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AIRPORTS AND ECONOMICS

VIEWS: 26 PAGES: 2

Regarding the overall airport/airline economic relationship [Bill Ayer] says, "I think it's time we rethink this relationship." He stresses that the cost per enplanement is "potentially core-critical" when an airline is considering service to a market. 'What you're really betting on is the leadership at that airport," he says.

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									 M A N A G I N G A I R P O R T S TODAY
By John F. Infanger, Editorial Director                                                       in a better position to capitalize on air           James Masoero, general manager
                                                                                              service opportunities in the future.           of corporate real estate for Delta Air

AIRPORTS                                                                                             Regarding the overall airport/airline
                                                                                              economic relationship Ayer says, “I think
                                                                                              it’s time we rethink this relationship.” He
                                                                                                                                             Lines, questions why the U.S. airport
                                                                                                                                             industry has accumulated some $27
                                                                                                                                             billion in cash reserves, up from $21


AND ECONOMICS                                                                                 stresses that the cost per enplanement is
                                                                                              “potentially core-critical” when an airline
                                                                                              is considering service to a market. “What
                                                                                              you’re really betting on is the leadership
                                                                                                                                             billion in 2001, during a period when
                                                                                                                                             he says cost per enplanement has risen
                                                                                                                                             49 percent. [For more on this topic,
                                                                                                                                             see “Inside the Industry,” page 24.]
Conference themes: the economy; the credit                                                    at that airport,” he says.
                                                                                                     Ed White, vice president of real
                                                                                                                                                  Masoero offers up some specific
                                                                                                                                             rates and charges topics for consider-
markets; and the airport/airline model                                                        estate for Alaska Airlines, adds that the
                                                                                              particular airline/airport agreement
                                                                                                                                             ation by airports:
                                                                                                                                                  • competitively bid outside con-
SEATTLE — This year’s Airport Economics & Finance Conference hosted                           — be it residual, compensatory, or a           tracting for services and use the air-
                                                                                              hybrid — isn’t as important as how a           port’s purchasing power as a tool;
by Airports Council International-North America reflected the concerns                        specific agreement works in a particu-              • review refinancing opportunities
of the nation regarding an economy in recession and tight credit markets.                     lar market. “We need one that brings a         on current debt service;
Airports are focused today on reducing costs; finding new efficiencies;                       downward pressure on CPE,” he says.                 • review the airport’s cash reserves
reconsidering or holding off major infrastructure projects; and rethinking                           White also tells airports that before   and assess if adequate/justifiable;
                                                                                              they plan infrastructure expansion                  • “value engineer” projects;
the airline/airport economic model, which continues to evolve as the air                      such as a new concourse, that they                  • consider the potential to moth
carrier industry has its ongoing struggle with making a profit.                               should first consider what the tenant          ball facilities that are currently being
                                                                                              airlines can afford. Then work together        underutilized;
     Airports have been hard hit by              passenger projections as a result.           toward determining what’s appropri-                 • consider deferring any sched-
the paralysis that has occurred within                William Swelbar, a research engi-       ate to build, says White, and not first        uled rate increases to tenants; and
the banking community over the past              neer at the Massachusetts Institute of       decide on a facility and then consider              • implement landing fees for gen-
six months. David Spirakis, managing             Technology, says of the U.S. airline         the costs to the airlines.                     eral aviation where feasible.
director for pu
								
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