Top 5 Airport Construction Projects of 2014, Led By Dulles and LAX

WASHINGTON (TheStreet) -- As the airline industry continues to coalesce around its hub airports, those hub airports continue to expand, spending billions of dollars to upgrade facilities.

A survey by Norcross, Ga.-based Reed Construction Data listed the top five airport construction projects of 2014. Each involves more than a billion dollars in spending or, in some cases, in contract awards for future spending.

The biggest project this year is the $5.6 billion, 23-mile extension of the Washington D.C. Metrorail system to Dulles International Airport. When completed, the new Silver Line will offer direct "one-seat" transportation from downtown Washington to the airport.

Top projects also include expansion at LAX, Dallas-Fort Worth, Denver and Salt Lake City, the survey showed. Dulles and Denver are hubs for United (UAL). Salt Lake City is a hub for Delta (DAL) and Dallas-Fort Worth is a hub for American (AAL).

Big airport projects are important for four reasons, said Bernie Markstein, U.S. chief economist for Reed Construction Data.

"First, when they are an expansion of landing spots/available gates, which most large projects include, they represent a response to demand for air travel to that city," Markstein said. "This is an indication of an expanding, vibrant local economy."

Secondly, when airport expansion enables more flights, "it helps attract more companies and tourists since it is easier for people to travel to and from that location," Markstein said.

In particular, American CEO Doug Parker has said that hub growth creates a "virtuous circle." During a 2013 visit to Charlotte, Parker said that when US Airways offers more flights in Charlotte -- currently it has 645 daily departures -- "the business community can attract more and more companies, and once more companies come, we can (offer) more flights."

Markstein said airport projects also enhance construction spending, which much of the money flowing directly to the community as "workers spend their wages and local companies are paid for building materials." Additionally, he said, "Even if the project doesn't expand the size of the airport, having a modern, architecturally beautiful airport with efficient means of moving people, their luggage, and packages has a big impact on the impression that city makes on various people from business travelers to tourists.

"The airport is often the first impression a traveler has of a city -- and you know what your mother told you about first impressions," he said.

As for Dulles, work on the Silver Line extension began in March 2009. Passenger service to the first five stations along the line will begin this summer; construction of the remaining six stations, including the Dulles Airport station, is projected to be completed in 2018.

Funding for the project includes $900 million from the federal government, $575 million from Virginia, and various amounts from Virginia counties and the airport authority, which will provide $233 million, said Rob Yingling, a spokesman for the Metropolitan Washington Airport Authority. About half of the funding is provided by toll road revenue.

Markstein noted that the Silver Line does not actually extend into the airport because authorities "got cold feet about the cost." As a result, he said, "You have to walk outside about 50 or 100 yards from the train before you get to the terminal. It's just enough to discourage some people from using it -- it's penny wise and pound foolish."

Online travel columnist Joe Brancatelli said it's about time for a Dulles extension: "They've been talking about extending that line from back in the days when I was living in Washington in the 1980s."

The United Airlines hub at Dulles offers 270 daily departures to 116 destinations including 35 international destinations. That makes it the primary Washington area airport for international travel.

The second-biggest project this year is terminal expansion at LAX. Reed Construction put spending at $4 billion for this phase of ongoing LAX expansion, which has already led to remodeling of the Tom Bradley International Terminal. Work at TBIT is ongoing, said airport spokeswoman Amanda Parsons.

"Still under construction (are) our TSA screening area, our arrivals and departures area dining and retail locations and demolition of our original TBIT south concourse," Parsons said. "Coming soon we will also be demolishing our original TBIT north concourse." The airport has said it is replacing its central utility plant and also plans major renovations of airline terminals.

According to the airport's tabulation, actual spending in 2014 will total between $750 million and $1.1 billion. That is the average amount of spending for the next few years, Parsons said, noting that the airport is "currently budgeted to $7 billion through 2019." Markstein said the Reed compilation tabulates the total planned expenditures for a project, in particular contracts that have been awarded but may or may not have been paid. "Exactly when and how much of that plan will be spent in a particular year is not available in our data base," he said.

At Denver International Airport, Reed Construction counted about $3 billion in spending. The airport is building a hotel and transit center that includes a 519-room Westin hotel, a public transit center with a commuter rail station and a public plaza. It is slated for completion in phases, with the hotel opening in 2015 and rail service starting in 2016.

Airport spokeswoman Julie Smith said the airport is also working on upgrades to vehicular bridges, and at C Concourse on the addition of five gates to be used by Southwest (LUV). Work on the gates will be completed this year, she said.

At Dallas Fort Worth International Airport, Reed Construction counted about $2 billion in spending this year.

The airport, which celebrated its 40th anniversary in January, "is entering middle age with a $2.3 billion face-lift on its original terminals and more flights to exotic international destinations like Shanghai and Abu Dhabi," The Fort Worth Star-Telegram reported.

During the current year, construction was completed on three gates connecting Terminals B and D, on the DART station that connects to Terminal A, and on the Terminal B north stinger, which will add nine regional-jet gates to the terminal, the newspaper said. Work on a second renovated section of Terminal A continues.

The fifth-largest construction project this year, Reed Construction said, is at Salt Lake City International Airport, where a $1.8 billion airport reconstruction project is underway, with the spending spread over 10 years. The Salt Lake City Tribune reported in January that contractors had been selected for the project, which will provide new facilities, rehabilitation of various structures and improved roadways.

Over the next five years, Delta plans to increase its Salt Lake City capacity by 8%, increase departures by 1% to 2%, the newspaper said. "We're going to have a brand-new crown jewel of an airport," Natalie Gochnour, chairwoman of the airport board, told the newspaper. "It's going to be great for our state."

Written by Ted Reed in Charlotte, N.C.

To contact this writer, click here.

Follow @tedreednc

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