DL to redevelop its terminals as part of LGA CTB redevelopment

[WorldTraveler]

There is no contract under which DL will redevelop its terminals. it is all conceptual.

and DL could very easily tell the PA that it won't spend the money on its own terminals that the PA wants to spend.

Airlines do that all the time.

DL has done wonders to take 125 slots which US didn't want and turned them into viable flights which DL continues to upgrade - and wants to do even further.

Further, it is very doubtful that the CTB redevelopment will come in anywhere close to what is being proposed even at $4B and even if it does based on current boardings, LGA will be have one of the highest Cost per Enplaned Passenger in the US - and higher than most other airports in the world.

Not only will airlines simply not be able to sustain that kind of service - esp. the low cost carriers that the DOJ says NYC needs - but also legacy carriers that will not be able to justify keeping even a 76 seat RJ on a gate that is as costly as the CTB will be.

All of the great conceptual ideas sound great now and the CTB airlines may have no choice but I can absolutely assure you that DL doesn't and won't go along with a plan that leaves it with costs that are so high that the airport is no longer economically viable.

and that is a very high risk whether you understand it or not.

but to help you understand, how about you tell us the price of some of the most recent airport terminal projects in the US?

 

[topDawg]

ramble ramble ramble nothing important ramble ramble

Alright I figured that would happen. 
 
Again I will ask, can you prove that Delta has any leverage to demand any of the crap you said they would or not? its a simple yes or no question. 

 

[WorldTraveler]

you haven't come up with the cost of any recent terminals, have you?

let me help. DL spent about 1/3 per gate at JFK compared to what it would have to spend at LGA if DL's costs are in line with what will be spent on the CTB.

AA spent about the same at JFK about a decade earlier. AA never built out its facility.

$4B for 40 gates that will be almost entirely used for narrowbody flights is WAY beyond the economics of a sustainable airport.

If the PANYNJ spends $4B on the CTB, it will kill LGA by virtue of making ticket prices so expensive that passengers will flee to other airports.

I can assure you that reality will become very apparent long before DL has to sign any contract requiring it to spend that much money at LGA.

in the meantime, how about you let us know how much MIA spent on their terminal design and also let us know how many passengers pass thru MIA compared to LGA.

 

[topDawg]

So no I can't prove anything. I will still keep rambling on and being hopeful that others wont find out I don't understand how a basic lease works. 
 
Ramble Ramble Ramble

FIFY 

 

[700UW]

Its four billion dollars for 70 Gates, once again you get it wrong.

The new CTB and C/D will have 70 gates.

 

[WorldTraveler]

Uh..show me where DL's terminals are included in the $4b

And even at $50 million per gate, that is well over the cost of other US domestic only terminals

Did you find the cost for MIA?

 

[topDawg]

Its four billion dollars for 70 Gates, once again you get it wrong.
The new CTB and C/D will have 70 gates.

and more importantly no airport has basically completely replaced itself all at once in the same exact location of the old airport. 
 
It costs money to piece together a terminal like LGA is going to have to do. 
 
then add in on top of all of that.......its New York City. Cheap and NYC have nothing to do with each other. 

 

[700UW]

I already posted it on the first page, here it is once again:
 
http://nypost.com/2015/07/27/la-guardia-airport-to-get-complete-rebuild-for-4b/
 
$4 billion for a COMPLETE Rebuild.
 
Let me make you look even more foolish, your own article in the OP thread contains the information.

Do you even read what you post?
 

Governor Cuomo was joined today by Vice President Joe Biden to unveil the vision for the comprehensive redesign of LaGuardia Airport. The airport will be transformed into a single, structurally unified main terminal with expanded transportation access, significantly increased taxiway space and best-in-class passenger amenities. Construction on the first half of the new unified terminal, expected to be a $4 billion project that creates 8,000 direct jobs and 10,000 indirect jobs, will be managed by LaGuardia Gateway Partners, a new public private partnership chosen by the Port Authority of New York and New Jersey to build the project.
 

http://www.governor.ny.gov/news/governor-cuomo-unveils-vision-transformative-redesign-laguardia-airport

 

[WorldTraveler]

even here http://mobile.nytimes.com/2015/07/28/nyregion/la-guardia-airport-to-be-rebuilt-by-2021-cuomo-and-biden-say.html?_r=2&referrer=

it says the cost is predominantly for rebuilding the CTB.

DL has about half of the gates at LGA.

DL's cost per gate and thus per enplaned passenger even here wil be far smaller than for CTB airlines.

and DL managed to move into and refurb T4 for about 1/3 of what it will take to rebuild LGA even by those estimates.

and MIA is the closest example to a rebuild and the cost per gate was far lower than what it will be at LGA... and MIA is not a cheap city either

like DL at JFK, MIA benefits from having int'l flights which move lots of people thru the airport and push down the cost per passenger.

 

[LDVAviation]

 
No WT it doesn't work that way. The Port owns C/D. If they want to rebuild them then they will and its that simple. Its not a matter of they will rebuild them if Delta gets this or that. 

 
I believe the master leases for the buildings belong to Delta.
 
If it works the same way as it does at LAX, that means that the Port Authority wouldn't want to renovate/tear down the terminals on its own without buying out the master leases.  (Too much risk, not much reward for investment even if the board is just fronting a bond issue.)
 
(In any case, the ownership/lease structure of the various terminals should be easy to ascertain.  Just search for the most recent Fitch rating of LGA.  Fitch usually singles out the terminals which the airport board does not exclusively control.)

 

[jcw]

The articles coming my out now say DL has a quid pro quo ask - if you want me to participate in the terminal - you need to lift the perimeter rule. I think that is a great ask.

In addition I think the government should then ask for slots back to auction off for those who want to fly transcon so all airlines get a shot at it.

It would be good for everyone to write the Government agencies to ensure slots are granted equal access for transcon service

 

[WorldTraveler]

there are some articles saying that but I'm not sure there is any way of knowing that is what is an official request.... but I suggested it as a possiblity in the first of this thread.

and given that LDV is saying what I said - that the PANYNJ may have a whole lot less authority to force DL to redevelop its terminals that what a lot of people here think - I'm not sure there is a whole lot of basis for a quid.

The basic operational reality is that DL's terminals have far more capacity than the CTB and are in far better shape. There is far less reason for DL to have to spend a bunch of money on a terminal redevelopment to carry the same number of passengers as they can realistically carry now. DL has enough slots at LGA to fly to nearly every viable destination inside the perimeter. In many small markets, DL uses larger aircraft from LGA (3 class RJs than any of its competitors use at LGA or UA uses at EWR). LGA is a much more point to point focused operation than UA has at EWR or any of the big 3 (AA, B6, or DL) have at JFK.

The only real way to increase the value of DL's operation is to add more seats via larger aircraft to further destinations.

and the argument that DL should be required to give up slots in order to fly longhaul if the perimeter is lifted stands in complete contrast to what is being done at other airports including DAL where no carrier is being allowed to add flights that they weren't already operating or were in the process of adding through the accommodation request. B6 was given dozens of new slots to start service at JFK when they started; there is no basis for them or VX or anyone else to be given slots at LGA just because a new opportunity exists there. B6, WN, and ULCCs have obtained slots at LGA either thru divestitures - the AA/US merger which excluded legacy carriers - or thru the open market which is exactly the same way legacy carriers built their slot portfolios.

Further, the perimeter rule at LGA is a PANYNJ rule and not a federal rule... it operates on a completely different basis that the DCA perimeter rule which has been repeatedly broken for the benefit of one city and airline or another. Slot restrictions should NOT be used as political favors for a city or an airline which is exacty what they have been used as at DCA.

The feds might stick their nose into the LGA slot issue but it is doubtful that they will be successful since they didn't make the perimeter rule in the first place and there is no legal basis for the federal government to dictate the economic basis of how slots can be used in NYC.

The value to DL in relaxing the perimeter restriction at LGA is that DL has enough slots and a large enough hub presence at both LGA and JFK that it can operate successfully from both airports. No other carrier can do that and maintain what they have. AA has more than enough slots to operate a substantial presence at LGA and JFK but the cost will be many of the small markets which they serve at LGA. It will also impact the viability of their 3 class service at JFK but that has been discussed elsewhere.
I have also said that, if given a choice of flying transcon from LGA or to DAL, VX would probably choose transcons and shut down or shrink its JFK operation where it is already facing more and more competition from B6.

Considering that so many people here have tried to defend what AA is able to do at LAX, what AS has at SEA, and what WN has at DAL, this would appear to be an advantage that DL has in NYC and which they should be just as free to expand on as any other carrier is in any other market.

DL had the foresight to build a dual hub operation at LGA and JFK when many said it was stupid for them to do so. DL also had the ability to see value in the 125 slot pairs which Doug Parker said US didn't want and couldn't be profitably used.

 

[topDawg]

 
I believe the master leases for the buildings belong to Delta.
 
If it works the same way as it does at LAX, that means that the Port Authority wouldn't want to renovate/tear down the terminals on its own without buying out the master leases.  (Too much risk, not much reward for investment even if the board is just fronting a bond issue.)
 
(In any case, the ownership/lease structure of the various terminals should be easy to ascertain.  Just search for the most recent Fitch rating of LGA.  Fitch usually singles out the terminals which the airport board does not exclusively control.)

LGA is a complicated matter. 
IIRC the master lease for C(or at least part of it) is in the hands of United (via CO via EA). D is controlled by Delta. 
 
and I generally agree that LAWA and the Port act the same (if you have the master lease of the terminal its pretty much your problem). 
My point is, though, that WT is making this very black and white and in the black and white, the port can do what they want to do (for the most part) as long as the accommodate Delta or American or United or jetBlue or Southwest etc. etc. via the terms of its lease.
 
Having said that, its a stupid pissing contest because the Port isn't just going to do this or that just like Delta isn't going to dig in its heals. Every airline and every airport authority is going to try to work together to find something that works. 
 
I personally don't see Delta playing hard ball, last thing they want is to be stuck with a JFK T2/T3 when AA has that beautiful T8 again. JMO. 

 

[WorldTraveler]

DL doesn't have to play hard ball and won't. You do realize that RIchard Anderson is on at least one of the major business/government groups in NYC?

DL won't end up with a T2/3 situation. The sole reason why it took DL as long as it did to tear down T3 and build out T4 is because DL wasn't going to spend what AA did per CPE and so DL took its time and waited for the right financial climate. DL pushes far more passengers thru its terminals at JFK than AA does at a lower CPE. DL and NW both have a history of operating airports that have low CPEs and Parker figured it out at US which is why CLT and PHX work for them and why they are fighting a major rebuild of PHL which will be just as costly.

None of the articles indicate that even in concept the cost for rebulding DL's terminals will be close to what it is for the CTB.

it's not a pissing contest, dawg. It is a business decision that DL does indeed have the right to make.

Go back and check the leases but I am quite certain that LDV is right that the control of the leases passed to DL with the slot exchange and terminal transfer. DL is smart enough to know it isn't good business to allow its cross-town competitor to control its leases which is also why it took over the sublease from US.

the only thing that is not black and white are the assertions by some here that the PANYNJ can drag DL into rebuilding its terminals and that the cost has already been figured into the cost.

The cost even of the CTB is likely to increase; the project is immensely more complicated than any other airport rebuild that has taken place due to the very limited amount of space.

btw, the North Terminal project at MIA cost about $3 billion which was one of the most expensive terminal rebuilds in the history of US aviation. It doesn't take too much to realize that AA alone pushes far more traffic thru the North Terminal at MIA than will ever go thru the CTB. The CTB will be a very expensive airport for airlines that operate there and the advantage that DL has is that they have the only other terminals at LGA.

DL can consolidate its operations at LGA and get out of the MAT, will likely succeed at getting the perimeter rule lifted because it will increase the value of all of the slots at LGA including those for AA, and the presence of RJs at LGA will drop dramatically and they will be pushed to JFK where it makes more economical sense for them to go and leave the most expensive and largest markets to be served from the preferred NYC airport.

It's all economics and unless the PANYNJ wants to kill LGA, they will let the rules of economics work instead of trying to force requirements that will hurt and not help the problems that exist there.

 

[WorldTraveler]

here's another article on the subject specifically noting that DL is paying for the cost of refurbishing its own terminals.

http://www.thestreet.com/story/13243551/1/delta-applauds-the-new-laguardia-but-its-wait-and-see-for-other-airlines.html?puc=yahoo&cm_ven=YAHOO

while it gets the slot transacton between DL and UA wrong saying that it involves LGA, it also notes that it is likely that lifting the perimeter restriction is part of the deal.

If the majority of the cost of the $4B overhaul of LGA is for other than DL's terminals and the majority of it will be for the CTB and DL gets the perimeter restriction lifted in return for its support of the deal which will likely result in higher costs per gate for CTB airlines than for DL, it is not a surprise that DL is supporting the plan.