Interview: Michael Landguth

Safe bet

With health measures in place, the airport and airline segments expect a continous recovery

What are your main takeaways from having operated in the pandemic landscape for more than a year? The initial impact of the pandemic was unprecedented. We lost 96% of our customers in April 2020 and the recovery has been slow, particularly in the business travel segment. But with all the precautions we have implemented, we believe air travel is safe, and our customers agree. In a survey of RDU travelers last year, 83% agreed we are taking the appropriate steps to keep them safe and healthy when they travel. We are emphasizing social distancing, providing free hand sanitizer in the terminals and requiring everyone to wear a mask in the airport. There has been no evidence that people are at higher risk of contracting the virus as a result of air travel. In fact, a recent study from the Harvard School of Public Health found that flying is as safe as grocery shopping. What is the long-term view for your capital improvement projects amid decreased revenues? In March 2020, our board approved the airport’s FY 2020-2021 budget, which included a 21-gate expansion in Terminal 1. The following month, after COVID hit and passenger traffic plummeted to historic lows, we quickly transitioned to survival mode, cutting our $300 million budget in half and pausing nearly all capital projects. The board approved another survival budget in 2021 that included a list of contingency projects linked to passenger traffic thresholds. The contingency projects were identified as high priority projects to accelerate recovery if traffic returns sooner. Examples include Terminal 2 checkpoint expansion, roadway improvements and an e-commerce platform. We are also starting the environmental assessment for the replacement of our primary runway, which should take around 18 months. We expect recovery to continue throughout the year but it is hard to predict an exact time frame and it may be inconsistent, so we are being strategic and financially conservative.

What message is sent by airlines investing in RDU? In November 2020, JetBlue increased the number of nonstop destinations it serves at RDU from three to 12. American Airlines, Delta Air Lines, Frontier and Spirit have also added new routes during the pandemic and Sun Country became RDU’s 11th airline when they began service in May. This reflects the overall feeling in the business community that this is a hot market. Airlines are investing here because they want to ensure that they have the capacity and network in place to support the impending return to growth. Businesses in the Research Triangle region have continued to recruit during the pandemic, and they will need robust air service once things return to normal.

Michael Landguth

President & CEO – Raleigh-Durham International Airport

( ) had nearly 400 daily flights on seven airlines reaching almost 45 nonstop destinations. It is expanding its international reach, as well, and there are 1.5 million passengers annually passing through RDU on their way to international destinations.

Of course, airports, air travel and airlines were among those areas hit hardest by the pandemic as fear of contagion and social distancing protocols caused a precipitous decline in traffic. In the face of this emergency, RDU had to cut budgets and operations, reducing spending by nearly 45% as it deferred $96 million in capital projects. The federal and state governments were able to step in and cover 45% of the airport’s budget: RDU received $49.5 million through the CARES Act, $50.7 million through the American Rescue Plan Act, and a further $18 million from the North Carolina state government.

Such a decline is problematic for the entire region. RDU, after all, brings $15.1 billion in annual economic impact, supports 99,000 local and regional jobs, provides $518 million in state and local taxes and is responsible for $3.5 billion in personal income. The deep cuts will put RDU on a precarious footing for some time to come.

One brighter spot for the airport, and which augurs well for the US economy, has been the return of cargo passing through the airport. The pandemic caused a revolution in e-commerce, rapidly accelerating trends that had been at work for years. Much of the cargo passing through the airport is stamped with UPS or FedEx, indicating that it is e-commerce driving the growth. Already volume exceeds 2019 levels, and this figure itself is misleading since international shipments have not resumed, only domestic. Many see such trends as a sign that pent-up demand will cause a postpandemic economic boom in the United States.

RDU provides an economic impact of $15.1 billion annually

Despite these difficult times, RDU was able to complete work on certain capital infrastructure projects: annual preservation work on the airport’s primary runway was completed ahead of schedule, while another runway had its pavement successfully repaired; a four-gate activation project was completed in Terminal 1; and in the parking garage, elevators, moving walkways and other systems were modernized.

In the pipeline is the RDU Vision 2040 plan which, thanks to the extended time scale of the project, will likely remain unaffected by the shortfalls caused by COVID-19. With this plan in place, the next 20 years promise to bring a raft of improvements to the airport: upgraded taxiways, a new primary runway, expansion of the airport’s capacity to process customs and international cargo, enlarged corporate aviation facilities, expansions of both Terminals 1 and 2, as well as improved garage and rental car facilities.

Utilities The picture for utilities is mixed in the Raleigh-Durham area, where there have been calls for upgrading water infrastructure and moving away from fossil fuels but with few results. The system is getting creaky. That’s not to say it’s small. The North Carolina Utilities Commission regulates nearly 3,400 separate companies that have a combined jurisdictional revenue of nearly $11 billion.

In energy, there is a demand among consumers for more market competition but this has been slow in coming and companies are still operating in a similar marketplace to that established 100 years ago. House Bill 611, sponsored by Republican Representative Larry Strickland and making its way through the state assembly, would study the ways the market could be restructured to offer consumers more choices while promoting renewable energy, increased competition and innovation.

In June 2021, a massive energy bill — Bill 951 — was unveiled. It is the product of months of secret negotiations between House Republican leaders and the major player in the North Carolina energy industry, Duke Energy Corporation. The survival of the bill is in doubt, however, as it did not take long for the opposition to make their voices heard. Many see the bill as too amenable to Duke Energy’s long-term interests (the company played a large part in writing it). Environmental groups oppose the bill on the grounds that it offers weak protections. House Democrats oppose the bill on similar grounds. Ultimately, it was hastily and surreptitiously written, and, in only 47 pages, would largely redraw the state’s energy infrastructure. Still, the fact that it is here in the first place shows an awareness that something must be done for the region’s aging energy system.

For all the talk of fossil fuels, every passing year makes alternative energies a more viable option. A report from the Research Triangle Park-based RTI International showed that there has been $40.3 billion invested in renewable energy across the state of North Carolina and that in 2020, renewable energy development investment was 62 times higher than what it had been in 2007. These numbers are translating into jobs. With 99,670 people employed in the clean energy sector, North Carolina ranks ninth in the nation. It is first looking solely at rural clean energy jobs.

Looking ahead It has been a difficult year for infrastructure, transportation, and utilities. Although these areas

The RDU Vision 2040 program promises to bring a variety of improvements to the Raleigh-Durham International Airport.