There is a plan being floated by New York State to move all air cargo action from JFK International Airport (located in the Borough of Queens, at a place once called Idlewild), to a sleepy upstate country location called Stewart International Airport, 60 miles north of Gotham.

     In 1978, while out riding in a car together, I asked my good friends, the late former Port Authority of NY & NJ Aviation Director Caesar B. “Pat” Pattarini, and the late, great General Manager of JFK (retired in 1984) Ike Dornfeld, (right) if they thought moving cargo to Stewart was a good idea. Both laughed out loud.
     Well, what goes around comes around; once again, Stewart is in the headlines—although as the idea was floated by politicians around election time, we can only wonder if it has any legs.
     Prior to 9/11, Stewart International Airport handled as much as 100,000 tons of air cargo annually and had a growing passenger business built on narrow-body commercial service.
     The NYS Department of Transportation, which then controlled the airport, saw the activity levels as potentially attractive for private investment. In 2000, DOT privatized the airport: the National Express Group (NEG) of the UK assumed control with a 99-year lease and the belief that their marketing efforts and business acumen would grow the operations. Relationships with the surrounding community were contentious and airlines focusing on their profit margins pulled out of Stewart.
     In 2007, NEG opted out of the contract and the Port Authority of New York and New Jersey purchased the lease with a major commitment to invest in and develop the airport’s business. This year, Stewart stands as a prime example of changing industry dynamics, and despite the best efforts of the PA, will handle about 20,000 tons of cargo—down 80 percent in the past decade.
     The air cargo segment of the aviation industry is in many ways far more complex than the passenger side of the business.
     However, one thing that both segments have in common is a focus on the bottom line.
     Cargo is particularly sensitive because of the competitive nature of the business, very low yields, and tight profit margins.
     An airline is not an economic development tool: it is a business that must make measured and sometimes difficult decisions that impact the markets it serves and the stakeholders it represents.
     When evaluating the viability of a cargo operation for an airport, we examine 25 factors in three broad categories: Industry Variables, Business Partners, and Factors for Success.
     A quick review parallels the industry’s perception that to serve New York, there are better options than Stewart.
     No laughter yet, but on a measured and calm basis let’s consider the proposed relocation from the perspective of the three “C’s” that drive cargo – Connectivity, Consolidation, and Costs.

Connectivity

     The success of an air cargo operation is predicated upon an effective system of connective elements that enable aircraft to balance inbound and outbound tonnage in volumes sufficient to make a round-trip flight profitable and affordable for their customers. Cargo may be destined to move from A to B, but that does not preclude stops at C and D, or the utilization of a circle route between several points to generate adequate cargo volumes.
     This often involves connections between different carriers or “interlining” and requires a strong multi-option support system on the ground as well as in the air. Redundant air options are also critical for international shipping and these are most often available in the bellies of passenger aircraft.
     Stewart offers virtually no connectivity and JFK has the most diverse connections in the Northeast.
     Last year JFK had more than 400,000 aircraft movements to over 100 domestic and international destinations.

Consolidation

     Air cargo is a high-volume, low-margin business whose success depends on serving diverse markets, filling outbound airplanes with large volumes of cargo, and bringing the planes back equally full.
     This requires both diversity and volume in the distribution system and takes close coordination among many partners in the logistics chain. Cargo routes must be built block-by-block until together they begin to offer sufficient lift to attract and ship new cargo at reasonable rates. As different routes/customers are added, the incremental volumes they bring create a self-fulfilling prophecy—“more volume creates more lift, which lowers cost, which attracts more volume.”
     In 2014, JFK will handle about 1.4 million tons of cargo compared to about 20,000 tons for Stewart.
     The savings generated by the economies of scale are significant.

Costs

     The ability to ship quickly anywhere in the world is important, as is the ability to build sufficient freight volumes to sustain a cargo operation.
     But the key is cost.
     Connectivity by ground or air keeps freight from sitting and adding additional costs to the logistics supply chain.
     Through consolidating volumes, the industry evaluates the viability of a given route because the greater the volume, the lower the per-pound shipping cost, and the higher the profitability. For an airport to be successful, the industry must believe that the three “C’s” are clearly in play and that they bring direct benefit to the carriers.
     Despite the perceived “cost of doing business” in New York City, the cost of per pound shipping and reduced trucking time to the core of the City offset higher operating costs at JFK.
     When looking at the numbers, it’s important to remember that only about 50 percent of JFK’s cargo is destined for the immediate region. The rest comes and goes from all over the country, from points as far west as Seattle and as far south as Miami. In 2025, forecasts predict that JFK will handle about 2.5 million tons of cargo.
     Of that, about 530,000 tons is domestic.
     The tonnage on the passenger flights will not move because the passenger flights will not move.
     The freighter traffic is almost entirely integrators, whose business model requires that they be as close as possible to the central business district.
     Roughly 800,000 tons will be international belly cargo, which will stay where it is because the passenger aircraft will not move.
     That leaves roughly 1.1 million tons of international freighter traffic—about three quarters of that tonnage is flown by carriers who also fly passengers into JFK. History tells us that they will be very much opposed to splitting an operation and in effect incurring double costs.
     That leaves approximately 300,000 tons that is flown by carriers that need to connect to other carriers and a broad ground transportation network that covers most of North America.
     For them, relocation to an airport without those connections is not an option.
     The fact of the matter is that for the past ten years carriers and all the supporting air cargo businesses have had a “Stewart Option,” and have declined to move there because it is inconsistent with their business model, and would be disruptive to the massive and intricate ground distribution network that involves hundreds of firms on both the shipping and receiving ends.
     Operating from JFK is not a question of arbitrary preference; it represents sound business decisions that consider how best to provide service, maintain profitability, and control costs for their customers and business partners.

A Postscript

     But Pat and Ike told me most of this (minus the 2014 updates, obviously) a long time ago.
     I can therefore only share a lesson learned, something I have thought about and believed for all these years.
     I still think about those guys and Tim Peirce over at LaGuardia, and Vince Bonaventura at Newark International.
     I loved ‘em all and still do, and I’m proud to be part of the New York airport scene having moved forward during the past 44 years.
     New York State politicians need to keep their mitts off of JFK International Cargo, except to invest more state funds, raise the quality of access, and add other necessary, valuable abilities to an airport that serves the greatest city in the world.
Geoffrey