Legislative Program Review and Investigations Committee

Chapter III

Management and Operations

Organization and Structure

Bradley airport has been owned by the State of Connecticut since 1948. It is administered and operated by the state Department of Transportation's Bureau of Aviation and Ports. Figure III-1 depicts the organizational structure for Bradley within the DOT.

Staff. In total, Bradley has 122 authorized DOT positions. The vast majority of Bradley personnel are located at the airport, although management and administrative staff are also located at DOT headquarters in Newington. The shaded boxes in Figure III-1 indicate those units where the staff are off-site. These include personnel responsible for financing, planning, and marketing. As the organizational chart also indicates, the two largest units, both on-site, are the airport maintenance and operations with 44 staff and the fire/crash and rescue unit with 35 staff. Only the DOT personnel for Bradley appear on Figure III-1.

Other staffing at the airport is done in one of the following ways:

• Contractually (e.g., the state police provide law enforcement services under contract);
• Staff employed directly or indirectly by the airlines (e.g., baggage handlers, ticket counter service); or
• Personnel hired by airport tenants (e.g. rental car agencies, retail and food stores.)

Operational reporting. The on-site, day-to-day operations are overseen by the airport director (currently acting director) who reports to the aviations operations director of the Bureau of Aviation and Ports. The operations director, who is also responsible for all six state-owned airports, reports to the bureau chief of Aviation and Ports, who reports to the Commissioner of DOT.

Thus, Bradley International Airport does not operate as an autonomous unit. Management decisions affecting the airport take place in the larger DOT and state context, and are governed by the same policies and procedures controlling DOT operations. For example, hiring consultants, leasing facilities, and bidding contracts must all go through the DOT selection process, including review and approval by the attorney general and state properties review board, where required.

Financial Operations

Bradley International Airport does not receive any appropriation of funds from the state. It is financed by revenue derived from rents, fees, and other income generated by airport operations, the issuance special revenue bonds, grants received under the federally supported Airport Improvement Program, and money obtained from Passenger Facility Charges (PFC) imposed on passengers departing Bradley.

Operating budget preparation and approval. Although not subject to the state's normal budget process, Bradley does prepare an annual budget detailing its operating revenues and expenditures. The development of the budget is governed by agreements between the state and the signatory airlines operating at the airport³, the Indenture of Trust statements associated with the 1982 and 1992 bond issuances, and state statutes.

The commissioner of DOT, signatory airlines, and secretary of the Office of Policy and Management (OPM) play key roles in the budget approval process. The General Assembly on the other hand has only limited decision-making authority. The legislature's role in Bradley's financial affairs is restricted to authorizing the dollar amount of the special revenue bonds that may be issued to finance airport capital projects.

The responsibilities of the commissioner of DOT, secretary of OPM, and the General Assembly with respect to Bradley's operating budget are defined in state statute (C.G.S. 15-101m). The authority of the signatory airlines to review the airport's capital and operating budgets is contained in agreements granting the airlines access to Bradley's facilities.

The financial director of DOT's Bureau of Aviation and Ports oversees the preparation of the initial working draft of the budget. Except for timing, the draft is prepared much like that of any other budgeted operation within DOT.

The process begins in November or December, when unit heads are asked to identify their needs for the coming fiscal year. During January, February, and March the budget staff work with airport personnel to craft a budget that meets the airport's needs. During this process an effort is made to stay within the gubernatorial guidelines being imposed on state agencies.

On or about April 1, after the DOT commissioner has approved the budget, it is sent to the signatory airlines, with copies forwarded to the secretary of OPM and the General Assembly. The signatory airlines have until late May to approve the budget. Typically, DOT staff meets with the airlines in late April to negotiate a final agreement.

If a majority⁴ of the signatory airlines does not approve the operating budget it can still be adopted by DOT. However, the airlines can force any increase in charges and fees contained in the budget to be held in escrow until the matter is resolved through legal or other remedies.

Capital improvements are treated differently than the operating budget. If the improvement affects airline rates and charges it must be approved by a majority of the signatory airlines within 50 days of their being notified about the project. There are exceptions to this requirement including improvements:

• required by the FAA or similar governmental authority;
• required to repair casualty damage to the airport;
• requested by an airline or financially responsible third party resulting in the development of a specialty facility to be leased by the airline or third party;
• to the airfield (including apron) costing less than $250,000 in the applicable budget year and not exceeding $500,000 in any fiscal year;
• to the terminals costing less than $75,000 in the applicable budget year and not exceeding $150,000 in any fiscal year; or
• in the HVAC of the terminal necessary to accommodate an additional airline.

According to DOT, the airlines have objected to only one capital improvement project at the airport. The project involved a new firehouse. The signatory airlines claimed the plans called for more square feet of space than FAA requirements. DOT resolved the issue by using a funding source (passenger facility charges) that did not require approval of the signatory airlines.

The program review committee identified two incidents where the signatory airlines objected to Bradley's operating budget. In FY 95, the airlines opposed the overall increase in the airport's budget from the previous year. In response, the DOT cut $406,302 from the $20.3 million budget and it was approved. The second incident occurred in the proposed FY 01 budget. The signatory airlines approved the budget only after an increase in the line item for the Bradley Airport Commission was eliminated.

Once the signatory airlines have completed their review, the secretary of OPM must approve the final budget within 30 days of the start of the state fiscal year. A copy of the budget approved by the secretary is filed with the General Assembly.

Operating revenue. Bradley's operations generate revenue in three broad categories including airline user fees, non-airline user fees, and passenger facility charges. Passenger facility charges will be discussed later in this section.

Airline revenue comes from charges Bradley imposes for using the airport's facilities. In calculating these charges relevant expenses are allocated to cost centers including landing areas, apron areas, and terminal space. Once the costs are determined, various methods are employed to distribute a portion of the costs to the airlines. In the case of landing areas, airlines pay fees derived from factors including the costs allocated to the areas, number of airport landings in the aggregate and by the airlines within the carrier's classification (i.e., signatory, non-signatory, general aviation, or military), and landed weight in the aggregate and by the airlines within the carrier's classification. Airlines pay a rental fee for use of the apron areas (space around terminals used to park aircraft.) Similarly, airlines are charged pro-rated costs for the terminal space they exclusively use.

The annual operating budget includes the estimated charges that will be imposed on each airline based on the allocation of costs and the airline's expected use of the airport's facilities. The fees and rents are collected during the year covered by the budget. In the next fiscal year, adjustments are made on an airline-by-airline basis in order to correct over- or under-charges in the previous fiscal year.

Non-airline revenue is derived from such things as automobile parking, interest on income, and the leasing of space and access rights to rental car companies, air cargo companies, restaurants, advertisers, retail concessions, etc. Revenue from these sources is crucial because over the last six years fees generated from the airlines have covered approximately 45 percent of Bradley's expenses.

Figure III-2 illustrates Bradley's operating revenues - exclusive of PFCs - from FY 95 through FY 00. The figure shows a steady increase in revenues (32 percent) over the period, with most of the growth coming from non-aviation sources. Year-to-year increases ranged from 3 to 9 percent.

Changes in non-aviation revenues were always positive, with increases ranging from 4 to 13 percent. Revenues from airlines varied considerably from year to year, ranging from a 12 percent decrease in FY 99 to a 15 percent increase in FY 00. The wide variation is due in part to the fact airline fees are adjusted retrospectively.

Bradley's operating income is deposited in an Airport Revenue Fund and transferred at the end of each month to the trustee (State Street Bank) overseeing the airport's bonds and their related obligations. The trustee distributes the money among a series of accounts established by the 1982 and 1989 bond indenture statements (see Appendix A). At all times there is on deposit with the State Comptroller enough money to cover the airport's projected expenses over the coming two-month period.

Expenses. Bradley's annual expenses can be divided among four major categories - personal services, contractual services, debt service, and other. Figure III-3 illustrates Bradley's expenditures from FY 95 through FY 00. The figure shows spending increased only 13 percent over the entire period. Annual changes ranged from a decrease of 2.6 percent in FY 98 to an increase of 6.3 percent in FY 99. Although the variation in overall airport expenditures is modest, Figure III-3 shows there is some fluctuation within the categories.

In FY 00, the largest expense category was personal services (salary and benefits) at $10 million. This was followed closely by payments on the airport's bond obligations ($9.7 million) and spending on contractual services ($9.1 million). The "other" category, which includes such things as the cost of commodities, energy, and utilities, accounted for $2.7 million in spending in FY 00.

The contractual category is diverse. It includes three large items: the amount charged by state police for providing airport security; Payment in Lieu of Taxes (PILOT) to municipalities; and building and landscape services. Also covered by this category are such items as staff training and travel, insurance, advertising, and equipment rentals.

Revenues less expenses. Figure III-4 combines Bradley's aggregate operating revenues and expenses and illustrates the relative size of the surpluses generated by the airport. The graph shows the size of the surplus has tended to grow. An analysis of the data presented in Figures III-2 and III-3 indicates this trend has been revenue driven.

Bonding. In 1981, the General Assembly restructured Bradley International Airport into a self-sustaining enterprise (P.A. 81-406) and authorized the issuance of $100 million of special revenue bonds. The bonds were issued by the state in 1982 and made payable solely from revenues derived in connection with the operation of the airport.

The purpose of the initial $100 million was to finance an upgrade of the Bradley's facilities including an expansion and renovation of existing terminal facilities, construction of a new terminal building, construction of access roadways and parking lots, construction of new aircraft aprons and taxiways, and upgrades of the airport's infrastructure. In 1987, the General Assembly authorized the issuance of a second $100 million in bonds. The proceeds from the sale of these bonds, issued in 1992, were used to refinance the bond obligations still outstanding from the initial issuance.

In total, the General Assembly has acted five times to change the bond authorization level applicable to Bradley International Airport. Table III-1 shows the history of the changes from 1981 through 2000. In 1991, at the depths of a state financial crisis, the General Assembly reduced Bradley's authorized bond level by $96 million. In subsequent years the authorization was increased to its present level of $294 million. As of July 1, 2000, the unallocated bond balance was $194 million.

In obtaining funds under its bond authorization, Bradley follows the same basic procedures applicable to any state agency under the state's bonding process. First, the state Bond Commission must authorize the issuance of bonds. Next, a bond counsel, financial advisor, and lead underwriter are selected to work closely with representatives of the State Treasurer, secretary of OPM, and commissioner of DOT to prepare the bond offering. As a part of the offering an indenture of trust is written that binds the state to follow certain procedures in operating Bradley while there are outstanding bond obligations. After the bonds have been sold the proceeds are available to Bradley. However, money from the sale is released for use only upon request to and approval of the Bond Commission.

An additional $55 million in special obligation bonds (not shown in the table) were recently issued to finance construction of a parking garage and surface parking lots at Bradley. This occurred pursuant to an agreement between the state and a private developer requiring the latter to construct, operate, and maintain the parking garage. If the developer fails to meet the terms of the agreement the garage will become the property of Bradley as it does automatically at the expiration of the 25-year agreement. According to DOT, the agreement, which runs concurrently with the bond obligations, guarantees sufficient revenue to pay off the bonds and provide additional money for the airport.

It should be noted, the $55 million in bonds does not count against Bradley's authorization limit. Under state statute (P.A. 93-307) bonds issued to finance a self-sustaining facility at Bradley and payable solely from the revenue of such facility and not the airport's operating revenue do not count against the statutory bond authorization limit.

Requirements associated with the airport bonds. The Indenture of Trust statements associated with each of the bond issuances spell out specific requirements the state must meet as long as it has outstanding bond obligations related to the airport. The indentures function as contracts between state and the trustee and bondholders. The terms and conditions outlined in the indentures are enforceable through the courts.

In terms of Bradley International Airport, the indentures provide direction in both the operational and financial areas. Their purpose is to make certain Bradley International Airport is operated and maintained in a manner that minimizes the risk of financial loss to the holders of the bonds issued to finance the airport's development. The requirements can be as broad as mandating the airport shall be maintained in good operating condition to as specific as requiring the rates charged by the airport to yield gross operating revenues at least equal to 125 percent of the debt. A listing of the key indenture requirements with respect to airport operations can be found in Appendix A.

Federal Airport Funding

As mentioned previously, Bradley also relies on two types of funding authorized under federal law, the airport improvement program, and the passenger facilities charges.

Airport Improvement Program (AIP). This federal program was established in 1982 through the Airport and Airway Improvement Act. The funding comes from taxes on passenger tickets and aviation fuel, and is collected by the federal government. The Federal Aviation Administration (FAA) uses the funds to support airport planning and development projects that enhance capacity, safety, security, and mitigate noise. There are three categories of funding under the Airport Improvement Program:

Entitlements or formula grants. These allocate funding to primary and cargo airports based on passenger boarding or cargo weight.

Discretionary grants. The majority of these grants go to the goals established by Congress, i.e., enhancing capacity, safety, security, and lessening noise. These funds are available for all types of airports.

Set-asides. These grants fund specific categories of projects - such as noise abatement or planning; certain types of airports like nonprimary commercial airports; or the transition of former military airports to general aviation or commercial airports.

Most of the AIP funds are allocated in the first category, via a legislated entitlement formula, based on population and passenger volume. Airports may use their entitlement AIP funding on capital projects, equipment, and some types of planning and environmental studies. AIP funds cannot be used for airport operating expenses or for debt financing.

Discretionary funding is approved by the FAA for particular projects as described above. The FAA has authority to allocate the discretionary and set-aside funding among airports and gives a higher priority to financing projects like noise mitigation and land procurement.⁵ Airports may use their entitlement funding for projects the FAA considers a lower priority for discretionary allocation, like developing terminals or roadways.

Congress establishes the AIP program goals, its broad funding categories, and program limitations, and the FAA administers the program on the basis of needs identified by the individual airports. Appendix B provides a diagram describing the AIP funding process.

The Airport Improvement Program has been a major source of financing for capital projects at airports. From 1982 to 1999, funding for all U.S. airports through the AIP program totaled $24.4 billion -- $12.8 billion in entitlements and $11.6 billion in discretionary funding. Congress has authorized almost $2.5 billion for FFY 2000 and $3.2 billion for FFY 2001, but actual funding obligations have fallen significantly short of authorizations in the past.

Bradley and AIP funding. Table III-2 below shows the funds Bradley has received through the AIP program - both entitlements and discretionary.

Appendix C lists Bradley's cumulative expenditures of AIP funds as of September 2000. The list shows AIP funding was spent mainly on Bradley's airside: ramps ($11.2 million); runways ($12.7 million); and taxiways ($9.5 million).

Comparison of AIP funding. Bradley has not benefited as much as other airports from AIP discretionary funding. The table below shows the cumulative amounts received under the two categories of AIP funding at selected airports.⁶ As the table shows Bradley ranked second to last among the airports selected, garnering about $56 million over the 17-year period; only the Albany, New York airport fared worse at $55 million.

Table III-3 indicates the total amount Bradley received over the 1982-1999 period in federal funding does not compare well with other airports. Because AIP entitlement funds are related to airport size, Bradley would be expected to fare better than smaller airports but not as well as larger ones. To get a better sense of Bradley's success in receiving federal grants relative to its size staff compared the amounts received in both entitlement and discretionary categories for 1999 and then analyzed those on a per-passenger basis, using each airport's 1999 passenger statistics. The results are shown in Table III-4.

Again Bradley fared worse than the other selected airports; it was the only airport to receive nothing in discretionary funding for 1999. Further, only Columbus received less than Bradley in entitlement funding for 1999.

The program review committee staff explored the comparatively low discretionary AIP funding with staff from FAA New England Region and DOT. The FAA indicated there is a limited amount of money for discretionary funding in each region. FAA also indicated that although Manchester and Providence (T.F. Green) are smaller airports than Bradley, they needed upgrading to accommodate congestion at Logan, and from a regional perspective that was a priority. In the opinion of the program review committee, Bradley does not appear to have competed aggressively for AIP federal dollars. The airport submitted no capital improvement projects resulting from its 1993 master plan that would warrant allocation of discretionary AIP funding beyond amount received. Further, DOT staff indicated it did not believe Bradley had been treated unfairly.

Passenger Facility Charges

Authorized in 1990 under the Aviation Safety and Capacity Expansion Act, passenger facility charges (PFCs) are imposed by individual commercial service airports that apply for and receive from FAA the authority to assess these charges. Beginning in 1992, airports could receive up to $3 per passenger (for each boarding, or up to $12 for a round-trip ticket) in PFCs to use for AIP-eligible projects, or for certain types of projects not eligible for AIP financing, like debt financing.⁷ The PFC program was designed to offer an additional source of revenue for airports to improve their facilities, and to enhance airline competition by providing a revenue stream less subject to airline control.

Under PFC statute and regulations, all air carriers serving an airport must be given an opportunity to comment on - but not veto - proposed PFC projects prior to the application being submitted to the FAA. A public comment period, during which any interested party may submit comments, is required after the application is submitted to the FAA. Large- and medium-sized airports that impose a PFC must, under federal law, return up to 50 percent (75 percent if the airport charges the new $4.50 PFC) of their AIP entitlement monies to the FAA for redistribution to AIP discretionary grants, or to small commercial and non-commercial airports.

Airlines collect the charge when the ticket is sold and are responsible for distributing the money to the appropriate airports. The airlines are allowed to keep $.08 of each PFC charge for administrative expenses. Airports control how the PFCs are spent. Airports may use PFC funding for any project allowed under the AIP program or for other projects that would not be allowed under the AIP program (like terminal gates) and financing costs associated with issuing municipal or other bonds.

From calendar year 1992 through calendar year 1999, airports nationwide collected $7.7 billion in passenger facility charges. Since the charges are collected on a per-passenger basis, the larger airports obviously receive more PFC revenue. Over the years, almost 70 percent of the PFC spending at airports occurred in three major project categories - terminals (34.4%), interest on debt (21.1%), and airport access (12.4%). Under the AIP program, these projects would either not qualify or would be given a low priority.

Passenger Facility Charges at Bradley. Bradley International Airport began imposing a passenger facility charge of $3 on October 1, 1993. Thus, revenues from passenger facility charges do not appear until FY 94. As mentioned above, passenger facility charges may be instituted for airport capital projects including those that preserve or enhance safety, capacity or security, reduce noise, or enhance airline competition. The FAA must approve projects and the length of time the fees will be in place for a given project. Since 1993, the FAA has approved 10 separate projects for which PFCs may be used at Bradley:

• new aircraft ramps;
• terminal B roadway system;
• peak mountain lighting;
• design and construction of glycol collection system (de-icing) (2 projects);
• equipment acquisition;
• taxiway J;
• remote ramp lights
• security fencing; and
• partial funding of a new firehouse.

Monies from PFCs are not included in Bradley's overall budget submitted to the Office of Policy and Management and the General Assembly, nor in the capital improvement section of the budget approved by the airlines. They are included in Bradley's improvement fund, and therefore must go through the Bond Commission.

Independent audits of the PFCs are conducted annually by Di Santo & Bertoline, P.C., and submitted to the DOT and FAA. PFC figures are shown for 1994 through 2000 in Table III-5 and Figure III-5 below. As these show, each year Bradley's PFC revenues exceeded expenditures, although the surpluses in each year vary from less than $1 million to more than $6 million. The revenue, together with interest, built a surplus of about $21 million over the seven-year period. It should be noted, however, that a number of the PFC projects are not yet closed; thus expenditures are still being incurred under those categories.

Management and Operations

• focus of the study is to evaluate if Bradley is optimizing its economic development potential. To develop that potential, it is assumed Bradley management must be able to act quickly and operate in a business-like fashion. A number of consultant reports were recently completed of Bradley International Airport (see Chapter IV on Governance in this report for a summary of the studies), and the crux of the conclusions reached is that Bradley is not a "world class" or even a "best in class" airport.
• committee concludes that Bradley management and operations are performed well in a number of areas, but several shortcomings prevent it from becoming a top-rated airport. This chapter identifies the areas where the committee finds Bradley is well managed, outlines findings of deficiencies and the contributing reasons, and provides recommendations for improvement.

Safety, security, and reliable service. The program review committee concludes Bradley performs well and is highly regarded in this area. Bradley clearly places great emphasis on staff that provide safety, security, and reliability. Of the 122 DOT positions allocated to Bradley, 88 persons are assigned to airport operations, maintenance, air crash and rescue, and security. The cost of these units accounts for about 75 percent of Bradley's total $10.5 million personal expenses (including fringe) in FY 00. In addition, Bradley contracts for law enforcement services with the state police. Forty-two state troopers are assigned to the airport at cost of $3.9 million in FY 00. Thus, Bradley's expenses are heavily weighted on safety, security, and operations.

Competitive Aspects of Bradley

There are two kinds of features that make an airport competitive. First, there are factors like geography and weather that are largely beyond the airport's control. Second there are those elements that can be shaped by the airport, including the skills of the people entrusted to manage, the strategies in place to increase business or development (e.g., tax policies), and business practices conducive to growth - factors that make people, airlines, and other businesses want to come there. While an airport's management team cannot directly control the first two factors, its actions can influence the effect the latter three have on the airport's ability to compete.

It is difficult to evaluate how competitive an airport is based on quantitative measures alone - they really only tell part of the story. What isn't apparent from looking at just outcomes is how the airport achieved them. For example, growth at an airport could be due entirely to population or geographic location (an airline hub) or it might be the result of a strategic plan, including economic development objectives, which an airport has developed and executed effectively.

Bradley's competitiveness is analyzed in Tables III-6 and III-7, (on pages 40 - 42) by arraying some quantitative measures with which airports can readily be compared. In addition, the committee contacted management of the airports in the selected sample to gain a sense of how each operates, and what contributed to the performance on some of the benchmark measures.

Passenger Growth. Bradley experienced moderate growth during the mid- to late-1990s. As Table IV-7 shows, Bradley's enplanements (boardings) grew 19 percent from 1993 to 1998. This placed it 9th out of the 14 airports compared. Bradley's annualized growth for the five-year period was about 3.8 percent, roughly equal to the average annual growth in passenger enplanements at airports nationally. In 1999, Bradley's passenger growth jumped to 12.8 percent, and growth during 2000 was about 16 percent.

"Southwest effect". One of the greatest factors spurring airport growth is the initiation of flights by Southwest Airlines (SWA). Southwest is a low-fare carrier offering flights (often to non-hub cities) at very low prices. This prompts other airlines serving the airport to lower their fares to compete. The resulting lower fares create substantial passenger growth at an airport, where people who would not have traveled before (or not through that airport) now can afford to fly. This has become known as the "Southwest effect".

The initiation of Southwest service is responsible for passenger growth at a number of airports in the selected sample. Southwest service seems to precipitate a period of unprecedented growth at each airport it enters. It is open for debate how much Southwest's decision to locate at an airport has to do with the airline's own business strategy, or whether an airport's efforts can influence that decision. Bradley made periodic contact with Southwest starting in the early 1990s, but those efforts were not successful.

Whatever the reasons, Southwest chose to locate first at T.F. Green (Providence) in 1996, and then at Manchester, New Hampshire in 1998. It located at Bradley in October 1999 (see Table III-7 for service dates at other airports). Thus, those two New England airports enjoyed a period of spectacular growth before Bradley.

To grow, airports typically must be competitive to the consumer: offer fares that compare well, or are lower, than other airports; offer flights to destinations where consumers want to travel; and provide convenient and reasonably priced airport services. Some of those measures are compared here.

Fares at Bradley. Table III-7 contains two columns related to fares. Column F is the average one-way fare during the last quarter of 1999 for all flights from that airport, a statistic compiled by the U.S. DOT. A variety of factors can influence this number such as the overall numbers of flights, flight destinations, and airlines serving the airport, but in general it provides a yardstick for comparing the competitiveness of airports. As column F in the table shows, Bradley's average one-way fare was $162, which placed it 9^th of the 14 airports compared. It should be noted that while Southwest would be included in this fare measurement for Bradley, it would not gauge the full effect of SWA, which only began service one month into the fourth quarter of 1999.

The three airports (BWI, Manchester, and Providence) with the lowest average fares all include Southwest among the airlines located there. On the other hand, the airports with the highest average fares (Cincinnati, Colorado Springs and Albany) had no Southwest service during the last quarter of 1999. Cincinnati airport, which enjoyed dramatic passenger growth (72% from 1993 to 1998), also had the highest average fare of the selected airports. Its growth appears to be linked to Delta's hub location there rather than to competitive fares.

Indeed, Cincinnati is one of the airports identified by the FAA as being non-competitive because it relies on one airline, Delta, for more than 50 percent of its enplanement activity. A new federal law (P.L. 106-181) requires that each of the airports considered non-competitive under this standard (only one or two airlines control 50 percent or more of passenger boardings submit a plan to the FAA, outlining the airport's efforts to become more competitive. Table IV-7, Column I, identifies which medium- and large-sized airports among the sample must submit a plan. Bradley, as the table indicates, is not considered noncompetitive under the law and therefore is not required to submit a competitiveness plan.

To compare average fares in another way, the program review committee used the lowest average fare listed for flights from each airport to Orlando, Florida, a popular destination. Those are shown in column G in Table III-7. (Palm Beach is not listed because of its close proximity to Orlando, and the committee substituted Tampa for Orlando from Providence because no Orlando flights originating in Providence were contained in the U.S. DOT database.) The lowest fare from Bradley was $105, which placed it fifth among the airports compared. It should be noted that, in the comparison group, the five airports with the lowest average fares to Orlando were within $10 of each other -from $95 to $105.

However, a closer examination of Bradley's fares historically, compared with those of other airports in the selected sample, shows that it has only been recently that average flight prices have dropped substantially at Bradley. Fares at Bradley and other selected airports from 1995 (where available) to 1999 are displayed in Figure III-6. As the figure indicates, only in 1999 did Bradley charges decrease to the $162 level. Prior to 1999, Bradley's average fares were not that competitive -- at $200 or above -- ranking it second- or third-highest among the 14 airports.

Indeed, high fares at Bradley have been a concern. According to Bradley Airport Commission (BAC) minutes, during the period of March 1997 and September 1997, Bradley management wrote three separate letters to airlines servicing Bradley protesting the high fares at Bradley. However, not until the initiation of service by Southwest in 1999 do fares drop considerably.

Flight destinations and markets. Bradley compares well in terms of flight destinations. It offers 41 non-stop or same plane destinations, ranking 6^th of the 14 airports in the selected sample. Another measure of competitiveness of airports is how many markets or cities it serves. One gauge of this used by the U.S. DOT is how many of an airport's markets rank in the top 1,000 city-pair markets (by number of passengers traveling that route). Figure III-7 shows the number of markets each airport serves that rate in the top 1,000.

As shown in the graph, BWI again appears to be the most competitive among the airports in the sample, with 51 of its markets ranking in the top 1,000. Nashville has 33 markets that rank in this category, while Indianapolis had 31. Bradley ranked 4th with 29 markets that rated in this category, which indicates Bradley's destinations appear to be popular cities where passengers want to travel. A major drawback of Bradley International Airport, however, is its lack of true international service (other than charter or flights to Canada). For years, Bradley management has attempted to bring international service (i.e., flights to Europe) to Connecticut. One of the problems appears to be that Bradley has not developed a comprehensive strategy for attracting international carriers to service Bradley, as noted in the Schiphol consultant report (p. 20-21). At Baltimore-Washington, airport management established a business objective of "2 by 2" (two international carriers by the year 2000), and enlisted the assistance of Maryland's governor and lieutenant governor to pursue potential carriers. This contrasts sharply with Bradley's hit or miss approaches such as changes in advertising forms, hiring an airline-marketing firm, and attempts to survey the business community's support for international service have yet to result in service to Europe.

Yields. Another measure of an airport's consumer competitiveness is the yield for flights originating at that airport. Yield is the individual fare charged divided by the number of miles for a particular flight. It is usually expressed in cents per mile. The lower the yield the better for the consumer, since they are being charged less per mile traveled. The higher the yield the more the airlines are charging each passenger per mile traveled. As column G in Table III-7, shows, the average yield at Bradley for the last quarter of 1999 was 14.59, placing it fifth among the airports in the selected sample. The yield at Bradley is almost 2.5 cents higher than Providence, which had the lowest yield, but is about 13 cents lower per mile than Cincinnati. This seems to further indicate that growth at an airline hub, like Cincinnati, does not necessarily mean it is due to lower fares, or that growth directly benefits the consumer.

On the other hand, consumers have benefited from lower yield (meaning lower fares) at Bradley over the past couple of years. As recently as 1997, the average yield at Bradley was 19.5 cents, before dropping to 15.9 in 1998 and to 14.6 in 1999.

Thus, while Bradley has made remarkable improvements in both fares and yields that certainly benefit the consumer and have contributed to passenger growth, those have been most dramatic since 1999, and are in large part due to the "Southwest effect".

Air cargo. Airports within the same geographic region compete for the area's cargo business just as they do for passengers. This is an important competition because the amount of cargo handled at an airport contributes not only to the airport's economic health, but also directly impacts the economy of the surrounding region.

The national statistics indicate Bradley does very well in this area, consistently ranking among the top 35 U.S. airports in the volume of air cargo handled. As Table III-8 shows, Bradley does even better among the 14 selected comparison airports, with the 3^rd best ranking in cargo activity in 1998 and 1999, and 4^th largest increase in cargo volume between 1998 and 1999.

Several factors impact an airport's ability to increase the volume of air cargo it handles. Among them are:

• location within a region were goods need to be distributed;
• access to good highway system connecting all points within the region;
• airport infrastructure;
• ability to handle weather conditions; and
• airport marketing.

Concession development. In addition to attractive fares and destinations, a competitive airport must offer its customers convenient services at good value. Bradley certainly does not provide "best in class" concessions, either in terms of the number or the level of goods and services offered. Bradley has only six food concessions, including two snack bars, compared to 15 food concessions at Indianapolis airport, which has a similar number of enplaning passengers, and 13 at Palm Beach airport, which has about 300,000 fewer enplaned passengers than Bradley. In fact, airports with far fewer passengers have a better selection of food concessions. Albany, for example, has about one-third the number of passengers as Bradley, but has seven food shops.

In addition, airport management consultants studying Bradley have noted the poor lighting and layout of many of the concession areas. The program review committee agrees the concessions are sorely lacking in appeal, as well as products and services.

In terms of revenues, Bradley ranks at the top of all mid-sized airports with respect to the money the airport gets from concessions on a per-passenger basis. However, as the Schiphol report cited, this is not because passengers at Bradley spend a lot at the concessions; that amount is actually low for an airport Bradley's size. It is instead because the contract Bradley has with Host International, (now Host Marriott), which was signed in 1984 and runs for 20 years, contains provisions financially beneficial to Bradley. The Host group is required to pay 12 percent of gross receipts on food and beverage, and 20 percent on alcoholic beverages, or an increasing base amount per year, whichever is greater. Currently Host is paying Bradley the base amount, about $2.2 million in calendar year 2000. The provisions of the contract encourage Host to adopt a captive rather than choice strategy -- depending that customers who require a meal or a snack at the airport are willing to pay a high price for limited offerings. It may also encourage Host to hire fewer workers than are needed and pay low wages, as implied in testimony by concession workers and their labor representatives at the program review committee's October 12, 2000, public hearing (see public hearing transcript pages 90-92). By contract, Host is also responsible for all renovations, upgrades in lighting and the like.

Bradley management, as with other areas of the airport, does not take a business development thrust -- expanding and upgrading for customer satisfaction -- with its concessions. Instead it is focused on: the predictability of the contract with Host Marriott; the substantial payments currently received from the contractor; and the belief that customer concerns will be directed at the vendor and not negatively impact the airport.

At Indianapolis airport, BAA (a subsidiary of British Airways) assumed management in 1995. BAA indicates it initially tried to work with Host Marriott to upgrade it concession choice, expand hours and institute street pricing (charging the same price for an item as would be charged in an off-airport location.) When BAA could not get full cooperation with Host, it terminated its contract. It now handles its own concession management, has expanded to 15 food concessions and upgraded the types of food offerings.

Intermodal Transportation

The Gallis study of Bradley (December 1999) indicates, "often airports provide a critical element to a region's competition for economic activity, requiring it to reach beyond its borders to form new sets of social, economic transportation, logistic and communication relationships". The program review committee finds that Bradley management does not "reach beyond its borders". The committee believes that the passive approach to on-airport planning discussed in the previous chapter also applies to Bradley management's approach to off-airport efforts, including those for alternate sources of ground transportation. It does not aggressively pursue policies or strategies that would grow the airport, but reacts to plans or policies, when presented with them, in a process-oriented rather than results-oriented fashion.

The program review committee believes Bradley needs to take an aggressive outcomes approach to intermodal transportation if economic development projects -- like Adriaen's Landing and the convention center in Hartford -- that depend on moving large numbers of people in short time periods, are to be successful.

Generating Capital for Airport Improvements.

Revenue bonds. Consultant reports, as well as the 1993 master plan, have been highly critical of Bradley's lack of space, its layout, and obsolete Murphy terminal. The committee believes the reports depict accurately the terminal conditions at Bradley. The situation has worsened since the arrival of Southwest. The airline's is located in the old International Arrivals Building (IAB), where passengers pack into small gate areas, clearly indicating a makeshift approach to accommodating the airline and its passengers.

As the briefing report indicates, Bradley has not issued bonds to finance new development since 1982. At that time, $100 million in revenue bonds were issued to fund a major upgrade, including the construction of a new terminal as well roadways and airside improvements. Between 1982 and 1998 no new bonds were issued to finance improvements. In 1999, the construction of a parking garage was begun and financed with special obligation bonds. These bonds, to be paid back entirely with parking revenue, do not affect the $294 million in airport-revenue bonding the legislature authorized for Bradley. Bradley is currently putting a financial package together to go to the bond market in February 2001 for approximately $140 million.

Thus, including the upcoming issuance, Bradley has only twice sought to finance major capital improvements through the sale of bonds since its creation as an Enterprise Fund in 1981. It should be pointed out there is no evidence that during this period Bradley explored any other way of new construction or improvements. Instead, Bradley is just now ready to move ahead with it plans to build a new terminal, even though it was recommended seven years ago in the 1993 master plan.

Airport improvement funds. As discussed earlier in this chapter, Bradley has not applied for any discretionary funding under the federal Airport Improvement Program since 1993, and thus has not fared as well as other airports in garnering federal financing. DOT staff state the regional FAA indicated Bradley had no projects that would qualify for discretionary money when it developed its master plan, and thus Bradley did not file applications. Instead, Bradley kept its financial belt tightened, and operated in a maintenance mode.

The FAA New England region also wrote a letter stating "because Bradley has the necessary infrastructure and has developed and maintained the airport in an efficient and self-supportive manner, the state [DOT] has been able to rely on their entitlement dollars and not required the level of discretionary moneys [sic] that other airports have needed."⁸ The program review committee believes that while this is testament to Bradley's ability to live within its means to maintain and operate its airside, without reliance on discretionary federal money, it is another indication of Bradley's non-competitive attitude toward development and financing. This may have been the acceptable approach prior to airline deregulation but, in the competitive post-deregulation era, Bradley management needs to assert itself to obtain as much federal financing as possible. Indianapolis for example, meets at least monthly to go over its needs with its regional FAA office, and often enlist the support of its congressional delegation to assist with funding requests.

Passenger facility charges. PFCs are federally authorized charges an airport may assess on passenger tickets to maintain and upgrade airport facilities. As discussed earlier in this chapter, Bradley has been authorized to collect passenger facility charges since late 1993. Bradley collected more than $30 million since FY 94, and has expended about $13 million for projects approved for PFC money, the costliest being the glycol recovery system (anticipated to cost $14 million when completed). Bradley has been running a surplus from the PFCs, which are to be used for the new terminal once that project receives necessary FAA approval.

Business Development

Business plan. Bradley does not have a strategic or business plan as pointed out in the previous chapter. The concept of such a plan, while not yet widespread among airports, is not a new one. It is apparent from Bradley's organizational chart there is currently no unit with the expertise to develop such a plan. DOT has acknowledged its lack of a strategic plan for Bradley, and contracted with PB Aviation, an airport consultant, to develop one along with a master plan for Bradley.

Interaction with business. DOT has not actively worked with major business interests to respond to and shape the region's growth. Bradley management could have initiated working with business leaders to initiate a business plan or strategy for Bradley to help shape the region's economic future. Instead, the Governor's Council on Economic Competitiveness and Technology, and its subgroups, commissioned three separate studies that all concluded Bradley does not have a vision for economic development and lacks an entrepreneurial culture.

Bradley management has also not worked sufficiently with state agencies like the Department of Economic and Community Development (DECD) or the Connecticut Development Authority (CDA) that could use the airport as a tool to bring in new businesses or expand existing ones. While financial incentives of approximately $35 million were made from DECD and/or CDA to locate and expand Bombardier, United Parcel Services, and Aviation Facilities Company (AFCO) at Bradley, cooperative efforts on the part of all agencies may well produce even greater results. For example, Indianapolis Airport worked with the city of Indianapolis and the state to support financial incentives of almost $800 million for a United Airlines maintenance facility, FedEx sort facility, and FedEx hangar facility, creating thousands of jobs and generating hundreds of millions of dollars to the economy.

Creating a commercial center that creates jobs, opportunities, and wealth. Bradley management has not assessed, with any frequency, the economic value of the airport to the region, or marketed and promoted the airport's value. As reported in the briefing document, the last economic impact statement was developed in conjunction with the master plan in 1993. DOT contracted with a consultant, Wilbur Smith Associates, in June 2000, to conduct an economic impact study. The results -- which indicate Bradley's economic impact on the area including direct, indirect, and induced benefits is currently about $2 billion annually -- were released at a press conference on December 6, 2000.

However, the program review committee believes a seven-year interval between economic impact assessments allows too much time to lapse. If the assessments were done at regular intervals -- for example, every two years -- Bradley management would be able to assess whether the airport is contributing to regional growth to the extent expected, and gauge Bradley's impact trends with other airports of similar size and in this region.

The economic impact study conducted by Wilbur Smith assesses present impact only and makes no evaluation of the impact based on growth estimates. The Connecticut Center for Economic Analysis (CCES) performed an independent analysis, (not at Bradley's request) on growth at Bradley using its computer model - Regional Economic Models Incorporated (REMI). The results concluded that for every 1,000 increase in passengers: 2.23 new jobs are created; the gross state product rises by $75,550; and personal income increases by $102,707.

The committee believes that Bradley should be initiating such evaluations of the airport; working with entities like the CCES to assess Bradley's value to growth in the region and promote it that way. Baltimore-Washington constantly uses the economic value of the airport to the region and the state economy (about $5 billion) in its marketing of the airport. Likewise, Indianapolis in its marketing material to customers stresses the billions of dollars the airport, its customers, and the 110 businesses located there generate to the economy.

Other efforts. The Bradley Development League (BDL) is a non-statutory consortium, comprised of representatives of towns adjoining the airport, aimed at furthering the economic development of the region surrounding Bradley International Airport. Participants include the economic development directors from each of the four towns. Bradley International Airport has no economic development director. The marketing director for Bradley tries to attend the BDL meetings and work with BDL, according to the group, but marketing is only one function of business development, and marketing resources are thin at Bradley. Economic growth in the towns surrounding Bradley - as measured by the growth in each town's grand list from 1993 to 1998 - has been only tepid. The growth for the period has ranged from 5.7 percent in Windsor to 9.5 percent in Suffield. Some towns in the state enjoyed growth in their taxable property as high as 50 to 90 percent for the period. A wide variety of factors contribute to a town or region's economic development, but the sluggish growth in the towns surrounding Bradley suggest to the committee the airport has not capitalized on its economic significance to the region.

According to a 1999 study on Bradley's development potential by Hagler Bailly, Inc., an airport consultant in Arlington, Va., there are approximately 2,600 acres of developable land in the Bradley airport environs, but only about 200 developable acres are actually located on the airport site itself. Thus, it becomes imperative for Bradley to work with its neighboring towns, and the Bradley Development League, to realize the airport's development potential to the area.

Findings

• Bradley devotes sufficient resources to safety, security and airside operations
• Bradley compares well with other cities in terms of the number of favorable destinations
• Bradley lacks a comprehensive, persistently applied strategy to obtain international service
• The addition of Southwest Airlines has helped Bradley reduce its average air fares to more competitive levels and increased passenger flow through the airport
• Bradley's food concessions generate more revenue per passenger than other airports, but because of required vendor payments, not because of wide selection and value pricing to the customer
• Bradley has not sought financing for major improvements or expansion of passenger facilities in more than 15 years, choosing instead to pursue a maintenance strategy over a build and grow approach
• Bradley does not have a strategic or business plan
• Bradley has taken a passive approach to economic development, working with external parties only when approached for assistance

Management and Financial Constraints

The deficiencies discussed above are products of a number of constraints both external and internal. Those constraints may have, at one time or another, been put in place to ensure a system of checks and balances for Bradley. The committee staff believes the result has been that Bradley is treated like any other state agency, ensuring adherence to policy, process and procedures, while losing sight of the ultimate goal of economic development at the airport and beyond. Some of the constraints and their impact are discussed below.

A number of constraints negatively impacting Bradley were outlined in the briefing report and are listed in Table III-9.

External Constraints

Budget. When Bradley International Airport was statutorily authorized as an enterprise fund in 1981, it was required to operate on its own revenue, and was removed from the regular budgetary process. Thus, Bradley's budget is not a part of the DOT's budget, and is not required to receive approval from the legislature. However, the airport's budget as indicated in the briefing report must receive approval from the Office of Policy and Management. While Bradley management indicates OPM has always approved the budget once the airlines have accepted it, the state budget agency applies the same budget development guidelines and increase restrictions on the airport as it does with other state agencies. But Bradley's costs are not paid for with tax dollars, and the ultimate goal of growth at Bradley may be sacrificed for the sake of staying below the standard budgetary increases.

Cap on hiring. In addition to requiring compliance with OPM budget development guidelines, Bradley must also comply with caps on hiring like any other state agency. In fact Bradley has been frozen at its current 122-position level since 1994. Further, when vacancies occur, approvals for the positions must go through the regular personnel processes, adding time to the process and imposing a state bureaucratic focus on the descriptions, functions, and skills required for airport positions.

Law enforcement contract. Over the years, Bradley's commitment to contract with the state police has also become a constraint. When first begun, the state police were to act as overseers of the airport police, with Bradley paying for half of the state police budget there. Now the state police has more than 40 sworn personnel at Bradley, and since 1992, the airport has paid for the entire Bradley troop budget, the equivalent of 37 percent of Bradley's own personnel budget.

Bond commission approval. The bond indentures entered into in the early 1980s require the state bond commission to approve all capital improvement expenditures, even when no bond funds are involved. This requirement will likely be in effect until 2004, when the current bonds can be redeemed. While a perceived restriction only (the Bond Commission has always approved a Bradley request) it does add another bureaucratic hoop to accomplishing any capital improvements at Bradley.

Bonding authorizations. Having the legislature approve bond authorizations can be an obstacle in capital improvement planning and implementation. Since the bonds issued for Bradley are based on airport revenue, and not the general obligation of the state, the committee believes the authorization ceiling should be removed. The financial markets, and not an arbitrary cap, should establish what debt Bradley is capable of assuming.

Other outside approvals. Section 13b-42 of the Connecticut General Statutes states "with the approval of the Attorney General, the Secretary of the Office of Policy and Management and the State Properties Review Board, the commissioner may sell or lease or grant any interest in any airport or airport site or any part thereof". While Bradley is a state property, the program review committee believes requiring Bradley to submit to the same cumbersome processes for lease approvals as any other state agency is a severe constraint. Bradley's enabling legislation as a separate Enterprise Fund should release the airport from compliance with some of the more cumbersome restrictions meant to protect Connecticut taxpayers but which do not serve that purpose with Bradley since the airport pays its expenses with user fees, not taxes.

Another external constraint is the requirement Bradley use DOT's procurement system when purchasing goods for the airport. This can delay obtaining goods needed for the airport, further restricts Bradley's ability to operate like a business, and, according to Bradley management, does not reduce its purchasing costs.

Authority to impose fees and rates. Another constraint affecting Bradley is interference through the political process with the airport's ability to impose fees and rates as authorized in C.G.S., Sec. 15-101m. In 1997, off-airport parking operators were successful in having airport-set fees reduced through legislation (P.A. 97-269). The program review committee believes Bradley management's legislative authority to impose fees and rates at the airport should not be undermined. If parties dealing with Bradley management believe they can work out a "better deal" in the political arena, Bradley leadership is somewhat handicapped in managing the airport.

Internal Constraints

The external constraints discussed above certainly affect Bradley's ability to perform in a quick and business-like fashion. But, the committee believes Bradley management has not chafed against operating under such limitations, and in fact imposes its own set of confinements that affect the focus and growth of Bradley.

Organizational structure. As discussed earlier in the chapter, the airport is considered just one of many units within the Department of Transportation. Its organizational chart (see Figure III-1 on page 26) shows the emphasis is on maintenance, security, and airport operations. Further organizational and structural characteristics reveal Bradley's status within the DOT:

• the organizational focus of Bradley International Airport is to operate it as a transportation facility;
• key policy and management decisions are made off-site at DOT headquarters and not at the airport;
• there is not a division (or even a unit) responsible for business development in the organizational structure at Bradley;
• Bradley has no personnel designated to conduct planning;
• Bradley has no personnel designated to community relations or community development;
• Bradley has a unit responsible for project management but no unit responsible for project development; and
• Bradley has no economic development director (even though surrounding towns do).

Bradley is also treated like any other DOT unit in that it must conform to DOT policies and procedures:

• When selecting a consultant or contractor, Bradley follows the DOT selection process outlined in C.G.S. Section 13b-20b to Section 13b-20k. These procedures are time-consuming and cumbersome, and contrary to the spirit of the legislation establishing Bradley as a business enterprise so it could respond quickly to opportunity and challenges. In addition, this type of selection process defies what is considered "best practices" for airports, where airports actively solicit the best consultant or contractor based on specific performance at an agreed upon amount.
• In addition, the BAC, which has members with some expertise in airport management, offered its assistance to Bradley management in helping write requests for proposals (RFPs) for certain projects, but their input was not accepted.
• The job descriptions for the upper management of Bradley and the Bureau of Aviation and Ports are heavily weighted on the airport operations side rather than on business and development. For example, the aviation administration position duties emphasize ensuring preparedness of airport to respond to emergency situations; "directing and coordinating aviation activities including airside and landside operational activities, security and emergency services; and mutual aid/protocol (for emergency services) agreements; negotiates and manages airport capital improvement contracts and major equipment purchases". The duties do not include a business development perspective to grow the airport.

Marketing

Resources. DOT allocates little staff or monetary resources to marketing. It also has no written marketing or business development plan. Neither does it have any type of expected growth benchmarks by which to measure its own success. Bradley marketing has 2.25 DOT positions, and expends about $250,000. In contrast, on a per-passenger basis, Baltimore-Washington spends about eight times what Bradley does and Indianapolis expends about 1.5 times.

While resources allocated to marketing are extremely limited, the expectations of the job are not. For example, the marketing director's job description contains the following duties:

• formulate programs to maximize revenue on the airport;
• coordinates, plans, and manages aeronautical development activities;
• administers existing and potential airline operating agreements;
• lease concessions and other contractual agreements involving use of state airport property;
• recommends terms and negotiates leases requiring multi-million dollar investments to realize maximum revenues;
• initiates and develops special studies, reports and analysis with respect to airline industry trends on traffic, schedules, routes and fares.

It appears to the committee that all business development and implementation responsibilities have been assigned to one person. In the committee's estimation, this is unrealistic for one person to accomplish and makes success impossible. Business development is more than marketing. There has to be adequate and knowledgeable staff to: be familiar with the area's development potential, both on and off airport; understand development programs and potential sources of capital, both locally and within state economic development agencies that could attract growth. There also must be adequate and capable staff to market the area and build incentives to potential business and industry.

Marketing strategy. Without a marketing or strategic plan, Bradley's objectives for growth are not articulated, its staff are operating without a guide for development, and Bradley's performance - other than it makes a profit-is difficult to measure. If no goals and objectives are established, it is easy for management to accept no growth or minimal growth at Bradley as normal course of business. For example, the February 1998 Bradley Airport Commission minutes reflect that 1997 was a "record year" for Bradley. Technically, that was true; however, the actual passenger growth rate for 1997 was .8 percent compared to a 5.3 percent increase in the gross state product, and a rise of 6 percent in personal income in the state. It appears Bradley was not capitalizing on the state's economic recovery as it should have.

Customer satisfaction. Another "best practices" approach to operating a competitive airport is to ensure the customer is satisfied. Airport management must consult customers about what they like, but also what they would like to see changed. As noted in the September 2000 committee briefing report on Bradley, Indianapolis International Airport is an airport that employs this "best practice", surveying about 10,000 customers a year and using the resulting information to change and upgrade airport operations and facilities.

Bradley began to adopt this practice in 1999. It conducted two extensive survey asking customers what they liked and didn't and also what they would like to see. During calendar year 2000, Bradley conducted six airport-sponsored surveys, but the recent surveys concentrate on demographics and generally what the customers indicate they like about Bradley compared with other airports (e.g., closeness, road systems, flight times, etc.).

The committee believes it is not clear that Bradley intends to use surveys as a method to discern real customer satisfaction, or only as a tool to collect passenger demographics and gauge broad airport services. The committee concludes to truly be a "best practice," airports should survey and measure what customers would like to see improved, and incorporate those into business and facility planning.

Findings

• Bradley does not have a business development approach in its management and operations and is not organizationally structured to carry out such an approach.
• Bradley does not devote the staffing and resources needed to business development, nor does it have staff with the knowledge, skills, and experience to implement such an approach.
• Bradley has no goals and objectives targeted at airport growth, nor any measures for tracking them.
• Bradley's passenger growth in the 1990s was positive but sluggish, behind the increases in the state's overall economy. Only in 1999 and 2000 has growth picked up substantially, due to introduction of Southwest Airlines service, resulting in lower fares at Bradley.
• Bradley's enabling legislation, creating it as enterprise fund, intends that Bradley operate differently than other state agencies, dependent on it own revenues for capital improvements and operations.
• Despite intent of legislation, Bradley is operated like any other DOT unit, with the same department- and state-imposed constraints on budget increases, hiring freezes, bonding approvals, contractor and consultant selection procedures, and contracts and lease agreements.
• Bradley is operated like a transportation facility and not a business. It does not view itself in competition with other airports in the region for passengers, business development, or funding.
• Bradley's key decisions are made offsite. Most airport management teams are located on airport.
• Bradley's operations are process-oriented -- assuring that proper policies and procedures are followed - and not results-oriented. Bradley management is used to functioning in this environment, and has not sought to change these process-directed constraints
• Bradley marketing is in need of significant resources. It has allocated too many responsibilities to the marketing director; they cannot be successfully accomplished by one person.
• Bradley has begun a practice of gauging customer satisfaction, but it needs to focus on what customers want and work that into its business practices and facility development.

Recommendations

8. The program review committee recommends that Bradley International Airport be reorganized to add a business development approach. It shall establish a business development division in its organizational structure. The division shall be headed by a director of business development with knowledge, background, and skills in economic development and business expansion. The business development division shall be responsible for non-airside operations including: retail and concessions; on- and off-airport economic development; airline and passenger development; contract negotiation; airline and lease agreements; marketing and public affairs; community affairs; and customer relations. (See Appendix E for proposed organizational chart.)

The program review committee review also recommends that Bradley establish a planning and project development division. It shall have responsibility for coordinating development of the airport's master plan, strategic and business plans, and their implementation.

The committee also recommends that Bradley significantly upgrade the resources (both in number of qualified personnel and financial resources) allocated to perform the duties involved in business and economic development, marketing, and planning and project development.

All staff included in the Bradley Enterprise Fund, and who spend half time or greater on Bradley functions shall be located at Bradley International Airport.

The program review committee recommends Bradley management and staff operate in an entrepreneurial fashion, where they can respond quickly, and seize opportunities for growth. To do that, Bradley shall be exempted from compliance with the following:

• legislative authorization in order to issue revenue bonds;
• state-imposed budget guidelines or hiring freezes;
• DOT internal selection processes for contractor and consultant selection;
• DOT and state procurement procedures for purchasing; and
• DOT and state personnel functions for top management positions including development of position descriptions and selection of candidates.

Further, the indentures for any new bond issuance should not require bond commission approval each time capital improvement funds are expended for Bradley.

The program review committee also recommends Bradley establish goals and objectives for growth, infusing a competitive approach to running the airport.

³ Signatory airlines are those airlines that in the early 1980s signed agreements with the state necessary to secure airport revenue bonds for Bradley, and include American, Business Express, Continental, Delta, Northwest, TWA, United, and US Air.

⁴ Majority is defined as: at least 50 percent in number of the signatory airlines which account for more than 50 percent in aggregate aircraft arrival weight landed in the immediately preceeding calendar year.

⁵ Specific projects may be allocated to any of the following: runways; taxiways; land; aprons; roadways; safety; terminals; lighting; noise; miscellaneous; planning; state block grant; security; buildings (not terminals); weather equipment and navigational aids.

⁶ The program review committee selected 13 airports with which to compare Bradley on a number of different factors. Elements used to select the other airports included similar size or governance to Bradley, recent growth, airports located within this Northeast region, or in close proximity to larger airports (like Bradley is to Logan and NY airports).

⁷ Congress, in April 2000, authorized (P.L. 106-181) an increase in the passenger facility charge up to $4.50 effective July 1, 2000; however, because airline computer systems record PFCs in whole dollars only, the new charges have not yet become effective.

⁸ September 21, 2000 letter from FAA New England Region. p. 2.

Return to Year 2000 Studies

Return to Table of Contents

Return to Top