• A study done by the Swiss consulting firm SITA reported that Minnesota displays an absence of shipper demand for better international service. Minnesota could lose companies due to insufficiencies in our cargo system.
• Task force members also said that an air-cargo airport in a less densely populated area would allow more night flights to serve cargo/ shipping needs. Night flights at MSP, despite voluntary restrictions, have been a continuing irritation for residents of south Minneapolis.
• None of Northwest’s hubs are major freight shipment points-which illustrates that cargo flows are not generated directly out of MSP. Many must be re-routed which results in a cost increase to shippers.

Ability to access cargo/freight hampered by local metro gridlock if MSP's cargo capacity was increased.

• Access is limited by a lack of alternate routes.
• Access is impaired due to the outmoded Hwy 62, Hwy 494, major routes into MSP which are unable to handle current traffic.
• Ability to compete in global markets is seriously affected by the lack of a dedicated state-of-the-art cargo facility with a 10,000 ft runway.

Industries are heavy users of air transportation for moving exported goods destined for intermediate processing or public consumption.

Source:
The Competitiveness of the Twin Cities Metropolitan Area and the Minneapolis-St. Paul
International Airport, University of Minnesota, January 2001.

• Export-producing industries constitute a fundamental element of the regional economy.
• The high projected export growth from 1997 to 2010 for the Minneapolis-St. Paul metropolitan area relates to the area’s increasing dependence on exports.
• Northwest Airlines’ hub airports are significant air cargo airports. Yet freight has the lowest priority moving at the convenience of the carriers.
• Reflecting this, the Northwest Airlines 747 freighters which carry transpacific cargo do not cycle through MSP except for maintenance purposes.
• MSP has the smallest amount of space to support a metric ton of air cargo of any of the airports where data is available.
• Total purchases of air transportation services from local sources were only $424 million-slightly less than seven-tenths of one percent of the total value of industry exports originating from the Minneapolis-St. Paul area.
  

The Importance of Cargo/Freight Operations to Economic Growth

SOURCE:
US Department of Transportation n, Bureau of Transportation n Statistics, March 2002
http://www.dted.state.mn.us/

• Air freight is an increasingly important revenue source for the air transportation industry. This includes both freight handled by dedicated air cargo handlers and air cargo combined with passenger and air freight carriers.
• The ability of carriers to transport this cargo by direct flights, as quickly and efficiently as possible will determine the financial success of both the shipper, the producer and the transporter (the airlines).
• Producer prices for transportation parts are highest for aircraft and parts, followed by ships and boats, railroad equipment and then motor vehicles
• Transportation n supporting industry employment accounts for over half of the total related transportation industry related jobs. Auto dealers and service stations lead the supporting industry with aircraft and parts and other transportation at the bottom.
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• Tourism recovers from recessions and natural disasters and outdistances world GNP growth rates.
• Tourism is resilient to inflation or recession.
• Tourism is symbiotically interrelated to transnational business, banking, telecommunications, technology and trade.
• International tourism grows despite recessions, civil disturbances, and natural catastrophes.
• Tourism contributes to the economic viability of countries.
  

ITA-International Trade Administration- http://www.tineet.ita

Tourism’s export contributions to the US have grown nearly 250%. International tourism is considered an export creating jobs, selling agricultural products, consumer goods and services. Attributable to the value of tourists’ visits, the sum total of $70 billion annually is injected into the American economy.

Minnesota’s Barriers to Tourism and the International Tourist Market

Source:
Barriers to Increasing Minnesota’s Share of the International Tourist Market, University of Minnesota, December 2000.

• Minnesota is currently a regional destination with the majority of its tourists coming from within the state and adjacent states in the North-Central region of the U. S.
• Minnesota is primarily a drive market (i.e., the majority of the visitors are driving to arrive here).
• Overseas visitors to Minnesota comprise less than 2% of Minnesota’s total number of tourists and Minnesota has a 1.4% share of the total overseas market to the U.S.
• There is some evidence to suggest that international airfares to Minnesota are not as low as other U.S. international gateways.
• Minnesota is served by Amtrak and shuttle service to some Greater Minnesota destinations but these systems are not packaged for tourists or promoted.
• Although there is a desire to visit new places, the propensity to do so declines rapidly if airline ticket prices add substantially to the cost of accessing a "new place".
• MSP lacks a high-speed public transportation system that many other cities offer. Minnesota lacks an inter-modal transportation system that could serve to move non-driving Visitors to its attractions and Greater Minnesota destinations.
• Minnesota lacks transportation links from its communities to its rural resorts, vacation properties and its natural resource-based tourism facilities.
• The lack of new airline routes and expanded airline networks that could stimulate tourism growth to hub cities and destinations are lacking.
• Policies affecting "open jaw" airline tickets and stopovers are the two main policy barriers preventing growth in Minnesota’s share of the international market.

Fewer connections lead to higher quality of air passenger service. Therefore more direct International flights are the preferred way to travel long distances.

US Department of Transportation n, Bureau of Statistics - http://www.bts.gov/
Flight Availability and Distance: International Flights of US Carriers
According to the DOT, the frequency of aircraft departures, the number of connections required for a single trip, and the match between available flights and travelers’ desired origin and destination points are all important determinations of scheduling convenience.
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• The Census Bureau estimated that from 2000 to 2020, the total population of the U.S. will rise by 48.2 million persons, or by about 12 million every five years.
• That is a 17.6 percent increase in 20 years.
• The first results of the 2000 Census indicate that future growth may be even greater.

MSP can not keep up with increasing demands placed on its services by export-producing industries.

Source:
The Competitiveness of the Twin Cities Metropolitan Area and the Minneapolis-St. Paul International Airport, University of Minnesota, January 2001.

Adequacy of air transportation infrastructure is a significant contributor to a region’s ability to compete in a global marketplace; therefore, MSP should be considered as an important part of the region’s overall economic infrastructure and its capacity relative to demand should be periodically reviewed.

• Lack of air access signals industries to seek out other metropolitan areas.
• Forecasts reveal limitations far into the future of essential services and facilities for reaching distant markets.
• Analysis demonstrates a service gap for business travelers.
• Ground transportation and access are viewed negatively at MSP.
• Attempts to market MSP as a competitor to Chicago’s O’ Hare would not be successful.
• Passenger enplanements grow at a rate three times the rate of growth in population and six times the rate of growth in gross area product.
• The annual change in total enplanements for the Minneapolis-St. Paul area for both the reported period from 1991 to 1997 and the projected period from 1997 to 2010 is well above three percent per year.
• Fewer connections lead to higher quality of air passenger service. Therefore more direct International flights are the preferred way to travel long distances.

Underused Regional Airports An Alternative to Runway Gridlock

Source:
GAO Report to the Ranking Minority Member, Committee on Commerce, Science, and Transportation n, U.S. Senate: Long Term Capacity Planning Needed Despite Recent Reduction in Flight Delays, 2001.

• A solution to create safe capacity would be to utilize more regional airports and underused airports located about 50 miles from congested metropolitan airports.
• They would be used mainly for transfer passengers, particularly at large, congested hubs that have a large percentage of transfer passengers.
• A network of regional airports could be located around a major congested hub and would take origin and destination passengers diverted from the large hub.
• Also, the cost to upgrade and expand the existing facilities would likely be less than new airports and possibly somewhat less than wayports.
• To the extent that regional airports are located in less densely populated areas, concerns with noise and conflicting land use may be less than at large metropolitan airports.
• Like the previous two measures, however, this measure would require at least one airline to commit to incorporating a regional airport into its long-range hubbing service system.
• Added capacity may mirror what transportation engineers and the traveling public have often noted about adding new highways in congested areas-that is, the additional capacity quickly induces more people to drive, thereby leaving traffic conditions little better than they were before.
  

Source:
Star Tribune, August 20, 2000
Officials look for ways to deal with increasingly crowded skies over the Twin Cities, a regional airport may be the answer.

Oberstar, one of Congress' leading transportation authorities, said that expansion of service at St. Cloud has "some real attractiveness" because of the area's low population density, undeveloped buffer areas and the prospect of commuter-rail service. He sees St. Cloud holding more potential for air cargo shippers than for passengers, at least in the short run. But even that could help MSP, he said. The more air traffic that can be diverted from MSP during prime hours, the more service can be freed for "very lucrative passenger operations," he said. He added that those diversions also could help reduce MSP's noise problems. Minnesota's updated aviation system plan, prepared by the Minnesota Department of Transportation n, recommends that St. Cloud be developed to absorb additional demand for air service. It has the potential to become a `second-tier' airport, like Duluth and Rochester, potentially attracting passengers from the northern parts of the Twin Cities.

The Wayport Alternative is a regional transportation hub offering connections to surrounding cities by multi-modal transport and also serving as cargo and mail handling centers.

Source:
GAO Report to the Ranking Minority Member, Committee on Commerce, Science, and Transportation n, U.S. Senate: Long Term Capacity Planning Needed Despite Recent Reduction in Flight Delays, 2001.

• Wayports are developed by using existing underused regional airports and former military bases or by building new airports-to supplement the current capacity needs of congested or capacity-constrained major hubs.
• Wayports are envisioned to be potentially large facilities-located on the fringe of or away from large metropolitan areas and near smaller cities (100,000 to 200,000 population)-that would serve mainly as transfer points for long-distance air travel routes.
• Except for nonstop service from one city to another (called "city pairs"), all flights would connect at these points to accomplish passenger transfer.
• As envisioned, service between these transfer points could be supplied either by large aircraft or by conventional aircraft operating on a high-frequency schedule.
• Connection between wayports and major cities in the region could be provided by short-haul aircraft or high-speed ground transportation, such as rail or highway.
• Building wayports may not face the degree of opposition that building new airports would-especially from local communities-because wayports would be further away from large urban centers.
• Also, some studies have suggested that wayports would be less costly than comparable airports built in major metropolitan areas, could provide more open competition among airlines, and would likely result in less airspace congestion because of their location further away from congested metropolitan areas.
  

Source:
Aviation Week and Space Technology
October 23, 2000
Explosive Cargo Growth Predicted for Long Term
Forecasters say the world cargo business will nearly triple and its fleet double in the next 20 years as it meets the challenges of a competitive global marketplace seeking faster, efficient service.
According to the International Air Transport Assn.'s Freight Forecast published in October 1999, air freight will reach 20.7 million tons by 2003 from 15.9 million tons in 1998--an increase in a five-year period ending in 2003 that reflects an average yearly growth of 5.5%.
According to Boeing's World Air Cargo Forecast 2000-01, long-term world air cargo will grow 6.4% annually in the next 20 years.

Tourism Projections Demand More Capacity
Source:
World Travel and Tourism Council
http://www.wttc.org/
Travel and Tourism demand has been forecast to increase by 2.1 per cent per annum between 1999 and 2010 to reach US$ 1.13 billion in 2010.
Travel and tourism employment is expected to increase by 1.3 per cent per annum over the same period to reach 20.21 million in 2010.
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• Transportation n can increase the value of goods by getting them to locations where they are worth more.
• Transportation n, as part of the logistics process, increases values by getting things where they are needed, safely and competitively.
• Travel time equates to savings.
• Carrier Competition equate to savings.
• Good Transportation n adds value.
  

The Importance of Cargo/Freight Operations to Economic Growth

SOURCE:
US Department of Transportation n, Bureau of Transportation n Statistics, March 2002
http://www.dted.state.mn.us/

• Air freight is an increasingly important revenue source for the air transportation industry. This includes both freight handled by dedicated air cargo handlers and air cargo combined with passenger and air freight carriers.
• The ability of carriers to transport this cargo by direct flights, as quickly and efficiently as possible will determine the financial success of both the shipper, the producer and the transporter (the airlines).
• Transportation n supporting industry employment accounts for over half of the total related transportation industry related jobs.
  

The Importance of rural Minnesota's contribution to our regional economy.

Minnesota's non-manufactured goods lead the state in export products.
Minnesota’s Food and Agricultural Exports Are Fourth Leading Source of Employment.

• We can't remain competitive without a competitive cargo infrastructure, and more efficient systems to cut down on shipping delay due to inadequate cargo carriers and facilities.
• University of Minnesota Study shows inadequacies in both domestic and International freight/cargo facilities.
• Multi-modal transportation and infrastructure are imperative components of the economic success of rural Minnesota.
• The transport of products is crucial to sustained business and new opportunities for elevated the rural economic share of the region's economy.
  

Source:
Minnesota Department of Trade and Economic Growth
http://www.dted.state.mn.us/04x00f.asp

Minnesota has a 10.9% share of total US exports in Soybean & Products
9.8% share in total US Feed Grain and Produce
8.2% share of total US Diary Products
3.5% share of the total US Live Animals & Meat
Minnesota was 20th in the nation for manufactured exported goods with a 1.5% share.

Source:
Have Car Won't Travel; The Sober- and Sobering Case for Priviatizing Urban Transportation n, The Milken Institute Review, April 1999, by Clifford Winston, Brookings Institute Senior Fellow, Economic Studies Program.

Minnesota is ranked 17th in the nation for jobs supported by the Export of Manufactured Goods.

Source:
Minnesota Soybean Growers Association
http://www.mnsoybean.org/

Inclusion of biodiesel would supplement our nation's current energy security programs at little or no cost to the taxpayer. Increased biodiesel production would also result in significant economic benefits to state economies such as Minnesota's as well as agricultural producers.

Source:
Renewing the Countryside
http://www.mncountryside.org/

New value-added products being researched at the University of Minnesota like using Minnesota wool as a mulch product to protect plants, reduce weeds and retain moisture will ad the rural economy and also contribute to the regional economy.

Sources:
The Biomass Research and Development Initiative
Minnesota Bio-mass Fuels, Power, Products
Minnesota Department of Commerce and Sustainable Minnesota

• Minnesota's ethanol industry contributes $350M in net annual benefits to the state.
• Minnesota will generate $185M to $460M in total economic impact.
• The industry contributes 983 to 2,439 jobs.
• The industry contributes $64M to $159M in value-added products.
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• Resource based attributes of the destination that present a unique comparative advantage are required.
• Accessibility, facility, land-use requirements, environmental and carrying capacity constraints, infrastructure and labor availability are necessary attributes.
• Climate, location, natural resources, tourism awareness among local citizens, and indigenous culture are necessary attributes.
• Trends in tourism that will affect demand will include environmental degradation and a concern for building sustainable development.
• The development of niche/speciality tourism on a global scale will be important in order to maintain competitiveness in the tourist market.
• Competitiveness and sustainable tourism is linked because tourism often depends on the uniqueness of the environment.
  
  

Source:
The Competitiveness of the Twin Cities Metropolitan Area and the Minneapolis-St. Paul International Airport, University of Minnesota, January 2001.

• Out-state users do not appear to be experiencing schedules that are convenient.
• MSP appears less accessible for out-state travelers.
• There is a marketing opportunity for groups responsible for airport development, as well as the airlines, in terms of removing these perceptions and educating the out state user.
  

Competitive pressures lead airlines to make decisions that can potentially worsen delay problems, rather than reduce them.

Source:
GAO Report to the Ranking Minority Member, Committee on Commerce, Science, and
Transportation n, U.S. Senate: Long Term Capacity Planning Needed Despite Recent Reduction in Flight Delays, 2001.

• Competition encourages airlines to take maximum advantage of capacity during the times that offer the greatest advantage.
• Airlines are generally motivated not to stretch out their schedules throughout the day, but rather to concentrate their operations in certain peak periods.
• According to the GAO, "Airlines set their fares in individual markets based on a complex mix of economic and financial factors, but primarily on the supply of and demand for air transportation by passengers with different travel requirements.
• The amount of competition from other airlines supplying similar service is a key factor in determining the price of an airline ticket.
• Markets where competition is limited tend to have higher fares than markets with more competition.
• Many markets to and from airlines’ hubs-- which are usually dominated by those airlines--often have relatively little non-stop competition.
• Some research has shown that fares in those markets tend to be relatively higher than fares in other markets."
• Relatively high airfares are a reflection, in part, of how individual airlines dominate airports and markets.
• Research has shown that routes to and from dominated airports tend to have higher airfares than routes to and from airports that have more competition from other airlines.
• Dominant carriers often have exclusive access to essential facilities at airports, as well as sales and marketing practices, which combine to limit the ability of new entry carriers to enter markets and compete with them."
  

Source:
You Can't Get There From Here: Government Failure in U.S. Transportation n, Clifford Winston, Senior Fellow, Brookings Economic Studies Program

Competitiveness in Transportation n is a vehicle for government to exert its influence on the economy

The DOT has claimed they want more competitveness in the deregulated airlines industry, but the cumulative actions of its own agency, the FAA restricts competition. Here's how:

FAA perimeter rules prohibit long-distance flights to or from Washington's Reagan National and New York's La Guardia airports.

Slot controls limit the number of take-offs and landings per hour at La Guardia, National, Kennedy, and Chicago O'Hare.

FAA defined air routes are an inefficient use of airport and air space capacity

Congestion pricing at airports was defeated by the strong AOPA lobbies who objected to higher landing fees.
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• 33 percent of the daily traffic is congested. In other words, one-third of the daily traffic is moving at less than free flow speeds.
• On average, incident delay comprises 54 percent of the delays
• On average, mobility is not improving. The congested periods are getting longer with more traffic subjected to congested conditions. The time to complete a congested period trip also continues to get longer.
• Major projects or programs require a significant planning and development time-10 years is not an unrealistic time frame to go from an idea to a completed project or to an accepted program.
• At recent growth rates, the urban area average congestion values will jump to the next highest classification-medium areas in 2009 will have congestion problems of large areas in 1999.
• On average, the occupancy of each vehicle would have to rise by 0.04 persons or, in other words, 4 out of every 100 vehicles would have to become a new 2-person carpool to handle one year’s traffic growth.
• The average cost of congestion to the state was $1.1 billion in 1999.
• The average cost per person for congestion was $630 in 1999.
• On average, 55 gallons of fuel are wasted per person per year in stop-and-go traffic or idling at traffic signals.
  

Road Travel Won't Be Replaced Any Time Soon

Source:
Governing Magazine, March 2002 Anthony Downs, Senior Fellow Brookings Institute,
Economic Studies

• In 2000 private autos dwarfed public transit: transit accounted for 46.6 billion transit miles compared to 2.5 trillion in cars, 1.5 trillion in small trucks and SUVs.
• That's 86% greater, averaging 1.26% from 1985 to 2000.
• Even though three agencies reported a 4.8% transit gain in 2000, Downs says transit is at a disadvantage with a 1.5% share in 2000 and total passenger travel on highways rising all the time.
• If transit grows at 5.36% per year, and highway travel gains only 1% per year, transit passenger miles wouldn't catch up until 2036.
  

Can Commercialization or Privatization create a more efficient urban transportation system?

Source:
Government Failure In Urban Transportation n, Clifford Winston, Brookings Institute Senior Fellow, Economic Studies Program

• Evidence based on urban transport in US cities reveals substantial allocative and technical inefficiencies that have led to large public transit deficits and severe highway congestion.
• Current transit losses are large and growing. Only when the burden of financing public deficits and coping with complaints about inefficient and unresponsive service overwhelms the joys of political patronage will there be change.
• More efficient policies such as congestion pricing and weighing costs and benefits when deciding transit services are problematic because urban transportation policy is largely shaped by entrenched political forces that inhibit constructive change.
• The commercialization of roads themselves will open up the competitive forces necessary to eliminate jammed peak travel hours, inefficient use, and poor road conditions.
• Technological advances such as navigational aids guide choices of routes, set travel speeds, and even drive vehicles.
• Society's gain from eliminating transit deficits: private carriers would earn profits that would substantially exceed travelers' losses from highway fares and reduced service.
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• Increase tourism and our national and global market appeal with a permanent state tourist campaign that will grow exponentially, beginning with a smaller base and increasing as every sector of the community joins, e.g. industries, government agencies, environmental agencies, non-profit agencies, tourist industry, public sector, etc.
• Develop sustainable tourism that creates a new economic opportunity for communities by minimizing environmental impacts and contributes to a prolonged life expectancy of destinations and sociocultural heritage.
• Green Minnesota by supporting eco-based products, services and industrial practices as long term objectives for environmental quality and sustainable development.
• Attract corporate interest in building a relationship based program to increase tourism, protect the environment, and invest in value-added products to boost the local economy.
• Build relationships and alliances within the community to promote and sustain its value and attractiveness for generations of future residents and tourists.
• Create interactive tourist Kiosks based at strategic locations including, MSP, Mall of America, Science Museum, Minnesota Landscape Arboretum, Historical Society, Minnesota Zoo, Walker, Weisman, Fort Snelling, Minnesota Museum of Art, etc., featuring special packages including tickets to different venues and transportation for out-of-state tourists.
• Promote and build green tourism, heritage tourism, adventure tourism, resort tourism, farm tourism, golf tourism, forest tourism, thus bolstering the economies of urban, suburban, and rural areas and creating new sectors for economic growth.
• Create an airport theme to match a state-wide campaign supported by interactive kiosk-based centers strategically located: e.g. Minneapolis, St Paul, Duluth, Rochester, etc.
• Promote sustainable practices that benefit the environment through community promotions involving the arts, education, recreation, living choices, transportation and eco-tourism.
• Stimulate collaboration of corporations and non-profit agencies like the MN Soybean Growers Association, Minnesota Rural Partners, Sierra Club, etc. in supporting innovative regional marketing that supports rural development of value added products and services.
• Develop and fund more sustainable modes of transportation throughout the state with smart transportation technologies for better access to tourist attractions and area resorts.
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