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John F. Kennedy International Airport

Airport news: Delta to spend $1.2 billion on terminal renovation at JFK

Mary Jane Credeur and Simone Baribeau  Aug 05, 2010

Delta Air Lines Inc. plans to renovate one terminal at New York’s John F. Kennedy International Airport and demolish another as part of a $1.2 billion overhaul of one of its hubs for overseas flights.

The financing includes $900 million in special-project bonds, as much as $215 million in passenger facility charges and at least $75 million in equity from Delta, Susan Baer, aviation director at the Port Authority of New York and New Jersey, said today at a meeting in which the agency’s board unanimously approved the plan. The port oversees the airport.

Principal and interest on the special-project bonds will be paid through airline rent to John F. Kennedy International Arrivals Terminal, a corporate entity created by the Port Authority to be responsible for retiring the debt. Several airlines will be paying rent to use the renovated terminals’ gates, said Steven Coleman, a Port Authority spokesman.

Delta will begin work next month and finish by mid-2013. It uses Terminal 2 and the 1960s-era, saucer-shaped Terminal 3, which will be razed and replaced with parking, two people familiar with the plan said yesterday. Atlanta-based Delta will redo Terminal 4 and link it with Terminal 2.

‘Welcomed and Overdue’

“Delta’s JFK terminal upgrade is both welcomed and overdue,” said Robert W. Mann, owner of consultant R.W. Mann & Co. in Port Washington, New York. “Delta should come out of this in 2013 with the best facilities on the New York-New Jersey airport scene.”

The plan will provide nine more gates for Delta, the world’s largest airline. Kennedy is Delta’s biggest base in the region, eclipsing the carrier’s operations at LaGuardia airport in New York and Newark Liberty in New Jersey.

Delta’s main jet fleet accounted for 21 percent of JFK passengers in the 12 months that ended in April, trailing only JetBlue Airways Corp.’s 42 percent, according to the U.S. Bureau of Transportation Statistics.

Since exiting bankruptcy in 2007, Delta has been adding New York flights and local sponsorships, such as support for the Yankees and Mets baseball teams, to expand its foothold in the nation’s biggest aviation market.

Competition in the market is ramping up, especially for the corporate fliers who typically pay the highest fares.

Industry Merger

UAL Corp.’s United Airlines is preparing to merge with Continental Airlines Inc., which has a Newark hub, to become the world’s biggest carrier. AMR Corp.’s American Airlines and JetBlue began a venture in July to ease passengers’ connections on some routes at Kennedy and at Boston’s Logan airport.

Talks were under way with the Port Authority about renovating the Delta terminals before the terrorist attacks on Sept. 11, 2001, curtailed those discussions. Delta’s investments in Kennedy totaled more than $70 million in the past four years, the airline said in April.

Terminal 3, once used by Pan American World Airways and dubbed Worldport in its heyday, has been a focus of passenger criticism.

“Customers equate that to a third-world country, and I think they’re right,” Delta Treasurer Paul Jacobson said on April 26 at an airline-finance conference in New York. “We’ve got to improve facilities at JFK.”

Airport news: Delta to spend $1.2 billion on terminal renovation at JFK
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Source: Bloomberg

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