Billion Annual Economic Impact

Tucson Airport Authority (TAA) has come a long way in the 75 years since it borrowed $25,000 to begin operation of Tucson International Airport.

Today, it has an $8.3 billion annual economic impact.

TAA President and CEO Danette Bewley calls it an “evolution,” and it’s continuing at an ever-increasing pace.

As TAA marks its 75th anniversary, it’s poised to spend more than $1 billion over the next decade or so to continue to upgrade, expand and modernize the Tucson International Air- port – or TUS (it’s federal aviation designator) − in response to the growing community, to federal safety requirements, to businesses who want to move to the region, and to travelers who want and need more from their airports.

“I think what you see at airports is evolution,” said Bewley, only the fifth person to lead TAA since it was formed in 1948. She arrived as part of the management team in 2012 to continue a long career in aviation and was appointed to head TAA in 2019.

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“We’re in the same situation that many other airports are in where you are finding outdated infrastructure and a growing community and you have got to make some changes to accommodate the airlines, the community and the desires of the traveling public. You have got to adjust.” continued on page 74 >>>

That’s exactly what TAA is doing.

In 2018, the Terminal Optimization Program completed a revamp of the terminal within its footprint, to reconfigure the security checkpoints and other space for easier access for travelers, to provide modern amenities and to relieve some of the cramped quarters around the terminal.

The airport is in the third year of a $400+ million Airport Safety Enhancement project to meet new Federal Aviation Administration (FAA) safety standards on the airfield. In the next several years, a new, relocated parallel runway will be completed along with the accompanying improvements to improve safety and airfield access for aircraft users. The airport will ultimately have two parallel commercial runways, and a crosswind runway, that will accommodate all users, including the airlines, military and general aviation.

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In all, about $1.5 billion is expected to be spent on these two airport projects – assuming grant funding is available through the federal government.

“You have to figure out if you can get it federally funded to the maximum level and if not, how do you want to pay for it,” Bewley said. “As good stewards, those are questions we have to ask ourselves.”

There are billions of dollars at stake.

In 2021, the Arizona Department of

Transportation produced the Arizona Aviation Impact Study that put TUS’ economic impact at $8.3 billion. The airport supports more than 45,000 jobs that result in about $2.5 billion in earnings. Ryan Airfield (RYN) has added $35 million in economic impact with another 216 jobs supported.

About 3.4 million passengers passed through TUS last year, the TAA said in its 2022 Year in Review report. TAA is the landlord for 80 tenants at TUS and another 25 at RYN.

One of the airport’s focus areas is diversifying revenue streams. The TAA has a portfolio of aeronautical (airlines, etc.) and non-aeronautical (non-aviation buildings, land, etc.) endeavors. Revenue from aeronautical activities is about 65%, with the remaining 35% coming from non-aeronautical activities.

Typically, airports purchase land to protect the airport from encroachment and/or minimize noise impacts to the surrounding areas, when possible. The TAA has amassed a lot of land over the years for these purposes. With more than 5,000 of developable land around the airport, another 1,000 on the airport property for aeronautical tenants, and 2,000 more around RYN, there is room to develop some of the land holdings to expand the revenue portfolio.

COURTESY TUCSON AIRPORT AUTHORITY

PHOTOS continued from page 74 is readied for market. Before any land can be developed, the FAA must conduct a comprehensive analysis and review, which includes an evaluation of the planned or intended use (aeronautical or non-aeronautical), ensure proper environmental studies are completed, and identify the original source of funds used to purchase the land (FAA grants, etc.). In some cases, the FAA may require an airport pay it back at fair market value. Airports must be strategic in how they approach land development; it is not uncommon for this process to take several years.

The TAA does not always go it alone. Sun Corridor Inc., the region’s economic development arm, provides expertise and assistance as well as business leads. Working together, the TAA and Sun Corridor discuss issues and challenges, and the best approach to use in different scenarios to achieve the best outcome. There is a lot of work to do, which is exciting.

“What we’ve seen over the last few years is a lot of companies coming into the airport employment area,” said Joe Snell, president and CEO of Sun Corridor. “We’re working with some on air port land, but it’s really the airport that’s influencing all of this.”

It’s an opportunity for the region to continue developing the area as a business corridor with nearby transportation access. If it’s on airport land it has to have a connection to TUS. But the airport’s influence in the area goes beyond the land it owns.

“We’re seeing a lot of movement in this whole airport employment area. It is the key economic development area right now for Southern Arizona.”

Bewley is careful to point out that any development on land the airport owns must have a direct benefit to TUS because it is regulated by the FAA. At the same time, any business the land generates is good for Southern Arizona.

“Our goal is to develop the land for the airport authority that happens to have a byproduct that develops business,” Bewley said. “We keep that straight because the FAA looks at us very carefully as to how we spend air- port money. It always has to benefit the air port system.”

It all started in 1948 with a $25,000 loan when the local chamber of commerce put together a group of 15 business leaders to run the airport which was operating on land purchased by the City of Tucson.

A couple of small airfields and later, Davis-Monthan Air Force Base had served as the region’s airport from the early 1900s until after World War II when city government purchased the land where TAA now sits in 1941. The city didn’t have the resources to run the airport, so the chamber stepped in.

It formed the TAA as a nonprofit corporation in 1948 and hired Robert W.F. Schmidt as the first general manager.

Around that time, Ryan Airfield had been built west of town to train World War II pilots, and after the war it became a commercial airfield. The TAA took over operation of that in 1951 and still operates it.

Over time, all the major airlines, some that are still around and some that are not, made their way to TUS – TWA, Pan Am, American, United, Delta, Continental. Today, through consolidation of many of the larger airlines, the four largest − American, United, Delta and Southwest − still serve TUS. Alaska, Flair and Sun Country bring the number of airlines serving the Tucson community to seven.

TUS is now in the middle of, arguably, its biggest construction effort in its history to meet safety standards, hence the Airport Safety Enhancement Program.

“We’re taking a long-term view –20, 30 years into the future,” said Ken Nichols, TAA VP of planning and engineering, pointing to current planning to expand the terminal from 22 gates to as many as 35 gates, and to improve aging infrastructure and modernize technology.

“We have been planning with con- sultants for about a year and a half now,” Nichols said. “They have crawled all over the terminal, and looked at our baggage systems, check-in counters and gate holdroom circulation spaces, concessions spaces, our Federal Inspection Services area, curb frontage and parking, to name a few areas.

“They have evaluated alternatives for how the airport could effectively grow in the future and also enhance passenger experience and flow throughout the air port.”

Austin Wright, chief communications officer at TAA, said the airport recognizes its role.

“I think that we try to share the good work that we’re doing with the whole community and that we are more than just a port for an airplane to come into town, load up passengers and leave,” Wright said. “We have a lot of businesses that thrive on the land that we own. We are an economic engine for Southern Arizona and there are many people that rely on this airport for their livelihood.”

Bewley said the airport is still recov- ering from COVID-19 to continue being a positive influence in the region.

“Working with the airlines, we have restored about 90% of the flights as compared to the pre-COVID levels of 2019. We still have a gap to fill,” Bewley said. “Of course, we are not going to be satisfied until we get back to where we were in 2019 and beyond.”

“It’s really important that we diversify our revenue stream,” she said. “The real reason airports do what we are doing is to have a different revenue stream so if an airline decides to reduce their flights or cut service altogether, we are not left going, ‘Oh no. What are we going to do?’

“We have another revenue stream coming in and that is very important. Not every airport has the same land holdings that we do. But I can promise you, if you talk to any CEO of an air port, they are going to tell you how important diversification of revenue streams is because COVID was a perfect example to test an airport’s resolve.”