New aviation director is in for a bumpy economic flight
By Michael Lewis
A decade, a couple of billion dollars and a couple of executed aviation directors later, Miami-Dade County commissioners have discovered that they were wrong to hand an airport terminal's construction over to a single airline.
They'd have known that in 1993 had they listened to then-aviation director Rick Elder instead of sending him packing because he opposed plans for American Airlines to build its own mile-long terminal at Miami International Airport, supported by other airlines, at a $500 million cost.
They'd have taken construction under county control a decade later if they'd listened to former aviation director Angela Gittens instead of sending her packing in November for wanting to rein in American's spending on the terminal - then estimated at $1.6 billion.
Now, with the terminal skyrocketing over budget at almost $2 billion, years behind schedule and creating far more capacity than we can use, commissioners last week decided to change flight plans. They want the aviation department to pilot this white elephant.
Welcome to the aviation director's chair, Jose Abreu. Just load this dangerous package into your cargo hold as you begin learning about the aviation industry. Oh, and remember not to step on American Airlines' toes while boarding.
The chores for Mr. Abreu, named director Friday, are indeed vast. He takes over an airport where criminal scandals have abated but economic problems are mounting.
Yet while he navigates aviation industry turbulence, at ground level, he must tread carefully over the political minefield made more treacherous by the split between the mayor and commission over mayoral efforts to control the county right down to the department level - read that aviation director, Mr. Abreu.
Problems are vast enough without the politics. The airport's $4.8 billion expansion - which Ms. Gittens thankfully scaled back from $6 billion - was predicated on growing passenger numbers this decade to more than 50 million annually. Instead, traffic plummeted and has barely come back to where it was, just above 30 million, when those grandiose plans were hatched.
Passengers not only stoke our economy, but they also help pay for airport expansions through user fees. The ability to repay bonds to finance the massive construction is directly related to the number of passengers who use the airport. The fewer passengers, the more airlines pay for each - and the higher the cost of air tickets to Miami versus other destinations.
When American's terminal was planned in 1993, the county was told per-passenger fees would rise from $10 then to $25. Now, figures are in the mid-$30s, and that's without updated cost estimates for the new terminal.
As user fees soar, low-cost air carriers have, too. They have largely chosen Fort Lauderdale-Hollywood International Airport instead of Miami International, with the result that by 2003, a one-way ticket from Miami averaged $32 more than a ticket to Fort Lauderdale-Hollywood. Traffic growth at the Broward airport is soaring as ours stagnates.
Another danger lurks for Miami International: As it builds capacity, bedrock clients, led by American, are flirting with bankruptcy or worse. The more we build, the higher the cost. The higher the cost, the fewer passengers. The fewer passengers, the more airlines suffer.
Mr. Abreu, whose expertise is ground transportation, thus faces an unfamiliar challenge. Florida needs roadways, but Miami International doesn't need what we're building.
Indeed, commissioners are already talking about shutting down and leaving vacant older terminals though they're perfectly serviceable because we're building far more than we need.
Oh, add in the ongoing problems that 9/11 has left us: the need for security devices in terminals to meet federal requirements while stringent security delays are turning away foreign visitors - and their spending infusions that range from tourist dollars to investments.
We won't lose all visitors from abroad - not all have a choice - but many are losing patience.
There are multiple lessons for Mr. Abreu and his bosses in the debacle of the American Airlines terminal:
nListen to all of your customers, not just the biggest. Other airlines objected to American getting to build its own terminal - with more amenities than other airlines have - using other airlines' money. Five even sued to prevent it. But the county forged ahead.
nListen to professionals. The advice of Mr. Elder and Ms. Gittens, both with significant aviation experience, was overridden by commissioners, who had none.
nKeep the professionals. Ousting aviation directors at the bidding of a single client sends the wrong message to the industry. Maybe it's one reason the new director had to be chosen from outside aviation ranks.
nDon't let a bully push you around. No matter what anyone implies, American was no more a threat to leave if it didn't get its way than the Florida Marlins are if the county doesn't come up with $45 million more for a baseball stadium by June 9.
nIf it sounds too good to be true, it probably is. The passenger bonanza we were promised in the mid-1990s evaporated. Yet we built on forecasts based on a short-term trend rather than the underlying basics of economics - and we built assuming that past success would determine the future. Savvy stock investors know the small print always says past successful predictions don't mean today's forecasts are valid.
nMost importantly, commissioners never take the blame. The commission, not aviation directors, got the massive expansion going and insisted that American take control of what's turning out to be more than 40% of the spending. Yet commissioners demand to retain close control of the airport.
What is the best solution to the crisis?
It's what commissioners won't do without a public referendum: Turn the county's airports over to an independent authority. The commission has fought this off for years - years in which the county ousted competent aviation directors and sent spending soaring out of control.
As the grand jury reported last year, the aviation director should report to an authority board that isn't controlled by county hall. That wouldn't guarantee sanity in aviation policy but would give us a fighting chance. No authority would have turned over a mile-long terminal to American Airlines and let costs quadruple.
So welcome, Mr. Abreu, to the thrilling world of aviation in Miami-Dade County. Put your seat back in an upright position, buckle your safety belt and prepare for a turbulent flight.