Airport Director Discusses Changes Coming To The Aviation Industry
By Joshua H. Silavent - Staff Writer
January 29, 2013 - Mario Rodriguez has seen the aviation industry change dramatically in his 25 years in the business. And it's this rapid pace of change that so interests the director of the Long Beach Airport.
During his tenure here, which began in February 2009, Rodriguez has presided over a remarkable evolution at the airport, culminating in December with the opening of a world-class, brand-new $45 million concourse and terminal. "We're stepping into a new era," he said.
As the airport celebrates its 90th anniversary this year, Rodriguez sat down with the Business Journal to discuss what's next for the airport, the aviation industry and a few of his personal thoughts on everything from the Wright Brothers to what he loves about Long Beach.
LBBJ: What is the single most distinguishing characteristic of the Long Beach Airport and how does it differentiate Long Beach from other regional airports?
Rodriguez: What's interesting is that there are many different distinguishing characteristics, but it all boils down to one thing: superior customer service. We purposely are running this airport like we should be, like a business. For example, we only spent $45 million on the new terminal. It cost about one-tenth of what a normal terminal costs in the United States. Why is that important? Because eventually the customer pays for what you built. So these really, really expensive projects, customers pay for that. I don't believe that's good customer service. I believe we should provide a very high-end product at a very reasonable price. The cost-burden will not pass on to the customer. We don't have to increase the cost of concessions beyond street pricing. It's also very changeable, very scalable and modifiable. Most buildings will last 30 years. This industry changes so dramatically that this terminal will probably become functionally obsolete before we reach those 30 years. So you need flexibility to change the building. And more than that, you need the debt capacity to do it. And we have it. So we can change it a lot of times while making sure we keep customer service levels as high as possible.
LBBJ: How did the concept for the new terminal/concourse originate?
Rodriguez: There were many, many years of design work prior to the team congealing over one. We started looking at it in a different way, circa four years ago, more from a business perspective. It was about letting the business needs drive the engineering, instead of the engineering driving the business needs. It's not oversized. If you build it for ultimate capacity, you end up with empty spaces paying debt service for years.
Philosophically, we opted to build what we need right now, and slowly scale up as needed. The boutique nature, the look, came from resort hotels. So it looks like a resort hotel on purpose. The image right now is a world-class airport, not in the image of what other people think, but in the image of what Long Beach thinks is world class. It truly reflects the city. It really is a conduit for the City of Long Beach. You need to have that.
LBBJ: What do you think is the future of commercial aviation in the United States?
Rodriguez: Consolidation. You take advantage of the assets, reduce hubs. Before the pendulum swings the other way, I truly believe the industry is headed for more consolidation and mergers. So I believe we're going to end up with four major airliners: Delta, whatever comes out of the American Airlines-U.S. Airways merger, Southwest and United.
LBBJ: Are you concerned that more rigorous and inconvenient security checks are driving people away from flying?
Rodriguez: That's already occurred. Very little can be done in the short term. Right now air transportation is very, very vital. Last year, the country moved about 730 million passengers in its air transportation system. It's the most vibrant in the world. The United States would not be the United States without it. So security is not driving people away, it drove people away. And it eliminated what was called the short-haul. The short-haul doesn't exist anymore. For example, in Florida, the short-haul market used to exist between Palm Beach and Orlando. A short-haul would be LAX to San Diego. Pre-9/11, it kind of made sense. Not now. But that's part of the evolving aviation industry.
LBBJ: What types of training and clearance do all airport personnel, from management to baggage handlers, have to undergo?
Rodriguez: Everybody goes through a security check and the people who are airside go through different types of training – driver's training, security training. Everybody is trained if they go out on the airfield. And everybody has an FBI clearance.
LBBJ: Does the TSA provide security screening for private and corporate air travelers?
Rodriguez: There is limited screening for private aircraft . . . depending on the type of service. If it's an air carrier charter, the screening is done here [by TSA]. But if it's a private aircraft, the levels are a little different.
LBBJ: Who is in charge of patrolling and securing the perimeter of the airport?
Rodriguez: It's a combination of us, the City of Long Beach, TSA, the Department of Homeland Security. There are multiple layers. There are a couple of things I can't go into, but it's multiple layers of security. Depending on where you are, the security level is different. There are also sensors and detectors. This is a very, very secure facility. You don't only have our security. You have airline security. You have Boeing security. You have Gulfstream security. Every FBO [fixed base operator] has security. It's not just us. It's an entire team effort.
LBBJ: What sources of money fund the Long Beach Airport?
Rodriguez: They are multiple and diverse. We operate much like a business. We have direct airline revenue and indirect airline revenue, like a percentage of gross on concessions, parking, rental cars. There's also non-airline revenue, which are direct rentals. The FBOs rent land. We have two office complexes. We have a golf course across the street. So there are multiple revenue streams. This airport generates a positive cash flow. And we don't take any taxpayer dollars and the FAA supplies grants to improve the airfield.
We plan to continue to diversify revenue. It only makes good business sense to do so. It's important because the aviation industry is so cyclical, much more so than the economy.
LBBJ: What is the capital budget?
Rodriguez: Normally, on the airfield, we'll spend anywhere between $8 and $10 million per year. But now most of the large building programs are done.
LBBJ: How much do you have in cash reserve?
Rodriguez: Right now, we're sitting at about 320 operational days of cash. And having a cash reserve is pretty important because 10 years from now I can guarantee you this airport will be here. It provides flexibility.
LBBJ: What are the airport's biggest expenses?
Rodriguez: Taking away capital, it's probably personnel. Right now we employ about 100. Within the airport campus, there are about 18,000 direct jobs. We actually run this airport with fewer people than all other airports around us. So we're very, very efficient in what we do. For example John Wayne Airport (in Orange County) has 179 employees.
LBBJ: How many tenants does the airport serve?
Rodriguez: It's a huge list. [We have] two large business parks, which we rent to a master lessee. Then we have multiple FBOs. We have all the airlines. Sometimes we have the Goodyear and MetLife blimps come in here. And we have rental car agencies, too.
LBBJ: Have you ever envisioned expanding the airport on the north end?
Rodriguez: At the north end of the airport all of the land is owned. So there's no room to expand. We would love to have this land back. That north end is prime real estate. We just don't own it.
LBBJ: Do you think a day will come – perhaps once the economic upside can no longer be dismissed – when Long Beach is no longer a slot-regulated airport?
Rodriguez: I don't like to speculate. The noise ordinance shook the industry so much that the federal government implemented regulations so these types of ordinances could never occur again.
LBBJ: What is the biggest mistake other airports make?
Rodriguez: Most of it is financial. If you look at the successful airports, they run like businesses. Thinking big and delivering cheap is a good thing. This city should be proud. It's been able to deliver a product, the terminal, for one-tenth the cost. And it's high end.
LBBJ: What do you love most about the airport and aviation in general?
Rodriguez: Change. It's constant change. Ten years ago the industry was completely different. I remember times when Southwest wasn't an important player. The legacy carriers had the market share of the industry. Now, the low-cost carriers have the market share. The airlines have consolidated. At the end of the day, you're probably talking about three big airlines that will dominate the industry for a long time. 9/11 brought about massive change. SARS [severe acute respiratory syndrome] did, too. This industry recycles itself all the time, changing and morphing. There are more bankrupt airlines now than there are airlines in existence.
LBBJ: What is the most surprising thing you've learned on the job?
Rodriguez: The industry is small. Just count the airlines that exist. There are 499 air carrier airports in the United States, of which probably 100 really matter.
LBBJ: What has working as airport director taught you about the City of Long Beach?
Rodriguez: There are very few places in the United States where people in our career field can actually stay. This is one of them. Plus, there's no better place to live than Long Beach. I'm not saying that for the story. It really is heartfelt. The weather is phenomenal. The people are genuinely nice. The community is caring, understanding. I live here. This is my community. This is my home.
LBBJ: How does somebody get to do your job?
Rodriguez: Dumb luck. I've been doing this for 25 years. I've gotten lucky in my career. I've worked in the private sector and I did work privatizing airports in South America. I've worked on projects all over the East Coast. I've worked in Hong Kong, worked in Kuwait for a little bit, Palm Beach, New Orleans, here. Over 25 years, I kind of learned something. Right now there are career fields that start you in aviation management. You can start in operations and start building your way up. It's a small field. There are not a lot of people in it. And there's very high demand for people in this field. So the unemployment rate in aviation is very low.
LBBJ: If money and time were of no concern, what is the one thing you would make happen at the airport?
Rodriguez: Further elevate customer service and the economic impact of the airport. Wouldn't it be great to have an even better facility that offers complimentary valet parking, meals, drinks, etc.? That would generate even more jobs and economic impact.
LBBJ: In 20 or 30 years, how do you want people to remember the airport during this time period?
Rodriguez: I want them to think that this was the point when we actually got a world-class gateway. This is the city's connection to the world.
LBBJ: What would the Wright Brothers think of aviation if they were alive today?
Rodriguez: I think they'd be very proud. A lot of people in this industry are visionaries or nuts. Sometimes they go hand in hand.