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Part 2: DFW’s EVP of Global Strategy and Development Discusses Post-Covid Growth
The role of airports is greatly underestimated, as the airline industry goes forward after a pandemic that caused devasting effects.
During the World Routes 2021 event in Milan, however, airports made clear that they want to be an active player in the recovery, and Dallas-Fort Worth was not an exception.
AirlineGeeks had the chance to sit down with the airport’s Executive Vice President of Global Strategy and Development, John Ackerman. The half-hour talk was divided into two parts. Here’s the second part of our discussion.
AG: And what are the national limitations on incentives [from airports towards airlines]?
JA: The U.S. Federal Aviation Administration will not allow incentives in the United States. You can only pay incentives for two years, and that’s the main limitation. Then they will also look at the amount of the incentive. So if you tried to pay too much the FAA would step in and stop it.
But we carefully design our incentive program and we make sure our lawyers review it – legal experts, review it to make sure that it’s, that it’s a good program
AG: Going forward, do you think that Dallas is the best-prepared airport [for a post-COVID world]?
JA: Obviously I’m a senior executive for Dallas-Fort Worth International Airport so I’m pretty proud of my team, but I would say there are many amazing airports around the world. and I think we went into the pandemic very strongly. We came out even stronger on a relative basis. We’re second in the world right now, for a number of operations. We are third in departures.
So we’re a very, very big airport right now, but there are many good airports. So we think all airports have their own strengths for carriers that are interested in the US market. We think we’re among the best choices for the US market. You know, we think we’re the best destination in the US but it [all] depends on the airlines’ network. I mean, different airlines have different strategies.
But for an airline that is interested in it, the United States aviation market is still the biggest aviation market in the world and it will be for some time. I mean, obviously with the growth of China, eventually China will pass the US, but right now, the US is still a very important market, it’s still a very rich market. It did very, very well during the pandemic. So for airlines that want to serve the US, we think we’re an excellent choice for them. Our Texas economy is incredibly strong – if Texas were its own country, we would be the ninth-largest economy in the world.
We’d actually be just behind Italy where we’re sitting right now. So we would be the next country after Italy, whereas the DFW Metro area by itself would be one of the top 30 countries in the world. So it’s a very big market. It’s growing very quickly. It has a very diverse economy, a diverse industrial base. So we think it’s a really attractive market for many airlines,
AG: Which route are we missing right now – if you chose one or two right now, which one [would it be]?
JA: Barcelona is one of our largest unserved markets and in Europe, that’s a market that we’ve long had, our eye on.
We think that for American, they’re going to continue to expand in Mexico, so we think there’s room to grow in Mexico. South America has tremendous potential for us, American has long been very strong in South America. So we think that there are several South American cities that, that will, that will come over time.
But yeah, we have our target list, you know, like everybody else. And I would say we just added Istanbul two weeks ago from Turkish Airlines, we’ve been talking to Turkish for a long time, so even during the pandemic, Turkish realized how strong the DFW market was and they introduced service; and also American is going to launch the first-ever service from Texas to Israel; we’ll have Tel Aviv service coming in January. So even in the pandemic, you know, American, but other carriers are making bets on DFW because they believe in DFW
AG: What does it mean for you to be back in the presence?
JA: We think it’s really important. I mean, we learned that we can do things virtually, we can use Zoom and we can use Teams. And those are great tools, but I really believe there’s no substitute for being able to sit down, face-to-face. We’ve seen many people already today that we haven’t seen in two years. We’ve talked to them many times on the telephone and seeing their face on the screen, but I think humans in general, you know, humans like to be around other humans.
There’s a longing to connect with other humans. There’s a longing to explore other cultures. And I could have Zoom calls every day with a colleague in Italy, but coming to Milan and being on the ground and looking at the people and smelling the air — it’s just different. You can’t experience a culture via Teams and Zoom. I don’t believe that you can really truly understand people via the screen. I think there’s no substitute for that human contact. And I think a lot of people feel that way, and that’s why air travel continues to grow as fast as it does.
As people’s incomes rise and as the lower and moderate-income countries raise their standard of living, people want to travel, right? I mean, look, people want to go, they want to meet other people. They want to see things. They want to experience things and eat the food and see the sites.
And you can’t do that via Zoom. You just can’t. So long term we are very, very bullish on air travel; in short, it’s going to be choppy. It’s going to be rough and it’s going to be choppy and rough for the industry. And it will be choppy for us as well. You know, we’ve had a very steady recovery, but we’ve had a couple of little dips in there as well that caused us to hold our breath for a month or so. And then things kept recovering.
AG: Do you see life corporate travel being as important as it was before?
JA: Oh, I think corporate travel will always be very important, but that is, I was going to say, the million-dollar question.
That’s the trillion-dollar question maybe, what’s going to happen with corporate travel, and again, on corporate travel, we are still very bullish on corporate travel just because, again, the world is [all about] connections. 20 years ago [it was] said that teleconference is going to put air travel out of business, and then [that] video conferences would put air travel out of business, and then [that] Zoom would put air travel out of business.
But it hasn’t, right. And are there some trips that are being not taken and done on Zoom? Absolutely. But the overall business market is growing so rapidly because again, as the world gets more connected, you may make your first connection via zoom, but you’re going to eventually want to meet with these people in person.
So overall we’re still very bullish even on corporate travel. Although we do believe that there will be some corporate travel that used to be done that probably won’t be done in the future, I don’t think we’re unique in our view on this, that the company travel, you know, 10 of us from offices around the world, around the country meeting up for a couple of days for a sales meeting that might be done via Zoom – some of that may be done via Zoom. But we think the majority of corporate meetings, you know, will, still. We think a majority of the corporate travel will come back, but there will be some percentage that probably switches to a virtual setting.
But again, corporate travel is just growing so fast that we don’t think you’ll really see that, you know, five years from now, that we think that’ll be very hard to see in the data. The corporate market will be bigger. It’ll just be a little bit different as far as that was close to.
AG: When do you see the [track] numbers back to where they were before?
JA: We think to get to really, really where they were before, sometimes in kind of the middle of 23 to get fully back to where we were. We’ll start to get towards the end of next year, you know, maybe a year from now — we’ll start to see our numbers about where they were in 19, but to get an entire year of that, that’ll be just towards the end of the year.
You know, right now we’re still a little bit, 10 or 20% down — we think that’ll clear up about even with 2019 by later on, late next year, call it September of October, maybe, of 22, we think we’ll be back. And then it’ll come.
AG: What do you expect to accomplish at this conference?
JA: Look, in this conference, as I said, there’s many people we haven’t seen for a long time, we have, some airlines that requested to see us that are keen to start making some decisions [and] that wanted some additional data and they wanted to speak with us.
So we have no announcements to make here, everybody would love to make a big splashy announcement; we won’t have any announcements to make here, but we’re hopeful that some of the conversations here start to get things closer to announcements, but we have no new announcements.
AG: Are there any new airlines that you’ve been talking to?
JA: Yeah, we’re talking to several new airlines. We hope to announce some new airlines, but yeah, we’re talking to a few.
AG: And where do you see Dallas-Fort Worth Airport in five years time?
JA: Well, in five years time, I think we’ll be fully recovered from COVID.
[In] five years time we’ll have opened new gates. We’ll have five terminals we’ve updated and renovated all of our terminals are updated except for one in five years — that will be done as well. So we think we’ll have a gorgeous airport with an amazing customer experience. In five years our traffic will be fully recovered and it will have grown significantly. I believe we’ll have several new airlines in five years.
And again, something that’s not talked about a lot in this conference is our cargo business is growing very rapidly as well. And I think in five years the entire world will understand what an important cargo airport DFW is as well.
- Part 2: DFW’s EVP of Global Strategy and Development Discusses Post-Covid Growth - November 17, 2021
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