Reaching New Heights

KENTUCKY’S earliest transportation links were river and rail. Today, road and air dominate. A single airport can contribute almost $4 billion in one year to the economy of its region. A model of passenger service not only statewide, but globally, the Cincinnati/Northern Kentucky Airport (CNKA) brought $3.9 billion to the region in 1998, according to the University of Cincinnati. About $471 million flows annually into Boone County, which leads the region in growth. Kenton County gets no direct tax revenue, but claims about 4,000 of over 10,000 airport jobs. Based on current figures, annual economic impact of the airport will increase 68 percent to $6.5 billion by the year 2011, with some $3 billion in household earnings and 114,500 jobs.

According to Ted Bushelman, director of communications at the airport, "we’re just getting started." A $12 million hangar with 155 new jobs was just completed for Meseba, a Northwest Airlines regional carrier. Comair is building a $50 million, 165,000-square-foot corporate office. Flight Safety International is finishing a $40 million flight simulator facility. DHL Worldwide Express is expanding its primary U.S. hub at CNKA with a $270 million investment, increasing capacity threefold and adding 700 jobs over the next decade.

Internationally respected passenger service

CNKA is not all that big, ranking 23rd in the U.S. Fares are among the nation’s highest, yet it has been voted best airport in North and South America and number two worldwide in AC Nielsen 1999 research. The International Air Transport Association (ITAA) has ranked CNKA among the world’s top facilities since 1994. In a recent ITAA survey, international travelers rated CNKA seventh out of 57. "Take care of your passengers and all else works," Bushelman explained. Outstanding customer service is expected from everyone, even janitors and parking attendants.

The FAA predicts CNKA will remain one of fastest-growing major airports in the U.S., with more departures than the five closest airports of Indianapolis, Louisville, Lexington, Columbus and Dayton. Delta and Comair account for 92 percent of all the airport’s passengers and the commuter carrier has the most flights – about 320 a day. From three Piper Navajos in 1977, the business has grown to a fleet of 100. Comair moved 250,000 flyers a month through CNKA gates in 1994. Today there are 700,000. In fact, according to USAToday, CNKAleads the nation in its overall number of commuter flights.

Do what you do very well

In 1996, a consultant suggested Louisville could stay competitive by focusing on just a couple of things and doing them very well. Those two chosen areas were biomedical services and logistics and distribution. In UPS, this strategy has come together like a well-executed flight plan.

Louisville International Airport is the national hub of United Parcel Service (UPS), distributing more than 700,000 parcels daily to more than 180 countries. Volume like this makes Louisville the fourth-largest cargo airport nationally and sixth-largest worldwide. Site Selection magazine ranked Louisville International Airport in the top 10 for distribution.

A major new project has further cemented the Louisville/UPS partnership and promises 6,000 new jobs. "The $1 billion UPS hub expansion was the largest economic development project in the country in ’98 and second largest in world," said Michael Bosc, vice president of communications, Greater Louisville, Inc. "When completed in 2005, it will be the largest, fastest sorting facility on earth." Initially, UPS was concerned about finding local workers for the new facility, so civic and education leaders united to create the Metropolitan College Program, providing education to any Kentuckian who works at the hub. Half the cost is picked up by the state and half by UPS.

Growing pains in the Bluegrass

While Louisville and Northern Kentucky have found their niches, Lexington Bluegrass Airport is finding itself. "Bluegrass Airport isn’t anywhere close to reaching its potential," said Michael Gobb, executive director of the airport. "Part of the difference for Bluegrass is that it is so close to two major airports. We must present compelling messages to carriers and customers" to capture business.

The airport hopes several research projects, including an economic impact study by the University of Kentucky, will help define these messages. "We are expanding research to include many kinds of travelers," said Gobb. "We just did a survey of travel agencies." Another looks at small and medium businesses in surrounding areas.

The studies will drive expansion strategy. "If there is demonstrated need, we build facilities," Gobb explained. "We are unique because of our 7,000-foot runway. It would not meet all criteria if built today. We are looking for ways to continue to operate with 7,000 feet and feel there will be a solution within the next year that minimizes any negative impact on the community." As neighbors, Bluegrass Airport has some of the premier horse farms of the region. "We don’t want to use up farm land, but we have to do something to maintain a surface footprint, not just for Lexington, but all central and eastern Kentucky."

A little relief has come from the direction of Georgetown. The Bluegrass Airport Board and the FAA proposed the 5,000-foot reliever airport there as a way to take pressure off Bluegrass. "Georgetown is a great business runway," Gobb declared. "It is extending the life of our facility."

Economic tool for small communities

Kentucky has one of best local airport systems in the nation, according to retired U.S. Senator Wendell H. Ford, and he should know. He held key positions on the Senate aviation committee for many years and was responsible for securing millions for Kentucky airports. "Wendell Ford would write one sentence in a bill, and we would get $80 million," claimed Bushelman of CNKA. "We hated when he retired. He knew more about aviation than anyone in Washington."

Some 66 general aviation airports in Kentucky provide accommodations for corporate aircraft. "A small local airport is the best economic development tool a community can have to get anyone to look at industrial sites," said Senator Ford. "Blue chips have their own planes and want to come in and drive. Commercial private airports could appeal to a lot of blue chip companies."

Warren County is exploring a business-oriented aviation strategy. Community leaders researched a new airport and business park because the existing airport at Bowling Green couldn’t expand. In 1998, the Intermodal Transportation Authority was established and pursued a $6 million grant to study feasibility, select a site, construct, and operate the Kentucky TriModal TransPark. Expected to open in 2005, the facility is positioned as an advanced industrial park with rail and road links and a first-class business airport. Net job impact of the combined airport and industrial park could range between 250 to 1,880 jobs in 2010, according to studies.

Closer to most places than most places

Travel remains a fact of corporate life and not all business travelers associate Kentucky with easy air access. "Routinely people act like it is one of the seven mysteries of the world to get here. Then they find there actually is a real airport," said Greg Ray, CFO and executive vice president of eCorporation, a Lexington-based accelerator for early stage technology companies in Kentucky, North Carolina and California. "It is as easy to get from New York to Lexington as it is from New York to Chicago, if not easier, because you don’t have miles of terminal and an hour of traffic."

"Aviation is a good selling point for us with international companies," added Pamela Trautner, director of marketing and communications for the Kentucky Cabinet for Economic Development. "Daily we can get people, parts, raw materials for customers around the world." Over 200 companies in Cincinnati and Northern Kentucky have owners in Japan, England, Western Europe or Canada.

Moving the new economy

E-tailers who put everything at our fingertips via the Internet must also have a way to put it at our doorsteps. "The next wave is clicks-and-mortar partnering," said Greg Ray. "Companies like UPS and others connected with aviation are great catalysts for new business creation like logistics, fulfillment and smart warehouses." UPS Worldwide Logistics leverages aviation and distribution expertise to provide transparent service for third party shipping.

"Louisville has been an incredible e-commerce magnet," Bosc declared. Business 2.0 magazine calls the city a power center of the new economy, reporting that 55 percent of goods sold over the Internet are shipped by UPS. "Approximately 50 companies have located here in the few last years to be near UPS. Guess jeans began moving their Internet operation here last year. Global Sports Interactive just announced they are bringing 320 jobs to Louisville to do Web site outsourcing for retailers.

"Nine computer repair businesses have moved to Louisville since 1996 to provide rapid repair and return services. If they can’t fix it by phone, someone in a brown shirt picks it up and brings it to Louisville and has it back 24 hours later repaired. That can only be done in Louisville and Memphis," Bosc declared.

Last year pharmacy e-tailer DrugEmporium.com. moved from Columbus, Ohio, to handle Internet orders, bringing 100 jobs, including 30 pharmacists. "The challenge has been to make these jobs better-paying," said Bosc. We are very aggressively going after e-commerce, but we don’t just take pick-and-pack jobs. We are also insisting on the pharmacist spots as well."

Attracting and growing talent

"We want to pursue companies that offer higher wages and career paths," said Bosc. Aviation salaries range from $25,000 to $125,000. Numbers provided by the Kentucky Cabinet for Economic Development put employee compensation per air transportation job, including benefits, at $47,470, and indirect value added per job at just over $11,000.

"With the new economy, we have to attract a talent pool and part of the pull is being able to get places," said Greg Ray. "We have people who moved here from Denver and Florida and for them, airport accessibility contributes to quality of life. It’s a huge selling point."

"Looking ahead, I think aviation will remain a major force," said Michael Bosc, although land availability remains one of the biggest challenges to expansion and a source of friction with local communities. The state has put millions into its airports and announcements come out almost daily of new projects or funding. Kentucky can also expect to share in the new "Wendell H. Ford Aviation Investment and Reform Act for the 21st Century," a $40 billion national appropriations bill. Kentucky aviation appears on course to generate more regional growth, attract profitable businesses and spawn new industries.

Carro Ford (carroford@lanereport.com) is a staff writer for The Lane Report.

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