"Airport Improvements Are Adrift After Sept. 11"

Wednesday, June 26, 2002

Airport Improvements Are Adrift After Sept. 11
By MICHAEL BRICK
The New York (NY) Times


MORRISVILLE, N.C. - At 3 o'clock on a weekday afternoon, there are no fewer
than 75 travelers standing before the security checkpoint at Raleigh-Durham
International Airport here. Proposals to design an expansion of the airport,
in part to address this bottleneck, are being considered.

But the project is modest, with less than a third of the budget and ambition
it carried before plans were put on hold in September. The airport's
managers are caught between an obvious shortage of capacity and a new
uncertainty about what and how to build.

There are evolving guidelines about baggage screening, parking lot placement
and the like from the Transportation Security Administration, a division of
the Transportation Department spawned in the organizational upheaval in
Washington that followed the terrorist attacks.

Many of the nation's airport directors were attending a conference in
Montreal on Sept. 11, and by the time they were able to get home they had
already called off big construction projects. Those are now hesitantly
restarting, with diminished budgets that focus on security measures or, more
often, expanding just a little bit while avoiding interfering with whatever
security requirements are eventually issued.

Jayne M. O'Donnell, a vice president of Turner Construction charged with
overseeing the company's aviation group, counts $6 billion in current
projects, a reduction of $5.95 billion from what was in the works before
projects were halted.

To many urban planners and designers, including some who make a living from
these projects and some who have a detached academic interest, these efforts
are insufficient.

"Critical plans to meet the needs of the 21st century were stopped in their
tracks," said John D. Kasarda, director of the Kenan Institute of Private
Enterprise at the University of North Carolina. He has made a focus of his
career a concept he calls the aerotropolis, arguing that airports drive
commercial real estate values higher in the way that highways did in the
20th century, railroads did in the 19th century and seaports did in the 18th
century. "Long-range planning," he said, "has stopped."

David E. Powell, an Army veteran who refers to the terrorist attacks as
nine-one-one and to the snack bars here as the commissary, is the director
of major capital improvements for the Raleigh-Durham Airport Authority,
responsible for planning construction projects. This is how he describes the
new $350 million remodeling plan:

"This is really trying to be flexible and not doing things that can preclude
other things. You just want to adapt to rules, regulations, processes,
equipment or lack thereof."

The airport has two terminals, A and C, separated by a roadway and a parking
garage. Terminal C, with 25 gates, was built in 1987 after American Airlines
established a hub, signed a 40-year ground lease and began operating 120
long-distance and 90 commuter flights a day. In 1995, the company reduced
its schedule to 15 flights a day, subleasing 20 of its gates to Midway
Airlines, which was moving operations here from Chicago.

In 1999, Southwest Airlines moved in, and that company's low fares
significantly increased demand for travel. By July 2001, the airport was
busier than ever. For the first time, more than a million people passed
through in a month. And the buildings were showing their age. A baggage
claim area was plagued with flies, and some gates had rows of seats with
those little television sets that have TV written on the back. The airport
authority was contemplating an expansion program for both terminals, with a
budget of more than $1 billion.

Then Midway filed for Chapter 11 bankruptcy protection, terrorists used
airplanes to murder and the government shut down the airlines for a few
days. Only 454,000 people passed through in September, though that number
has since risen to more than 700,000 a month.

The airport authority has bought out the American Airlines lease for $27.5
million plus some rent credits, and received proposals to manage a $275
million overhaul of Terminal C and a $67 million expansion of the apron, the
area where planes park.

The terminal project will re-emphasize the ticket counter area, a reversal
of a trend toward retail development by the gates that was driven by
electronic ticketing. Airports can be attractive to certain retailers
because "you have so many people in one place," said Andrew Goldberg, senior
managing director of the retail group at the real estate services firm
Insignia/ESG. But, he added, "if you're on the wrong side of security, you
lose a whole lot of people."

The project will also probably use an island-style arrangement instead of a
wall of counters in the terminal to accommodate bulky new baggage screening
machines. There is already a $140 million parking garage project under way.

"It's kind of a plug-and-play situation," Mr. Powell said. "It's going to be
really ugly for the customer. We're just trying to make it a relatively
pleasant experience, assuming the T.S.A. doesn't kill off the whole
industry."

Since its establishment on Nov. 19, the Transportation Security
Administration has started a pilot program at five airports for baggage
screening, and has said that all checked bags must be screened by Dec. 31
and that parking garages must be 300 feet from terminals, with some
exceptions.

The screening is to be done with machines called Explosive Detection
Systems. They are the size of sport utility vehicles and look somewhat like
magnetic resonance imaging spectrometers. Boeing has a contract to put them
or similar machines called Explosive Trace Detection devices in 429
commercial airports.

"All of the money has been funneled into security," said Ronald L. Steinert,
a vice president of the design firm Gensler. He added that all the money
spent on retrofitting airports for baggage screening could push back
expansion plans to the extent that airports become so unpleasant that
travelers stop flying. The danger, he said, is that "we will have 100
percent screened, but we will have ignored capacity to the extent that the
whole industry will collapse."

The construction and design companies that profit from expansions say that
Congress has created an unfinanced mandate in the Transportation Security
Administration, but their complaint is more accurately directed at the
airlines. The T.S.A.'s sources of financing include $2.4 billion in
appropriations for fiscal 2003, and it has asked for an additional $4.4
billion this year and appropriations of $4.8 billion next year, but much of
that will be spent on hiring a work force of 52,000 to 54,000 security
workers. Deirdre O'Sullivan, a spokeswoman for the agency, said some money
would be set aside for the cost of installing the baggage screening
machines, but she declined to say how much.

The Federal Aviation Administration, which administers the $3.3 billion
Airport Improvement Program, is in much the same position as the airport
directors, said Marcia Adams, a spokeswoman for the F.A.A. Its program has
been used to finance airport expansions in previous years, but now the
F.A.A. is waiting to see whether the Transportation Security Administration
will issue new guidelines for the kind of projects it can finance, and
waiting to see how airport directors will react to the security agency's
guidelines.

Local airport owners themselves generally have no taxing authority. Some are
beginning to reach out to private developers, copying the European model of
privatized airports, but those efforts are in their infancy. For now, the
airports make money from airlines, which pay landing fees based on the size
of the aircraft, and from passengers. The airlines have received billions of
dollars in direct federal assistance - which of course does not register on
any airport's count of landing fees - since the terrorist attacks.

"Airports need airlines to pay, and they also need passengers to rent their
cars," said Kurt E. Fursgren, a director of Standard & Poor's who covers
airport bonds. "Any improvements that they do related to security are part
of what they do, but they're not going to generate any revenue for them."


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