Airports Council International-North America
Answers provided by Greg Principato, president

On what the aviation industry will look like in five years and, specifically, the airport segment ...
Over the long-term, FAA and industry analysts agree that passenger enplanements will continue growing, reaching about 850 million in 2014 and one billion by 2021. That means that airports must invest additional resources in capital projects to increase the safety and efficiency of their operations.

Increasingly airports are recognizing that reliance on aeronautical revenue to fund the needs of passengers and shippers is not an effective long-term strategy. Throughout North America, airport managers are developing creative ways to diversify their revenue stream, focusing on a wide variety of non-aeronautical revenues including retail and other concessions, indoor and outdoor advertising, parking fees, and real estate development. A recent ACI World survey indicates that non-aeronautical revenues [currently] generate around 50 percent of airport industry revenues globally.

On the top three issues facing airports ...

• FAA reauthorization. H.R. 915 provides $16.2 billion for the Airport Improvement Program and a $2.50 increase in the Passenger Facility Charge. Fully adjusting the PFC to account for construction cost inflation would place the fee at $8.18.

• Reduced air service and capacity cuts. Since last summer, airports have carefully evaluated their operations, cutting their budgets and in some cases reducing their airline landing fees and rental charges in an effort to maintain current levels of air service.

• Security. It continues to be a critical issue for airports. H.R. 2200, the Transportation Security Administration (TSA) Authorization bill [includes] a requirement that an airport security plan put procedures in place to ensure the federal security director of the airport is notified whenever federal, state, or local law enforcement is called to an aircraft or onto the airfield; a section establishing an Aviation Security Advisory Committee, consisting of 27 members of the aviation industry; and a section which creates a biometric identifier airport access enhancement demonstration program.

It is clear that more effective security procedures can be developed in cooperation with airports; [an H.R.915] amendment would return the well-established “notice and comment” protocol that unfortunately TSA has not often used.

• Environment. Airports have been taking steps to reduce pollution, consume less energy, and reduce consumption of scarce natural resources. Airports are community leaders initiating voluntary environmental programs rather than just responding to state or local mandates. ACI-NA is seeking federal help in the United States to go further with funding assistance for pilot programs that will allow airports to continue their environmental leadership.

ACI-NA remains a member of the Commercial Aviation Alternative Fuels Initiative Coalition to identify alternative aviation fuels. We are also working to ensure that alternative fuels — regardless of their source — can be distributed and stored at airports by existing fuel systems.

Over the last 18 months, ACI-NA has worked to educate the U.S. Environmental Protection Agency about airport deicing regulations as it considered developing its first regulations to govern deicing fluids.

On the discussion of uncovering a new economic model for airports, domestically and globally ...

Airports throughout the world have evolved from being infrastructure providers to multi-faceted businesses that are recognized as the public face of aviation in their region, critical to generating jobs and economic commerce. Contrast that with the airlines which have the ability to reduce or even eliminate service to a community, often with very little notice. That means that airports must have the financial tools to invest in infrastructure, equipment, technology, and staff to meet the current and future needs of passengers and shippers.

For a variety of reasons, interest has been limited in the FAA privatization pilot program, authorizing up to five airports to participate in the U.S. There are also a number of unresolved issues relating to privatization.

ACI-NA has not taken a position in support or against airport privatization. However, ACI-NA supports greater flexibility for airports and their sponsors, increased independence of operations, and means of developing investment capital to improve and expand facilities.

American Association of Airport Executives
Answers provided by Todd Hauptli, senior executive VP

On what the aviation industry will look like in five years and, specifically, the airport segment ...
Businesses will continue to seek more efficient ways to operate. For airlines, this will mean scaling back on some services, which would continue a trend we’ve seen in recent years, ranging from food service onboard to closing frequent-flyer lounges, and trimming the number of customer staff working at airports. For our members, this will mean increased demand for services traditionally provided by tenants — such as VIP lounges provided by the airport, rather than a specific carrier.

The changes will impact operations behind the scenes as well. For instance, airports are now providing more planeside services than ever before, such as conditioned air (in lieu of APU power) and leases of jet bridges, to allow airline tenants flexibility.

Concerns such as an airport’s carbon footprint will raise the bar on what our members must do to be considered responsible environmental citizens. While programs such as FAA’s VALE effort underscore the focus that airports already have in cutting power consumption and greenhouse gas emissions, a cross-segment industry effort is needed.

On the top three issues facing airports ...
1) An adequate, steady funding stream for capital improvement programs. Solving this would involve passing a multi-year reauthorization bill that includes a boost in the PFC cap — preferably to $7.50, and indexing it to inflation, and funding the Airport Improvement Program to the full amount allocated by lawmakers;

2) Opposing unwarranted revisions to existing aircraft rescue and firefighting (ARFF) standards, which could cost airports millions if not billions of dollars, both in capital outlays as well as ongoing O&M expenses, without an appreciable increase in safety; and

3) Maintaining air service at smaller communities. If the U.S. wishes to maintain its position as the world’s most advanced and robust air transportation market, we must ensure adequate air service for all. As airlines seek to maximize their business opportunities, it is critical that smaller communities are not left off of the air service map.

On the discussion of uncovering a new economic model for airports, domestically and globally ...

U.S. airports, while almost exclusively public-owned, continue to be efficient, well-run businesses, and the executives that run them are put under as much pressure as corporate executives. Many larger airports are seeing a shift in their revenue sources from the traditional places — namely, airline rates and charges — to things like parking. Power plants at airports, such as solar-power projects that have recently been launched, show yet another innovative development. All of this shows that, regardless of the ownership structure, U.S. airports are pushing the innovation envelope and finding success that would be welcomed by any private business.

Privatization has been successful in other places around the world and has been tried in this country. The new venture in Branson is the latest example. Airports will continue to seek the most efficient ways to run their businesses while generating and/or receiving enough funding to keep key capital projects on track. If private investors and airport operators can meet these goals under a privatization model, that’s fine, too. The key isn’t the model — it’s the result. Airports must stay fiscally sound while constantly keeping an eye on future demand, and executing plans to meet that demand.

Air Transport Association
Answers provided by John Heimlich, vice president and chief economist

On what the aviation industry will look like in five years and, specifically, the airline segment ...
I expect that the U.S. airlines will be slightly but not much larger than today. The industry will see structurally higher fuel costs and a more streamlined fleet. I also expect to see some attempt at further consolidation. We also could see a fleet comprised of fewer 50-seat aircraft. The need for efficiency gains will drive even further automation of the travel experience as well as certain administrative functions. From a security perspective, the Transportation Security Administration is working hard with airlines and airports to streamline the security checkpoint process, including the possibility of not having to remove our shoes and coats.

The need to generate ancillary revenues, I believe, is here to stay, and inflight Wi-Fi offerings quickly are becoming the norm.

U.S. airlines may be hindered by public policy in their ability to compete effectively in the global aviation marketplace, and it is in the intercontinental markets where demand is expected to grow; the U.S. domestic market is relatively mature.

On the top three issues facing airlines ...
1) The inability to cover the industry’s cost of capital;
2) The excessive taxation burden without commensurate return on investment;
3) The asymmetry between ease of (capacity) entry and ease of (capacity) exit.

On the public policy front, the top issues are:
1) Energy;
2) Air traffic management/NextGen deployment; and
3) The environment.

National Business Aviation Association
Answers provided by Ed Bolen, president/CEO

On the state of the aviation industry in five years and, specifically, the business aviation segment ...
We expect five years from now for business aviation to be a growing industry. The underlying economy will be the primary factor. You’ll also see continued emphasis on productivity and efficiency, and that is going to bode well. I question whether or not airlines are going to add substantial capacity very quickly, and so I think the reduction in airline service and frequency will continue to be a driving factor for the growth of business aviation. I think we’ll continue to see that it is a global economy as opposed to a national economy, and that can have a positive impact.

In terms of new aircraft models and new utilization strategies, I’m not as sure that we’ll see quite as much activity in that area looking forward over the next five years. When you go back and look at some of the utilization strategies such as the Jet Card, it has been one of the major developments of the last five years. I would not be surprised if people found additional ways to make business airplanes available. It’s reasonable to expect continued innovation.

On the top three issues facing business aviation ...
The economy throughout our history has been the overwhelming factor. The things that are more unique and fundamental – I probably have four. The primary one is image. Business aviation has to be an accepted business tool; it has to be understood to be essential to our economy and our air transportation system.
There’s security; we’re in the midst of the Large Aircraft Security Program development; a new proposal and implementation. Clearly, we’ve been put on notice by the Large Aircraft Security Program that these things can have a huge impact.
FAA/NextGen funding is another issue. The user fee debate; the funding debate; how all of that plays out will have a major impact on our industry. User fees have had a pretty negative impact on general aviation, including business aviation, in other parts of the world. That’s a real concern.
Finally, I would say environmental regulations. We know enough from the European emissions trading scheme, with the emphasis on scheme, that that can be pretty significant in terms of its consequences.

On the potential impact of new environmental regulations ...
One thing we’d like to see be brought more to forefront of the policy debate are the advances that have been made in terms of efficiency from the business aviation community. Whether it’s the early adoption of winglets; the improved engine technologies; the direct routes that we fly; the fact that we try to use airports where there’s not a lot of congestion and taxi time.
We have been pretty focused on getting more efficient for a long time. The environment is not necessarily a new issue to us. Whether it’s noise or emissions, we’ve been pretty active.
We’d like to see more talk about how you can make the aviation system itself more efficient. That gets to some of the technologies that they discuss with NextGen.
We’d like to see any funding initiatives that come from environmental regulations put back into aviation. One of the many frustrations all of us feel about the emissions trading scheme in Europe is that it’s not clear to us where the benefit to aviation is. We know it’s a huge amount of money; a huge regulatory and paperwork burden. It looks like that money might just fund health care, or unemployment, or whatever the domestic program may be.

On policies at airports ...
Whether it’s a curfew or a nighttime ban on jet operations … it all stems from the fact that people say, that’s my local airport and we should have complete control. We’ll dictate how it works. In a nation that’s trying to have a federal system of airports and a national policy, that’s very problematic. We don’t think that we should have a patchwork quilt of unique airport regulations.

Brian Foley Associates
Answers provided by Brian Foley, founder --

On the state of business aviation in five years ...
Everyone has been sucked down into this black hole. Some went down earlier than others — charter; fractional; and FBOs; they all started seeing a slowdown in business arguably back in 2007, which is around when the U.S. recession started. The manufacturers of business jets, on the other hand, didn’t slow down until October of last year.
Talking with some of my charter friends in different regions of the U.S., they say that it appears to have bottomed out and in some cases is slightly improving. I think the argument could be made for a first-in, first-out scenario. We saw charter as one of the first in, and they’re starting to show signs of life now.

On the buying frenzy of FBOs in recent years ...
The people that are interested in FBOs today are really the smart money. They kind of held out; they didn’t buy at a high. The opportunities today are much greater; there are more FBOs looking for an injection or even a sale. If an investor does go forward, they’ll be paying less. You’re not paying the kind of multiples that you were just a year or two ago when that industry was flying high. It’s a great time to be a buyer now.
I’m helping investors find FBOs and charter companies. There are even big institutions that are looking to invest in some of the business jet manufacturers.

On the overall economic climate ...
The second wave of companies that will improve in our view will be the FBOs, the MROs, and the catering people. We think that will start materializing probably the third quarter of this year. There will be a measurable rise in business jet utilization — takeoffs and landings. Year to year, that’s down on an average of 30 percent from a year ago.

On what he expects at the NBAA Convention this fall ...
I don’t think we’ll see any records for attendance, but it will still be up there. In talking with some manufacturers and others that typically display at NBAA, I’m told that many of them are bringing fewer employees to man the booths; they’re doing smaller booths.

National Air Transportation Association
Answers provided by Jim Coyne, NATA president

On the state of the industry in five years and, specifically, the FBO/tenant segment ...
I’m a fundamental optimist; I’m encouraged by some recent reports that I’ve gotten from [AOPA president] Craig Fuller and others that reveal that public attitudes toward private aviation have improved in the last month or two — dramatically.

The industry is going to have a very tough couple of years, mostly because in many segments there is more supply than there is demand. We’ve got more airplanes for sale than need to be; we’ve probably got a lot of airports where there are more FBOs than there need to be. All of the segments of the industry are dealing with oversupply issues.

There will be more consolidation with all segments of the industry; the better term would be more rationalization of supply, of capacity. Before long, I think we’ll get back to a match of supply and demand, and back to a 3, 4, or 5 percent growth rate.

On the top three issues facing tenants ...
Corporate profits and the general health of corporate America is critical to the health of our industry. Corporate profits have to recover before we can recover. That’s the number one thing in my mind.

Number two is, getting confidence in the marketplace about what government is up to. There is a great deal of uncertainty. Are the perennial proposals for user fees going to be imposed?

Will there be a new security regime on [FAR Part] 91? With the government right now, it’s not clear what’s going to happen. Whenever you have a lot of uncertainty people tend to defer decisions and reduce investment.

The third issue is the management, especially the financial management, of airports. I think there’s a real serious crunch right now coming with state governments, a la California’s virtual bankruptcy. State and local governments are looking to sock it to people they think can afford to pay higher taxes, which oftentimes affects our community. The other side of this coin is many smaller airports are really at risk for their continued existence.

On the relationship between airports and their tenants ...
I know many airports where the aviation tenants and airport are just joined at the hip, and truly believe that their fortunes are tied together and it’s essential that they work together for the health of their community. On the other hand, I could give 20 examples of just real adversarial relationships.

There are a lot of common solutions that can be reached. A lot of cost-sharing can be done; manpower that exists at FBOs can help with some of the needs of the airport. They can work on getting community support for their airport. If they get into a confrontation, the only people who win are the law firms.

On the potential impact of new environmental regulations ...
These things are definitely going to become more costly for us. My hope is we take our time getting to what is really effective and not just create a big taxing mechanism and end up taking money out of aviation and spending it on something else. If we really are focused on our environmental impact, our contribution to global warming, there’s no reason that aviation can’t be a partner in the process.

The thing that really does concern me though is that we’ll just be taxed in the name of environmental relief.

On AOPA’s new advocacy program, General Aviation Serves America, for which Coyne is an advisor ...
We really want to turn the FBOs and the airports into embassies for reaching out to the public about general aviation; reaching out to decisionmakers and others. We’re going to be creating material to set up at airports. We have videos that can be displayed. Signature is going to be the first FBO chain to be the beta test site for this. We’re working with their staff to get videos of Harrison Ford talking on the TV screens in their lobbies. They’ll have materials to hand out; we’ll be doing fundraisers at airports and FBOs.

I think a lot of airports and FBOs will want to work with us on this. That’s part of my job on the advisory council is to get the airports and the FBOs joined in this effort, so it’s not just an inside Washington thing but something that’s effective all across the country.

Aircraft Owners & Pilots Association
Answers provided by Andy Cebula, VP

On the state of the aviation industry in five years and, specifically, general aviation ...
I am tremendously optimistic about the future of general aviation. With more than 5,400 public use airports in communities large and small, GA can unite the country in a way that other forms of aviation simply cannot.

On the top three issues facing GA ...
They relate primarily to funding, security, and understanding.

Funding for the FAA — and how Congress and the Administration ultimately structure a plan — is the missing piece that’s holding back progress on a great many other issues, not least of all modernization of our air traffic control system and investments in general aviation airports. I believe strongly that FAA needs a stable long-term funding plan that balances excise taxes on fuel with a substantial public contribution through the general fund.

In terms of security, we have recently seen several significant proposals that impose expensive and impractical requirements on general aviation. The Large Aircraft Security Program jeopardizes small airports and threatens the very nature of the freedom of GA operations with its insistence on pilot background checks, vetting of general aviation passengers, third-party audits, and airport security measures. And the recent action by TSA using a Security Directive to impose badge and identification requirements that simply won’t work for GA pilots who visit air carrier airports has been a major concern . We are working with both TSA and the Department of Homeland Security to find solutions that will resolve their security concerns in a way that is reasonable and appropriate for general aviation.

The third issue is understanding, or more accurately lack of understanding. If policymakers in Congress, the White House, and public agencies understood what general aviation is, how it works, and what it contributes to the economic and social fabric of the nation, they would be more likely to begin formulating policies from a perspective that recognizes GA’s unique nature and needs. That’s why AOPA has created the General Aviation Serves America campaign.

One of the best things about general aviation is the wide variety of missions it serves, from small business transportation to emergency services to recreation. We will continue to need aircraft appropriate to all these different missions, so there will continue to be a place for everything from business jets to high-performance piston-singles to light sport aircraft.

On environmental regulations ...
There’s no question that we would all like to see a lead-free fuel become available, and AOPA, in conjunction with EAA and GAMA, has been actively involved in efforts to find one. Of course, to be effective any alternative for low-lead avgas will need to work in the existing general aviation fleet with minimal modifications. Many of the existing low-compression engines currently in the fleet could make the switch to unleaded fuel with very little trouble. And piston engine manufacturers are making strides in developing electronic controls that would allow existing high-compression engines to run on unleaded fuel while designing new engines that will work on diesel or other unleaded fuels.