HD47 - Southwest Virginia Air Freight Feasibility Study


Executive Summary:
This study, requested by the 2004 General Assembly, examines the feasibility of developing an air freight center at the Virginia Highlands Airport in Abingdon, Virginia, or at the Lonesome Pine Airport in Wise, Virginia. As outlined by the General Assembly, this review contains

• an analysis of the air cargo industry as a whole;

• survey results of businesses in both regions to ascertain current use and potential demand;

• an inventory of the current infrastructure and capacities of the two airports;

• the identification of infrastructure improvements that would be required at the respective airports, as well as adjacent improvements to house potential air freight businesses;

• an enumeration of all impediments to such development; and

• a recommendation as to which airport would better serve as an air freight center.

Today, the air cargo industry in the United States is a somewhat fragmented activity marked by much ambiguity regarding movement of goods by ground versus movement of goods by air. In other words, a package may be shipped by what appears to be air, but is never actually airborne. This is a result of the industry coming to the conclusion that distances and time frames once thought to be cost effective for using the air mode needed to be reconsidered. When this analysis was performed, previous parameters that automatically dictated the use of air have become more flexible, such that now, the more cost effective option for certain trip lengths is often to use some form of ground transportation, while still branding the service as “air cargo.” Consequently, cargo is not necessarily broken down or referred to as ground vs. air much any more - except when the distances of either transcontinental or intercontinental are brought into the equation.

The air cargo industry, or at least that portion of it that is definitively measured as air cargo, is growing at a steady rate. This is in part due to the increasingly popular trend of retail shopping on the Internet, as well as the inventory process methodology known as “just in time delivery.” Air cargo growth rates are forecast to be approximately 2%, on an average annual basis, for the domestic market during the next five years. Time sensitive goods that carry a relatively high value represent a large segment of dedicated air freight in the market today.

Business Demand Survey

An air freight demand survey was conducted to gauge business demand for air cargo service in the Southwest Virginia region. A total of 42 responses were received. The Appendix contains the survey questions and a summary of the data collected. Taken both individually and in aggregate, both study communities seem to be very pleased with their current level of air freight service – 90% of all respondents indicated that their overnight shipping needs are currently being met.

Findings

The Virginia Highlands Airport and the Lonesome Pine Airport both appear to possess adequate existing infrastructure to be the host of what is termed “feed” or “tertiary” cargo nodes to a dedicated secondary or primary level air cargo hub. Likewise, the two airports could also serve as host for a route representing a singular source of demand on a point-to-point basis. However, the two airports differ in their road access attributes and the level of inherent cargo demand they possess in their respective market areas.

Although both could handle the establishment of scheduled air cargo service at the tertiary level, neither is likely to do so in the current or future market environment. Air cargo services currently offered in the region act to mitigate the advantage of establishment of a new destination node and corresponding spoke to networked hub. Those services, along with the trend toward the utilization of ground transportation, act as impediments standing in the path of a possible initiation of regularly scheduled cargo service.

In the final analysis of the two airports identified by the General Assembly, the Virginia Highlands Airport would be the more plausible location should such regularly scheduled cargo service be needed.

Legislative Background

The Virginia General Assembly, through a budget amendment (Item 95#1c) in the FY 2005 budget, has requested an:

I. “examination of the feasibility of developing an air freight center at the Virginia Highlands Airport in Abingdon, Virginia, or the Lonesome Pine Airport in Wise Virginia.”

The budget amendment further stipulates that:

II. “such feasibility review shall identify infrastructure improvements that would be required at the respective airports, as well as adjacent improvements to house potential air freight businesses.”

Finally, the General Assembly directed that:

III. “the resulting report shall include an enumeration of all impediments to such development, a recommendation as to which airport would best serve as an air freight center, and a preliminary plan for the development of an air freight center.”

The task of researching and compiling the report was assigned to the Secretary of Commerce and Trade with assistance to be provided by the Department of Aviation.