POSTED ON MAY 22, 2013:
Tulsa, We Have a Problem
Airport short on funds, initiative
A recent report on the cost to fly from Tulsa International Airport (TIA) didn't really come as a surprise to frequent flyers. Those who fly for pleasure or business have known for quite some time that Tulsa is a very expensive airport for flying. Many were shocked, however, to find that we are the sixth most-expensive airport in the nation for flying.
Considering that Tulsa is the 45th-largest city in the country, this news should be very troubling to travelers, as well as to those responsible for airport operations. It also adds another hurdle for those responsible for bringing new jobs and companies to the Tulsa region. For a business where traveling is vital to its success, the fact that the travel costs at TIA are this high will, at the very least, cause a company to reconsider relocating to Tulsa.
Part of the problem is Tulsa's location, market size, and travel demand. For the most part, there is little that airport operators can do about these conditions. The fact that the number of Tulsa travelers has dropped by tens of thousands, that the number of daily flights in and out of Tulsa has dropped from 90ish per day to 60ish per day, and that the number of airlines serving Tulsa has gone from eight to four means ours is a seriously shrinking airport.
But another part of the problem is that some of the recent activities we have seen at TIA will not help lower the high cost to travel. We can't solve this problem by just rebuilding runways and concourses, retooling websites and logos, and conducting surveys. As nice as all of those things are, a strategic business plan to drive down costs and increase revenue cannot be built on these cosmetic features. They add nothing to the economic bottom line of the cost to fly and do nothing to impact the cost of a ticket.
TIA's future cannot be sustained on the old model that airports are only places for planes to land and take off. Even the federal transportation bill which passed last summer recognized that airports of this century, like shipping harbors and railroad stations of past centuries, must be hubs of economic development that do more than serve one form of transportation.
All airports face the same challenges as Tulsa. We are not unique in that regard. Airline mergers, acquisitions, bankruptcies, and declining passenger numbers are affecting every airport.
But successful airports in this country have figured out that one way to help cover the cost of airport operations -- and hopefully lower the cost of flying -- is to develop non-airline revenue sources. The more non-airline revenue sources an airport can rely upon for operational costs, the less they have to pass along expenses to each traveler's ticket. The centerpiece of this strategy is the launching of aggressive economic- and property-development projects and finding new sources of revenue other than increasing the ticket cost on the traveler.
There are several types of non-airline sources of revenue at airports. Typically, this is revenue from parking lots, rental cars, tenants, vendors, and advertising. At most airports in this country, the parking facilities you see are under the control of the airport. But not at TIA.
Several years ago, while airport management was asleep at the wheel, a very enterprising young businessman named Mike Fine scooped up a prime piece of real estate and developed a parking operation in direct competition with the airport lots. Airport management soon learned that if you snooze, you lose, and the free-market choice for parking has been very good for Fine and his customers and very bad for the airport.
So with parking revenue as a significant non-airline source of revenue pretty much off the table, what else should the airport be doing? The new model of airport operations, as was so clearly spelled out in the transportation bill, was for airports to be more aggressive with economic and property development in and around the airport. This means that airport operators have to know more than just how to run an airport. They have to be economic and property developers, something most airport operators are not.
No longer can airport operators cater only to airport tenants or wring their hands in worry that the Federal Aviation Administration (FAA) will squelch their development efforts. Clearly, other airports in the country have found a way to find financial diversity without any FAA backlash, and Tulsa needs to find its way as well. From an economic and property development standpoint at TIA, Tulsa is way behind the curve.
And just because BOK has brought back its Great Plains lawsuit doesn't mean that we should have a bunker mentality and be timid when it comes to being innovative and aggressive with economic and property development. Leaders lead through the tough times, not the easy ones.
To understand what TIA should be exploring and doing, one only needs to look at what makes some airport models competitive and successful.
The first thing to change is the operational model of TIA. Airports which are either run or substantially controlled by a local government are not as well diversified with economic development options as those that are either privatized or where all of the responsibility rests with either an airport commission or airport authority. While Tulsa has an airport authority, much of the airport operations are controlled by city government. This needs to end and controls moved back to the airport trustees.
Perhaps TIA could pursue the best of both of these ideas like in Indianapolis where the airport is privately operated by professional airport operators not government bureaucrats but the private firm reports to the Indianapolis Airport Authority led by business leaders.
Besides a change in the operational model, there are hundreds of acres of industrially zoned, vacant, available land which is owned either by the city or the airport. With American Airlines and Sprit Aero Systems and other aerospace industries near the airport, this land is vastly underused and underdeveloped. When you look at places like Alliance, Texas and the vast development created by its airport, one can see the potential development we are missing. TIA should be developing this property and charging lease payments as a source of revenue. TIA has spent thousands of dollars studying these issues. It's time for action.
Airport operations and travel are highly competitive. We can't compete for travelers, airlines, or businesses by being the sixth-most expensive airport in the country and think that the answers are more about how the airport looks using easy soft approaches than the real heavy lifting of economic property development with new tenants.
When the going gets tough, the tough get going. It's time for that at TIA. We need a new vision that sees our airport of the future as an economic engine where jobs and revenue take off, not just airplanes.
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