Editor’s Note: This article is based on research conducted by Washington, DC-based Swelbar-Zhong Consultancy, which provides industry analysis to aeronautical companies. Author Dr. Mike Jones served as the principal researcher of the study. More recently, Dr. Jones has served for eight years on the Pinehurst (NC) Airport Authority, including as chairman.
New research from the University of Florida has found that approximately 54% of the nearly 5,000 publicly owned airports in the United States are failing to perform as well as they should be doing, mostly due to simple mismanagement. This condition costs local airports an average of $20 million annually in lost economic impact, which extrapolates to about $35 billion annually on the national level.
Some small airports are great to visit, but many are economic ghost towns. What’s worse is that because they’re owned by governments they can linger like zombies for years, without anybody making effort to fix the problems. These airports are missed opportunity as airports should be dynamic; they should be economic engines actively helping towns to grow, to create jobs and businesses, and help young people find careers.
Airports are businesses, and they can be fiercely competitive as they fight for fuel sales and customers. The success of these smaller airports is important both locally and nationally because their total economic contribution is in the range of $100-$150 billion annually.
83% of the public-use airports in the U.S. are owned by cities, towns and counties. In my opinion, many municipal-owned airports don’t perform well because governments have difficulties managing for-profit businesses.
Governments try to provide a basic level of service to everybody in a fair and impartial manner, like the Department of Motor Vehicles or the Post Office. Meanwhile, for-profit businesses do the exact opposite, trying to thrill a narrowly-defined group of customers. That kind of target-marketing just isn’t in the DNA of a government agency. They don’t have the organizational structures, the vocabulary, or even the reward systems to work like that. In short, to have a successful airport, we found it needs to be removed as far as possible from traditional government structures and processes.
While working on my doctorate at the University of Florida, I examined the management structures of 236 small airports in Virginia, North Carolina, and Florida. Using public data, the airports were classified as either “single-function” or “multi-function” structures. Multi-function organizations were those which lump airport operations inside other departments, such as inside a Department of Public Works or a Parks Department. In the study, 129 airports used the multi-functional model.
In those cases, the “board of directors” usually were the city council or county commissioners. These politicians usually lack a nuanced understanding of airport operations even though they are directly involved with hiring staff, defining budgets, and setting priorities. As a result, politicians ignore the highly technical needs of the airport and focus on other departments which attract more community interest, such as schools, roads, and parks. This degrades and undermines the ability of the airport to make significant contributions back to their community.
I have heard dozens of examples of politicians making perfectly logical decisions which were completely wrong for an airport. A great example is closing the FBO at 5pm, or on public holidays, because all government offices close at 5pm and on public holidays. Another example is forcing the airport to use clumsy fund accounting systems which can’t even produce a profit and loss statement.
The examples of mismanagement abound, and like the ancient torture of “death by a thousand cuts” each mismanaged airport hurts aviation at large. Everybody remembers the tragedy of Meigs Field in Chicago, but that’s just one instance of many. There is an airport in a northern climate that has to beg the highway department for snow removal services.
Lock Haven, Pennsylvania, is the airport where they made Piper airplanes for more than 40 years, but now the new city council intends to sell off the airport because it “costs the town too much.” In Camas, Washington, an aloof Port Authority manages both a marina and an airport and is so uninterested in the airport they actually have refused federal grants. City officials in Watsonville, CA, plan to close a crosswind runway and build 500 homes on the land. In Monroe, NC, a base customer reports that, “The airport manager thinks he has only one customer, and that customer is the city manager.”
A better model, according to the research, is a single function organization chart which is defined by the presence of an independent airport authority, board, or district. Some 91 airports in the study used the single-function organizational structure. I believe that airports run by independent authorities are more likely to be focused on meeting customer requirements, thereby producing greater total economic impact for their community.
My colleagues and I found the data supported our hypotheses. In a simple side-by-side comparison, airports operated by independent authorities generated economic returns twenty times greater than multi-function airports. Even after controlling for population, economics, geography, and airport facilities, the average single-function airport out-performed multi-function airports by more than 60%. This raises the total economic impact of an average airport from about $30 million to over $50 million. In turn, this creates hundreds of extra jobs and millions of dollars in new wages.
It should be no surprise that better management produces better outcomes. But what’s unique, what’s really new here, is this study actually quantifies the havoc created by an inappropriate organizational chart. It defines the cost of having a boss who either doesn’t care about the business or doesn’t understand the business. Knowing how much money is lost can justify the effort and investment to change the system.
There were a number of secondary findings in the research which are intriguing in their own right:
- Not all airport authorities perform equally well; about one-quarter were not “active and engaged.” Our team controlled for this phenomenon by profiling twelve specific behaviors which characterize a professional airport authority.
- Airports with volunteer “pilot advisory boards” showed no statistical difference which would indicate those volunteers are persuading the politicians to make better decisions.
- Shared or remote airport authorities are a bad idea. If an airport authority manages several airports, the largest airport prospers and the subordinate airports whither.
- Privately-owned and/or “privatized” airports (where the operations are outsourced to a private company) almost always under-perform.
More research is in the works. We’re hoping to expand the study to include states west of the Mississippi River to enhance the validity of the effects we’ve found. We’re looking to determine if personality factors or leadership styles might have measurable effects, or if high levels of employee engagement might enhance airport success. We’re also considering a study to define criteria which might describe the most successful airport managers.
Small airports are fascinating organizations. From a research perspective they’re marvelous subjects for all sorts of analyses, and it’s odd that nobody’s looking at them. Maybe we can crack that code, and free up some of that $35 billion in lost economic impact and really make a difference to our communities.