Clear for Takeoff
The Louisville Airport Authority delivers on its promises to create more flights, more jobs and more business

When the businessmen and public officials who called themselves the Regional Airport Authority got together a decade ago to plan the Louisville Airport Improvement Project, they announced the rebuilt facility was "cleared for takeoff" and promised it would mean "more flights, more jobs, more business."

Today, as the initial heavy construction phase of the project is nearing completion, those promises have come true. Louisville International Airport (LIA), which has replaced Standiford Field on the same site, is now one of the busiest in the world -- especially if you are a package -- and will become more active when its largest tenant, United Parcel Service (UPS), completes its massive "Hub 2000" in three years.

But the project designed to preserve the UPS presence and combat a competing proposal for a "regional" airport in Shelby County has come with social cost -- the disruption of 1,500 neighboring families and 115 local businesses and churches and now the wholesale relocation of one adjacent community.

Ironically, since the project has taken place on the site of familiar Standiford Field over a 10-year period, most people in the Louisville metropolitan area may have overlooked how extensive the changes have been.

Louisville International Airport now handles 180,000 "air operations" a year (an operation is a take-off or landing), twice the total in the 1980s. It accommodates 3.7 million passengers at the terminals, again twice the number from 1985. LIA is now the tenth busiest facility in the world measured in terms of cargo tonnage shipped, primarily because 60 percent of the air operations are UPS flights. And, in those terms, it is now a much busier facility than any competing regional airport, nearly equal in cargo capacity to O’Hare in Chicago and dwarfing Atlanta, Greater Cincinnati/Northern Kentucky, Indianapolis and St. Louis. (Only Memphis, home of Federal Express and the number one cargo airport in the world, carries more tonnage than Louisville among facilities than are not also seaports.)

Today, replacing outmoded predecessors, are a new 270-foot-tall air control tower, a 85,000-square-foot postal facility, an operations building and hangars for the "fixed base operator" (the tenant that accommodates corporate and charter aircraft) and a campus for the very active Kentucky National Air Guard. Also completed is a 6,000-capacity parking garage, the facility’s first enclosed parking structure, which has won recognition for its easy access and airiness. Last to built will be a new fire station.

Cornerstone of the improvement project, and the source of all resulting activity, are the twin, parallel north-south runways. By eliminating the obsolescent cruciform runway that had been the standard since the 1930s, the Airport Authority created the capacity for today’s activity and tomorrow’s. Louisville International Airport is intended to function effectively for 50 years, as did its predecessor.

The deactivated runways are not gone, however. One now serves as a taxiway between its replacements and the other is the site of the UPS "Hub 2000" (see related story).

These improvements, while startling when viewed collectively, are only part of the overall effort to improve transportation in the region and throughout Kentucky. Each of the state’s commercial airports is undertaking some form of expansion and one, Bowling Green, is attempting a visionary "intermodal" airport industrial facility.

Louisville, too, has its own piece-meal intermodal plan: the McAlpin Locks are at the beginning of a comparable rebuild that will double their carrying capacity and studies are underway to improve ground transportation by linking the airport and downtown Louisville with a light rail system. More prosaically, community leaders are still pushing for a new Ohio River bridge and the state has implemented the "TRIMARC" traffic control system on connecting interstate highways.

All of these related projects will allow easier access for cars, people and goods to Louisville International Airport within its defined marketing area of 14 Indiana and 29 Kentucky counties.

Despite this activity, the most startling change at the airport is in the Airport Authority itself.

Once perceived as secretive, autocratic and imperious -- as recently as two years ago the Authority fought against admitting a "citizen" member -- the Authority is now personified by its new general manager, James DeLong.

DeLong was lured from Denver because he thought the situation in Louisville was "dynamic and refreshingly free from partisan politics." He has won high praise from former Authority critics for his candor and his commitment to public participation. State representative Jim Wayne (Democrat, 35th district), who led the fight in the General Assembly to force the Authority to accept a member from the impacted neighborhoods, has said DeLong’s leadership style has helped dissipate lingering animosity toward the airport.

The new general manager is reluctant to discuss the past except to say, uncomfortably, that "things were a bit harsh, but maybe necessary at the time." However, DeLong is emphatic when expressing his philosophy: "An airport is like a landfill. It’s not pretty, but we need it."

"We serve several different constituencies now -- the Board (of the Airport Authority), city and county governments, our tenants, the traveling public, the surrounding neighborhoods and, most importantly -- future generations," DeLong explains. "Our plant and facility must last for 50 years. This viewpoint colors every decision we make."

This new openness was revealed recently when DeLong scrapped plans for proposed commercial activity at Bowman Field, the general aviation facility the Authority also manages. Although the actual plans were much more restrained than reported in local media, there was an immediate public outcry from the surrounding residential areas. DeLong promptly announced he would table the proposal "for the foreseeable future."

More significantly, DeLong has engaged affected areas in a multi-year study of noise patterns, changed by the reconfiguration of the runways. The ongoing study, discussed openly at a series of public meetings, has requested input from citizens on effects and locations.

As a result, the Authority has adopted a series of noise abatement procedures and communicated its policy widely. The most significant has been to divert UPS traffic, which is active primarily at night, to southerly approaches, away from the most densely populated areas.

However, this decision has a profound effect on the small city of Minor Lane Heights, now directly under the UPS flight path.

Consequently, in response to a unique request by the city and its residents, the Authority agreed to relocate the community, intact, to a new location. The process, actually a series of coordinated individual actions, allows the residents to replace older housing with more modern amenities while preserving the rural character of the little city. And, perhaps most importantly, it is entirely voluntary.

"Our process is very open," DeLong says proudly, "perhaps the most democratic and participatory in the country."

With most of its construction components completed or nearing completion, the Airport Authority and DeLong are now focusing on elements that will enhance the airport’s revenues. Foremost among these may be a new hotel.

The Authority is seeking proposals for a 250-room facility that would be built just east of the main terminal and that could be expanded in 250-room increments, as needed. At that capacity, which might not be achieved for many years, the hotel would become the city’s third largest, behind the Galt House and Executive Inn complexes. And it would serve both the airport and the nearby Kentucky Fair & Exposition Center.

In the terminal itself, DeLong is focusing on three concession contracts that all come up for renewal in the near future -- the restaurants, gift and book stores, and advertising displays. The Authority hopes to boost revenues from these entities to $11 million a year from the current $7 million. And DeLong is also looking at developing a convenience store near the baggage claim, similar to concessions in European airports. (The desire to balance the operating books was the motivation behind the proposal to develop commercial activity at Bowman Field, DeLong explains.)

These plans are all designed to support one of the Authority’s most ambitious goals -- to make Louisville International Airport a terminus for direct international flights for human beings, and not just packages.

Central to that goal is a proposal voiced by Louisville Mayor David Armstrong to re-locate a customs station at the airport terminal instead of in the federal building downtown. (UPS already has a center for its cargo operations.)

This relocation will be a "long process," DeLong cautions, involving the Immigration and Naturalization Service, the Department of Agriculture and the Customs Service itself. But "make no mistake," Armstrong says. "We want a physical facility at the airport to allow direct international flights."

Finally, in assessing the Louisville Airport Improvement Project, which has already generated "more flights" for its $700 million price tag, can it be shown that it also has generated "more jobs" and "more business"?

To prove its assertions, the Authority commissioned an economic assessment in 1996 that showed at that time the project had generated 22,600 permanent jobs to date, producing $650 million in wages and $86 million in state and local taxes -- more than had been originally predicted to be generated by 2010. Furthermore, the project claimed it had spawned another $2.1 billion in additional business spending.

Most significantly, the project had induced UPS to maintain its presence in Louisville -- not a certainty 10 years before. Since that study, UPS has undertaken its own $1 billion "Hub 2000", a project identified by Site Selection magazine as one of the top 10 economic development deals in the world.

Because of this success, the Kentucky World Trade Center recognized Louisville International Airport as the winner of its 1998 "World Trade Success" award in the service category.

Moreover, while Mayor Armstrong points to Louisville’s success in becoming a locus for "logistics-based" businesses in the vicinity of the airport, DeLong believes the future may belong to those businesses that can best take advantage of "just-in-time" manufacturing and shipping. Some of these entities are already developing in the Riverport and Hurstborne Green centers, both publicly-owned, and may eventually replace aging manufacturing plants such as the Philip Morris cigarette factory and General Electric’s Appliance Park.

"Ports of the air," DeLong calls such visionary plans, rivaling earlier sea ports such as Baltimore, Houston or San Francisco as centers for integrated, self-sustaining businesses, and granting the Louisville area a sustained economic advantage in its competition with other regional centers.

"Maybe we should have built a regional airport in Shelby County rather than expanding Standiford Field," DeLong muses. "But we would have lost jobs and taxes in Jefferson County and we may have lost UPS."

Robert Carter is associate editor of The Lane Report.

Investing $1 Billion in Louisville

A reminder: United Parcel Service (UPS), for its obvious local and global presence, is not headquartered in Louisville and remains a privately-held company. These facts prompted the Regional Airport Authority to rebuild Standiford Field into Louisville International Airport to accommodate the giant shipper that has now become Jefferson County’s largest private employer.

And the company, which could have moved its hub operations on short notice to almost any sufficient airport facility in the U.S., has responded to the invitation by investing $1 billion in its "Hub 2000" and cooperating in an educational-workforce project that is unique in the U.S.

"Hub 2000," which UPS announced in 1998, will increase the carrier’s package-sorting capacity from 220,000 to 300,000 packages an hour, add 6,000 permanent jobs to the current 7,000 at the facility and improve the company’s ability to pinpoint package locations at any time by a quantum leap.

When completed in 2002, the new facility will cover 2.5 million-square-foot under roof at a construction cost of $350 million. The balance of the project, nearly $650 million, will include the costs for the elaborate package handling conveyors being built in Germany and the computer tracking system. Nearly 1,000 workmen are laboring 24 hours a day on the site to finish the facility. Thanks to the hot, dry weather, they are several weeks ahead of schedule.

To accommodate the anticipated increase in business resulting from its new facility, UPS has just announced plans to float a public stock offering, the first in its 92-year history. The expected cash yield could be $2.5 billion for the 10 percent public shares, enough to finance several regional carrier acquisitions. A recent ruling by the U.S. Tax Court, however, could dim that projection. The court ruled that UPS inflated its allowable insurance deductions from 1985 to 1990 and perhaps since, a ruling that could cost hundreds or millions of dollars in taxes, penalties and interest. UPS is appealing.

Whatever the financial fallout, UPS is investing in Metropolitan College, a cooperative program of the company and the University of Louisville, Jefferson Community College and Kentucky Tech. Metropolitan College is designed to attract a permanent force of part-time employees in exchange for pay, of course, and free tuition and books.

About 700 students are now enrolled with another 400 expected this fall. The students work as package handlers at night for UPS -- from midnight until 4 a.m. -- and attend classes specially scheduled in the afternoons and evenings at the UPS facility. Eventually, the company may build dormitories adjacent to its site.

Costs are approximately $1,400 a semester for room and board and students can concentrate in 19 interdepartmental undergraduate studies. Wages for the part-time work start at $8.50 an hour plus benefits.

The project has been successful enough, despite the areawide labor shortage, that local economic development officials are thinking about a modified version for another major local employer, Sykes Health Plan Services. Sykes, which is building a new headquarters for 3,500 employees, attracts technical and medical workers, also in short supply locally, and may cooperate in a graduate-level program modeled on Metropolitan College.

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