Challenges await new airport chief
By Maria Saporta and Ben Smith
Friday, August 20, 2010
The new general manager of Atlanta’s airport will have to deal with a full plate of managerial challenges and politically fraught decisions in the coming months.
The general manager of Hartsfield-Jackson Atlanta International Airport is arguably one of the most important public roles in the Atlanta region. As the world’s largest and busiest airport, Hartsfield-Jackson is the fuel that makes Atlanta the economic engine of the state.
Atlanta Mayor Kasim Reed is expected to name his top choice for airport general manager in the next week, and that selection is of great interest to metro business leaders who understand how important the airport is to the region’s economy.
Former Atlanta Mayor Shirley Franklin, in a telephone interview, stressed how important the position is for the city, the state and the mega-region of the Southeast.
“The airport is a large, complex organization that deserves someone with strong executive skills,” Franklin said. “You are in the midst of a major capital program. And the general manager of the Atlanta airport is a national and international leader in the industry.”
Reed currently is said to be narrowing the field of candidates to three finalists. A search committee headed by Carol Tomé, chief financial officer of The Home Depot Inc., has been engaged for the past couple of months.
Among the potential candidates are thought to be John D. Clark, executive director and CEO of the Indianapolis Airport Authority and former head of airport operations in Jacksonville, Fla.; Lester W. Robinson, former CEO of the Wayne County Airport Authority, which oversees the Detroit Metropolitan Wayne County Airport; and Miguel Southwell, deputy director of business retention and development at the Miami International Airport and five general aviation airports.
“It’s a plum job,” Franklin said. “It seems to me as though we should be recruiting from the top five airports in the country. Any one of our concourses is a top 20 or top 30 airport operation in the country.”
Conversations with several people who are close to the city and the airport reveal a laundry list of thorny issues looming on the horizon.
Sam Williams, president of the Metro Atlanta Chamber, broadly outlined the top three priorities — finish the international terminal, secure the bond financing, and stabilize the airport’s operating budgets.
First and foremost is the completion of the new international terminal, which is currently under construction and scheduled to open in April 2012.
Integral to completing the international terminal is stabilizing the airport’s finances. The airport and the city will need to go to market to sell $600 million to $700 million in bonds by the end of the year.
“The key responsibility of a new airport general manager will be to convince the investor community to provide enough money to finish the international terminal,” according to one source who has worked closely with the city and the airport. (The city did get a $350 million line of credit from two banks earlier this year in anticipation of bonds financing being raised to pay back that line of credit).
But before the city goes to market, it wants to be sure that the airport’s credit rating is in good standing and that its debt service ratio is strong.
Before he retired as general manager in July, Ben DeCosta told the Atlanta City Council that the airport needed to strengthen its balance sheet before going to the bond market.
At the time, he estimated that the city’s new lease with Delta Air Lines Inc. would cost the airport about $20 million in annual revenues. That meant the airport was going to have to cut costs and raise revenues to make up that difference.
The new general manager will need to continue on that same path while not hurting Hartsfield-Jackson’s reputation as being the largest, lowest-cost airport in the country. The airport also is known for its focus on customer service, maintenance and cleanliness.
Also, a major portion of the airport’s concession agreements is expiring in 2011. That means that the new general manager will need to oversee the requests for proposals and the bidding process to award those concessions, which are primarily for food and beverage.
In addition, the general manager will need to put together the proposals and bidding requirements for all the concessions on the new international terminal. That will include the duty-free shops, the advertising, the food and beverage operations, and the retail stores.
Given that the terminal will open in 20 months, decisions on those concessions also will need to be made in 2011. Because of the size of the terminal — 1.2 million square feet — the opportunity for new revenue is significant, insiders said.
The new airport general manager also will have to walk the tightrope between keeping its largest tenant, Delta, happy and making sure that Hartsfield-Jackson continues to welcome airline competition to keep airfares as low as possible.
In other words, a strong airport general manager would be able to exert a level of independence where Delta is concerned, in the best interest for the city and Hartsfield-Jackson. But he or she also would want to continue the strong relationship that the city and Delta have enjoyed for more than 85 years.
Running the airport on a day-to-day basis also is no simple challenge. The airport sits on 4,700 acres, and its facilities need regular maintenance, which costs between $50 million and $100 million a year.
The airport also needs to continually update its strategic plans to make sure it can accommodate anticipated growth. Among the long-term expansion issues include the possibility of building another runway, the redevelopment and/or expansion of the existing West Terminal, and deciding whether to build a second airport.
Also, the general manager will need to be able to oversee the airport’s operations with minimal political interference from City Hall.
Sources close to the search process said the city is not planning to offer the new aviation commissioner a contract, which would provide some political immunity. DeCosta, who held the job for 12 years, operated with a contract, as did his predecessor, Angela Gittens.
One observer said that by not offering a new commissioner a contract, it demonstrates that city leaders “are trying to run the airport out of the mayor’s office.” That person also questioned who would be willing to work without a contract, especially when other top airport jobs offer the security of a contract.
“In today’s world, airport directors expect a contract,” another source said. “All the people being considered come from airports where directors have a contract.”
People close to the search process have expressed surprise that there were not more potential candidates from the nation’s top 10 airports. Search committee members have realized that the Atlanta job is not as desirable as some would assume because of the complex politics involved — with the mayor’s office, the city council and the major airlines — as well as the gigantic tasks on a general manager’s “to do” list.
Much is at stake in Reed’s pick for a new airport general manager — arguably one of the key decisions of his administration.
But more importantly, the general manager’s impact will be felt far beyond the city’s political boundaries.
“The airport is the biggest economy generator, not only in the Atlanta region or the state of Georgia, but in the whole Southeast,” Williams said. “If this person really does a great job, it’s going to help the employment and economic competitiveness of our region.”