New research from the University of Florida has found that approximately 54 percent of the 5,000 publicly-owned general aviation (G.A.) airports in the United States suffer from a dysfunctional organizational structure. This condition costs local airports an average of $20 million annually in lost economic impact.
“Some small airports are great, but many are economic ghost towns. What’s worse, because they’re owned by governments, they can linger in a zombie-like state for years,” according to Dr. Mike Jones, the principal researcher of the study. Jones feels this is a missed opportunity, and both politicians and flyers should be concerned.
Most Americans are familiar with the big commercial airports, but the vitality and success of smaller airports is equally vital, both locally and nationally. The most common G.A. activities include flying privately-owned airplanes, corporate and charter flights, police, air ambulance and firefighting activities, agricultural aviation (crop dusting and such), aerial surveys, photography, and flight training. The total economic contribution of G.A. airports is $100-$150 billion annually. If all of the under-performing airports in the U.S. were boosted to operate near their theoretical potential, their national impact would jump by about $35 billion.
The problem stems from the fact that airports are fiercely competitive businesses but 83 percent of the public-use airports in the U.S. are owned by cities, towns and counties. Research has found that governments have difficulties managing for-profit businesses. The “Board of Directors” for most community airports are politicians who know little about the science and economics of running an airport. As such, they ignore the airport’s operational needs and run it inexpertly, responding to public pressure rather than airport’s commercial or technical needs, ignoring industry best practices, and tolerating “good enough” performance.
“Governments are skilled at providing a basic level of service to everybody in a fair and impartial manner, like the Department of Motor Vehicles or the Post Office,” Jones notes. “Meanwhile, for-profit businesses try to delight a target group of customers. That kind of thinking just isn’t in the DNA of a government agency. They don’t have the organizational structures, the vocabulary, or even the reward systems to work like that.”
In short, to have a successful airport, Jones found it needs to be removed as far as possible from traditional government structures and processes. While at the University of Florida, Jones compared the management structures of 236 small airports in Virginia, North Carolina and Florida. Using public data, 129 airports were found to be operating inside other government departments, such as Public Works or a Parks Department. Another 91 other airports were run by independent and expert airport authorities. Jones’ study measured the difference in the performance of the two groups, along with controls for geographic, demographic and environmental factors.
Jones found that airports operated by independent authorities generated economic returns twenty times greater than multi-function airports. Even after controlling for population, economics, geography, and airport facilities, the average authority-run airport out-performed government airports by more than 60%. This raised the total economic impact of an average airport from about $30 million to over $50 million. In turn, this potentially creates hundreds of extra jobs and millions of dollars in new wages.
“Airports should be dynamic and energetic; they should be economic engines helping their communities,” Jones concluded. “They should be actively helping towns to grow, to create jobs and businesses, and help young people find careers.” The mismanagement that the research measured stops small airports from benefiting their communities.
“I have heard of dozens of examples of politicians making perfectly logical decisions which were completely wrong for an airport,” Jones said. “A great example is closing the FBO at 5 p.m., because all government offices close at 5 p.m. Another example is forcing the airport to use clumsy fund accounting systems which can’t even produce a profit and loss statement.” Jones knows of one airport in a northern climate that has to beg for snow removal services from the highway department.
“It should be no surprise that better management produces better outcomes,” Jones explained. “But what’s really new here is this study actually quantifies, in dollars, the havoc created by a bad organizational chart. It defines the cost of having a boss who either doesn’t care or understand about the business. Knowing how much money is lost can justify the effort and investment to change the system.”
There were a number of secondary findings which are intriguing in their own right:
• Not all airport authorities perform equally well; about one-quarter were not “active and engaged.” Jones characterized this phenomenon and found 12 specific behaviors which indicate a professional, well-run airport authority.
• Some airport authorities are staffed by the politicians themselves “which is a recipe for disaster,” according to Jones. Not surprisingly, these airports underperformed, leading Jones to develop a list of criteria for membership on an successful airport authority.
• Airports with volunteer “Pilot Advisory Boards” showed no performance improvement, which would indicate those volunteers are not able to persuade the politicians to make better decisions.
• Shared airport authorities are a bad idea. If a central organization manages several airports, the largest airport prospers and the subordinate airports whither.
• Privately-owned and/or “privatized” airports (where the operations are out-sourced to a private company) almost always under-perform.
More research is in the works, according to Jones. He’s hoping to expand the study to include states west of the Mississippi River to enhance the validity of the effects he found. He’s looking to determine if personality factors or leadership styles might have measurable effects, or if high levels of employee engagement might enhance airport success. He’s also considering a study to define criteria which might describe the most successful airport managers.
“Small airports are fascinating organizations and it’s odd that nobody’s looking at them,” Jones explained. “Maybe we can crack that code, and free up some of that $35 billion in lost economic impact and really make a difference to our communities.”
