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City-funded study recommends airport authority

A city-funded study of how best to run Charlotte Douglas International Airport has recommended turning the airport over to an independent authority.

The draft report, released Thursday, deals a potential blow to city officials, who have been trying to stop a bill to create such a body. Completion of the study, expected next week, would open the door to a final vote in the N.C. House – after which the bill would become law.

Charlotte City Council has overseen the city’s airport since 1935, although the city has typically given its aviation director broad latitude to run the facility. The new authority would take ownership of the airport and its board of directors would oversee it.

In the 62-page report, Bob Hazel, a former US Airways vice president and consultant with the firm Oliver Wyman, praised Charlotte’s management of the airport. But he concluded an independent airport authority would be able to completely separate its finances from the city, act more like a business, devise its own pay structure to lure and keep top talent and be insulated from city politics.

He did recommend changing the authority board’s structure to give Charlotte a bigger share of appointments.

Charlotte Mayor Anthony Foxx declined to be interviewed Thursday, but his press secretary, Al Killeffer, said the mayor thought the report was even-handed.

“He thought it was fair,” Killeffer said. “It lays out both sides clearly. It makes it clear the authority can’t be rushed.”

He added: “The mayor has stated he remains open to putting this conversation on a path where real input can be given and the community can reach a consensus.”

City council members commissioned the $150,000 study last month, in response to suburban legislators’ push to establish an authority. State legislators pushing the authority bill had suggested they would disregard the study, which they said could be biased. State Rep. Bill Brawley, a Matthews Republican and one of the bill’s sponsors, had called the study “something Charlotte is doing for Charlotte’s benefit.”

To oversee Hazel’s study, the city appointed a five-member committee. One member of the study committee was Shawn Dorsch, who had also been chairman of the volunteer Airport Advisory Committee. On Tuesday, Foxx removed Dorsch from his positions on both boards, after accusing him of going behind the city’s back to build support for the airport authority bill.

Dorsch contacted the chairmen of at least two neighboring counties to encourage them to pass resolutions in support of the authority bill.

Asked for his reaction to the draft report, Dorsch said Thursday: “I think this is a positive development, and I’m going to study this further.”

‘Best form of governance’

Hazel heaped praise on the city’s management of Charlotte Douglas, calling it “a spectacularly successful airport.” He said airport problems cited by authority supporters – such as increased police costs after Charlotte-Mecklenburg Police took over airport law enforcement – “are readily fixable” under the current setup.

And he wrote that the legislature’s proposal has many shortcomings and should be changed to give Charlotte, Mecklenburg County, and possibly local business groups more appointments.

Still, Hazel came down in favor of removing the airport from city control.

“Our conclusion is nevertheless that the best form of governance for most public sector U.S. airports, including the Charlotte Airport, is a properly structured airport authority,” Hazel wrote.

Hazel quoted an airport employee anonymously to summarize what he said were the views of many airport executives.

“I know my colleagues pretty well and would be surprised if the vast majority did not prefer to work for an Airport Authority,” the employee told Hazel.

Recommended changes

The bill under consideration by the state legislature would create a 13-member authority to run Charlotte Douglas International. Members would be appointed by Charlotte, Mecklenburg, the five surrounding N.C. counties, the state Senate and House, and the governor.

The authority would own and run the airport, and would likely pick the next aviation director. Jerry Orr, 72, has headed the airport since 1989, and has hinted he might retire in the coming year. He was paid $211,042 in fiscal 2012.

Hazel interviewed more than 40 people, including local politicians, airport employees, and state legislators.

He recommended a number of changes to the proposed airport authority:

•  Hazel wrote that the Charlotte Airport Authority board should include mostly appointments from Charlotte, Mecklenburg County, and other groups, such as local organizations. State appointments are unnecessary, and surrounding counties should have “limited” representation only, Hazel said.

•  The board should have between 7 and 11 members, not 13, Hazel wrote.

•  The legislature should consult with financial experts and aviation experts. “In its current form, the legislation does not provide best industry practices for a properly structured airport authority, nor for a smooth transition to an airport authority,” Hazel wrote.

•  Hazel also said that Charlotte should have a “large number” of appointments to the board, but not a majority. That would endanger the board’s independence, Hazel said.

Foxx didn’t comment on whether Charlotte should have a majority of board appointments.

Charlotte City Manager Ron Carlee said he is “interested” to hear a greater explanation about the recommendation that Charlotte should not have a majority of board seats.

“Maybe he’s saying no jurisdiction should have a majority, but maybe you have a plurality,” Carlee said. “That’s a question for further exploration. I haven’t made any conclusions. I want to hear his perspective.”

He said one piece of the report that stood out was that the consultant said Charlotte “is one of the least likely airports to be up for a conversion” to an authority, since Hazel said it has no glaring mismanagement issues.

Carlee said he plans to study the report more. “I need to understand the details, and how we might be going down the paths he recommended,” he said.

Lowest costs of top 25

Hazel said the airport’s success is due entirely to its low costs, which has made Charlotte an attractive place for US Airways to establish its largest hub. He said that at $2.28, the airport’s cost per boarded passenger is the lowest among the top 25 U.S. airports.

“Charlotte cannot take its hub status for granted,” Hazel warned. But he also noted that there is “no obvious correlation” between how an airport is governed and the airport’s costs.

The 86 U.S. airports with more than 1 million passengers are run under a mix of city, county, and authority structures. Hazel found 48 percent are run as city or county departments, while 44 percent are under some form of an authority. The rest are state-run or privatized.

US Airways spokeswoman Michelle Mohr said the airline – Charlotte Douglas’ biggest tenant by far – is still refraining from taking a side in the authority fight.

“It appears to be a thorough and well researched report,” Mohr said. “We will hold off comment until the final version is issued.”

Portillo: 704-358-5041 On Twitter @ESPortillo
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