11/12/2001 - Updated 11:58 AM ET
Airport expansion plans come to screeching halt
By Fred Bayles, USA TODAY
© Copyright 2001 USA TODAY, a division of Gannett Co. Inc.
Hit with plunging revenue and increased security costs, the nation's largest
airports are rethinking their master plans, trading dreams of expansion for
the realities of new security requirements.
Airports in Los Angeles, Boston and Phoenix have put off major projects. Other airports have delayed or canceled work already started on runways and terminals. Smaller facilities have canceled modest face-lifts, fearful that they may lose their carriers as airlines cut back on service.
All told, airports have canceled or delayed an estimated $16 billion in hundreds of capital projects, according to a soon-to-be released survey by Airports Council International-North America, a Washington, D.C., trade group that represents 450 airports in North America.
According to the survey, 88% of capital projects have been delayed for an unspecified period of time. An additional 6% have been delayed for a year or more. "You're seeing a lot of jobs and a lot of stimulus being removed from the national economy," says Stephen Van Beek, a senior vice president with the group.
Van Beek and others in the industry say the canceled projects will likely cause travelers to experience worse delays and headaches when the economy eventually rebounds.
Not everyone agrees. "Now is a time to look at problems like over-scheduling of flights and the poor management decisions by airlines that were behind the delay problems," says Jack Saporito, president of the U.S. Citizens Aviation Watch Association, which opposes many airport expansion plans.
A change in priorities:
Before Sept. 11, the nation's airports were poised to build their way out of the delays and other inconveniences faced by travelers. Transportation Secretary Norman Mineta said building more runways was a top priority.
Now nearly every major airport has cut back. Among those hardest hit:
• Los Angeles International, which for years was the flash point in a debate about ambitious expansion plans. Now, Mayor James Hahn has ordered a master plan focused on security and a greater reliance on the region's other airports. "LAX is maxed out," Hahn says. "It's time to rethink in terms of a regional solution."
• Charlotte-Douglas International in North Carolina has delayed about $80 million in construction contracts for the airport's fourth runway and has shelved a $1 million parking expansion project amid uncertainty about the airport's shrinking revenue and the health of US Airways, its major carrier.
• Boston's Logan International has cut next year's capital budget by a third, deferring 139 separate projects for at least a year. "Nearly everyone is trying to balance budgets by pushing things back," Van Beek says.
Although the air travel industry had shown signs of weakening before Sept. 11, the attacks put a halt to passenger volumes that grew an average 4% annually to about 600 million passengers a year. Before the downturn, government officials and travel analysts predicted the number would reach 1 billion by 2010.
Since the attacks, passenger volume dropped by as much as 30%. Airlines cut capacity an average of 20%, laid off about 90,000 employees and warned of multibillion-dollar losses well into next year.
Airports have suffered along with the airlines. Revenue from landing fees, parking lots and concession stands has plummeted, while costs for tougher security have climbed. Some examples:
• Dallas-Fort Worth had to add $5 million to its budget for enhanced security while cutting $15 million to compensate for a 30% decline in passenger volume last month.
• Revenue at Denver International Airport dropped $215,000 a day compared with the same period last year.
• With traffic off by 25%, San Francisco International now faces a budget shortfall of over $100 million. "We're looking at potential cuts in everything from toilet paper to capital improvements," spokesman Ron Wilson says.
"It's the worst of both worlds," says Spencer Dickerson, executive vice president of the American Association of Airport Executives.
These losses have forced airport executives to rethink expansions. While most believe these plans will still be necessary, few currently have the funds to see the projects through.
Minneapolis-St. Paul International was in the midst of a construction program that includes a new runway, new terminal and other improvements. Airport officials sent 2,000 construction workers home in an attempt to keep its debt in line with falling revenue.
"A month-and-a-half ago, we were the envy of the airport industry because we were building for the future. Now they're all saying they're glad they don't have the huge debt level Minneapolis-St. Paul has," airport manager Jeff Hamiel says.
Seattle-Tacoma International, also in the midst of building a runway and terminal, has put off much of the construction for at least a year.
Gina Marie Lindsey, the managing director of aviation, says the delay will let planners incorporate security requirements into the design of the terminal. "We're going back to decide if we have enough space to handle a more centralized security approach," she says. "Architecture is something everybody is going to have to rethink."
Some forge ahead
Still, some airports continue to march ahead with construction.
Dallas-Fort Worth International broke ground last month for a $2.6 billion expansion that includes a new international terminal and people mover.
Officials at Atlanta's Hartsfield International, the nation's busiest, are moving ahead with a $1.3 billion fifth runway.
Officials at Lambert-St. Louis International have no choice but to see the project through. Bonds for the $1.4 billion runway project have been sold, and $264 million has been spent. "It would be more expensive to delay a project we have every confidence will be needed in the future," spokesman Michael Donatt says.
Dickerson of the airport executive association agrees, noting that declines in air travel have traditionally seen a robust rebound of passengers that then overtax the system. "We're going to have a tough time for a long period of time, but it's going to bounce back," he says. "We need to move forward with these capacity issues to be ready."
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Editor's Note:
It's a sure bet the taxpayers will be the ones to pick up the tab to cover
these losses. It's a well known fact that big businesses don't pay taxes:
their customers pay the taxes for them in the form of higher costs.