Global Gateway: Lack of Foreign Flights May Be Thwarting Economic Development in the Triangle
(Triangle Business Journal – January 9, 2015) (pdf)
When Mercedes-Benz announced on Jan. 6 that it will be moving its U.S. headquarters operation from Montvale, New Jersey, to the Atlanta area, much was made of Georgia's robust incentives package for the German luxury carmaker.
What was not mentioned in detail was the automaker's wish to relocate to an area known for its global prowess.
While the Research Triangle Park area was on the short list of potential sites for Mercedes' latest HQ project, local economic development officials knew all along, such a high-profile international project simply was a long shot. Why?
Much has to do with the Triangle's lack of providing direct international air service from Raleigh-Durham International Airport.
John Boyd, a New Jersey-based site selection consultant says Atlanta won the Mercedes project primarily because of direct access to European cities from Hartsfield-Jackson International Airport.
The Raleigh-Durham area may make national lists as being a great place to work, live and play, but there is a reason why the area falls near the bottom when it comes to attracting large corporate headquarters. Often, on top of a company's list is access to international markets.
Now, RDU officials, along with a few local business groups, want to change the narrative. And local executives have started with a pitch to air carriers for a direct service to Frankfurt, Germany; or Paris, France.
It really is a chicken-and-egg interdependence: RDU is under pressure to secure new trans-Atlantic flights to enable those global connections, but airlines are hesitant to launch new flights without a clear, in-place demand that will guarantee minimum passenger levels.
Air carriers, having moved beyond the trauma of the Great Recession, are directing revenue back into assets at the rate of a whopping $1 billion per month, according to industry trade organization Airlines for America, which says the reinvestment is translating into "additional air-service options," among other perks such as additional seating on aircraft.
In the Triangle, that expansion could include a new trans-Atlantic flight to Europe, which is why RDU's Teresa Damiano is leading the conversation with interested air carriers. With more than 15,000 annual passengers leaving RDU for Paris each year, and around 10,000 for Frankfurt, these two destinations are among the top 10 existing international destinations from the airport.
"It's not a secret that Delta has been looking at Paris off and on over the last several years," Damiano says. "We've talked to Lufthansa for many years as well. Each of those carriers is interested in RDU, and it looks as if there is sufficient volume for either flight. Now it's up to the community."
"We have a growing customer base," says RDU President and CEO Michael Landguth. "We have 1.5 million passengers on an annual basis traveling internationally, and a 29 percent increase in overall international passengers."
Corporate support
Members of the business community have come together to demonstrate willingness to support a new nonstop international flight, both in pledging to secure seats and in monetary contributions to solicit airlines.
Under the umbrella of the Regional Transportation Alliance, businesses have pledged an aggregate of $234,000; $66,000 in cash pledges and $168,000 worth of in-kind commitments, such as marketing support. Participating companies include Cisco Systems, Duke Energy, Duke University, First Citizens Bank, Forge Communications, IBM, Quintiles, Red Hat, Wells Fargo, UNC/Rex and several area chambers of commerce.
The RTA has created the Air Service Advancement Project (ASAP), which is a three-year $500,000 commitment toward marketing international air service, meant to "mobilize, highlight and focus business support for the recruitment and promotion of nonstop service to international gateways."
While the airport initially expressed interest in having nonstop destination flights to Europe, the business community is examining the possibilities of how a new flight can expand access to various markets – more than 40, according to Walden's research – in Europe, the Middle East and especially Asia.
"It's less about those cities as destinations; we are looking at those for gateways, for example, better connectivity to India," says Landguth. "That's a country with 55 million citizens in its middle class. By 2025, we are looking at 550 million citizens. It's a major consumer market. It's not just about Frankfurt or Paris. It's about those hubs that allow us to flow to major geographical markets."
According to Joe Milazzo, executive director of the RTA, the companies that are pledging don't have a preference as to which hub gets a new flight. He says local companies are interested in growing global reach, attracting new talent and increasing the headcounts of foreign students at local universities who may be the next generation of their workforces.