"The Aerotropolis: Home Is Where The Airport Is"

Monday, August 20, 2007

Home Is Where The Airport Is 
An "aerotropolis" has formed around the runways of Dallas/Fort Worth as
executives see the benefits of life near a hub 
BusinessWeek


A few years ago, a professor at the University of North Carolina at Chapel
Hill, John D. Kasarda, began to write and lecture about something called the
aerotropolis. An airport city, complete with residences, entertainment, and
offices, it reflected the idea that populations would cluster around this
century's key transportation hub, as they once did on the banks of shipping
ports (New York) and at railroad crossings (Atlanta). In this world, the
airport becomes the nexus of a new kind of community, but also of a new kind
of work. Knowledge workers hop "nerd birds," as direct flights between
technology centers are dubbed, laptop in hand. Executives exhausted from
frequent flying plop down $1 million-plus to live in a house 10 minutes from
the runway. Global headquarters of all sorts of businesses set up shop down
the road, their staff of road warriors ready for battle at a moment's
notice. 

If it sounds futuristic, let us welcome you to Dallas/Fort Worth airport.
Larger than the island of Manhattan, with 60 million passengers per year,
DFW is one of the busiest airports in the world. But of its $619 million in
annual revenue, the majority, 65%, comes from sources other than airlines.
Land leases, commercial development, two upscale hotels, natural gas rigs,
and even a pair of 18-hole golf courses are among the ways DFW earns money
from its 18,000 acres.

A DFW-fueled boom extends well beyond the airport borders. This chunk of
north Texas, largely agricultural when the cities of Dallas and Fort Worth
decided to build a common airport 30 years ago, is now the fastest-growing
area in the state. The headquarters of 24 of the country's largest companies
are located in the "DFW Metroplex" area, a region including both cities.
Bedroom communities like Southlake and Colleyville, each 10 minutes from the
airport, were mere hamlets when DFW opened its gates in 1974. Today, they
are enclaves for corporate transfers and their families, with prices for
palatial homes easily reaching into the millions. "The airport is really
responsible for the creation of this whole area," says Cindy Ruppert, a
Realtor at Ebby Halliday Realtors in Southlake. In all, the airport pumps
more than $14 billion each year into the local economy.

Smart planning by airport authorities set the stage, but a broad shift in
how we work and compete fuels the airport's torrid growth. Knowledge
workers-consultants, IT experts, accountants, top management-all travel more
and travel farther. Speed and global reach are the way many competitors try
to distinguish themselves today. That has made airports more integral than
ever to the business models of a host of service and manufacturing
industries. The highest-value products-2% of world trade by weight but 40%
by value-move by air. Kasarda predicts that global air cargo traffic will
triple over the next 20 years, and that commercial passenger travel will
increase from 4.4 billion trips in 2006 to 8.2 billion by 2020. "The
airplane is the physical Internet," he says. "It enables the real
connectivity. We're talking about what enables the world to be flat."

The fact that virtual connections still need to be balanced with
face-to-face contact places the airport squarely in the path of modern
urbanism. Consider the experience of Sage Software Inc., a $1 billion
company which sells software to help businesses run better. It has 30
locations throughout the U.S., the result of a nine-year acquisition spree,
but no headquarters. So its eight-member executive team, scattered from
Tampa, Fla., to Irvine, Calif., fly once a month to Dallas. There they check
into the Grand Hyatt DFW in terminal D for two days of meetings. Everyone
can get there for a 1 p.m. start, work until 6 p.m., get dinner together,
and then work all day the next day until 5 p.m., when they run for the next
flight home. It's a schedule that has forced managers to be more productive
and focused on the key issues for the business. It also helps them hold on
to good people. Companies making an acquisition traditionally consolidate
operations, and then see much of their new talent leave rather than
relocate. In contrast, Sage CEO Ron Verni, who's based out of a home office
in Atlanta, leaves his new colleagues where they are. That's kept retention
high in the more than 20 deals he's inked in the past four years. "Business
is no longer about location, it's about talent," he says. "If you want the
right people, you have to be flexible."

In such a high-travel business environment, proximity to the airport has
become a good thing, turning on its head traditional biases against the
noise, pollution, and traffic airports produce. In Southlake, the retail
corridor is under the noisiest flight path, with homes built under the
quieter landing routes. That's where Ronald E. Peddicord, senior
vice-president for development at Oxford Properties Group Inc., and his
wife, Jill, an executive coach with Adam Taylor LTD, settled last August
when they decided to move their family back to the U.S. from Toronto. The
couple searched by school district, climate, and value for their housing
dollar. But they also spent time scouring each neighborhood's distance to
the nearest airport, that airport's on-time statistics, its number of direct
flights, and where they landed. Cincinnati, Atlanta, and Charlotte, N.C.,
were all in the running, but DFW won out.

One reason for their big interest in the airport: Peddicord still works in
Canada. On Thursdays at 3:35 he hops American Airlines (AMR ) flight 1203
out of Toronto, arriving at 6, just in time to coach his son's basketball
team. Sunday afternoons, when his kids are burrowing into their homework,
he's back at DFW boarding the last plane to Toronto, about to spend four
nights in a rented condo. Peddicord knows by sight a core group of 10 to 15
people making the same trip every week. "You would think that the fact that
I live in Dallas and work in Toronto would be big cocktail conversation,"
says Peddicord. "In Dallas, not so much. One dad on my son's team works for
a company based in Massachusetts and spends most of his week in France. It's
not normal, but it's not weird anymore." That's thanks to his "CrackBerry,"
call forwarding to his cell phone, and a USB flash drive he unplugs to take
work between offices. The first thing he does when he gets a new BlackBerry:
remove the "Sent from my BlackBerry" message on the bottom. "I want my staff
thinking I'm upstairs on my Outlook," he laughs.

Aerotropolitans argue that their travel-intensive schedules make them better
business people. "I do my best thinking on an airplane," says Jim Tam, a
regional vice-president at Kastle Systems Inc., a manufacturer of building
security devices. Tam, who also lives in Southlake, spends three days a week
in Houston and the other two in Dallas, commuting between the two via
Southwest Airlines (LUV ), out of Dallas Love Field. He also flies to New
York and California frequently from DFW. For years, Tam commuted by bus and
subway from Ft. Lee, N.J., to Manhattan, where he worked for Citigroup (C ).
Straphanging allowed for little more than reviewing e-mails. But the flights
he takes now provide hours of dedicated time to think or do reading he can't
get to during the week.

Setting up shop near a well-run airport has become a key consideration for
relocating companies as well. Engineering giant Fluor Corp. (FLR ) had deep
roots in Southern California, but two years ago the company decided to move
its top 200 executives closer to East Coast customers such as the U.S.
government in Washington. They considered D.C. and other cities but ended up
on Las Colinas Blvd., just east of DFW. Executives, who take 4 to 10 trips
per month, can get to the airport in 10 minutes. Once there, they can fly
nonstop around the world, including direct flights to Latin America, Asia,
and Europe. California and Washington can be done in a day trip.

John L. Hopkins, head of the Fluor Government Group, spends 80% of his time
on the road, much of it lately in Britain and Russia. With almost all of
Fluor's contracts coming from repeat customers, he argues, senior management
has to be on-site a lot.

Many U.S. airports don't have nearly as much free land and couldn't imagine
the scale of development at Dallas/Fort Worth. Around the world, however,
the idea of the aerotropolis seems to be on the ascent. At Amsterdam's
Schiphol Airport, behind passport control, you can find a branch of the
Rijksmuseum Amsterdam, which makes it the first airport with a museum in its
terminal. Frankfurt Airport offers shopping in the baggage area, and 28
conference rooms complete with translators, laptops, and catering. (Spaetzle
and Chinese prawns with salsa dip are on the menu.) Asia has embraced the
concept most forcefully, building from scratch airport cities in Bangkok,
Kuala Lumpur, Seoul, Beijing, and elsewhere. Singapore Changi International
has cinemas, saunas, and even a swimming pool. "Everything that used to be
in the downtown is now there," marvels Kasarda. Including the business
people.

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