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Revamp won’t cost airlines

Goal is to expand airport without boosting user fees

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The executive director of Salt Lake City International Airport believes a revamped $1.47 billion reconstruction of the airport can occur in the next decade without increasing user fees paid by its 11 airlines.

And if they can get something for practically nothing, the airlines — including hub carrier Delta Air Lines— would presumably rubber-stamp the expansion plans and renew their contracts to serve the airport, which expire in 2003.

Tim Campbell, who took over as chief of the city's Department of Airports last August, has been working with his staff for months to retool what was once a 20-year, $1.7 billion expansion plan promoted by former Mayor Deedee Corradini.

Current Salt Lake Mayor Rocky Anderson hired Campbell and initiated a review to see whether the design concept espoused by Corradini's staff — a single, consolidated terminal with linear satellite concourses — was efficient and worth pursuing.

After that process confirmed a reconfiguration was in fact needed, Campbell and his staff began devising a new development plan that would give the city an airport for the future without cutting too deeply into the profits of its carriers.

That effort is ongoing, but Campbell said it does appear the financial issues — which caused Delta and others to question the initial plans — are less formidable than they appeared several years ago.

The goal, Campbell said, is to build the new airport within eight to 10 years without increasing airline user fees, except to adjust them for inflation.

"Right now we have a model that seems to achieve that," Campbell said. "We're still working this through with the carriers and there are still some issues to work through, but basically a couple of things will allow us to do that, we think."

Perhaps the biggest reason is that the federal government recently allowed the airport to increase its passenger facility charge (PFC) — a fee paid by the customer as part of each ticket purchased — from $3 to $4.50.

The airport began charging the new amount in April and will receive about $10 million more per year — a total of roughly $30 million annually — from those passenger fees.

"Much of the terminal program can be funded with PFCs, so that helps considerably," Campbell said.

"What we're doing now is we're reimbursing ourselves for projects we've done previously. But as we begin the new program, we can use that $4.50 to pay as you go — collecting it at approximately the same time you're spending it — and that obviously increases the cash flow considerably."

In addition, Campbell said, the airport has accumulated funds for construction over the past several years, money that was placed on hold while discussions about the proposed expansion dragged on. And the airport has other revenue sources it can funnel into the expansion project as it moves forward, he said.

"Mix all that together and it looks like we would be able to do that program at little or no increase in cost to the carriers," Campbell said. "So the question is, do you want a new car and pay what you're paying today or keep your old car and pay what you're paying today?"

Delta and Southwest Airlines, the two main tenants at Salt Lake City International, hope Campbell's optimism doesn't turn out to be the rhetoric of a used-car salesman.

"We're a low-fare airline so we keep a keen eye on costs, and we hope their efforts will develop in a cost-neutral environment. We would always encourage that," said Kristin Nelson, a Dallas-based spokeswoman for Southwest. "But from what we've heard, everything is still in the planning stages."

Robert Dibblee, Delta's Salt Lake-based director of western governmental relations, said the carrier has completed a "comprehensive technical review and financial analysis" of the airport's new proposal and is hopeful it will indeed have a minimal impact on Delta's operating costs at Salt Lake City International.

"We believe that we're headed down the right path to achieving that goal," Dibblee said. "Obviously, nothing is final."

Delta has struggled to make the same margin of profits in Salt Lake as in its other main hubs, Atlanta and Cincinnati, and recently received a fuel-tax break from the Utah Legislature.

Delta announced last week that it will remove 10 planes from its network this fall, reducing the capacity of its entire system by 1.4 percent, in reaction to a sluggish economy. But both Dibblee and Campbell say there is no reason to think Salt Lake will not remain a vital Delta hub in the future.

Passenger traffic at the airport has slowly decreased over the past several years, due in part to some Delta maneuvering that has decreased the number of connecting passengers at the airport. But Campbell said the number of passengers traveling directly to and from Salt Lake has steadily increased and said the airport reconfiguration is critical to its future success.

The expansion project will not add much capacity, at least not initially, but it will make expansion in the future that much easier.

Reflecting Delta's own internal change in focus, the new plans include more gates for SkyWest regional jets — 40 as compared to 29 today. There will be roughly 52 gates for larger jets, about the same as today.

Delta also has changed its mind about where it wants to locate its operations, Campbell said, choosing the concourse closest to the proposed terminal. Also, an underground tunnel with a moving walkway has been added to the design, allowing easier connections between Delta and SkyWest planes.

Campbell said the business plan for reconstruction should be completed in a few months. He hopes to have tentative approval from the airlines by early next year.

He said the total cost is just $1.2 billion in 2001 dollars. The $1.47 billion price tag reflects inflation at the midpoint of the project.


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