Thomas P. Glynn CEO Report to the Massport Board July 17, 2014

Transcription

1 Thomas P. Glynn CEO Report to the Massport Board July 17, 2014 Welcome to the July meeting of the Massport Board. Aviation International Air Service Logan s international carriers customarily increase frequencies, and even routes, during the summer vacation season. But this summer we are also seeing an overall increase in opportunities for Logan s passengers to travel overseas as carriers are increasing the number of available seats flying out of Boston. New service from Hainan Airlines, Emirates, Copa Airlines and Turkish Airlines accounts for about 11% of the total available international seats through May Worcester Airport Summer Travel Travel to Florida normally slows down during the warm summer months. But JetBlue service from Worcester Regional Airport to the Sunshine State appears to be defying convention as the new service passed the 75,000 passenger mark last week on the strength of 87% load factors. The summer popularity of JetBlue s service is actually 3% higher than average load factors since JetBlue began daily nonstop service to Orlando and Fort Lauderdale last November. This trend is continuing into July as load factors hit 88% for the first week of the month. Continuing our efforts to promote commercial air service at Worcester Regional Airport, Massport sponsored a luncheon in late June to brainstorm on ways college recruiters could more effectively utilize JetBlue s eight-month old nonstop service to Florida in their efforts to bring more students to Central Massachusetts. As we learned from Dr. Francesco Cesareo, President of Assumption College, at a Latino outreach luncheon we sponsored last January, nearly 10% of his students 1

2 live in Latin America and so JetBlue s nonstop service to Orlando and Fort Lauderdale with easy connections to other destinations in Central and South America were critical to his ability to recruit international students from the region. Dr. Cesareo was among the representatives from 11 colleges and universities who attended the strategy session in June, led by airport director Andy Davis, Worcester City Manager Ed Augustus and Karen Pelletier, representing former Lt. Governor Tim Murray as Director of Higher Education Business Partnerships for the Worcester Regional Chamber of Commerce. Among the ideas discussed to benefit the airport and schools alike were plans to conduct college recruitment drives in Florida highlighting the easy access to Worcester that JetBlue s service now provides, or direct promotions of JetBlue s nonstop service with Central Massachusetts alumni now living in Florida. Greater utilization of Worcester Airport by students who might be interested in studying abroad in Latin America, or by intercollegiate and professional sports teams traveling between Florida and Massachusetts, was also discussed. Logan Public Health Study Follow-up Massport remains in discussions with the Department of Public Health and neighborhood health centers on how we might support their efforts to address some of the issues raised in a recent DPH study of health issues in the communities surrounding Logan Airport. Needs assessments are being done in these communities to develop targeted strategies for responding to the 14-year study that found no adverse cardiac or hearing issues related to airport activity among the more than 6,000 residents surveyed in 17 surrounding communities, nor any connection between the airport and cancer among nearby residents. An elevated likelihood of COPD in adults living close to Logan for many years as well as some respiratory effects in young children indicating probable asthma was suggested. Among the possible responses discussed have been the provision of nurse practitioners, home visits and education by case managers and community health workers, healthy home kits and the tracking of care and referrals as needed. 2

3 In the meantime, DPH is recommending that Massport continue our efforts to reduce emissions, which have dropped by 60% since the 1990s alongside a 90% drop in noise impacts due to improvements in aircraft technology. Maritime Fish Pier Centennial/Economic Impact Report Later this month, Massport will celebrate the 100 th anniversary of the Boston Fish Pier, believed to be the oldest continuously working fish pier in the United States and home to one of this region s signature industries, which has long defined the character of New England and continues to provide good paying jobs for hundreds of working-class Massachusetts families today. Massport will be marking the centennial of the Boston Fish Pier next Monday in conjunction with the release of an economic impact report by Martin Associates that ranks the Port of Boston as the sixth largest employer in Boston and whose more than 7,000 direct jobs place it immediately behind such venerable Boston institutions as Massachusetts General Hospital, Boston University and State Street Bank. Throughout Massachusetts, more than 98,000 jobs are in some way connected with the fishing industry, which places the Commonwealth directly behind nationleading California for the most workers employed in the seafood industry. Massport Bond Rating All three rating agencies gave Massport, and the Massachusetts economy that supports us, a strong vote of confidence last month when the agencies maintained Logan s credit rating as among the best in the airport industry. Fitch and Standard and Poor s both sustained Massport s AA credit rating while Moody s Investment Services gave Massport an equivalent Aa3 rating. And all three agencies rated the future outlook for Massport s bonds to be stable. Among the numerous strengths cited by the rating agencies was Logan s historic standing as one of the ten most diversified airports in the country in terms of air carriers. Logan also has a strong and stable origination and destination passenger base above 90% where no single carrier enjoyed more than a 27% market share. 3

4 Another positive: Logan s diverse mix of domestic and foreign flag airlines is augmented by the increasing presence of low cost carriers such as JetBlue, which is currently Logan s largest airline measured by the number of passengers carried. Massport's strong financial performance, the agencies said, was anchored by a resilient and growing demand for air travel within a strong Boston metro service area. This was further supported by a relatively stable maritime activity where Port revenues have been positive as both cargo container and cruise revenues are growing. Demand for travel is likely to remain strong, the agencies said, since Logan serves a Boston area market that has a travel intensive economic base, enjoys relative low unemployment, has above average incomes both regionally and nationally, and is an attractive destination market for domestic and international travelers. Also cited as a plus by the agencies was Massport s strong infrastructure development program of just over $1.2 billion. With modest borrowing needs going forward, and a conservative debt structure that has 90% of obligations in fixed rate instruments, the Authority s exposure to future financial market risk is limited, the rating organizations say. One wildcard in the minds of the credit agencies is Logan s relatively high enplanement cost of $13 per passenger, which is above Moody s national median of $7.76 per passenger and also above its $9.61 median for other large hub airports. Also of concern to the agencies are the implications of Massport s development role as the economic engine for New England, which they believe exposes Massport s capital program to expenditures on non-core projects. Specifically, the agencies cited the loss of revenues from the Tobin Memorial Bridge when that facility was transferred to the Commonwealth in 2010, and the acquisition of Worcester Regional Airport before the arrival of regular commercial service on JetBlue Airways last November helped to reduce the airport s existing $4 million annual deficit. 4

5 Fiscal Year 2014 Accomplishments I wanted to begin the new fiscal year by noting that Massport has a lot to be proud of for what we were able to accomplish together during the past fiscal year which ended on June 30. In 2013, while Logan ranked as the 19 th busiest airport overall measured by passengers, Logan was rated 7 th highest among the nation s top 20 airports in terms of domestic revenues, at $4.1 billion. Los Angeles International Airport led the nation, with $6.7 billion in domestic revenues, followed by San Francisco International Airport and Chicago O Hare Airport. On safety and security, Massport Fire Rescue once again showed why the department is widely considered one of the best in the industry when Chief Donahue s crews quickly contained a potentially catastrophic fire in Logan s fuel farm last September. Massport made major strides to improve customer service with the opening of a new $300 million Rental Car Center last fall, along with the completion of a new post-security connector that unites both sides of Terminal B for the first time and allows United Airlines to operate out of a single facility. At Worcester Regional Airport, new nonstop service to Orlando and Fort Lauderdale is as popular with Central Massachusetts travelers as we hoped it would be as, since November, JetBlue has served more than 75,000 passengers. There was also good news for Massport s corporate and general aviation customers at Worcester Airport and Hanscom Field as well, as Rectrix Aviation is completing new FBO facilities to enhance services at both Massport airports. New all-time records of more than 30 million passengers at Logan Airport and 382,000 passengers at Cruiseport Boston, along with the addition of four new international carriers, enhanced Massport s standing as economic engine for New England. The securing of $300 million in state and federal spending for the deepening of Boston Harbor will greatly advance Massport s maritime mission as ports everywhere prepare for the arrival of larger container and cruise ships once the expanded Panama Canal opens in

6 Projects like the East Boston Greenway, Roseland s Pier One housing development, the refurbished Saratoga Street Bridge in Winthrop and Massport s proactive response to the issues raised in the newly-released Department of Public Health study I mentioned earlier, testify to Massport s commitment to be a good corporate neighbor. And to promote employee morale while thanking our workers for going above and beyond the call of duty to make FY14 such a successful year, Massport took time out to honor our outstanding employees at three separate ceremonies: the Safe and Stars awards ceremony attended by New England Patriots owner Robert Kraft last December; an appreciation luncheon in May to thank Massport s administrative staff for all that they do; and an All Hands meeting in June. Hanscom Accident Later in executive session, we will continue our discussions of the May 31 crash at Hanscom Field of a Gulfstream IV jet that killed four passengers and the plane s three-member crew. Our thoughts and prayers go out to the families of the deceased. This matter remains the Authority s highest priority. We have cooperated and continue to cooperate fully, with the National Transportation Safety Board in its investigation of the incident. A preliminary report released by the NTSB on June 13 and based in part on information from the flight data and cockpit voice recorder suggests that pilots may have failed to conduct a preflight check, which may have allowed the plane s lift controls to be in a locked position, making take-off impossible. According to the NTSB report, the flight data recorder did not reveal any movement consistent with a flight control check prior to the commencement of the takeoff roll. The NTSB also questioned whether the so-called gust lock, which is used to prevent wind damage when a plane is on the ground by locking ailerons, rudders and elevators in their neutral or down positions, was still engaged when pilots attempted to take off. 6

7 Anna DeFronzo Center Last week, Massport joined family members, local elected officials and former Governor Michael Dukakis to re-dedicate the Anna DeFronzo Center which, for the past 15 years, has served as a meeting place and recreation center for local residents, senior citizens and community groups like Air Inc., which meets monthly in the space to work on issues that balance local concerns of health, safety and quality of life with on-going operations at Logan Airport. Last year, Massport undertook a $300,000 renovation of the center that included the installation of new rugs, new lighting, new ceiling tiles, window repairs and the installation of the a memorial plaque dedicated to Anna DeFronzo, organizer and inspirational leader of a group that came to be called the Maverick Street Mothers. As the East Boston Times quipped after the event, having Massport memorializing one of its harshest critics was sort of like the New York Yankees having a party for Red Sox slugger David Big Papi Ortiz, or perhaps like the Democratic Party hosting a fundraiser for Republican members of the House of Representatives. It will be 44 years ago this September 28 th that Anna DeFronzo brought the citizen activism of the civil rights movement to East Boston when she organized mothers along Maverick Street who pushed their baby strollers in front of the dump trucks which had been rumbling through their neighborhood, creating road blocks with their children to halt Logan Airport expansion in its tracks. And so, it is no exaggeration to say that Anna DeFronzo helped create a new awareness and social consciousness for the entire East Boston community during that fall in 1968 which endures today and which defines a more responsible and productive relationship between Massport and our neighbors. Boston Pops Pop Up Concert at Logan And finally, travelers departing through Terminal B in late June were pleasantly surprised when 12 members of the Boston Pops Orchestra, led by conductor Keith Lockhart, were on hand to perform an early morning pop up concert to promote the world famous orchestra s annual Boston Pops Fourth of July Fireworks Spectacular. Logan was one of several venues across the City of Boston chosen by 7

8 the Pops to promote its annual concert at the Hatch Shell on the Charles River Esplanade. Thank you Mr. Chairman. That completes my report. 8