHANGE
Total Big 6 Carriers (AA, CO, DL, NW, UA, US, WN)
14.88
13.54
-9%
Total Carriers 100K+ Seats (AS, B6, F9, FL, HA, NK, YX)
2.45
2.43
-1%
Total Carriers 10K+ Seats
0.31
0.30
-2%
Total Discontinued Carriers
0.25
0.00
-100%
Total All Carriers
17.89
16.27
-9%
Source: APGDat scheduled seats/week U.S. to U.S. comparison of November 2008 versus November 2007
TABLE 2. FEW ORDERS/OPTIONS FOR SMALLER EQUIPMENT EXIST.
Aircraft
Seats ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 Total
Canadair RJ 100/200/440 Canadair RJ 701 Canadair RJ 900 Dornier 328 Embraer RJ 135 Embraer RJ 140 Embraer RJ 145 Embraer RJ 170 Embraer RJ 190 Subtotal regional jet BAE Jetstream 41 Beechcraft 1900D de Havilland Dash 8 200 de Havilland Dash 8 400 Dornier 328 Embraer 120 Brasilia Saab 340 Subtotal turboprop Total
50 64/70 76/86 32 37 44 50 70/72 99/100
16
6 6 35
25 9 38
36
28
16 13 45
15 26 88
27 34 133
25 27 96
18 23 69
4 25 25 22 29 25 22
19
20
17
6
6
4
19 107
20 17 153 113
6 75
6 35
4 0 29 22
19 19 37 72/74/76 13 32 30 30/34 13 58
Source: Back Aviation Solutions — as of 5/8/2008
www.ACConline.org
8
13 13
1 1
0 13
0 1
39 15 153 0 0 0 0 105 209 521 0 0 0 85 0 0 0 85 606
brought in by offering tax breaks, training programs, real estate deals and other types of incentives. The same principle applies — develop innovative ways to assist airlines in the present environment in exchange for sustained commercial air service. Incentive programs have been used in the past and will likely continue to be needed by many communities going forward. For an underserved market, incentives and community support programs can help present the business case to either maintain existing service or secure and promote the long-term success of new air service. In the short-run, subsidies and incentives may help to get a spot on the airlines’ radar screen for continued air service opportunities. However, no community incentive/support program will make a weak market strong in the long-term, regardless of how profitable the program can make it in the short-term. If a quantifiable market exists, and from it a profitable business case built, carriers will still be looking for profitable opportunities.
Examples
Localities should also fi nd examples of other communities that have had success and demonstrated that air service is essential to economic development. There is no better way to cultivate support within the community than having a consultant, airport manager, or economic development corporation tell what programs and ideas have been successful elsewhere. However, each market is unique and comes with its own risks. What is successful across the river may not be what your community needs, yet again another reason to collaborate with experienced professionals.
Going Forward
Ultimately, while mitigating the short-term obstacles, communities need to support the local airport by using it for continued development and expansion. In the long-run, well constructed marketing programs, corporate partnerships and other types of support are going to get people to use the local airport, which in turn increases your market potential. It comes down to getting the local passenger into a local seat, but if your community is unprepared to weather the current market conditions, that local seat may not be there in the future.
5
Consultant Perspective By Barry Molar, Unison Consulting, Inc.
Noise Land Reuse What to Expect from FAA’s New Guidance
A
re your airport clients ready to meet the fast approaching FAA noise land reuse plan deadline?
In February 2008, the FAA issued new guidance to manage land acquired by airports under its Part 150 noise compatibility program. The guidance was issued in Program Guidance Letter 08-2 (or PGL 08-2), and it mandates that airports develop comprehensive reuse plans for land acquired for noise compatibility. The plans must be submitted by October 2009. Over time shrinking noise contours have moved a considerable amount of land outside the 75dB contour. As a result, there is more land that the FAA would readily identify as available for disposal. So what’s in store for airports and their consultants under the new guidance?
Background The FAA’s airport noise compatibility program is designed to encourage airport operators and surrounding communities to prevent or mitigate noise sensitive land uses around airports. One way that airports can mitigate noise impacts is to acquire noise impacted land and convert it to a compatible use. Airport Improvement Program (AIP) funding is available for the land acquisition, but only if the FAA has approved this strategy through the Part 150 process. When an airport uses AIP funds to acquire land for noise compatibility, certain noise land management obligations are triggered. Specifically, the airport must execute a grant assurance committing it to dispose of the land “as soon as practicable” when the land is no longer needed for noise compatibility purposes. The airport must then decide to repay the federal share of the proceeds to the FAA or to
6
Consulting, Fall 2008
reinvest the funds, with the FAA’s concurrence, in its noise compatibility program. A September 2005 audit report from the Department of Transportation Office of Inspector General recommended that the FAA enhance its monitoring of the noise land disposal requirement. In response, the FAA committed to a number of actions, including publishing detailed guidance on the noise land disposal requirement included in PGL 08-2.
Noise Land Reuse Plan Under PGL 08-2, airports must develop a Noise Land Reuse Plan. The process includes the following steps:
Step 1: Include Detailed Noise Land Inventory The starting point is developing the Noise Land Inventory. The inventory must be detailed and comprehensive, and it should include: • Noise land that the airport previously disposed of, as well as parcels still held by the airport; • Aerial photograph showing all noise land parcels; • Noise contours for those parcels; and • The proposed use of each parcel.
Step 2: Determine Which Land is Needed for Noise Compatibility Once the Noise Land Inventory is completed, the airport must determine whether each parcel is needed for noise compatibility or can be reused or redeveloped. The FAA will allow an airport to retain parcels for noise compatibility with contours above 75 dB, unless the
parcel has been redeveloped or is reasonably capable of being redeveloped with a high level of noise compatibility. The FAA considers all land in the 65-75 dB contour to be available for disposal. For parcels outside the 65 contour, the FAA considers most uses to be compatible. If a local community has adopted local land-use standards that are more restrictive than the federal standard, redevelopment should be consistent with that local standard.
Disposal Options Once the Noise Land Reuse Plan is in place, airports have six disposal options available under the guidance. They are listed in Table 1 with the respective repayment or reinvestment requirement. An airport may repay the required federal share, if any, to the FAA for redeposit into the Airport and Airway Trust Fund or reinvest the federal share in other noise projects. Two options for retaining the federal share are also available. The airport may establish an escrow account to hold the funds and draw as needed to pay the costs of noise projects. Alternatively, the airport may transfer the
funds to the FAA to be held on its behalf. The funds are available at any time and are not subject to competition from other airports.
Noise Land Inventory and Reuse Plan Cost If the noise land inventory is one element of a larger master planning effort, the FAA will consider the costs as an allowable cost of the master plan for AIP funding. Also, whenever new noise compatibility land is acquired, the airport must present a reuse plan at project closeout. The FAA will consider the cost of the plan as an allowable cost of the overall land acquisition project. However, the FAA will not provide AIP funding for noise land reuse plan on a stand-alone basis.
Conclusion The new FAA guidance significantly increases airports’ noise land management responsibilities, and the deadline for compliance is quickly approaching. Consultants need to be aware of these new requirements and be ready to advise their airport clients on strategies to satisfy them.
TABLE 1
Disposal Method
Repayment/Reinvestment Requirement
1] Convert to AIP eligible development land
No requirement to repay or reinvest federal share of the fair market value (FMV)
2] Exchange for AIP eligible development land
Repay/Reinvest federal share of any excess FMV of noise land over the FMV of land received in exchange
3] Convert to AIP-ineligible development land
Repay/reinvest federal share of full FMV.
4] Exchange for AIP-ineligible development land
Repay/reinvest federal share of full FMV of noise land
5] Fee simple sale at FMV
Repay/reinvest federal share of sales proceeds
6] Long-term lease
Repay/reinvest federal share of full FMV at the time of lease execution
www.ACConline.org
Barry Molar joined Unison Consulting as the director of the firm’s Federal Maximization specialty in their new Washington, DC satellite location. He has 32-years career with FAA, most recently serving as Manager of the Airports Financial Assistance Division focusing on aviation and airport issues. A copy of the PGL 08-02 is available on the FAA’s website. For more information on noise land reuse plans, including a presentation on the FAA’s new noise land reuse plan guidance, please visit Unison Consulting’s Web site www.unison-ucg.com.
7
Member Spotlight
ACC E XECUTIVE MEMBER
Unison Consulting, Inc.
In May 2008, brother and sister Anthony and Yovette Drake consolidated their formerly separate airport consulting fi rms, UNISONMAXIMUS and UCG Associates, to form Unison Consulting, a privately held company and one of the largest minority and disadvantaged business enterprises (M/DBE) within the aviation industry.
Airports such as Chicago O’Hare International, Chicago Midway International, Kansas City International, General Mitchell International, San Antonio International, Lambert-St. Louis International, Birmingham International, Dayton International and Little Rock National airports have engaged the knowledge and resources of the fi rm’s team of seasoned consultants.
The merger brings together two industry leaders that have years of experience providing innovative solutions to tackle ever-changing airport challenges. While it was still a separate entity, UNISON-MAXIMUS worked with over 80 airport clients of all sizes, providing fi nancial consulting services in all areas of fi nance including rates and charges, airline lease negotiations, capital fi nance, non-airline revenue creation, program and concession planning and management, and the development of fi nancial feasibility studies. UCG Associates worked with more than 40 airports, large and small, and over 15 government organizations, providing demand forecasting, economic analyses, fi nancial planning and information technology services.
Combined, Unison Consulting’s professionals are experts in economics, fi nance, retail concessions, airport planning, information technology and airport management with several years of professional and industry expertise. Senior staff average an excess of 20 years experience. Prior to forming Unison Consulting, the fi rm’s founding members held senior positions at leading airports, government consulting fi rms, with airlines and other national aviation consulting fi rms.
Under the new Unison Consulting, the fi rm adds to its client roster an impressive and wellestablished list of over 100 large, medium, small and non-hub airports, spanning the globe from the United States, Canada, South America, Asia and the Caribbean. These clients are overwhelmingly pleased with Unison Consulting’s services on a regular basis. In fact, over 95 percent of the fi rm’s long-term clients typically request the fi rm’s services on additional engagements.
8
409 W. Huron St., Suite 400 Chicago, IL 60654 Tel: (312) 988-3373 Fax: (312) 988-33370 E-mail: latoyabrown@unison-ucg.com web: www.unison-ucg.com
Consulting, Fall 2008
With a continued commitment to provide the highest quality consulting services, Unison Consulting’s expanded portfolio of services are organized into four practices — Airport Finance and Economics, Retail Concessions Planning and Management, Information Systems and Program Management and Control Services— designed to tackle almost any airport client challenge. Unison Consulting is certified as an M/DBE and has 40 employees. Headquartered in Chicago, the fi rm has offices in Orange County (CA), St. Louis, San Francisco, San Antonio and a
newly opened Washington, DC metropolitan location. Please visit the Unison Consulting web site at www.unison-ucg.com Prepared by Latoya Brown Marketing Communications Director
Member Spotlight
A C C A S S OC I AT E M E MBE R
200 Colonial Center Pkwy., Suite 300 Lake Mary, FL 32746 Tel: (407) 333-4100 Fax: (407) 333-8008 E-mail: Tania.ladic@ncr.com web: www.ncr.com
Consumers want to help themselves. Years ago it began with pay-at-the-pump and ATM’s. Through customer demand this has grown to encompass self-service convenience across numerous industries. NCR has led that evolution. The airport environment is no exception. Deployed in more than 300 airports worldwide, NCR self-service check-in solutions are setting the standard for convenience and functionality. Travelers are increasingly expecting a seamless journey that begins before they arrive at the airport and continues long afterward. NCR addresses the need for anytime, anywhere convenience through its portfolio of online, mobile and kiosk travel solutions that put the traveler in control. These robust solutions are designed to promote efficiency and productivity, increase revenue and enhance customer satisfaction by delivering a consistent experience for travelers throughout their journey regardless of channel. For example, passengers now have the freedom to check in, check and pay for overweight or excess baggage, purchase upgrades and review itineraries online, via hand-held device or at the self-service kiosk. Beyond check-in, NCR simplifies the traveler experience with wayfi nding functionality, an interactive mapping solution that helps passengers fi nd their way around the airport.
www.ACConline.org
Further streamlining the travel experience, NCR’s advanced Common Use Self-Service (CUSS) platform allows different airline applications to run concurrently on a single self-service device, providing multi-airline check-in from any self-service location, including the airport, hotel, car rental agency and beyond.
NCR
increase system availability, improve customer satisfaction, reduce operational costs and refocus on core business issues. Prepared by Tania Ladic Vice President, Travel Industry Marketing NCR Corporation
The needs of the modern consumer are changing. They want to interact with businesses at an ever-accelerating pace through a variety of channels. In fact, a recent study conducted for NCR by Buzzback Research reveals that 86 percent of consumers are more likely to do business with a company that offers self-service. NCR is uniquely prepared to meet those demands, processing more than 23 billion transactions each year through its ATMs, kiosks and retail self-checkout solutions. With a direct presence that spans 110 countries, NCR can also ensure that its customers’ selfservice solutions are available when they need them to be. NCR’s global support network provides help desk, deployment, maintenance, hosting and managed services, which includes comprehensive management and operational support of your airline and airport IT infrastructure. Applying in-depth knowledge of the travel industry, NCR provides a single point of accountability that allows our customers to
9
ACC Events Highlighted
Photo Review
ACC/FAA/TSA Summer Workshop Series High fuel prices, new regulations and guidelines, and industry cutbacks provided an appropriate backdrop for all phases of the aviation industry to convene at the annual ACC/FAA/TSA Summer Workshop Series. Strong attendance, active participation and the most current topics of discussion marked this year’s workshop as another success that will surely keep consultants returning in coming years. Kirk Shaffer, FAA Associate Administrator for Airports, and Mike Golden, TSA Assistant Administrator, Operational Process and Technology, provided welcome remarks. During the event, the nearly 200 attendees took part in 24 sessions to discuss, clarify and offer resolutions for specific issues facing today’s airport consultants.
(Left to right) Kirk Schaffer, FAA, and Mike Golden, TSA, discuss industry hot topics in an opening session moderated by ACC Vice President, TJ Schulz (L to R). (Left to right) Mark Koester, Stantec Consulting, 2008 Summer Workshop Series Committee Vice Chair, and Jim Harris, Coffman Associates, Inc., 2008 Summer Workshop Series Committee Chair.
Mike Golden, TSA, gives perspective on industry hot topics to open the 2008 ACC/FAA/TSA Summer Workshop Series
Enrique Melendez, Jacobs Carter Burgess, stirs discussion during a Security/Terminal Workshop.
(Left to right) Mike DeVoy, P.E., RW Armstrong, 2008 ACC Board of Governors Chair; Solomon Wong, InterVISTAS; John Burns, Burns Group; Charlotte Peed, TSA; Ralph Thompson, FAA; Barb Kulvelis, HNTB; Monica Geygan, Landrum & Brown; John Dermody, FAA; Patrick Sullivan, FAA; Mark Koester, Stantec Consulting, 2008 Summer Workshop Series Committee Vice Chair; Jim Harris, Coffman Associates, 2008 Summer Workshop Series Committee Chair
10
Consulting, Fall 2008
ACC Agency Best Practices Award During the Summer Workshop Series, ACC presented its 2008 Agency Best Practices Award to Ed Melisky with the Federal Aviation Administration (FAA), and Bob Cammaroto with the Transportation Security Administration (TSA). The award recognizes agency representatives who have shown a spirit for streamlining, gone above and beyond to cooperate with stakeholders, exemplified teamwork, initiated or taken part in innovative projects and remained flexible and worked to benefit all involved. Ed Melisky was presented the award largely due to his dedication to environmental issues and his frequent, cooperative and productive work with ACC and other airport industry groups on significant environmental issues that have advanced the aviation industry. He led FAA’s preparation of NEPA Implementing Instructions for Airports (Order 5050.4B) and it’s accompanying desk reference. He also led the update of FAA’s Order 1050.1E titled Environmental Impacts: Policies and Procedures. Melisky is an Environmental Specialist in the FAA’s Airport Planning and Environmental Division of Headquarters.
2008 ACC Agency Best Practices Award recipient Bob Camarotto
Bob Cammaroto is the first TSA representative to receive the award and the first recipient to be nominated by an ACC committee. He was recognized because he has been a dependable single-point of continuity at the TSA and a strong advocate for collaborating with the industry on the development of standards and policies, and has been instrumental in helping to lead the TSA through a difficult start-up in developing new and updated guidelines and policies. Cammaroto is currently Manager of the TSA Airport Policy Branch and was previously with the FAA. The recipients of the award are nominated by ACC members and committees.
2008 ACC Agency Best Practices Award recipient Bob Camarotto with Mike DeVoy, P.E., RW Armstrong, 2008 ACC Board of Governors Chair
www.ACConline.org
2008 ACC Agency Best Practices Award recipient Ed Melisky
2008 ACC Agency Best Practices Award recipient Ed Melisky with Mike DeVoy, P.E., RW Armstrong, 2008 ACC Board of Governors Chair
11
ACC Events Highlighted
2009 Perspectives
from the experts by the experts for the experts
November 10 – 12, 2008 DON CESAR BEACH RESORT // S T. P E T E B E AC H , F LO R I DA
…bringing the experts together
www.ACConline.org
Max Wolfe
Memorial Scholarship On Thursday, April 24, 2008, the aviation industry unexpectedly lost one if its leading members. Max Wolfe passed away suddenly while working at home, and he left an unfillable void in the lives of his family, friends, and colleagues. As a professional airport planner for nearly three decades, Max was truly a “luminary” in the industry, pioneering many new approaches in the environmental field and leading some of its most challenging projects. Although his inspiration and influence will certainly live on with his family and friends, his memory and contribution to the practice and industry are being recognized in the new Max Wolfe Memorial Scholarship. Jointly established by Jacobs Consultancy and Landrum & Brown, the scholarship will be administered and awarded through the American Association of Airport Executives (AAAE).
12
Consulting, Fall 2008
Details
on the scholarship are as follows: ➤ Eligibility Criteria: Scholarship is open to students interested in careers in airport planning and consulting. Eligible students must be enrolled in an accredited university and pursuing a primary degree in airport planning, airport management, or other airport-related study. Consideration will also be given to financial need.
➤ Scholarship Selection: Application requirements will include a standard form and essay documenting one’s desire to pursue a career in airport planning/consulting upon graduation. Selection will be made annually between May (ending spring semester) and July. Award announcement details to be determined. ➤ Scholarship Presentation: The first scholarship will be awarded in summer 2009. The scholarship program will run for 4-5 years with contributions made between 2009 and 2013. IF YOU WISH TO FIND OUT MORE INFORMATION
Please contact Eric Bernhardt at Jacobs Consultancy (eric.bernhardt@jacobs-consultancy.com) or Suzie Kleymeyer at Landrum & Brown (skleymeyer@landrum-brown.com).
Out & About with ACC ACC & British Aviation Group (BAG) Collaborate
On behalf of the ACC Board and Globalization & International Affairs committee, Paula Hochstetler met with leaders of the British Airports Group (BAG) in London in June at the BAG Summer Seminar, to encourage members of the two airport consultant associations to collaborate in pursuit of global airport projects. She also made a presentation to approximately 100 of its members concerning potential opportunities worldwide and exchanged ideas with more than a dozen BAG members. Representatives of BAG plan to attend the ACC Annual Conference this November 10 – 12 in Florida to further pursue potential teaming opportunities between association members.
ACRP Airport Oversight Committee (AOC)
In July Paula Hochstetler participated in a meeting of the Transportation Research Board (TRB) Airport Cooperative Research Program’s (ACRP) Airport Oversight Committee (AOC). During this meeting the AOC considered nearly 150 submittals by the industry, including airport consultants. A total of 17 problem statements were selected for Fiscal Year 2009, totaling nearly six million dollars.
ERAU Student Teams Take Top Honors In FAA Design Competition
(Left to right) Mike Forester, Strategy & Regulations Director, British Airports Authority; Paula Hochstetler, ACC President; Martin Harman, Chairman, Pinsent Masons.
ACC and Habitat for Humanity
ACC Staff took time out from the AAAE Conference in New Orleans to join Habitat for Humanity in the continuing rebuilding process from the devastation of Hurricane Katrina in 2005. ACC Vice President TJ Schulz (Left) and Richard Horstmann of Urban Engineers, Inc. lay flooring for a new Habitat for Humanity home in New Orleans, LA.
www.ACConline.org
Two student teams from Embry-Riddle Aeronautical University received first-place awards in the FAA’s Design Competition for Universities for their proposals on the use of alternative fuels and GPS technology at airports. A team of business administration students from Embry-Riddle’s Sky Harbor Campus in Phoenix, AZ were awarded first-place in the category of Airport Environmental Interactions for a proposal to use solar energy as a clean, cost-effective alternative fuel for airport ground support equipment. A second Sky Harbor team captured an honorable mention in the Runway Safety/Runway Incursions category. This year’s competition attracted 36 proposals from 16 colleges and universities. The winning proposals were selected by panels of FAA, industry and academic experts. ACC acted as a partnering organization in the competition along with AAAE, ACI-NA and NASAO.
13
Associate Members
ACC Members
ERA CORPORATION Bill Colligan, Vice President & General Manager 1881 Campus Commons Drive, Suite 101 Reston, VA 20191 Tel: (703) 637-7250, Fax: (703) 637-7245 E-mail: bcolligan@erabeyondradar.com Web: www.erabeyondradar.com
New Members Executive Members AIRPORT DESIGN CONSULTANTS, INC. Stephen M. Lucchesi, P.E., Principal 10330 Old Columbia Road, Suite 104 Columbia, MD 21046 Tel: (410) 309-0080, Fax: (410) 309-0081 E-mail: slucchesi@adci-corp.com Web: www.adci-corp.com
AXYS TECHNOLOGIES, INC. Dale Leier, Aviation & Terrestrial Systems 2045 Mills Road, Sidney, BC V8L 5X2 Canada Tel: (250) 655-5861, Fax: (250) 655-5856 E-mail: dleier@axys.com Web: www.axystechnologies.com
Airport Design Consultants, Inc (ADCI) provides comprehensive planning, design and construction management services to the airport industry. Clients include airport sponsors, airlines, fixed base operators and many of the major airport consulting firms. ADCI is a certified MBE/DBE under the Unified Certification Program.
AYXS Technologies Inc. is the only Canadian manufacturer of Automated Weather Observation Systems (AWOS) for airports. By combining their next-gen WatchMan500™ eDAPT™ core processor technology with FAA approved sensors from leading manufacturers, AXYS is able to provide the most advanced system available for the price. AXYS has been manufacturing customized environmental monitoring technology solutions for the past 35 years.
ARUP Al Lyons, Principal 155 Avenue of the Americas New York City, NY 10013 Tel: (212) 896-3114, Fax: (212) 229-3991 E-mail: al.lyons@arup.com Web: www.arup.com
MONGOVEN CONSULTING INC. Michael A. Mongoven, President 1109 Briergate Drive, Naperville, IL 60563 Tel: (630) 946-6745, Fax: (630) 946-6745 E-mail: mike@mongovenconsulting.com
Arup is a leading independent consulting firm, internationally recognized for innovative award-winning solutions that help clients achieve their goals. During the past 60 years, Arup has worked at more than 100 airports around the globe.
Mongoven Consulting Inc. provides consulting for airport lighting and signage. The company has experience with FAA and ICAO requirements for airfields, heliports and military installation, and can provide installation, design and manufacturing details for each application.
FOR THE
FOR NOMIN AT IONS
Era provides a web-based application suite for airport operations powered by its multilateration and ADS-B surveillance technology. Solutions include landing fee management, surface management, noise management and data feed subscriptions.
FLINT TRADING, INC. Dan Lang, VP Business Development 115 Todd Court, Thomasville, NC 27360 Tel: (336) 475-6600, Fax: (336) 475-7900 E-mail: sales@flinttrading.com Web: www.flinttrading.com Flint Trading is the manufacturer and supplier of durable preformed thermoplastic pavement markings for landside (PreMark) and airside (AirMark) applications.
VANDERLANDE INDUSTRIES James Hanna, Business Development Manager 128 West Oak Parkway, Marietta, GA 30062 Tel: (770) 250-2800, Fax: (770) 250-2810 E-mail: james.hanna@vanderlande.com Web: www.vanderlande.com Vanderlande Industries is an internationally known, leading supplier of baggage handling systems and specializes in the concept, design, project management and integration at more than 400 airports worldwide. Vanderlande Industries is recognized for its innovative solutions to solve today’s baggage handling challenges and for technological breakthroughs in equipment design and implementation.
2009 AIAA/AAAE/ACC JAY HOLLINGSWORTH SPEAS AIRPORT AWARD
Nominations are currently being accepted for the 2009 AIAA/AAAE/ACC Jay Hollingsworth Speas Airport Award. The recipient will receive a certificate and a $10,000 honorarium. This award is jointly sponsored by the American Institute of Aeronautics and Astronutics (AIAA), the American Association of Airport Executives (AAAE) and the Airport Consultants Council (ACC). It honors the person or persons judged to have contributed most outstandingly during the recent past towards achieving compatible relationships between airports and/or heliports with the surrounding environment. Such improvements might be in airport land use, airport noise reduction, protection of environmental critical resources, architecture, landscaping or other design considerations to improve the compatibility of airports with their communities, etc. DEADLINE for submission of nominations is October 1, 2008.
Presentation of the award will be made at the ACC/AAAE Planning, Design and Construction Symposium, scheduled for February 2009. The recipient will be asked to make a brief presentation describing their accomplishment/contribution. To obtain a nomination form or more information, please visit: www.aiaa.org or contact Carol Stewart, AIAA Honors and Awards Program at 703/264-7623 or by email at carols@aiaa.org. CONTACT >>> Carol Stewart > 703/264-7623 > carols@aiaa.org 14
Consulting, Fall 2008
On the Move TKDA has acquired ECMC Services, Inc. in Tampa, Fla., an aviation fueling system design firm. The acquisition will expand TKDA’s services for aviation and other fuel-dependent clients. TKDA has collaborated with ECMC on numerous aviation fueling projects for over a decade. TKDA is ranked #368 among the Top 500 Design Firms by Engineering News-Record (ENR). CEDRIC CURTIS, AIA, joined Reynolds, Smith & Hills, Inc. as Vice President — Aviation National Buildings Service Group Leader. He will be based in the Washington D.C. area. Curtis will serve in a leadership role as Project Officer and Project Manager of quality assurance, technical direction, schedule and budget control and technical standards leadership for aviation projects throughout the world. His experience includes major airport terminal projects including work at Atlanta’s Hartsfield-Jackson, Orlando, Dallas-Ft. Worth and Birmingham International Airports. TOM CORNELL joined Landrum & Brown, Inc. (L&B) as a Vice President in the Facilities and Operations Division responsible for managing their new San Francisco bay area office. Cornell most recently served in a similar position with Jacobs Consultancy. He brings over 20 years of experience in airfield and airspace, facilities, environmental and airport master planning for large and small airports throughout the U.S. Cornell is known by his clients as a strong project manager who provides practical solutions that meet challenging operations, growth and environmental needs.
LOUIS RONDINELLO has been named Assistant Vice President in the New York Office of TranSystems. Rondinello joins TranSystems with over 18 years experience as a project manager and senior civil engineer for aviation and transit projects. He has an extensive technical planning analysis and design background and has worked for government and private agencies, airside and landside operations areas and airport terminal/ circulation roadways. STEVE PELHAM has been named Director, International Sales for Reveal Imaging Technologies. Mr. Pelham will be responsible for all aspects of the Company’s international sales. A key task will be the development of a worldwide distribution network for Reveal’s state-of-the-art security systems. Mr. Pelham has been leading Reveal’s business development efforts with US airports, aviation organizations and consultants since 2005, and he has been active with ACC and various subcommittees for over 14 years. ALICE C. MEYER and RODDY L. BOGGUS, AIA, NCARB have been appointed to new positions at Gresham, Smith & Partners. Meyer will serve as Director of Operations for GS&P’s Dallas aviation practice. Meyer offers experience in business and architecture and has successfully managed numerous aviation project types ranging from the design and construction of airport terminals to the implementation of complex, phased construction projects during ongoing airport operations. Boggus has been named Executive Vice President of Aviation. In his new role, Boggus will be responsible for the growth and development of GS&P’s aviation practice.
ACC Updates
Between June and September 2008, ACC released e-mail supplements to this publication. These supplements are also available at www.ACConline.org.
Legislative News LN 8-09 (JUNE 26, 2008)
• Congress Passes Three Month FAA Extension
LN 8-10 (JULY 17, 2008)
• FAA Extension Options Weighed By Congress • FY 2009 FAA & TSA Appropriations Underway
Regulatory News Regulatory News 8-03 (July 15, 2008) • FAA Announces Second Round of SMS Pilots for Smaller Airports
ACC Tech Talk TECH TALK 08-02 (JUNE 24, 2008)
And the Winner Is… ROBIN LEE MONROE & ASSOCIATES has been selected by the Virgin Islands Port Authority to develop and implement an Air Service Development Strategy for St. Croix (STX), U.S. Virgin Islands. URS CORPORATION has been selected by the Tulsa Airport Authority to provide program and construction management for its terminal and concourse renovation program. In addition to the renovation of the two terminal concourses, URS will be responsible for managing the installation of the in-bound baggage system. ESA AIRPORTS has become a Founding Reporter of The Climate Registry by being among the fi rst to join the organization. The Climate Registry is a non-profit organization established to measure and publicly report greenhouse gas emissions (GHG) in a common, accurate and transparent manner consistent across industry sectors and borders. Thirty nine U.S. states, eight Canadian provinces, six Mexican states, three Native American tribes and the District of Columbia are the founders of the organization. SOLUTION DESIGN GROUP (SDG) announced that its CapitalVision® software subscription services has been purchased by the Lee County Port Authority for use at Southwest Florida International Airport. CapitalVision® will allow the Authority to streamline its fi nancial management process of the capital improvement program and allow for more efficient tracking of different funding sources as well as improve reporting to the Authority. INET AIRPORT SYSTEMS has been awarded a $2.4 million dollar contract with the Dallas Fort Worth International Airport. This project requires the supply and installation of thirtyfour Air Handling Units at Terminals A and C, replacing the existing Teledyne units. The provision of the new state-of-the-art equipment eliminates the need of the running the aircrafts’ APU’s (Auxiliary Power Units) which results in fuel savings for the airlines and assists the airport in emissions reduction.
• Interim Update to FAA Design AC 150/5300-13, Engineering Brief 75
TECH TALK 08-03 (JUNE 26, 2008)
• RTCA Document 230B Available for Download
www.ACConline.org
15
Cover Story TURBULANT continued from page 1
anticipated performing,” said one respondent. Financially strapped airlines are also pressuring airport management to cancel projects underway and stop non-essential projects early in their evolution. “Several of our planning and design contracts have been stopped or downsized as a result of the airlines fighting against additional projects,” one fi rm responded. As a result, “several airports have deferred as much as 50 percent of their capital programs.” Air cargo carriers are also feeling the squeeze. One fi rm reported that three on-going projects were cancelled due to cut backs by an air cargo carrier.
Delays in Grant Funding Compounding the airline situation is the delay in passing critical federal aviation and security legislation. The FAA reauthorization bill is almost a year late, and as a result, funding for the Airport Improvement Program and other FAA accounts has been issued in small increments through short-term extension bills. This has forced many airports to defer projects into the following fiscal year or greatly accelerate projects when grant funding eventually becomes available late in the year.
“The economic downturn couldn’t happen at than medium to large fi rms which typically do a worse time with the delay in funding sources work in other sectors, not just airports.” (both FAA and DHS),” one firm replied. Another company noted that its biggest challenge was However, numerous mid-sized to large fi rms FAA funding. “It is difficult to get a notice report that airports are holding back on the to proceed with design or plan construction issuance of significant capital expenditures. with the delay in getting the funding through “My primary concern and what keeps me up at Congress this year,” they stated. night is that projects we have won may have their funding stripped,” one respondent stated. Immediate Impacts “As a company that relies on the one or two big These decisions to delay future projects are projects, that would be disastrous for us.” having immediate outcomes. “We have noticed a significant reduction in projects hitting the At one small streets, which makes us feel fortunate we have an upcoming backlog,” one fi rm noted. Still hub airport, others have experienced scopes of work that 17 proposals have been downsized, extended schedules and less activity on existing on-call contracts. were recently
Small & Large Firms Impacted The impacts are hitting both small and large fi rms. One small, women-owned consulting company stated that “we have already experienced a drop off in activity and revenue. Even as a DBE, the work we can do is apparently decreasing.” One sole proprietor noted that their business “is impacted sooner and with greater impact in a severe economic downturn
submitted for a relatively small project. Small businesses report that they are seeing much more competition from larger companies on smaller jobs. This was confi rmed by larger fi rms that said they will need to take
Effective Project Management Becomes Critical The reduction in air service and the subsequent drop in airport revenues has put airports into a tight financial bind. Many are struggling with shrinking budgets and increased project costs. At this time, effective project management becomes critical.
To help reduce airport project costs, ACC members suggest the following: Focus
on
involve people with consultant experience in the selection and negotiation process.
conferencing. Allow more staff to work from the home office instead of at the airport site.
Include the airline. Incorporate
Streamline the procurement process. Have a well defined RFQ and
their program needs and goals early in the facility designs. This will help maintain programs and budgets that suit the airlines. Select a reasonable project schedule and stick to it. Avoid
rushing projects which add to overtime costs.
scope. Put more
emphasis on project planning to prevent scope creep and avoid costly changes later.
Pay more attention to planning and design reviews.
Avoid unnecessary re-drafts. Involve the right people. Allow
for more direct contact between designer, contractor and senior airport staff. Also,
16
Consulting, Fall 2008
avoid pre-proposal meetings unless needed. Limit the number of pages associated with SOQs and RFPs. Don’t shortlist numerous firms — keep the list to two or three. Hold interviews only if necessary.
Minimize travel requirements.
Have fewer face-to-face meetings and emphasize conference calls or web/video
Utilize Qualifications Based Selection. Ensure the best qualified firm
is selected to get the project right. Adhere to AIP requirements and avoid waiting for reimbursement before paying your consultant.
on many more small projects rather than a few big ones. “There will be more competition on projects as both small and large fi rms once again start competing for the same aviation dollar,” one experienced consultant with a large company stated. “This has happened before.” Others noted that in an attempt to secure work and keep payroll, fi rms are now expanding their services and pursuing specialty projects that are outside their regular menu of services.
Lower Profit Margins Because of the cut back in airport projects, firms are experiencing significant reductions in billable hours and lower profit margins. Airports are placing tremendous pressure on consultants and suppliers to reduce fees and multipliers. “This is the fi rst time our business plan may show no growth or maybe a retraction,” one fi rm stated. Another said that the value of projects they are working on has dropped a third from the levels three years ago.
Backlog Overall, competition is fierce. One consultant stated that “new competition is arriving daily” in his region. Another reported that there have been more submittals for fewer projects. At one small hub airport, 17 proposals were recently submitted for a relatively small project.
Staffing A majority of survey respondents reported challenges with staffi ng at their companies. A few have already had to lay off some staff, while others are attempting to keep current staff working. Many fi rms have postponed hiring new staff, while some have instituted freezes on wages and overtime. Training budgets have been slashed or eliminated in some fi rms. Companies will be challenged when it comes to keeping staff busy. One respondent said that their biggest concern is “retaining staff experienced in existing projects which may be put on hold.” When projects come back online, this may pose problems for airports and their consultants if the staff has been let go. Some are still trying to fi nd and hire experienced staff. Ironically, it was noted that the current downturn “may help create opportunities for hiring as experienced staff are let go” by other firms. The ability to fi nd and retain young engineers and planners also remains a challenge. Virtually all respondents see pressing future challenges relating to staffi ng.
Business Ramifications As a consequence of the reduction in projects, consultants and airport suppliers are fi nding it increasingly difficult to run their respective businesses due to the overall economic downturn and the increase in fuel prices.
www.ACConline.org
Many fi rms responded that their backlog of work is decreasing. “We are now facing gaps in backlog as expected projects either don’t pan out or are being held,” one company reported. Generating new backlog is seen as a considerable challenge in the future.
My primary concern and what keeps me up at night is that projects we have won may have their funding stripped. International Markets There is increasing pressure to expand internationally with the downturn in the domestic market. Some companies note that their biggest challenge in the future will be to break into the international markets. This increases start-up costs and adds substantially more risk.
Hard Times According to USA Today, the expected percentage drop in service between November 2007 and November 2008 at selected airports is:
Honolulu Oahu
-27.1%
Oakland
-25.5%
Cincinnati
-25.5%
Kansans City
-22.8%
Chicago (Midway)
-17.1%
Las Vegas
-15.5%
Milwaukee
-15%
Raleigh/Durham
-14.8%
Santa Ana (John Wayne)
-14.5%
Milwaukee
-14.2%
Orlando
-14.1%
Sacramento
-13.6%
Salt Lake City
-13.4%
Chicago (O’Hare)
-13.3%
Los Angeles
-13.1%
Source: USA Today analysis of preliminary OAG airline schedule data
Increased Costs/Overhead As with other businesses and government agencies, travel costs have increased substantially for consulting fi rms and suppliers. More expensive travel normally increases project costs, which conflicts with clients’ desires to reduce allowable costs. Many are strictly monitoring travel decisions and are holding more teleconferences with customers or prospective clients. Fewer staff are attending client meetings. Industry meetings and conferences are becoming a challenge to attend. These costs, along with the fact that more staff
17
Cover Story
are idle, may result in higher overhead rates for fi rms and businesses.
Bright Spots The impacts on some fi rms have been substantially less to date. “We are in a minor lull that we are associating with the ebb and flow of the business cycles and not the economy,” one fi rm reported. Others are currently on track with their business plans or are slightly growing. Another respondent stated, “We are living off of current federal funding and projects that have been in motion for a while. At this point we have had only two major projects cancelled due to loss in air service.”
One fi rm expressed hope that the increasing focus by airports on the environment and sustainability will minimize the impacts of the drop in air service.
The Future This downturn in aviation may differ considerably from the September 11th aftermath. The recent increase in oil prices may stabilize and even decrease, but prices will likely be higher than what has been experienced in the past. Current airline business models will not, however, survive with significantly higher fuel costs. The challenges being experienced by airlines, airports, consultants and suppliers may therefore be more long term.
One company that specializes in safety noted that In the ACC survey, consultants and suppliers regulatory issues such as safety compliance and noted that the primary challenge seems to be, security are not as influenced by the economy. “How do we get airports (and airlines) to think But, according to this fi rm, “Operations and long term under these conditions?” maintenance (O&M) spending by airport organizations is flat or is being cut where it does Survey responders suggested that airports work not impact regulatory safety or security. This with consultants to help airlines identify O&M limits value-added services that airline or airport cost savings. “In the long term, consultants can operators might otherwise budget.” keep airline and airport facility and operating costs down by designing efficient, durable Some responded that their airports are “catching airports that are adaptable to changes — thus up” or doing more planning and strategizing. avoiding the expense of replacing facilities and
equipment prematurely,” according to one respondent. Airports are also encouraged to ignore the cyclical nature of the market when managing projects. Even with a drop in service, capacity constraints will remain a challenge at many airports. Delaying these capital projects will eventually increase costs due to the continued rise in materials and construction costs. At a minimum, airports should consider building up their designs and plans so they are ready for construction when funding becomes available. Consultants and suppliers need to consider changing their focus to reflect new market realities. While large terminal and other airport projects may have been cancelled, airports are still spending billions on maintenance and retrofitting. Many airports will turn to planning and designs to get projects ready once the economy turns around. Finally, passage of an FAA reauthorization bill is critical for all aviation stakeholders. A sustainable, long term federal funding commitment will give airports more certainty for future capital projects.
FAA Also Feeling the Effects As airlines, airports and consultants navigate the current downturn in the economy, the Federal Aviation Administration has had considerable challenges in trying to administer federal airport grants. In FY 2008 alone, Congress passed five short-term funding measures to keep the FAA running. This piecemeal approach has caused difficulty in distributing the funding according to the various AIP formulas. Staff has also been threatened with furloughs. In the long term, FAA will need to look at how volatile fuel prices and the economy will impact long-range planning. Below are some issues that may be considered by FAA:
• Air service forecasts may need to include a range or scenarios that consider sustained high fuel costs and slow growth in GDP. • Air service and demand changes may receive closer scrutiny during the NEPA permitting process to determine if the
18
Consulting, Fall 2008
potential variances impact the purpose and need for airport projects. • Decision-makers may need additional information to determine financial risk associated with projects, and there may be more emphasis on benefit-cost analyses to examine various pay back periods. • While the fuel price escalation may be cyclical and longterm, certain key airports still require additional capacity. These commitments will need to be maintained to avoid future capacity-constraints. If the decline persists, projects at various levels of development may need to be reviewed. • FAA funding priorities will likely focus on safety, rehabilitation and standards projects, particularly in light of NextGen improvements.
Spotlight ACC INSTITUTE The ACC Institute… promoting excellence in airport development through advanced studies AND RESEARCH.
More on the Research Front General ACRP Facts as of July 2008 Funding: FY 2005 $3 million FY 2006 $10 million FY 2007 $10 million FY 2008 $10 million FY 2009 $15 million (anticipated) Studies in progress: 64 Studies completed: 23 Number of panel slots (active projects): 404 Problem Statements considered: 487* (*includes FY 2009)
Proposals: 314 (6.0 per project average)
AC R P ACC has become a key player in the Airport Cooperative Research Program, or ACRP. The program was established as part of the Vision 100-Century of Aviation Reauthorization Act in 2003 and is currently administered through the National Academies, acting through its Transportation Research Board (TRB). ACC Vice President T.J. Schulz participated in the initial screening of 150 fiscal year 2009 project proposals, while President Paula Hochstetler attended the annual ACRP Oversight Committee Meeting in July for the second year in a row (see Out & About with ACC). ACC also regularly sends its members ACRP project panel solicitations and requests for proposals In the future ACC intends to play a leading role in ACRP. For the first time ACC Committees will be asked to identify critical research needs and submit potential problem statements for the FY 2010 program.
I PR F /A A P T P ACC members continue to play key roles in the Innovative Pavement Research Foundation (IPRF) and the Airfield Asphalt Pavement Technology Program (AAPTP). ACC met with representatives from the National Asphalt Pavement Association to offer support in continuing federal funding for this important research.
EVENTS
Proposers: 184 (primes)
Along with providing quality training programs, the ACC Institute helps guide the Council in the various national aviation research programs. Of course, many ACC members and aviation professionals participate in these national research programs, either by serving on the project oversight panels or serving as the contractors. ACC as an organization has become much more engaged in these research efforts as well. So, what is ACC doing on the research front?
www.ACConline.org
ACC/AAAE Conference on Information Technology & Systems at Airports October 26 – 28 > San Diego, CA
ACC Institute New Airport Pavement Design & Evaulation Workshop November 3 – 5 > Arlington, VA
ACC 30th Annual Conference & Exposition November 10 – 12 > St. Pete Beach, FL
ACC/ACI-NA/FAA NEPA Essentials Course November 13 – 14 > Tampa, FL
ACC/AAAE Airport Planning, Design & Construction Symposium February 25 – 27, 2009 > Denver, CO
19
After All…
Facilitate Project Success Through Your E&O Policy Consultants are hired to provide the highest quality designs possible under a given budget. However, capital projects are extremely complicated and can veer from the best laid plans. In fact, unexpected changes are not unusual during most projects because virtually no set of designs are perfect. Deviations from design plans often occur during the construction phase. This can result in finger pointing by the contractor, designer and owner. The good news is that, in many cases these problems can be resolved and a successful project can result. So what differentiates a successful project from one mired in delay and controversy? The simple answer is a cooperative effort to resolve problems that involve all parties. Airport owners, their consultants and contractors need to be flexible and work collaboratively to ensure that an overall project is successful. A good error and omissions (E&O) policy can facilitate a collaborative effort to fix problems and to get projects back on track. An E&O policy should:
AT THE BEGINNING OF A PROJECT… » State the purpose and scope of the E&O policy and provide foundation principles. State that a teamwork approach will be taken to analyze and correct errors and omissions efficiently; recognize that all design and construction projects contain some errors and omissions; and that the design engineer is expected to perform to the standard of care.
» When planning a project, include a contingency budget to account for the changes that are common on every project. This provides the owner with some flexibility to address projects changes as they arise.
WHEN A PROBLEM IS DETECTED… » Immediately notify the design engineer of the problem. Provide an opportunity for the design engineer to work with the owner and contractor to find the most effective and efficient solution.
WHEN EVALUATING AND ASSESSING THE ERROR OR OMISSION… » Recognize “betterment,” or the principle that the design engineer should not be responsible for materials or construction that would have been required and/or desired by the owner regardless of whether they were omitted or mis-quantified in the design documents. These costs would have been required anyway and would have been borne by the owner. » Resolve the final cost recovery at the end of the project, where the totality of services can be taken into consideration. This allows the owner to consider the overall level of quality, performance and value over the entire course of the project. » Base the evaluation of E&Os on “negligence.” The courts have recognized that designers are not perfect and some level of design deficiencies exist on every set of plans and specifications. The common law that applies to design professions is that they must meet the professional
Source: American Council of Engineering Companies Risk Management Committee www.acec.org
20
Consulting, Fall 2008
standard of care in the performance of their services — not perfection. (See Fall 2007 AirportConsulting) » Include a fair appeals process that provides for an independent review and opinion. Why should owners adopt these principles? Expecting perfection will make risk avoidance a top priority and can substantially increase project costs. Designs may be over-designed or designed overly simple. Ultimately, it can also fracture the project team and put the success of the project in jeopardy. Owners that adopt a fair and equitable E&O policy which fosters collaboration among the project team increase the likelihood of a successful project even when changes inevitably occur. The best projects aren’t free of problems, but they are led by teams that cooperatively and efficiently find solutions.