Airports are a tricky business, but they represent a golden opportunity for Leidos Holdings Inc. (NYSE: LDOS). Especially now that the Reston-based government services and technology firm is six months into its merger with Lockheed Martin Corp.’s Information Systems & Global Solutions business.
CEO Roger Krone told investors Thursday at Cowen and Co.’s 38th Annual Aerospace/Defense & Industrials Conference in New York City that the Leidos-IS&GS combination is well-positioned to expand on both companies’ history of performing airport modernization services. The only barrier now to dominating the market is the fact that it’s fragmented and there’s no one central authority governing every airport.
In December 2015, Leidos won a contract to provide runway management technologies and… more
"Airports are complicated entities,” Krone said. "Each airport’s governance process is different. Some are owned by cities. Some are owned by counties. Some are independent organizations.”
It’s impossible right now to take on a traditional "systems integrator" role at an airport, which would entail taking charge of the systems and processes that make up the air travel experience from, as Krone describes it, “curb to takeoff.” That’s where Krone wants to see a change.
"We would like to see some consolidation in airport management and ownership to where you could walk in as a systems integrator — and walk in holistically — and solve some of the issues,” Krone said. "Maybe we will get there.”
There are early signals from the White House that change could be coming.
On Thursday, President Donald Trump hosted a breakfast at the White House with representatives from the airline industry, telling the high-profile audience he would work to help them in “developing our aviation infrastructure.” In the course of that roundtable discussion, Gary Kelly, chairman and CEO of Southwest Airlines Co. (NYSE: LUV), suggested reforming the Federal Aviation Administration — changing it from a government agency to a not-for-profit corporation with a board representing all industry stakeholders, including those in government and the private sector.
"Until that time the airport business development model is: you go in at four or five different entry points,” Krone said. To secure a hold on any one airport, Leidos has to bid on contracts with the Transportation Security Administration, the FAA, as well as various airlines and airport authorities. It’s a scramble to piece together work, as opposed to grabbing one contract that governs it all.
– James Bach Staff ReporterWashington Business Journal