The cost of LaGuardia’s overhaul doubled, and Delta is stepping up with the cash. What will it get in return?
As with any major revamp of a big airport, the cost of dragging LaGuardia Airport into the modern era is measured in billions of dollars. It started at $3.6 billion, but that was just for a three-story terminal to replace a 1964-era shell that leaks water, squeezes travelers, and inspired U.S. Vice President Joe Biden to dub the runt of New York’s three main airports a “third world” facility.
The refit of the central terminal, also called Terminal B, rose to $4 billion with the later addition of a “Great Hall” entry to connect the 35-gate structure with Terminal C. The entire project also seeks to expand onto real estate now allocated to parking, hard up against the traffic-clogged Grand Central Parkway. The planning and design work alone got $1 billion back in 2004.
Major infrastructure projects in New York City rarely come in under budget or without surprises along the way. The total cost of LaGuardia’s rebirth has been dribbling out slowly, with each increase noted in an obscure press release or at a meeting of the Port Authority of New York & New Jersey. Commissioners even disagree about what to include in the price, and whether past funds should be included to offset it. And there may indeed be some surprises before it’s done. That doesn’t sit well with public interest watchdogs.
“It’s time now for partners to bring greater transparency to the overhaul and build confidence in the project by posting clear budgets and timelines to the project website,” said Joseph Sitt, chairman of New York infrastructure advocacy group Global Gateway Alliance, in an email.
LaGuardia Gateway Partners
LaGuardia Gateway Partners, the winning consortium for the project, took over management and operations at Terminal B last month. The partnership consists of Vancouver-based Vantage Airport Group Ltd., Swedish construction firm Skanska AB, and Paris-based Meridiam SAS. Terminal B, which houses eight carriers, including American Airlines Group Inc., Southwest Airlines Co., and United Continental Holdings Inc., was designed to handle 8 million annual passengers. Last year, it hosted 14.3 million. By 2030, it’s expected to handle 17.5 million per year. The Federal Aviation Administration restricts LaGuardia operations with landing slots due to congestion, as the agency does at John F. Kennedy International and Washington-Reagan National.
All told, the airport’s total projected cost including work at Terminals C and D, redesign of roads, parking structures, and other infrastructure, is likely to run as much as $8 billion.
One of the project’s big funding sources is Delta Air Lines Inc., LaGuardia’s largest operator by passenger share and arguably the most aggressive in terms of trying to become the New York metropolitan area’s “hometown airline.”
“This doesn’t happen without Delta Air Lines,” New York Governor Andrew Cuomo said in a July 2015 speech.
On Thursday, the Port Authority will debate whether to spend $600 million to complement the money Delta will spend to revamp Terminals C and D. The Atlanta-based airline won’t say how much it plans to spend for the new 37-gate dual terminal. The Port Authority’s agenda says “approximately $4 billion for design and construction work,” subject to commissioners approving a new lease with Delta, “as well as other agreements relating to the project.” Under the deal, Delta would pay no rent on the terminal and would get a new lease, through 2050, to match the length of the lease granted LaGuardia Gateway Partners for Terminal B. In 2012, Delta began a more than $100 million improvement project at Terminals C and D, to add larger clubs, new dining options, and a bridge that connects the terminals.
One question that arises is what Delta may want in return for its magnanimity. Aside from its role in the renovation, Delta has also been seeking to have the Port Authority scrap a regulation limiting flights at the airport to 1,500 miles. The “perimeter rule” has been a critical factor in how airlines have structured their schedules at the other two city airports, Newark Liberty International, a United hub, and JFK, the primary home of JetBlue Airways Inc. as well as a Delta stronghold.
“American and Delta would serve the local, New York-to-Los Angeles, and beyond markets from LaGuardia, assuming [they] had the terminal facilities to accompany a high-yield service,” says Robert Mann, an aviation consultant in Long Island and former American executive. “United Airlines is placing its bets on Newark alone.”
In the past, carriers such as American and JetBlue have argued that LaGuardia, in its current state, isn’t prepared for long-haul flights. Sitt, the alliance chairman, said the Port Authority should consider scrapping the rule to boost competition among area airports.
Delta “looks forward to taking the next steps” on its LaGuardia work, a spokeswoman said, declining further comment. A Port Authority spokeswoman referred questions about the project to the agenda for the July 21 meeting, declining further comment.
The full project is expected to finish in 2022. As part of it, LaGuardia may well have a new feature the Port Authority isn’t ready to discuss: nonstop flights to the West Coast.
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