Airport Follies

WHETHER TO BUILD a new airport (for an estimated $4.7 billion) or expand the current facility (about $2.8 billion) has been a hotly debated subject for years, with immense environmental, economic, and political ramifications; thus the 7-year-old "dual track" planning process by which the Metropolitan Airports Commission (MAC) expected to make a recommendation by July. But Governor Arne Carlson recently asked the Legislature not to wait around for the seven-year, $7 million analysis to be completed before deciding not to build a new airport, claiming that preliminary indications from an economic impact study due this week back up his position.

Be that as it may, Carlson's unwillingness to wait for the finished reports has fueled speculation that he's acting in concert with Northwest Airlines, which quickly backed the governor's statements and within days sent MAC a letter "saying that if we selected the new airport option, Northwest's reaction would be to significantly move maintenance activity out of the Twin Cities [to Detroit], and that we could expect to see an overall 15 percent reduction in flights here," according to Lynn Richardson, MAC deputy executive director of airports. At the same time, Sen. Ted Mondale (DFL-St. Louis Park) announced a bill that would bar MAC from building a new airport.

Regardless of the larger questions involved, it makes perfect political sense that Northwest would not want a new airport. A new facility would mean higher costs (paying for the airport through lease fees) and many more gates--quite likely cutting into Northwest's local monopoly. By way of contrast, growing the current airport at Northwest's proposed rate of "15 new gates over 25 years" (this at the relatively modest cost of about $600 million) means little room for additional competition. "When you have a situation with constrained supply and solid demand, it's ideal," says Ernest Arvai, president of the New Hampshire-based consulting firm The Arvai Group. "Of course you wouldn't want a new airport."

But more is at stake for Northwest. The airline is currently riding high on the best financial performance it has turned in since its largest shareholders, Al Checchi and Gary Wilson, took control in 1989. Given the shaky recent history of the U.S. airline industry, and the financial pressures building within Northwest, it appears Wilson and Checchi are doing everything they can in 1996 to dress Northwest for sale to or merger with another carrier. And what's more appealing to a would-be buyer or partner: the liability of being locked in at a location that will see dramatically higher gate fees to pay for a new $4.7 billion facility (as operator of 80 percent of the flights using the airport, Northwest would foot much of that cost), or a legislative mandate, as proposed by Carlson and Mondale, forbidding the construction of a new airport and thus guaranteeing controlled costs in Northwest's most important domestic market?

As for the airport, it makes sense in the short-term not to build a new one, Arvai says. But, he adds, "The big question is what about the year 2015? Twenty years from now, if you continue to have growth of 5 percent a year, you'll have double the traffic."

MAC's lengthy planning process will provide the public with more information about future growth projections this summer--though it may be a moot point by then.

 
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