Monday, June 26, 2017

Puerto Rico Air Cargo Industry Could Take Off

By on June 17, 2017

Think about the possibilities. If Puerto Rico were included in a two-paragraph amendment to the 2003 Century of Aviation Reauthorization Act, its airports would be able to tap into cargo-growth opportunities and become a major cargo hub in the Caribbean and Latin American region.

Puerto Rico virtually sits on a gold mine but can barely do anything to extract its benefits. Until 2004, it was illegal in the United States for foreign carriers to exchange cargo among their own fleet or to transfer cargo among different carriers while on U.S. soil because those rights are preserved for U.S.-flagged carriers. However, that year an amendment sponsored by then-Sen. Ted Stevens (R-Alaska) allowed cargo transfers in Hawaii and Alaska.

(File Photo)

Efforts that began last year to have Puerto Rico exempted from air cabotage regulations have all but failed. Congress has ignored pleas made last year by different groups to a congressional task force in charge of developing economic-growth initiatives for this exemption. A Puerto Rico House resolution that would order the Ports Authority to begin lobbying efforts to have the island exempted from air cabotage laws has been in limbo since February.

While the exemption must be renewed every two years, it is understood that it will not be vacated for the foreseeable future.

According to news reports, the airport in Anchorage, Alaska was the fifth-busiest cargo airport in the world over the past year, according to Airports Council International, with nearly 2.5 million metric tons of freight landing at the airport. The airport charges thousands of dollars in landing fees that have brought millions to the economy because it receives flights from China and other Asian countries.

Jerónimo Lectora, of Jerónimo Lectora & Associates, noted in December in a statement to Congress that Puerto Rico shares important similarities with Alaska regarding the air cargo industry, which justifies the application of the Stevens amendment to Puerto Rico.

“Both [locations] are geographically isolated from the mainland [U.S.]; therefore, both are heavily dependent on air transportation. Both have an important strategic location that is ideal for an international air cargo hub. But, prior to 2004, Alaska could not fully utilize its geographic location to its advantage because most cargo flights were overflying the state, which is what is happening right now in Puerto Rico,” he said.

Except for pharmaceutical shipments, the island does not produce significant amounts of air cargo. Consequently, Puerto Rico does not attract enough international flights to help develop the island as an international cargo hub, he said.

While modern planes can fly farther without stops to refuel, cargo planes have to achieve a balance between carrying more fuel to fly farther with less cargo or carrying less fuel to fly shorter distances with more cargo.

Therefore, it is important for a cargo plane to have a site strategically located to refuel and carry more revenue-producing cargo, he said.

Right now, Puerto Rico confronts competition from airports in Colombia and the Dominican Republic that attract more international flights in the region. He said the air cargo industry benefits both nations’ tourism industries. The Stevens amendment leveled the playing field for Alaska against competing airports, making that state more attractive to domestic and foreign air cargo carriers for refueling and transfers, he said in a statement to Congress.

Tom Vicent, vice president of Prime Air Corp., said during an activity at the P.R. Manufacturers Association (PRMA) Convention that a cargo plane going from Germany to Brazil could stop in Puerto Rico to refuel as well as exchange cargo. “This is a golden opportunity for Puerto Rico,” he said.

While members of the PRMA believe it would be difficult for the U.S. House resolution to yield any results, they put their faith in private-sector lobbyists and P.R. Resident Commissioner Jenniffer González to include the island in the Stevens amendment.

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