The Wall Street Journal
By Andrew Tangel
Feb. 15, 2016 8:51 p.m. ET
The price tag of La Guardia Airport’s long-awaited overhaul is now coming in at more than $4.2 billion as major potential changes loom for the busy travel hub.
The latest figure comes after a series of design changes and costs related to replacing the airport’s Central Terminal Building, known to travelers as Terminal B. A 2014 estimate of $3.6 billion from the Port Authority of New York and New Jersey for the overall project didn’t include a new central hall.
Plans for Terminal B include the hall to unify it with the rest of the airport and added space for security screening and retailers, as well as a potential hotel. It is currently expected to open by the end of 2021.
A deal to replace the aging, often-ridiculed terminal building, which was built in 1964, is expected to close in coming months. The Port Authority, which operates the area’s major airports, is likely to consider terms of a final lease on Thursday.
The cost of designing and constructing the new Terminal B and related infrastructure is pegged at $3.93 billion. That figure excludes other items, such as $147 million for Port Authority costs including staff and overhead, $96 million for third-party consultants and $35 million for a temporary parking deck, according to a Port Authority resolution released Friday.
The agency also plans to set aside $182 million in reserves for the project. Factoring in other costs such as financing could push the project’s price tag to about $5 billion, a person familiar with the matter said.
The terminal project will be constructed and financed largely by a private consortium known as La Guardia Gateway Partners. The scope has evolved in the last year, and to be sure, cost estimates in big projects often change as construction nears and once it commences.
An airport-advocacy group said improvements to La Guardia are long overdue and would be a boon to travelers. “Even if there is some additional cost, it’s so well worth it—the payback is mind-boggling,” said Joseph Sitt, chairman of the Global Gateway Alliance. “We deserve a top-notch, quality airport.”
A New Terminal B
After a series of changes, a long-awaited overhaul of a major La Guardia Airport terminal is under consideration by the Port Authority of New York and New Jersey.
The Port Authority’s board on Thursday is also set to consider a $2.3 billion revamp of Terminal A at Newark Liberty International Airport.
It remains unclear how much La Guardia’s broader transformation will eventually cost and how long it will take. Another planned project, to remake Terminals C and D, which are occupied by Delta Air Lines Inc., has yet to take shape.
Nor is it clear whether the Port Authority will lift a 1984 restriction on flights to destinations more than 1,500 miles away. Lifting the so-called perimeter rule at La Guardia would shake up New York City’s airport system that generally relegates long-haul domestic and overseas flights to Newark and John F. Kennedy International airports.
Delta, which has generally handled about 40% of La Guardia’s passengers, has long supported lifting the restriction.
Eliminating the perimeter rule would likely allow the airline to offer lucrative long-distance flights from its La Guardia hub. Higher fares and increased passenger volumes could also help the airline finance its expected portion of La Guardia’s overhaul.
“Eliminating the perimeter rule will give customers the ability to choose how and where they fly and allow carriers to match capacity with that demand,” Delta President Edward Bastian wrote to the Port Authority in a March 2015 letter.
Lifting the perimeter rule raises a host of issues including aircraft noise, whether airlines would retain flights to smaller markets and effects on Delta’s competitors.
Some of those airlines also weighed in on the perimeter rule early last year, according to Port Authority documents obtained via a public-records request.
Jeffrey Goodell, an executive at JetBlue Airways Corp. , which has a hub at JFK, said any change to the perimeter rule “would add an additional layer of traffic and complexity to an already challenging environment.”
Kate Gebo, an executive at United Airlines Inc., which has a hub at Newark, warned of “significant impacts on air traffic, congestion and competition” across the region’s airspace.
Melinda Katz, the Queens borough president, has called for an environmental-review process to address potential noise, pollution and traffic concerns at La Guardia, which is located in Queens.
A Federal Aviation Administration spokesman said a decision on whether to lift the rule was up to the Port Authority.
The Port Authority, which has been studying potentially lifting the rule, likely wouldn’t reconsider the restriction until the fall, a senior official at the agency said.
“It needs to be an open and transparent process that reflects the fact that the decision has been made on the merits,” this official said. “There are no preconceived outcomes here.”
A decision would likely follow at least a few months of public disclosure and opportunity to comment on the matter, the official said.
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