Challenge and opportunity alike have landed at Spokane International Airport since Lawrence Krauter took the helm as director and CEO last March.

Fresh off a 12-day lapse of Federal Aviation Administration funding following a congressional deadlock and eyeing another funding deadline this fall, the airport is watching closely how that issue might delay its construction projects.

Meantime, as carriers have announced plans in recent weeks to drop and add flights to Seattle and amid worries of losing Chicago flights, Krauter is lobbying airlines to add direct flights to other major hubs, including Los Angeles.

Among the opportunities he's pursuing is an initiative called Project Pegasus, which is an effort to create an aerospace manufacturing hub that would attract Chicago-based Boeing Co. back to the Inland Northwest.

"I would describe it as the single most significant economic development opportunity that we have. It would be a game changer for the economy," Krauter says.

While Project Pegasus still is in its beginning stages, Krauter says he's already taken steps to encourage Spokane-area community leaders and economic development groups to work together to bring aerospace manufacturers to the West Plains as part of a broader effort to entice Boeing to continue manufacturing its 737 jet airliners in the state. Boeing's Washington manufacturing facilities are located in Everett and Renton.

"Project Pegasus, among other things, will result in a series of recommendations made to enact legislation or make changes in laws that would be seen as necessary to keep Boeing in the state," Krauter says. "Spokane and its regional partners would need to formulate a program in parallel with that to incent them to locate here."

Gregoire requested the big aerospace initiative in May, Krauter says. Since then, Spokane-area proponents have identified an approximately 1,500-acre plot of land located north of Interstate 90 and between SIA and Fairchild Air Force Base as an area where Boeing and its vendors possibly could locate.

Most of that land now is owned by SIA and Spokane County, and Krauter says it would be an ideal spot for aerospace industry manufacturers to set up shops because of its accessibility to I-90, the Geiger Spur rail line, and the airport.

Boeing hasn't had a presence in the Spokane area since 2003 when it sold its former West Plains plant to Triumph Composite Systems Inc., the big manufacturer of aircraft components that supplies Boeing. Triumph still operates there, making parts for Boeing and other aircraft manufacturers.

The Project Pegasus effort was prompted by an estimated demand for 33,500 Boeing aircraft over the next 20 to 25 years, Krauter says. He says the jet manufacturer also has announced that in the future it will pursue an effort to re-engineer its 737 models, and will look into designing and building a new, smaller aircraft that would be considered a successor to the 737.

"Both of those basically provide us with significant opportunities to develop business here on the West Plains in that area between the airport and Fairchild Air Force Base," Krauter says.

FAA lapse

Another issue Krauter has been following closely is Congress's lapse in extending authority to the FAA to grant federal funds for airport capital-improvement projects, such as SIA's ongoing $20.3 million project to improve visibility on Runway 21.

A partial 12-day shutdown of the FAA began on July 22 when a bill extension expired that had given the FAA authority to raise revenue through airline ticket taxes, which go to fund FAA-authorized airport infrastructure projects and some FAA employees' salaries. Krauter says that when that bill expired last month and Congress couldn't agree on a resolution, the FAA no longer had the authority to collect those ticket taxes, and it's been estimated that during that 12-day shutdown it lost between $300 million and $400 million in tax revenue.

The U.S. Senate since passed on Aug. 5 another extension of that bill to allow the FAA to reinstate its ticket taxes until Sept. 16, Krauter says. He says Congress has from Sept. 5, when it reconvenes from its summer break, until then to come up with another resolution.

"They have nine days to pass either another extension or to agree on a long-term bill, which they haven't been able to do in over four years," he says, adding, "Anyone would agree that this is no way to run the safest aviation system in the world."
During the 12 days last month that the FAA couldn't collect taxes, Krauter says airlines took advantage of the situation and upped their fares to match what the FAA's taxes normally would have added to ticket prices and collected that extra money as their own revenue.

In addition to the lost tax revenue, about 4,000 FAA employees across the U.S. were furloughed, along with about 70,000 construction workers involved in FAA-funded projects, he says. FAA employees at SIA weren't affected by that furlough, Krauter says, because the airport was able to pay them from its own operating funds during that period and because most of the funding for the Runway 21 work that's going on now already had been secured through an FAA grant awarded earlier this year. He says, however, that a road-improvement project at Felts Field was put on hold due to the lapse.

He says SIA still is waiting to receive an FAA grant worth just over $3 million to complete the final portion of the runway project and that he expects those funds to arrive after Labor Day. If that grant isn't received by then, however, he says SIA would raise its landing fees between 7 percent and 12 percent to collect the revenue needed to finish the project.

"I've informed the airlines that the project for the runway was so critical that we would continue even if we had to use our own money to continue ... and that we would increase landing fees to pay for that project," he says.

Krauter says he's concerned about Congress' upcoming decision because a critical flight-check test of the navigational aids being installed on Runway 21 is scheduled to occur in October. He says that if lawmakers can't reach an agreement, it could push back that test - administered by the - and would mean that the Runway 21 project wouldn't finish on time and subsequently wouldn't reopen as scheduled in late October.

Improving service

Krauter and the airport's board of directors are in the process of updating SIA's 10-year master plan, which is expected to be completed in the first quarter of next year, he says. A new capital-improvements plan for SIA also is in the works.

Since stepping into the role of SIA's airport director, Krauter - with board approval - also has taken steps to improve customer service to the airport's users.

"I think we have significant opportunities to improve relationships with customers," he says.

Starting this week, the airport now allows customers to use its wireless Internet connection throughout the terminal and concourses at no charge for up to 20 minutes per day. Previously, it charged $7.95 for one block of 24-hour access. In addition to that, baggage cart usage fees - currently - will go away on Sept. 1, he says.

Krauter says he's also looking into the possible development of a gas station and convenience store on the airport campus in response to customer demands for such services. If that facility were to be constructed he says it would be located near the airport's rental car facilities, but says that at this time he doesn't know when that could occur.

He adds that he and other airport leaders also continue to evaluate ways to improve parking facilities at SIA.

Another major effort Krauter has taken on is increasing direct air service to some major U.S. cities, and mostly that focus now is on Los Angeles. At this time no airlines that serve SIA offer direct flights to and from there, he says.

The airport recently applied for a $1 million grant through the U.S. Department of Transportation that would provide an incentive for an airline to provide regular nonstop flights between Spokane and Los Angeles, he says. The LA area is SIA's second largest travel market behind Seattle, he adds.

"The airline environment is extremely unpredictable and volatile," Krauter says. "The only tool they can use to exercise discipline in their business model is to control capacity. Most airlines are projecting no growth in capacity or they are projecting to take capacity away, and accordingly Spokane will have to work hard to retain the existing air service as well as build new markets."

If SIA is awarded that grant, he says, the airport would need to raise $200,000 in local matching money. He says he expects to hear back on the outcome of the grant application late this year or early next year, and if SIA receives the grant, nonstop service between Spokane and LA likely would begin next summer.

Krauter says he's currently in talks with Southwest Airlines, American Airlines, and United Airlines about providing nonstop flights to and from LA.

Another concern is preserving service to Chicago, he says. United currently services Chicago and recently has reduced the number of flights there because of what Krauter says the carrier regards as low demand that's also mostly seasonal.

Before coming to SIA, Krauter served as airport director for just over 20 years at a three-airport system in Lehigh Valley, Penn. He says he's been working in airport management for 24 years.

In his new role, Krauter is responsible for overseeing not only SIA, but also the adjacent Airport Business Park and the Felts Field airport, in East Spokane.