Florida Airports Address: The Need for Change

I’ve just returned from the Florida Airports Council meeting in Naples.  This is usually the third largest annual airport conference in the United States and offers a full program touching on the key issues facing airport operators.  Florida is a state heavily dependent on aviation; indeed more than 10 percent of the national impact of the airport economic engine, as measured by our Economic Impact Study earlier this year, comes from Florida.  This is the second time I have been invited to speak.

As you might imagine, I focused my speech on the need for a new airport financing model.  One Florida airport director has told me that a project recently completed at his airport could not be accomplished today given the out-of-date system.  He was lucky to have completed his project, but others are not quite as lucky.

Greg Donovan, of Northwest Florida Regional Airport and president of the Florida Airports Council, and Greg field questions at the July 25 event.

Our message must be getting through because I now see things coming from important airline voices designed to counter our arguments.  You might think I am happy about this, and perhaps on a certain level I am.  But, as I always point out, I am NOT anti-airline and I don’t know any airport directors who are.  I truly believe that if we can reform and modernize the system by which we finance airport infrastructure, airlines would benefit financially and in every other way.  They may not have as much control at airports as they do now, and the competitive landscape may be more wide open, but they will do better, I am convinced.

There have been calls for a national “airline” policy.  I, and others (most recently Chicago Aviation Commissioner Rosemarie Andolino in a well-received speech at Washington’s Aero Club) have called for a national “aviation” policy.  One that recognizes that the purpose of air transportation is the movement of people and products to destinations and markets and, by so doing, promotes economic development and activity.

No airline executive I have ever heard believes the current set of federal policies, including various taxes and fees, is very good.  They might be surprised to know I agree with them.  I saw a piece by the CEO of United Airlines (I fly United a lot, made 1K for 2012 on July 8) a few months ago where he talks about the mish-mash of policies that adds up to a burden on airlines.  He might be surprised to know I agree.  What we are doing now does not keep us globally competitive, and we need to change.  But that need is across the board.

If you go to www.airportsforthefuture.org you will see plenty on this from the airport perspective.

Here’s one from the airline perspective:  in the 1997 FAA reauthorization (which did NOT include a PFC increase) included changes in aviation taxes and fees.  The legacy airlines, in fact, insisted that the tax section be looked at and “re-balanced” as they felt the previous regime favored the low cost carriers a little too much.  And, the re-balancing (reducing the ticket tax and adding the segment fee) had that basic effect.  But by opening all that up for discussion, the other changes that were made (mostly the increase in the international arrival/departure fee) means that airlines have paid $11.8 billion MORE than they would have otherwise since that time ($10.6 billion net if you subtract the savings from the other changes mentioned above).  Yes, if nothing were done and current law had been maintained, the airlines would have saved a net of $10.6 billion.  And have we seen Customs and Border Protection Services, which are supposed to be supported by those fees, improved since then?  That answer is an absolute NO.  Are the airlines happy about that?  No!  Are the airports happy about that?  No!

No airport operator likes this result.  We want to see these kinds of things changed; we want our aviation system:  airports, airlines, manufacturers and others, to be globally competitive.  The time is ripe for a fresh look at all of this.  Calls for a policy focused on only one segment of the industry distract from what this country really needs.

Air Line Pilots Association President Lee Moak said recently at another Aero Club of Washington speech that the industry agrees on 95 percent of the important issues and we should focus there.  I agree.  And, I believe that if we do that, we can improve the landscape over that 95 percent while finding a way forward on the other 5 percent that can work for all of us – and especially for the travelers and shippers who depend on us.

A Week in Tuscany

Following a very good set of meetings in Rome, Ann and I set out for a week in Tuscany.  If you have never been there, Tuscany is one of the world’s great spots.  Every place you turn is beautiful and gives you a different perspective.  It is the kind of place you cannot get tired of.  It has wonderful small places dating back centuries, places like San Gimignano and Pienze.  Pienze is a place where they make the wonderful pecorino cheese, the whole town smelled like the cheese just as our son (who studied in Siena several years ago) told us it would.

We went to Siena in time to see a preliminary of the Palio horse race.  This race has been run in Siena for centuries; each of the “Contrada” or neighborhoods in Siena is represented by a horse and for the winning Contrada it is a big deal indeed.  We were lucky enough to be able to join one Contrada for dinner following the preliminary (the night before the final).  There were hundreds of people at this outdoor feast and this particular Contrada was buzzing with excitement as it had reason to believe its horse had a good shot at winning the final the next day.  Which is exactly what happened!

Of course, no trip to Tuscany is complete without a trip to Florence with its many iconic views – as well as its legendary Uffizi art museum and the Academia, which houses Michelangelo’s David.  We did all of these things and I can tell you that seeing the real David  was enough to convince me that all of the fakes one sees in various gardens and elsewhere should be destroyed because they do not match up.  And he carved David during the period between his 27th and 29th birthdays!  Wow!

Our last night in Tuscany, we had dinner in a small restaurant with a great view of the Tuscan countryside in the village of Certaldo, near the house where we stayed.  Following dinner, I was informed that the cook wanted to meet me; his name is Principato!  On further discussion I found out his first name is Salvatore, which happens to be my dad’s name.  We “cousins” had a great chat and it was a wonderful way to wrap up our trip.

Given the depth of the Euro crisis and the impact Europe’s economic woes are having on the rest of the world, I spent much time trying to observe what was going on and quizzing people about it.  I did not find a single Italian with an optimistic word to say about the future, which was discouraging.  I also noted that the place still shuts down for two hours every day.  And when we were in Rome, that city shut down for a whole day to observe the Feast of Saints Peter and Paul; then when we were in Certaldo a few days later THAT town shut down for the feast of ITS patron saint.  Being a church going Catholic doesn’t make me an expert, but I think most days are the feast of some saint or other.  So, someplace in Italy, some town or other is shut down almost every day!  All of that sounds nice and quaint to us Americans, and I suppose it is.  But when the rest of the world refuses to work that way it tells me Italy must either change or fall further behind.  I hope it does change its approach to things related to the economy, while retaining the charm that makes it one of the world’s most wonderful countries.

Reflecting After More Than a Month on the Road

It has been a while since I have written a blog.  Partly this is due to the fact that I have been traveling almost constantly the past 6-7 weeks (Singapore, Sacramento, Chicago, Idaho and Italy).  This is also due to the fact that the last 8-10 days I was actually on vacation and was determined to, more or less, treat it as such.

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In Piazza del Poppolo celebrating a team Italy goal.

But now it is time to get back in the swing of things.

As mentioned, I was in Italy for almost two weeks.  The first part of the trip had a business purpose, specifically the twice yearly meeting with ACI World Director General Angela Gittens and my colleagues who direct ACI’s four other regional offices.  To be frank, this is a favorite part of the job for me.  Angela and my regional director colleagues:  Patti Chau, ACI-Asia/Pacific; Olivier Jankovec, ACI Europe; Ali Tounsi, ACI Africa and Javier Martinez, ACI Latin America/Caribbean are among the brightest and most dedicated people with whom I have ever worked.  When Montreal airport CEO Jim Cherry was chair of ACI World, his vision was that the World Director General and the regional directors would work more closely together to solve problems and promote airport interests. Twice a year, separate from anyone’s annual conference, we get together; taking turns hosting.  It was Olivier’s turn and we attached our meeting to the Annual General Meeting of CANSO (the worldwide organization of air navigation service providers; we met with their regional directors as well).  CANSO was meeting in Rome, the city in which Olivier lives.  I suggested he arrange the Sistine Chapel for the meetings; alas this was not possible J .

When we have these meetings I am struck by how similar our problems are.  Financial pressures, security, facilitation, environment (some more than others), air service and airline relations are always big topics.  Not just in our work on behalf of members, but also in our individual and collective efforts to position our organizations (ACI World and the regional organizations are independent entities with a federal structure).

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A photo from Rome with Angela Gittens, Olivier Jankovec, Patti Chau, and Ali Tounsi.

But I am also struck by how different our worlds are.  Privatization and other innovative forms of airport ownership and operation are more the norm in most other regions; not so much on the U.S. side of the North American region.  In Europe, airports are responsible for security and purchase the equipment, not so here.  There are totally different ground-handling regimes.  Political pressures on the environment are intense in many parts of the world; much more so than here.   And so on.  I tend to think we have the better of it on security and a few other areas.  I also think that American ownership and governance structures are way out of date compared to others around the world.  And you know how stupid and outdated I think our financial regulatory regime is here in the United States (if you’ve missed my comments on that topic go to www.airportsforthefuture.org).  And, by the way, all of us complain that governments do not adequately understand the importance of aviation and airports to their economies (this is true too on both sides of the North American border).

In coming days I will write more about the rest of the trip.

But before I go, one final note.  Ernest Borgnine, a great Italian-American, died last week at 95 years old.  My first memories of him were from the show McHale’s Navy (which also introduced most of us to Tim Conway).  But my life, more or less, intersected with his in two other ways (though I never met him).  First, the night I was due to be born, my folks waited it out at a drive-in showing of the movie Marty, for which he won an Academy Award.  I kept my folks waiting 10 more days.  Second, a couple of years ago, my son attended the big Consumer Electronics show in Las Vegas.  Borgnine was there, walked up to my son and his colleagues with a big smile and said “How’s it hangin, boys?”  My son got the biggest kick out of that and so did I.  Ernest Borgnine.  RIP