"Operating costs expected to soar at D/FW"

Friday, June 8, 2001

Operating costs expected to soar at D/FW
The airport budget could almost double to $600 million by 2010, an official
says.
By Bryon Okada
The Fort Worth (TX) Star-Telegram


D/FW AIRPORT - By 2010, it may take $600 million - almost twice the current
cost - to keep Dallas/Fort Worth Airport operational, the top airport
executive said Thursday.

A proposed record $314 million operation and maintenance budget for 2002
will probably be headed for approval to owner cities Fort Worth and Dallas
next month. It could be the beginning of escalating operating costs through
the end of the decade.

D/FW Airport is in the middle of an ambitious expansion designed to restore
the aging infrastructure to elite status. By 2010, the airport could serve
80 million passengers annually, projections indicate. A $3 billion project
that includes a fifth terminal, a hotel, runway extensions, a power plant
and possibly an eighth runway is under way.

Also, the cost of operating an increasingly dense and complex airport is
increasing, airport officials said.

"While we're proposing a budget of $314 million, in the next nine years, the
budget will go up over $600 million just to keep the airport up and
running," Chief Executive Officer Jeff Fegan told D/FW Airport Board members
during a briefing about the proposed budget.

Operating costs are paid with various revenue streams, chiefly landing fees
from airlines, parking, concessions and car rentals. If operations go over
budget, the landing fees for tenant airlines will increase.

The proposed operation and maintenance cost, minus debt, is an 11.6 percent
increase from this year's budget. That means operating costs will increase
more than 10 percent for the second consecutive year at D/FW, which employs
1,877 workers.

"Rather than having to deal with the shock of it, let's say it's the price
of being No. 1," board member Pedro Aguirre said. "We poured the concrete.
Now we have to pay for it."

The biggest increases are for pay raises, seven new jobs, rising utility
costs and state-mandated programs to protect the environment. New programs
such as a customer call center and easier access for concession deliveries
are designed to improve customer service. The proposed budget has been pared
down by more than $30 million compared with department requests, including a
rejection of 78 new jobs.

If projections are accurate, operating costs would increase an additional 91
percent through the end of the decade.

"Two years of 10 percent increases are significant," board member Max Wells
said. "I don't know what I'd do differently - 30 percent of the increases
are human resources - but I think staff ought to prioritize by categories so
we can see how bad you really want something and what might be phased in."

What remains is enough to keep the status quo and to focus on crucial areas,
Fegan said.

Because Terminal D is not scheduled to open until 2005, the airport will
endure four more years when limited gate space are expected to keep
passenger and flight totals flat.

Senior Executive Vice President Kevin Cox said costs have typically grown by
10.3 percent since the airport opened in 1974.

"As far as net cost, we will have a spike through 2005. It's a lack of
facilities," he said.

After Terminal D opens, the net cost should decline, Fegan said.

Board members will meet June 18 to further discuss the proposed budget. The
board will officially adopt a budget July 5, though not necessarily the
proposed one. July 15 is the deadline to submit a budget to Fort Worth and
Dallas for approval in August.

Focus on construction

As usual, construction is the name of the game for the Dallas/Fort Worth
Airport Board. Myriad projects are under way as part of the $3 billion
capital development program or as part of other developments.

Board approvals include:

   A $133,170 change order with Angelo Iafrate Construction for the Runway
17C extension and other renovations;

   A $34,440 change order with Angelo Iafrate Construction for the Runway
18L holding apron and cross taxiway;

   A $2,870,054 supplemental agreement with Hensel Phelps Construction Co.
for construction of a de-icing facility;

   A $16,615,150 incorporation of a work package into a supplemental
agreement with Hensel Phelps Construction Co. for the guideway of the
automated people mover;

   A $24,526,458 incorporation of a work package into a supplemental
agreement with Hensel Phelps Construction Co. for automated people mover
stations;

   An $8,290,000 reimbursement and a $193,103 reimbursement to the Federal
Aviation Administration for installation of an Airport Traffic
Identification System and a Picture in Picture for Airport Surface Detection
Equipment;

   A $1,115,814 contract with I.C.E. Contracting to abate asbestos at Hyatt
Regency DFW West, which will be demolished;

   An $8,139,913 incorporation of a work package into a supplemental
agreement with Austin Commercial for Terminal D parking garage excavation
and utilities;

   A $20,584,253 incorporation of a work package into a supplemental
agreement with Austin Commercial for central utility plant changes;

   A submission of nomination forms to the Texas Department of
Transportation for $15,025,725 in Statewide Transportation Enhancement
Program money to beautify International Parkway;

   A $1,775,540 contract with Chamberlain Waterproofing and Roofing Systems
for terminal frontage enhancements;

   A $353,375 purchase order with Landscape Forms for terminal curbside
furnishings;

   A $31,650 purchase order with Surfaces for terminal curbside furnishings;

   A $5,845,868 contract with DPR Construction for renovations to D/FW
Department of Public Safety fire stations;

   A $127,500 contract with J.D. Power and Associates for a passenger survey
and action planning services.

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