India's shippers feel frozen out as perishable exports are hit by freight tax
Perishables shippers in India have begun to feel the pinch from the additional Goods and ...
Freighter operators moving cargo on intra-Americas routes have a new option as Airglades International Airport (AIA) targets their traffic.
The airport has announced plans for a “state-of-the-art logistics complex in southern Florida to dramatically reshape the efficient flow of perishable goods from Latin American producers to North American consumer markets”.
The US Federal Aviation Administration (FAA) cleared the way for the project in September, okaying a proposal for a private takeover of AIA to convert it into an all-cargo gateway. The project had already secured the backing of local and regional authorities.
According to the airport authority, AIA is one of three airports in the FAA’s Airport Investment Partnership Programme, launched in 1996 to generate access to private capital for airport development and improvement.
“I’ve spent 10 years on this,” said AIA chief executive Fred Ford. He has worked closely with third-party airport services provider AvPorts, as the designated airport operator, and Star America as a private investor and equity provider.
Their plan includes construction of a 600,000 sq ft cooler complex to handle fish and seafood, flowers and high-end fruits and vegetables flown from Latin America to the US.
The airport has a 6,000 ft runway, but the developers are planning a new 10,000 ft runway to accommodate widebody freighters and also intend to build taxiways and a cargo apron to serve 20 aircraft, Mr Ford said.
He expects to move forward with the construction soon.
“We have sufficient firm commitments to go to capital markets,” he said. These are from construction and fuel providers as well as major perishables importers. We are now converting letters of intent and term sheets into contracts so we have guaranteed tenants and volumes. We want to convert as many as possible.”
He intends to complete this stage before the end of the second quarter and begin construction in Q2 or Q3.
And there have been talks with airlines that operate freighters: “It’s basically the all-cargo aircraft operators we target,” Mr Ford said.
So far none has made a commitment, but some regard the project as an interesting possibility.
“It’s an interesting option because of its focus on cargo operations and congestion reduction,” said Kamal Hadad, network and alliance director of LATAM Cargo. “Right now, our freighter supporting bellies strategy relies heavily on Miami as a key location and therefore we believe we should continue operating there. Nevertheless, we are constantly evaluating new opportunities for our network.”
US freighter airline 21 Air also sounded a positive note: “The focus of this development is to provide an alternative solution to the everyday, busier Miami International Airport, especially on the air cargo service to flowers, fruits, fish and other perishables. 21 Air, as an all-cargo carrier, is aware of this situation and has expressed its interest in having future operations via this airport.”
According to Mr Ford, the Miami-Dade Aviation Department, which manages Miami International Airport (MIA), has reached out to start a dialogue with a rival that is presenting itself as an alternative to the congestion at the mega-gateway.
With congestion and longer dwell times at MIA, the AIA project emphasises its location, 100 miles north of MIA, means shorter truck transit times to US markets beyond Florida. (It is located just on the southwest of Lake Okeechobee shown on the map above.)
“We had to prove shelf-life and transport miles savings to the perishables industry to be acceptable,” said Mr Ford. “The reduction in overall cost of a trip is the foundation for the concept.”
Users of the airport will be charged a throughput fee. Instead of per sq ft rental on the building or landing fees, the airport’s costs will be paid for by this mechanism. The amount will be determined by the expense and the amount of debt the airport has.
“Historically, attempts to capture cargo-related revenue have mostly fallen under less-imaginative landing fees charged to all-cargo carriers, fuel fees passed through fueling agents from airlines and rents for the land and/or physical facilities depending on whether the airport was an active or passive landlord,” noted Mike Webber, associate vice-president of aviation planning and development consultant Landrum & Brown.
“Very few airports contemplate air cargo as even a break-even proposition for revenues, but tolerate it for its economic development benefits for their constituents, and accept that it doesn’t need to pull its own weight but is just a typically off-peak user of mostly fixed assets, so must only (hopefully) cover the marginal costs of cargo operations,” he continued.
Previous attempts to divert international freighters from Miami to other airports in the south-eastern US have failed, chiefly because of the connectivity and infrastructure at MIA. Combination carriers like LATAM and Avianca usually are reluctant to split their operations.
On the brighter side, cargo airports have fared better over the past couple of years. However, much of this has been driven by e-commerce. If AIA were to succeed, it would be the first cargo airport story written on the back of the strength of perishables.