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Airport ponders radical ideas to boost revenue

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The Indianapolis Airport Authority is poised to pull out all the stops to maximize revenue in the face of declining travel.

Imagine attending a farmer’s market—not along a country road, but atop the roof of the parking garage at Indianapolis International Airport.

John Clark “How do we reinvent ourselves?” asks Airport Authority CEO John Clark.

Or, without a plane ticket, being able to walk back to the secured gate area of the airport to shop or to have lunch.

Airport officials might even rent out their expertise to other airports or to businesses.

These are among a myriad of ideas—revenue-generating ones—being considered by airport staff as part of a five-year strategy to make the airport less financially dependent on the whims of passenger traffic.

It’s a far cry from airport planning over the last several years. That period was dominated by big capital projects, whether taxiways, runways or the culmination of decades of planning in the form of the $1 billion midfield terminal that opened in 2008.

Since then, passenger travel has ebbed, falling more than 8 percent here. At the same time, the airport had to begin paying some $40 million a year toward debt on the palatial facility. Cutting staff and utility bills goes only so far.

“How do we reinvent ourselves?” John Clark, CEO of the airport authority, said, describing the essence of the authority’s 2010-2015 business plan.

It’s received scant attention beyond the airport’s executive offices perched above the terminal’s Civic Plaza. Rather, the buzz lately has been the signing of a $1.3 million contract with a consulting firm to study how best to redevelop more than 80,000 acres of airport property, including the old terminal and its vast parking areas, to the northeast, and private land surrounding it.

The plan suggests potential uses for some of that property as well as ways to squeeze more revenue from the new terminal.

While the land-use study won’t be completed until later this year, the authority’s strategy hints at some potential non-airline revenue. Ideas include a gas station/convenience store, a grocery, an immediate-care health clinic, a “restaurant/casino” and fitness facilities.

airport factsAll are things area residents—not just passengers—might use, Clark said.

Community destination

Since arriving last year, Clark, the former head of Jacksonville, Fla.’s aviation authority, has spoken often about making the airport a destination for non-passengers.

Late last year, coinciding with the holidays, the airport hosted a number of small concerts and other events on a test basis. They weren’t necessarily moneymakers, but “we got good feedback,” Clark said.

In that vein, the strategy contemplates more ambitious possibilities, including concerts atop the 500,000-square-foot roof of the airport’s parking garage—a roof space larger than the flight decks of two modern aircraft carriers.

The garage roof has been closed amid sparse use and to reduce maintenance costs. But it could be ideal for other events, such as car shows, swap meets and seasonal festivals, airport officials say.

“If we create a venue of entertainment, then the shopping becomes a byproduct of it,” Clark said.

The more people spend to shop and dine, the more the airport collects in fees from concessionaires.

Even the sanctum sanctorum of airport property—the post-security-gate areas—are being looked at for non-aviation uses. Clark said the authority last year proposed to the Transportation Security Administration a pilot program that would allow visitors without plane tickets to access retail and dining areas in the concourse gate areas.

“That was before the underwear bomber. That was unfortunate,” Clark said of the Nigerian passenger who unsuccessfully attempted to ignite an explosive in his underwear on a Detroit-bound flight late last year, sending the TSA into a tizzy of re-evaluating security measures.

Still, Clark said he thinks the TSA might yet warm to the idea as the agency gets its security procedures settled. Only a handful of airports have such pilot programs in place, including Pittsburgh International Airport.

Overnight guests of the Hyatt Regency Hotel at that airport can get a “non-flier” pass to go beyond security for shopping and dining, said JoAnn Jenny, spokeswoman for Pittsburgh International, which built a shopping-mall-like terminal in the early 1990s. Imagine Greenwood Square Mall with shoppers toting carry-ons.

Such pilot programs to get more people to post-security concessions makes sense, said Pauline Armbrust, publisher of Florida-based Airport Revenue News.

She noted that airports, including Indianapolis, placed a greater percentage of their concessions in the secured, gate areas in recent years. That’s because since the 2001 terror attacks, passengers arrive earlier to clear more onerous security screening and have more time to kill at the gates. But with air passenger traffic slowing nationwide and the recession, sales have been especially challenging in the gate areas.

The moneymaking ideas in the airport’s plan seem endless. Even the new employee parking lot, with its easy access to Interstate 70, is mentioned as a possible venue for special events related to the Indianapolis 500, the Brickyard 400 and other sporting spectacles.

“Consider fee-based hunting, fishing, off-road vehicles and four-wheeling or driver’s training courses in designated areas on airport property,” states one idea.

Another idea, to offset the cost of operating an airport service that assists passengers with jump-starts and flat tires, suggests the airport secure sponsorships for the service from car dealers or travel clubs.

Selling smarts?

Perhaps the most radical idea involves packaging and selling the airport authority’s expertise.

Why, Clark wonders aloud, couldn’t the authority sell its expertise to other airports? A handful of major airports already do that, including the Houston Airport System, the entity that runs George Bush Intercontinental and William P. Hobby Airport.

HAS created a separate, not-for-profit entity known as HAS Development Corp., which is involved in the management of airports in Central America, including in Quito, Ecuador.

According to Airport Business magazine, HASDC “borrows” talent from Houston’s airport staff. The Houston Airport System pay for that project flows into its airport development fund, “which ultimately should have a positive impact on rates and charges to the airlines.”

The HASDC entity is legally structured to protect the city of Houston from liability the venture might incur.

Indianapolis International is a pipsqueak compared with Houston’s airport system. But how many airports in recent times have spent more than $1 billion on a major terminal project? Clark asked. “There’s a lot of intellectual capital and expertise” here.

Monetizing that expertise needn’t be as exotic as running airports in foreign lands. Even airport departments such as maintenance and operations could earn fees by providing building- or vehicle-maintenance services or disabled-aircraft recovery “at rates less than those charged by off-airport service providers,” said the plan.

Although the airport authority is a municipal corporation, it is not funded by local taxes. Most of its revenue comes from rents and charges to airlines that use the airport. Revenue from parking and concessionaires is also a big money generator.

New, diversified revenue streams and further expense reductions can’t come soon enough as the authority gets down to brass tacks in negotiations with carriers on a new airline agreement.

The present agreement expires at year-end and the authority is at least trying to hold the line on fees and charges airlines must pay as it adjusts to higher debt costs and lower-than-forecasted passenger numbers amid the recession.

The strategy also calls for stepping up marketing efforts to lure passengers from other airports in the region, including Cincinnati and Louisville.

Cincinnati/Northern Kentucky International last year posted the nation’s biggest decline in passenger traffic—a 22-percent drop. That was due mostly to No. 1 carrier Delta’s de-emphasizing Cincinnati as a hub in favor of the relatively new Detroit airport, which is a hub for newly acquired Northwest Airlines.

“Our theme is, we want to become the airport of choice” in the region, Clark said.•

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  • Retail Facilities
    Once I needed a swatch watch for a present. The closest Swatch Store was at Newark Airport. I drove there, paid the $4 parking fee, and went to the store inside the airport. I can't do that now as all of the retail stores are inside of the security area. On the other hand, in Richmond VA, when my family could not decide where to have dinner before I returned to NJ, I suggested the airport. Their restuarants are still outside of the security gates. In the hopes of continued increases in the number of passengers, even though video-conferencing was taking a slice of travelers, many airport planners concentrated on the passenger only as a shopper. They must began to pay more attention to the non-passenger especially in areas like metropolitan NY where hour delays are somewhat the norm.
  • Parking Garage Roof Concerts
    Better check the structural load capacity, first. Code requires 40 pounds per square foot design load for passenger vehicle garages. Assembly requires more like 100 pounds per square foot.

    By the way, how come these rocket surgeon accountants and lawyers keep talking the city into multi-billion projects that it turns out they can't afford? Ooops...
  • teleconference facility
    Great meeting facility with provision for attendees to attend by video conference.
  • airport
    80,000 acres leaves plenty of land for a solar farm and with the newly approved IPL Tariff, the Airport Authority could negotiate a no upfront cost no maintenance system and simultaneously freeze the electric rates for the next 11 years. Seems like a no brainer to me. All you need is 4 acres for one megawatt (which is the equivalent of about 120 homes.
  • ideas
    support troop homecoming events
    set up a mini medical clinic for locals
    internet cafe and movie area
    defensive driving or beginners driving class
    local american idol singers to entertain
  • International Terminal
    I'll say this again as I've said before.. I think they should convert the old airport into an international terminal. The use of the old airport as an international terminal, will produce more growth of the airport as well as more income to help fund other projects within Marion County. More international would include more of a draw to more international companies, hence more jobs for this state, county and surrounding counties. If we want to be considered a "world-class" city, then there needs to be more of an appeal to have more international flair!
  • 5 cool ideas
    1. Make it a venue for high school and college arts performances - it brings locals out AND it welcomes travelers to the city in a cool way.
    2. Ditto - with BIG venue musical groups (would attract them to come in for the day and perform)
    3. BRING BACK the ATA mystery day or weekend trips!
    4. Where could they put cool state of the art meeting space for fly in meetings?
    5. Communal entrepreneur/start up business space, like this: http://www.ingoodcompanyworkplaces.com/
  • There's money in smoke
    Smokers are cash cows. So open a cigar bar and cigarette friendly area with an admittance fee. Quit treating nervous fliers who crave a last cigarette before their flight like criminals. Embrace them and make money off of them.
  • IND Airport Revenue
    I think the new IND is a tremendous facility however I am astonished that the new IND would place restaurants in the terminal area BEYOND security checkpoints... Talk about limited availability to possible patrons...
    Bud Perry
    Windermere, FL and Terre Haute, IN

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  1. The east side does have potential...and I have always thought Washington Scare should become an outlet mall. Anyone remember how popular Eastgate was? Well, Indy has no outlet malls, we have to go to Edinburgh for the deep discounts and I don't understand why. Jim is right. We need a few good eastsiders interested in actually making some noise and trying to change the commerce, culture and stereotypes of the East side. Irvington is very progressive and making great strides, why can't the far east side ride on their coat tails to make some changes?

  2. Boston.com has an article from 2010 where they talk about how Interactions moved to Massachusetts in the year prior. http://www.boston.com/business/technology/innoeco/2010/07/interactions_banks_63_million.html The article includes a link back to that Inside Indiana Business press release I linked to earlier, snarkily noting, "Guess this 2006 plan to create 200-plus new jobs in Indiana didn't exactly work out."

  3. I live on the east side and I have read all your comments. a local paper just did an article on Washington square mall with just as many comments and concerns. I am not sure if they are still around, but there was an east side coalition with good intentions to do good things on the east side. And there is a facebook post that called my eastside indy with many old members of the eastside who voice concerns about the east side of the city. We need to come together and not just complain and moan, but come up with actual concrete solutions, because what Dal said is very very true- the eastside could be a goldmine in the right hands. But if anyone is going damn, and change things, it is us eastside residents

  4. Please go back re-read your economics text book and the fine print on the February 2014 CBO report. A minimum wage increase has never resulted in a net job loss...

  5. The GOP at the Statehouse is more interested in PR to keep their majority, than using it to get anything good actually done. The State continues its downward spiral.

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