AUSTIN | ABIA Updates

[LoneStarMike]

A bit more info from the closed caption log of the City Council Meeting on 08/23/2007, a couple of months after the initial presentation:

Leffingwell: On Item Number 4, I believe Mr. Smith is here, Airport Director. This is an item to approve a ground lease for a low-cost terminal at...midfield and the item now reads to negotiate. Hopefully, we will establish some guidelines for these negotiations and talk about those guidelines in future executive sessions as we progress in the negotiations. My main concern -- it is going to be a complex agreement, I think, and there will be a lot of variables involved and it's complex enough to where I think we ought to be -- the Council ought to be briefed on it as we go forward. And my main concern is to make sure that we -- the contract is structured so that there's fairness between those who operate -- fairness and equity between those who operate out of the low-cost terminal and those who are currently operating out of the main terminal. So Mr. Smith, if you would like to make a couple of comments on that, you are more than welcome, but I'm going to leave it on consent. I just wanted to make that explanation.

Jim Smith: Well, as it relates to the rate structure, the F.A.A. requires that we do not discriminate among the players at the airport. And what they mean by that is that there's two fees involved at the airport. One is an airfield-related [fee] for the use of the runways, taxiways. Everybody who flies at the airport pays the same fees so that cannot be modified. Then you pay a fee for the facilities that you rent from the airport -- your office space, your gates, your loading bridges, et cetera like that, and there's a fee associated with that. The only way you can differentiate among the players is if one doesn't have the same type of facilities as the other. And under the lease arrangement we're contemplating, the new ultra low-cost terminal is going to have loading gates. It's not going to have the same level of electronics and telecommunications, and as a result it's going to have a cheaper rent.

So it is perfectly okay under the F.A.A. guidelines to have a rent structure in the main terminal. All the players who share that facility, and have that be different than the rent structure for the ultra low-cost terminal. What you can't change is anything on the landing fee. The only variation that occurs in that is occasionally the airport offers incentives to a carrier who is introducing new, non-stop service, and for a limited period of time, the airport will sometimes offer incentives to underwrite sombody's landing fee or rental rate in the terminal for a specific period of time while they introduce the new non-stop service. But that has a limited time period where the rent's obviously good on for as long as that entity is there. So that's pretty much how it works. And as a result, any deal we strike with GE has to be sent to the F.A.A. for review to make sure we are not[...] discriminating against any of the carriers.

Leffingwell: And I also assume as you've been going along, you've been getting input from the other airlines, the ones who currently operate out of the main terminal and like to make sure they are fully informed as to what's going on, too. But little...it is a complex agreement. The term has not been totally nailed down yet. The price per square foot, we have a minimum number of per square foot, but that has not been nailed down. It's complicated enough to where we have another agenda item today that we are going to approve on the consent agenda to hire outside counsel to negotiate that agreement. So my concern is just to make sure that we're briefed on an ongoing basis and hopefully we can start that executive session to talk about those details next week. So Thank you.

Jim Smith: If any of you at the council offices have any questions or concerns we would appreciate hearing about them before we bring this item back in a couple of weeks in executive session for you to vote on the final lease deal. Thanks.

Here's additional information from the closed caption logs of the City Council Meeting on 09/27/2007 when the council approved the negotiation and execution of the lease with GECAS. (Some misspellings and/or acronyms that I don't know what they stand for, but I re-typed it as is.)

Mayor Wynn: Council, that concludes our general Communication. Let's see. We had discussion -- let's see if any of our Aviation Department folks are here. Mr. Smith is here. Let's see. We have four folks on the dais. So Council, earlier in closed session we took up Item number 78, the real estate matter regarding a potential land lease at Bergstrom. We had a good presentation from our Aviation Department in closed session pursuant to state law. We have posted Item number 8 for potential action related to that discussion. That being authorizing the negotiation and execution of a land lease and perhaps a quick staff presentation about that item and the four of us could deliberate. Welcome Mr. Smith.

Jim Smith: Mayor and Councilmembers, this is the third time we've been here before you with this issue. The first two times to give you an update on our negotiations with General Electric Commercial Aviation Services to build a low-cost terminal on the south side of our airport. We've completed those negotiations and coming to you today for an action item to actually execute that particular lease. The terms of the lease, a 30 year land lease, which is the same as all the other leases we have out at the airport. It's -- transfer model which means at the end of the lease term the facility reverts back to the City of Austin.

The first step in the process will be the renovation of an existing building at the airport to make an interim facility that would have three gates. And we need an interim facility before a whole lot of money is invested to see if this business model will work successfully. Assuming it does work successfully, GE is committed as soon as there's a demonstration of a business need, they will start building a 100,000 square foot new facility on the site of the airport.

In terms of a rent structure, again, it's the same as the other leases we have at the airport. There's a ground rent plus a performance rent based on how well the facility does. We will share in those profits. We have arranged with GE to dord [sic] nature their operating budget, capital program, market ago program and concessions program to make sure it's in sync with what we're trying to accomplish at the airport. Also sthef [sic] committed to a strong DBE program and they are working not only in anticipation of the construction of a new terminal but also on the interim facility to make sure they are doing sufficient outreach and identifying scopes of various projects and working with SMBR to get that into the community so the contractors know what kind of work is available.

The bottom line, this is really a unique opportunity for Austin to develop a niche in the aviation market which would hopefully bring more air service to Austin that the pop lakes [sic] (Population?) actually deserves and that's because we would essentially be becoming a mini hub for some of those ultra low-cost carriers. So this is a rare opportunity and we're hoping in partnership with [GE] and their strength of having relationships with over 270 airlines in 70 countries that we can make a dent and improve the air service here in Austin

Mayor Wynn: Great, thank you, Mr. Smith. It is exciting. Questions, comments? We have posted Item 8 which is this authorization to negotiate a execute [sic] I'll entertain a motion.

Leffingwell: I move approval

Mayor Wynn: Motion made by Councilmember Leffingwell, seconded by Councilmember Cole to approve Item 8 as presented by staff. Further Comments? Hearing none, all those in favor please say aye. Opposed? Motion passes on a vote of 4-0 with the mayor pro tem and Councilmembers Martinez and McCracken off the dais. Thank you, gentlemen.

So does anyone know exactly which existing building is being renovated for the interim facility and if renovations have begun?

[arbeiter]

Originally Posted by texboy

I still have a hard time believing that this will work out. Just bc a low cost airline (that btw is brand new) comes to town doesn't mean business will follow. And if they are banking on people driving from Houston and San Antonio....I think they might be mistaken. The people that are flying out of those cities are usually people of means. Loading they're own luggage on to a plane and Standing out in the elements to board the plane just isn't their cup of tea. And the fact that the guy specifically states that Austin has had a hard time attracting flights to Mexico should be a big ol' red flag to the city AND the airline, that this may be too huge of a risk. (Maybe more of a risk to the airline than the city though) What this sounds like to me imho, is the city of Austin trying to further justify the I in ABIA. As it stands I believe Austin has maybe a few seasonal flights to Mexico, and a couple of daily's to Mexico? Look, I'm not trying to insult Austin as some on here would take it that I was....Im looking at this from a business stand point, and something about this just doesn't smell right. I feel that the city and the Airline are going to be very disappointed with the results of this....now if it happens to work out...more power to Austin and I will stand corrected!

You're definitely right in being skeptical that it won't succeed. Nobody is entirely optimistic - but the point is, there is little financial risk on Austin's behalf in undertaking this venture. It's better to think of it as an experiment that GE Capital would like to carry out. If it fails, all that will probably happen is that some other airline arrives to take the slots.

[misterno]

Originally Posted by texboy

I still have a hard time believing that this will work out. Just bc a low cost airline (that btw is brand new) comes to town doesn't mean business will follow. And if they are banking on people driving from Houston and San Antonio....I think they might be mistaken. The people that are flying out of those cities are usually people of means. Loading they're own luggage on to a plane and Standing out in the elements to board the plane just isn't their cup of tea. And the fact that the guy specifically states that Austin has had a hard time attracting flights to Mexico should be a big ol' red flag to the city AND the airline, that this may be too huge of a risk. (Maybe more of a risk to the airline than the city though) What this sounds like to me imho, is the city of Austin trying to further justify the I in ABIA. As it stands I believe Austin has maybe a few seasonal flights to Mexico, and a couple of daily's to Mexico? Look, I'm not trying to insult Austin as some on here would take it that I was....Im looking at this from a business stand point, and something about this just doesn't smell right. I feel that the city and the Airline are going to be very disappointed with the results of this....now if it happens to work out...more power to Austin and I will stand corrected!

People will never drive 3 hours to catch a flight just because it is $200 cheaper. Personally, I will never do it.

[JAM]

Originally Posted by misterno

People will never drive 3 hours to catch a flight just because it is $200 cheaper. Personally, I will never do it.

We would, that would be $400 in savings. I think a lot of people would. A family of 4 could save $800. My reservations are the low budget issues. Do I really want to get on some old plane pulled out of the bone yard maintained by a low budget airline?

[M1EK]

Originally Posted by misterno

People will never drive 3 hours to catch a flight just because it is $200 cheaper. Personally, I will never do it.

I've done it many times - when paying for 3 or 4 tickets. Drove to Dallas twice to save just about that much per ticket.

[misterno]

Originally Posted by arbeiter

This is no way to start out as a new member of a forum. First of all, Austin's metro area is well over 1 million, and second, it's not our fault that Houston was unable to take advantage of this - I guess it can't be the business leader in everything. The bottom line is that landing fees and operating costs are what really makes the difference, and obviously they shopped Houston first.

For example, Ryanair only flies to Charleroi Airport in Belgium and won't fly into Brussels' main airport. The reason budget airlines go to smaller cities and smaller airports is because of cost.

I have to admit, I was really mad when I read OP's posting. I am sorry for being rude in the beginning.

But when you say landing costs, please read the paragraph where I was talking about Ellington Field. Officials in Ellington Field which is 15 minute drive from downtown Houston, told me there is no landing fee but whoever wants to use the airport needs to build a terminal.

[Trae]

Yeah seriously, I wouldn't do it either. I doubt it would be that much cheaper anyway.

[misterno]

Originally Posted by Trae

Yeah seriously, I wouldn't do it either. I doubt it would be that much cheaper anyway.

Seriously, $10 per flight that they are claiming is impossible. If you add the "international flight" tax it will be very close to $100.

It is still at least $200-300 cheaper than Continental though.

[misterno]

I will be emailing the guys in Ellington Field so that they can join the conversation here. I am hoping they will.

I have never seen that much information about Texas airline industry in a forum before. This forum is great.

[ATXboom]

ABIA as of end of October... from the airport itself.

http://www.ci.austin.tx.us/austinair...ctov_oct07.htm

Passenger Activity: Total passenger traffic for January – October YTD was 7,412,852

Low estimate of 775K/month will put it plus or minus 9mil. With holiday traffic I expect 9.2mil.

They key is added flights... as austin has added about 3 per quarter. With 4 new flights starting early next year as well. We will hit 10mil within 2 years.

I'm not sure if Hobby's capacity or flight routes are increasing?

Fun figures but not really relevent to why Vivo is coming to Austin over some other place. - for the real reasons see my last post.

[Major AWACS]

The US Mexican bilateral air agreement only allows 2 airlines from each country to fly between most cities in each country so Viva could only choose San Antonio or Austin as Dallas and Houston are full.

I wouldn't piss and moan on Continental to much, they offer more service to Mexico than any none Mexican airline and Houston has the largest INternational service in Texas (DFW is higher for domestic service)

Ellington field has a small terminal, CO Express used it for years with hop flights to IAH. IN Fact Houston was the only US city with intra city limit flights on fixed wing aircraft, for nearly Two decades.

Ciao,
AWACS

[ATXboom]

Those are some cool tidbits of knowledge AWACs! ...thanks!

I have driven to Houston just to get a direct international flight... and the flight wasn't any cheaper... driving does happen - particularly for the right market.

[misterno]

[QUOTE=Capt AWACS;3258078]The US Mexican bilateral air agreement only allows 2 airlines from each country to fly between most cities in each country so Viva could only choose San Antonio or Austin as Dallas and Houston are full.

What do you mean Houston is full? We have Ellington... And why is this aggrement enacted? We need more airlines between Mexico and USA, this is so clear and obvious.


Ellington field has a small terminal, CO Express used it for years with hop flights to IAH. IN Fact Houston was the only US city with intra city limit flights on fixed wing aircraft, for nearly Two decades.

Guys in Ellington told me that if any company approaches them with a promise of terminal they will not charge a dime per customer. They also said Viva did not approach them.

----------------------------------------------

Here is what I do not understand. The airline industry in Mexico is exploding. There are almost 15 airline companies in Mexico at this moment. Once they got familiar with the business and make profits, they will start looking new destinations to expand business and make more money. US is the first destination that comes into mind and Houston and LA are the 2 cities that they will want to fly first for obvious reasons.

First being the huge Latin American population who would use this service to get to Mexico or use Mexican airports to hop to other southern home countries.

Secondly, population of cities in Texas, California, Arizona and Nevada are literally exploding, this is just a small airline company should be looking for. Not a city like Detorit, losing population.

Third, you can fly from numerous tiny cities in the north and west to Mexico for dirt cheap whenever there is sale. Just an example is Sipirit Air and another one is Airtran and many others. They have sales as low as $5-$10 and even you add the tax, the round trip cost less than 100 bucks. There are no such airlines in the southern cities.

Fourth, caribbean countries are so close to both mexico and US, this will be an opportunity for airlines flying between US and mexico because it is so close to the route.

----------------------------------------
One day this vacuum will be filled. I still can not believe that there is an aggreement that restricts number of airlines flying between US and Mexico. It takes only 2 hrs and 15 minutes to fly from Houston to Cancun and yet there is only one or two airlines flying and cheapest is $500. This is crazy. This should not happen in a country praising itself all the time with free enterprise and competition. Something is definitely wrong in here.

Take a look at any vacation package deals from Dallas and Houston to Mexico and you will notice that Dallas is by far cheaper than Houston. I wonder why. Something is really wrong with airline services from Houston. What makes Dallas cheaper than us to a destination which Houston is closer.
Gotta hate continental

[JAM]

misterno - would you mind explaining your relationship with guys at Ellington? What level of people are we talking about here? I would think that most of airport operations are related to non-civilian and NASA related management, so again, I'm curious who runs the airport?

I'm not even sure if they have ground control for private aircraft at Ellington. Is ground control for private aircraft coming from a regional control center or is Ellington handling it?

Are they actively looking to expand Ellington into public commercial operations or is it more if someone approaches them they would consider it?

What are the noise issues concerning the nearby subdivisions?

Found the answer to most of the above questions:

http://www.fly2houston.com/EllingtonMasterPlan

[GoldenBoot]

And this does not include the budget terminal and the future, 21-gate south terminal. Way, way down the road, plans could call for two mid-field concourses. Each capable of being expanded to 20+ gates.


THE NEAL SPELCE AUSTIN LETTER
Volume 29, Number 38
Friday, January 4, 2008

For the first time since the new Austin-Bergstrom International Airport (ABIA) opened for passengers 5/23/99, a major terminal expansion will begin in 2008.

Coming off a year when a record number of passengers crammed into ABIA, look for airport officials to seek permission from the Austin City Council in February to add from 6 to 9 gates to the existing 25 gates at the Barbara Jordan Terminal…

[Jdawgboy]

That is great news, I knew it wouldn't be too long before we saw an expansion.

[misterno]

Originally Posted by JAM

misterno - would you mind explaining your relationship with guys at Ellington? What level of people are we talking about here? I would think that most of airport operations are related to non-civilian and NASA related management, so again, I'm curious who runs the airport?

I'm not even sure if they have ground control for private aircraft at Ellington. Is ground control for private aircraft coming from a regional control center or is Ellington handling it?

Are they actively looking to expand Ellington into public commercial operations or is it more if someone approaches them they would consider it?

What are the noise issues concerning the nearby subdivisions?

Found the answer to most of the above questions:

http://www.fly2houston.com/EllingtonMasterPlan

JAM

Thanks for the link. I found the website for Ellington Field and emailed them my question as to if Viva ever approached them. That is how I got to know them. This correspondence happened last week.

His title is Airport Operations Supervisor and his email extension is cityofhouston.net. If you need more info about him I can PM you.

it is more like if someone approaches them they would consider it. This is what I understood from their emails. But what is surprising was, Viva never approached them. Also, they did not want to comment on my remarks about Continental's influence on Houston area airports.

Here is an excerpt from his email

"Any company that would like to build a facility at Ellington has to
lease the land and build a facility of a certain dollar value based upon the
type of aviation operation they are licensed to conduct. A Passenger
Facility Charge (PFC) is not charged at EFD at this time and I know of no plans to do so.

Not all US passenger airports charge a PFC. For example, Hobby charges
and IAH does not. A PFC is one option an airport can use to generate money
for capital projects. The PFC program is managed by the FAA and involves a
comprehensive application process and oversight by the FAA. A complete
description of the PFC program can be found on the FAA web site
(www.faa.gov).

Hope that answers your questions."




Here is an earlier email he sent to me

" I received your inquiry from xxxxxxx and
> would be happy to help. I
> have not heard from Vivaaerobus or any other
> commercial airline about
> starting scheduled service to/from Ellington Field.
> We are certificated by
> the FAA to be used by commercial airlines, however
> we are not negotiating
> with any air carriers at this time but we are
> certainly open for
> discussions.
>
> As far as the cost structure, Ellington has the
> lowest rates of the three
> airports. However, we do not have the
> infrastructure required for extensive
> airline service such as terminal buildings, security
> screening and baggage
> services. These issues would need to be addressed
> prior to starting any
> airline service.
>
>
>
> I hope I have answered your questions. Please let
> me know if I can do
> anything else to help"

[Major AWACS]

I am not sure what random non factual points you are trying to make here but you are once again incorrect.

The US Mexican bilateral air agreement only allows 2 airlines from each country to fly between most cities in each country so Viva could only choose San Antonio or Austin as Dallas and Houston are full.

What do you mean Houston is full? We have Ellington... And why is this aggrement enacted? We need more airlines between Mexico and USA, this is so clear and obvious.

The US and Mexico, as the US does with many countries, has a bilateral air agreement. There is no open skies. Open skies means you can fly wherever you want. many include 5th freedom and 6th freedom rights on routes.
Ellington Field and Hobby are part of Houston and fall under the same rules.

The US-Mexico bilateral only allows two airlines from each country to fly on most city pair routes. There is not enough O/D demand for medium haul airliner on a daily route from most Mexican cities to Texas. The bilateral is being revamped but Open skies are not coming soon.

Viva could not fly from say Houston to Monterrey because Aeromexico and Aviacsa fly it from the US side, With Continental on the US side. A US flagged carrier could fly the route, and Mexican one could not.

Ellington field has a small terminal, CO Express used it for years with hop flights to IAH. IN Fact Houston was the only US city with intra city limit flights on fixed wing aircraft, for nearly Two decades.

Guys in Ellington told me that if any company approaches them with a promise of terminal they will not charge a dime per customer. They also said Viva did not approach them.

Again, Ellington Field has a small terminal. If you are as "familar" with the airport as you say you should know this. Co Express used it for years on the "Houston Express" route to IAH. It is near the old tower SE of the 147 FW ramp. Viva did not approach them because the couldn't fly main routes to Mexico and it was a horrid business plan.

----------------------------------------------

Here is what I do not understand. The airline industry in Mexico is exploding. There are almost 15 airline companies in Mexico at this moment. Once they got familiar with the business and make profits, they will start looking new destinations to expand business and make more money. US is the first destination that comes into mind and Houston and LA are the 2 cities that they will want to fly first for obvious reasons.

While I disagree with your overly basic analysis of Mexican aviation (go to Airliners.net or Flyertalk.com for some basic reading) as I noted above the US Mexican treaty will not allow most of those flights you wish for.

Third, you can fly from numerous tiny cities in the north and west to Mexico for dirt cheap whenever there is sale. Just an example is Sipirit Air and another one is Airtran and many others. They have sales as low as $5-$10 and even you add the tax, the round trip cost less than 100 bucks. There are no such airlines in the southern cities.

Those fare bucket sales are only for roughly 10-15% of the seats on those flights. Businessmen and even many VFR-visiting friends and relatives don't travel like you discuss above. The CASM and RASM on flights from these markets does not allow the flights you wish for.

Fourth, caribbean countries are so close to both mexico and US, this will be an opportunity for airlines flying between US and mexico because it is so close to the route.

This makes no sense at all. Caribbean traffic is well covered from Miami, Houston, Atlanta, Charlotte and Dallas the big hubs for Carib traffic. No one would fly via Mexico to the Caribbean, it addes hours to the flight, a connection meaning moremissed bags and delays and doesn't save money.

----------------------------------------

One day this vacuum will be filled. I still can not believe that there is an aggreement that restricts number of airlines flying between US and Mexico. It takes only 2 hrs and 15 minutes to fly from Houston to Cancun and yet there is only one or two airlines flying and cheapest is $500. This is crazy. This should not happen in a country praising itself all the time with free enterprise and competition. Something is definitely wrong in here.

Well write your congressman to change it. Until this coming March, the Bermuda II agreement limited flights from the US to London Heathrow meaning Houston couldn't have direct flights to LHR only Gatwick, causing many missed oil connections. Starting in March Houston will get 4 daily flights to London with the new rules. Aviation rules are complex.

Take a look at any vacation package deals from Dallas and Houston to Mexico and you will notice that Dallas is by far cheaper than Houston. I wonder why. Something is really wrong with airline services from Houston. What makes Dallas cheaper than us to a destination which Houston is closer.
Gotta hate continental

Actual the vacation packages you mention are not "always" cheaper from Dallas and this (vacation deal pricing) has nothing to do with Continental.
There is a reason, Continental makes money, is constantly ranked #1 US airline for customer service and provides excellent international connections from Houston. In fact Houston actually has some of the lowest air fares in the country.

I hate to break it to you but you cannot fly everywhere you want for 200$ roundtrip each time. That is not how it works. Oil is up, landing fees and airport fees are up and the airlines have to make a profit for shareholders. The true cost of CASM will be passed on to consumers.



The Bureau of Transporation stats at BTS.gov is great place to start research and learning about such things, as are the websites I noted above...

Ciao,
AWACS

[arbeiter]

Can anyone explain to me why a shuttle from Ellington Field to IAH was ever successful? Traffic has never been bad enough that an hour or 2 hour drive (at the very, very worst) would not be better than a flight.

[JAM]

Originally Posted by arbeiter

Can anyone explain to me why a shuttle from Ellington Field to IAH was ever successful? Traffic has never been bad enough that an hour or 2 hour drive (at the very, very worst) would not be better than a flight.

While they had service, I lived next to Ellington. Lots of people live down that way. Saves a 50 mile drive to IAH each way, parking was free, and it was easy to check-in. I loved it. Many people I knew that lived /worked down that way used the facility. Imagine being able to jump on a plane w/o struggling thru traffic, and there was no extra charge for the service, plus CO gave you 500 miles for using it. AND, you got a nice ariel tour of Houston. Handling bags was a breeze, other wise, once you're up at IAH, you jump on a shuttle 5 miles from your gate, and drag luggage the whole way. Get to Ellington, drop and forget your luggage.