By: Michael Webber, president Webber Air Cargo
In 2008, I participated in a study examining the development of an all-cargo airport in northeastern Pennsylvania. What was proposed as a potential $505 million development was to kick off with a $250 million infusion of public cash from the Commonwealth of Pennsylvania. The consulting team was tasked with studying the potential economic impact and indirectly, the likelihood of success.
According to public information sources, local developers – Gladstone Partners – estimated that the airport would open with 500,000 tons of cargo, growing to 1.4 million tons per year. Using calendar year 2011 data, the new all-cargo airport theoretically would have opened with annual tonnage on the order of FedEx’s western region hub at Oakland, and then grow to be comparable with New York’s JFK (#6 in North America). Complicating matters, the all-cargo airport would almost certainly have to achieve those tonnages without significant contributions from either FedEx or UPS which already have regional hubs at Newark and Philadelphia, respectively.
A “green field” all-cargo airport, not anchored by a major integrator, removes meaningful comparisons to East Midlands in the UK or Alliance (Texas) in the US. Troublingly, the US air cargo industry was shrinking rather than growing, so the “overflow” so often trumpeted by would-be alternative gateways did not exist. Updating the analysis of the time, between calendar year 2000 and 2011, annual tonnage fell almost 26% at both New York JFK and Philadelphia (PHL) and almost 25% at Newark (EWR). Cargo fell about 45% at former US Airways passenger hub Pittsburgh International Airport, leaving many Pennsylvanians to wonder why not support an existing commercial airport’s cargo efforts.
State senators Raphael J. Musto (Democrat) and Lisa Baker (Republican) commissioned our study to ensure that at least one independent analysis was performed that didn’t rely entirely on the input of the potential beneficiaries of the Commonwealth’s largesse. Senator Baker’s office later stating “with the developer shopping for a huge amount of public money, and a report now issued indicating a fairly high level of risk, the need for clear and effective taxpayer protections is clear”.
The effort garnered more scepticism when one principal, Robert Powell, was convicted of making payments to judges in Pennsylvania’s shocking “kids-for-cash” prison detention scheme. Powell, who had an interest in a juvenile detention facility, is now serving an 18-month prison sentence, reduced by his turning government informant to enable prosecutors to convict the judges Powell previously paid. Construction financing was secured in part by a written commitment from one of the convicted judges to place juveniles in their facility, and it has been suggested that minors were convicted and given unduly harsh sentences simply to fill the facility’s beds.
The son of a former chief justice of the state Supreme Court, Greg Zappala, was Powell’s partner in both the detention business and the proposed all-cargo airport. After word of a federal probe into the detention centre became public, Zappala bought Powell’s interest in the detention centers, the firm that managed them, and took sole control of the company they had formed to develop the all-cargo airport.
A Rockwell Sabreliner, formerly owned by Powell, has been prevented from leaving the city until aircraft tie-down parking fees are settled and Hazleton Municipal Airport manager ordered fuel trucks to block the twin-engine jet from leaving. According to an article in the local Standard-Speaker, the amount owed is only $750 – a relative pittance compared with $250 million that the developers had once sought from the Commonwealth’s taxpayers. The airport manager suggested Zappala had paid pilots to retrieve the aircraft and fly it to St. Louis for refurbishment.
A November 2011 article in Luzerne County’s Citizens Voice suggested that the all-cargo project “did not survive the kids-for-cash scandal”. Certainly, the cargo industry business case had only deteriorated since our study was completed in 2008.
With that knowledge, I was no less than stunned to read Luzerne County’s Times News Online’s article that Gladstone Partners had been granted a special exception to the county’s zoning ordinance to construct a commercial cargo airport in East Union Township. The article observed that the decision concluded a year’s worth of hearings filled with strong objections by area citizens and other officials.
While the reported objections suggested that the airport would stimulate so much traffic as to negatively impact local quality of life, the more likely outcome is still likely to be the opposite. Neither FedEx nor UPS has experienced compulsions to abandon existing regional hubs to anchor the new development. Losses in annual tonnages have only created greater capacity to accommodate all-cargo carriers at airports already integrated into their networks with passenger and other commercial operations to satisfy overhead costs.
The Times News Online reported last year that Stanley Komosinsky – a real estate broker and appraiser – predicted the project would be a “big boon” to the real estate business and have a “major positive impact” on the economy in northern Schuylkill County. The former mayor of Hazleton (and principal owner of the project) gave testimony on air traffic, expertise apparently gained in his years as a Continental Airlines pilot and helicopter operator as a state trooper. While questions about real estate values, traffic assumptions and aeronautical impacts were apparently asked, the former mayor was reported to have answered that most questions were not his field of expertise.
Stories of depressed areas betting on air cargo development to deliver economic recovery abound and unfortunately many follow a predictable pattern of evasion from independent analysis. Four years ago, the Commonwealth of Pennsylvania was spared becoming another cautionary tale when a pair (a Democrat and a Republican, it should be noted) of state senators required that experts beyond those paid by prospective beneficiaries should examine the business case of an all-cargo airport in this region.
While a consultant making the case for such studies undoubtedly will strike some as self-serving, the tradeoff in 2008 was that a $195,000 study gave the legislature enough insight not to make a $250 million investment in an all-cargo airport at a time and place that no industry expert would likely have thought wise. I do not monitor Pennsylvania politics enough to know if Senators Baker and Musto still serve in the legislature, but for the sake of the region’s citizens, I hope some comparably astute public servants still exist.
