"Indiana airport's top executive departing on a high note"

Sunday, September 7, 2003

Airport's top executive departing on a high note
By Urvaksh Karkaria
The Fort Wayne (IN) Journal Gazette


When C.T. "Skip" Miller first arrived at Fort Wayne International Airport in
the mid-1980s, he found himself performing CPR on a dying airport.

Miller, who this week begins heading Louisville International Airport,
refers to his first years as director of operations as being "in the midst
of a dire situation."

Lighting systems at the airport were failing, and some airlines were
threatening to yank aircraft because of severely deteriorated pavements,
recalled Miller, who on Friday left as executive director of the Fort
Wayne-Allen County Airport Authority.

"It was falling apart," Miller said about the airport. "We were almost at
the point of losing our operating certificate as a commercial service
airport."

Nearly two decades later, the airport is busier and in better shape.

"Virtually 95 percent of that airport has been completely rebuilt," Miller
said. "It was not an overnight process and not one that was accomplished
easily."

Tim Haffner, airport authority board member, praised Miller's tenure at Fort
Wayne International.

"Much of what has been accomplished at the airport can be attributed to Skip
and his leadership," Haffner said. "Skip has proven himself to be an
exceptional manager of both our facilities and our operations."

Fort Wayne International has weathered the recent aviation slump with
resilience. While passenger traffic is down about 20 percent compared with a
record year in 2000, the airport is doing better than the national average.

With about 307,000 people boarding flights at Fort Wayne annually, passenger
traffic is up 1 percent compared with last year. The nationwide average is
down about 2.5 percent, Miller said.

The local airport's ability to weather the storm hinged on aggressive
marketing and diligent cost-cutting. Fort Wayne International's 5-year-old
comprehensive marketing program aims to get people to consider flying out of
Fort Wayne, Miller said.

"It's beginning to bear fruit," he said. "People are checking fares in Fort
Wayne first. They are giving us the opportunities that they didn't give us
before by just automatically driving to competing airports like
Indianapolis."

Favored by business travelers - who account for about 60 percent of the
traffic - the airport has been somewhat cushioned. Business travelers are
less price sensitive than leisure travelers.

The airport also has corralled its spending. The airport's proposed budget
for 2004 is nearly 16 percent lower than this year's forecast, he said.

Miller offers an example of the cost savings culture. Instead of purchasing
a new snow broom for the runway - which would have cost about $300,000 - the
airport had its existing unit refurbished, saving more than $170,000, Miller
said.

But while the airport might have lifted off, its ascent is hardly over. The
challenge is to keep the airport moving forward and attracting new business,
Miller said.

Recent wins include luring Shuttle America to relocate its headquarters from
Windsor Locks, Conn., and getting Pinnacle Airlines to open a maintenance
hub. Both projects unfolded within the last year amid an aviation recession.

"It's very difficult to get the airlines to do much of anything right now
because they are so spending-conscious," he said.

Holding onto viable routes will be the biggest headache for regional
airports such as Fort Wayne's, said Jack Williams, airline analyst at
Georgia State University in Atlanta.

As their balance sheets bleed, airlines look to control costs by cutting
back or eliminating air service, especially to regional airports, Williams
said.

That's already happening. Starting Nov. 1, American Airlines will pull out
of Fort Wayne where it operates four daily roundtrip flights to St. Louis -
the fallout from cost cutting measures.

A reduction in air service increases the inconvenience to passengers and
costs the airport revenue, Williams said.

Airlines are also more likely to cut or reduce service from regional
airports than from a busier hub airport such as Chicago O'Hare, Williams
said.

"The regional airport is like the end of a finger and the hub is the palm,"
he said.

Regional airports face the threat of cash-strapped airlines seeking
concessions such as more favorable take-off and landing times and reductions
or exemptions in taxes and airport fees, Williams said.

Airports also have to wrestle with increased security and the costs
associated with it.

"Those are fixed costs that the airport is going to have to shoulder,"
Williams said.

Fort Wayne International needs to ensure it has physical room to expand to
accommodate future growth in passenger traffic, Miller said. Under an
aggressive land acquisition program, the airport has doubled its acreage in
the last 18 years and has budgeted about $750,000 in 2004 toward that end,
he said.

Looking forward, Miller is optimistic about better days ahead.

"We're beginning to see pockets of prosperity begin to redevelop in the
industry," Miller said. "And as those pockets of prosperity spread, you'll
see the industry begin to recover."

Fort Wayne, he added, is poised to take advantage of that recovery.

Being flanked by larger airport hubs in Chicago, Indianapolis and Detroit
might make the local airport unattractive to some airlines. Miller argues,
however, that airlines have an advantage in picking the less competitive
Fort Wayne airport.

"Indianapolis is a low-fare, very marginally profitable marketplace to do
business in," Miller said. "When an airline looks at Indianapolis, they have
to look at being able to serve that community on razor-thin profit margins."

Fort Wayne, on the other hand, can sell itself as a market that offers
larger profit margins because it's a regional airport primarily serving
business customers, he said.

Indianapolis International Airport is a low-fare airport and "we attract a
lot of passengers because of that," airport spokesman Dennis Rosebrough
said.

And despite the low fares and competition among airlines, air service at the
Indianapolis airport has expanded and continues to grow, he said.

Miller said competition is needed to reduce some of the higher fares without
lowering fares so far that it would become unattractive for the airlines.

"As always, there's a balancing act," he said. "What you need is some key
competition that brings (prices down) but doesn't drive off the existing
players in the marketplace."

The airport is looking for a discount airline such as JetBlue.

"We have had some dialogue with a couple of carriers," he said, declining to
disclose names. "We're trying to find a right fit for the market."

Miller advocates the continued development of the airport's cargo and
commercial business.

For now, the airport's 450-acre Air Trade Center boasts a single client:
Kitty Hawk. The air cargo carrier, which employs about 325 at its Fort Wayne
hub, only recently found its wings after being grounded in Chapter 11
bankruptcy for nearly 2 1/2 years.

Along with more cargo carriers, the airport has its sights on firms, such as
warehouses and aviation maintenance businesses, that require proximity to an
airport. Light manufacturing operations that need just-in-time delivery and
air transportation are also being targeted.

Miller sees opportunity everywhere he looks.

"You always sleep," he said, "with one eye open."

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