Rickenbacker Int'l: An Economic Engine by Air, Rail & Road

Author: 
Rebecca Kanable
Published in: 
May-June
2013

factsfigures

Airport: Rickenbacker Int'l Airport

Owner & Operator: Columbus Regional Airport Authority

2011 Takeoffs & Landings: 39,400

2011 Freight & Mail: 146.2 million lbs.

2012 Economic Impact Study: CDM Smith

Rickenbacker Global Logistics Park Owner:
Columbus Regional Airport Authority

Logistics Park Developer: Duke Realty Corp.;
Capitol Square, Ltd.

Passenger Airlines: Vision Airlines; Allegiant Air;
ad hoc charter flights

Cargo Carriers: FedEx; UPS; AirNet; Evergreen;
Kalitta; Atlas; etc.

Rail Providers: Norfolk Southern; CSX

Trucking Operations: Forward Air; CEVA;
Towne Air Freight

While most airports are more than just airplanes and runways, Ohio's Rickenbacker International Airport (LCK) stretches the usual format further than most. In addition to cargo, military and passenger services, it also includes rail and trucking. As such, the airport is a key component of the Rickenbacker Inland Port - one of the largest integrated logistics complexes in the United States.

"We refer to it as an inland port because we don't have a natural body of water for ships, but we have everything else," explains Elaine Roberts, A.A.E., president and CEO of Columbus Regional Airport Authority.

With large cargo as its focus, LCK has two 12,000-foot runways, 200,000+ square feet of air cargo facility space and 130 acres of uncongested cargo ramp with a hydrant fueling system. Cargo activity is generated by a network of express and all-cargo carriers, including FedEx, UPS, AirNet, Evergreen, Kalitta, Atlas and others.

The Norfolk Southern Rickenbacker Intermodal Terminal, which marries rail and truck transportation, is capable of handling more than 400,000 containers annually. Norfolk Southern operates the intermodal terminal and the most extensive intermodal network in the East. CSX Corporation also provides rail service from
nearby Rickenbacker. CEVA and Towne Air Freight are among a multitude of trucking companies serving the area; and Forward Air makes the intermodal terminal home of its North American trucking hub and the heart its
operations that serve 85 U.S. and Canadian cities.

Also included in the inland port is the Rickenbacker Global Logistics Park, which includes 1,576 acres on five campuses surrounding LCK and the intermodal terminal.

"When we talk about Rickenbacker, it's a huge complex that extends well beyond the airport itself - both geographically and in scope of transportation and distribution services," Roberts says.

Improvements that have taken place in the last decade and continue today make Rickenbacker Inland Port a world-class multi-modal logistics hub that helps sustain the airport financially.

Economic Engine

In addition to operating LCK, the Columbus Regional Airport Authority also operates passenger-focused Port Columbus International Airport and Bolton Field for general aviation users.

Last year, the authority commissioned an independent study to quantify on-airport activities, capital improvement projects, visitor-related expenditures and ripple effects generated by airport businesses. It introduces the economic impact study with two simple statements: "Airports are more than just airplanes and runways. They are vital economic drivers."

According to the six-month study conducted by CDM Smith, the authority's three airports support nearly 38,400 jobs, more than $1.3 billion in payroll and $4.6+ billion in total output annually. (Figures include both direct and multiplier effects.) The results indicate a significant increase in impact vs. the findings in a similar 2004 study. Specifically, employment has increased 28%, annual payroll is up 68% and annual output has risen 69%.

LCK alone accounted for 4,806 jobs, an annual payroll of $267.3 million and a total annual output of $904 million.

In addition to the airports, the study also considered certain off-airport, non-aviation businesses at Rickenbacker Inland Port that have direct ties to the airport authority. They accounted for almost 15,800 jobs, $515.2 million in annual payroll and $1.9 billion in total annual output. The figures only include operations directly tied to the airport authority. The impact of all Rickenbacker area businesses is significantly greater.

Logical Location

Almost 15% of the jobs in Central Ohio are related to the logistics industry. Jeff Zimmerman, director of the Columbus Region Logistics Council, explains why the area is a logical place for such activity: "If you look at a map and draw an imaginary 500-mile circle around Columbus, you find that we have great proximity to dense population centers. That by itself makes Columbus an ideal center for distribution."

  Fully 47% of the U.S. population and about 35% of the Canadian population is within that 500-mile radius - just one day's truck drive from Columbus, Zimmerman elaborates."There's great reach to the consumer and retail level," he explains.

About 50% of all U.S. manufacturing capacity exists inside that same 500-mile radius, he adds. And Rickenbacker Inland Port and LCK are in the thick of it all - located in the middle of the New York-Atlanta-Chicago connection and already equipped with infrastructure. The combination, he explains, makes Central Ohio "the perfect epicenter for distribution."

Financial Self-Sufficiency

Most of LCK, which had been a military airbase, was given to Franklin County, Ohio, in 1979; and some land was kept for joint military use. Units including the U.S. Air National Guard, Army National Guard, U.S. Army Reserve and Navy/Marine Reserve continue to remain active at the airport.

Revenues at the cargo-centric airport are derived from landing fees, ground-handling and fueling operations, cargo facility rent and associated fees from charter passenger traffic. In addition, the county subsidized LCK with millions of dollars through its port authority.

About 10 years ago, however, Rickenbacker Port Authority merged with the Columbus Airport Authority to form the Columbus Regional Airport Authority, which began operating LCK in 2003. Its challenge was to become financially self-sufficient within 10 years, when Franklin County planned to stop providing a subsidy to help offset operating deficits and other expenses, Roberts explains. That's when the authority began promoting Rickenbacker as an inland port.

"This was not a new idea," she notes.

Planes, Trains & Trucks

Shortly after the authority took over operations at LCK, Norfolk Southern Corp. expressed interest in building a $68.5 million intermodal terminal on airport property.

Finding a location for the facility posed challenges. What would have been the most convenient site was partially located on top of a military landfill. Although the military had cleaned up the site, tests would have been needed to determine if anything could be built there. The site ultimately selected on the south side of the airport is in Pickaway County vs. Franklin County with the airport authority and mayor of Columbus; so installing utilities required extra coordination. The creation of a Joint Economic Development District allowed the City of Columbus to bring water and sewer across the county line and tax development that takes place there.

In addition to assisting during site location, the airport authority helped obtain $30 million in federal highway funding to match investments by Norfolk Southern. And the Rickenbacker Intermodal Terminal opened in 2008.

A railway improvement project to the Heartland Corridor subsequently increased clearances in tunnels to accommodate double-stack intermodal trains. This change reduced travel times for shipments between the East and Midwest. A public-private partnership of Norfolk Southern, West Virginia, Virginia, Ohio, the federal government, and local groups made the $321 million project possible.

The large rail-truck intermodal facility and improved railway allows double-stacked cargo to arrive by train from the eastern seaport in Norfolk, VA, stop at Rickenbacker Inland Port, then head to Chicago - saving  two to three days vs. coming by train or truck from the West, explains Roberts. More than 90% of the containers at Rickenbacker are international in origin, she adds.

Having the rail-truck intermodal terminal, LCK and highway access and land for development helps convince companies to locate in the Columbus region even though few will use all those modes, Roberts relates. Some ship by air because they have high-value or time-sensitive cargo. Other less urgent shipments arrive via ocean or truck, which is typically less expensive.

What If?

Roberts considers the merger of the two port authorities 10 years ago a critical step in local development. "Without it, I don't think there would have been the collaboration and the resources from the two counties and the city," Roberts says. "I think the railroad would not have ultimately built the intermodal terminal at Rickenbacker. We still might have been doing some of this industrial development, but the rail yard has made a huge difference for demand. I think that's what energized the community and community leaders and Congress to help essentially put more than $100 million into the intermodal facility and Heartland Corridor to Norfolk, VA. That investment would not have happened."

Last June, the airport authority and its stakeholders learned that after three unsuccessful funding applications, they would receive $16 million in Transportation Investment Generating Economic Recovery grants for the Rickenbacker East-West Connector. The project will replace rural roads with a highway capable of handling heavy truck traffic and provide access between the airport, Norfolk Southern intermodal yard, south airfield businesses and U.S. Highway 23. The East-West Connector will also replace an at-grade railroad crossing with a bridge. In total, the area has had three roadway improvement projects totaling about $30 million.

They, too, would not have happened without the merger that created the airport authority, Roberts relates."Clearly, there would have been a lot less development and fewer jobs created," she explains. "The coalescence of the whole community around the development of the Rickenbacker Inland Port I don't think would have been nearly as strong. I think it would have been there as an asset, but it would have been a lot more challenging to ... make this airport self-sufficient."

Global Logistics

While Franklin County's Rickenbacker Port Authority had started some industrial development, Roberts says it was not to the large scale of current efforts.

Using existing airport land and other land it purchased, the airport authority created a nearly 1,600-acre industrial park in 2006. Rickenbacker Global Logistics Park is a master-planned, speculative and built-to-suit industrial park divided into campuses. Most of its warehouses are more than 400,000 square feet. The park's prime location offers tenants access to roads, rail and air.

The park also includes Foreign-Trade Zone (FTZ) status, which allows companies doing business on an international level to defer, reduce or eliminate Customs duties and entry fees on products and production components. This, in turn, lowers businesses' costs and helps boost profits. The highly successful FTZ program is overseen by the airport authority, but extends beyond the inland port to a 25-county area.

Remaining Challenges

While infrastructure improvements and organizational changes have helped LCK and the inland port overcome significant challenges, the overall economic slowdown has hampered progress in the industrial park.

Now that the airport authority has paid off the debt at LCK and is close to breaking even with operating costs, the next challenge will be funding capital improvements, she explains.

As 2013 and the last scheduled payment from Franklin County approached, Roberts planned meetings with the county and local leaders to underscore the ongoing support needed for Rickenbacker Inland Port.

Focused on the goal of financial self-sufficiency for LCK, the airport authority took over management of the field's fixed-base operator after the previous operator's lease expired last fall. The airport also assumed control of fueling, cargo handling and servicing aircraft for both passenger and cargo operators.

With the 2003 airport authority merger came a 43,000-square-foot, two-gate passenger terminal funded by the FAA. Since Port Columbus International already had plenty of passenger space, the LCK terminal was dedicated primarily to seasonal charters, special events and military flights. Last October, Allegiant Air began offering nonstop service twice a week to Orlando-Sanford International Airport, and the airport authority's FBO won the bid for its ground handling and fueling. In addition, Vision Airlines offers seasonal nonstop service from LCK to Myrtle Beach.

"We're really diversifying to make this airport as self-sufficient as it can be, but our biggest challenge will be paying for major capital improvements," Roberts emphasizes.

Currently, LCK is not classified as a primary airport, because it falls below the FAA's 10,000-passenger threshold. With the Allegiant flights, LCK hopes to be above the threshold in 2013, and therefore eligible to receive $1 million in Airport Improvement Program funds per year, instead of its current $150,000.

"That's a big jump," she acknowledges, adding that LCK has received funding from a military assistance program twice. "We really are looking around for all kinds of creative revenues to help us pay for projects and daily operations of the airport."

 

For example the control tower, which is staffed by the military and owned by the airport, needs to be replaced at a cost of about $6 million. A design contract has been awarded, and the airport authority is looking for funding to build in 2014.

Big Things Ahead

While economic challenges remain, they are balanced with reasons for optimism.

A project to widen and deepen the channels in the Panama Canal that is scheduled for completion in 2014 includes trickle-down benefits for LCK and the inland port. The improvement will allow ocean container ships from Asia to enter the Panama Canal and go straight up the East Coast to Charleston, NC; Norfolk, VA or New York, and therefore bypass the West Coast.

"When the Panama Canal project is done, we'll see more goods transiting from the East Coast into the Midwest through Rickenbacker - that's the vision," Roberts explains.

Courting Cargo Customers

As a dedicated cargo airport, LCK often finds itself competing with much larger airports in Chicago, New York and Miami.

"We want to increase the amount of commercial air cargo activity that comes through LCK, and we have an excellent business case," says David Whitaker, the airport authority's vice president of business development and communications. "Our cost structure is much lower than that of traditional gateways, and we have capacity."

To solicit business, Whitaker explains, he talks with the entity that typically assumes the risk for cargo flights - often a freight forwarder - instead of approaching the cargo airlines directly. For U.S. consumer goods originating out of Asia, he also talks with the airlines and shippers.
 
"We're not as well-known as some of the traditional gateways, so we have to let them know we are here," Whitaker explains, noting that forwarders often already have facilities and staff at gateway airports. On the up side, he adds, most forecasts predict fairly significant increases in air freight.

Improvements help bolster the airport's image and are especially helpful luring companies looking for new distribution center sites, Whitaker explains.

"We want to make sure we remain ahead of the demand curve," he says.

With that goal in mind, the airport authority built a 48,000-square-foot cargo facility and renovated old military facilities for commercial use.

"If we're successful in our business development efforts to attract a new air cargo operator ... it would be a mistake on our part if we didn't have any space for that to happen," he says, acknowledging that building on spec is somewhat risky. "It really connects the dots between the business development requirement and being successful with that and attracting customers to occupy that space."

Zimmerman commends Roberts, the airport authority and community leaders for facilitating enhancements to further the area's ability to handle growth. Because of them, he says, "We can respond to needs as they present themselves and grow in proportion to those needs."

Subcategory: 
Cargo

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