Across the Aisle from Phoenix Aviation Director Jim Bennett on International Service, Terminal Projects, and the TSA

While I was in Phoenix for this year’s symposium, I had the chance to sit with the new Aviation Director in town, Jim Bennett. Jim was at Phoenix many years ago before he went on to DC and eventually Abu Dhabi. Now he’s returned. I initially was going to use the discussion to write a post, but I thought the whole interview was interesting enough to just put it out in an Across the Aisle format. Let’s see if you agree.

Cranky Flier: You’ve been away from [Phoenix] for awhile. In the meantime, things have changed here quite a bit. I guess I’m curious when you thought about coming back to Phoenix, what were the biggest challenges at the airport you wanted to solve?

Jim Bennett, City of Phoenix Aviation Director: One of the challenges that I worked on before I went to Washington and Abu Dhabi is international service in the Phoenix market. That’s one of the issues I certainly want to focus on and have been focusing on.

Cranky: This has been vexing to the people of Phoenix for a long time, right? You look at similarly-sized cities, you can talk about business demographics of course, but the lack of long-haul international service certainly stands out. British Airways is the lone participant in that over a sustained period of time. Think about other places and the service they get, even from secondary types of carriers like Thomas Cook… After all, you are a leisure destination. Why don’t we see any of that here?

Jim: Those are all good questions and questions we ask the airlines on a regular basis. But the Phoenix market is a strong market. The international airline business is a very interesting business, and there’s somewhat of a herd mentality by international carriers for international service. You see a city such as Phoenix which is geographically-blessed but at the same time it’s a geographic negative in terms of its relationship to Los Angeles, San Francisco, Seattle, Vancouver…. It’s very difficult to convince an airline “it’s OK to overfly California.”

Cranky: But you do see, for example, Vegas has seen tremendous growth. Obviously Vegas is a different type of destination but it is a leisure destination. And Phoenix has a tremendous leisure component.

Jim: Yes Phoenix has a leisure component but it’s also a business destination. That’s something that we’ve been working on for the past 25 or 30 years in international markets; trying to convince folks that Arizona has a tremendous leisure component but it is a business destination. And we are really starting to see that now when you look at job creation and growth. We’re back hitting on all cylinders here in Arizona and the airport is having record years in terms of passenger traffic. We just have to find that magic potion that gets the right carrier here.

Cranky: So what’s on your most-wanted list?

Jim: We would love to have an Asian service. We think we have a strong case for a Tokyo service.

Cranky: Presumably from American or [Japan Airlines]?

Jim: A oneworld partner would be the most logical service because we are such a large oneworld presence with American. And we would like to see another continental Europe service. That’s very important to us. We have terrific service from British Airways. We used to have service for a period of time from Lufthansa.

Cranky: It’s been more than 10 years now, right?

Jim: Yeah and they were here for about 3 years. The question is when you look at the European market, and where the oneworld hubs are, you know we’ve got the service to London with British and we’re coming up on the 20 year anniversary. And the other oneworld hub is Madrid. So we need to find a strong market that we can support out of Phoenix and on the other end it’s not necessarily going to be a oneworld hub.

Cranky: So how are you gonna do this? Your predecessors have all wanted to do the same thing.

Jim: One of the things you have to remember is it takes patience and research. Yesterday we were having a session with folks. The mayor asked a question of the group, “How much of air service market determination is science vs art?” And the overwhelming majority of it is science. There’s a lot of analysis that goes into it. It’s our responsibility to prove to the airlines scientifically that they can be profitable here. Long gone are the days when an airline could start a route and give it 3 or 4 or 5 years before they start making a profit. We need to be able to show that if they start the service, it’ll be profitable ideally from day 1. So we’re doing a lot of additional research trying to better understand our market and our passengers.

Cranky: So you’re just trying to provide more data.

Jim: We know we’re on lists. Now we just need to get ourselves to the top of those lists.

Cranky: Do you think it’s an issue of them not understanding the Phoenix market or do you think the market has changed and they just have outdated views?

Jim: I think it’s a function of the market has changed. They probably have some outdated views of the Phoenix market. It’s our job to prove to them what the market is today and what our customers are looking for and how the business community is willing to support that service.

Cranky: You seem focused on the idea of a year-round traditional flag carrier style service. But have you had conversations with some of the leisure guys?

Jim: Oh yeah. We’re absolutely talking to the Thomas Cooks and Condors of the world. Absolutely. Those are very important components and we would welcome services from those providers and have been communicating with them.

Cranky: I’m going to shift a little here to American, to the hub. American has done something that I thought was surprising. They’ve really built up Los Angeles and that means there’s the ability for a lot of Southern Californians to overfly Phoenix compared to how it used to be with US Airways and America West. Do you have any concerns about the future of the hub?

Jim: Just as a matter of principle, for the 35 years I’ve been in this business, I’ve always been concerned about the airline presence in my markets. You never take anything for granted. That said, all of our conversations with American have been very positive. We’ve seen continued growth by American in terms of their passenger levels and frequencies in some of their markets. We certainly watch what’s going on in Los Angeles. But a lot of that activity, they’re trying to get in that competitive mode for the international services. And the majority of services here, really all the services except Canada and Mexico, are US domestic. You don’t see that kind of growth taking place in Los Angeles from a domestic standpoint. We think Phoenix actually provides a very unique opportunity for American to feed the entire West Coast without using some of those limited and scarce resources at those airports.

Cranky: So you’re not seeing anything that concerns you other than your general level of concern.

Jim: Yeah, my general level of concern is always there. One of the things we’re doing here is making sure we remain very competitive in terms of our facilities and the costs of our facilities.

Cranky: Let’s talk about the facility a little bit. There had been some criticism about the train with the costs involved. What’s your vision for where this facility needs to go?

Jim: We are in the process of modernizing and updating what we refer to as Terminal 3 to give it more state-of-the-art facilities and services as well as adding additional gates.

Cranky: How many gates are you adding?

Jim: Well what we’re doing is essentially we’re replicating the gates on Terminal 2 so we can close and tear that down. The net effect will be no additional gates but we consolidate and save money by not maintaining and having to upgrade the old Terminal 2. That also does a tremendous thing for us in future capacity. It gives us the ability in the area to the west of Terminal 3 to start to straighten out our landside access and get a site ready for a future terminal once demand warrants. And then we’ll also continue our Sky Train from Terminal 3 all the way to the west to our consolidated rental car facility. The whole concept of the Sky Train is to alleviate congestion on our roadway system to give [travelers] a better experience coming in and out of Phoenix.

We’re also looking at additional gates. All airports are experiencing this. The 737 models evolve and you go the 800s and the 900s. And you see the A320s roll into the A321s. Then some of the widebodies, you get into things like the 787s and others. The wingspans have changed which, when you have older facilities like some of ours, it changes your parking configurations. You have to realign some gates and lose a gate here and there. We need to take a look at how we can perhaps bring some additional gates on.

Cranky: On the south side of Terminal 4 you could put another concourse on, right?

Jim: Correct.

Cranky: And that’s it?

Jim: When we put that additional concourse on, Terminal 4 it will be built out.

Cranky: Is there room for Terminal 3 to grow after this or do you need terminal, I don’t know, let’s call it 9 since the numbering doesn’t make any sense?

Jim: We’ll call it Terminal 12 because it’ll be where Terminals 1 and 2 used to be. *laughing* After we clear out Terminal 2, the next logical thing to do would be to build a new facility on the west side that could be incrementally expanded, not too different from how Terminal 4 was originally built.

Cranky: So when are these things happening?

Jim: The Terminal 3 project is about a 2019 time period. In fact, later this year we’ll open the first phase which will be a new ticketing lobby, new consolidated security check point…. We hope to start work on the new south concourse by the end of this year, early next year.

Cranky: When does the train get built out?

Jim: It needed to be built out yesterday. But we’re in the process of identifying the financing plan that will allow us to move that forward. Once we get that done, it’s about a 4-year project.

Cranky: Do you have any need for additional runways?

Jim: We don’t. We have 3 runways and given our weather conditions most of the time, we can operate those three runways quite efficiently. We’re actually operating in today’s market, we’re probably operating about 100,000 operations per year less than what peak used to be. So we have plenty of airfield capacity.

Cranky: I’ll wrap it up with one last thought. I’ll probably want to get a picture of your face here, but how’s TSA doing these days?

Jim: Like all of my colleagues around the country, it’s a very frustrating experience dealing with TSA.

Cranky: So what can you do?

Jim: That’s one of the more frustrating aspects of the situation. There’s not a whole lot we can do at the airport but sit back and take the abuse like the rest of the passengers around the country. The bottom line is you’ve got an agency that can’t keep pace with an industry that is growing and will continue to grow. You’ve got one aspect of the federal government, called the Federal Aviation Administration, telling us we’re gonna have a billion enplanements here in a few years in our air transportation system. Then you’ve got another federal agency, called the Department of Homeland Security, that Congress keeps a cap and budget restraint on and won’t allow them grow their resources in order to match that up. Somewhere those guys need to get together and have a conversation as to how they’re going to accommodate this continued growth.

Cranky: If only…