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Global Gathering Lands in Memphis


Memphis, TN, the original Aerotropolis (according to the professor who coined the term), is hosting the global 2011 Airport Cities Conference & Exhibition, held last year in Beijing.

This month, representatives from major airports around the world have gathered at the venerable Peabody Hotel in Memphis, TN for the Airport Cities World Conference & Exhibition. Held in Beijing last year, Airport Cities is the premier global meeting for cities vying for the status of being designated as an aerotropolis.

As air cargo and passenger traffic have grown—along with the need to move them around the world much faster—so has the importance of the airport, making it more and more of a magnet for commercial and industrial development.

Around the globe, airport authorities, politicians, business leaders and corporate executives are recognizing the airport as a job and revenue generator. The runway is now the central point of vital economic systems, with industrial and logistics parks, office complexes, hotels, entertainment centers, shopping malls and even upscale residential development all extending out from the terminal.

What was once the city airport is now the airport city, or in the most ideal cases, the aerotropolis. The term was coined by John Kasarda, director of the Kenan Institute of Private Enterprise at the University of North Carolina. The aerotropolis fans out from an airport for up to 20 miles, with layers of aviation-linked business clusters and residences, all further linked by wide highways and express trains to facilitate fast movement and seamless connectivity to the airport and the rest of the world.

Kasarda, who is serving as conference chairman for this year’s Airport Cities conference in Memphis, has closely watched the evolution of aerotropolises around the world.

“What started out in the 1990s with a handful of international air gateways, substantially notching up their duty-free and traditional terminal retail and eateries has become a world-wide phenomenon of airport commercial expansion and diversification,” he says.

“In the process, commercial airports are assuming roles few before anticipated. Major airports now serve as regional multi-modal surface-transportation nodes and as magnets for businesses, trade, information exchanges and leisure activities. As their terminals transform into shopping malls and artistic venues, airports are also spawning aviation-linked clusters of hotels; convention, trade and exhibition facilities; corporate offices; and retail complexes along with culture, entertainment and recreation centers,” Kasarda says. “Air gateways, in short, have become as much commercial destinations as places of departure; they are urban realms in their own right, driving and shaping the very fabric of the new cities they are creating.”

When Dr. Kasarda coined the term “aerotropolis” in 2006, he cited Memphis International Airport as a classic example of the genre.

 

MEMPHIS: U.S. AIR GIANT

Memphis, TN generally is considered North America’s premiere, perhaps its only, aerotropolis. The world headquarters of FedEx, Memphis International Airport has the distinction of being the busiest cargo airport in the world and also a major passenger airline hub. The airport pumps more than $28 billion into the region’s economy, and airport-related companies are responsible for 220,000 jobs, or one in every three in Memphis, according to a recent University of Memphis study.

While the airport is the heart of the aerotropolis, it is just one part of the robust transportation system that is crucial to Memphis’ success. Equally vital to the city’s strength as a logistics hub are its superior road and rail networks and its port on the Mississippi River. All play integral roles in the economy of a city that is forecasted to see increased activity in both freight and passenger traffic in the years ahead. A recent study by IHS Global Insight Inc. noted that as the global economy rebounds from the Recession, the U.S. will see an increased demand for imports from South America, Eastern Europe and parts of Asia, the regions expected to bounce back first. Those goods will go to market through container traffic, making Memphis, with its lower-cost water and rail options, an attractive distribution point.

Memphis has been nurturing its assets and preparing for an even brighter future. The airport itself has been modernized and expanded over the past 15 years with nearly $1 billion in improvements. One recent accomplishment was a recent land exchange that saw the Tennessee Air National Guard’s base moved from a 103-acre airport site that was surrounded by FedEx to another part of the air field where it built a state-of-the-art base. Years in the making, the exchange allowed FedEx to accomplish a critical expansion onto the former base.

 

“WIN-WIN” SITUATION

“That was a win-win-win all around,” says Arnold Perl, an attorney with Glankler Brown and chairman of the Memphis Shelby County Airport Authority. “And it illustrates, I think, the culture that exists within the Memphis airport community to expand the horizons of this airport and aerotropolis.”

It’s been a common theme in Memphis: Business and government leaders joining forces to pave the way for future success. Regional leaders including the Greater Memphis Chamber have been focused on planning and accomplishing broad improvements to the area surrounding the airport, with numerous projects designed to strengthen the area’s position as a logistics center.

Memphis’ five Class I railroads have in recent years invested more than $500 million in new or expanded rail systems, which already bring more than 200 trains through Memphis each day. The city’s port will also get busier as river traffic increases with the planned expansion of the Panama Canal, so more rail connections to the water are in the works. The highway network is also growing. Memphis is located at the intersection of interstates 40 and 55, which both cross the Mississippi River, and the city will be a central location on I-69, nicknamed the NAFTA Superhighway since it will run from Mexico to Canada. Also, the construction of I-22 from Memphis to Birmingham is nearly complete, providing yet another direct connection to major East Coast markets. Meanwhile, plans call for the city to gain a third bridge across the Mississippi, accommodating road and rail.

Perl says Memphis is unified and determined to continue to develop the aerotropolis. And he says the hard work has paid off, noting that FedEx recently won the Institute of Transport Management’s “Best Global Cargo Hub” award for its Memphis World Hub. The judging panel cited the company’s achievement in successfully uniting the disparate capabilities of the city of Memphis—road, rail, river and air —to create a lynchpin of trade within the U.S.

“FedEx’s award as the best cargo hub highlights that Memphis continues to earn the accolade or reputation as America’s Aerotropolis™,” Perl says. “And Memphis International Airport still has availability, still has further capacity to enable FedEx to further expand on that airfield. Very few airports would have that. We do.”

According to Perl, the Memphis Aerotropolis recently was awarded a multi-million-dollar grant from the U.S. Department of Housing and Urban Development, part of which will be used to develop a master plan for the Aerotropolis. The master plan is expected to be completed by the end of next year.

This month’s global Airport Cities Conference & Exhibition includes a bevy of high-powered presentations, including keynotes by Fred Smith, chairman and CEO of FedEx Corp., and Richard Anderson, CEO of Delta Airlines. Memphis International Airport is the primary global shipping hub for FedEx, which moves more than 3 million packages per night through the airport.

Dr. Kasarda will deliver the opening address, entitled “Framing the Airport City & Aerotropolis Concepts,” at the Airport Cities Conference. Larry Cox, president and CEO of the Memphis Shelby County Airport Authority, and Kim Day, manager of aviation at Denver International Airport, will chair a conference session entitled “CEO Vision: The Aerotropolis Economic Powerhouse.” The conference in Memphis also will feature an airport leaders panel discussion including Rajeev Kumar Jain, president of Mumbai International Airport; Rosemarie S. Andolino, commissioner of the city of Chicago’s Department of Aviation; John Clark III, executive director and CEO of Indianapolis Airport Authority; and Bradley D. Penrod, executive director and CEO of Alleghany County Airport Authority. A session also will be held at the conference focusing on the crucial challenges facing new airport city developers in designing and adapting an airport’s existing framework and facilities.

 

IDEA TAKES WING ON A JET

According to a feature story in the Memphis Business Journal, the idea for the creation of the Memphis Aerotropolis took flight, appropriately, on an airplane.

In July 2006, John Moore, president and chief executive officer of the Greater Memphis Chamber, was on the same Memphis-bound flight as then-Shelby County Mayor A C Wharton [now Mayor of Memphis]. Moore read a Fast Company magazine article about Kasarda, then a business professor at the University of North Carolina-Chapel Hill. Kasarda was quoted in the article saying Memphis was one of the most well developed examples of the Aerotropolis concept in the U.S.

“It really hit me that this is what we are,” Moore told Memphis Business Journal. “This really defines the core strategic assets of Memphis and the uniqueness of them, the fact that they’re very difficult to replicate. The question is, how do you maximize the value of those to drive economic growth in your future?”

When Moore landed in Memphis, he sent the article to his board and executive committee, airport commissioners and others, including Tom Schmitt, president and chief executive officer of FedEx Global Supply Chain and two-term chairman of the Chamber, and Arnold Perl, chairman of the Memphis-Shelby County Airport Authority.

In 2009, the Greater Memphis Chamber started changing marketing efforts from “America’s Distribution Center” to “America’s Aerotropolis.” It has trademarked the logo and phrase “Memphis: America’s Aerotropolis.”

“Economic development officials from France, including some from Charles de Gaulle Airport in Paris, came to Memphis for a three-day tour of the area’s four transportation modes. Paris now calls itself “Aerotropolis Europe.” Similarly, Gaungzhou, China is labeling itself as “Asia’s Aerotropolis.” FedEx also has hubs in these cities.

 

AEROTROPOLIS OF THE FUTURE

UNC’s Dr. Kasarda, the aerotropolis pioneer, is busy charting the future of major gateway cities.

In his new book, Aerotropolis: The Way We’ll Live Next, John Kasarda declares that cities should be built around airports, which he calls the “physical Internet.” Kasarda told UNC’s Tarheel newspaper that his theory represents the physical manifestation of a 21st century, globalized world that requires better transportation of people and products—and has influenced many airports already.

“The Internet cannot move a box—or a person,” he said.

“It’s an airport-integrated economic region where businesses and travel-intensive workers locate to be in quick contact with their customers, partners, suppliers and markets around the country and world,” Kasarda said.

Kasarda said he believes face-to-face interactions for major business transactions remain highly important despite a rise in electronic communication, giving the most connected places a competitive advantage. His theory, he said, applies to students, as well.

“Aviation affects students’ lives whether they get on a plane often or not, whether it is the blueberries on their cereal or the laptop they’re using. UNC is having an impact all over the world,” Kasarda said.

According to Kasarda, Europe and Asia have already embraced the importance of airport-based cities, recognizing them as primary infrastructure for the 21st century. However, Kasarda added, the U.S. is lagging behind in the aerotropolis race.

While the aerotropolis idea is gaining steam in the U.S., many airport regions in Europe and Asia already lay claim to these developments. Hong Kong, Dubai, Guangzhou (China), South Korea and Malaysia’s Kuala Lumpur are all home to carefully designed airport cities, while Paris and Amsterdam also claim aerotropolis status.

“U.S. airports are considerably behind many in Asia, Europe and the Middle East when it comes to understanding and implementing the airport city and aerotropolis models,” Kasarda told Business Facilities. “Most U.S. airport heads and their senior staff are just becoming knowledgeable of these models where airports are operated as much for commercial facility development as aeronautical infrastructure.”

Many American airports are planning to try to replicate the aerotropolis concept; those that are already the center of multimodal transportation networks are leading the way.

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