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MIA Expansion Costs Up Yet Another $1 Billion

Sat Oct 28, 2006 1:06 am

http://www.miami.com/mld/miamiherald/business/15859498.htm (requires subscription)

A summary of the article states that MIA's expansion costs will now balloon by $1 billion to $6.2 billion. This is despite elimination of an atrium, other architectural enhancements, elevators, escalators, etc. The North Terminal project will now cost $2.66 billion (5 times the original $500 million) and will be completed in 2010, years behind schedule. The main culprit is escalating costs for materials and labor.

The article states that it remains unclear whether the airport can sustain the additional debt, which will increase its per passenger costs and possibly dampen its bond rating. MIA's cost per passenger would rise to $36 from $17.01 currently. Borrowing could become more expensive if agencies lower MIA's bond ratings.

AA and other airlines that will pay their share of the costs based on passenger traffic have not yet endorsed the plan. AA has long argued that they need the added gates, people mover, new bag system, large FIS and other amenities to grow their Latin American and Caribbean hub at MIA. AA is projecting that they will control about 70% of MIA's pax traffic by 2025, up from 63% today.

Concourse A will be closed when airlines moved from there to the South Terminal in the spring of 2007, allowing the North Terminal to open 2 years earlier in 2010.

MIA's high costs are a major reason they have had trouble attracting low-cost carriers because they can serve FLL where per pax costs are about $4.

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