Stewart air cargo

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“A regional cargo distribution hub will be established at Stewart Airport by growing its current cargo capacity, which will relieve JFK Airport of most cargo shipping facilities and create room to expand potential amenities and services for JFK Airport,” announced a press release from New York governor Andrew Cuomo’s office on October 20.

There’s no question that Stewart has more than enough space for such a transition, as a six-page Port Authority (PANYNJ) study called “Business Attraction Plan for Stewart International Airport” reaffirmed in December 2. Port Authority and Empire State Development will collaborate on an expanded plan to use state business attraction programs, according to the governor, including Start-Up New York and other tax incentives, to attract investment.

The state’s initiative would “allow companies to move back-office manufacturing into one connected major distribution center.” At the same time, Stewart would enlarge its present capacities as a regional cargo distribution hub.

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Meanwhile, an accelerated comprehensive master plan design competition is being conducted at JFK. Last Wednesday was the deadline for initial draft submissions. Final design submissions are due January 30.

Were air cargo carriers to detour a significant portion of their JFK business to Stewart, the latter would gain “short-term and long-term actionable opportunities to grow air cargo service.” The syntax is tangled: In this optimistic universe, Stewart and JFK could “both grow their collective cargo businesses in concert with one another.”

Kumbaya.

Wait a second. Enormous logistical, economic and political obstacles face such a shift.  Some of the action-minded governor’s big ideas are brilliant. Others have proven impractical.

In May 2012 Port Authority and New York City’s Economic Development Corporation (NYCEDC) published a study of air cargo at JFK. Given the sources of the funding, it’s not surprising the consultants, Landrum & Brown, Inc., did not discuss a Stewart role.

There are 15,000 direct air cargo jobs (out of 69,000 total jobs) at JFK. The off-airport business opportunities are also huge. Stewart, with 2700 jobs, has plenty of space on-site and off-site, but comparatively low levels of airport activity.

The JFK study conceded that land was the scarcest resource in the utilization mix at that huge airport. “The amount of unused property available for cargo development is an important aspect of measuring present and long-term capacity.”

JFK, which is losing air cargo market share, is saddled with a cost structure for the air cargo industry about 30 percent higher than its biggest domestic competitors (Atlanta, Chicago, Miami and Los Angeles). Major problems include off-site traffic bottlenecks, monumental corruption and obsolete infrastructure.

With the exception of calling for financial targets for air cargo and looking for reduced costs and rate adjustments, the Landrum & Brown study accepts JFK’s limitations. “The cost of doing business in the region and at [JFK] is higher than at any other North American gateway,” it says, “and represents major concern to the industry which for the most part realizes that there is little that can be done on the broader scale.”

The gradual loss of market share has been accelerated as a greater proportion of air cargo is carried on freighters and a smaller proportion as belly cargo on passenger flights. A Port Authority spokesperson, however, contended that the trend, projected in the 2012 study, is now moving in the opposite direction, toward a greater share of belly cargo and a lesser share of freight.

Reform vs. power

In last year’s state of the state address, Andrew Cuomo was less fatalistic. He announced that New York State government would take over management responsibility for construction at JFK and LaGuardia airports from the Port Authority.

Cuomo sees an opportunity to shift a portion of the air cargo load from overcrowded JFK to underutilized Stewart, something with both economic and political consequences. As is his wont, the governor is pushing hard for change under his control.

For better or worse, he is doing so at a time when a massive struggle over control of arguably the most powerful public authority in the northeastern United States is taking place. As has been widely publicized, Cuomo and New Jersey governor Chris Christie have been resisting their legislatures’ ideas.

This tough fight will continue. After the Bridgegate scandal, the two state legislatures have been active in seeking to curb tightening gubernatorial control over each governor’s Port Authority fiefdoms. Andrew Cuomo’s extraordinary veto in late December of legislation curbing the Port Authority (passed by a unanimous vote of both houses of both state legislatures) showed the strength of the governor’s commitment to run the New York portion of the PANYNJ empire out of his office. The governor will instead listen to the recommendations of the task force he himself had appointed.

“It’s shameful,” former assemblyperson Richard Brodsky, a critic of Port Authority governance, was quoted as saying. “They ripped the heart out of real reform in order to maintain their control and power.”

Does it make sense for New York to divide air cargo between its two major components, air freighters and belly cargo, and handle them at different locations. I’ve crunched some of the numbers. It’s a complex question.

On the one hand, dedicated air freighters (FedEx and the like) have been the growing part of the air cargo business, and they would benefit from increased handling efficiencies and a lower cost structure, leaving JFK greater capacity to expand its passenger businesses. On the other hand, the bold step of sending significant amounts of what is now JFK cargo volume to the more distant Stewart (maybe 60 per cent of the total) would introduce other inefficiencies, particularly in the short term.

JFK presently handles close to a hundred times as much total cargo as Stewart’s 15,520 tons annually. But Stewart handles almost ten per cent of FedEx’s JFK business.

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