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Economic concerns raised during airport conference

The next economic downturn turned heads at a panel discussion during the North America Airports Council International conference.
The next economic downturn turned heads at a panel discussion during the North America Airports Council International conference. (Karen Talley)

Orlando International Airport's much vaunted south terminal could be sidelined and development and airport staff let go under the worst case scenario of another economic recession in the area.

"I think about it every day,"  Phil Brown, executive director of the Greater Orlando Aviation Authority, told GrowthSpotter on Tuesday.

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The comments came after Brown attended an airline industry conference in Orlando that included a session on the next economic downturn.

Panelists, who did not include Brown but did feature Tampa International Airport finance vice president Damian Brooke, were leery about the economy and also still stung by the last recession.

Tampa International, for instance, has spent the last few years "completely reconfiguring how we look at capital budgets," Brooke said.

Brown said Orlando International Airport, because it is such an international port and because recessions tend to occur globally, is looking at conditions both here and abroad. This is especially true in Latin America, given a prolonged recession and political instability in Brazil.

"We're watching the airlines that carry most of that traffic," he said. "We do see some retrenching."

Orlando International is also taking a very cautious approach to the building of its south terminal, a more than $200 million project that will add 16 to 24 gates, a train docking station and an automated system for taking passengers to terminals.

If a "worst case scenario" downturn occurs, "the program stops in terms of expansion," Brown said.

And if this happens, thousands in the construction industry suffer, as do staffers like those who clean the airport and give people directions because there are fewer travelers, so less workers are necessary.

In regard to the south terminal, the airport is protected to a large degree because it is using as its construction method a variation of the construction-manager-at-risk approach.

"We will not proceed with the next part of the project if things are slowing down,'' Brown said.

In a construction-at-risk scenario the construction manager, while guaranteeing to deliver the project at a maximum price, generally has the right to keep working, and be paid.

Orlando International Airport is not being hard nosed, but pragmatic.

Last year it flew a record 38.8 million passengers. In 2008, during the depths of the recession, it carried 5.1 million less.

That is considerably less commerce and business for Orlando, where construction is a significant part of the economic fabric. Consumer spending makes up the lion's share of gross domestic product, at 70 percent.

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The rest is spent on things like building and capital projects, which account for billions of dollars and thousands of jobs. The corollary is that a down economy turns off the spigot of people who move here, and the spending they do.

The session, at the North America Airports Council International conference held at the Renaissance Orlando at SeaWorld, was among the best attended as airport and airline leaders have begun to grow a bit uneasy.

"We're just now bottoming out," said John Schubert, senior director of finance at Tucson International Airport.

That may not hold Tucson in good stead, considering the current expansion has held up 82 months, while the average recovery lasts only 52.

"Is it time to worry?" asked panelist Sharon Sarmiento of Unison Consulting.

Have a tip about Central Florida development? Contact me at ktalley@growthspotter.com or (407) 420-5176. Follow GrowthSpotter on FacebookTwitter and LinkedIn.

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