Gary Airport, Reconsidered

GARY, IN — Only 25 miles from downtown Chicago, Gary/Chicago International Airport (renamed to reflect its location) here hopes to establish itself as the region’s third major airport, along with O’Hare and Midway. And while the airport has faced some struggles attracting and retaining air service, officials here are positive that the latest displays of confidence in the airport — in the form of funding — will put Gary in a position to help meet the demands of northwest Indiana and the Chicagoland area. Public support of the airport, including the mayors of Chicago and Gary, the governor of Indiana, as well as a non-profit organization (Friends of Gary/Chicago Airport), and the creation of a Regional Development Authority, will be one of the main drivers of the future success of the airport, according to director Paul Karas.

Marketing director Denise Williams says a new focus on the airport “in terms of seeing it as a viable economic development arm — not just for this city, not just for this county, but for the entire state” is responsible for much of the positive news that has come out of Gary lately. And the incremental growth plan the airport has implemented over the years has helped poise Gary/Chicago International for continued growth.

Regional Collaboration, Support

The Gary/Chicago International Airport Authority which governs the operations, policies, and use of funds at the airport is made up of a six-member board. A second board, the Gary/Chicago Regional Airport Authority, is a 12-member board that the governors of Indiana and Illinois and the mayors of Gary and Chicago make appointments to. This board is responsible for managing the compact that the airport entered into with the City of Chicago and the Chicago Department of Aviation in 1995. Under this collaboration, between $1.5 million and $2 million is annually put into a fund to support “the growth and development of infrastructure at Gary/Chicago International Airport,” explains Williams. “That fund approaches about $15 million over the course of the agreement.”

A recently established Regional Development Authority is comprised of three Northwest Indiana counties — Lake, Port, and LaPorte — and was developed to address transportation issues in the region. Neighboring cities which have casinos, including Gary, East Chicago, and Hammond, had to put $5 million into a pool. Lake and Porter counties also contributed $5 million and the State of Indiana then matched those funds.

According to Karas, $20 million from the RDA will be available to Gary beginning in July. The current agreement has the RDA funded for a period of ten years at some $120 million.

Karas considers the airport’s growth and development a four-legged stool with general aviation, corporate aviation, cargo, and passenger service. “They’re not mutually exclusive and they’re fully complimentary here.”

$85 Million Initiative

The airport’s most recent feather in its cap is a letter of intent (LOI) from FAA for $57.8 million (equals $6 million per year for nine-plus years). Karas says the amount is particularly significant because the airport received 96 percent of the amount it requested. The $57.8 million represents 68 percent of the total program cost of $85 million (not including inflation or capitalized interest), which includes relocation of railroad tracks currently located at the end of the airport’s 7,000-foot runway.

In addition to the LOI, funding for the project comes from the following sources: $2.8 million, 2005 AIP; $7 million from the Federal Highway Act; $20 million, Regional Development Authority (RDA). Additionally, the Gary/Chicago Airport received $2 million from the transit administration for relocation of the railroad.

It’s the tracks that Karas says have been an obstacle in attracting air service to Gary. “We have a 7,000-foot runway — longer than Midway, as long as LaGuardia, and longer than anything at Reagan (National) — except that we have a 15-foot high embankment with a railroad at the end of it. We need to move [the railroad tracks].”

While the runway is long enough for safe operations, explains Karas, it does impact procedural requirements. “If you lose an engine in Stage II — that’s the rule, you assume you lose an engine — and a 15-foot high hill assumes, in procedure, that there’s a 23-foot high train on it, you’ve got a 38-foot high obstruction.” When Southeast Airlines was providing service out of Gary, Karas says the airline was impacted by this, particularly in the warmer months. They were flying DC-9s and were limited to filling 90 seats out of 110; with MD-80s it was 150 seats out of 165. “Airlines don’t want to risk the hot weather load limitations here,” he says.

Karas expects the railroad relocation project to be complete by the end of 2007. The estimated $85 million project includes some $35 million for land cleanup, civil works and infrastructure; some $20 million for extending the runway; some $15 million to relocate power lines; roughly $8 million for land acquisition; and, miscellaneous costs and contingencies.

Karas says the airport’s location makes it ideal for growth, with convenient access to the Indiana Toll Road, South Shore railroad, the Chicago Skyway, and the I-80/94 expressway. The airport is surrounded by industrial property, brown fields, vacant property, truck terminals, rail yards, and sewage treatment plants, “We’re not going to bother anybody,” says Karas. “We’ve got 700 acres of property. In another year or so, we’re going to be at about 1,000 acres.” Current expansion projections, show that not a single home will be affected by the airport’s expansion program, which Karas calls a 40-year plan. Gary/Chicago’s master plan, which was approved in 2002, shows a new terminal capable of handling 30-35 million passengers annually through 43 gates. Karas expects with two runways the airport could see 200,000 to 300,000 operations a year, depending on aircraft type and time of day.

Marketing, Air Service Hits and Misses

Williams says studies put the catchment area of Gary Airport at some 9 million travelers. The airport’s target market is Northwest Indiana as well as the south suburbs of Chicago, north to downtown. “There’s a lot more convenient access to Gary than to Midway or O’Hare for a lot of people,” says Williams. The airport also offers free parking, something she calls another strategic advantage for the airport.

For airlines considering serving Gary, Williams says the airport has some of the most reasonable rates and charges: the landing fee is 58 cents per 1,000 pounds.

Gary International has had some success in attracting scheduled air carrier service in recent years. From November 1999 to early 2002, Pan Am was offering flights to Sanford/Orlando. On the heels of Pan Am’s departure, relates Williams, Southeast Airlines came in serving the St. Petersburg and Sanford/Orlando, FL markets as well. And, shortly after Southeast’s departure, Hooters Air came to Gary; by the time it ended service in January 2006 it was flying to St. Petersburg, FL; Myrtle Beach, NC; Nassau, Bahamas; and Las Vegas. “Las Vegas has always been top on our list,” says Williams. “Because of the six casinos in this region, we have a very pro-gaming community always looking for options.”

The airport does offer an incentive package to new carriers, which includes marketing dollars that the airport is in charge of, without exception. Williams says the airlines approve the ads, but it’s the responsibility of the airport to develop them and place them either on radio, TV, or billboards. “We know the market and our agencies have the best economy of scale in terms of media rates in the highly expensive Chicago market,” says Williams. “As opposed to seat guarantees or just writing checks to the airlines, no matter what advertising is done, it still benefits the Gary/Chicago Airport.”

According to Karas, the airport is leery of incentive packages that include revenue guarantees. “Getting air service is the toughest job in the airport business,” he says, “tougher than the politics some big city airport directors have to put up with.” Williams adds that the airport’s marketing efforts include e-mail blasts. “We have several thousand people in our database that we keep aware with articles, etc.”

Location, the town’s reputation as a rough area, and other preconceived notions about Gary have also stood in the way of the airport’s growth in the past. “So many times, what we’ve had to overcome is perception,” says Williams. “The people of Chicago think Indiana is so far away and they think we’re in a cornfield. So the past few years have really been about reeducating the community to the advantages of what’s going on here.”

Karas says getting the master plan or the “vision for the airport” in front of the public and letting them know what potential exists at Gary was key. “Then we just started chipping away at one thing after another — showing certain successes.”

Corporate, Cargo Growth

Corporate aviation has seen a boost at Gary as well in recent years. Shortly after Boeing moved its corporate headquarters to Chicago, it chose to base its corporate fleet at Gary — a definite boost for the airport. In a perfect case of “if you build it they will come,” Gary constructed the $9 million hangar, says Williams.

Wil Davis, president and CEO of Gary Jet Center, a full-service fixed base operator here, says business aviation at Gary is growing. “Basically all of my business is Chicago-based corporate jet business,” says Davis. Due to expanded airline service at Midway, Davis says that airport is no longer ideal for corporate aviation.

The FBO’s facilities, including a 24,000-square foot hangar and two subleased hangars totalling 25,000 square feet, are completely full. Davis also has an option on additional land at Gary where he’s looking to build a 38,000-square foot corporate hangar to meet growing demand. With Gary/Chicago Airport, Davis says his business is “in the right place at the right time. With the relocation of the railway, the growth potential here is just unlimited.”

Gary Jet Center employs 40, offering maintenance, charter, and line services. Davis’s company also handles cargo loading and unloading, as well as passenger handling and ground support when an airline is serving the airport. The FBO maintains the Boeing corporate fleet of two 737s and five Challengers; Gary Jet Center has five aircraft on its own charter certificate. According to Karas, some 2.5 million gallons of jet-A and avgas flow through the airport annually. In 2005, Gary had 49,000 operations and currently has some 90 based aircraft.

The National Guard is also investing in Gary/Chicago Airport and recently began clearing some land there for an anti-terrorism facility. According to Williams, the facility will house Blackhawk helicopters and SWAT teams that would be used against any terrorism in the region.

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