Aviation

LaGuardia Airport: A National Embarrassment for Seven More Years (at Least)


Long before Vice President Joe Biden tagged New York’s LaGuardia Airport as best suited to “some third-world country,” millions of travelers despised its dilapidated Central Terminal Building as a depressing symbol of U.S. infrastructure decline. The airport closest to Manhattan often ranks worst in traveler surveys.

The central terminal’s ceiling leaks regularly, requiring plastic buckets to be placed in the concourse to collect water. The bathrooms are staggeringly small for an airport, and many of the seats in gate areas are torn. In fact, the Wells Fargo ATMs may be the terminal’s newest and nicest amenity. The terminal, home to American (AAL), United (UAL), Southwest (LUV), and other carriers, was built in 1964 and designed for 8 million annual passengers—50 percent fewer than it handles now.

At long last, LaGuardia’s labyrinth of crowded gloom appears headed for a dramatic overhaul. The Port Authority of New York and New Jersey, which oversees the region’s three major airports, is expected to approve a $27.6 billion capital spending plan (PDF) on Wednesday that details the pace and funding for projects through 2023. LaGuardia’s Central Terminal Building is high atop the list of priorities, with a new terminal housing 35 gates expected to be completed in 2021 as part of a $3.6 billion project. Virtually everything now at the current site, just west of the renovated Terminals C and D serving Delta (DAL) and US Airways, will be replaced. The first 10 new gates are expected to open in 2016.

“LaGuardia remains frozen in time,” New York Governor Andrew Cuomo said in his January State of the State address, and state officials will assume management of projects at JFK and LaGuardia. Both facilities, as Cuomo noted, had seen redevelopment debated for years with little action.

The Port Authority’s capital plan has a similar $2 billion overhaul for 40-year-old Terminal A at New Jersey’s Newark Liberty Airport, set to be finished in 2022, as well as a $1.5 billion rail link from the Newark airport to lower Manhattan.

“Investment in aviation in New York and really around the country took a backseat to other budget priorities,” says Stephen Sigmund, executive director of the Global Gateway Alliance, a coalition that formed last year to agitate for improvements in the region’s airports. The group claims that local economies could lose $79 billion in revenues by 2025 if under-investment at the three airports isn’t addressed. Fixing LaGuardia’s oldest terminal is first on the group’s list of top 10 priorities. The ailing central terminal “always went off and on the capital plan, and mostly that was because other projects took precedence over it,” says Sigmund, a former chief of public and government affairs at the Port Authority.

Because of the airports’ consistent revenue generation—the trio creates or supports 350,000 jobs and $50 billion in economic activity in the region—their income has traditionally flowed into the Port Authority’s general fund and was “used as a subsidy for other priority projects,” Sigmund says. If you want to know where the revenue goes, check out the gleaming new World Trade Center complex. “The profits were not reinvested in the airports as they should have been.”

The new spending plan has a different funding mechanism for airport upgrades: The Port Authority will choose a private developer to fund a large chunk of the construction costs. The developer will then earn that money back through the airport’s various revenue streams, be it concessions, advertising, or leases. A winning bidder is expected to be chosen this spring. Political leaders have grown fond of these kinds of arrangements because they lower the upfront capital costs on budgets, while private firms value a consistent revenue source over decades.

In time, if the plans come to fruition, LaGuardia may even find a fan in the vice president.

Bachman is an associate editor for Businessweek.com.

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Companies Mentioned

  • AAL
    (American Airlines Group Inc)
    • $43.31 USD
    • -0.85
    • -1.96%
  • UAL
    (United Continental Holdings Inc)
    • $55.33 USD
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    • -1.92%
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