Burrell Aviation, a new venture offering cash-strapped secondary airports a unique model of private-sector financing and operational capabilities to spur development of cargo and other non-passenger infrastructure, has hired a former sales chief at Southwest Airlines Cargo to attract airfreight subtenants.
It’s even considering starting an express regional airline to round out a comprehensive airport service bundle aimed at enticing logistics companies.
The investment group appointed Dave Hinderland, who spent nearly 20 years in cargo sales at Southwest Airlines, as chief commercial officer, executives told FreightWaves. He was director of cargo marketing and business development when he departed Southwest in 2008. His job is to attract cargo airlines, express delivery carriers and freight forwarding companies that will bring the business necessary to make Burrell’s infrastructure projects viable.
Burrell Aviation is part of The Burrell Group, a family-owned conglomerate of businesses in healthcare technology, medical education, mental health, commercial and residential real estate and mining based in Aspen, Colorado. The company is laying the groundwork to soon begin work on several infrastructure projects at airports around the country, with a focus on capturing spillover freight at overcrowded hub airports like Atlanta and Chicago.
Twenty-two airports have signed master ground leases with Burrell Aviation to invest, build and operate cargo, maintenance and repair, logistics, aerospace and defense and corporate jet facilities. Management has indicated it plans to grow the portfolio to 35 or 40 locations. The sponsor has also assembled a team of partners to execute its plan, including: Architecture design firm Perez & Perez; Lemartec, a large construction firm owned by multinational engineering firm MasTec; real estate services firm Cushman Wakefield to market airport sites to non-cargo businesses; and Alliance Ground International, a ground handling agent that provides aircraft support and cargo transfer.
The strategy is to lock up development opportunities and provide turnkey projects at airports that are beginning to attract attention as air cargo alternatives but don’t have the experience or resources to fund or manage cargo facilities.
“What’s needed now is somebody that’s been in the industry who has relationships with the freight forwarders and the air cargo airlines, and understands the point-to-point connectivity of airlines to airports, and how to get them to take a look at our airports,” Burrell Aviation CEO John Carver said of Hinderland. “It’s not enough to just go to an airline and say, ‘Hey, we’ve got a land position in Lincoln, Nebraska, we can get you a building. You really have to build the business case for how they can become more profitable by doing that.”
Since leaving Southwest, Hinterland has been a consultant and formed his own company providing advisory services for airlines, airports and related interests. He also spent 2021 as global procurement director for DHL Same Day, an expedited transportation division within DHL Global Forwarding, responsible for negotiating and managing contracts for express and pharmaceutical service with commercial airlines and ground delivery suppliers.
“We have to sort of create the deliverable that includes showing them what a building can look like, when it can be built. And if there’s an operational component, showing them what the rates can be for them to operate and anticipate the logistical questions that are going to come up,” Carver said in an interview.
Burrell Aviation plans to officially introduce Hinderland as its chief commercial officer next week at AirCargo 2023, an industry conference where representatives from the freight forwarding, motor carrier and airport sectors will convene in Nashville, Tennessee.
Secondary airports attract attention
With congestion worsening at traditional cargo gateways such as Chicago, Atlanta and JFK in New York, and e-commerce expected to double worldwide by 2025, many all-cargo carriers and logistics companies are looking for alternative airports with capacity and land-side access to quickly turn shipments. Freight forwarders frequently have to wait several days for airport warehouses to process their import shipments and their motor carrier partners can spend hours in queue to get to the dock door.
More freight forwarders are controlling their own charter aircraft through long-term leases to guarantee capacity and ensure reliable service, essentially functioning as quasi-airlines, instead of sharing space on passenger or freighter jets. They are able to dictate which airports their carriers use and increasingly are looking for non-metro locations that offer flexibility, custom service and lower fees.
Greenville-Spartanburg International Airport in South Carolina, for example, handled 30 to 40 freighters a week during the pandemic, with traffic settling now to about 15 scheduled cargo jets plus ad hoc arrivals, said GSP Chief Operating Officer Kevin Howell. GSP is not involved with Burrell Aviation.
Hinderland said freight intermediaries and express parcel carriers are increasingly establishing operations in secondary markets to support next-day and second-day e-commerce deliveries that require air connections. And if international forwarders can bypass the spider web of delays at big airports, they can compete better with integrated carriers like FedEx and UPS, he explained.
Logistics companies have more customers in Colorado Springs, Colorado,for example, because it is growing and has a large military base. They could benefit with direct airport access instead of having to truck shipments from Denver or other cities, said Hinderland.
Major airports in cities are land-constrained and can’t expand to accommodate rising cargo demand. Air cargo traffic spiked 8% during the pandemic compared to 2019 levels. It has declined for the past 10 months, but appears to be settling at a higher baseline than before and is forecast by Boeing and others to continue growing at 4% per year. Many logistics professionals expect international trade to strongly rebound in 2024 or 2025, increasing pressure on the hubs and the need for relief valves like the ones Burrell Aviation is courting.
Carver said the company has $300 million worth of cargo, cold storage and aircraft maintenance projects actively advancing through the planning stage at three or four airports.
Burrell Aviation is even exploring the possibility of starting its own airport feeder airline to provide extra value to freight forwarders.
“We’re looking at the synergies between having our presence on the bricks-and-mortar side and the ability to provide that transportation component,” said Carver.
Feeder airline service
Hinderland has spent the past few years conceptualizing a business plan for a low-cost, same-day airline dedicated to transporting e-commerce cargo for logistics, and e-commerce supply chain companies. The startup, called LibertyJet Cargo Airlines, would serve 19 U.S. markets with 10 Boeing 737-800 converted freighters. It secured $70 million in revenue guarantees from interested freight forwarders, according to his resume.
The airline is envisioned to fill in the gap between markets and help forwarders looking for faster nationwide distribution from large gateway airports.
Burrell could provide the capital to make it a reality. Its website mentions a scheduled private air cargo service as a secondary extension of the core infrastructure strategy.
“It’s almost a Southwest-style operation on the cargo side” with point-to-point service, Hinterland said. “We’re just kicking the tires.”
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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