A commodity is an object, a food product, or a raw material that is bought and sold on the open market. Commodities have value — a value that shifts constantly as a result of the vagaries of supply and demand.
If there’s a hard freeze in Florida, orange juice prices rise. If OPEC floods the market with oil, gasoline prices fall.All sorts of things are listed on the world exchanges as commodities.
Stocks are also remarkably common investment vehicles. You probably own some yourself.
Whether commodities, or stocks, ETFs, or mutual funds, brokers, traders, buyers, and sellers track them all with a steely eye, looking for every advantage they can find. Palm oil, wheat, wool, Cobalt, and even good old everyday sugar are all included on the commodities exchange.
Shares of computer makers, automobiles manufacturers, ship builders, and even Bowie Bonds (a bond tied to the performance of David Bowie’s royalties), can be had on the open market for those who have the guts, the insight, and the bucks.
Welcome to capitalism, perhaps the most powerful tool for the advancement of human kind ever.
Can you imagine how things might be different if instead of being municipally owned as they commonly are, airports were bought and sold as commodities or shares of stock?
Most of us don’t buy a few metric tons of copper to keep around the house as a hedge against inflation. But more people than you might think have precious metals included in their investment portfolios, or a few shares of General Motors, or a mutual fund that’s well balanced with a wide assortment of investment products.
What if you could buy shares in the local airport? What if you could buy shares in any airport, anywhere, based on your impression of its true value?
Wow, what a game changer that could be.
At the top of the heap would be the blue chips: LAX, JFK, ORD, and MIA. Folks like Warren Buffett, George Soros, Peter Lynch and their peer group would snap those shares up in a New York minute, certainly.
The heart and soul of international business flows through those ports on a daily basis. Putting a few dollars to work on their behalf only makes good sense, and so plenty of well-to-do investors, as well as a fair number of smaller investors who wish they were well-to-do, would be redirecting dollars into those investments, quickly.
It’s ironic to think of it as an opportunity to get in on the ground floor of this new investment vehicle, considering the tangible vehicles at the facilities in question spend as little time as possible on the ground, being far more profitable when they’re airborne.
Of course a big basket of blue chips does not a well rounded portfolio make. There are myriad investment opportunities across the nation, and the globe.
Smaller airports, lesser known facilities that serve a critical function to the system overall, and out of the way runways that are of real value to a select group of users, are all out there for your consideration.
A good argument could be made for Louisville, Kentucky, where UPS established its first major hub. Or Memphis, Tennessee, where FedEx put down roots.
Trying to manage and grow a global economy without overnight shipping services would be a tough nut to crack in this day and age. I’d sure consider shifting a few dollars to those investments.
I may not be a highly educated economist with plaques on my wall and awards on my shelves, but I know the value of shipping a product from here to there as quickly as possible. That being the case, if Apple stock is worth anything, Louisville and Memphis airports would be high up on my list of investments to buy.
There are even small, out of the way destinations that deserve a look, too. I was in Simsbury, Connecticut, last week and wandered into the FBO at the small, privately owned airport in that New England town.
Nestled in between shade tobacco fields and a good sized graveyard (now there is some true irony for you), Simsbury (4B9) is a diminutive non-towered field with only 2,200 feet of runway to work with, a smattering of hangars, and Bradley International’s Class C airspace hanging directly overhead.
Yet, it’s a successful field that serves an important purpose in the big scheme of things. The torn T-shirts hanging on the wall of the flight school attest to its contribution. The flight instructor diligently working the phone, checking his schedule, and motivating his students suggests the number of post-solo T-shirts will continue to grow in the coming months.
Maybe there should be an IPO (initial public offering) in the works.
Young men and women come to Simsbury Airport and thousands of similarly small fields that boast none of the bells and whistles the bigger facilities brag about. But how many of those jet jocks sitting at the controls of a turbine-powered beast launching from Bradley International’s 9,500-foot runway got their start at a place just like Simsbury? I’m willing to bet it’s a fair number of them.
It’s a slam-dunk guarantee that more than a few of those high rollers come back to places like Simsbury to have some low-power, propeller-driven aeronautical fun in between their work-related travels. It’s sure a lot more enjoyable to take your significant other or your kids up for a sight-seeing tour in a C-172 or a PA-28 than it is to book them into a short hop from Bradley to Boston and back on an airliner.
Who wants to look at the fall foliage from 7,000 feet, anyway?
With all that in mind, I wonder what the future of aviation, and historically rich destinations like Santa Monica (KSMO), might be if tens of millions of investors began to look at them as long-term economic opportunities, rather than as the albatross around the neck so many local politicians seem to mistake them for.
I wonder.
Interesting perspective Jamie. And certainly around the world there has been some limited movement in the direction you discuss. For example, Amsterdam Schipol airport is a corporate entity with most of the airport’s neighbors being shareholders of a certain percentage of the whole. While it has them invested in the wellbeing of the airport it was initially conceived as a way to allow them a voice relative to aircraft noise mitigation and future airport and operational expansion.
When airfields were first being developed in the U.S. they were commonly intended for military use, the use of remotely located farmers and ranchers, the result of businessmen developers who felt that an airfield near their business location (city) would help the economy, or they were the result of forward thinking some municipalities themselves and other government entities.
If I am not mistaken, Simsbury was long owned by a family whose aviation members eventually passed on. While certain developers and some in the town felt that the land might be ideal for other development and sought to acquire it for such, the pilot community came together to create the Simsbury Flying Club. It struck an arrangement to take over control and operation of the airfield and personal investment (not just monetary investment) took off in a positive manner. It’s a nice little suburban airport and the folks there work pretty hard to generate sufficient revenues to keep it alive. While I haven’t been there in a number of years your reporting suggests that it is doing well and that is great news for all of us.
The real challenge today is to run an airport (just about any airport) and make the numbers come out on the positive side of the equation. The ones that seem to do the best monetarily are those that have a specific niche like a substantial flying club, or a large maintenance base or avionics company, a large number of Fortune 500 corporate flight departments as base tenants or something else that is unique and gives them a leg up in their region. By way of example, there is one development group that I have been doing some consulting for that is looking to build a totally non-federally funded newly constructed airport in close relative proximity to a major U.S. City. A major challenge for sure but they are basing the future success of the financial model on the projected profit from fuel sales to corporate users of the airport. Interestingly, they have already been able to line up many of the other things that you would think to be obstacles and, should it come to pass, others will probably be asking themselves why they didn’t think of it first.
But in closing I would like to point out that the privatization model that was touted not long ago as the be all and end all to save U.S. Airports has never really come to fruition. The formula to make it successful in the US is still unknown and I suspect that there will probably never be a one size fits all answer. Personally, I don’t think there should be.
But What I do hope for the most is that the spirit of aviation and love of flight that so many of us share finds it way into enough nooks and crannies so that the variety of airports we currently enjoy, and those that we can’t even conceive of today, are preserved long into the future.
Steve Korta, A.A.E.
Retired Airport Administrator, State Aviation Administrator and Commissioner of the Connecticut Department of Transportation
Excellent insights, Steve. Thank you for sharing them with the rest of us. It’s that open forum for discussion that provides the give and take, the creative impulse, and the practical examples you cite, all of which are necessary to find a workable solution to any problem.
As you suggest, I doubt there will be, or should be, a single solution to every airport problem in the world. But if we commit to working together, share our expertise (as you’ve done so well) and show a willingness to work collaboratively toward a common goal – we’ll be so much better off than we might be otherwise.
From what little I know about economics, I understand that smart investors buy and sell stock on the basis of current or expected dividends (from profits) to be gained from the company. That, and whatever buzz or panic – positive or negative – that the stock generates, leading to higher or lower prices for the stock. “Buy low, sell high.” Active investors will also demand maximum profits from the company, including raising revenues and imposing cost-cutting measures that may or may not benefit the company in the long run.
Much of the benefit that Jamie attributes to airports large and small comes from the social and operational support they give to aviation. That’s different from the profitability of the airport operations themselves. I don’t know anything about the economics of running a municipal airport, but I imagine that most of them get some kind of financial support from their government sponsors. And investor-owned airport would be on its own to cover all its expenses.
Expect a stock-investor-owned airport to raise fees, cut corners, lay off workers, eliminate unprofitable lines of business. It happens all the time to investor-owned companies, including my last employer when it went public. Or at least expect grass-roots investors to make little or no financial return on their investment in their local privatized airport. Maybe they’d be OK with just having the honor of financially supporting their local flying field, but they may not be OK with owning part of an unprofitable company.