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The Hub of the Matter
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Hub airports
are engines for economic growth in the areas in which they are located.
By Peter Downs
There’s an old saying that the three most important things in business
are location, location, location. In the modern economy, that is
not quite true. The three most important things now are connectivity,
connectivity, connectivity.
Connectivity is so important that Phil Condit, chairman of Boeing
cites the difficulty of traveling by air to and from Seattle as
one of the reasons for moving the headquarters of the giant aerospace
company. The three cities contending for the company headquarters,
Chicago, Dallas and Denver, all are home to airline hubs.
“National or international accessibility are always among the top
three factors a company considers when choosing a location for regional
and corporate offices,” says John Kasarda, professor of logistics
at the Kenan-Flager Business School at the University of North Carolina.
“It’s also important for accounting and consulting professionals,
and for high-tech industry, whose people travel more than other
professionals.” One reason is that it extends the business day,
since passengers flying from hub airports can leave earlier and
return later than passengers starting from an airport that is at
the end of a spoke.
And that is why hub airports are engines for economic growth in
the areas in which they are located. Numerous studies have shown
that hub airports attract investment in a range of manufacturing
and supply chain management sectors, Kasarda says. “The number of
jobs generated within four or five miles of a hub airport are always
substantially greater than other parts of the suburban ring,” he
says.
Not all manufacturing is tied to hub airports, however. Richard
Kadzis was part of the development team that convinced German automaker
BMW to build an automobile factory in Greenville, S.C. “One of the
things we constantly had to fight was our lack of a hub,” he says,
but they got away with it, “because we were getting a manufacturing
plant, not a headquarters. For a headquarters, you need a hub.”
Traditional, heavy manufacturing is not tied to hubs, Kasarda agrees,
but high-tech manufacturing is. “Microelectronics, pharmaceuticals,
and other types of digitalized equipment depends on hub airports,”
he says. “Having a hub adds up to 12,000 high-tech jobs to an area
versus not having a hub.”
Kasarda’s own studies have shown that airline hubs generate job
growth, not the other way around, and the reason is the connectivity.
McKinley Conway agrees.
Conway points to the development of Hartsfield as an airline hub
as the initial step that set Atlanta on the path to becoming one
of the premier cities in the United States. In the 1940s, several
cities were competing to become the leader in the Southeast. By
the end of the 1950s, Atlanta had emerged as the key airline hub
in the region and won the battle, he says. Expanding Hartsfield
will be key to making Atlanta one of the top 100 cities in the world,
he adds.
Conway, a former NASA researcher, pioneering pilot and state senator,
is the founder and executive vice president of the Industrial Development
Research Council and publisher of Site Selection magazine.
All hubs are not created equal, however, since some airlines connect
to more places than others. The more connections travelers can make
from a hub, the more powerful an engine for job creation the hub
is. That’s one reason the American Airlines acquisition of TWA “is
a definite plus for St. Louis,” Kasarda says. “American Airlines
is one of the most recognized airlines in the world and one of the
top two in the U.S. That has to benefit the metropolitan area in
terms of convenience for both tourists and the business community.”
Besides boosting efforts to make St. Louis a center for the emerging
biotech industry, an American Airlines hub can boost St. Louis’
appeal to industries that rely on air cargo, to the distribution
industry, and to headquarters companies (large and small). The emerging
trend in distribution center development is ready access to multiple
forms of transportation: highways, railroads and airlines. The hold
of every American Airlines flight carries cargo, as did TWA flights,
and “the American Airlines network is much more extensive and connected
than TWA’s, so there will be far greater connectivity,” Kasarda
says.
With American Airlines expanding aggressively in Latin America,
closeness to an American Airlines hub “will be quite valuable for
industries shipping to Latin America or receiving components from
there,” he adds.
St. Louis used to be a major center for the distribution of goods
in the United States, a history to which the Cupples Station warehouses
give testimonial. A recent boom in distribution center construction
across the metropolitan area, behemoths near Edwardsville, Ill.,
and new construction in St. Louis city after decades of quiet, the
area is reemerging as a distribution center. In fact, the Lambert
hub is uniquely complemented by Mid-America Airport’s capacity and
role as a cargo hub. American Airlines will ratchet up the advantages
of locating in St. Louis above anything TWA could offer.
Certainly, American Airlines already has two hubs in the central
portion of the country: one in Chicago, the other in Dallas. Once
before it tried to have multiple hubs in one region, with hubs in
Knoxville and Raleigh-Durham both serving the Southeastern United
States. It ended up abandoning both of them. The situation with
Chicago and Dallas is different however.
Both of its central U.S. hubs are very near to capacity. Even if
Dallas expands its runway, it is the airspace that is so congested
there is no room for more capacity, Kasarda says.
Peter Downs is a free-lance writer and editor of Construction
News & Review.
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