CEO Interview – Raul Regalado

Raul Regalado & Associates

Interview with Raul Regalado, Principal Consultant, Raul Regalado & Associates

Raul, why did you choose to get involved in the airport business?
As a youngster I was always interested in airplanes and used to build airplane models. During Vietnam, I chose to enlist in Aviation Army flight school. I learned to fly helicopters and completed 2 tours in Vietnam. After 5 years of active duty I was searching for what was next and just happened to go see Burt Lancaster in Airport and I realized I wanted to be an airport manager. So I got a degree in Aviation Management. Since then, I have worked at a number of airports and gotten involved in the parking business as well as consulting. In the spring of 2001, I came to Nashville as head of their airport authority. I am still a pilot and the proud owner of a 1962 Comanche 250.

So you came to Nashville six months before 9/11?
Yes. On 9/11/01 I was in Montreal Canada, along with many of my executive staff attending an aviation conference. Airport management from all over the world were there as well. We have never discovered if that was a significant coincidence or part of the plan to hit when airports didn’t have leadership on site. We immediately set up an Ops center in the Montreal airport. We had a CNN feed, the internet and phone lines. Soon after we were able to set up a mini ops center in the hotel. There was a short window of civilian open air space a few days later and the Airport Authority chartered a private jet to bring us home. Partly as a result of getting home faster than many of the others, Nashville was one of first airports to reopen. We also had excellent staff able to move quickly and establish the procedures. But because other airports weren’t open yet it didn’t help a great deal.

What were some of the biggest issues you dealt with immediately after 9/11?
We have always operated under a lot of federal regulations. Most airports are owned independently, by local governments, so we didn’t rely on the federal government for anything to carry out our responsibilities; it was incumbent on us to figure out how to implement their regulations. We had several significant challenges. Our biggest challenge at the time was a “silo’d” organization and we needed to figure out how to fix that so we could effectively deal with everything else. Obviously, there was significant economic fallout and we had to take measures to ensure economic viability. As you know, congress took measures to take security away from the FAA and created TSA—a true game changer. It increased our costs significantly (more people, more security. The Feds recapture their expenses from the airlines.) There were no conversations between the federal agency and local airports; there were discussions with industry associations in DC about how to make this work but local implementation concerns weren’t a priority. Interestingly and problematically, since the FAA security leadership had lost the confidence of others, few transferred into TSA so TSA leadership came from the FBI, Secret Service, and other law enforcement so it was a highly disciplined, defensive mentality.

What would you do to improve on how airport security is run if it were up to you?
TSA is reactive and for show. It is the traditional government approach—make lots of noise and get lots of press but little actual impact. I would use the risk assessment approach similar to the Israelis which focuses on identifying the threat. I think we are moving in that direction. Essentially it means that passengers are screened multiple times for different things; it is more of a behavioral assessment from afar and up close; constantly observing behavior for “tells”. I also believe in allowing frequent flyers to have pre-clearance; they still have security requirements but there are fewer. It also could be done more efficiently. To do that, we would need to privatize. But even though there is actually a pilot program that would allow 6 airports to try it out, few have taken it on because there is a concern about immunity from liability.

It seems there is a wide variety of implementation at different airports.
The processes should be standardized but not all processes are needed at all airports and they need to vary enough so people can’t game the system. In Nashville, the TSA and airport work closely together and we are fortunate that the local TSA management has embraced our customer service culture which is very high. In addition, our local community is friendly so TSA employees are drawn from that population.

What can airport authority do when TSA creates problems?
Unfortunately, airports often get the complaints and there is little we can do but try to involve TSA and apologize. The airport has no responsibility or control.

Let’s talk about your leadership style and how it was developed.
I am a “taught” leader and I believe that there is no one style that is right. My goal is to adapt to the situation and be flexible. My approach developed through a combination of leadership training and experience. As the work force continues to change demographically, leaders must adapt. One of my mentors was the city manager of San Jose who was visionary in leadership development. This approach led me to incorporate strong business disciplines like strategic planning, process mapping and reengineering (six sigma). We implemented the Baldridge standards in Nashville—and we ended up at level 4. We were the first and only airport in the country to achieve that. We have had some significant economic hurdles. Most recently in 2007-2009 we had $450 mil of capital projects at the same time we had to freeze hiring; it forced us to be more efficient and effective. I am pleased to say we were able to maintain profitability and pay bonuses for most years through 2001-2012.

What is the biggest leadership challenge?
Uncertainty. At the airport authority we have absolutely no control over the economic or regulatory environments in which we operate. So we need to be flexible. We also are responsible to our communities. The Airport needs to be an economic driver for the community. In Nashville we wouldn’t be building a $500 million convention center if we couldn’t support the traffic. Airports are in the travel and tourism business as well as economic development.

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