The next step for improving Los Angeles International Airport is an automated people mover to connect the sprawling airport's nine terminals, parking lots, rental car facility and public transportation access points.

Construction is scheduled to begin in 2018, to be completed in 2023, and to be paid for with an innovative $3 billion to $3.5 billion financing package that will spread many aspects of the risk to the contractor.

The contractor, not yet selected, would build the automated people mover -- known as an "APM" -- and then collect payment from the airport in fixed annual installments over 30 years. The contract would include maintenance, performance and cleanliness metrics.

"We are bringing in outside operators to come in and solve a problem (and) we're getting something new in the equation: The developer will bring the money to the table," said Ryan Yakubik, chief financial officer for Los Angeles World Airports.

"It's not solely a financing," said Yakubik, once a portfolio manager for a bond fund. "It's also a project delivery method."

"We're transferring the risk of construction and the quality of construction to the operator," he said. "If they shortcut us on construction, if they go cheap on the facility and the facility breaks down, they have the risk of the longevity of the asset they are providing.

"Nationally, it's innovative, but this approach has long been used internationally," Yakubik said. "It's not common in the U.S., largely because it's hard to compete with tax-exempt financing."

Another key part of the $14 billion improvement effort at LAX is Delta's (DAL) - Get Report $1.9 billion plan to improve and connect its new terminals with the Tom Bradley International Terminal.

"Even that one is a little unique," Yakubik said. "Delta is undertaking the construction and financing the construction. Then we will buy {debt} from them step by step."

Generally, airport improvements are financed with tax-exempt bonds, paid off by the airlines and by revenue from airport sources such as parking. At LAX, the model will be used first for the people mover and then for a consolidated rental car facility.

"U.S. airports typically issue debt in their own name," said Seth Lehman, a senior director at Fitch Ratings' global infrastructure group.

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"In this case, the airport is telling the winning bidder 'we will make a certain payment, enough to recover the costs: operating cost, debt payment and equity return.' From the airport perspective, that provides risk sharing."

Debt investors will take on debt issued by equity parties and possibly the lead contractors, but "they will get LAX as an entity who will {indirectly} make the payment," Lehman said. "A strong counterparty like LAX is appropriate to this kind of financing: It's a highly rated airport."

The financing method is not typical for airports, he said, but it is becoming more common in surface transportation projects.

The LAX people mover arrives as part of the airport's $14 billion improvement effort, which is apparently the biggest ongoing airport infrastructure improvement project in the country.

Last month, the Port Authority of New York and New Jersey approved a 10-year, $32.2 billion capital plan that includes about $11 billion for redevelopment projects at the regions' three major airports.

LAX is growing rapidly, despite starting from a large base. Since 2007, the LAX passenger count has grown to 81 million, the second highest total for U.S. airports, a 31% gain from 62 million. The growth has reflected increased trans-Pacific travel, increased trans-continental travel and the desire of all three global U.S. airlines -- American, Delta, United -- to expand their fledgling LAX hubs.

Before industry consolidation and a sharp decline in fuel costs, it was said that the big airlines could not make money at LAX and could not afford to abandon it. International carriers set prices on their routes, and the airport was too congested to enable viable hub economics.

Now American, Delta, Southwest and United are all focused on LAX improvements.

American, which has the biggest market share at LAX, has moved from Terminal 3 into Terminals 4 and 5. Southwest had a $508 million improvement project at Terminal 1; United has a $537 million project in Terminals 7 and 8.

In mid-May, Delta will relocate from Terminals 5 and 6 to Terminals 2 and 3. The move will impact 21 airlines, which will also have to move as Delta takes the first steps in its LAX improvement plan.

Lehman said LAX "has worked out arrangement with airlines where the airlines lead construction and LAX would repay them. That gets the projects moving faster and caps airport exposure."

He said airlines, particularly Delta, are also investing directly in improvements at New York's John F. Kennedy and LaGuardia airports. "These large airports are more comfortable having airlines more involved in terminal investments," he said.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.