Retiring DFW Airport CEO Turned It Into International Gateway
American Airlines Communications worker Andrea Hugely takes a photo of the new American Airlines Boeing 777-300ER at Terminal D at DFW Airport in Euless, Texas, January 31, 2013. Brad Loper / Dallas Morning News/MCT
The fate of American Airlines and its merger hangs over DFW, as does the $2.3 billion terminal renovations that are facing substantial cost overruns.
On Jeff Fegan’s first day as chief executive of Dallas/Fort Worth Airport, he received a plaque from his staff that said “Create and Share the Vision. Set the Course. Get the Hell out of the Way. — Your Loyal Staff.”
After 19 years of leading the airport through major events including the aftermath of 9/11, major recessions, the construction of a new international terminal and uncertainty surrounding the American Airlines bankruptcy, Fegan is getting out of the way.
The plaque, like many other items in his office at the airport’s headquarters building, has been placed in a box as Fegan, 59, prepares to retire in October.
“This place is too complicated for one person to control all aspects of the business. I had to be a leader of leaders,” Fegan said, fondly remembering his first-day gift. “That’s what the message was and it was something I embraced as my management style.”
During his tenure, the airport opened its concessions to multiple vendors, built a centralized rental car facility, and installed the SkyLink people-mover system. He has grown the airport’s revenues from about $200 million to $650 million annually, doubled the number of international destinations to 50 and grown the number domestic destinations from 113 to 148.
And although Fegan leaves the eighth busiest airport in the world on solid financial ground, his retirement comes as the airport is in the middle of a $2.3 billion terminal renovation program that is facing possible cost overruns of $220 million and uncertainty over the future of the airport’s largest tenant, American Airlines.
Fegan had initially planned to retire by Sept. 1, but his successor, Virgin Australia chief operating officer Sean Donohue, won’t be able to start until next month. In the meantime, Fegan is staying around a few more weeks to make the transition to Donohue as seamless as possible for the airport board and staff.
“Your mind and body need to have a break every once in a while, and I think this is the time to go,” Fegan said. “I could have stayed much longer but I think, personally, it was the right time.”
Transforming an airport
Fegan started at DFW Airport in 1984 as chief planner and helped the airport navigate through several political battles to get a seventh runway built. Ten years later, Fegan was named DFW’s chief executive and immediately laid out a set of goals that have transformed the way the airport operates.
“I was a young guy. I was 39,” Fegan chuckles. “I felt that this place could be really different and I could take it to a whole different place. We were more of a landlord and we weren’t really active in the execution of entrepreneurial type of activity.”
At the time, the airport used only one vendor for all of its concessions inside the terminals. Fegan felt it should be opened up to multiple businesses, launched a concession department and bid out several concession locations to local entrepreneurs.
When he would walk through the airport as a customer on a personal trip with his family, Fegan would take note of what needed to be improved.
“He would notice the carpet is wearing out or if there was a piece of trash, he would pick it up off the floor,” said his wife of 38 years, Carol Fegan.
Next on his list was adding more parking spaces at the terminals and shuttle lots which also brought in more money. With more international airlines interested in flying to DFW, the airport began planning to build an international terminal, its first new terminal since the airport opened in 1974.
“We started looking at how can we operate this more like a business and how we can satisfy our customers,” said Fegan, adding that between 1994 and 2000, “everything we touched turned to gold.”
Dark days, hard decisions
And then came the terrorist attacks on Sept. 11, 2001.
Fegan, like many airport executives, wasn’t even in the country when it happened, as there was a large airport conference underway in Montreal that week.
“That was the one time he was anxious to get back and be back at the airport,” his wife remembers. It took Fegan several days to get back to DFW by car, driving across the border in Detroit.
Flights were grounded for days and when air service did return, passengers did not. Airlines started cutting capacity and the airport was looking at a budget shortfall of almost $20 million. Departments were asked to cut expenses and freeze hiring.
“After 9-11, we had a lot of hard decisions to make. A lot of resources were cut out of our budget and to match the size of our business,” Fegan said. In 2003, the airport laid off dozens of employees because of the budget cuts. “It was something I didn’t enjoy at all.”
Despite the tough economy, Fegan made the decision to continue with construction of the Terminal D, hoping that air service would rebound by the time the new international terminal was open in the middle of the decade.
Then Delta Air Lines, the airport’s second-largest tenant, surprised the airport by announcing it would no longer operate a hub at DFW and reduce its daily flights from 268 to only 20 by January 2005.
“You don’t expect them to come out and hand you a free ticket on one of their planes,” said Fegan, recalling how Delta vice president offered to fly him to Atlanta for a meeting with the airline’s top executives. “We suspected that [Delta's leaving] was a possibility … We felt we were at risk.”
For the first time, Fegan said he had gates to market. The airport bought back the terminal from Delta so it could control the gates there and started an incentive program to lure new airlines with free rent and reduced landing fees.
The Wright choice
While Delta was exiting, the fight over the Wright Amendment restrictions began to heat up.
The airport had long opposed any changes to the Wright Amendment, which went into effect five years after the airport opened and limits non-stop flights out of Dallas Love Field to several nearby states. Dallas-based Southwest Airlines, which is based at Love Field, wanted the restrictions lifted so it could fly anywhere in the country from its home airport.
Fegan acknowledges that was a very contentious time as politicians from Fort Worth and Dallas and airline executives tried to reach a deal to lift the restrictions.
“We clearly hoped we could get Southwest Airlines to come out to DFW,” Fegan said. “We offered to build them a terminal. We offered them all kinds of incentives to come out here.”
Eventually, the airport agreed to a 2006 compromise that would allow long-haul flights out of Love Field starting in the fall of 2014 but cap the number of gates at Love to 20. International flights will still not be allowed at Love Field. Fegan said after the airport analyzed the compromise’s effects on DFW, he felt the impact would be minimal.
“I don’t think it’s going to have an adverse impact on DFW; that assumes we have a healthy American Airlines next October,” Fegan said.
Legacy, and retirement plans
Having spent close to thirty years at DFW Airport, there isn’t a project there that doesn’t have Fegan’s fingerprints on it.
But airport board members say you won’t find Fegan’s name stamped on anything or hear the CEO brag about his accomplishments.
“I’ve never once heard him say about any project, ‘I have done this.’ Not once,” said board member Francisco Hernandez. “His greatest accomplishment is creating a culture at the airport and a staff and giving credit and letting people do what they’re best at.”
In July, Fegan presented a $656.3 million 2014 budget to the airport board that projects 4.7 percent revenue growth from non-airline sources such as parking and concession. Costs to the airlines will also increase by $19.4 million next year to help pay for the debt service tied to the renovations of Terminal A, B, C, and E, although the landing fees will drop.
During his tenure, Fegan has overseen several expensive capital improvement projects that have pushed the airport’s overall debt to about $6 billion. In the latest budget, the airport has lowered its debt service payments by 2.6 percent, to $282.5 million in 2014, through refinancing and lower interest rates.
But now the staff has warned about cost overruns in the airport’s $2.3 billion terminal renovation program. The airport is three years into the eight-year project, which could cost an additional $220 million because of increases in labor and building materials. Fegan has said the terminals, which have not been renovated since the airport opened in 1974, need to be overhauled to improve the travelers’ experience.
Fegan has also elevated the airport’s international status, often traveling overseas to convince carriers to fly into DFW. In the past few years, Qantas Airways launched non-stop flights from Sydney and Emirates Airlines initiated daily flights to Dubai.
On one trip to China when she was chairwoman of the airport board, Lillie Biggins remembers Fegan helping guide her through business etiquette to help represent DFW Airport to the international airlines they would be meeting.
“I can remember him telling me, when you get a business card from them, don’t put it in your pocket. Put it on the table as it’s a show of respect,” Biggins said, adding that Fegan’s calmness and humility have helped the airport gain international respect.
Even though he will no longer need to travel for airport business, he’s planning on taking several trips in the next year that don’t include meetings or touring airports. Fegan said he and his wife have already decided to visit his sister in Sardinia, Italy, and to walk Hadrian’s Wall in England.
“I’m looking forward to kind of getting my life back and trying to figure out what are my interests,” Fegan said. “This job is all-consuming, so when you walk away from it, hopefully, I will have time to reflect.”
Andrea Ahles, 817-390-7631 Twitter: @Sky_Talk