Thursday, February 25, 2016

Airport CEO talks to JJ

The Jackson municipal airport has dominated the news lately as the fight for control rages in the legislature.  The media focuses on the "horserace" but rarely provides any real information about the airport itself. It is all about who wins, you see.  Jackson Jambalaya sat down with Jackson Municipal Airport Authority CEO Carl Newman two weeks ago for an hour-long interview.  We covered the finances, Hawkins Field, the pilot shortage, and yes, Southwest's departure for the Jackson market.

 Meet Carl Newman, JMAA CEO

Mr. Newman replaced long-time CEO Dirk Vanderleest in January 2015.  Mr. Newman said  "I'll be honest, Jackson, Mississippi was not on my radar screen.  Recruiters had to convince me to apply for the CEO position. After  chatting with them for a bit, I decided to throw my hat in.  I was the number two person at the Phoenix airport. In Houston I was number two or three depending on how you look at it." Mr. Newman was the general manager of George Bush Intercontinental Airport  in Houston. Mr. Newman continued "I saw this as a chance to be a CEO of an airport.  I was a finalist for the CEO position at Louis Armstrong International Airport in New Orleans and tried to get the CEO job at the Hartsfield-Jackson Airport in Atlanta."  The airport veteran has more than thirty years under his belt.

By the numbers

The balance sheets are strong and the airport is in good financial shape.  Operating revenue is 3% ($119,000) above projections while the operating expenses are 16% ($694,000) below the budgeted expenses.  The net income is 132% ($712,000) above projections. He said the the huge increase in net income is due to controlling expenses while fuel and utility prices have fallen during the last year.

Mr. Newman said the net income should be approximately $2.5 million in 2016 and was $3.5 million in 2015.  The budget predicted revenue is above $17 million while expenses is $14.5 million.  JMAA added several positions and made structural improvements to the main airport such as replacing doors and repairing the roof.  The most recent financial statement reveals that JMAA has $17 million in unrestricted cash.   Mr. Newman said the cash on hand continues to grow and is important when the ratings agencies review JMAA finances.  He said "from a cash flow standpoint we are very, very strong."**

 JMAA has not laid off anyone but is not fully staffed.  He said the two airports have traditionally been "understaffed".  109 of the 115 positions at JMAA are staffed but the CEO is trying to staff the vacant positions.  However, Mr. Newman said the police department and operations are fully staffed.

Enplanements fell last 10% year and are 20% lower than two years ago but have stabilized in 2016.  Southwest served JMAA for most of 2014.  Its departure affected traffic.  The enplanements for the current fiscal year* are 126,000 and 129,000 at the same time in 2015. The average load factor on a passenger flight is 82%.  The load factor is the proportion of the seats that are sold on a flight.  The industry standard is 85%  The cargo flights are 2% less than budgeted. The cost per enplanement are budgeted at $11.45 but are "coming in at $11.16".  Mr. Newman said he would like to get it below $10.00 and "drive it down as far as we can".  

Some JJ readers have complained about the gate fees but Mr. Newman said the current rent is 79.17 per square foot.  Mr. Newman said "I've been in airports that are much higher than that."  He said the main airport has seven gates.  He said all gates were taken by the airlines but he recently "got one back from Delta" although Delta still has two gates.   He said the return of that gate will make it easier for him to pursue another airline.

Pilot Shortage

There is currently a pilot shortage among regional airline carriers due to increased standards for obtaining a license.  The FAA increased the hours required to sit on the right side of the cockpit from 250 to 1,500 flight hours.  The new rule means it takes longer and costs more money for those desiring to fly for a commercial airline (This article provides more information on the shortage. ).  They are also facing a longer period working at lower wages and are thus choosing not to become pilots. Regional carriers are suffering a shortage of qualified pilots that is expected to grow more severe in 2016 and 2017.  The military is trying to retain its pilots so there are not as many military pilots available for hire.  Regional carriers have had to reduce some service.

Mr. Newman said Delta would like to increase service to Jackson but does not have the "iron" (aircraft) or pilots to service Jackson.  He said the shortage will eventually impact major carriers and cities as well.  The shortage also affects Jackson's ability to attract lower-cost carriers as well.   

The loss of Southwest Airlines

The main topic that comes to mind when discussing the airport is Southwest Airlines.  Southwest Airlines withdrew from the Jackson market for a very simple reason.  The Jackson service faced declining revenue and rising costs.  Mr. Newman said the load factor for Southwest service was only 66%.  Southwest had also reduced its service from 9 daily flights in 2009 to 4 daily flights in 2013.  Mr. Newman said the load factor was still 66% when Southwest left Jackson despite the decrease in daily flights by Southwest.

Southwest also utilized its own ground crew.  United, American, and Delta share the same ground crew at the airport.  Such sharing reduces the costs per flight for those airlines.  Southwest refused to participate in this arrangement, thus insuring its costs per flight were higher.   The expiration of the Wright Amendment in 2014 also meant there was less need for the Jackson market since Southwest could offer non-stop airline service from Love Field to the rest of the country instead of one region of the country.  The amendment's expiration changed the business model for Southwest.   Mr. Newman said the expiration had a "tremendous impact on us."  Southwest also started offering international flights and needed the planes from "under-performing markets."

Future Plans

JMAA hired Intervistas Consulting Group to create a strategic improvement plan. The plan was unveiled last week at a a work session of the Board of Commissioners (Earlier post with video of presentation.).   Mr. Newman would not provide any details as he joked it would "not be fair to his board".  However, he did respond to a question about concessions and said he wanted to make improvements.  He provided the concessions at the Phoenix airport as a model, calling them "first class".  He said he was developing the terms for a request for proposals for concession services (Can he write it in a way that will ensure only Two Sisters gets the bid?). 

Minority Participation

 Mr. Newman said JMAA does a good job of focusing on minority participation.  He complimented Jack Thomas, Director of Disadvantaged Enterprise, calling him a "great resource".  He said $1.2 million procurements or projects went to disadvantaged business entities in Jackson and another $1.3 million to those in other parts of the state.  He said there was $10.9 million in contracts in 2015.  $5.2 million went to Jackson-based businesses.  There is no general goal for minority participation but rather the focus is on each project.  Mr. Newman said a great deal of work is specialized work for airports.

Freedom Real Estate development

There was not much discussion on the Freedom Real Estate development.  Mr. Newman said Freedom Real Estate approached the airport.

Hawkins Field

Hawkins Field is often called a diamond in the rough with a 5,400 foot runway and a control tower. Often forgotten and rarely remembered, Hawkins Field will receive some much-needed attention in 2016.  Mr. Newman said JMAA is going to rehabilitate the runways and ramp at the general aviation airport.  The interior of the South Terminal will be renovated.  A review of Hawkins Field procedure and operations will be conducted.  Mr. Newman hired a general manager for Hawkins Field- the first one since 2009.  JMAA will apply to the FAA and MDOT for funding the Hawkins Field projects.  However, Mr. Newman said "all of the work on the south ramp and runway is coming out of our pockets".  However,  reimbursement of the projects through federal funding will ease the financial burden.   (Earlier post on Hawkins Field and planned improvements).

He said his administration is reviewing the policies for building hangars at Hawkins Field.  He agreed that it made no sense for invest in building a hangar, pay an expensive lease, and then turn ownership over to JMAA after ten years.  He said another option was for  Hawkins Field to build and rent hangers.   He said Hawkins Field also needs covered tie-downs as none currently exist.

He recognized that Hawkins Field sold gas at a higher price than surrounding general aviation airports such as John Bell Williams and Bruce Campbell.  He said the aircraft are serviced by a truck either on the runway or in the hanger.  He said if the truck is staffed, the cost will be higher.  He said a self-service truck will lower the price of the fuel.  Needless to say, the Newman administration is going to bring change to Hawkins Field.

It is clear Mr. Newman is not just happy to get the job but is intent on improving both airports.

*The fiscal year began on October 1, 2015.

**We can only hope the politicians ignore that number. 


Devine1816 said...


Another example why JJ is Number #1!


GREAT Job Kingfish!


Anonymous said...

Thank you for this interview. I flew SW a lot--plenty of people on those planes were going from, for example, Houston to Baltimore and had to stop in Jackson. I'm guessing they didn't include those numbers in the 66%..there could have been more people from jackson had there been room on the planes!

Anonymous said...

Great article. Looks like the airport is headed in a better direction with Newman there.

Anonymous said...

Mr. Newman is too good for this area. No way I would put up with this mess Rankin is trying to pull.

Anonymous said...

And Josh Harkins will take all the credit 4:48

Anonymous said...

Sam R. Hall is crying right now.

Anonymous said...

4:50...of course he will. His type always does.

Kingfish said...

They don't care. I've yet to see a single reporter from any media at a Board meeting besides the one announcing Newmans hiring.

Anonymous said...

4:22 - next time you think about inserting yourself into a conversation you obviously know nothing about, why don't you rethink it and put your hands back in your pocket (or your pants). I can assure you that the airlines industry, including SW, knows how to calculate its loads and its routes. Your calculation on your 'many times flying SW' would carry little influence in the SW offices as they decide how to allocate their assets and where to rent terminal space and place employees.

Go back to whatever it is that you do - clearly, not much.

Anonymous said...

5:08. You obviously don't know how to read so I'll spell it out point by point.

1-When I flew Southwest- even after paying extra money for priority boarding- there were always people on the plane from the previous airport. This means they couldn't sell as many tickets here as seats on the aircraft or they would have overbooked. Since we had limited operations, that just wasn't an option. Did Southwest take that into account? Thats all I asked. Period.

2-It's been proven that Southwest went into new markets and just couldn't keep Jackson in its business model.

Why did you resort to that level of language? You must not know any better. Go back to your little gated community and have your box wine in your faux chateaux. I doubt you can afford it.

Anonymous said...

What does it mean when you say 'the media focuses on the horse race'. That makes no sense.

Just Dropping By... said...

The whole article here is a lot of yada yada. Where's the beef? After reading it all, word for word, what's the take-away. Ah, the take away is that JJ claims credit for an interview that really has no value. OK.....

5:08 here just to make 5:37 happy said...

I could read fine. And still comment that you obviously don't give the airlines much credit. Yes - they realize that when they have a stopover that some of the seats are filled and those couldn't be sold. The problem was that not all the remaining seats were being sold - and that is what they based their JAN loading percentage on. If they had not put JAN in as a stopover, we would not have justified having the flight. Instead of stopping over in JAN on their way to BWI, they would rather go through a market where they would fill more seats than they were filling here. Yes - their 66% number is the number of possible seats to fill IN JACKSON. Yes - they have done this before; actually they do it every day.

SW pulled out of JAN because there were more lucrative markets available. Once the Wright Rule sunset, SW was able to operate out of more airports. JAN was not profitable, and I can damn well assure you that they realized that some of the seats were full when they passed through.

My point is - SW left because we were not filling up the seats that were available and there were better markets.

And no - I don't live in a gated community. I don't drink box wine. And I don't live in a faux chateaux. I do live in a nice house in a nice (old) subdivision that is not and probably will never be gated. House is paid for, so I guess I can afford it. And the reason I resort to that kind of language is that I get frustrated with folks that want to inject commentary into subjects that they know absolutely nothing about, but think they are evidently smarter than the people who make a business around the subject.

SW would fly through Jackson if it was more profitable than other markets. Jackson is not, so SW left. It had nothing to do with the Board or even the Executive Director. It had nothing to do with the politics of the city or of the state. It had everything to do with the all mighty dollar - and for that I don't blame them at all. That is the basis of good capitalism, which is something that I still believe in despite the fact that our country, and now our state, seems to ignore all too often.

Anonymous said...

BS Alert!
Most every time I flew SW the plane was full, the others were nearly full.
The only way to get a number of 66% is to monkey with the numbers.

Anonymous said...

Just before SW left I spoke with a SW employee. He told me the understanding of the local SW employees was that the Airport Board was jerking SW around and the company decided it was easier to deal with airports that weren't trying to screw them. He was not happy and he was hoping that SW would some day return to JAN.

Anonymous said...

And the reason I resort to that kind of language is that I get frustrated with folks that want to inject commentary into subjects that they know absolutely nothing about, but think they are evidently smarter than the people who make a business around the subject.

You are anonymous. We're all experts. Get over yourself.

Anonymous said...

Nice interview, KF. Thanks for taking the time to bring us this perspective. Newman seems well-suited for his role, and will soon be qualified for the same role at a bigger airport. Looking forward to seeing what he does with the two airports while he's here. (Yet still hoping to see the state take over JAN this year.)

Ride That Fence said...

Make up your mind, 8:59. You wonder what he'll do yet you suggest he'll soon be qualified for a larger role somewhere else. And you believe there's finally a 'well suited' person in the job yet you want the state to take the place over. I'll bet it takes you an hour in the voting booth while you argue with yourself over who you will vote for.

Anonymous said...

Bryant wants to appoint someone with only a HS education to that post like he has several other positions. All about power and cronyism to him.

College Grads You Say said...

Since when does it take a West Point graduate to sit on a small town airport board. All of the current board members have college degrees. Howz that workin' out for ya?

Kudos, Blessings and Salutations said...

"Thanks for taking your time to conduct this important and earth-shattering interview and bringing it to us via cyber media. Your dedication to truth, justice and the American way is what will save this country from certain destruction and you will be among those selected by the powers that be to rise to the top of the pudding."

Anonymous said...

What's going on at CLT is instructive...

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Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

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If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

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