ORLANDO INTERNATIONAL AIRPORT: LANDING INTERNATIONAL

AIRLINE BUSINESS1

On a sunny Florida afternoon in 2012, a group of local business people contemplated the state of foreign
investment and business in Orlando through Orlando International Airport (MCO). Understanding
Orlando’s foreign direct investment position was very important for the airport. Orlando’s international
experts and organizations attracted foreign investment to the Greater Orlando Area, which brought more
business through the airport and created greater potential for direct flights between Orlando and foreign
companies’ countries of origin. Also affecting the decision for foreign companies to set up business in
Orlando were variables such as perceptions of the city, its reputation, economic indicators, exports,
imports and quality of life. How could Orlando attract more business through the airport? More
importantly for MCO, which factors were most important for determining both the countries to pursue for
direct flights and how best to attract the appropriate airlines to offer direct flights?

ORLANDO INTERNATIONAL AIRPORT

Orlando International Airport was the 13th busiest airport in the country and the 29th busiest airport in the
world.2 With four parallel runways and 96 gates, MCO was capable of handling the largest aircrafts and
was larger geographically than Miami International Airport (MIA), Los Angeles International Airport
(LAX), and John F. Kennedy International Airport (JFK) combined.3 More than 30 domestic and
international airlines serviced the airport. Total airport revenue was diversified, which allowed one of the
lowest costs per passenger of the major airports in the United States.4

A group of local business people wanted the airport to continue to attract new airlines and to expand its
services to new regions and countries. Orlando’s reputation as a tourist destination and the presence of
international companies and large domestic companies contributed to and supported the airport’s business
case to attract particular airlines to the area. As the airport pursued different airlines in different regions of
the world, other variables also became important, such as growth of travel between Orlando and a
particular region, underserved markets, and time and cost savings.

ORLANDO IN A NUTSHELL

Orlando’s history dated to 1838, when the U.S. Army built Fort Gatlin to protect settlers from attacks by
Seminole Indians during the Seminole Wars. First known as Jernigan, after the family who established the
first permanent settlement, the community was renamed Orlando in 1856, and the Town of Orlando was
incorporated in 1875.5

The citrus industry spurred development in the 1880s, as better transportation was necessary to move the
goods to market. Between 1910 and 1920, the population doubled, and the community experienced a
building boom and grew to become a major city. 6 In the early 1920s, millions of immigrants, speculators
and builders descended into Central Florida in pursuit of land. Land speculation spiralled out of control,
but the bubble burst in 1926, when construction slowed and many left Florida for the North. Then in
1929, the stock market crash ruined Orlando’s economy entirely. President Roosevelt’s New Deal
programs and the beginning of World War II brought Orlando’s economy back to life. Florida’s
population increased by 79 per cent during the 1950s; in the 1960s, the new government space industry
helped to fuel the economy. In the 1970s, Walt Disney World (Disney) opened, attracting 20 million
visitors in its first two years. Other attractions began to call Orlando home: SeaWorld in 1973, and
Universal in 1990.7 In 2010, the city of Orlando had a population of 238,300 making it the 79th largest
city in the United States. The Greater Orlando Area had a population of 2,134,411 and was the 27th
largest metro area in the United States.8

Orlando was perhaps best known for its extensive tourism industry. On October 1, 1971, Walt Disney
World’s Magic Kingdom and two hotels opened in Orlando, setting the tone and the base for the area’s
infrastructure. Over time, Disney expanded its operations; in 2011, Disney was responsible for $18.2
billion9 in economic activity in Florida, 2.5 per cent of Florida’s gross domestic product, ties to one of
every 50 jobs in Central Florida and comprised 6 per cent of all jobs in Central Florida. 10 As a premier
travel destination featuring a host of world-famous theme parks and attractions, accommodations, world-
class airports and one of the largest convention facilities in the nation, Orlando attracted more than 50
million visitors each year (see Exhibit 1). Visitors to Orlando came from all over the United States and
internationally (see Exhibit 2), including Canada, and the United Kingdom.” 11 In 2010, 51.5 million
visitors spent $28.3 billion in the Metro Orlando area. This area included 453 hotel properties with
116,534 rooms and $13.4 billion annual earned wages. Tourism accounted for more than 216,000 direct
industry jobs and 24.4 per cent of private employment in the Metro Orlando area.12
Although tourism was admittedly the reason the area was so well known, Orlando was also home to many
other businesses and industries. According to Michael Shiffhauer, executive vice-president at Enterprise
Florida, a Florida business opportunities centre:

Orlando should be known for a variety of things: tourism, of course, but also the space program,
the simulation training industry, agriculture, the airport, the convention center. It should be
known for business as well, but there is a lot here that doesn’t necessarily get conveyed. The
message is not getting out and there is a lot that is not being told.13

The featured industries in the Orlando area included the following:

 Technology – The region’s second largest industry was technology: “Orlando boasts a high-tech
ecosystem that has been building here since the 1960s, and which today is a strong technology
industry of 2,600 companies that employs more than 42,000 people. An established technology sector
means that companies growing or relocating to the area have immediate access to a high-tech
infrastructure that has been in place for decades. This [infrastructure] includes immediate access to a
tech-savvy workforce, renowned university research and development, unique partnership
opportunities, and a wide variety of organizations and facilities dedicated to helping technology-
driven companies flourish.”14
 Defence – Companies such as Lockheed Martin and Siemens had located facilities in Orlando.
 Healthcare and Medical City – Healthcare had a major presence in the Greater Orlando Area. Lake
Nona medical city was a $2 billion medical campus that included a medical school, research
laboratories and hospitals. Countless other hospitals had established operations in the area: Florida
Hospital, Nemours Children’s Hospital and Orlando Regional Medical Center with its subsidiaries
Arnold Palmer Hospital for Children and Winnie Palmer Hospital for Women and Babies.
 Modelling, Simulation and Training – The simulation and training industry in Orlando was the largest
cluster in the country. According to Thomas L. Baptiste, president and executive director of the
National Center for Simulation, “Orlando and Central Florida are the epicenter for modeling and
simulation. When you combine the power of the Research Park, close ties between a world class
university, industry, and Team Orlando you produce a synergy found nowhere else in the world.
Companies who want to be serious players in the modeling and simulation industry need to consider
focusing their efforts on Orlando and Central Florida.” 15 The simulation and training industry in
Central Florida was comprised more than 100 companies, 12,500 direct employees and $3 billion in
gross regional product.16 As the plans for the medical center proceeded, potential for medical
simulation was also growing.
 Space – Located just east of Orlando, the John F. Kennedy Space Center was “the nation’s gateway to
exploring, discovering and understanding our universe.” Although the space program ended in 2011,
Kennedy Space Center continued “to make history as America’s spaceport,” as it entered the new era
of commercial space flight.17

Another important part of Orlando’s economy was its exports. Florida was the fourth largest exporting
state in the United States, after Texas, California and New York, with exports reaching $64.8 billion in
2011. Florida also had the highest trade surplus among all U.S. states. International business and foreign
direct investment in Florida sustained nearly one in six jobs with exports projected to double by 2014. 18 A
branch of the World Trade Center was located in Orlando; the organization brought business and
government agencies involved in international trade together to promote and enhance the Orlando
economy.

In addition to diverse industry presence, the Greater Orlando Area was also diverse in terms of people.
The Orlando MSA had a total population of 2,134,411; 10.45 per cent from Latin America first, then 2.65
per cent from Asia, 1.86 per cent from Europe, then 0.57 per cent from Africa. 19 In Forbes magazine’s
2011 list of Best Cities for Minority Entrepreneurs, Joel Kotkin wrote “As the American economy
struggles to recover, its greatest advantage lies with its diverse population.” The Orlando-Kissimmee
metropolitan statistical area (MSA) ranked ninth on the list. 20 Hispanics made up 22 per cent of the
population in the area, which had attracted more than 20,000 Hispanic-owned business operations to
Orlando. One out of every six people in Orlando was born outside the United States, the majority from
Latin America.21

FOREIGN BUSINESS PRESENCE IN ORLANDO

Identifying foreign companies doing business in Orlando was important for MCO, as it indicated traffic
between Orlando and foreign countries and potential underserved markets. According to a foreign direct
investment study of the Greater Orlando Area, 312 foreign companies conducted business in almost 800
separate locations across Central Florida’s seven-county area of Brevard, Lake, Orange, Osceola, Polk,
Seminole and Volusia.22

The foreign companies engaged most often in manufacturing, services, wholesale trade and retail trade
(see Exhibit 3 and Exhibit 4); in fact, over 75 per cent the foreign-owned companies in the Greater
Orlando Area were involved in the following four sectors:

 Manufacturing (88 firms)

 Services (64 firms)
 Wholesale Trade (49 firms)
 Retail Trade (35 firms)

More than 30 foreign countries had a business presence in Orlando. More than three-quarters of the
foreign-owned companies were from the United Kingdom, Germany, Japan, Canada, France and
Switzerland (see Exhibit 5):

 United Kingdom (60 firms)

 Germany (51 firms)
 Japan (37 firms)
 Canada (32 firms)
 France (21 firms)
 Switzerland (19 firms)
 Ireland (11 firms)
 Italy (10 firms)
 Sweden (10 firms)

DOMESTIC COMPANY PRESENCE IN ORLANDO

Business in Orlando often revolved around the “Four D’s” — Disney, Darden, Defence and
Development. Disney’s development over time had provided the city with its international reputation as a
tourist destination. Darden, the world’s largest full-service restaurant company, was headquartered in
Orlando. The business represented several brands that were recognized internationally: Red Lobster,
Olive Garden, LongHorn Steakhouse, the Capital Grill, Bahama Breeze, Seasons 52 and, more recently,
Eddie V’s and Yard House. The company owned and operated more than 2,000 restaurants and employed
more than 180,000 people.23 Orlando’s defence industry had a gross regional product of $3 billion; such
companies as Lockheed Martin, Northrop Grumman and Booz Allen Hamilton had operations in Orlando.
Hand in hand with the defence industry was development, particularly modelling, simulation and training
(MS&T), which was prevalent in the Greater Orlando Area. MS&T was also expanding into healthcare:

With our region’s strong reputation for MS&T and the emerging life sciences cluster with the
Lake Nona Medical City and two of the nation’s top healthcare systems, Florida Hospital and
Orlando Health, Metro Orlando has seen a merging of these two industries into the medical
simulation sector which holds great potential for the region to be a leader.24

A similar study of domestic companies in the Greater Orlando Area had identified 1,719 domestic
companies in nearly 2,200 separate locations across the six-county area of Brevard, Lake, Orange,
Osceola, Seminole and Volusia.25

The most common industries in the Greater Orlando Area were services, retail trade and public
administration; however, services represented more than half of the 1,719 companies. In total, services,
wholesale trade and public administration represented nearly 75 per cent of all companies:

 Services (897 firms)

 Retail trade (225 firms)
 Public administration (159 firms)

The same study also identified the largest 100 domestic companies by employment and the largest 100
domestic companies by sales volume. Forty-nine companies held a place on both lists. Of these 49
domestic companies, more than half operated in the service industry, 14 per cent operated in
manufacturing and 12 per cent operated in finance, insurance or real estate; these industries represented
more than 80 per cent of the 49 companies (see Exhibit 6):

 Services (27 firms)

 Manufacturing (7 firms)
 Finance, insurance and real estate (6 firms)

Roughly 43 per cent of these companies had business relationships with varying countries, including
operations, franchises, distributors and business interests. The most prominent countries were Canada,
United Kingdom, Mexico, Germany, France and Japan.
MIAMI INTERNATIONAL AIRPORT

Miami International Airport (MIA), located approximately 360 kilometres (225 miles) south of MCO,
was one of the busiest airports in the world, ranking 28th in the world for total passengers (see Exhibit 7).
More than 80 airlines serviced MIA, nearly 50 more airlines than were serviced at MCO. Miami had a
huge presence in the international marketplace. In 2010, Miami was the second busiest airport in the
United States for international passengers, behind only JFK in New York. Orlando was 15th on that list.
Miami was well-connected to Latin America, offering direct flights to many cities in Central America,
South America and the Caribbean. Direct flights to popular Canadian and European cities were also
available.26 MIA was ranked 27th in the world in total international passengers, behind such international
cities as London, Paris and Hong Kong. 27 As a result of these statistics, Miami posed a real competitive
threat to MCO, as many travellers were willing to travel the 360 kilometres (225 miles) to bypass a
connecting flight to an international city.

TAKING OFF INTO THE FUTURE

To pursue the regions, countries and airlines with the most potential and greatest benefit to MCO, airport
management needed to evaluate the following key factors and variables:

 Passenger traffic at MCO

 Foreign companies operating in Orlando
 Number of employees
 Sales volume
 Industries represented
 Diversity of Orlando (in terms of population)
 Lack of airline service (or underserved markets)
 International locations where Orlando’s large domestic companies conducted business

Surrounded by data, the executives set out to answer the key questions for success: What two or three
industries should MCO focus on attracting to Orlando? What countries were the dominant players in these
industries? How could MCO use this information to meet MCO’s real need: more airline business and
more direct flights? Wrapping up the meeting, the executives considered what they needed to get the new
ideas off the ground.
 EXHIBIT 1: ORLANDO VISITOR VOLUMES, 2007–2011

Visitor Volumes % change

(millions) 2007 2008 2009 2010 f2011 11/10
Total 48.745 48.888 46.583 51.455 54.29 5.5
Domestic 45.907 45.515 43.319 47.780 50.50 5.7
Leisure 35.334 35.282 33.992 38.263 40.46 5.7
Business 10.574 10.233 9.326 9.517 10.04 5.5
International 2.838 3.343 3.264 3.675 3.79 3.0
Canada 0.783 0.910 0.865 0.960 0.99 3.3
Overseas 2.055 2.433 2.399 2.715 2.78 2.3
U.K 0.990 0.959 0.831 0.839 0.82 –1.85

Source: Visit Orlando, “State of the Market,” http://corporate.visitorlando.com/research-and-statistics/orlando-visitor-

statistics/visitor-forecast/, April 2012, accessed on May 30, 2012.

EXHIBIT 2: INTERNATIONAL VISITORS TO ORLANDO, FLORIDA

2007 2008 2009 2010 2011 % change

11 / 10
Europe 1,300,000 1,483,000 1,386,000 1,462,000 1,355,000 –7.3
Western Europe 1,275,000 1,439,000 1,339,000 1,422,000 1,319,000 –7.2
United Kingdom 990,000 959,000 831,000 839,000 767,000 –8.6
Germany – – – – – –
Belgium – – – – – –
Eastern Europe 25,000 44,000 47,000 40,000 40,000 –10.0
Caribbean – – – – – –
South America – – – 822,000 – –
Argentina – – – – – –
Brazil – – – – – –
Venezuela – – – – – –
Central America – – – – – –
Africa – – – – – –
Middle East – – – – – –
Asia – – – – – –
Oceania – – – – – –
Total Overseas 2,055,000 2,433,000 2,399,000 2,715,000 2,788,000 2.7
Canada 783,000 910,000 865,000 960,000 1,015,000 5.7
Mexico – – – – – –
Total International 2,838,000 3,343,000 3,264,000 3,675,000 3,803,000 3.5
EXHIBIT 3: FOREIGN-OWNED AND DOMESTIC-OWNED COMPANIES IN THE GREATER ORLANDO
AREA, BY INDUSTRY

Foreign-Owned Domestic-Owned
Companies Companies

Finance, Insurance and Real Estate 312 68

Manufacturing 88 122
Services 64 897
Wholesale Trade 49 72
Retail Trade 35 225
Transportation, Communications, Electric, Gas 30 78
and Sanitary Services
Construction 12 88
N/A 12 1
Agriculture, Forestry and Fishing 3 12
Mining 1 0
Public Administration 1 156

Source: Created by authors.

EXHIBIT 4: FOREIGN-OWNED INDUSTRIES IN THE GREATER ORLANDO AREA, BY COUNTRY OF

ORIGIN

United
Kingdom Germany Japan Canada France Switzerland Ireland Italy Sweden

Number of total
businesses 60 51 65 32 21 19 11 10 10
Agriculture,
Forestry, and
Fishing 1 1 0 1 0 0 0 0 0

Mining 1 0 0 0 0 0 0 0 0

Construction 3 2 1 1 2 1 1 0 0

Manufacturing 5 17 13 7 8 6 7 3 1
Transportation,
Communications,
Electric, Gas, and
Sanitary Services 10 4 4 0 2 2 0 0 0

Wholesale Trade 9 9 10 4 2 1 0 3 4

Retail Trade 3 7 5 5 2 1 1 2 1

Finance, Insurance,
and Real Estate 2 4 1 3 2 1 1 1 0

Services 23 5 31 11 3 7 1 0 2
Public
Administration 1 0 0 0 0 0 0 0 0

N/A 2 2 0 0 0 0 0 1 2
EXHIBIT 5: 312 FOREIGN-OWNED COMPANIES IN THE GREATER ORLANDO AREA,
BY COUNTRY OF ORIGIN

“OTHER” FOREIGN-OWNED COMPANIES IN THE GREATER ORLANDO AREA,

BY COUNTRY OF ORIGIN