$1 billion airport expansion back on track

  • Article by: SUZANNE ZIEGLER , Star Tribune
  • Updated: November 25, 2009 - 11:59 AM

Airport officials are planning for a bigger future - but one that also is tied to the future of Delta Air Lines.


MAC is voting on whether to upgrade Humphrey Terminal. The Humphrey Terminal in 1998.

Photo: Jerry Holt, Star Tribune

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The Twin Cities airport has big plans for the next 20 years -- if forecasts of rising passenger traffic hold up.

An upscale hotel, an all-Delta Lindbergh terminal and bridges that would carry airplanes over sunken roads going to and from the Lindbergh terminal are part of the long-range plans being considered by the Metropolitan Airports Commission (MAC).

If everything is built as planned between next year and 2030, the price tag would be more than $1 billion.

The proposal, which includes no new runways but would add about 30 gates to the airport's existing 127, is still in the early stages. But MAC officials say the changes will be necessary if forecasts of doubled passenger numbers become reality.

"If the passenger forecasts are correct, it's needed in order to accommodate the people that will be coming through these facilities. This is not 'build it and they will come,'" said Dennis Probst, the MAC's deputy executive director of planning and environment.

If the plan sounds familiar, it's because much of it, including a hotel and an all-Northwest Airlines Lindbergh terminal, was part of a $983 million plan announced in 2004 to expand the airport by 2020. But when Northwest filed for bankruptcy in 2005, those plans were put in a holding pattern.

Now, Northwest is out of bankruptcy and part of a larger Delta Air Lines, which uses Minneapolis-St. Paul International Airport as a hub and has promised to do so through 2020.

Fewer people are traveling because of the recession, prompting struggling airlines to cut fares and flights. The airport's revenue, including fees from concessions, parking and retail stores at MSP, is coming up short this year -- under budget by $8.1 million, or 4.14 percent, through the end of September.

The uncertain future is prompting some observers to urge caution.

"Be very careful with what you build on the basis of just projecting the past into the future," said airline analyst Michael Boyd, who is based in Colorado. "Call Pittsburgh and ask them how well that worked. They built a new terminal in 1992 for US Airways and now US Airways is essentially gone. They have whole concourses essentially boarded up."

MAC spokesman Pat Hogan said: "We won't build anything until we are confident it is needed and there are revenues to support it, regardless of the anticipated dates in the long term comprehensive plan." He described the plan as "how we intend to develop the airport if and when there's the demand for it."

The proposal, which is broken into five-year segments, is expected to be presented to the full MAC, which owns and operates the airport, by the end of the year. It then goes to the Metropolitan Council, then back to the MAC board for a final vote.

While the MAC does not need legislative approval for what it does, it must keep the Legislature apprised of what it's doing.

That's not nearly enough for Sen. Scott Dibble, DFL-Minneapolis, a member of the Senate's Transportation Committee who chairs the committee's transit subcommittee.

"I've always thought that the MAC is a largely unaccountable entity," said Dibble, who said the commission has been "too cozy" with Northwest Airlines and other airport businesses. "It really has no obligation to come back to any elected official or a representative body like the Legislature to seek approval of its plans."

A matter of balance

With all projections showing passenger traffic going up between now and 2030, MAC officials say they'll need to strike a better balance between passengers, parking and car-rental facilities at the two terminals.

Now, Probst said, 88 percent of the passenger traffic goes through Lindbergh. If Lindbergh becomes only for Delta and its SkyTeam partners while the other air carriers move to Humphrey, the passenger split between the two terminals becomes more even, with 60 percent at Lindbergh and 40 percent at Humphrey, he said. That move likely wouldn't happen until about 2015, according to the MAC.

And more passengers means more car-rental facilities, parking and overall facilities to accommodate them, as well as more revenue to help pay for the improvements.

"With airlines packing more passengers in on larger planes, the emphasis on the changes is not adding gate space," Probst said.

The MAC also would like to add a hotel -- preferably an upscale one to draw visitors on the weekend as well -- and is looking for a third-party developer that would lease the space, generating revenue for the airport.

"Part of it is driven by our desire to be a major international hub, and virtually every other significant airport around the world does have an airport hotel for the convenience of people who are making those kinds of trips," Probst said.

The hotel would be next to a new parking ramp, where the post office sits now.

In the final five years of the plan, a taxiway would be built to connect both ends of the parallel runways that run on either side of Lindbergh. The planes would cross over the roadway on two bridges. The roads to and from Lindbergh would pass underneath.

The change, said Probst, would allow jet traffic to have better access between the two runways and achieve more balance between them.

How much?

In an interview, Probst said the projects would cost more than $1 billion and the first phase would likely be "north of $350 million."

If the project is approved, funding would come from cash generated by airport revenue and bonds that would be repaid using passenger charges and revenue from rent and concessions, Probst said. Delta isn't making any contribution other than what it pays in fees and rent.

The MAC's revenue comes primarily from the airlines via airport lease payments and landing fees, followed by parking fees and other items, such as concessionaire payments and fees paid by passengers. It also receives construction grants from the Federal Aviation Administration and fees paid by most airline passengers at the airport.

"Nothing would come from the state's general tax coffers," Hogan said.

Under the plan, Delta and its SkyTeam partners would be the only carriers at Lindbergh; all others would move to Humphrey.

Hogan said Delta is not providing any upfront financial backing to make that transition, but it pays rent for the space. And, he said, "We're not going to build space unless we are confident that we have an airline that's going to use it."

Asked if the MAC had that guarantee from Delta, he said: "Not yet; they're obviously going over this plan very carefully with us and we obviously want their input because they're 80 percent of our business and we want to make sure our planning actually reflects what the needs are likely to be."

Hogan said one of the key questions is how long Delta will keep its hub at MSP and whether it will remain as strong as it is today. "We have no indication that they intend to downsize it in any way," he said. "So our expectation is that they will continue to grow their airline here."

Asked to comment, Delta said that MSP continues to be a "vital part of the Delta network."

Suzanne Ziegler • 612-673-1707

  • related content

  • Long-range airport plan highlights

    Wednesday November 25, 2009

    • Expand Humphrey terminal at both ends, going from 10 to 27 gates.

  • 2004 view


    December or January: the proposed plan will be presented to the MAC, a 15-member commission that owns and operates the airport.

    If and when approved, it will be sent to the Metropolitan Council for approval.

    Plan then goes back to MAC for final approval, most likely next spring.

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