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Economy & Business

Are two airports better than one? Lambert and MidAmerica compete to become China hub

This article first appeared in the St. Louis Beacon, Nov. 29, 2010 - The eagerly awaited cargo plane from China landed at the St. Louis area airport in a test of what local supporters hope will soon be a regular arrangement that could be an economic game-changer.

But the airport in question wasn't Lambert St. Louis International Airport, which for more than two years has been the object of a concerted regional campaign -- dubbed the "Big Idea" -- to persuade Chinese government, business and transportation officials to use the airport as a cargo hub to transport goods to and from the Midwest.

Rather, the Chinese cargo plane landed at MidAmerica St. Louis Airport in Mascoutah, Ill., where officials say they've been wooing China for six years.

"Our efforts pre-date Lambert's by quite a long time," said St. Clair County Board chairman Mark Kern.

And, he observed wryly, "I believe that we're certainly talking to some of the same people."

Still, across the Mississippi River in St. Louis County, Midwest China Hub Commission co-chair Mike Jones plays down any talk of a rivalry -- sort of.

"We're not in competition, but I can't say these are cooperative efforts," Jones said. But he emphasized that, as he saw it, "I dthink we have different thrusts."

Richard C.D. Fleming, president of the Regional Chamber and Growth Association, conceded there may indeed be a bit of a "sibling rivalry" -- but adds that the result strengthens the region's hand as it seeks permanent air deals with China.

"It does help to have two assets that can meet a growing demand,'' Fleming said.

As for the Chinese, he added, "the customer looking at the St. Louis region doesn't make a distinction'' between the two airports.

MidAmerica's Pitch Includes Its Coolers

Kern says that MidAmerica's bid for Chinese business began in 2004, as airport and regional officials opted to switch their marketing campaign from passenger traffic to cargo.

Open since 1997, MidAmerica is owned by St. Clair County and was originally touted as a "reliever airport" to ease the congestion at Lambert, then a major hub for now-defunct Trans World Airlines.

But the forecasted passenger traffic at MidAmerica never came, especially after Lambert lost its hub status when TWA was absorbed into American Airlines, which then dramatically trimmed its St. Louis operations.

Like their Lambert counterparts, St. Clair County officials have had to reassess how -- and where -- to market MidAmerica.

MidAmerica has been part of a designated "foreign trade zone" for years. The airport also got a boost from Boeing's decision to convert a 50,000 square foot cargo building into a manufacturing plant.

The prime vision for foreign customers, said Kern, is to promote MidAmerica as a hub for cargo from China and Latin America -- and to serve as a bridge between the two routes.

China and South America are too far apart for direct cargo flights, so connections are now are made in the United States. Many of those connections are now made in Miami and Los Angeles.

MidAmerica installed special coolers, billed as "state of the art," which attracted, for more than a year, cargo flights of flowers from Latin America. "The chiller capacity at MidAmerica is not duplicated anywhere else in the Midwest," Kern said.

But that flower business ended, he said, primarily because of the lack of flights from MidAmerica to Asia. The Latin American flower flights went back to Miami.

The hope, says Kern, is that regular Chinese cargo traffic will attract Latin American customers back to MidAmerica. And St. Clair officials are optimistic about their chances.

"We believe Latin America is an important part of this equation," Kern explained.

The Nov. 16 cargo flight from China went without a hitch, he said, with more than 100 tons of cargo quickly unloaded and sent on their way to markets around the Midwest.

MidAmerica has had agents in China for some time lobbying on its behalf and meeting with the appropriate officials.

"I really think we're in the hunt to negotiate regular scheduled service," Kern said.

Like Lambert, MidAmerica is highlighting its location just off interstate highways and near railyards and key rivers, notably the Mississippi.

The biggest difference, said Kern, is that MidAmerica and St. Clair County are making their pitch without Lambert's benefit of several million dollars in state and federal money.

Lambert Effort 'More Holistic'

In St. Louis County, Jones said that the pitch to the Chinese about Lambert takes on a "more holistic approach," as the region seeks to create an economic arrangement that goes beyond just receiving Chinese cargo.

The pitch also includes expanding Chinese markets for Midwestern goods, along with an effort to expand investment and "a cultural exchange."

Chinese and St. Louis business, civic and governmental leaders have been exchanging visits for more than two years. The latest was just a few weeks ago.

The Lambert effort is visibly bipartisan, with U.S. Sens. Christopher "Kit" Bond, R-Mo., and Claire McCaskill, D-Mo., joining a massive entourage to China in 2008. Bond has helped snag some federal aid for the marketing effort, while Gov. Jay Nixon, a Democrat, has approved some state money.

In early October, with fanfare, St. Louis Mayor Francis Slay and County Executive Charlie Dooley co-signed a letter aimed at boosting the chances of the region's federal application to restructure the Missouri side's "foreign-trade zone" (one of 274 nationwide) to help local companies seeking to trade overseas.

Such a restructuring is seen as encouraging companies here, and elsewhere, to locate operations within the zone so they can avoid customs duties. The aim to create a larger market of goods that could, in turn, be sent to China and elsewhere.

Lambert recently hosted two test cargo flights from China, so Chinese airline officials could check out the airport's facilities and infrastructure. Lambert's pitch is that it could be an alternative to the Chinese cargo operation in Chicago, which Jones says is is overcrowded.

Jones believes that getting the Chinese business also could lead to Lambert attracting air freight traffic from Latin America. "If we get regular flights from China every other day, we will get Latin American flights," he said.

For Lambert, the added cargo traffic could help its passenger service as well, by making it cheaper for the existing airlines.

Jones noted that Lambert collects landing fees from all air customers that use it. Because the airport's costs are generally fixed, regardless of the amount of air traffic, more flights -- freight or passenger -- means cheaper fees a flight, he said.

During their latest visit, Jones observed that Chinese officials didn't mention MidAmerica in any of their meetings.

Nor would he have expected them to, Jones added. "The Chinese don't perceive this as a competition."

The region and Lambert, said Jones, needs "a transformational opportunity." A Chinese cargo hub at Lambert would be just the ticket, he added.

Dooley, like Kern, says he doesn't see their common quest as a competition.

That may be true, but some of the language hints otherwise. Said Kern: "I think whoever wins this, it will be a plus for the region."

Fleming observed, though, that actions speak louder than words. The last time the Chinese were in town in October for the "Big Idea" pitch for Lambert, Slay invited Kern to attend the big dinner. The aim was to promote a united front.

Analysts Skeptical of Airports' Chances

While officials with both airports, and the RCGA, exude optimism about landing a permanent China connection, some cargo-industry consultants do not.

"It's such a long shot," said Mike Webber, a Kansas City-based cargo consultant for a number of airports, including the four major ones currently handling international air freight: Los Angeles, Miami, New York and Chicago.

The issue, he said, isn't the fact that St. Louis has two airports vying for cargo business with China. That doesn't matter, said Webber.

Rather, the issue is the nature of the cargo industry, which gravitates to "gateways" -- airports that already do business with other cargo carriers and already have frequent freight flights around the country and the world.

"That's why (carriers) are slow to leave the major gateways," Webber said.

Webber also questioned the need for additional cargo hubs, saying that the existing major gateways have excess capacity as it is because of overall drops in cargo traffic in recent years.

And he pointed to the existing competition from FedEx and UPS (United Postal Service), both of which have set up national cargo distribution systems.

Two St. Louis area airports competing for the China business, said Webber, means only that "you'll have two airports that fail... instead of one."

Webber emphasized that he wasn't singling out the St. Louis airports for criticism: "My hometown of Kansas City doesn't have much of a chance, either."

A similar assessment came from Dan Muscatello, managing director of cargo and logistics for Cincinnati-based Landrum and Brown, an aviation consulting firm.

Muscatello and Weber said that a few cities, such as Indianapolis, have developed niche overseas cargo markets to serve certain industries or businesses. Pharmaceutical giant Eli Lilly is in Indianapolis, said Webber, prompting international cargo business to provide supplies and distribute the company's products.

But for the most part, both consultants said, cargo carriers prefer airports that already have lots of cargo traffic.

Muscatello said that gateways like Chicago already have numerous daily flights to various cities in China, giving cargo operators plenty of options. If a flight is missed, an alternative is available within hours.

At Lambert and MidAmerica, he said, the best-case scenario of one daily flight to China offers little flexibility to freight haulers. A missed flight means a longer wait until the next one.

Still, leaving aside his general skepticism, Muscatello said that Lambert may have an edge in any jockeying with MidAmerica for international cargo traffic.

"There are certain advantages to Lambert," he explained because cargo carriers arriving from overseas can then shift some of their freight to passenger planes to carry the cargo to their final destinations.

MidAmerica can't do that, he said, because it has so little passenger traffic. Instead, all international cargo not directed to connecting cargo flights would need to be loaded on trucks to be sent on.

"Some of those trucks would likely go to Lambert," Muscatello said, to load the cargo onto passenger planes.

Lambert and MidAmerica also have plenty of competition, Muscatello added. He estimates that at least 20 other U.S. cities are making the same pitch for a cargo arrangement with China's carriers. Pittsburgh, Pa., for example, recently sent a delegation to China, he said.

Looking at the chances of Lambert and MidAmerica, Muscatello said, "You don't want to 'never say never,' but it will be difficult."

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