August 8, 2011
By Susan Carey
MASCOUTAH, Ill. – Every major economic development project is a potential white elephant, but for smaller cities, airports have been a particularly tough bet.
Though air traffic continues to grow nationally, more of it than ever is served though the largest airports, and this is putting a squeeze on smaller players.
At MidAmerica Airport here in southern Illinois, birds fly inside the sleek white metal and glass atrium of the deserted passenger terminal. Airline check-in desks, rental-car counters and luggage carousels sit unused. The parking lot is sprouting weeds, and St. Clair County taxpayers have to cover more than $1 million a year in operating losses.
To cut red ink, airport officials have leased some land to farmers and are trying to turn the airport into a cargo hub for Chinese shippers. But that strategy faces major problems, including competition from the bigger airport in nearby St. Louis, which has similar plans.
Some members of the county board are ready to throw in the towel. Craig Hubbard said closing down MidAmerica “is something we have to do. If not now, very shortly.”
Other small airports face similar problems. The airport in San Bernardino, Calif., on the site of the former Norton Air Force Base, has yet to land a passenger airline, 17 years after the base closed. “It’s a real struggle,” said Bill Ingraham, the aviation director.
Schenker Inc., the U.S. logistics unit of the German state railroad, recently said it would shut its cargo hub in Toledo, Ohio, cut 700 jobs and phase out its 19-aircraft fleet. Delta Air Lines Inc.’s recent decision to reduce service or exit from 24 small airports is going to hurt places such as Pierre, S.D., and Muscle Shoals, Ala.
Meanwhile, Congress is threatening a program that provides subsidies to airlines that serve small airports.
The skies appeared brighter when MidAmerica opened in 1998 as a “reliever” facility to crowded Lambert-St. Louis International Airport, a 38-mile drive to the west. But Lambert’s traffic took a dive after 9/11, eliminating the need for overflow flights. Four passenger airlines that started flights at MidAmerica went bust or pulled out.
Now, the airport is trying to change course. Passenger flights “are not the business model,” said Tim Cantwell, the airport director, dismissively waving his arm around the silent 50,000-square-foot terminal.
A 57-year-old retired Air Force colonel who came to Mid-America in 2002, Mr. Cantwell says the correct strategy “is out on the ramp with cargo.” So he is trying to rustle up business from Chinese importers, exporters and cargo airlines with his airport’s inexpensive landing fees, 10,000-foot runway and access to rail, river and roads to markets throughout the Midwest.
He envisions China flights coming into MidAmerica loaded with electronics and auto parts, and going back full of Midwest beef, berries and even Asian carp fished from the Mississippi. “We’re trying to make an international trade route where it doesn’t exist,” he said.
Complicating this quixotic quest are Lambert’s similar aims. The Missouri legislature plans a special session in September to pass a jobs bill that would allocate $360 million in tax credits to attract freight forwarders and manufacturers to Lambert.
Michael Webber, an air-cargo consultant, says both efforts are doomed to fail because freight forwarders already are established at large cargo gateways such as Chicago and don’t want to split their business.
A few St. Clair County board members are losing patience with MidAmerica. The entire project cost $313 million, some of which was borne by the Pentagon because MidAmerica was built as a joint-use airport adjacent to Scott Air Force Base. The military, by far the largest user, operates about 14,000 flights a year out of the airport.
The Federal Aviation Administration also kicked in funds, but taxpayers in the county of 270,000 are on the hook for about $60 million in bonds, and must cover MidAmerica’s annual deficit, which is about $1.3 million this year. The county budget is $131 million this year and the unemployment rate is 9.7%.
“The operational deficit is the part that kills us,” said county board member Ed Cockrell. “It’s too much for a county of our size.”
But Mark Kern, chairman of the 29-member county board, insists the improvements made to Scott because of MidAmerica helped keep the base open. The air base pumps more than $2 billion into the local economy.
“We’re trying to bring Mid-America to a break-even position,” Mr. Kern said, even if that meant investing more.
MidAmerica opened an $8 million cargo warehouse in 2005 to facilitate its freight ambitions. After getting only sporadic international flights, it leased the building last year to Boeing Co. for a small-parts-assembly plant.
St. Clair County last year awarded a $250,000 incentive to a developer who promised a new $6 million cargo warehouse. But the project has been delayed by funding woes. MidAmerica now is spending a $2.5 million FAA grant to expand its ramp area to be able to simultaneously accommodate four 747s.
Mr. Cantwell, who has been to China three times since April, is taking some unusual steps to reduce MidAmerica’s deficit. In addition to leasing land to farmers, he says the airport makes a profit on its fuel sales and from deicing military planes, and plans to start selling fill dirt from airport property.
“My job is to make it work,” he says. “If you want a graveyard, you’ve got the wrong guy.”
http://online.wsj.com/article/SB10001424053111903635604576476170691580238.html?mod=googlenews_wsj
Source: WALL STREET JOURNAL
Date: 2011-08-08