First phase of Charlotte Douglas Airport governance study released

First phase of Charlotte Douglas Airport governance study released

First phase of Charlotte Douglas Airport governance study released

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by WCNC.com Staff

WCNC.com

Posted on April 5, 2013 at 5:07 PM

Updated Friday, Apr 5 at 7:56 PM

CHARLOTTE, N.C. -- The initial report is in from the consulting firm hired to conduct the Charlotte Douglas Airport Governance Study.

In recent months, there's been a push from state lawmakers to turn Charlotte-Douglas over to a regional authority, taking control from the City of Charlotte.

A regional authority structure would consist of board representation from throughout the region.

Consulting firm Oliver Wyman released the initial findings in a report on Friday. The study is overseen by a Study Oversight Committee, consisting of one representative from each entity from the Charlotte City Council, the Airport Advisory Committee, US Airways, the Charlotte Chamber, the Charlotte Regional Visitors Authority and the Charlotte Regional Partnership.

In the report's introduction, it's explained that the goals of the independent review are the following: 

  1. Determine drivers for interest in change of governance structure
  2. Review and assess current governance models of U.S. airports
  3. Review and assess peer airports' governance
  4. Governance transition issues

After conducting more than 40 interviews with stakeholders, law makers, business and community members and major airport tenants, reviewing the Governor's Logistics Task Force Final Report of 2012, press reports and other relevant materials, the report simply summarizes the main reasons given, both for and against, the changing of the governance structure of the Charlotte Airport, but does not offer an assessment of the validity of those reasons given.

Reasons given for interest in changing the governance structure of Charlotte Douglas  (Section II)

  • As the City’s most important economic asset and the most important economic engine for the region, the Airport must be overseen using the governance structure most likely to ensure its continued success. A critical factor in the Airport’s success is its low cost to the airlines.
    The Airport’s success to date is attributed to a combination of a very capable airport manager and very limited prior City involvement in the management of the Airport. Recent City actions are seen as demonstrating that the City will be more involved in Airport management going forward.
  • There is a natural tension between the City’s need for revenue to support services and programs, and the Airport’s goals of keeping operating costs to a minimum. Stakeholders who favor a change in governance acknowledge that federal law prohibits the use of airport revenue for non‐airport purposes, but believe that when a City operates an airport, the airport may be required to contribute more for city services than would be the case if the Airport were truly independent.
  • The governance structure most likely to ensure the continued success of the Airport involves oversight by a business‐oriented board whose sole focus is the Airport.
  • Such a board would differ from current City governance in its full‐time focus on airport issues, greater understanding of airport issues, business‐orientation, and lesser degree of ongoing involvement by elected officials. have a strong business‐orientation.
  • The Airport has grown to become a major regional asset and the development of the Charlotte Regional Intermodal Facility means that the Airport will have even more of a  regional focus in the future. Therefore the Airport should have oversight by regional stakeholders located both in and beyond the City of Charlotte.
  • By having elected officials from multiple North Carolina jurisdictions make appointments to a new airport authority board, proponents of change believe the new board would be more representative of the region and more likely to have a strong business‐orientation.

Concerns expressed about changing the governance structure by interviewees who favor change (Section III)

  • A change in governance to that of an airport authority structure is seen as a balancing of risks; a new authority structure is seen as likely to have “less risk” in terms of effective airport governance, but as nevertheless still involving some level of risk that board appointments could take the airport in an unintended direction, e.g., by focusing on specific local interests as opposed to the broader interests of the Airport and region.
  • A change in governance to an airport authority is seen as likely to result in a board strongly aligned with important stakeholder interests, but proponents of change nevertheless recognize there is still the risk that a new authority board could prove less responsive to stakeholder interests and, in that event, that stakeholders may have less recourse than under the current system.
  • There is concern that a change in governance that is not seen as based on the merits and that does not involve an earnest and open discussion of the merits may cause longterm damage to the relationship between the City and other stakeholders who must continue to work together for the long‐term success of the Airport.

In the report, it states "those who are opposed to changing the current governance structure have expressed a number of reasons why the current structure should be maintained. They observe that the Airport has the lowest airline charges of any major U.S. airport; that it has become extremely successful under the current governance structure; and that no one is in favor of doing anything that would be detrimental to the success of the Airport. They assert that specific issues/problems that have arisen under the current structure can be addressed within the current structure. A number of those who oppose changing the current governance structure emphasize that they are not opposed in principle, but just feel that no one has put forward a persuasive case for change."

Specific incidents and circumstances (Section IV) 

Many individuals interviewed, both for and against a change in governance, cited specific examples to support their position. The report states that in many cases, the same incidents were used on both sides of the argument. Further, the report states, some examples were mentioned multiple times as evidence of unnecessary City intervention, while the same incidents were cited to show the City exercised responsible oversight.

  • US Airways’ reported request for involvement in the process of selecting a successor to the current Aviation Director, and the City’s reported response to that request.
  • The replacement of CLT Airport police with a larger CMPD police force.
  • The death of a teenager who may have climbed the Airport fence and who fell from the wheel well of an aircraft that departed from CLT.
  • IRS questions regarding the use of Airport bond funds.
  • The relationship between the prior City Manager and the Aviation Director.
  • The City’s reported requirement that the Airport participate in funding City financial and IT systems.
  • The Charlotte City Council having not approved a City Capital Improvement Plan for the current year.
  • The reported interest of the City in imposing a tax on Airport parking.

One thing everyone agreed upon: the airport is "enormously important" to the City of Charlotte, and no one is interested in creating "conditions that would interfere with that success"

The final report, due May 1, will address how different forms of governance will or will not address the issues mentioned in Section II (Reasons given for interest in changing the governance structure of Charlotte Douglas).

To view and read the whole report, click here.

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