Small Airports Adopt Airport City Strategies

Author: 
Kathy Scott
Published in: 
May-June
2014

Pizza makers, football teams and brew houses certainly aren't the most common sources of non-aeronautical revenue; but they're exactly the kind of businesses currently adding to the bottom line at some airports.

The type of airports benefiting from non-traditional tenants and activities may also surprise some in the industry. While many associate the airport city or aerotropolis model with large, metropolitan areas, small facilities in more rural settings are also successfully leveraging the concepts. Perhaps the term "airport town" will become equally popular.

The Salina Airport Industrial Center, just outside the perimeter fence of Salina Regional Airport (SLN) in Kansas, includes apartments, convenience stores, two secondary education institutions (Salina Area Technical College and Kansas State University at Salina), light manufacturing businesses, warehouse and distribution centers, the world's largest pizza factory, a rescue mission, an agency that helps individuals with disabilities find jobs and develop skills, and more.

factsfigures
Project: Growing Non-Aeronautical Revenue
Location: Salina (KS) Regional Airport
2012 Traffic: 62,300 operations
Revenue Source: Industrial park
Size: 700 acres
Sample Tenants: Convenience stores; educational institutions; light manufacturing businesses; warehouse/distribution centers; pizza factory; rescue mission; etc.
Total Employment Impact: 10,000+ jobs
On-Airport Tenants: Schwan's; Blue Beacon
Noteworthy Feature: 12,300-foot primary runway, built when Schilling Air Force Base occupied the field
Location: Cape May (NJ) Airport
Landside Development: Industrial park
Airport & Park Operator: Delaware River & Bay Authority
Sample Tenants: Brewing company; print shop; construction firms; auto parts store; etc.
Noteworthy Features: 1,000 additional acres of underutilized land; recently created historic district

The total employment impact of the industrial park is estimated at more than 10,000 jobs, according to The Center for Economic Development and Business Research at the W. Frank Barton School of Business at Wichita State University.

The bustling 700-acre landside development shares the main road with SLN, a general aviation/commercial airport born from roots of Schilling Air Force Base, which operated there more than 50 years ago. With a year to plan for the government's exit, the city of Salina used "enabling legislation" to acquire, own, maintain, operate and improve the base. In 1965, the Salina Airport Authority was formed to oversee SLN, Salina Aviation Service Center and the Salina Airport Industrial Center.

Melissa McCoy, manager of public affairs and communications for the airport authority, acknowledges that the early years were extremely difficult, but the Schilling Development Council established an airport-education-industry complex to replace the military operations.

Today, more than 80 businesses and 4,100 jobs are located at the Salina Aviation Service Center and Salina Airport Industrial Center, McCoy reports. "Airport activity can be tied to more than $323.6 million in wages," she elaborates. "In addition, net tax impacts were estimated to be more than $15.8 million when combining impacts to Salina, Saline County and Kansas."

Landside development opportunities at SLN were undoubtedly bolstered by nearly $250 million of airfield infrastructure the federal government left behind when it closed the base. Few airports SLN's size have a 12,300-foot primary runway. In 2013, it logged about 75,184 operations and 1,983 enplanements. In addition, several of the former military barracks are currently being used as apartments, and a large military hangar now serves as a practice location for the Salina Bombers arena football team.

With such diverse business development already surrounding SLN, the airport authority's mission remains focused on growing jobs and payroll in the area, notes McCoy. "Currently, we are targeting our efforts toward MRO (maintenance, repair and overhaul) operations, light manufacturing and warehouse and distribution centers," she adds.

Inside SLN's security fence, corporate clients such as Schwan's and Blue Beacon continue to be key tenants. Schwan's is the parent company of Tony's Pizza, the town's number one employer. With corporate offices in Marshall, MN, Schwan's executives routinely fly out of and into SLN. Blue Beacon, which is headquarters in Salina, uses its flight department to shuttle local personnel to the company's network of more than 100 U.S. and Canadian truck wash locations.

Cape May's Calendar Challenge

Tourism is king in Cape May, NJ; and Cape May Airport (WWD) serves at his majesty's pleasure. From May to October, the picturesque town's year-round population of 4,700 swells up to 40,000 people; and traffic at the otherwise-quiet general aviation airport increases significantly. Last year, WWD handled 39,000 airplane and helicopter takeoffs and landings during the six-month tourist season - a healthy portion of its total annual traffic.

It was consequently a significant development when Cape May Brewing Company began leasing 1,500 square feet of space at the airport's industrial park. Not only was it a success for the brewer (which increased its production from 62 barrels in 2011 to over 1,500 last year), the airport also gained a valuable source of year-round revenue.

Delaware River and Bay Authority, the bi-state transportation agency that manages the two-runway airport, also operates the nearby industrial park and handles its leases. The Economic Development Committee - comprised of local, county and state officials - works with the authority to help grow the airport's economy. In April, senior officials from the two organizations brainstormed about ways to bring more jobs to the area.

In addition to Cape May Brewing Company, WWD's industrial park currently includes a print shop, several construction firms, an auto parts store and various other businesses. The two guiding organizations, however, see potential for even more growth. With an additional 1,000 acres of underutilized land available at the airport, infrastructure upgrades such as utilities could lead to more site buildings and development.

The airport's newly created historic district - established in cooperation with local officials and representatives of the Naval Air Station Wildwood Museum - will also affect future development. Currently, the authority is developing a revised airport layout plan for the FAA that reflects the newly created historic district, with areas designated for growth and development.

"The designation removes some of the uncertainty at the airport," explains Airports Director Stephen Williams. "You don't have to go through the process: 'Can I take this down? Can I build here?' We're trying to be smart about how we develop on the airport."

Big & Small

Whether it's local development at small airports in towns like Cape May, NJ, or the huge hotel and transit center currently under construction at Denver International, airport cities share common elements. 

In The Way Forward, John D. Kasarda, Ph. D., asserts that they grow based on four conditions:
  1. The need for airports to create new non-aeronautical revenue sources - both to compete and to better serve their traditional aviation functions
  2. The commercial sector's pursuit of affordable, accessible land
  3. Increased passenger and cargo traffic generated by gateway airports
  4. Airports serving as a catalyst and magnet for landside business development

Kasarda also notes the vital nature of public-private partners to assist financial and operational growth: "The airport city management model is thus quite distinct from the more traditional civil-engineering and aeronautical systems airport management model typically guided by government employees who run airports like public utilities using public-sector principles. The equally important commercial development role requires different strategies and operational skills driven by private-sector principles, fusing innovative management, finance and marketing with logistics and real estate knowledge."

Regardless of its size or structure, landside development can provide an enticing stream of non-aeronautical revenue in a variety of markets. In fact, the airport city or aerotropolis model, made Time magazine's 2011 list of 10 Ideas that Would Change the World.

No wonder so many airports now have real estate divisions, sales support teams and tenant service providers in addition to more traditional operations departments.

Subcategory: 
Landside Development

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