Airport Experience® News - Leadership 2022

ANDREWWEDDIG Q & A

WARD: Are you seeing signs that that evolution is starting to happen, or are we as an industry stuck in the same ways of doing things when it comes to RFPs? WEDDIG: Right now, it’s changing but it’s changing slowly. Some airports are doing the same old same old because, hey, after all, we’re recovered. Other airports are starting to evolve certain business terms. Just as there is pent-up demand for travel, there seems to be pent-up demand from airports to issue RFPs, and so there are a lot of RFPs in the pipeline. Getting facts out there in front of airports before they issue those RFPs is crucial. There are a number of industry leaders on the airport side who understand these challenges and are adapting their RFPs accordingly, or are adapting some of their processes accordingly. There are airports that are modifying how the MAG happens, and some that have eliminated the MAG in their RFPs. There are airports that are … eliminating minimum capital investment requirements. Things along those lines that are small steps toward evolving a more sustainable framework for the business. WARD: What role does automation or robotics play, and can some of these new technologies address the labor challenges the industry faces? WEDDIG: It isn’t labor substitution as much as it’s a labor augmentation. This isn’t a cost-saving move, it is a productivity enhancement move so that we can do more work, deliver more product, deliver more service and deliver a better experience in the face of the reality of a shortage of labor. Also, it is a capital investment and we need to be able to make a return on that capital investment. That return takes time, making the transition takes time, and overall just developing the tools and the technology to move forward also takes time. This is a capital-intensive industry where the assets can’t be moved. It’s not easy to adapt, it’s not easy to redo in the middle of the lease. We will also be looking at things like programming… or planning the concessions program. We had a number of metrics before, but are those metrics still valid given the cost structure? It may require a change in how we think about concessions programs, and that by itself is going to be a long-term process. WARD: As we look to 2023, can you encapsulate ARRA’s key goals? WEDDIG: Our key goal is to continue the conversation. Our role here is to inform our airport partners of the realities of our business and help collaboratively arrive at solutions …. I want to reemphasize that we are not recovered, this industry should not act as though we are recovered.

don’t necessarily want to work [at the airport] irrespective of the pay, and we can’t just charge more to cover those costs. It becomes an issue of, how does the industry recover the costs? Working together with airports, we need to get to a point where we can have more flexibility in our operations so we can adapt to pressing challenges. In the long run, we need to consider the pricing level that is appropriate for airports. This street model that we’ve been working under for 20 to 30 years now, is that an appropriate model for an environment that is most definitely not the street? That becomes part of the discussions that ARRA has to have with our airport business partners. It’s not an immediate fix. It’s baby steps toward a more sustainable future. WARD: Of the things ARRA can influence, is pricing the top concern, or is it build-out costs or something else? WEDDIG: Since we operate under contractual relationships, these aren’t things that we can just unilaterally address. We need to work with the airport industry to start evolving the model, but it’s something that’s going to take place, basically, over the lifecycle of leases. Moving forward, we can start to evolve the terms of RFPs, but we can’t just do it overnight. It’s something that has to happen, and it’s something that takes a process. ARRA’s role has to be keeping the information out there. Our role is to provide an educational-type of informed engagement with our airport partners so that [airports] understand the realities of the business model and what is coming down the pipe, because it is in our mutual interest to serve the traveling public. We need to be able to serve the traveling public to generate that great customer service. At the same time, everyone has to be cognizant of the fact that these are private businesses that investors around the world have put their money into, and we need to be able to make a fair return commensurate with the risk. “Just as there is pent-up demand for travel, there seems to be pent-up demand from airports to issue RFPs, and so there are a lot of RFPs in the pipeline. Getting facts out there in front of airports before they issue those RFPs is crucial.” – Andrew Weddig, executive director, ARRA

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