Saturday, July 27, 2013

Experts question company's plan to build cargo planes; MidAmerica director touts developers' track record

While some aviation industry experts are pessimistic about a plan to produce a newly designed freight aircraft at a business park near MidAmerica St. Louis Airport, the airport's director says those behind the proposal have a track record of success.

The plan calls for Covenant Aerospace Inc. to build a business park about 253 acres currently owned by St. Clair County. The park would be located south of Interstate 64 along Illinois 4 in Mascoutah.

The park would be centered around the production of a regional freight aircraft and create about 2,180 jobs, according to the Covenant's website.

The owners of Covenant and St. Clair County Board Chairman Mark Kern could not be reached for comment.

Richard Aboulafia, a vice president of analysis with the Teal Group Corporation in Fairfax, Va., advises numerous aerospace companies and analyzes broad aviation trends.

Aboulafia said he's seen many such plans in the past and successfully guessed the proposed plane to be produced was a twin-engine turboprop freighter. While he wished the company well, Aboulafia said he didn't count on the plans coming to fruition.

"There have been so many approaches over the years and none of them have actually succeeded," Aboulafia said. "The idea of creating the perfect small-medium cargo lifter has been around for years and never did gain much traction."

MidAmerica Director Tim Cantwell said members of Covenant Aerospace have proven their ability to certify new aircraft.

"I was a consultant in the business jet community before I became the airport director. There are members in that community who have been trying to produce a business jet for 12 years," Cantwell said. "Some of those members are proven engineers who have certified three or four airplanes and gone through that process. I met some of those engineers in initial discussions with Covenant Aerospace. They have already gone through that process. It's not easy, it's not a given, but there are resources inside Covenant Aerospace that have the ability and proven their ability before."

Mike Boyd, president of Boyd Group International in Evergreen, Colo., had one piece of advice for taxpayers regarding the proposal -- "run for cover." The Boyd Group provides aviation related consulting to legislators and industry organizations.

"This is another Hail Mary pass," Boyd said, noting MidAmerica's previous proposals to ship carp, flowers and seeds. "You wish people the best and want entrepreneurs to do great things, but MidAmerica has had so many fruitcake ideas the last 10 years. If I was this guy, I'd go somewhere else. MidAmerica is not an opportunity for anybody except consultants to make money."

Why the pessimism?

The problem is twofold, according to Aboulafia.

"First, converted existing aircraft are just much cheaper. People aren't willing to pay a premium for optimum design," he said. "The second reason is a niche aircraft producer just doesn't have much of a chance. Perhaps a company like Boeing could, but since 1960 exactly one niche company has succeeded." He was referring to Embraer in Brazil.

Boyd said regional cargo aircraft is not an efficient way to ship freight unless the goods are time-sensitive. Trucks shipping up to 600 miles make more sense economically.

Covenant's website states: "The industry demand for a purpose built, truck-like aircraft has been created by an aging fleet of inefficient regional aircraft originally designed to transport passengers, not cargo. Currently, there are no regional twin-engine turboprop aircraft in the world that can satisfy the industry demand to carry containers and pallets cost effectively."

St. Clair County Board member Mike Baker, a Democrat of Mascoutah, represents the district that would host the site of the proposed business park. Baker said the proposal was a neat concept but cautioned it was too premature to say whether it would get off the ground.

The proposed site of the business park would be better suited for high volume retail than manufacturing because of its proximity to the major thoroughfares of Interstate 64 and Illinois 4, Baker said. He noted retail and commercial businesses have already developed just north of intersection.

"I think the best use for property up and around the airport would be on the commercial and retail side, then towards the back part of county-owned land put the manufacturing aspect centered around the airport," Baker said. For example, Baker suggested the proposed business park would be built behind retail businesses lining Illinois 4.

Boyd said his company was hired as a consultant prior to MidAmerica's construction and advised the state to delay construction until customer demand increased.

"There is no credibility left with MidAmerica. It was built with bad data to start with," Boyd said. "We worked for the state of Illinois and told them not to turn a spade of earth until they got customers lined up. It was a solution looking for a problem, and they haven't found the problem yet."

Baker said he was confident about MidAmerica's future.

"I believe MidAmerica is one of the greatest assets that the county has, and also Mascoutah," Baker said. "What I see happening at MidAmerica is the expansion of cargo flights, which looks like it's going to happen. And hopefully, Allegiant (Airlines) will pick up more routes. If that happens, it sure would be nice to see a route from here to Chicago to eliminate wait times for downtown business people using Lambert (St. Louis International Airport)."

Who is Covenant Aerospace?

Covenant Aerospace appears to be a reincarnation of SkyTitan International with the same owners and listed phone numbers. SkyTitan sought tax incentives from the state of Illinois in 2011 and lists its address as MidAmerica St. Louis Airport, according to the company's website.

The website domain for Covenant is registered under Freight Feeder Corporation. Freight Feeder President David Bridges is also a member of the board of SkyTitan and listed in the telephone directory of Covenant Aerospace.

Bridges and other members of the three companies could not be reached for comment.

Freight Feeder purchased the plans and patents for the aircraft proposed to be built at MidAmerica in 2007 from a start up company called Utilicraft Aerospace Industries Inc. in Albuquerque, N.M. The sale intended to infuse money into developing Utilicraft's existing products.

An airplane currently being designed would take at least five years to come into production, Boyd said.

"Crazy stuff like this is what builds America, but to say this is going to be something at MidAmerica -- this is going to take years," Boyd said.

Covenant's aircraft will take four years to develop and certify and another year to increase deliveries to four per month to achieve profitability, according to the Covenant's website.

Other metro-east aviation companies see success

While industry experts are pessimistic about the regional cargo market, other local companies serving different markets in the aviation industry have seen success.

Jet Aviation St. Louis, formerly MidCoast Aviation, employs about 850 people at St. Louis Downtown Airport in Cahokia. The company provides a host of services for aircraft and their crews, and has nine hangars capable of hosting up to 70 aircraft.

"Things are going very well," company spokesman Charlie Bosworth said. "As the economy picks up so does our business."

The company was just named the only certified service center for Embraer Lineage business jet in the nation. The announcement follows Jet Aviation's construction of a new hangar constructed specifically for such larger airframes.

"We have amazing capabilities," Bosworth said. "I've only been here a couple months and the first time I was exposed to the facility there is such an 'Oh, wow' factor. Most people don't realize what we do here."

The Boeing Co.'s subassembly plant at MidAmerica airport is completing construction of a 700-square-foot mezzanine within the plant to accommodate more workers. The plant produces equipment for the F/A-18 Hornet fighter jet, CH-47 Chinook helicopter, and C-17 Globemaster III military transport aircraft.

The additional office space will allow the company to grow from about 90 workers to 110 employees by August. Boeing representatives have said the company's site at MidAmerica is the most profitable of all the company's locations.

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