http://www.azcentral.com/news/articl...harbor-ON.html
Phoenix council authorizes $2.9 billion airport expansion
Ginger D. Richardson
The Arizona Republic
Feb. 20, 2007 05:34 PM
Phoenix City Council members authorized a $2.9 billion expansion of Phoenix Sky Harbor International Airport Tuesday afternoon, despite strong objections from its two hub carriers, US Airways and Southwest Airlines.
Both airlines would help foot the construction bill by paying millions more in rent and landing fees in the coming years.
The city calls the rate hikes "modest," but the carriers say it would more than double their cost of doing business in Phoenix.
That, they say, could affect their ability to grow, or even maintain, their existing flight schedule.
"We are concerned that these cost increases would turn a modestly profitable hub into a money losing hub which would jeopardize our ability to grow or sustain our current level of operations," C.A. Howlett, US Airways senior vice president of public affairs said in a letter that was delivered to council members Monday. The airline has budgeted about $40 million for Sky Harbor rents and landing fees this year, he said.
Council members say they understand the carriers' concerns, but said that the expansion program - which includes the construction of a $1.1 billion automated train system, and a 33-gate terminal to replace aging Terminal 2 - is critical to ensuring that Sky Harbor can accommodate future passenger growth.
"This is an exciting opportunity to help this state and community move forward," Phoenix Mayor Phil Gordon said shortly before the council's vote.
He and other council members encouraged the airport to continue discussions with the airlines and to try to minimize the impact on them in the coming years.
The carriers say they are disturbed by Phoenix's plan in part because they don't believe that some of the projects, most notably the driverless train system, are necessary.
Bob Montgomery, Southwest's vice president of properties, called it an "extraordinarily and prohibitively expensive" project that is designed to merely replace the airport's existing bus system. In a sharply worded letter to the city, he detailed the carrier's long history of cooperation with the city, but said that Tuesday's decision marks a sharp departure from that positive relationship.
He made similar remarks to the Republic over the weekend.
"It is self evident, given the short timeframe, the foregone conclusion, and the questionable benefit of the (train) project, that the polar opposite of our previous partnership is beginning to take hold in Phoenix," Montgomery said.
The two carriers were notified only late last week that the airport intended to seek the council's approval of the expansion plan on Tuesday. However, Sky Harbor executives said they had been talking with the carriers about the airport's needs for years.
Assistant Aviation Director Paul Blue also said that the airport would continue to work with its airlines to address their concerns and minimize their costs. The current proposal calls for raising the airline's cost per enplaned passenger from $4.65 to $7 or $8 by 2016 - an increase of about five percent a year over the next 10 years.
"We can't implement $2.9 billion of work without close collaboration with our airline partners," Blue said. "We have a long road ahead of us. We'll work with them and do this in the most cost-effective way we can."
Passengers could feel the effects of the construction in their pocketbooks too.
Sky Harbor also hopes to take in extra cash via the passenger facility charge, a $4.50 fee tacked on to every ticket originating at the airport. The Federal Aviation Administration has submitted legislation to Congress that would, among other things, increase that fee to $6.
In addition, the airport will consider increases in rental car taxes, parking fees, and concessions to help pay for the work.
Tuesday's council decision means that planning and design to on the new train system and terminal can begin almost immediately. In addition, the airport intends to build out a final, eight-gate concourse in Terminal 4 and give other passenger areas, like baggage claim and ticketing, a major facelift.
The new round of construction follows other major improvement work at the airport, including the construction of an $89 million air traffic control tower and a $285 million rental car center.