A feud between large and small carriers over how to share the cost of a new single terminal at Kansas City International Airport is still causing problems for the $1.6 billion project.
In a statement issued late Tuesday afternoon, Kansas City Mayor Sly James said the city met with the airlines to develop a timeline to start construction on the new terminal while allowing the carriers — which will bear the costs of project — to finish their “due diligence.”
The airlines that serve KCI have been at odds over how to share the cost of a $20 million baggage handling system. They need to reach a funding agreement for the city to sign off on the project and begin construction.
At the same time, the city is waiting for the Federal Aviation Administration to approve its environmental assessment on the project.
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“Since the project cannot move (forward) with further design and construction until the environmental approvals are granted, the airlines have requested as part of their due diligence, and we have agreed, to take a second look at the project scope and ensure everyone is comfortable,” James said in the statement.
It wasn’t immediately clear what might be reconsidered. James said the city would report back in January “when more information is available.”
Geoffrey Stricker, managing director for the project’s developer Edgemoor Infrastructure and Real Estate, said it was “too early to say” whether the second look by the airlines would have an impact on the project’s timeline, which already has been delayed from its November 2021 opening date. He said he expects the FAA to approve the environmental assessment in mid-December and no construction can begin before that happens.
“If they need a couple more weeks to finalize their due diligence, I don’t think that’s unreasonable,” he said.
The airlines were expected to appear at the Nov. 15 City Council’s Airport Committee but did not testify. Two smaller carriers, Allegiant and Spirit, sent letters expressing concern while a consortium of larger airlines, including Southwest, Alaska, American, Delta and United, wrote to reiterate their support of the project.
James said at the meeting that day that the baggage handling system was the hang-up in negotiations between the airlines.
But in a statement Tuesday, Spirit Airlines’ senior vice president and chief commercial officer Matt Klein said Spirit believes the cost of the project to be “higher than other comparable projects” and favored the larger carriers.
“As a direct result of the project as now conceived, Kansas City residents and visitors will pay significantly higher fares in the future and may lose valuable low-fare service,” Klein said. “We are urging the city to move toward a plan that allows all carriers to operate equitably and to one that does not stifle competition.”
In a letter to the City Council’s Airport Committee dated Nov. 14, Klein said the $1.6 billion price tag for the project would make costs of operating in Kansas City “unsustainable.”
In a letter dated the same day, Allegiant’s vice president of airports and government Keith Hansen said the airline could not “support the terminal development program at this time.”
Along with the total cost, the airline took issue with how the larger airlines were seeking an arrangement that places “a disproportionate amount of airport operating costs on Allegiant” and other smaller carriers.
Stricker has said the costs rose because the airlines requested more gates and airplane parking and larger holding areas.
Southwest Airlines spokesman Dan Landson said in an interview Tuesday that the airlines are working through several issues, including the baggage system, but he could not comment on other points they were negotiating. He said the company didn’t anticipate being at a scheduled Airport Committee meeting Thursday.
Committee members are reviewing documents governing the project, including a development agreement, a pledge by Edgemoor to use a significant number of woman- and minority-owned businesses as contractors and a list of community benefits Edgemoor promised to provide.
The committee and the full council will also have to approve a fourth document — the funding agreement the airlines are working to reach.