Piece of the action: Pan Am in talks with St. Louis on air cargo deal

Bob Hedrick, president of Brownsville-based Pan American Airways, said a "memorandum of understanding" he recently signed with the head of Lambert-St. Louis International Airport in Missouri could mean big things for Brownsville economically — unless he decides to set up shop elsewhere.

Hedrick signed the memorandum with Lambert Field director Rhonda Hamm-Niebruegge on May 5. The document details PAA’s plans to establish a cargo hub in St. Louis that would link to Brownsville South Padre Island International Airport and involve air cargo from China, which is seeking to greatly expand air freight operations to the United States and Latin America.

A PAA hub at Lambert Field would serve to develop "Midwest cargo activity" and also link future PAA flights serving Latin America to "operations serving China," according to the memorandum. St. Louis is on the verge of sealing a deal with China that would make Lambert Field the hub for air cargo between China and the United States. For the deal to become a reality, St. Louis is banking on passage of the $360 million "Aerotropolis Trade Incentive and Tax Credit Act" currently making its way through the Missouri Legislature. The Missouri State Senate recently passed its version of the Aerotropolis bill by an overwhelming majority. Now, differences between the Senate and House versions have to be hammered out before the bill can go to the governor for a signature.

The legislation would give tax breaks to companies involved in foreign trade and subsidize construction of more than 27 million square feet of warehouse and factory space in the St. Louis region. Incentives would include $60 million in credits over eight years for freight forwarders, which, along with other incentives, could benefit cargo companies like PAA.

Hedrick’s plan is to invest $50 million at Lambert Field to help develop its Midwest cargo hub and another $25 million in Brownsville "to support the connections from the Midwest and China to Latin America," according to the memorandum of understanding — not a legally binding document but rather a formal statement of intent between the two parties. PAA’s investments would include maintenance, operations and repair facilities at St. Louis and Brownsville. Hedrick said the $75 million has already been funded through equity and other forms of financing.

"I’ve been working on this since November of last year," he said. "All the pieces of the puzzle to make this happen are in place. Now I actually have to write an operational plan."

Hedrick said making Brownsville the "gateway to Latin America" for freight to and from China via St. Louis would have huge ramifications for the local economy thanks to the flood of cargo and jobs created — though he’s by no means wedded to Brownsville. Hedrick hasn’t forgotten the criticism some city officials, especially City Commissioner Charlie Atkinson, publicly leveled at his company during the recent, messy public debate over Fly Frontera, a proposed deal for passenger air service to Mexico that died after a negative financial report from the Brownsville Economic Development Council. Hedrick had insisted the bidding be opened up to PAA and other aviation companies, while Atkinson was a strong proponent of the Fly Frontera deal.

"I am questioning should I bring the gateway here," Hedrick said. "I need the city to get behind us. I can’t do it when I’m fighting everybody."

Hedrick said he’ll ask for meetings with Brownsville’s aviation board, the city commission, the Brownsville Economic Development Council, and the Greater Brownsville Incentives Corporation — but not until the May 14 election is over.

"I’m going to talk to them," he said. "I’m going to lay it out. If the city can’t support this, you need to tell me now."