The Airport Balancing Act: Capital Planning, Capacity, and Hangar Demand

Episode Transcript

Mollie (Host)
Welcome to {Brief}ly Speaking, the SEH podcast where we break down big topics in architecture, engineering, and construction into quick, useful insights. Airport management is a constant balancing act. Behind every runway improvement, terminal upgrade, or development project is years of planning, funding strategy, infrastructure coordination, and operational decision making. While passengers experience the finished product, much of the real work happens behind the scenes through long-term capital planning and infrastructure management. Today we're talking about how airports prioritize projects, navigate changing demands, and make infrastructure decisions that shape operations and growth for years to come, including one challenge many airports are facing right now, a growing demand for hangar space. Joining me today is Joel Martinez, our SEH Texas market lead for aviation with extensive experience in airport management and municipal government. Joel recently retired as Director of Aviation at Waco Regional Airport after 16 years leading airport operations, planning, and development. He also brings deep expertise in FAA, TSA, and Texas DOT aviation programs, along with a decade of teaching aviation management and airport administration at Baylor University. Joel, I'm so excited to have you here. Welcome to {Brief}ly Speaking.

Joel (Guest)
Yes, thank you for having me. I'm happy to talk airports, kind of talk shop and geek out a little bit.

Mollie (Host)
I love it. This is your world, so let's dive right in.

Joel (Guest)
Awesome.

Mollie (Host)
From the outside, people often think airport management is mostly day-to-day operations. But for airport leaders, capital planning is a major part of that job. How much of your focus is really spent planning 5, 10, even 20 years ahead?

Joel (Guest)
Honestly, once daily operations and those processes and procedures are kind of set in place, there is some oversight that goes into that on the day-to-day operation side. But for the most part, a lot of it is CIP or capital planning 4, 5, 7 to 12 years out, just trying to identify some of those plans, some of those needs, and then anticipate some of the budgetary constraints for some of those. You're looking at a project or depending on where your infrastructure is, the state of that current infrastructure. So your priorities will change just based on those needs. Roughly on a percentage basis, I would say probably 60 to 75% of that time is kind of identifying some of those big ticket items setting out the funding plan, scheduling of the design services and things that are needed for that, and trying to line all that up with whether it's federal funding or local match or state funding to maximize those types of opportunities for that as well. So not only in identifying the projects, but setting them up as far as the funding goes, and then establishing communication with those funding agencies to ensure that it all lines up with some of their priorities and then the available funding for that as well.

Mollie (Host)
Yeah, so it's a lot of that pre-planning work that we talked about there.

Joel (Guest)
Yeah.

Mollie (Host)
Now when you're building or updating a CIP, how do airports realistically balance FAA priorities, operational needs, tenant expectations, along with future development operations?

Joel (Guest)
You know, it's a very interesting balance. Sometimes the FAA just based on the nature of the current state of the national airport system. And you look at some current events that take place. Sometimes the FAA will change their priority sets to establish maybe some common deficiencies in the system so that they'll reprioritize those things. And so we always have to be in dialogue not only with our airport development office in your region. Also keeping an eye on some of the current aviation events that are taking place not only across the country, but around the world that have impacts for safety because safety is the FAA's main priority. There's so many ways to answer that question, there's so many layers to that question, right? So you have to make sure that as the airport management, airport leadership, you have to ensure that those systems that you have in place to monitor operations at your airport are one that they're working very fluidly. And the one thing that we like to say is those things are kind of like a living document, right? So we see the environment change, we see usage change, we see frequencies change and so then we have to kind of modify what that looks like. We start to identify some shortcomings and how those processes are done. Then we have to kind of modify those changes. And so again, trying to drive all that back, not only does the FAA drive in their safety standards and some of the things that they're trying to implement on a national level and how that filters down to different size airports, you also have to look at your current tenants, your current users of the airfield itself, right? Businesses, they have their own cyclical challenges, whether it's business flow at the beginning of the year, end of the year. Some airports have flight schools, they may line up with an academic semester. And so keeping your eye on some of those activities and some of those trends also help you recognize and realize, well, this will be a good time to do a crack seal overlay because our local users that are on a downward trend. So it really is quite the balancing act when it looks at some of those stuff. And then again, ensuring that you're identifying those projects and communicating the needs for any major changes, closures for our users. We have to make sure we're basically pushing that information out and being as transparent as possible so that they themselves can anticipate one, if it's a closure or a shortening of a runway or a tie-in taxiway that's going to cause them to change. And then we look at our users and then we have some of the stakeholders on their fields as well. You have air traffic control. They're not necessarily a direct user. I mean, they're part of the facility. So in constant communication, trying to make any of those tweaks or adjustments for closures or for maintenance, identifying them early enough, putting together a leadership plan or an operational plan to say, hey, during this month or during this period of time, we're going to be working here, making sure everybody's in the communication link. So I mean, that's more like on the operational side, but again, all that works out very well when it comes to kind of the big funding, big design packages. You look at phasing and things like that. When you have those communication links already set up, it's not so much of a shock when you come and say, hey, we're shortening or we're closing access or doing different things because they know, hey, this is coming in three or four years and we've known about this and we can modify how we plan to use the airport as well.

Mollie (Host)
It really sounds like a very complicated puzzle that you have to manage all of the different pieces. Just make sure you don't lose one piece in general, but then figure out how they can all fit together and plan ahead and communicate all of that the entire time. So it's a fairly complex process, but I think you explained it really nicely there. Looking at all the pieces, staying on top of it, adapting to the changes that you need to change, and having it be a living document, like you said. Now, this is a problem across the board. It's not just airports, but a lot of airports are managing aging infrastructure while also trying to position themselves for growth. So how difficult is it to add another puzzle piece in here, balance the preservation versus the expansion in today's funding environment?

Joel (Guest)
That's one of the interesting challenges that airports face, I know that that's something that across different industries, they're challenged differently because of where the funding comes from. The FAA has tried to create some required tools for airports to use. You have your pavement management plans, which require airport sponsors and airport owners to basically identify the current state of their asphalt or their pavement structures not only just the runways, taxiway stubs, but the entire paved facilities that are on an airport. And then it helps airports set priorities for the preservation process, because that's the one thing too that on the funding piece, just an example, if an airport were to not implement those strategies and identify their services, the condition of those services, and then implement a preservation or a maintenance program for that, then the FAA is going to say, hey, why are we going to invest such a big dollar amount into a facility where it's mismanaged? And so that's one of the tools that during my experience, really leaned into some of that, really showed being a good steward of that infrastructure piece. Not only did it help us prolong the life of that infrastructure, but it helped the FAA when it came to if a particular project or an improvement required additional funding. We had all the documentation to back it up and say, hey, when we had our infrastructure last touched, we basically implemented this program to ensure that infrastructure was in good standing workable condition for all of our users. So that's kind of one of the things that I think the FAA and state agencies also fall into that for larger general aviation airports. And I think it's just a good management practice for airport managers, airport directors, city, county administrators that have to look over that. And I know that for those that kind of get diluted in that responsibility, it's really more challenging to keep up with some of that. But I mean, there's a lot of good information to help those involved in airport operation, airport management, utilize some of those tools for that.

Mollie (Host)
No, I think that's a great tip or great advice, especially for some of those where this isn't their main role or their main focus is kind of where to look. What are the things that you should be focusing on and highlighting, so to speak. So I think that's a great tip for people. Now, again, talking about the kind of pre-planning and looking ahead, how much does forecasting based aircraft, corporate aviation activity, and regional economic growth influence the long-term infrastructure planning decisions that you're making in this role?

Joel (Guest)
So again, this is an investment that not only a small city or county or state make into that piece of infrastructure. So forecasting really does drive a lot of those funds and that priority. So, and it's kind of interesting, the one piece that people that aren't involved in airports that have an airport in their community, they may not recognize the direct impact that an airport has on their local economy. So even if there's not an airport specific project or development or economic growth in a particular community, that's not directly on an airport. The airport has to be aware of that growth opportunity or those growth patterns. So that way we can then justify the need for ensuring the infrastructure kind of meets that, whether it's shipping, whether it's cargo, whether it's air service, any of those things. The airport has to be aware of what's going on in their community in and around the airport and say, hey, we might need a longer runway or we might need to strengthen or widen or do those kinds of things. And probably more of a challenge for some smaller general aviation airports or airports that don't have too much business on the airfield, then you can kind of see it. But for those that are observing the community, so like getting involved with the local chamber of commerce, any type of economic development corp and kind of seeing and recognizing, you know, hey, we're investing or private companies investing, you know, so many dollars, it's going to create so many jobs and keeping tabs on some of that economic impact around the community, around the airport and helps the airport then justify and build that forecast, right? Not everybody that flies on an airplane worked at the airport, right? So when you look at the bigger airports, it's all derived on the economy in that metropolitan area.

Mollie (Host)
Yeah. So I'm just curious, are there certain warning signs that tell airport leaders capacity issues are starting to outpace infrastructure planning?

Joel (Guest)
Yeah. First sign for some of that is one is you see an abnormal use capacity. You hear of whether it's longer holding times for aircraft, even longer wait list than usual, or your wait list for hangars just keeps growing and growing and growing, recognizing either your fuel cells, starting to recognize, hey, wait a minute, these fuel orders are required more consistent frequency than what we've normally seen. There's some early signs to see some of those things as they come up. And then it's always a fun part of being involved in airports is identifying, okay, so what project makes the most sense to have the most impact? Because some airports that are limited on revenues to self-fund some of their capital projects that heavily rely on federal and state funding, they really have to understand, hey, look, this project, I may get one chance to have an impactful project to my infrastructure. Basically, what's the best bang for our buck? And so that's kind of a neat component of airports is we don't get blank checks. So hey, you got your one shot to make the best improvement. You have to state that case and understand how that'll improve and impact airport operations and reduce or address capacity concerns.

Mollie (Host)
Yeah, well, I would imagine that you can't just be going in and updating things one after the other because you have to have people flying in and out. Otherwise, the airport doesn't do very well.

Joel (Guest)
That's right. That's right.

Mollie (Host)
So we've talked about a couple of different challenges that airport managers face here. We've talked about, you know, pre-planning down the road years in advance. We've talked about balancing FAA priorities, operational needs, expectations, all of that kind of thing. To add one more to the list, we brought this up in the intro here, but hangar demand is kind of a newer growing issue that airports are facing. So it's a new pressure point here. What are you hearing most often from airport managers and tenants kind of surrounding this issue.

Joel (Guest)
Well, a lot of my experience and exposure, which I'm assuming is going to be true around the country, but for most of the folks here in Texas or airports in Texas, is their waiting lists are just growing and growing and growing. And it's just compounding. I know that when I was at Waco, we would have tenants that would actually be based here in Waco, but they would commute an hour to an hour and a half because the airport and their community where they lived either didn't have the facilities or didn't have space or opportunity. So we're seeing that those hangar needs are growing and growing and growing. We can go back to why, what's led to that demand. COVID, I like to go back to the very beginning, well, not the very beginning, but what led to this uptick in pilot training and pilots. COVID, one of the many negative things came out of COVID was that a lot of the pilots that were what the airlines, they were basically given the opportunity to retire because the airlines didn't realize that what that rebound would look like. And so a lot of those took that retirement opportunity and moved on from flying those commercial aircraft. Well, now that since COVID, obviously we recognize that travel has rebounded robustly and airlines are really growing in that area. And the one thing they need is pilots. So there are some steps for pilots to basically be able to fly for those regional carriers as they have to have so many hours of flight. And then they got to buy a plane to fly that's cheap. In some instances, it may be cheaper for a pilot or an aspiring commercial pilot to invest in their own aircraft. It's kind of then they see that as an investment that they can utilize in the future different ways. You have a growing population of those types of users. And I think we've seen that in the past six years. I think that we're going to continue to see those needs and that growth pattern take place. And so there's more pilots, there's more airplanes, more smaller airplanes. And that's where we see that. Now, the question was, where do we see that demand? How do we answer? How do we solve that? That's a, there are many opportunities for communities to do that. And I think that's one of the biggest challenges that airports, especially small general aviation airports, airports that have limited revenue. You've heard me say that limited revenue a couple times because airports, by FAA task or they have to be, I guess, physically solvent. They have to basically cover their own expenses. And so the FAA has their priority sets, comes to investing, giving grants for certain developments. And so a lot of those things basically start from the center line of that runaway and move out. And again, because of limited funds, a lot of that infrastructure and the price of that infrastructure really stops once you get to the hangars. I mean, there's opportunities there for hangar development for those airports. If there's another airport with a greater infrastructure need in that region or in that state, the state has to really kind of evaluate what that looks like and say, hey, the priority is for the flying public, not for storage of aircraft, those kinds of things. So how do we build more? I mean, it'd be easy, right? We just have a build more hangars. Construction costs are going up. And then some airports are limited with space. You know, they just don't have any more space to build hangars. And so airports are looking at improving some of their general aviation ramps, general aviation taxiways to either gain access to land that didn't have infrastructure on it, and that has a cost associated with that. And so some airports are kind of now being more open to private developers. And I'm kind of know I'm getting ahead of kind of where our conversation was going, but it seems like an easy flow for some of that. But yeah, so we're looking at some private groups that see an opportunity where there's a great need. I mean, it's like any other opportunity for business to make an income or drive an income, right? And what that does is that helps the airport not have to basically front the entire construction cost. And then there's ways for them to get for the private developer to gain the incentive, right? Not only do they get the rent, but they probably get a really good land lease rate. There's other incentives that airports and communities can offer those private developers to come into those facilities as well.

Mollie (Host)
As you were talking through that answer there, what kept going through my head was this is kind of a chicken and the egg situation because airports are wanting to grow. They're seeing more need for different flights and just more people going out. So they're wanting to grow, but in order to fill the growth, you need the planes to come in, which then needs the pilots to fly the planes, and the pilots need the hours to be able and certified to fly the planes. So which one do you first, when like you said, you only have so much space, you only have so much funding, and you only have so many projects you can do in a year. So I can see how that would be a challenge, and I don't envy you guys for having to solve that complex situation there. But, the private developer thing, that's a great secondary option that many airports might not be aware of as an option for them. So I think having that conversation throughout this too, and just putting that on the table is a great recommendation.

Joel (Guest)
Yeah, as I say, so it does take kind of like an innovative approach, right, to solve that problem. I mean, some airports and some communities don't recognize the value of an airport. So they don't put place a high priority on some of that. But in most communities where airports are active and growing in that regard, again, another part of airport management and airport leadership is being what I like to call a kind of being good neighbor is informing your community of what some of those priorities are and what those benefits are to the community. So definitely a challenge there for us.

Mollie (Host)
Makes sense. So funding is obviously a huge part of this conversation. We've kind of heard that theme throughout this entire conversation. How does the lack of traditional grant support for not only airport projects, but hangars too, and specifically, like we just talked about, how does that affect airport's approach to these development decisions?

Joel (Guest)
It really requires them to kind of understand what they can and can't do within the FAA kind of guidelines and policies. One of the great things about airport management and being an airport director, I think, and this travels across the country, it's kind of a great community of folks that want to help one another understand how to, why reinvent the wheel? You know, if you recognize an airport in your community, in your state, or in your region that has been able to address that problem, you know, being connected and networked is always helpful. So I always think that first and foremost, talk to your peers. I think that that's very important and valuable or invaluable really. But also, continue to talk to either your state planners, talk to your FAA planners, and kind of get an understanding and a grasp of how are other airports solving some of these problems. And they may not be your direct one source, but they can kind of point you in a direction where you can really run through those ideas and then see what fits your community the best. So that's one of the things too that I really encourage airport managers or those in airport leadership to really do is to really find that network. I have in my 25 plus years of working with airports in the state of Texas, I've never ran into an airport director, airport manager, airport administrator that said, I don't want to help you. I just don't have time for that. Everybody makes time for that, which is one of the cool things and one of the things that kept me in this industry for so long. And so that's one thing for sure is observe and ask questions and reach out to airports that have identified and solved those problems. And then again, talk to your state and federal regulators to kind of understand, hey, how does this translate to where we are and whether it's in a different state or in a different region within the FAA? What's the common practice here to solve this problem? Those are definitely things that I would keep in mind and encourage airports to keep looking at and looking for.

Mollie (Host)
I love that advice. I mean, I think it is such a unique field and unique challenges that this position faces. So having that connection, talking to the other airports makes total sense to rely on that kind of community members we'll call it. So I think great advice again. So my last question for you today is for airport executives or managers looking ahead over the next 5 to 10 years, What should they be thinking about now to avoid being caught behind on capacity or infrastructure needs later? What's your tip, your next tidbit of advice?

Joel (Guest)
My thing is always to envision a grander infrastructure than you may possibly need, because you can always scale that back. But if you start anticipating a very large infrastructure, whether it's an extension or a complete rehab, basically if you go after the high dollar item, you may have to pare that back based on needs or based on other indicators that say, hey, we really don't need all of that capacity or all that infrastructure buildup. It would always be better to always be looking that far ahead than to basically have that problem show up with 18 months to 36 months of budgetary planning. So it takes, and again, that pavement management plan, that process the FAA has in place really is a great place for airports to kind of understand this is our infrastructure. Our normal life is X number of years. We've already had these many years left. Let's start looking at that opportunity. And then when you're in those early years of that infrastructure where you have 10 years of life left, then you start to look around the airport right up to the fence and say, what can we do here? What can we do there? Creating more opportunities to diversify the revenue for an airport whether that's more hangar space, hangar development, businesses on the airfield, things like that. My thing is plan early and dream big. I think that's the best way to think about it from the airport's perspective is the best way to approach that.

Mollie (Host)
Was a great way to end our episode here. Plan early and dream big. I love it.

Joel (Guest)
Yeah.

Mollie (Host)
Well, it's clear airport management is far more than day-to-day operations. It's really long-term strategy, balancing so many different needs: funding realities, regulatory requirements, future growth, and often years before the public ever even sees results, so it's much more than just a title. It is a very significant job that holds a lot of weight. So I'm so thankful for you coming on here and just joining us and sharing your perspective and honestly your experience with it. I think it's just a much needed conversation and we're happy and lucky to have you on the SEH team. And to everyone else, thank you for listening to {Brief}ly Speaking. Be sure to subscribe so you don't miss future conversations focused on the challenges, trends, and the infrastructure shaping both the AEC and our aviation industries.