A nod toward the future...The airline industry is slumping but the airport is building

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A nod toward the future...The airline industry is slumping but the airport=
=20
is building
By Bob Driehaus Post staff reporter

United Airlines and U.S. Airways have retreated into bankruptcy recently=20
while other major airlines, including Delta, are suffering steep=20
losses.  Images of empty terminals and runways during the flight moratorium=
=20
in the days following the Sept. 11, 2001, terrorist hijackings remain=20
vivid.  Yet in the eye of this storm, Cincinnati/Northern Kentucky=20
International Airport is planning for big-time growth, including:

=95  Groundbreaking Friday for a third north-south runway costing $237=20
million that has been six years in the making.

=95  A $1.7 billion, 30-year master plan to reconfigure and expand the=20
airport, beginning next year with an $8.2 million phase mostly to improve=20
Terminals 1 and 2.

=95  Comair anticipates expanding temporarily into Terminal 1 in the next=
 few=20
years to accommodate peak-hour flights. The change would mean some=20
passengers would have to shuttle from Terminal 3 to Concourse C, then=20
shuttle again to Terminal 1. Eventual plans call for Comair to be housed in=
=20
the new Concourse D, which won't be built for years, and for Concourse C to=
=20
be razed.

Subsequent phases would be triggered into implementation by demand, not a=20
timeline. The plan calls for the eventual razing of Comair's Concourse C=20
and Terminals 1 and 2. All would be replaced by  a new Concourse D for=20
Terminal 3, plus extensions to Terminal 3's A and B concourses. Other major=
=20
changes include a new underground shuttle system, a new Interstate 275/Ky.=
=20
212 flyover ramp interchange, and a reconfigured loop road.  Plans for=20
massive investments in tough economic times may leave some people=20
scratching their heads, but airline and airport planners say history,=20
bureaucracy and population growth point to a pressing need to work on=20
expansion.  "They literally plan for the next generation, not for the next=
=20
few months," said John Kennedy, Delta Air Lines spokesman. "You're looking=
=20
at huge distances out in the future numbers."

Business and political leaders throughout Greater Cincinnati say the new=20
airport runway is critical to the region's long-term growth, because it=20
will enable the number of flights transporting goods, services and people=20
in and out of the area to increase.  According to the airport's Web site,=20
airport construction projects are expected to pump nearly $1 billion into=20
the local economy over the next 12 years. Along with the airport's growth,=
=20
the impact from tourism and airport-related spending is projected to reach=
=20
$6.5 billion a year by 2011. The number of direct and indirect jobs is=20
expected to grow accordingly, reaching 114,500 by 2011.  Planners=20
considered several factors in deciding to press ahead with the master plan=
=20
and runway:  Past storms weathered: The tragedy of 9/11 may be=20
unprecedented, but it's not the first crisis to send the airline industry=20
into a tailspin. Landrum & Brown, the aviation consultant that led the=20
30-year master plan for the airport, tracked demand over the last 30 years,=
=20
including several crises. Events like the air traffic controllers' strike=20
in the early 1980s and the first Gulf War in 1990-91 caused drops in demand=
=20
nationally that sent the airline industry into turmoil.

All flights were grounded Sept. 11-12, 2001, before resuming on a=20
scaled-down schedule on Sept. 13. Comair operations were shut down for 81=20
days during a pilot strike in spring and summer of the same year, a=20
terrible combination for the airport.  But from the Cuban Missile Crisis in=
=20
1962 through the first Gulf War, downturns proved to be temporary and=20
overcome by healthy long-term growth.  "We go back 30 years. You can never=
=20
account for those things, but there's always been some major event --=20
deregulation, the oil crisis, the first Gulf War. There's always been some=
=20
major event that dampens demand," said Doug Goldberg, Landrum & Brown vice=
=20
president. "We purposely didn't want it to be overly aggressive. We wanted=
=20
(the master plan) to be achievable and realistic."  Atlanta-based Delta,=20
the No. 3 U.S. carrier, posted a first-quarter net loss of $466 million and=
=20
has said it is looking to cut costs by $1.5 billion to $2 billion by 2005.

It has reduced its work force by 16,000 employees through layoffs,=20
attrition and voluntary programs since the Sept. 11, 2001, terrorist=20
attacks. The airline lost $1.3 billion last year despite union employees=20
agreeing to salary cutbacks.  But the current crisis hasn't deterred the=20
airline from stating similar long-term optimism.  "I guess if you look over=
=20
100 years, this will look like a hiccup," said Kennedy, the Delta=20
spokesman. "If you look at the overall graph, the industry keeps=20
growing."  Delta has suffered steep financial losses since 9/11 but has=20
fared much better than some of its competitors who have grappled with=20
bankruptcy. Its stock sold for just under $40 per share in early September=
=20
2001. After plummeting as low as $6.10 in April of this year, it has=20
rebounded significantly, closing at $14.66 Friday.  Kennedy believes air=20
travel demand will continue growing until a better, unforeseen mode of=20
travel is invented.  "It's always going to be on an up curve until we have=
=20
another quantum leap in the way people move around," he=20
said.  Cincinnati/Northern Kentucky International Airport has bounced back=
=20
from 9/11 better than most. Though the number of passengers still lags=20
behind pre-9/11 numbers, the number of flights has reached an all-time high=
=20
on the back of a surge in regional jet flights.

The airport was hit with the 81-day Comair pilot strike in spring and=20
summer 2001 before the 9/11 terrorist attacks. Comair has nearly rebounded=
=20
completely to pre-strike numbers, and others have picked up the slack to=20
get back on track for the long-term growth curve.  In February, 2001,=20
before the Comair pilots' strike and 9/11, there were 571 daily departures=
=20
from Cincinnati/Northern Kentucky airport, including 188 mainline jets and=
=20
383 regional jets.  In April of this year, there were 600 daily departures,=
=20
including 161 mainline jets and 439 regional jets.

=95  Glacial pace of planning: Hartsfield Atlanta International Airport,=20
Delta headquarters, unveiled a 10-year, $5.4 billion master plan in early=20
1999, with plans for a new runway and a host of other changes.

Delta operates 78 percent of flights out of the airport.  The runway plan=20
has wound its way through the regulatory process, including public=20
hearings, environmental impact studies and other hurdles. Construction will=
=20
begin in 2006 or 2007, eight or nine years after plans were unveiled.  "We=
=20
have a 10-year, $5.4 billion expansion program underway and have been=20
confident that air travel would rebound. Because of that we knew we would=20
need expanded facilities in the future. We felt that the impact of 9/11=20
will be short term, we think," said Lanii Thomas, Hartsfield spokeswoman.=20
"We never slowed down and continue to move full speed ahead."  The program,=
=20
begun in 1999, includes a new international terminal, a fifth runway and a=
=20
consolidated rental car facility  Cincinnati/Northern Kentucky airport is=20
no exception, having completed years of noise abatement studies, public=20
meetings, federal grant solicitations and other steps leading up to=20
Friday's runway groundbreaking.

Were the airport to wait for the need for another runway to materialize, it=
=20
would already be too late to meet the demand, many agree.  "If you like to=
=20
sit on tarmacs, then don't build that runway," said Tom Parsons, CEO of=20
Bestfares.com, a Dallas-based aviation expert. "It's good that they're=20
planning now instead of later. At least you have the land to do it," in=20
contrast to other cities like St. Louis that have more development adjacent=
=20
to their airports and cannot expand.  The airport stretches over 6.7 square=
=20
miles of Boone County and owns 4.5 additional square miles for future=20
development. That number represents 4.4 percent of the county. After land=20
purchases are completed for the new runway, the total airport-owned land=20
will be 11.9 square miles, or 4.7 percent of the county land.  Dale Huber,=
=20
Cincinnati/Northern Kentucky's deputy director of aviation, said the=20
airport must prepare for growth.  "If you contemplate all the (worst-case)=
=20
alternatives, then nothing will ever get built. So you have to make the=20
assumptions that we will grow. You need to be ready when it happens, and we=
=20
have always operated with that mindset. And it is happening right now. Our=
=20
airport growth is up. We're over our (pre-9/11) levels," he said.

=95  Growth projections: By 2030, Cincinnati/Northern Kentucky airlines will=
=20
have twice as many passengers using the airport as today. That's the heady=
=20
prediction offered by Landrum & Brown as a primary justification for its=20
30-year expansion plan.

The airport consultant used research from Woods and Poole of Washington, a=
=20
demographics consultant, that forecast Greater Cincinnati's population=20
would grow from the current 2 million to about 2.5 million in 2030 --=20
approximately a 1 percent annual growth rate.  Woods and Poole also=20
projected personal income growth as the second major factor in planning for=
=20
airport demand, Doug Goldberg said.  The firm plugged in its formula to=20
compare real demand with real income and population growth in the last 30=20
years and found it was a sound predictor.  Landrum & Brown forecasts the=20
number of flight operations -- both departing flights and connecting=20
flights -- to grow from the current annual 500,000-plus to 855,000 in 2030=
=20
-- a 71 percent increase.  The number of passengers departing from=20
Cincinnati on Delta, the only current and projected hub airline, are=20
expected to grow from 6 million to 16 million in 2030.

Comair and other regional jet carriers are projected to continue growing=20
rapidly through 2013 before cresting and growing at a far slower rate as=20
demand is met.  Current enplanements -- passengers getting on planes -- of=
=20
about 4 million will rise to more than 6 million by 2013, then gradually=20
rise to more than 7 million in 2030, according to projections.  Nick=20
Miller, Comair spokesman, won't venture a guess on Comair's future 10 years=
=20
down the road, but he's confident the airline will continue growing for the=
=20
foreseeable future under the airport's master plan.

"You have to have a vision, and I think that's what they're developing, and=
=20
I think they're doing a great job. When you make predictions, that's all=20
well and good, but you have to actually see how the market plays out,"=20
Miller said.  "I think from Comair's perspective, the important part is=20
having a plan that accommodates airlines' growth. We want it to still be=20
convenient. We want it to be as easy as possible to get around. We think=20
the plan helps everyone involved accomplish these goals," he said.  Delta's=
=20
Kennedy said the master plan meets the basic requirements for such things,=
=20
including providing for efficient operations, a construction pace that=20
matches passenger demand and a reasonable funding mechanism.  "We feel that=
=20
the master plan is a good step in that direction. We are looking forward to=
=20
working with them," Kennedy said.  Goldberg said the current ratio of=20
connecting fliers to local fliers is about 3 to 1. He expects local=20
population growth and growing affluence to change the ratio to about 65=20
percent connecting fliers to 35 percent local.  Parsons of Bestfares.com=20
said the key to more local fliers is more competition to break the hold of=
=20
Delta and its affiliates on the market.

"The only thing that you really need that would make your airport better is=
=20
a low-cost carrier," he said. "What people want today is good airfares. In=
=20
Cincinnati, you probably still have to pray for those."  Last year,=20
Business Travelers Coalition calculated that prices for airfares on flights=
=20
out of Cincinnati averaged 57 percent higher than in other markets, and=20
short-haul flights were 78 percent higher.  They attributed the higher=20
prices to the lack of competition, especially from discount airlines. Other=
=20
major airlines are not likely to challenge Delta's dominance because they=20
have traditionally avoided competing against hubs with more than a few=20
flights to connect to their own hubs.  Landrum & Brown projects very little=
=20
growth in departures from other airlines.

=95  Others airports growing: Airports throughout the country are planning=
=20
for growth despite the nationwide slump.

Cleveland Hopkins International Airport is building a 9,000-foot runway, a=
=20
portion of which is already open.  Indianapolis International Airport is=20
undergoing a dramatic renovation, including a new terminal.  According to=20
the airport's Web site, the estimated total project is $974 million,=20
including $939 million to fund construction of a new terminal, concourse=20
and parking garage, airfield improvements, utility work and site=20
preparation.  Bush Intercontinental Airport near Houston has a $2.8 billion=
=20
capital improvement program including a fifth runway, taxiway improvements,=
=20
a consolidated rental car facility, a new federal inspection services=20
building, an additional international terminal and a 160-acre new cargo=20
facility, all financed by the airlines and user charges, according to its=20
Web site.

Cincinnati/Northern Kentucky began working on its master plan nearly three=
=20
years ago but suspended it for about a year while the airport grappled with=
=20
the effects of 9/11. Planning resumed in 2002, and a draft was assembled by=
=20
May. Approval by the Kenton County Airport board appears likely later this=
=20
month.  Goldberg said Cincinnati/Northern Kentucky airport has a=20
competitive advantage over other airports because of its status as a hub=20
for both Delta, a mainline airline, and Comair, a regional carrier.  "We=20
have a fairly strong market here. We're probably fortunate because Delta is=
=20
probably in a better position than some other airlines in Chapter 11=20
(bankruptcy) right now," Goldberg said.


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