ALASKA'S AIR CARGO INDUSTRY THRIVES.

Even with the announcement that United Airlines is shutting down its cargo hub in Anchorage, the air cargo industry is expanding and doing well.

To say that Alaska's air cargo business is soaring would be an understatement. At least two ma air carriers, Northwest Airlines/KLM and Federal Express, are expanding operations in Anchorage, and Alaska's largest city will become the global air-cargo hub for Northwest by early 2001.

Thanks to a new $18 million cargo complex in Anchorage, Northwest Airlines announced its plans for further growth in the 49th state. Northwest Airlines vice president and general manager of cargo operations, Jim Friedel, said the company intends to put together a full global cargo hub in Anchorage.

"Anchorage is not just a fuel stop anymore," said Mike McKinley, Northwest's district manager for cargo and customer service. "We have between six and seven landings a day. In September, there were 148 (Northwest Airlines) landings, and that may climb to 250 a month soon."

McKinley said cargo planes are mostly filled with electronic equipment. Northwest also ships a lot of engines for Boeing 747s.

FedEx, based in Memphis, Tenn., has added about 70 employees in Alaska, bringing its total Alaskan work force to nearly 1,300. It also plans to add 38 pilots to its Anchorage hub over the next year. (Currently there are nearly 275 pilots, of which 40 percent live in the state.)

FedEx, which averages 435 flights a month through Anchorage, like other cargo carriers, uses Anchorage as a pit stop to refuel freighters, change crews and swap cargo. Anchorage is ideally situated between Asia and the Lower 48, which makes it attractive for such purposes. By stopping in Anchorage instead of flying directly between the Lower 48 and Asia, cargo planes can carry less fuel and more freight.

In mid-October, Atlas Airline signed on to be a new tenant for the Alaska CargoPort. Atlas Air will occupy approximately 4,500 square feet of warehouse space and over 5,300 square feet of office space. The move will consolidate all of Atlas Air's Anchorage operations in one facility.

Alaska Cargo Port Expands

Alaska CargoPort signed a lease that adds 426,000 square feet of land to their current air cargo transfer facility at Ted Stevens Anchorage International Airport. It will enable operators to add four more wide-body (large aircraft) parking positions. When complete, the Alaska CargoPort will have 12 wide-body positions and one narrow-body position at its site in the airport's North Airpark.

The lease, signed in July, is for a 35-year term and requires the CargoPort to construct two wide-body parking positions within two-and-a-half years, and two more within four years. The property was previously used as a transient parking ramp.

Richard Anderson, Northwest's CEO, said this new facility further enhances Alaska's central position in the air cargo world.

"We're very excited about the new CargoPort," said Linda Close, marketing manager for Ted Stevens Anchorage International Airport. "The cargo industry is doing just fine here in Anchorage.

"The advantage Anchorage has is that it's an equal distance from most major markets," said Close.

AIA Ranks First for Tonnage 

In 1995, Anchorage was ranked second in the nation among airports for total international cargo tonnage. Only Miami, Fla., airport was ahead. Three years later, AIA was ranked number one. Anchorage was first in terms of total weight from international and domestic landings.

Morton Plumb, Jr., director of Ted Stevens Anchorage International Airport, said this expansion of the lease space should enable the Alaska CargoPort and Anchorage almost unprecedented on-ramp, cargo-transfer capability. Plumb hopes that the world's leading air carriers will expand their use of these facilities to increase the efficiency of their international cargo operations.

There are other keys as to why Anchorage is so attractive as a cargo hub. For one, the Alaska CargoPort has the longest commercial runway in the nation. It is also accessible--heavy jets (747s) can use all runways. There are also two precision instrument runways. And the facility features a state-of-the-art fueling system; there are over 35 wide-body hydrant-fueling positions and the CargoPort has potential for growth.

In 1991, Anchorage International Airport had an average of 1,500 monthly cargo landings, by both domestic and international carriers. By 1998 that total nearly doubled--to 2,700. In 1990 the annual landings were 19,079, jumping to over 34,000 by 1998.

Monthly take-off weight from AIA in 1991 was close to 700 million tons. That rose to over 14 billion tons in 1998 and now stands at over 30 billion tons.

Trade Made Easy

Fewer trade barriers between the U.S. and Asia is the biggest reason for the boost in air cargo business for both Alaska and the nation. In late fall, the U.S. Senate OK'd permanent, normal trade ties with China, the world's most populated country, which is very likely to bolster its cargo as trade picks up.

Last year, China and the U.S. agreed to add 10 flights per week between the two countries starting next year. Which airline will get those flights has not been decided.

Anchorage already serves as Northwest's gateway hub to Asia, with the airline averaging about 34 freighter-flights per week. The planes now refuel and shuffle cargo among themselves. Eventually, Northwest is planning to fly cargo between Anchorage and Europe.

Clearly, the Far East is the market of the future. With a population of over 1.2 billion people, China is the hottest area for the cargo industry. Only three U.S. carriers-Northwest, United Airlines and FedEx-can fly into China. A fourth airline is expected to enter that market soon. Speculation over which carrier will fill that niche brings in leaders such as Delta Airlines, United Parcel Service or Polar Air Cargo.

Other than Northwest Airlines, United is the only U.S. passenger airline that also operates cargo-only flights. Other cargo carriers, like FedEx and Polar, specialize in moving freight.

"It's true Asia is the hot market, but now the European market is about to open doors for us," Close said.

Starling in November, British Airways began loading and off-loading cargo, where previously Anchorage had only been a fuel stop. It means flights to and from London and Glascow, Scotland.

"It's a real feather in our hats and it means more business for our importers and exporters," said Close.

Domestic Market also Shines

If it's the domestic air cargo business you're interested in, then Northern Air Cargo will likely fill your needs.

Whether its delivering baby formula to Barrow, or automobile air bags to Detroit, Mich., then NAC has shipped it. All legs of the trip are not necessarily in a Northern Air Cargo plane, but much commerce originates in Alaska.

"We'll ship anything, anywhere, any-time-from envelopes to airplanes," said Butch Hallford, NAC vice president for external affairs, who's been with NAC for 21 years.

Northern Air Cargo, which will celebrate its 45th anniversary in Alaska this year, has 12 D.C. 6s and three 727s.

"Because of good business, I can remember a time when we didn't have any planes on the ground, other than one or two in a hanger for scheduled maintenance."

Northern Air Cargo has no immediate plans for expansion, but Hallford said, "we're always looking for new opportunities."

"We average 10 flights out of Anchorage per day and between 18 to 20 during the peak summer months, said Hallford. "NAC flies anywhere in the state and has charter flights to Russia and abroad."

The Fairbanks Connection

Fairbanks also is in the air cargo business and doing well, according to the experts.

"We see the same type of cargo in Fairbanks as in Anchorage," says Dave Carlstrom, director of marketing for the Fairbanks International Airport. "We haul everything from electronics to industrial goods, mainly high-value, time-sensitive products. Most of the freight ranges from VCR's to camcorders. It's high-value ticket items. There's some pharmaceutical products included and it's all headed to Asia.

"By stopping in Fairbanks rather than Anchorage, carriers can save as much as 40 minutes flying time," said Carlstrom. "To an airline, that can be very significant. It's more or less a matter of preference. Weather has little or no bearing on whether an airline chooses to land in Anchorage or (Fairbanks). Of course, Anchorage is bigger and has more to offer its employees and crews."

Carlstrom said there's a lot of economic growth in Fairbanks that is directly related to the air cargo business. For example, there is over $30 million a year spent on jet fuel alone. Then there are the additional airport fees and company offices that airlines maintain in the Interior.

Ten years ago Fairbanks was unranked. Now it is in the top 10 international airports in the U.S., based on air freight volume.

UNITED AIRLINES BACKS OUT AS AIR CARGO LEADER

Not all the cargo industry news in Alaska is good.

In September, United Airlines announced that it will shut down its cargo hub in Anchorage next year. Over 200 pilots and ground workers were given notice of the closure. Just three years into its air cargo business, the world's largest airline is pulling the plug on its cargo service between Asia and the Lower 48.

However, United Airlines is not closing its entire operation in Anchorage. They will continue to move freight in and out of Alaska, only on passenger flights. Cargo will be shipped on a space-available basis.

The Chicago-based airline decided to make this change largely due to a combination of thousands of summer flights being delayed, or canceled, and pilots ref using to work overtime, said United Chief Executive Jim Goodwin. United Airlines, known more for its passenger service than cargo, ranked in the top 10 among international freight carriers in Anchorage.

Ironically, United sold two of its 747-200s to Northwest, which may have been a red flag to experts of United's pending decision to significantly pull out of the air cargo business.

United Airlines pilots could still live in Alaska and commute to other United hubs for their jobs, but that would mean flying thousands of miles to work because the closest cargo hub is in Seattle. Many, instead, are choosing to relocate.

Gary Madison, a pilot with United Airlines for 15 years, says a commute would be tough on families. Madison, a father of three, says it's not so much a hardship on the pilots as it is uprooting the children. Two of his children, Hayden and Erica, are college students, but, the youngest, Nick, attends middle school. "We're going to have to pull him (Nick) out of school, away from friends and schoolmates and then get him settled in a new place. That's the tough part.

"I think part of the reason (for the pull-out) is that when United was negotiating to purchase USAir, it didn't want to be strapped with running the two entities simultaneously," said Madison.