Jeff Fegan Plans Big Changes at DFW Airport
For 25 years, he's kept the aviation hub soaring. Now he's rebuilding the place.
Businessman and civic leader Jan Collmer sat with the rest of the board of Dallas-Fort Worth International Airport in a closed session, listening as plans were laid to launch a global search to find a new leader for the world’s biggest commercial-aviation hub.
When someone mentioned Jeff Fegan, DFW’s then-39-year-old deputy executive director of finance and administration, Collmer immediately decided that the search should be ended before it began. He declared that Fegan was the man for the job.
Another board member quickly agreed.
“It didn’t take 10 minutes before we had a substantial majority and the deal was done,” Collmer recalls. “I’m afraid if they’d gone ahead with the search, they would have wasted a huge amount of money and a lot of time and still arrived at the same result.”
It was 1994, and Fegan had been at DFW for 10 years, starting as chief planner. He’d come to the aviation business from a city-planning background, but had grown into roles that exposed him to the airport’s operations, administration, and financial matters by the time the board voted to give him the captain’s chair.
“He lives and breathes that airport. He loves it, and it’s part of him,” Collmer says. “Any good CEO, if you’re not bought-in 100 percent, you’re not going to do a good job. But he is absolutely bought-in 100 percent.”
In 2009, Fegan marked 25 years of employment at the airport, 15 of them as CEO. The milestone came as DFW was planning a major, $1.8 billion renovation that will dramatically alter its 36-year-old terminals. It’s a transformation made necessary by big changes in the aviation industry during the last two decades.
Fegan could have gone in any number of directions when he graduated from Georgia Tech with a master’s degree in city planning in 1978. Now he can’t imagine working in any other field.
“If you’re going to get into a form of transportation, there’s nothing more exciting and interesting. All you’ve got to do is stand at the end of a runway, or walk through one of our terminals to see what happens out here every day,” says Fegan, 56, chatting at a meeting table in his office on the second floor of the DFW administration building, on the airport’s southeastern edge. “It’s the human drama, the technology, and the airplanes that are connecting people from here to the rest of the world. It’s an exciting place, an exciting field, and I’ve never grown tired of it.”
A report by a local television station last year found that Fegan is the highest-paid airport executive in the country—earning significantly more, at about $400,000 annually, even than those who run multiple airports with more collective traffic than DFW.
Airport board members say that Fegan is worth every penny, and that the unique challenges at the airport make it worth it to pay top dollar for top talent. “DFW is a city on its own, and it’s got all the facilities of a city,” says Ben Muro, chairman of the airport board.
DFW covers 18,000 acres and operates its own police, fire, and engineering departments. It has spurred its own economic-development efforts, and has even become a player in the natural gas business. While no longer the largest airport in the U.S. in terms of size—Denver has bought up a bit more land—no other airport in the country rivals its combination of size and traffic.
It’s the third-busiest airport internationally, in terms of the number of planes moving through it each year. With its seven runways and five terminals, it has capacity to spare at a time when many airports have trouble finding open gate space. It’s a complicated business that’s become more complicated as airlines have ceased being active players in the airport’s development—Fegan says the airlines themselves handled terminal construction and renovations up until the late ’80s—and have left more duties to fall on the airport management.
Plus, there are the political considerations that come with running a quasi-governmental entity that’s jointly owned by the cities of Dallas and Fort Worth and that falls within the boundaries of four other cities (Coppell, Irving, Grapevine, and Euless) and two counties (Dallas and Tarrant).
Even so, Fegan says, it was the big challenges at this big airport that attracted him to move his family from Westchester County, N.Y.—where he was the noise abatement officer at the local airport—to North Texas in 1984.
“If you’re an airport planner, this is a place of legends. This is 18,000 acres. There’s no better place in the world to be,” he says. “I just felt there was so much more opportunity here than any other place.”
Since he first arrived, DFW has added two runways and a terminal. Even more important has been a reorientation of the business model.
“We used to say the airlines are our customers, but the passengers are our guests,” Fegan says. That has changed as the ratio of revenue extracted from airlines—primarily through landing fees and terminal rental fees—has flipped from constituting a majority to a minority of the airport’s earnings. Formerly, 65 percent came from the airlines; now it’s the non-airline revenue (from things like concessions, parking, and rental cars) that brings the lion’s share.
But even more important to DFW’s bottom line—its current-year budget totals $588 million—is commercial development. Empty land has been leased to enterprises that value putting operations right on top of this major transportation hub. Recent projects include a 400,000-square-foot merchandising headquarters and warehouse for the Dallas Cowboys, and a 100,000-square-foot rotor-blade repair and parts distribution center for Sikorsky Aircraft.
And, thanks to the Barnett Shale, the airport struck a deal to drill as many as 350 natural gas wells, though only about 100 have been set up so far. The drilling could generate between $20 million and $40 million in revenue for DFW annually for at least the next 20 years, Fegan says.
Board members are quick to credit the CEO with setting the vision that’s helped to transform the airport’s operations over the last decade and a half.
“You can’t have a productive, forward-moving environment or entity if you don’t have that kind of leadership to begin with,” Muro says. “If you’ve got it at the top, it all comes down from there.”
The change most noticed by frequent fliers at DFW in recent years may have been the construction of Terminal D, completed in 2005. The building has been warmly received by passengers who appreciate the way its elegant design and abundant natural light contrast with the relatively cramped, dark space of the four original terminals.
The difference has been clear in the airport’s coffers as well. While terminals A, B, C, and E pull in revenue of about $7 per paying air passenger, Terminal D has averaged $12. That’s a major difference and one of the big drivers behind the renovation project DFW will launch early next year.
Thanks to natural gas revenue, the airport recently was able to spend $45 million to replace carpets and lighting, renovate restrooms, and install new flight information monitors. But a lot of aging infrastructure remains in those 36-year-old buildings. The terminals need to be gutted and rebuilt with new heating and electrical systems, boilers, and pipes.
“Those systems need to be replaced. We’re shooting for a 50 percent reduction of our energy footprint, per square foot, with the refurbishment,” Fegan says. “So [each one is] going to be a long-term, sustainable, nice, more functional terminal.”
Though final plans won’t be approved until June, the concept at the center of it all is the construction of “concession villages,” like those operating in Terminal D. Bringing all the offerings of a terminal into two centralized locations, rather than stringing them out along the entire length of the building, will mean passengers don’t have to gamble on whether a walk down to the end of a terminal is worth the food that can be found there.
The result will be a more pleasant experience for passengers and mean more cash for the airport’s bottom line—or so Fegan and members of the board hope. Preliminary plans call for construction to begin after Super Bowl XLV, which is being played in February at Cowboys Stadium in Arlington. Between six and eight gates will be closed at any one time during the process, and Fegan doesn’t want to remove that much capacity during an event that’s expected to bring about 100,000 air travelers to North Texas.
Terminal A will be the first to be completed, with an early estimate of the finish date in 2014. The entire project will run until at least 2017. To disrupt normal operations as little as possible, no more than two terminals will be worked on simultaneously, and even then only one-third of a terminal’s gates will be out of service. Construction is being staggered to prevent too great an impact on any particular airline. For examples, terminals A and C, which house American Airlines, will never be worked on at the same time. Plans are also being laid to refurbish a satellite building of Terminal E to add back some of the temporarily lost capacity.
Ben DeCosta, the general manager of Hartsfield-Jackson International Airport in Atlanta, has known Fegan for decades. DeCosta, who calls him a “brilliant and balanced leader,” says it’s a major challenge to refurbish portions of terminals while keeping most of the airport operational.
“It will be like performing heart surgery on a patient that continues to run the marathon,” DeCosta says.
In addition, over the next several months the airport is planning for increased corporate and private plane traffic with a $3 million project to build an access road and refurbish a building on DFW’s northeast corner that was formerly used as a terminal by American Eagle.
All told, the major-terminal renovation pro–gram is projected to cost between $1.5 billion and $2 billion, requiring capital of between $300 million and $400 million a year during the construction. While DFW leaders consider the project vital, it’s being launched at a time of continuing difficulty for the airline industry.
TERMINAL D ATTRACTION: The “Crystal Mountain” 3-D aluminum sculpture by Dennis Oppenheim is part of DFW’s Public Art Program.photography by Elizabeth Lavin
DFW airport hasn’t been immune to the declining fortunes of the major air carriers following the drop in traffic after 9/11 and the recession. Last year Fegan’s team was forced to cut $52 million from its budget, and it’s pushed to keep expenses down this year.
Lillie Biggins, another member of the airport board, says Fegan’s actions during those difficulties demonstrated what makes him a great executive.
“We didn’t tell him you’ve got to cut your budget. They said, ‘Here are some things that we’ve identified that we can do without,’” she says. “He’s open, he’s honest, and he has a way of looking at things differently. It’s really amazing when you think about the scope of his responsibility and then you parallel that with his humble and gentle spirit.”
For his part, Fegan says it was relatively easy to find “efficiencies” that saved the required $52 million. About $20 million of that came from refinancing debt, and he estimates there were $10 million in energy savings. It also helps that the airport didn’t see as great a drop in traffic in 2009 as did many other major hubs. He pegs the average drop in passengers at airports nationwide at 7.8 percent, while DFW saw a dip of 3.8 percent.
Factors like that may have influenced his aviation-industry colleagues to select Fegan the 2010 airport director of the year among the nation’s large airports, according to a survey conducted by Airport Revenue News, a trade publication. He was honored with the distinction at a conference in Houston in March.
Atlanta’s DeCosta calls Fegan “a great spokesperson” for the aviation industry. “He gives clear and balanced messages to passengers, airlines, and cities that benefit all parties,” DeCosta says.
Gina Marie Lindsey, the executive director of Los Angeles World Airports (whose job includes running LAX), has known Fegan for more than 20 years. She counts him as one of the best in the aviation business because he has an unusual combination of talents.
“You can have people that are policy wonks, and you can have people that are good operators, but it’s rare to find someone who is both,” Lindsey says. “And Jeff is both.”
The surface of the meeting table in Fegan’s office is entirely covered by a huge aerial photograph of the airport, under glass. It seems fitting for a man who earned his bachelor’s degree in geography. He points to the map frequently as he discusses future plans, or even talks about where that day’s work has taken him.
While there are some longer-tenured em–ployees at DFW—some members of the police force have been there since it first opened—no one knows the airport like Fegan does. He tries not to get stuck in his corner office all day. Meetings often take him to other buildings strung across the airport campus, and he regularly eats lunch at one of the terminal restaurants. (UFood Grill in Terminal B and Uno Dué Go in Terminal E are two of his favorites, as is the restaurant in the airport-owned Grand Hyatt hotel.)
But contrary to the impression some observers may have, he doesn’t actually live in the airport. He and his wife raised two daughters in Bedford before moving a few years ago, as empty-nesters, to several acres in a quieter setting in Denton County.
In his time away from the job, he’s sat on industry and academic boards—he’s a past chairman of the trade group Airports Council International-North America, and he serves on the University of North Texas Board of Visitors. He’s also been involved with the Botanical Research Institute of Texas, and gets excited discussing that organization’s new 64,000-square-foot building under construction at the Fort Worth Botanic Garden.
“I don’t necessarily want to put an ‘environ–mental’ tag on myself, but I believe in the sustainability movement and protecting the environment wherever you can,” Fegan says. And he’s quick to tout DFW’s environmental record.
“The only carbon footprint of any substance out of DFW is the aircraft. But everything else that we’ve had control over—we’re almost entirely alternative fuel vehicles, very energy-efficient systems throughout,” Fegan says. “Our pollution footprint is virtually nonexistent. We control all of our waste at an extreme level. It’s something I believe in and something this organization believes in.”
He believes in it to such a degree that DFW set up an in-house environmental department, devoted to studying and decreasing the airport’s effect on the environment, under his watch as CEO. Fegan hesitates to take sole credit for the move—or for any of the changes seen there during the last 15 years, for that matter.
But Collmer says Fegan deserves recognition as the driving force behind all the airport’s initiatives.
“He’s the finest airport manager in the country,” Collmer says.
What makes him so good?
“I don’t know. What makes Tiger Woods such a good golfer?” Collmer replies. “They know what they’re doing, and they do it.”