San Diego Business Journal

Lindbergh Expansion Plan on Hold
Industry Woes Contribute to A Declining Passenger Count

By CONNIE LEWIS

Plans to improve Lindbergh Field, which include adding new gates at one of the terminals, have been put on indefinite hold.

The gates were seen as a stopgap measure to relieve congestion over the next 10 years, or until the facility is relocated.

But the ailing airline industry and the passenger count, which dropped 1.7 percent to 14.9 million in 2002, are prompting the delay, said Thella Bowen, the airport's executive director. Construction of 10 new gates at Terminal 2 was estimated to cost $75 million, or more, with the airlines using their credit to foot part of the bill.

"The gates and improvements are for the airlines, not for Lindbergh," Bowen said.

As United Airlines tries to pull itself from bankruptcy, and several other airlines face huge financial problems, the current condition of the industry is preventing such an investment, but it shouldn't stop the airport from planning ahead, said John Chalker of the Alliance in Support of Airport Progress in the 21st Century, also known as ASAP 21.

"I think the biggest problem the authority faces is trying to see how the airlines are going to emerge in terms of industry-wide restructuring," said Chalker, the group's chairman and managing director of San Diego-based LM Capital Group, LLC. "That has an impact on trying to project even near-term capital improvements, particularly when we're watching the airlines that are going through restructuring ask for concessions at airports around the country.

"But I think, personally, that most of this will shake out in the next 18 months."

The San Diego County Regional Airport Authority took control of Lindbergh in January after it was spun off from the San Diego Unified Port District. The authority's board has the task of recommending a site for relocating all or part of the airport's operations. The recommendation will be put to a vote in a countywide election in November 2004. But the deadline may be pushed to the 2006 election.

Bowen said that despite the decline in the passenger count last year, Lindbergh is trying to increase airline capacity. She cited the strength of the local economy as the main reason.

"We could do with larger aircraft having more seats and more long-haul markets serving more destinations," she said, pointing to New York-based JetBlue Airways, a discount carrier slated to make its first nonstop flight from San Diego to New York on June 26.

She said the airport's marketing staff is approaching other carriers on the possibility of routing larger jets and more nonstop flights to the city.

"In the past the carriers used to visit cities to see how to serve them," Bowen said. "Now we'll go to them to tell San Diego's story."

Meanwhile, air cargo rates have improved at Lindbergh. Air freight increased 12 percent last year, while mail routed by air rose 13.7 percent, Bowen said.

Revenue from the airport's food concessions also increased. Although people without airline tickets aren't permitted inside the concourse under new security rulings, passengers boarding flights now spend more time waiting inside the concourse and more money at the food courts, Bowen said.