Orlando International Airport is one of the crown jewels of Central Florida, and it is certainly the one that makes all the other jewels in the area shine. With each scheduled domestic flight there is an average economic impact of $40 million per year, and for foreign flights that impact more than doubles to $95 million. OIA is the second busiest airport in Florida, but is first in destinations and ranks as the third largest origination and destination market in the United States. With close to 18,000 people currently employed in airport related jobs, and with the projection that by 2025 that number will climb to almost 30,000, Philip N. Brown, the airport’s executive director, is one of transportation’s most strategic leaders.
I4B: Airports are one of the primary economic engines in a community. How is OIA positioning itself to be even more advantageous to Central Florida’s future?
PB: We are the means of getting people, globally, to come to the area. We have been a dynamic destination for the leisure market for over 30 years and currently 90 percent of our traffic is domestic and 10 percent is international, but international is growing at almost twice the rate as domestic.
One of our challenges is that airlines make their money filling up the front of the plane, which means: business travelers. We’ve never had a problem filling up the economy section. People here for leisure typically shop prices and they are looking for bargains. But in order for an airline to allocate its portable capital (i.e. aircraft) they have to make a profit, which means cultivating a business travel clientele. We help with that process by air service development.
PB: We spend a lot of time marketing our airport to airlines and to other destinations. Currently, we have 35 non-stop flights from European international locations, but our focus has been Latin America because of our proximity. The leisure market is where the interest began, but in the fastest growing segment, which is Brazil, these tourists not only purchase consumer goods, but they are also investing in the area. Combine that with what we see at Medical City or the Nicholson Center in Celebration, the new VA hospital and Nemours, all of these institutions have learning and simulation components and that is business traffic, domestic and international.
We market with our partners like the EDC, Visit Orlando and businesses located here. We were able to secure direct service to Frankfurt because Siemens has a significant presence here. We made a trip to Japan – because Mitsubishi Power has been here for 11 years – to call on ANA and JAL. With the introduction of the Boeing 787, it is now possible to make direct flights from Narita, outside Tokyo, to Orlando. You have to make the business case, and non-stop service is a great inducement to the business traveler.
I4B: What are the keys to making those connections?
PB: It is numbers driven; it is a pretty analytical process. People say it is relationships, and that is an important component, but airlines, both domestic and foreign, focus on network planning. What is the cents per mile or cents per kilometer yield?
I4B: Southwest is your biggest carrier, representing about 20 percent of OIA flights, but Southwest flies point to point, they don’t have a central hub. Why isn’t Orlando a hub?
PB: Well, that’s an interesting question. This airport opened three years after the deregulation of the airlines in 1978. Before that, the Civil Aeronautics Board assigned the routes and set the prices. The legacy carriers, like Delta which merged with Northwest, or United that merged with Continental, move traffic to a hub airport, like Delta’s hub is in Atlanta. Their model is to fly everything, even international, through Atlanta. These airlines often managed their profitability through bankruptcy. So if you were a hub and an airline like Eastern declared bankruptcy, you were at risk. We’re known as an ‘origin and destination’ airport; people don’t come here to make connections. Because we’re a destination, when carriers went bankrupt, we could supplement their traffic with other carriers; we’ve been very resilient.
I4B: Which puts you in control?
PB: It enables us to look out for the best interest of the community. We also have an asset many airports don’t have – we have land we can use to attract businesses; for instance, United does rehabilitation of large aircraft at the airport, and there are other development opportunities.
I4B: Is that something the airport is focusing on?
PB: Our biggest impact on the community is direct air service, then to provide opportunity for MRO (Maintenance, Rehabilitation and Overhaul).
I4B: In your long-term master plan I saw that rail was a component in that equation and I heard you refer to it at a recent transportation summit. How does it fit?
PB: Our vision statement describes us as a global, intermodal gateway. If you are going to be intermodal, rail is a primary factor in that equation.
What we have seen in the aviation industry is that the short haul business is on the decline. We are exploring a 3-hour and 15-minute rail commute from Orlando to Miami. What you are competing with is people driving the turnpike or I-95; you throw in some business amenities that make the trip more pleasant and valuable, like Wi-Fi, and it can be an attractive, convenient alternative.
Also, we are looking at several studies to link SunRail to the airport because of its potential, if for nothing else, our employees. Seven percent of our employees use public transportation now. Since we have some 18,000 people working here any given day, and then add to that the Medical City and the Veterans Hospital, you have a lot of people that need to get around. We have worked closely with the Expressway Authority and with LYNX to address these issues. Even if you have an airport, if you can’t get people to and from the airport you’re missing the target.
I4B: You’ve mentioned the growth in international. Do you see it moving to the point where there is parity between domestic and international?
PB: I don’t think there will be parity, but our forecast out to 2031 indicates domestic will grow about 2.8 percent annually, international 5.9 percent annually. I can easily see international increasing to 25-30 percent of our traffic. A lot will depend on global business concentration; currently, we are the #1 medical meeting destination in the country; add to that the medical simulation training and it really begins to build. Also, a major factor is the attractions are investing in international marketing.
I4B: The time it takes to move a transportation project from concept to completion astounds me. How long have you been working on the South Terminal project?
PB: Twenty to 25 years; we actually got approval from the airlines to move forward in 1997, because we reached a certain passenger threshold. These projects are incredibly capital intensive, so you can’t operate under a “if you build it, they will come” idea. Since we don’t get local tax dollars, but generate our revenue off of user fees, those revenue streams have to be in place.
I4B: Explain that.
PB: Under FAA policy, commercial airports have to be self-sustaining. We don’t get revenue from local taxes, though we do get certain federal grants from the “Ticket Tax” from the Airport Improvement Program (AIP). For fiscal year 2013, we had an operating budget of $445,882,000, of which 70 percent comes from non-airline sources.
I4B: Please break that down for us.
PB: Airlines pay about 30 percent of our revenue; our three top revenue generators were #1 Enterprise Rent A Car, #2 Avis-Budget and the third is Southwest Airlines. We’re the largest rental car market in the country. To some degree we subsidize the airlines; before I came, OIA started moving the dial from 50-50 with airline revenue to now 30 percent.
I4B: So what causes that switch to flip and a project like the South Terminal to move forward?
PB: We spend a lot of time thinking 20 years out, because the lead time on building a terminal is minimally four years – one year for design and three years for construction. The challenge is matching the demand with the facility; you don’t want to build too soon, but if you build too late you might never recover the lost traffic. Once it goes somewhere else, it is hard to get it back. Our current terminals were designed for 24 million passengers; we now have 35 million moving toward 36.
People ask, ‘Why are you concentrating on 10 percent of your business?’ It is the most impactful, from an economic standpoint, and it has the most growth potential. If you don’t capture it, it will go