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Kadner: Third airport could be cargo leader

A sign marks lacquired by State Illinois along Rt. 50 Eagle Lake Road near Peotone for proposed third airport Thursday

A sign marks land acquired by the State of Illinois along Rt. 50 and Eagle Lake Road near Peotone for the proposed third airport Thursday, September 27, 2012. | Brett Roseman~Sun-Times Media

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South Suburban Airport RFI Response - USF Intermodal Institute
Link 2014-07-15 18:10:47
South Suburban Airport RFI Response - William Blair Co
South Suburban Airport RFI Response - Epstein
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Updated: August 17, 2014 6:33AM



Responses to a state request for South Suburban Airport marketing strategies appear to be far more optimistic about attracting cargo traffic to a new airport than commercial passenger flights.

The SouthtownStar obtained responses to an Illinois Department of Transportation “Request for Information” publicly posted in February through the Freedom of Information Act.

The purpose of the RFI was to “obtain specific ideas and goals that will help generate a comprehensive and effective strategy to market commercial air passenger and air cargo activity” at the South Suburban Airport, according to a statement by IDOT.

There were four responses in all, none from an airline and only one from a business that seemed to have limited experience in airport construction.

The harshest criticism of the airport plan came from a response filed jointly by A. Epstein and Sons International and Flak International of Olympia Fields.

It states that the South Suburban Airport master plan “appears to have a major fatal flaw.”

That flaw, the response contends, is the initial runway length of 9,500 feet, would fail to accommodate some of the largest freight hauling aircraft in the world which require a runway of at least 11,000 feet. Despite that criticism, however, the Epstein/Flak response paints an optimistic picture for the future of the South Suburban Airport, especially as an international destination for cargo, if the runway is lengthened.

IDOT spokesman Guy Tridgell said the determination of runway length at the airport “was made with the FAA based on aviation forecasts for the facility.”

Tridgell said the runway length would handle most of the aircraft flying today and the airport is designed to accommodate growth and changing events in the aviation industry.

Epstein was the lead firm in developing the $400 million, 1.3 million square-foot facility that replaced the Midway Airport terminal built in 1947.

The Epstein/Flak report notes that while Chicago ranks sixth in a Global Cities Index, the city ranked only 20th for total air cargo volume in 2012.

“Chicago’s air transport network remains restricted to only two primary landlocked legacy facilities (O’Hare International and Midway airports) with service provided by only three major scheduled carriers.”

While O’Hare dominates the international belly cargo market, the response states, “less than three percent of the total cargo-carrying flights at O’Hare were freighters.”

The two carriers that dominate O’Hare, United and American airlines, control 84 percent of the O’Hare market and are exclusively lower-hold belly cargo operators.

By contrast, the New York City constellation of airports has full service providers for both commercial and air cargo carriers.

In 2012, O’Hare handled less air cargo tonnage than eight of the top 10 ranked Global Cities in the world.

“While (Chicago) ranked an impressive fourth place for regional GDP (and sixth overall) it placed 18th for total air cargo tonnage handled,” the Epstein/Flak report states.

The report claims that Chicago-Gary Airport has failed to maximize its potential because its maximum allowable runway length of “8,900 feet is not considered a commercially competitive cargo airport.”

“Gary’s expanded site is still completely landlocked on all sides by a combination of residential and industrial properties...”

All four of the businesses that responded to the request for information noted that the South Suburban Airport site lies within an area served by more railroads than most others in the nation, thousands of trucking operations and larger intermodal facilities constructed in the past 10 years.

A response from L.E.K. consulting, which claims to be a “leading strategic advisor to the global airline industry,” states that in order to attract a core set of commercial airlines, it would be important for the South Suburban Airport to first “lock down” an anchor tenant to ensure “strong usage at opening.”

Its analysis urges initial marketing to low cost commercial passenger carriers such as Allegiant Air, Spirit, Frontier, and Jet Blue, among others, but notes several potential obstacles that could keep each from operating at the South Suburban Airport.

One of the keys to attracting the low cost carrier would be keeping gate costs down, along with providing plenty of open gates and slots not available at O’Hare or Midway.

It notes that Allegiant pulled out of Chicago-Gary Airport and suggest the state find out why.

William Blair & Company, a global investment banking operation that specializes in public-private financial partnerships such as proposed the South Suburban Airport, states the goal of the airport marketing plan should be to attract “as much passenger traffic as possibly, as quickly as possible.”

“Identifiable passenger traffic will be a prerequisite of investment in the airport — from private sources of equity and debt as well as grants and other financing from the FAA.”

“Passenger forecasts must be credible and the best scenario is to have airlines committed to service prior to any sort of P3 financing. The Branson, MO. Airport provides a cautionary tale of overly optimistic commercial passenger traffic. The airport was financed privately, with debt issued in the municipal debt market in 2007. When the airport began operations in 2009 it severely underperformed on passenger traffic and eventually the owners defaulted on the bonds. Investors will be wary of unsubstantiated forecasts.”

The fourth response to the state’s request for information was produced by the Intermodal Transportation Institute at the University of St. Francis in Joliet, the Will County Center for Economic Development, Chicago Southland Economic Development Corporation and Kankakee County Economic Alliance.

It notes, as do several of the responses, that the population of the region served by the airport within a 45 minute drive is 1.8 million, the equivalent of a large city.

It emphasizes the airport should not compete with Midway.



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