As in real estate, "location, location, location" can be crucial for airports. It's especially true for Ted Stevens Anchorage International (ANC) in Alaska. The state-owned airport has parlayed its geographic quirk into a competitive advantage. With three runways (all longer than 10,600 feet), special ramp facilities and procedures, and a little help from the federal government, ANC has molded itself into a critical refueling stop for cargo carriers flying the skies between Asia and North America.
Project: Cargo Operations
Owner/Operator: Alaska Dept. of Transportation & Public Facilities
Primary Services: Refueling & ground handling for int'l cargo carriers
Rankings: World's 6th largest airport by cargo throughput; 2nd largest U.S. airport by landed
Runways: 3 (all more than 10,600 ft. long)
Fuel Storage Capacity: 36 million gallons
Approx. Daily Fuel Usage: 2 million gal.
Traffic: 500 wide-body arrivals/week
Competitive Advantages: Located within a 91/2-hour flight from 90% of the industrialized world; exempt from Jones Act cargo transfer restrictions
"We are the busiest airport in the world that nothing comes from or goes to," quips John Parrott, ANC's manager. "We handle 500 wide-body cargo plane landings per week, mostly 747s. We're the sixth-largest airport in the world in terms of cargo throughput and the second-largest in North America in terms of landed cargo weight."
The bulk of ANC's traffic is generated by pure geography. Nestled on the south-central coast of Alaska, Anchorage is roughly equidistant from Tokyo and New York City alike. That puts ANC within a 91/2-hour flight from 90% of the industrialized world. As such, roughly 80% of all air cargo traffic between Asia and North America passes through ANC, Parrott reports.
The basic financial calculus of air cargo also plays to ANC's advantage. Most international cargo carriers have two choices: carry more fuel and less cargo, which increases range but reduces per flight revenue; or carry more cargo and less fuel, which reduces flying range but boosts revenue. A stop at ANC allows many carriers to have it both ways, Parrot notes.
"Fortunately for us, (carriers) can carry an extra 100,000 pounds of cargo just by making a fuel stop in Anchorage, which in many cases is only 100 miles off the direct route," he explains. "At a conservative estimate of $1 in revenue per pound, five flights a day, six days a week and 52 weeks a year, that's more than $150 million in added revenue."
Parrott estimates that expenses incurred during stops amount to less than 10% of the additional revenue carriers can earn. "That's a pretty good business model - and the reason why almost every carrier that serves trade routes between Asia and North America stops in Anchorage," he notes.
ANC's market is so unique, airport officials don't consider it to be in competition with other major cargo hubs in Memphis, Chicago and Louisville. ANC actually helps facilitate their business, notes Parrott: "We enable economic activity to occur at a higher level at those origin and destination airports because of the efficiency we bring to the air cargo supply chain. Our existence makes the whole system work more efficiently."
From Passengers to Payloads
Decades ago, ANC was much more of an international passenger airport than a cargo hub. "There was a time when our airport was known as the crossroads of the world," Parrott recalls.
Two primary factors contributed to that. Back then, commercial airlines didn't have the range to fly non-stop from Asia to North America. Moreover, the Soviet Union's airspace restrictions translated into longer routes. The airspace opened up, however, after the fall of the Berlin Wall in 1989 and the collapse of the Soviet Union. Aircraft flight ranges also increased, and it no longer made sense for passenger airliners to stop at ANC, Parrott explains.
"International passenger traffic disappeared almost overnight after the Berlin Wall came down," he recalls. At its peak, the airport handled 104,000 international passengers in 1990; by 1994, that number dipped by more than half, to around 50,000 passengers. Today, passenger volume has declined to the point that ANC no longer offers year-round international passenger service, Parrott reports.
The airport's economic salvation arrived with the emergence of Asia (especially China) as an economic powerhouse, supplying goods to North America, the world's largest consumer market. The rise of FedEx and UPS air cargo services also strongly contributed to ANC's resurrection, Parrott relates.
To accommodate the increase in cargo traffic, the airport added more pull-through cargo parking spots, expanded and upgraded its runways, and improved its underground refueling system. Airport tenants also built additional cargo parking spots.
ANC still handles passenger flights. Alaska's largest business airport logged about 2.3 million enplanements in 2013 and handled more than 50,000 passenger aircraft landings. "The only reason we have even that level of passenger traffic is there's no other way to get out of the state in a reasonable amount of time," Parrott explains, pointing out that Alaska is larger than California, Montana and Texas combined. "It can take anywhere from three to five days of driving to leave the state ... and more than 80% of communities in Alaska aren't accessible by road."
"Alaskans fly eight times more than the average American," he continues. "Even high school basketball teams fly to their games in other towns. Aviation here is sacred - it's how we get around."
As such, ANC maintains a traditional passenger terminal (built in phases in 2004 and 2009) with two modern concourses and about 23 gates for commercial passenger jets.
All similarities to traditional airports end at the terminal. Unlike other cargo hubs that handle similar annual tonnage, ANC has no vast complexes of cargo warehouses and support facilities, railroad lines or even special roads for transport trucks. It simply doesn't need them. "By and large, most of our business is done on the ramps," Parrott explains.
Most cargo planes spend about two hours on an ANC ramp. Some, however, pay more for what Parrott calls the "Indy 500 pit stop treatment." In those cases, independent ground handlers (including Swissport International, Pegasus Aviation Services and FEAM Ground Services) allocate more resources to get an aircraft rolling in a little less than an hour. Just like an Indy pit crew, multiple ramp workers simultaneously perform numerous services, including refueling, lavatory cleaning, catering and general maintenance.
"We don't provide any of those services," Parrott clarifies. "We just own the infrastructure. A good analogy is that we own the shopping mall, but none of the shops. We just keep the lights on and make sure the sidewalks are shoveled."
Much of the action occurs on a large cargo ramp near the center of the airport, at 11 parking spots for wide-body aircraft. The ramp's central location makes it easy for cargo planes to clear a landing runway, taxi to the parking spots, receive service from ground handlers, and then depart.
"It takes a cargo plane as little as two minutes to get from those central parking spots to a departure runway," Parrott specifies.
ANC pumps nearly 2 million gallons of jet fuel per day via an underground hydrant system. Fuel is stored above ground, in nine 4 million-gallon tanks, for a total storage capacity of 36 million gallons. A consortium of 19 airlines owns and operates the fueling system.
According to Parrott, the vast majority of the airport's fuel comes from Alaska or is shipped via barges from the West Coast to Anchorage's port facilities; about 20% is transported from Asia via tanker ships.
Unlike many airports, where trucks carry fuel to airplanes on the ramps, ANC relies on an underground pipe system. One hose runs from an in-ground connection to a "connecting truck," and another hose connects the truck to the aircraft's gas tank. The connecting truck then uses a pump to move the fuel from the pipeline system into the aircraft.
"This system enables much faster refueling," Parrott relates. "A typical fuel truck can't fill up a 747 in one trip. (Workers) have to drive a truck up, connect it, empty it, disconnect it, go back and refill it. All that time really adds up. With our system, we can pump fuel from both sides of an aircraft at the same time for maximum efficiency."
Under most circumstances, American cargo carriers are not allowed to offload cargo onto foreign carriers' planes for delivery to cities in the United States. The Merchant Marine Act of 1920 (which also applies to aviation) prohibits foreign airlines from flying cargo from one United States city to another. The rule, also known as the Jones Act, was passed to protect American interests - both economic and those related to national security. Violations of the act are known as "cabotage."
The law's restrictions, however, don't apply to ANC. In an effort to stimulate economic growth and make national cargo shipping more efficient and economical, the U.S. Department of Transportation granted the airport an exemption from the Jones Act in the late 1990s.
Parrott uses a hypothetical example of a Chinese airline and an American airline carrying goods from Asia to cities like Chicago and Atlanta to illustrate how the exemption increases efficiency: Individually, the two airlines may not service those two cities often enough to satisfy customers. But between the two, they might be able to offer comprehensive service - if they could transfer their cargo to each other's planes at ANC.
"The piece that's unique to Anchorage is that an American carrier can take cargo off and put it on a foreign carrier for transport to another city," Parrott explains. "Say an American carrier leaves Shanghai and a Chinese carrier leaves Taipei, and they both meet in Anchorage. Each can take its cargo and transfer it to the other carrier, then one maybe goes to Chicago and the other to Atlanta. Then it works in reverse, too."
ANC's transfer capability is so unique, some carriers question whether it is legal, Parrot reports.
Looking ahead, the airport is working with the Anchorage Economic Development Corp. to explore what kind of value-added services it could offer to attract more customers. Like most airports, ANC is an economic driver of the area's economy; so its continued growth and viability are important.
Currently, the airport employs 380 people; and one out of every 10 jobs in Anchorage is dependent on ANC.
"We're a significant economic engine that enables a lot of other engines to run smoothly," Parrott says. "So we're trying to determine who we should be talking to in order to do more business at the airport - to be more than just a technical stop for getting gas and moving cargo between aircraft. Are there industries for which we could provide storage or value-added services? That's our next avenue to explore."