Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
1 Project Background The US aviation industry experienced unprecedented growth in the 1970s, 1980s, and early 1990s. Faced with expanding operations and an increasing number of passengers to serve, air- port managers rallied to address the demands of capacity expansion as best they could. When combined with the community pride associated with landmark airports, this exponential growth spurred airport managers to focus on building iconic facilities that were intended to meet the needs of the traveling public, serve as an economic growth engine for their region, and represent the communityâs desired image. On the heels of this prosperity and growth, the industry experienced a sudden economic down- turn in the late 1990s, which was immediately followed by the watershed events of September 11, 2001. These events would drasticallyâand permanentlyâredefine the airport operational envi- ronment. According to Fiscal Times (Jasen 2011), passenger carriers posted a cumulative loss of $63 billion in the decade between 2000 and 2010. As would be expected, these losses directly affected airport budgets, but they also reduced the bonding capacity necessary to fund the capital programs at many airports. This situation was exacerbated by a passenger facility charge cap that had not been raised for 20 years and lagged behind inflation. Economic woes, reduced customer base, constrained funding, and obsolete charges combined to present a significant change for the industry: Previously, airports enjoyed budgets commensurate with their responsibility to their traveling publicâs expectation for service; suddenly, this was no longer the case. In short, the changes wrought by deregulation and political-economic shifts over the last 20 years have significantly shifted business demands under which airports must operate. Rather than focusing on growth-fueled improvements, airport staffs are faced with the challenge of stretching budgets by preserving assets and identifying long-term operating efficiencies. The challenge becomes more complex when one considers the increasing number of new and aging assets in airports, managed over multiple departments that use many different standards and tools that are also quickly approaching the end of their useful life. Airports currently procure new assets using a linear and siloed approach, starting with planning, progressing to designing, building, operating, maintaining, rehabilitating, and finally decommissioning. Because of this linear approach, the total cost of owning an asset throughout its entire life cycle is often not considered in ongoing procurement decisions. As a result, many US airports are forced to either (1) retrofit their facilities under high capital replacement costs or (2) operate under the burden of the highest possible level of ongoing operating costs. Neither represent an optimal situation. A better alternative is to shift toward actively managing the total cost of ownership (TCO) to improve procurement decision making and use both capital and operating funds. Fortunately, TCO is not a theoretical construct but a proven process that is used successfully in manufacturing, C h a p t e r 1 Introduction
