Does the city need a new, billion-dollar Kansas City International? 

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November 12, 1972, marked the middle of a terrifying 32-hour jet hijacking, one of the more remarkable such air-industry ordeals in U.S. history.

A trio of hijackers, one of them a prison escapee, commandeered a Southern Airways DC-9 leaving Alabama with 27 passengers and four crew members. At one point, they threatened to crash the plane into a nuclear-weapons plant in Oak Ridge, Tennessee, unless authorities met their demands — chiefly $10 million in cash.

They got some of their cash and had the pilot steer the plane to Havana, where the hijackers thought they would get a soft landing and a warm welcome in Cuba. Instead, Fidel Castro greeted the weary passengers and crew and then tossed the hijackers in prison.

The same day, Kansas City International Airport opened.

That day's edition of The Kansas City Star played the hijacking above the fold, higher than the hometown debut of the facility's three terminals.

The hijacking, one of many during the 1970s and among the first to suggest that a passenger plane could be used as a weapon, also hinted that KCI's security outlay may have been outmoded from Day One. Almost 30 years later, 9/11 happened, and KCI's design further accelerated toward obsolescence.

There are reasonable cases to make in advocating for a new, single-terminal airport design, with security being perhaps the foremost. But Kansas Citians shouldn't be confused about what a new terminal will not bring: more airline business and more travel options.

The experience of other new terminals over the past six years shows that, as airlines consolidate and eschew consumer options in favor of profitability, $1.2 billion of construction at KCI's Terminal A is no guarantee of an increase in flights, passengers or revenue.


Mark VanLoh laughs when he's shown a copy of a May 11, 1994, New York Times article characterizing the then-new Denver International Airport as a "Field of Dreams."

That airport, beset by long construction delays and big cost overruns, was and has remained a widely panned example of a major development project not delivering on build-it-and-they-will-come promises.

VanLoh, an unabashed supporter of the new single-terminal KCI, is careful not to promise what only airlines can deliver.

"Some would want me to guarantee if we build a new terminal, we will get new flights," VanLoh told a City Council committee on April 4. "And no one in this room is going to do that. No one on Earth can guarantee what the airlines are going to do next week. But we can guarantee you now that we simply don't have space for some of our larger airlines to add flights."

But literature produced by KCI veers toward that promise.

"The new terminal will include common use gates and open possibilities for additional domestic, international and direct flights that KCI currently can't accommodate," reads a question-and-answer sheet published by the Kansas City Aviation Department in April. "Fewer connections and more direct flights will increase business and personal travel options, increasing Kansas City's appeal for all travelers."

About 10 years ago, some 500,000 passengers connected on flights through KCI. Today about half as many do.

VanLoh blames the decline on the difficulty of connecting flights through KCI. "These people are connecting somewhere, but they're not doing it here," he tells The Pitch. "Because it's so hard to connect here."

A new terminal would include common-use gates, which allow several airlines to use the same gate at different times of the day, rather than the clumsy lease arrangements now in place at KCI.

Mineta San José International Airport, for example, allows a Japanese airliner to use a gate there for a half day to send its one daily flight out across the Pacific Ocean, rather than leasing on a permanent basis for mostly unused space.

KCI requires new and existing carriers to lease gates in three- to five-gate increments. The way the airport is laid out, other deals could undercut existing leases, causing other carriers to cry foul.

Alaska Airlines figured out a way around this, for what airport officials say was a premium. That company replaced Southwest Airlines' Kansas City-to-Seattle route but did not want to lease three gates for one flight, so it subleased one of Delta Airlines' gates. And it's reportedly paying a steep price for that luxury.

Despite the addition of Alaska Airlines, though, KCI's travel options have steadily eroded since 2007.

From that time through last year, departures dropped from 87,976 to 61,421 — a 30-percent swoon that's higher than the average 26-percent drop experienced by similarly sized airports over the same span, according to data from the Massachusetts Institute of Technology.

The decline has more to do with the airline industry than it does with airports. "You don't build a new terminal to get new air services," says Mike Boyd, founder of the Denver airline consulting firm Boyd Group International.

VanLoh agrees with that assessment — mostly. "We're not building this for next week," he says. "We're building this for the future. It's cyclical. We want to have the option for them [airlines] to add [flights] effortlessly."

Ed Ford, a Kansas City councilman whose Northland district includes KCI, was against a single-terminal design before he was for it. "Southwest can't expand [at KCI]," he says. "If Southwest has a business decision to expand in four of five years, it isn't going to be at KCI."

The mergers of major carriers over the years, such as United Airlines and Continental, or Northwest and Delta, has reduced competition and, thus, the number of departures and arrivals at KCI and airports like it.

Fewer seats are bad for consumers but good for airlines — lower operating costs and higher demand (with corresponding higher prices) for seats. Which is why city officials like Ford may want to get comfortable waiting for Southwest to expand.

Kansas City's average fare was $292.75 in the third quarter of 2006. Its 18 percent growth to $345.69 in the third quarter of 2012 outpaced the national average increase — 10 percent — over the same period.

A study released this month by MIT says this dynamic hits airports like KCI the hardest. When, for example, Southwest Airlines — KCI's primary carrier — cuts domestic departures, "medium-hub airports [are left] in a precarious position," the MIT study says. It goes on: "With both network carriers and Southwest cutting service, these 'secondary airports' are often no longer able to compete on service or price with larger, nearby hubs."

For proof, just ask the folks at Indianapolis International Airport.

That airport opened a $1.1 billion terminal in 2008, just in time for a global financial crisis.

The year before that new terminal opened, Indianapolis International Airport had 65,539 departures. Last year, it logged just 49,641.

"Airlines are tending to appreciate profits more than market share, where in the past, if one airline initiated service, you'd see the other airlines have a knee-jerk reaction," says Carlo Bertolini, a spokesman for the Indianapolis airport. "After years of losses, we've seen them be smarter in how they dole out capacity."

Ticket costs have grown in Indianapolis, too, reaching an average fare of $376.24 in 2012, up almost 20 percent from $314.94 in 2006.

KCI is also losing market share to smaller airports that used to connect to other destinations through Kansas City. Airports like those in Manhattan, Kansas, and Columbia, Missouri, are subsidizing carriers to draw business rather than have their customers drive to KCI for a flight.

Wichita residents who used to drive to Kansas City if they wanted to take advantage of Southwest's lower airfares are about to save some gas money; on June 2, the airline introduces five flights from Wichita. And that city is in the middle of building a new $101 million terminal, a decision primarily motivated by improving security concerns.

Is the new terminal what lured Southwest?

"I don't think that was a consideration," says Valerie Wise, an air service and business development manager for Wichita Airport Authority.


What do airlines care about, with respect to airports? Mainly the cost of doing business at them.

"At this point, we've had some high-level conversations with the Kansas City airport about the new terminal and we've seen a design concept," Whitney Eichinger, a Southwest spokeswoman, writes in an e-mail to The Pitch. "Keeping costs low is of utmost importance to Southwest Airlines and we want to ensure this project keeps our costs in line, so we look forward to continuing our conversations and learning more about the project."

The airline isn't signaling an appetite for expansion.

"We currently have enough gates to satisfy the operation we have [at KCI] and anticipate it staying that way with the new design," Eichinger adds.

Costs would almost certainly increase with a new terminal — for parking, for a cup of coffee and for landing an airliner on a runway.

In Indianapolis, some costs went up after its new terminal opened. Indianapolis International Airport charges a $1.88 landing fee for every 1,000 pounds of weight on an aircraft that's landing on one of its runways, compared with $1.73 for the same measure in 2006 — an increase driven partly by the lower traffic at the airport since the new terminal opened.

Costs are critical to a new terminal in Kansas City because of airlines' sensitivity to expense and because financing the project would mean the issuance of up to $1.2 billion in bonds. It's the cheapest form of financing because interest rates tied to bonds are usually low.

Kansas City's finance team estimates that a single terminal could fetch 2.8 percent in interest rates. They would be lucky to find single-digit interest rates among private-equity financiers or pension funds looking to invest in municipally owned airports.

Bonds are sold to investors to drum up quick cash. The upfront money would pay for the airport's construction. Buyers would be repaid by airport revenues — from coffee, parking spaces, landing fees.

The city would not be on the hook to make up the difference if the airport didn't produce enough revenue to cover bond payments. Bondholders would be screwed on their investments, but so would the airport's reputation when it wanted to issue bonds in the future.

Kansas City last issued KCI bonds, worth more than $250 million, for cosmetic and security upgrades in 1999. City officials say that bond issuance bought the airport 10 years of useful life, but that's about it.

VanLoh compares KCI today with driving around in a clunker. Does KCI keep doing $250 million maintenance-type work to the old-bones airport, or does it get a low-interest loan in order to eliminate all those pesky upkeep costs? "You can keep paying your own money or you can take out a loan and buy a new one," he says.

KCI is more like an old house than a 150,000-mile car. On a tour of KCI, VanLoh points to a number of cracks and patches in the walls of the aging facility, as well as some flooding in underground parts of the airport. The wear appears largely superficial and is the type of thing that critics of a new airport seize upon: Can't these things be corrected at a lesser expense?

"How many of these problems can be fixed with a long-term fix without spending $1.2 billion on an airport," asks Kevin Koster, a marketing executive in the Northland who started savekci.com, sort of an online meeting place for opponents of the new KCI terminal.

Airport officials acknowledge that engineers have not estimated costs for repairing some of KCI's nagging issues, like the cracks in the walls and the flooding underground. ("Is it dangerous? No," VanLoh says. "Houses settle, so they will leak.")

New-terminal boosters are also counting on federal money to help defray project costs. But waiting on the feds these days is a fool's errand.

"You can't put together a financing plan that's dependent on the federal government," Kansas City Manager Troy Schulte tells The Pitch.

The Airport Improvement Program, a pot of grant money, was initially thought to have emerged unscathed from federal sequestration. But earlier this year, the federal government decided to raid the AIP for $250 million in order to fund air-traffic controllers at smaller airports who were at risk of missing a paycheck.

That move annoyed airport officials around the country. They were mindful of the possibility that Congress, like a black-sheep uncle with a hip flask, would get a taste of that new pool of money and keep drawing on AIP for other purposes.

"Our trade organizations have been working in Washington and saying, 'If you start to do this, it's not fine, but give airports an increase in passenger facility charges,' " VanLoh says.

And grants from the AIP tend not to be that large.

During fiscal year 2012, the largest such grant was a $70 million payout to Chicago O'Hare International Airport to fund runway work. Nearly all other AIP grants were a few million here, a few hundred thousand there — nothing that would go far in defraying the cost of a $1.2 billion project.

KCI during that fiscal year got nearly $3 million in entitlement grants. In any given year, KCI gets between $5 million and $15 million in discretionary funding from the federal government.

That puts pressure on airport officials to find new ways to make money while fending off substantial increases in costs to airlines. Right now, KCI's biggest moneymaker is parking. At $43 million a year, that haul represents about 43 percent of the revenue side of the airport's ledger.

Schulte wants to balance that equation with more revenue from other sources, such as concessions.

A new single-terminal airport could put more food and beverage options beyond security checkpoints, countering the existing KCI layout, which offers scant options for beer and chicken wings. They're nearly all outside the Transportation Security Administration curtain, another vestige of a pre-9/11 airport design.

KCI stoops below national averages for concession sales, fetching $3.90 per passenger. The national average for similarly sized airports was $5 in 2012, according to a report by Airports Council International.

It's the same song for retail sales: KCI picks $1.20 off each passenger, compared with the $3.06 national average.

Combined, KCI makes just 66 cents in net sales after operators absorb their costs and profits — the lowest in the country, according to VanLoh.

VanLoh says a practical haul on concessions and retail, which he believes is attainable with a new terminal, is $2 of net revenue per passenger.

Schulte adds that lease arrangements with food, beverage and retail operators could drum up quick cash to help finance the new terminal.

Concession revenue bloomed in Indianapolis with its new terminal, going from $5.3 million in 2006, two years before the terminal opened, to $8.6 million last year.

But Ford says the concession argument is dead on arrival for local travelers, who typically migrate beyond security before they have a need for nice restaurants and bars.

"It's real, but I don't think local people care," Ford says. "I think passengers with layovers care ... [but] I think it's a nonstarter, and the opponents are able to use that as a straw man."


The new terminal wouldn't actually cost $1.2 billion. Estimates peg the terminal bill itself at $700 million. Another $300 million would go toward new parking, with $200 million thrown in for a new de-icing platform.

Kansas City officials say keeping KCI as it is would require two new de-icing platforms — areas where planes sit on cold or snowy days while getting sprayed down with chemicals that prevent ice buildup. Schulte said that cost would approach $500 million.

It's costs like that, they say, that make the plan for a new terminal a relative wash, over time.

But even if the new terminal stalls, Kansas City plans to redo its de-icing pads, likely with a bond issuance.

The Missouri Department of Natural Resources and the U.S. Environmental Protection Agency have already browbeaten the Aviation Department for too much runoff from the old de-icing pads, which send chemicals seeping into nearby ponds.

KCI has never been fined for these transgressions, but city officials fear that the EPA could do to the airport what it did to Kansas City's sewage-spewing sewer system.

It was just a few years ago when the EPA got a federal judge to order a consent decree: basically a coerced promise that Kansas City would spend what will eventually amount to at least $4 billion fixing its nasty, ramshackle sewer infrastructure.

"The EPA has been very heavy-handed on us in these issues," Kansas City Councilman Russ Johnson said during a council hearing. "I'd hate for them to come in and dictate to us when we can get in front of the problem. We could have probably gotten in front of our sewer problem and didn't. Let's not make the same mistake twice."


One of the biggest mistakes by new-terminal proponents was hawking the idea that an airport could be built near Missouri Highway 152 before realizing that doing so would cost an extra $500 million. That dent in the city's credi0x00ADbility has lingered in the airport discussion.

Ford has suggested that the Aviation Department be governed by an airport authority that's separate from the City Council, similar to how Indianapolis and Wichita run their airports.

"Maybe it would be better to have people more attuned to the industry," Ford says, "and can be more strategic in governing the airport."

Ford was the chairman of a City Council in charge of transportation matters during Mark Funkhouser's term before he found himself sideways with the unpopular mayor. Funkhouser replaced Ford with Russ Johnson.

Johnson himself has leveled some poor public relations in the airport discussion. On April 4, during a Transportation and Infrastructure Committee hearing on the new airport, he shunted questions from Patrick Tuohey, Show-Me Institute field manager, and insisted that public hearings were for comments only, not questions. He also infamously bolted from television reporter Micheal Mahoney's attempts to question him about airport matters.

Johnson's office responded to an interview request with instructions to call Global Prairie, a PR firm that the Aviation Department hired in March for up to $117,000, for comment and information about the terminal proposal.

Since last year, the single-terminal concept has faced opposition not just from the City Council but also from what might be a majority of the public. Polls suggest that most Kansas Citians don't want a new airport. (Pollsters have not released the verbiage of the questions asked, though, which tempers the results somewhat.)

Besides savekci.com, a citizens group tried to start a petition against the project, only to be beaten back by the city charter. Now, Friends of KCI is opting for a petition drive in order to stall a new terminal without a public vote on it first. Spokesman John Murphy says his Brookside-based group would prefer that City Hall stick to issues such as education, crime and infrastructure.

"We've got all these other problems to fix," Murphy says. "Why are they tackling this?"

Crime and local air traffic aren't mutually exclusive, though. Money used for a new terminal would not come from the Kansas City Police Department's budget. Friends of KCI's efforts seem to stem more from their mistrust of City Hall and its misplaced sense of priorities than from the technical aspects of a revamped terminal.

"Our concern at the airport is, they will try an end around on the voters," Murphy says.

That's possible. Issuing bonds would require a public vote, but if such a ballot didn't go the city's way, it could seek funding from private equity (at a much higher borrowing cost).

Schulte, the city manager, cautions City Hall skeptics that a new terminal is not a done deal.

Mayor Sly James appointed a 24-member advisory committee on May 14 to research whether the current airport is suitable and, if not, how to find the best option for a future airport.

"The deal is not cooked one way or the other," Schulte tells The Pitch. "We're going to give it an honest look ... and be as transparent as we can."

The co-chairman of that advisory group is Bob Berkebile, the BNIM architect who helped design the original three-terminal model.

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