Thoughts and Opinions On Today's Important Issues

Wednesday, September 16, 2009

An Important Airport Story

A reader sent me this story. One wonders if the Lufthansa people ever spoke to the people involved or were they too busy otherwise.

I wonder if Ms. Nazzani ever spoke to them as well to get their take on the business.

There are two ways of looking at this. if one has a short-sighted mind's eye that can only see as far as November 2010, one might jump up and down with glee being almost giddy because a major competitor might be going out of business.

On the other hand, if one is far-sighted,and not just to the next election, one could say the air cargo business sucks and there goes another $300K of taxpayer money on top of the $200K already spent down the drain. One should partner with people who understand and are involved in the truck distribution system and are well-positioned with other modes of transportation as well.

You decide.
  • Willow Run faces turbulent outlook
    Options include closing as costs outstrip revenues

    Nathan Hurst / The Detroit News, September 15, 2009

    Van Buren Township -- Willow Run airport is facing severe financial problems and officials are considering a number of cost-saving options, from leasing the facility to possibly closing it.

    The airport's future essentially depends on how quickly the economy rebounds and whether Willow Run can hang on until then.

    The air field, which caters to private charters and cargo operations, "continues to be a financial disaster," said Thomas Naughton, chief financial officer of the Wayne County Airport Authority. The agency operates Willow Run and the much larger Detroit Metropolitan Airport in Romulus.

    The authority has been "looking at all options" for Willow Run's future, said spokesman Scott Wintner.

    "If we can just wait out the economic downturn, it would be the best. It's a question of who's willing to pay for it in the meantime," Wintner said.

    In 2008, running Willow Run cost $11.49 million, $7.77 million more than the $3.72 million it collected in revenue.

    It's a far cry from the heyday at the airport, which provided a major cargo launching point for Detroit's "Arsenal of Democracy" weaponry during World War II, and was carrying passengers before Metro Airport.

    The authority cut Willow Run's budget to $5.88 million for fiscal year 2009, which ends Sept. 30, and is looking to cut it again in 2010, to $3.26 million.

    Any shortfall is covered from the airport's other operations: Metro Airport and the authority-owned Westin Hotel, which is on track to lose money this year.

    In the end, the airlines pick up the overrun for Willow Run, since the authority doesn't take taxpayer dollars.

    Whether the budget cuts will be enough to put Willow Run close to a break-even point is unclear.
    This year, the amount of cargo shuttling in and out of Willow Run has been running at less than half the levels seen last year, which were far below levels seen in 2007.

    The number of operations at the airport -- a count of how many take-offs and landings -- is down significantly as well.

    That's due to a falloff in business from the Big Three automakers, as well as waning interest from general aviation and private charter operations.

    And while the falling numbers are easily attributable to the sour economy, the downfall is leaving the airport authority to look at just how viable the future is for Willow Run, which was transferred from the University of Michigan to Wayne County in 1977.

    Wintner said authority staffers have been exploring a number of options for Willow Run to make it more financially viable, and to lift the burden of its cost from the authority's other operations.

    "We're looking at everything, including privatizing, leasing the facility out, coming up with alternative uses," Wintner said.

    "The effort has just been stalled by the economy, particularly in Michigan. It would cost us money to close it, and there's a lot of potential."

    Willow Run used to handle scheduled passenger service, but an agreement with the airlines operating at Metro Airport prohibits it from serving such flights, along with charter flights where tickets are sold publicly. So the airport's business relies on cargo and private air traffic.

    And that's not been an easy business these days.

    Chris Healey, chief executive of USA Jet Airlines, which is headquartered at Willow Run, said his charter company had to "make some pretty tough cuts" during the recession's apex, and has since diversified its offerings.

    "Thank goodness we've managed to get into ground transit management," Healey said.

    "Our volumes aren't much better, but diversifying has turned out to be a good thing."

    Stuart Klaskin of Florida-based aviation consultancy Klaskin Kushner & Co. said keeping Willow Run open for the short-term, though financially difficult, is a better option than closing it altogether and forcing flights to seek space elsewhere, likely at Metro.

    "The downturn you're seeing is clearly linked to the downturn in auto manufacturing," Klaskin said.

    "But that is something short-term. This is a very long planning-cycle business, and looking long-term, the country is going to need more airfield capacity, not less. What looks really bad now is going to look much different in two years."
Wow what does the last sentence mean? Two year recovery for the auto business so everything will be back to normal. Or a complete collapse of the regional air cargo business and no recvoery until the very long-term!