Puerto Rico has a problem: How will it solve seven years of economic recession?
Officials hope establishing a new air cargo hub – the first one in the Caribbean – will kick the island’s economy to life.
In July, the island’s unemployment rate reached 13.5 percent. The U.S.’s unemployment rate was about half that.
“We identified that we have to enlarge the economy size,” says Mariano Parlato, chairman of the Puerto Rico District Export Council (PRDEC), a nonprofit group of international trade experts from the local business community. “Economic figures are lower than 15 or maybe 20 years ago, so we have to recover these economic indicators such as exports and manufacturing, production and service consumption.”
Four years ago, an idea emerged to transform Aguadilla Rafael Hernandez Airport, formerly Ramey Air Force Base, into an air cargo hub. PRDEC submitted a proposal for the project to the local government.
In August 2012, a Foreign Trade Zone (FTZ) was expanded to Aguadilla Airport, which is located in the northwestern city of Aguadilla. Now, PRDEC is helping local authorities develop the second stage of the master plan – capturing air traffic that overflies Puerto Rico.
“The economic activity in the surrounding area is what we want to create to foster the export and the economic development in the Caribbean region and specifically in Puerto Rico as a U.S. jurisdiction,” Parlato says. “That is our main area of action. This is a new vision that we have to transmit every day to local government authorities and local companies.”
Creating an air cargo hub in a FTZ will hopefully lead to more companies setting up offices in the region, says Jose Burgos, director of U.S. commercial service at the U.S. Department of Commerce. An FTZ offers benefits such as fuel that is 25-30 percent cheaper than in other Caribbean jurisdictions and less expensive than many places in South America.
This is due to the fact there are often no local taxes on fuel in an FTZ.
Burgos says more companies in Puerto Rico will lead to more manufacturing.
“We’re trying to bring eventually, working with the local government, to bring those kind of companies here in Puerto Rico,” he says. “They start manufacturing here. We create a growing economy, grow employment. We can export more from Puerto Rico.”
Local authorities are coming up with a plan to approach carriers and air cargo agents and convince them to establish operations in Puerto Rico, Parlato says.
The airport has the longest runway in the Caribbean, so it can handle larger aircraft, and it is near an engineering school, which will attract companies seeking talent.
Honeywell is already in Aguadilla, FedEx has an operation at the airport and Cargolux, Lufthansa and Martinair have made stops at Aguadilla, says Jeffrey Quinones, public affairs officer at U.S. Customs and Border Protection.
This all proves that there is “at least minimal interest” in the airport, says Quinones, who also volunteers with the PRDEC.
He says FedEx has a large flower operation at Aguadilla now, but what sectors make up cargo in the future will depend on which companies set up operations at the airport.
The Federal Aviation Administration has approved the master plan for Aguadilla. Now the responsibility for attracting investors and businesses lies with the authorities, who have received help from PRDEC.
“The facility basically has everything that’s necessary to expand and actually do a much larger facility for air cargo,” Quinones says. “It’s just a matter of getting the investment in.”
If all goes according to plan, Aguadilla Airport will start seeing an increase in projects in the next two years, he estimates.
Parlato says both Puerto Rico’s private sector and government endorse the initiative to make the airport into the first cargo hub in the Caribbean.
“Our vision was to create some sense of urgency in local authorities, and they got it. It took two, three years to see how to realize the idea. But now the plan is running, and they have been submitting the master plan to the FAA and other authorities,” he says. “I think that in the economic agenda of the local government, the development of the Aguadilla Airport is one of the top five initiatives to create jobs, and to bolster exports and economic development for the island.”