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Airport Capital Improvements Scrutinized

 

Airport Business Column August 2008



Skytrax, a privately-owned research company in London, recently released its annual World Airport Rankings and once again Hong Kong International Airport took the number one spot. Since 1999 when the rankings were first inaugurated, Hong Kong has earned the distinction of being the world’s best airport seven out of 10 times. Singapore Changi and Amsterdam’s Schipol both achieved the highest ranking in previous years. What I find disconcerting is that a North American airport has never been named as a world’s best airport, and in the past two years, North American airports have not even placed in the top 10.

What does Hong Kong have that our domestic airports do not that they can consistently wow their travelers on the judging criteria? Undoubtedly, one of the major benefits for travelers at top ranking airports in Asia, as well as in Europe, is their modern infrastructure – more space, more amenities, and easier and more efficient accessibility. Edward Plaisted, CEO of Skytrax, attributes the less-than-world-class rankings to an older airport infrastructure in the U.S.

By and large, North American airports are older and, due to increased operational requirements over the last few decades, are being pushed to their limits. Since no one seems to want an airport to be built in their own backyard (but they still demand the convenient access), 1960s-era domestic airports are constrained by space, regulatory issues, public pressure, and environmental considerations when they plan to upgrade, modernize, or embark on new construction projects, which are essential to creating a world-class airport system.

The dramatic rise in the cost of oil combined with the economic downturn have created a ripple effect as airlines cut back service and this reduction negatively impacts airports and other peripheral service providers that depend on travel and tourism. Analysts have indicated that cut backs by domestic and international airlines are estimated to be about 11 percent. This is putting essential capital infrastructure projects that many U.S. airports have planned at risk.

Here are just a few of the highlights of the capital improvement projects that may be jeopardized at U.S. airports.

  • Orlando International Airport planned a nearly $1 billion program that included overhauling the main ticket lobbies, which has now been postponed indefinitely along with several other planned projects.
  • Oakland International Airport has delayed plans for a third terminal, estimated to cost half a billion dollars, following the departure of three airlines for the winter schedule.
  • Long Beach and San Jose improvement projects are also under review.
  • Los Angeles International Airport has planned major upgrades for the Tom Bradley International Terminal. While these are planned to continue as of now, airport officials have made it clear publicly that they are exercising caution and, should airline services continue to shrink, LAX may have to push back on some of the long-term enhancement projects.
  • Pensacola has scaled back its terminal project development that is currently underway, electing to hold off on adding new gates and boarding bridges.
  • McCarran International Airport will be cutting $360 million from its $3.7 billion capital improvement plan, plus postponing a $215 million runway job, new signage, and baggage handling upgrade and totally canceling the $10 million escalator expansion at baggage claim. However, plans for the third terminal are expected to continue.

But it’s not all doom and gloom. Some U.S. some airports are moving ahead with their planned capital projects and infrastructure improvements.

  • San Francisco International is continuing with the $383 million modernization of its Terminal 2, scheduled to be completed in 2010.
  • The Port Authority of New York and New Jersey approved a $68 million plan to reduce congestion at Newark Liberty and JFK International airports, where flight delays are among the worst in the nation, including taxiway upgrades and new technology.

Canada’s airports continue to remain on track and expand. Major construction is moving forward in Vancouver, Edmonton, Winnipeg, and Ottawa, among other Canadian airports.

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