Representatives of Southwest Airlines urge caution on costly new KCI terminal

01/14/2014 10:26 AM

01/14/2014 11:35 PM

Want a spiffier airport, Kansas City, with more amenities, roomier gates and more practical security screening? Aviation experts say that’s what’s needed to replace an antiquated facility.

But the folks who strive to make a buck flying passengers in and out of the city said Tuesday it likely won’t tempt them to steer more flights to Kansas City International Airport.

If anything, they warned against spending so much that the cost of doing business here pushes them to take their flights elsewhere.

Airline representatives told a citizens task force Tuesday that a new terminal likely won’t increase nonstop flights, international connections or passenger demand.

“Higher cost can lead to less service, not more,” Southwest Executive Vice President Ron Ricks told the KCI Terminal Advisory Group, which is studying options for modernizing the airport, including renovating the three terminals or replacing them with a new terminal.

Ricks said he was speaking for the four major carriers at KCI — Southwest, Delta, United and American/US Air — as the citizens advisory group delves into how the airlines view plans for KCI’s future. The task force will hear from business leaders on Jan. 28, will hold public hearings in February and March, and plans to issue its recommendations in April.

Ricks told the group that the airline industry has finally emerged from more than a decade of turmoil and devastating cuts. It is stabilizing, with four major carriers and some measure of profitability. Through all that upheaval, he said, KCI has retained a remarkably stable customer base and is well served to most major domestic and international destinations.

But he predicted that KCI will only see “incremental” passenger growth for the foreseeable future and that’s not likely to change, with or without a new terminal.

Kansas City already has nonstop flights to about 50 domestic destinations, including coastal cities that lead to international destinations. Ricks doubted a new terminal would help Kansas City expand its access to more nonstop domestic or international markets.

“The terminals do not generate or impact demand,” he said, adding that airlines go where they can make money and passengers choose flights based on schedule and fare.

Ricks’ comments reinforced what many Kansas Citians have argued, that KCI is convenient and economical and shouldn’t be changed much.

Still, there’s another perspective that the airlines aren’t considering, said aviation strategy consultant Mike Boyd, president of Colorado-based Boyd Group International.

Kansas City is “between a rock and a hard place,” he acknowledged, facing what could be an expensive upgrade without the promise of a growing airline industry.

But he said “there are costs to not modernizing” and warned Kansas Citians against a “knee-jerk” reaction opposing any airport changes.

In a telephone interview from his Denver area office Tuesday, Boyd said airlines naturally want costs as low as possible. And he said they don’t make empty threats about cost-cutting. But he also noted that Southwest once said it would never go to Denver International Airport, and now Denver is one of Southwest’s prime destinations.

Boyd is not consulting on KCI’s current plans, but he agrees with Kansas City aviation officials that the 40-year-old, three-terminal configuration is antiquated and inefficient. They say fixes are needed to reflect multiple airline mergers and to improve post-9/11 security, concessions, parking, baggage systems, mechanical systems and technology.

A preliminary estimate for a new terminal, parking garage and other improvements is $1.2 billion, although aviation officials hope to lower that price tag.

Boyd said KCI was built for the 1970s and its multiple security points make it difficult to attract connecting flights, since passengers often have to leave a gate and go through security again to get to another gate. He pointed out that KCI has already closed one of its three terminals and argued the other two should be replaced with a single terminal designed for the 21st century.

“You need a new terminal to resolve that security issue,” Boyd argued.

KCI currently has an overall cost per departing passenger of about $5, which is low compared to many other airports and makes it attractive for airlines.

Bob Montgomery, Southwest vice president of airport affairs, said several cities, including Sacramento and San Jose, Calif., have spent more than $1 billion on new airport terminals in recent years. He said they are case studies of “what not to do” because their costs per passenger increased dramatically without increasing airport business.

KCI could use roomier gate areas with better concessions and restrooms, Montgomery conceded. But he said shortcomings can be fixed without hurting airline bottom lines or driving their business elsewhere.

Montgomery said the airlines want to collaborate with the city’s aviation department. Cities where the airlines have been at the table, he said, have had the best results with airport improvement projects.

Task force co-chair Dave Fowler said he hopes Kansas City eventually will be known for that type of collaborative relationship in its next airport modernization project.

Task force co-chair Bob Berkebile agreed. But he also said there’s a natural tension between airlines, which want to keep costs as low as possible, and the city’s need to provide an airport tailored to the modern age.

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