Analyzing FedEx Express Airlines

FedEx Express Airlines (Case Study)

In this case study, we will be looking at FedEx Express's hub airports. The airports will include Memphis International Airport (MEM) and Indianapolis International Airport. The focus will be mainly on capacity, traffic, and what is planned for the future of these airports.

FedEx Corporation is one of the largest companies in the courier industry. The company is renowned not just nationally in the United States, but internationally. FedEx Corporation belongs to the parcel service industry segment. The size of the industry segment is quite large in the sense that in the past fifteen years or so, consumers in America have spent beyond fifty billion dollars in shipping packages, parcels and also letters. Also referred to as Federal Express, the company is a big player in the segment and is positioned as one of the trailblazers in the industry segment (FedEx Corporation, 2014). The following paper will analyse two of the major hubs for FedEx Express and analyse their airport space and capacity level and also take into consideration their plans for forthcoming periods.

Memphis International Airport (MEM)

Memphis International Airport serves as a hub for FedEx Express. It employs the hub-and-spoke model and is one of the largest integrated carriers in the world. In particular, FedEx runs its central air hubs in Memphis. Memphis International Airport (MEM) has a multi-modal level of access. It is positioned towards the south of Memphis, Tennessee, at the junction of Interstates I-55 and I-240. The site is also aided by rail, fleeting through the north east of the airport, not more than one mile from FedEx's amenities, and by ship, with the Mississippi River solely 8 miles from the airport. Memphis International airport occupies a 5100-acre site with 3,900 acres hosting the cargo hubs for FedEx (Cosmas and Martini, 2007).

Primary passenger right is to use courses from Winchester Road to the terminal building, at the epicenter of the airport site. Winchester Road intersects the airport into north -- south expanses. The northern section is engaged predominantly by FedEx cataloguing facilities, member of staff parking, administration offices, and aircraft maintenance anchorages, in conjunction with R1, which is oriented east to west. The southern section principally consists of the passenger facilities, which consist of three terminal buildings, in addition to three runways, which are slanted towards north to south (Hao, 2015). MEM has four runways and the configurations of the four runways are listed:

1. R1: 9/27 orientation. 8,946 feet long by 150 feet wide. Asphalt material

2. R2: 18R-36L orientation. 9,320 feet long by 150 feet wide. Concrete material

3. R3: 18C-36C orientation. 11,120 feet long by 150 feet wide. Concrete material

4. R4: 18L-36R orientation. 9,000 feet long by 150 feet wide. Concrete material (Hao, 2015).

(Fig-1) MEM Airport Layout

In the recent number of years, the annual traffic in MEM airport has significantly declined. The international airport experienced a key stumbling block in the year 2008 after Delta Airlines merged with Northwest Airlines. In following and abiding by the ideologies of dismissed capacity and justification, Delta Airlines decided to drop MEM as a hub, owing to its closeness to Atlanta-Hartsfield. From 2013, MEM has experienced a significant loss in its passenger demand levels as Delta Airlines continues to reduce its flights to about forty every day (Hao, 2015). The following table indicates the annual traffic in the airport for every calendar year since 2000. As indicated the number of traffic declined from 11 million to about 4 million in the present day.

Traffic by calendar year

Year

Passengers

Change from previous year

2000

11,769,213

N/A

2001

11,340,439

3.64%

2002

10,712,059

5.54%

2003

11,033,269

3.00%

2004

10,442,181

5.36%

2005

11,039,077

5.72%

2006

10,806,754

2.10%

2007

10,896,305

0.83%

2008

10,532,095

3.34%

2009

10,229,627

6.37%

2010

10,003,186

2.21%

2011

8,737,641

12.65%

2012

6,753,186

22.71%

2013

4,598,186

31.91%

2014

3,597,601

21.76%

2015

3,758,450

1.04%

(Fig -2) Annual Traffic in MEM Airport

However, having four runways, MEM Airport continues to be the leading location for FedEx's hub, as it has good weather, is situated in the Central Time Zone, and sited optimally in relation to geography. The amount of traffic channelled via this hub make MEM the second busiest airport with regard to cargo traffic in the world, which has huge inferences on forthcoming necessities for growth and forecasts. With regard to future plans for MEM Airport, the hub had a 'The master plan' that was finished in the year 2007, projecting continuous passenger growth, which did not take into consideration the merger between Delta and Northern Airlines and the de -- hubbing of the airport. Taking into account the deteriorating numbers of connecting passengers, MEM Airport needs to extremely go back over its expansion commendations in addition to propositioning new ideas to close in on other airlines. Nevertheless, cargo traffic has relatively upheld its manifestation at Memphis, and could be the strong suit and redeeming feature of this airport, as it has been the sustenance of the metropolitan expanse for the last five decades (Hao, 2015).

Indianapolis International Airport

Indianapolis International Airport (IND) is an airport open to the general public that is situated 11 kilometres southwest of Indianapolis. The airport covers approximately 7,700 acres. The passenger terminal of the airport was the first one to be built subsequent to the 9/11 attacks. IND is the second-largest hub to FedEx Express, after MEM. It was originally opened in the year 1988 and has expanded three times since then (CAPA, 2015). The following illustration outlines the layout of Indianapolis International Airport.

(Fig-3) IND Airport Layout

Indianapolis was a center city for Northwest Airlines before the airline had its merger with Delta in 2008. It was also a center point for AirTran that had a strong presence in the market prior to the airline's acquisition by Southwest Airlines in the year 2010. The end result has been a number of route dismissals in the past 6 to 8 years or so. However, with the United States economy gaining some traction and alliance in the U.S. aviation market place principally whole, Indianapolis is attaining some new service (CAPA, 2015). Indianapolis International Airport has managed to overcome the U.S. airline consolidation fairly steadily, reporting an uptick in passengers during 2014, subsequent to a number of years of diffident deteriorations. It is attaining grip in the course of 2015 with new service from its biggest airline, Southwest, and the entrance of ULCC Allegiant Air into the market (CAPA, 2015).

The table below indicates the enplaned and deplaned passenger traffic at Indianapolis International Airport every year between 1996 and 2015.

Year

Passengers

Year

Passengers

1996

7,069,039

2006

8,085,394

1997

7,171,845

2007

8,272,289

1998

7,292,132

2008

8,151,488

1999

7,463,536

2009

7,465,719

2000

7,722,191

2010

7,526,414

2001

7,238,744

2011

7,478,835

2002

6,896,418

2012

7,333,733

2003

7,361,060

2013

7,217,051

2004

8,025,051

2014

7,363,632

2005

8,524,442

2015

7,998,086

(Fig-4) Annual Traffic IND Airport

The future plans and objectives of IND are to attract new service from airlines not presently serving the airport. In particular, the airport is currently in talks with Spirit Airlines, JetBlue as well as Virgin America. In particular, IND is targeting low fare service. For instance, JetBlue's entry into the Cleveland market could be a constructive development for Indianapolis' determinations to appeal to new service from the airline (CAPA, 2015). Spirit would be a fascinating addition to Indianapolis. Its associated ULCC Frontier also serves the airport with flights to Atlanta and Denver. It is not apparent whether Indianapolis has all the precise features for Spirit's contemplation, but the airport's greater than average prices may end up being quite an appeal for the airline (CAPA, 2015).