Editor’s Note: This article originally appeared on FreightWaves.com.
A boutique investment group is offering underutilized airports outside congested metropolitan areas a cargo-hub-in-a-box aimed at quick-starting infrastructure development to take advantage of demand for expedited logistics and overflow volumes.
Major airports for decades have concentrated resources on passenger operations, such as fancy passenger terminals and ride-sharing lanes, that generate the bulk of revenues. Cargo infrastructure and services have largely been an afterthought, and many airports are running out of capacity to efficiently handle shipment growth driven by e-commerce.
That is creating opportunities for secondary airports, especially as online retailers pursue more distribution points that are closer to customers and don’t face the shipping delays of crowded urban settings. But many airports don’t have the capital or expertise to implement a cargo strategy.
Enter Burrell Aviation.
The Aspen, Colorado-based firm essentially delivers an all-in-one package of financing, construction, marketing, leasing and operation of cargo and other airside activities in exchange for exclusive long-term ground leases. Burrell Aviation now has 22 airports in its portfolio. It is helping them modernize runways and taxiways, replace aging facilities with modern airfreight warehouses and make other investments to attract dedicated freighter airlines and logistics companies that cluster around airports.
The difference between Burrell and other airport development companies is its first-mover strategy that involves identifying promising airports and approaching them with a public-private partnership plan before officials realize a need or solicit bids for a project. Developers typically lease small parcels that cover specific projects, but Burrell’s speculative strategy is to lock up large chunks of airport property before it goes on the market.
“We’re readying sites for near-term development. This is a speed-to-market component of the airport world that cannot wait five to 10 years before it comes online. So we’re focused on working with our airport partners to prepare land parcels that can be shovel-ready for development in the next 18 to 24 months,” CEO John Carver said during a recent episode of FreightWaves NOW, a daily streaming TV program. “With an accelerated development timeline we can provide solutions, create jobs, create new revenue streams for the airport and maintain this supply chain evolution in the air cargo world.”
In an email message, Carver said the near-term business plan is to engage 35 to 40 airports in development deals for cargo, maintenance and corporate hangar projects. Characteristics the company looks for are proximity to large cities, a good highway network, a progressive airport administration, state economic development incentives and logistics activity in the area.
Nebraska officials on Thursday announced that Burrell Aviation would invest an estimated $65 million to develop Lincoln Airport’s first cargo facilities under a lease of up to 50 years. The firm will oversee the completion and operation of 210,000 square feet of cargo facilities customized to the needs of future tenants.
Lincoln Airport is a former Air Force base with a 13,000-foot runway, one of the longest at any commercial airport in the country, that can easily accommodate the largest cargo aircraft. Federal funding is helping to pay for the runway’s reconstruction.
Last month, Burrell Aviation agreed to lease 53 acres at Baton Rouge Metro Airport in Louisiana for 30 years, with two 10-year renewal options, to establish an air logistics center and other aviation activities. The estimated amount of investment for the project is $113.8 million.
Both airports have easy access to interstate highways.
Private Dollars, Public Infrastructure
A concession model that transfers financial risk for infrastructure projects from public agencies to the private sector in exchange for revenue generated is common in other sectors, such as port, and speeds up project development.
Burrell clears land, establishes utility connections and makes other preparations so sites are shovel-ready when tenants are signed. It has recruited a team of top industry players that can be plugged in to deliver a turnkey cargo solution, including an architectural design firm; Lemartec, a large infrastructure contractor with extensive experience building airport facilities; real estate service firm Cushman & Wakefield to market properties; and Alliance Ground International, a rapidly growing airport services company that will service cargo aircraft and process shipments.
The surge of freighter aircraft carrying medical supplies and goods diverted because of broken ocean and rail supply chains during the COVID crisis reminded airports about the importance of cargo to local economies and the need for diversified revenue sources, aviation professionals say.
Regional airports have the opportunity to catch spillover traffic, especially for e-commerce. Amazon, for example, is rapidly expanding its air logistics network to smaller airports such as Omaha, Nebraska; Wichita, Kansas; El Paso, Texas; and Manchester, New Hampshire. Amazon Air now serves at least 50 airports, according to DePaul University researchers.
“With this need for improvement of the air cargo supply chain the opportunity for private sector investment is huge because the airports don’t have money in their capital improvement plans for the most part, and the airlines, cargo handlers and freight forwarders that deal in this space are not equipped to provide infrastructure funding for new facilities either,” Carver said.
Burrell is looking for forward-thinking airports eager to compress the development timeline.
“The traditional developers are reactive to the interest that has been generated. We’re much further upstream,” Carver told FreightWaves during a trade show in November. “We’re picking the airports and then working with the airports to identify the highest and best use. And then we have the opportunity to make the investment. What we’ve done is secured the only developable land available at the airports that we have positions at … so if somebody has business [there], all roads are going to lead through our property.”
Burrell Aviation is part of the Burrell Group, a holding company for businesses in medical education and health care technology, financial services, construction, commercial and residential real estate, food services, hospitality, and natural resources.
For more coverage on air cargo, go to FreightWaves.com.