A History of Collaboration

Executive vice president and COO Scott Brockman, A.A.E., relates that the Memphis-Shelby County Airport Authority is guided by the principles of predictability, sustainability, and flexibility. Regarding the latter he says, “We don’t start a project if we don’t know it’s impact; we don’t build it if we don’t know if we can sustain it.” Imbedded in that philosophy is a history of collaboration with airline tenants at Memphis International Airport, a fact that explains why the airport is pursuing another residual lease agreement at a time when many airports are moving to compensatory agreements, or hybrids. Comments president and CEO Larry Cox, A.A.E., “Since we became an airport authority in 1970, we’ve had a residual airport agreement. We’ve never been denied by the airlines to do something that we thought was important to do. We have a very collaborative relationship with our airport users. It’s probably unique in the industry.”

That history of collaboration also extends to the community, the economic success of which is highly dependent and interconnected with the fortunes of Memphis International.

Comments Cox, “One in every three jobs, directly or indirectly, are the result of activities at the airport. FedEx alone has more than 30,000 full-time equivalent employees here; 40,000 on an actual basis with permanent part-timers.

“Everybody understands that Memphis is a transportation town. Memphis is here because of the Mississippi River; it started as a trade post and then a distribution center. When the railroads came in, Memphis was one of the few places where there was a railroad crossing the Mississippi River. So the railroads came here and that created transportation for both passengers and cargo.

“Then you have the highways, and in the ‘50s the Interstate highways came through here, and that brought the trucking distribution. Then the air. We’ve got four modes. It makes us a logistics juggernaut here.

“We have five Class 1 railroads; there are only five cities that have that.”

A recent study conducted by the University of Memphis shows that, in 2007, Memphis International pumped some $28.6 billion into the five-county metro area’s economy. It accounts for some 220,154 jobs (34.3 percent of total employment), all linked to air cargo, air passenger, and airport construction businesses. In all, it accounts for nearly $8 billion in earnings for area residents.

Says Cox, “I have not seen another economic impact study for an airport that has a higher economic impact.”

The authority also has a history of working with local groups to promote economic development, and is currently focused on connecting Memphis globally, driven as it has long been by the long reach of Federal Express.

Impact of delta/northwest merger
According to COO Brockman, the combined Delta/Northwest accounts for some 85 percent of airline traffic at Memphis International. When the merger was first announced, many analysts predicted the demise of the airport’s status as a connecting hub.

Explains Cox, “We feel very good about the merger. If you would have asked me two years ago, I was very fearful because the traditional viewpoint by so-called experts is that we’re one of the smallest markets to have a transfer hub. With our proximity to Atlanta [330 miles], there could very well be pressure to eliminate one or more hubs after the merger.

“When the merger was announced …we came to the conclusion that Memphis was going to be a very important strategic asset for Delta going forward. And we continue to believe that.”
He relates that advantages which Memphis brings to the new Delta include its geographical location, Central Time Zone, connectivity to other transportation modes, operating efficiency, and — perhaps most importantly — low costs.

Says Cox, “Memphis has minimum connect times, both domestic and internationally. We only have three banks of airplanes a day currently, so there’s plenty of room to add additional banks. We virtually have no air traffic delays, either for taxi out or taxi in; we have great weather.