Fate Of Rail Link American Airlines Cost Overruns Top Airport Concerns
Written by Paola Iuspa on February 7, 2002
By Paola Iuspa
A proposal to revise Miami International Airport’s expansion plans leaves two questions unanswered – the fate of a rail link to a central transportation hub and how to pay for millions in cost overruns by American Airlines, which is building a new terminal.
Aviation Director Angela Gittens told Miami-Dade officials at a workshop Monday that the airport’s capital improvement program needs to be cut from $6.1 billion to $4.8 billion. Airport officials blamed the need to revise the program on recent fallen revenues and overly aggressive growth projections.
Ms. Gittens said passenger projections, calculated in the early ’90s when the program was approved by county commissioners, were estimated to reach 48 million by 2010 – a number no longer realistic. Based on a decline in passengers using Miami International in the past four years, Ms. Gittens said, the airport expects 37 million air travelers by 2015.
Fewer passengers means less revenues to spend on making Miami International a world-class facility, Ms. Gittens said, the goal of the capital improvement program due to be completed by 2008.
Ms. Gittens was hired in spring 2001.
Airport authorities will go before the Miami-Dade commission, which governs the airport, to discuss Ms. Gittens’ revisions to the improvement plans on Feb. 26.
The proposed revisions would include going ahead with a $779.2 million south terminal for United Airlines and its Star Alliance partners as well as Delta Air Lines and Sky Team partners, the $1.3 billion north terminal for American Airlines, upgrades of security systems, environmental projects and a new runway due next year.
Ms. Gittens’ plan calls for delaying part of the expansion and renovation of the central terminal, estimated at $579 million.
Her revisions would include concourses E, F and G – known as the central terminal; construction of a parking garage for 1,500 cars; widening of the central boulevard serving as the airport’s main entrance, and acquisition of neighboring properties to expand cargo facilities, said Carlos Bonzon, a senior airport official overseeing the expansion.
The airport has already established revenue sources for the $4.8 billion plan but Ms. Gittens said revenue sources have not been locked in for the $300 million needed to build a people mover to connect air travelers with the Florida Department of Transportation’s proposed Miami Intermodal Center, to open in 2006.
"I think she painted the worst-case scenario," said Miami-Dade Commission Chairman Gwen Margolis. "The MIC mover is the centerpiece of the future transportation program. Her numbers were rather pessimistic. I think she was trying to paint it like that for negotiating reasons."
Commissioner Margolis, who attended the workshop, said the commission made a commitment years ago to pay for the airport-sponsored intermodal center people mover and Ms. Gittens "is going to have to resolve" the funding shortfall.
Department of transportation officials have said the people mover is a key component of the transportation hub as well as an important factor for the federal and state financing of the $1.3 billion central station.
Jose Abreu, the department’s district secretary, said funds need to be in place by April to go ahead with the financing of the ground-transportation center.
Commissioner Katy Sorenson, also attending the workshop, said she agreed with Ms. Gittens and her conceptual plans to attract public and private partnerships to build a hotel, offices and retail at the central station.
"There are local and federal grants available, and we may have to look for private and public partnerships," Commissioner Sorenson said. "This is too important to be put on the back burner."
At the same time, the airport is negotiating with American Airlines officials, who say they need an additional $321 million in overruns, atop the $1.3 billion it is costing to build the north terminal.
In 1995, the county made American the construction manager for its terminal, which originally was to cost about $800 million. American began work in 1999 and, that year, asked for $1.3 billion. Now, it is asking for another $321 million to prevent running out of funds between July and December, Ms. Gittens said. The additional money would help pay for a new baggage system, refurbishing existing buildings and fees rooted in construction delays, said Mark Massman with Dade Aviation Consultants, a firm hired by the county to monitor the capital improvement project.
Airport officials said they would be willing to lend that money to American, but the airline would have to pay it back to the aviation department. Other options are for the airline to cut costs or pay for those expenses itself, Mr. Bonzon said.
"I think we should finance it," Ms. Gittens said, "but put some of the responsibility back on them."
So far, American Airlines has rejected the loan idea, airport officials said.
Ms. Gittens said she hoped to seal a deal with the carrier by Feb. 26 when she will meet with commissioners on all proposed airport project revisions.