Monday, July 24, 2017
TKC MUST READ!!! KANSAS CITY TAX FIGHTERS TOUT NEW AIRPORT 'WHITE PAPER' WARNING OF TRAGIC CORPORATE SINGLE-TERMINAL CONSEQUENCES!!!
This morning we want to share a bit of scholarship that had big money consequences for all of Kansas City.
Accordingly . . .
CHECK THIS EXCLUSIVE KANSAS CITY AIRPORT STUDY THAT WARNS OF SINGLE-TERMINAL DANGER!!!
Citizens For Responsible Government KC: Airport Facts... Just the facts...
Don Hensley, has taken the time to research what is really going on with this “Single Terminal” push. Don is a 50 year veteran of aviation and has been directly or indirectly involved with KCI since 1978. He was the Air Traffic Manager at KCI from 1989 to 1998. He played a major role in KCI's current runway design which doubled KCI's airport capacity, obtained Federal Funds to build the new Control Tower, is a Commercial Pilot and Flight Instructor. He has also worked at nine (9) airports in his 37 years with the FAA and has a great deal of knowledge regarding Airline Operations at major airports. He is a true Advocate of Aviation.
Burns & McDonnell meanwhile, proving to be the amateurs they are, continue to run phony radio and tv ads, holds press conferences stating; “they will break ground on November 8th, the day after the election”. What if they don’t get the bid? What about the many FAA Assurances required before you can break ground (see white paper) not to mention the environmental requirements. It becomes more evident everyday B&M think they are running for public office not bidding for the biggest project in KCMO history. They obviously are out of their league but they do own many local politicians and are now buying up contractors to support their effort. Why don’t they tout their experience or qualifications? OH! Maybe they don’t have any. What assets do they have in the event of a hiccup once construction starts, if they get the bid? This is a $2Billion dollar job. A company will need financial bandwidth to handle it.
Below is Don’s WHITE PAPER ON AIRPORT FACTS. Please take time to read what’s really going on. This is not about what is best for KCMO voters, it’s about what is best for the airlines, Southwest in particular!
KCI Single Terminal vs. Renovation of Existing Terminals
Currently Kansas City’s airport has 66 gates available in 3 Terminals. There is a proposal to build a single terminal that will reduce the number of gates to only 35, thus restricting future growth. How much will it cost to reduce the legendary convenience and capacity of KCI by nearly 50%?
With financing costs spread over 3 decades, the single terminal proposal will cost about $2 BILLION. That’s right, rather than fully maintain and remodel what we already have built, retaining existing gate capacity, using the cash reserves we already have in the Aviation Department’s “savings account”, there is a proposal to REDUCE capacity for growth.
The plan also includes recouping the high cost of demolition and construction through higher ticket prices, concessions, and parking fees over 35 years. $2 BILLION dollars spent to reduce KCI’s 3 terminals down to one terminal, and reduce 66 gates down to 35? Now that’s a lot of $30 cheeseburgers!
Our city leaders complain KCI is a black eye to our community and somehow hurts the image of Kansas City. To make things worse the Aviation Department closed Terminal A as a cost saving move, closed the Terminal A parking garage and placed the two busiest airlines (Southwest and Delta) in Terminal B, creating self-imposed congestion in Terminal B. They even established Valet Parking at Terminal B to reduce curbside parking and create more congestion.
They continuously suggest we need more shopping, more eating areas, more bathrooms and phone charging stations, and have made incorrect statements about security, parking and what the airlines supposedly want. One issue they continuously harp on is they need larger “Holding Areas” because of “Larger Aircraft”. This has been misrepresented to make folks believe the existing terminals cannot accommodate the larger aircraft. Well I ask you, how did KCI handle B747s and B727s, B767s in the early years, all who carried as many passengers as the B737-8 carries today? (Last week we landed an L1011 and parked it at terminal A). Besides, the holding areas are expandable to double their existing size if one is interested!
Over the past several years the Aviation Department and the City of Kansas City have spent in excess of $15 million to promote a Single 35-gate terminal, instead of putting in phone charging stations, maintaining the two terminals that are operating or keeping all three terminals open. Why is such an effort being made with no concrete reason to support this a single terminal?
Let’s examine the “True Facts" about KCI.
(1) KCI sits on 10,680 acres, opened in 1972, with two fully instrumented runways.
(2) From 1990 to 1993 a third fully instrumented parallel runway and taxiway system was added that doubled the capacity of the airport even in inclement weather.
(3) FAA built a new Airport Traffic Control Tower (ATCT) to accommodate the needed procedures to increase airport capacity, which the new runway would accommodate.
(4) The entire airspace was revamped to accommodate the added runway and increased capacity that the airlines stated they needed. KCI could handle up to 90 arrivals and depart 45 aircraft an hour.
(5) Three terminals (A, B, C) were built and advertised as having 99 gates available. An area for a forth Terminal D was set aside for additional growth. Throughout the years all 99 gates were never occupied at one time. Today the airport states in their 2017 Moody Bond Rating Report they have the capability of 66 gates and 47 jet bridges.
(6) In 2003 Kansas City renovated all three terminals for nearly $280M. Before renovation they determined all three terminals were sound and could last at least another 25 years.
(7) KCI is a Federally-funded airport and must comply with 39 FAA Grant Assurances, i.e., Prohibit of exclusive rights, use of airport revenue, keep good title of airport property, self-sustainability, terminal development prerequisites, competitive access, just to mention a few.
(8) KCI passengers have declined over the years but now are on the upswing. However, KCI “enplaned passenger volume in 2016 was less than in 1999 over 17 years ago.
KCI reports that 95.4% of KCI passengers are Origin and Destination passengers (O&D) leaving 4.6% as thru passengers—less than 1% of thru passengers change airlines.
(9) KCI has 25,471 parking spaces.
(10) KCI’s current operating cost is $83M and current revenue is $127M.
(11) A $1.2BILLION 35 year loan at 4% generates a $65M annual debt payment.
12) Add $83M (current) + $65M (new) = $148M which exceeds current revenue of $127M by $21M.
The cost to build a new 35 gate Single Terminal and or renovate the existing Three Terminals 66 gate complex, is virtually the same dollars, $1BILLION. Building a 35 gate Single Terminal will reduce available gates from the existing 41 in use today or the 66 gates which are available today by 15% and 53% respectively. Cost per gate of the single terminal 35 gate proposal will be in the range of $35M per gate. With 66 gates, cost per gate would be in the range of $18 million which is near triple of what Southwest Airline spent to build 14 gates in St. Louis. (14 gates for $97M) 66 gates will promote growth and not limit airport capacity. 66 gates will provide room for additional airlines and additional routes. More importantly, the cost incurred ($1BILLION) by building 35 gates, will increase airline cost significantly which will increase airline ticket price significantly; will stifle airline growth; eliminate competition; keep startup airlines from establishing new service due to high fees, and freeze KCI passenger levels to numbers they are today. Worse yet, the significant increase in cost could actually cause passenger to look at Wichita, Des Moines, Omaha, or St. Louis not unlike they did when KCI did not have cheap fares.
Voters need to know that the proposed $1BILLION dollar Single Terminal, over the life of the 35 year loan being considered, will cost $2BILLION, depending on the interest rate obtained. Regardless of the paid advertising touting a “Free Terminal”, if the airlines fail to pay their bill, there will be a “pledge of security” to someone who is going to collect! This could come back on the City of Kansas City. It would ultimately be the tax payers left to bail out the airport.
You have to understand the “Single Terminal” will be on “City Owned Land”. Because Federal Bankruptcy courts may preempt any airline agreement, bankruptcy could close the new Single Airline Terminal at KCI and the City or other airlines will have to pay the bill or close the Terminal! Remember when Braniff Airlines went bankrupt and half of Terminal “A” was closed for a significant time.
In my research I have found the Aviation Department has either convinced themselves or been convinced that changing from the long standing Compensatory Airline Agreement to a Residual Airline Agreement is the best course of action for KCI. There are many flaws in this move. The major flaw under, the Residual Airline Agreement, is the Signatory Airline in the agreement, (in our case Southwest Airlines) will have significant control over the airport on spending and any future capital expenditure not to mention other major expenditures.
Now I understand why Southwest Airline changed their minds on a single terminal which they vehemently opposed originally and now total support. They will have control!
In my 50 years in aviation I have seen dozens of airlines go under, file bankruptcy, and walk away from millions of dollars of debt, taking pensions, costing jobs, and leaving a city devastated. Kansas City is not immune to this possibility; regardless of what the attorneys of big business want us to believe. Federal Bankruptcy courts may supersede any agreement.
If I needed to fix up the bathroom in my home, I would go to the bank and get a home equity loan for the remodeling or addition. I wouldn’t bulldoze the whole house and build a new one, all the while assuring my wife it will all be “Free!”
Kansas City Aviation Advocate