Government & Politics

Airlines hit snag in negotiations to fund single terminal rebuild of KCI

As airlines negotiate an agreement to fund the new single terminal at Kansas City International Airport, two smaller carriers are protesting the increased price tag and the current plan to pay for the $1.6 billion project.

Behind-the-scenes tension among the airlines made itself known Thursday as a Kansas City Council Airport Committee prepared to discuss the development agreement and other documents governing the project approved by voters last year.

Kansas City Mayor Sly James said the dispute includes how to pay for a $20 million baggage claim system.

Committee members expected the airlines to be at Thursday’s meeting, but none testified on the project that will create a single terminal to replace the three horseshoe-style buildings at Kansas City’s main airport.

Executives at Spirit and Allegiant airlines told the council in letters dated Wednesday that they could not support the project because of price and cost sharing issues.

“We will get these problems resolved and we will push forward with this project that was voted on by 76 percent of the people, and that even Spirit Airlines says is desperately needed,” James said in a statement released after the meeting.

“As we move forward, I will be looking and watching to see who is helpful in protecting the best interests of the city in a positive way, and who isn’t. We should also remember that we are operating under the watchful eye of the voting public.”

Taxpayers are not on the hook for the project, which is supposed to be paid for by the airlines that use the airport.

Matt Klein, senior vice president and chief commercial officer for Spirit, said in his letter that Kansas City’s aging airport should be updated and is “not befitting of a major U.S. city.”

“However, we believe the current investment proposal is simply ... too costly for smaller new entrant carriers to bear and still deliver the value that we deliver to the community in terms of low airfares,” Klein said.

Allegiant’s vice president of airports and government affairs, Keith Hansen, wrote that larger airlines were expecting smaller airlines to shoulder an unreasonably large portion of the costs of operating the airport.

“Given that the terms for the new airport rates and charges agreement remain unknown and considering the larger carriers continue to reject equitable cost allocation, Allegiant cannot support the terminal development program at this time,” Hansen said.

Larger airlines, including Southwest, Alaska, American, Delta and United, remained supportive of the proposal.

News of the smaller airlines’ dissatisfaction cast a shadow on the committee as members began to dissect provided documents. Those included a development agreement governing the project, a pledge by developer Edgemoor Infrastructure and Real Estate to use a significant number of woman- and minority-owned businesses as contractors and a list of community benefits Edgemoor promised to provide.

Airlines are still negotiating the agreement on how to fund the project. It is unclear what the airlines have proposed for splitting the costs.

James and Pat Klein, director of aviation for the city, said the sticking point in the airlines’ discussions is how they will share the cost of a $20 million baggage claim system.

James emphasized the dispute is between the airlines themselves and they will have to work through it.

“We will insist, however, that this resolution of their internal dispute be reasonable and fair and in no way diminish the flight or service options for our flying public,” James said. “We’re not going to allow this project, which is so important to this city, to be the platform for resolution of national issues and disputes between large and small airline carriers.”

James called the airport the most important economic development project the city has undertaken in 50 years.

“It took six years to get to this point,” James said, “and I’m not going to see it fall apart now because different agendas that are not in the best interest of this city are being pushed.”

James said the process of choosing an entity to develop the airport is closed and wanted to “put to bed” any notions that a company other than Edgemoor could step in. He called any such discussion “harmful” to the project and the city.

Thursday was the second time council members expected to hear from the airlines and did not. They were due at the council’s business session two weeks ago and rescheduled.

“At this point, the airlines are not holding us up, but we would like them to continue to work this process the way they have been so that we can get their answer,” said Councilwoman Jolie Justus, a candidate for mayor. “And when we get back from break it would be wonderful if we could move forward at that time.”

The committee did not get through its three documents Thursday and will reconvene in two weeks to continue discussions.

Fellow mayoral candidate and Councilman Quinton Lucas said he thought the airport committee got good information on the development agreement.

“But to the flying public who’s wondering when the project is going to be done, do we have a template for figuring that all out?” Lucas said. “We’ve still got more work to do, and I don’t think we resolved that today.”

In the council’s business session Thursday afternoon, Councilman Kevin McManus said he didn’t understand why the airlines were stuck on the $20 million baggage claim issue, a small part of the $1.6 billion project.

Pat Klein said the airlines have been collaborative so far and expects that will continue, but the department did not expect them to dig in on the baggage claim system.

Geoffrey Stricker, managing director for Edgemoor, said he was happy with the support for the project expressed at the committee meeting.

“We’re on the one yard line here,” Stricker said. “I know they are fierce competitors, but I also know they want to do the right thing and they are excited to be in Kansas City.”