Newark Star Ledger: Delta announces plan for new Kennedy terminal
Pataki applauds, but there's no P.A. deal yet
BY AL FRANK
NEW YORK-- Delta Air Lines yesterday announced plans for a $1.6 billion terminal at Kennedy International Airport, a move its chairman said will quadruple operations at the Jamaica, Queens, airport and put the carrier in direct competition with Continental Airlines' hub at Newark International Airport.
"Delta intends to be New York's premier airline flying from here to every major capital of the globe," said Leo Mullin, chairman and chief operating officer of the nation's third-largest carrier.
New York Gov. George Pataki, who hosted the announcement at his midtown Manhattan office, welcomed the news. "For too often, airlines looked to Newark instead of Kennedy, LaGuardia or upstate airports" when it came time to expand, he said.
Right now, Continental bills itself as "New York's hometown airline" and claims 26 percent of the local market, up from 18 percent five years ago. Its more than 700 daily flights account for more than 60 percent of operations at Newark, where it served more than 19 million passengers last year.
Delta's local share now stands at 161/2 percent, right behind the 18 percent held by second-ranked American Airlines, which also is building a $1 billion terminal at JFK.
Delta's shares closed yesterday at $40.38, down 50 cents in trading on the New York Stock Exchange.
The airlines are competing in what is the world's most lucrative -- and busiest -- center for air travel. The 89 million passengers that used Newark, JFK and LaGuardia last year are expected to swell to 130 million by 2009, according to the Port Authority of New York and New Jersey, which operates the airports.
The bistate agency contends that while Newark is the busiest airport now, it has little room to expand. JFK, with twice the runways and double the space, can handle plenty of additional growth.
"Continental is a worthy opponent and has done a nice job at Newark," Mullin said. "But we feel the expansion opportunity is greater at JFK because Newark and LaGuardia are (physically) constrained."
He said the hub plan to provide more connecting international and domestic flights is a natural outgrowth of efforts Delta began in 1997 to transform its JFK operations into a major overseas gateway. In three years, the carrier has seen its passenger counts at JFK increase to 4.7 million last year from 3.8 million in 1997.
"It's a shift in strategy to provide more domestic feed than we had before," Mullin said. Ultimately, the airport will be serving more overseas points in Latin America, the Caribbean, Middle East and Asia. It also will add more transcontinental flights to Los Angeles, San Francisco and San Diego and more low-fare service to Florida. It also promised more flights to upstate New York.
Delta was the last of JFK's major lease holders to announce its plans for renovating terminals that opened in the 1960s and became obsolete with the advent of the jumbo jet. Delta took over Terminals 2 and 3 from Pan American World Airways, which went bankrupt in 1991.
Rather than a single stand- alone terminal, Delta has now decided to build a 1.5-million-square foot addition to Terminal 4, the $1 billion replacement for the International Arrivals Building that is to open next May and serve some 30 airlines.
The announcement came just two weeks after a $1.2 billion plan for United Airlines, JetBlue and TWA was disclosed. While that project will spare the landmark concrete shell designed by Eero Saarinen at Terminal 5, the Delta plan will see the demolition of Terminal 3s "floating oval," a four-acre cantilever roof created by Walter Prokosch that could cover Yankee Stadium.
Like American, whose project was announced in January 1999 but not approved until six months later, Delta admitted it still had no deal with the Port Authority. But Pataki's endorsement carries considerable clout with the bistate agency he jointly controls with Gov. Christie Whitman.
Brad Race, Pataki's chief of staff and a Port Authority board member, noted eventual approval was likely, given the size of the investment and the economic boon it will provide the region.
David Sigman, senior vice president of developer LCOR Inc. and general manager for the private entity developing Terminal 4, said he expected negotiations with the Port Authority to continue through the end of the year. Estimates are the deal might be as expensive as American's in costing the agency at least $200 million in lost rent.
But Sigman said the Delta deal will be better than the American package because any Port Authority losses "will be more than offset by the income from the project. With the others, it's complete give."
Delta's new concourse, which is to open in 2004, will have 26 gates to serve an international operation that will quadruple to 164 flights daily by 2014 from 42 today. Delta will connect the new concourse to a renovated Terminal 2, which will have 20 gates to serve domestic flights that will quadruple to 280 daily by 2014 from today's 72.
Al Frank covers airlines. He may be reached at email@example.com or (973) 877-5808.