Wednesday, October 26, 2016

Phoenix OKs $950M expansion of Sky Harbor's Terminal 4, Sky Train

The Phoenix City Council has approved a $950 million plan to add gates to Terminal 4 and extend Sky Train service from Phoenix Sky Harbor International Airport to the airport's Rental Car Center. The vote was 7-1, with council member Jim Waring opposed.

The projects will be funded with existing passenger fees, other airport revenue and bonds and will be completed by 2021. They are needed to improve service for travelers and airlines and reduce congestion on Sky Harbor Boulevard, airport officials said in pitching the investments to the Phoenix Aviation Advisory Board on Thursday.

Phoenix Aviation Director James Bennett showed photos of long lines to catch shuttle buses to and from the rental-car center, which is located several miles from the airport itself. It opened in 2006 and houses all major rental companies. Bennett said the problem is not limited to peak tourism season, when as many as 34,000 customers a day use the center, but long lines formed as recently as a Friday this month.

"This is what poor customer service looks like,'' he said, adding that the airport fields countless complaints about waits as the buses sometimes crawl along Sky Harbor Boulevard.

The plan has always been to extend the 3-year-old PHX Sky Train beyond Terminal 3 to the rental-car center, eliminating the fleet of 108 buses, and that time is now, Bennett said. The airport's forecasts call for 48 million passengers in 2021, up about 9% from 44 million last year.

"You can't really bus your way out of this system,'' Bennett said.

He said the airport considered relocating the rental center near the Sky Train station south of 44th and Washington streets on the airport's eastern edge but couldn't find enough space.

Waring said he supports investment in Sky Harbor but voted against these projects because of comments by Bennett about other options the airport considered when studying the Sky Train extension.

He said the fact that Sky Harbor officials looked into moving the rental-car center suggests the current location is bad and perhaps wasn’t studied enough by airport officials before seeking approval. The center opened in 2006.

“It’s not like this facility was built 40 years ago,’’ he said.

Bennett said he wasn’t suggesting the location is bad. He said the airport has to study all options before deciding on such a big-ticket item.

New 8-gate concourse

A new, eight-gate concourse in Terminal 4 has also been on the table since the terminal opened in 1990 and is needed now to accommodate airlines' larger planes and reduce passenger congestion in the terminals, Bennett said.

Phoenix Mayor Greg Stanton gave his blessing to the investments on Friday during a tour of Terminal 3, which is wrapping up the first phase of a $600 million makeover. He said he plans to support it, and singled out the 2.5-mile Sky Train extension as a "very important strategic investment'' for the airport. The Sky Train extension is projected to cost $700 million, the Terminal 4 course and gates $250 million.

Airport traffic dips

The proposed investments come as Sky Harbor, which reported record passenger counts in 2015, posted sizable, back-to-back declines in monthly passenger traffic this summer. The airport's passenger count declined 5.6% in July from a year earlier and 8.2% in August. Year to date, traffic is down 1.2%.

American, the busiest carrier at Sky Harbor since its 2013 merger with Arizona-based US Airways, posted double-digit decreases in passengers each month. American passenger counts were down 10.7% in July and 15.8% in August. Spokeswoman Polly Tracey attributes that to the airline using smaller planes with fewer seats on some routes out of Phoenix and, in August, an early end to the airline's summer schedule, which reduced its flying in Phoenix and other hubs earlier than in previous years.

She noted that American has added or announced plans to add service to several new cities out of Sky Harbor, including Memphis and Sonoma, Calif

Southwest, the other dominant carrier at Sky Harbor, also posted year-over-year declines in traffic in July and August, with passenger counts down 4.9% and 2.7%, respectively.

Numbers not worrisome

Stanton and Bennett said the declines don't give them pause about the timing of the airport's investments in Terminal 3, the Sky Train or Terminal 4. They said passenger numbers rise and fall but that the overall trend is up.

Stanton said he is not worried about the looming third anniversary of the American-US Airways merger. It is notable because American CEO Doug Parker, the longtime CEO of US Airways and Tempe-based America West before that, said at the time of the merger that the airline would maintain the status quo at Phoenix and other hubs for at least three years. American recently announced plans to close its flight-training center in Phoenix.

"Thus far they've made a business decision to maintain Phoenix as a hub. We have no reason to think that's not going to continue,'' Stanton said.

In response to a question about the performance of Phoenix on the airline's earnings conference call Thursday, American President Robert Isom said Sky Harbor is a great connecting hub and Phoenix is a strong metropolitan area.

"It's serving our network very well,'' he said.

(Dawn Gilbertson - The Arizona Republic / USA Today in the Sky)

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