So the race is on is it? That's the way the mayor referred to the competition between London and Windsor to start up an air cargo hub. Despite the fact that the Federal Government has just recently earmarked funding of $8 million for London's initiative, Mayor Edgar is persisting to follow his mind's eye dream of a cargo village. So much so that he and Windsor Airport General Manager, Federica Nazzani, winged off to Washington DC to spread the word about YQG; on the tax payer's dime.
"Rather than reducing Windsor's chances of getting similar funding from the same agency, however, Francis said he sees it as "a very positive step" in getting Ottawa to recognize that such efforts are important to regional economic diversification."
Well, of course the Feds recognize that the efforts are important. They wouldn't have provided London with all that loot, otherwise. Instead of reading the writing on the wall, Edgar would rather play entrepreneur while Windsor residents take all the risk.
The federal money to London is meant to level the playing field, according to Edgar.
"Mayor Eddie Francis — who is pursuing an air cargo hub for Windsor — said money given to London was to make up for that airport being shut out during previous federal economic stimulus announcements. "They got $8 million to build a facility and warehouse and that's all we know," he said. "There is no announcement for new business or a business plan they are trying to achieve."
Really? London got $8 million only because they were left out of the trough previously? Is the Federal Government in the habit of handing out millions of dollars without there being a business plan in place? They don't vet proposals and determine the merits on whether to throw some money at it or not? Come on. Don't be ridiculous.
"The Federal Economic Development Agency for Southern Ontario — which provided the $8 million to London's airport — welcomes all applications for funding, said Michael Hammond, spokesman for the agency on Tuesday. "The announcement made yesterday by Minister Gary Goodyear of support for the London International Airport's new cargo terminal does not affect any other applications that it might receive," he said. He would not weigh in when asked if there was enough potential business for all the municipalities trying to cash in on air cargo."
Hamilton's John Munro Airport is the leader in Canada for air cargo operations and, in terms of the cargo business, is where Windsor wants to be in 10 years. It's part of YQG's 25 year "Master Plan". Or is it? In Nazzani's own words, there is some question if Edgar's baby is even included.
"If air cargo is what we want, if we want to diversify, we want to pursue air cargo, then we need to make sure that when we do our master plan, we have accommodated for development of air cargo."
Is there even a master plan in place? Does it include a cargo village? Or is Edgar just winging it?
The Hamilton venture is home to Canada's largest dedicated freighter, Cargojet. It also doesn't hurt that Hamilton is positioned in the midst of one of North America's largest economic regions. With easy access to an established network of highways, a port facility on the Seaway side of the Welland Canal, and only an hour from the financial heart of Canada, there's no question why it's called the Golden Horseshoe.
But it's not just the well-known competition from Hamilton that Windsor has to worry about. Toledo Express Airport is the home base for BAX Global, an international freighter. While Nazzani talks about having US Customs pre-clearance at YQG (not a likely scenario), Toledo currently has plans to add a US Customs facility on site to allow for faster clearance of goods arriving at the airport.
I ask you; Why would you fly into Windsor and then have to deal with the border when you have a choice to fly into two Detroit airports (City or Metro), Willow Run, or Toledo?
So, with Hamilton and Toledo already established in the air cargo industry, and London receiving funding from the Federal Government, just how much business is left to distribute to Windsor? Munro's CEO, Richard Koroscil, is doubtful that Windsor would profit.
"It depends how many (cargo planes) may stop here in the Ontario market," said Richard Koroscil, a University of Windsor business graduate. "They will face some challenges. For moving cargo there has to be a market, or why go somewhere?"
London's advantage over Windsor is the fact that, in addition to having three border crossing options, both of Canada's rail operators (CN and CP) run within the vicinity of the city while only Canadian Pacific passes through Windsor.
Detroit also works to the disadvantage of Windsor.
"Koroscil said. "Windsor is right next to Detroit, but the challenge is there are very large airports in Detroit."
The large shadow cast by Detroit was never more evident than during the Major League Baseball and the current National Hockey League seasons.
"The Blue Jays begin a four-game series in Detroit on Friday and had intended to fly to Windsor, Ontario, before crossing the border by bus. "Logistically, it's a little easier for us," traveling secretary Mike Shaw said. "We have no issue flying to Detroit, we just thought it would be a little easier flying to Windsor."
As we know much of the air cargo moved in Canada is flown on passenger flights. Other than Air Canada's Jazz airline, Windsor doesn't have a regular in-bound charter. Miami Air International is the charter service of choice for the Toronto Blue Jays, however they've been grounded because of new rules in place in the US, and recently adopted in Canada.
"Under new rules that came into effect in the United States last month and were quickly copied in Canada, charter carriers are no longer permitted to make domestic flights in foreign countries, meaning Toronto's plans to fly with Miami Air to Windsor were denied by Transport Canada."
Foreign carriers are not allowed to "inter-state", that is, to make stops within domestic air space. To do so could possibly take paying customers away from Canadian airlines making them less viable. It's long been a rule in the trucking industry and is now being adopted by both countries for air carriers.
As a result, the NHL ordered Miami Air to cancel 60 flights into Canada at the beginning of the hockey season. That's just how fast things can change in the air business. Models based on projections (often years in advance) can become null and void at the stroke of a pen.
Who will be the beneficiaries of a half million dollars of consultant's reports that Windsor is proposing? Again, according to Nazzani, it could be for interests other than the City of Windsor.
"There are a lot of people in this community that may want to pursue this opportunity themselves, so they may see an opportunity here that they want to pursue or know somebody who does," said Nazzani."
Just who are these people and why does the city (read taxpayer) have to shell out $500,000 to a German consultant just so that these people can profit? This is nothing other than more entrepreneurial spirit on the backs of the residents of Windsor. Let's spend a half million bucks when even the consultant who produced the feasibility report isn't 100% behind the project.
Councilor Halberstadt has an interesting way of looking at things.
"Mayor Francis, a young man in a hurry, is seemingly in awe of Lufthansa's station in the world. It is almost as if Windsor taxpayers should be grateful that Lufthansa has agreed to take our money to do business with us."
He goes on to say,
"Buyer Beware," should be the rule of thumb on Lufthansa's recommendation to proceed to Phase 2 of the feasibility study. The second phase will be executed by the same consultant, at an escalated cost of $310,000. Since Lufthansa was sole-sourced as the consultant (a purchasing policy waiver which I opposed), it is hard to beat off accusations of biased analysis."
But even the Lufthansa consultant doesn't exactly warm to Windsor Airport's potential.
"It certainly doesn't have the highest potential like other airports we examined in Asia, for example. On the potential side, I would say it's somewhere in the mid-field," said Thilo Schmid, Executive Vice President and Partner of Lufthansa Consulting GmbH."
Schmid continues by saying that there is more to the overall feasibility than just the cargo hub. There has to be an overall master plan of which the hub would just be a part. But there isn't a master plan, is there Federica?
"If there is a decision for a second phase, it also has to go hand in hand with the overall master plan of the airport. I don't think it makes sense to just create a cargo facility, it has to be part of an overall concept and then cargo will play one major role within the concept," said Schmid."
Now what we have is an airport with middling potential for a cargo facility, and only if that facility is part of a larger development. Just what is the plan? What other features are being placed within the airport grounds and why haven't we heard yet what they are? This is the modus operandi we have come to expect from Edgar; provide only the details that he wants floating about and keep the rest closely hidden, at least as far as the public is concerned. We've seen that with his friend, Schmuel Farhi, and the tax free provisions of the arena land swap, which only came out years after the deal was done.
We also saw the same M.O. with the downtown canal plot when council was kept in the dark while members of the Federal Government, and even the Windsor Star, had access to the plans. A major leak of information as far as I'm concerned. "Does your arrogance know no bounds," indeed.
Edgar's hand-picked General Manager of YQG is unyielding on the point that air cargo is the way to go.
"Nobody expects that we'll be in this economic slump for that much longer, so we hope that by the time we put all our ducks in a row, the market will have turned and the opportunity will exist."
OK. How about if the recovery does come?
"Even in good times, the industry is overcrowded, said Nils Haupt, spokesman for none other than Lufthansa Air Cargo, as quoted in the March 17th Windsor Star. "Actually the air cargo market already sees a lot of overcapacity – not only in the crisis. Adding capacity now might be difficult."
Ain't that just a kick in the pants? For Edgar.