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A Glitzy Expansion Plan For Bradley — That Might Never Be Needed

By BRIAN DOWLING and MARA LEE

July 23, 2012

Following a proud history of expansions at Bradley International Airport that began in 1971 with the opening of the airport's international building, the airport this month released a long-term plan to tear down the old Murphy Terminal and replace it with an ultra-modern terminal that will meet increasing demand for air travel.

Consultants hired by the airport were optimistic about passenger growth at Bradley over the next 16 years, saying that by 2028, New England's second-largest airport would need nearly twice as many gates as it has now, including some for larger planes.

The report also calls for a new parking garage with as many as 2,600 spaces and room to put the car rental facilities right at the airport, in easy walking distance from the gates.

It's a glitzy plan with data that appears to back it up, but there's a problem: The growth estimates were out of date when the report came out July 2 and appear to be far too optimistic.

Outside experts, including the Federal Aviation Administration, now say Bradley will not even return to its 2005 peak by 2028. Even airport officials concede the numbers could be overly rosy — and they're recasting the forecasts this summer.

The report says the plan is long-term, but if the lower estimates are correct, a new terminal would not be needed at all in the coming generation.

There is near-unanimous agreement among experts that investing in a regional airport as robust and inviting as possible makes good economic sense. Parts of the new plan — demolition of the 1952 Murphy Terminal, also known as Terminal B, as well as moving the rental car businesses onto the airport property and redirecting the roadway circuit — do not depend on higher passenger traffic and could be worth their cost over the next few years.

The document, released July 2, pegs the cost of tearing down the terminal, rerouting roads and building a central power plant at $50 million. Building the first part of a new terminal would range in price from $580 million to $600 million, the report said.

There is no cost estimate for a garage.

The consulting firm, InterVISTAS, projected 81 percent more trips at the airport by 2028, justifying the need for an additional 19 gates at the new terminal. The existing Terminal A, which now has 23 gates, would be reconfigured for 20 gates, some for jumbo aircraft that are not currently using Bradley.

However, the Federal Aviation Administration, which forecasts passenger traffic estimates annually, projects only 23 percent more passenger trips at Bradley in the same time period. A separate FAA study of growth forecasts through 2020 at the six largest New England airports showed that Bradley would be by far the slowest to gain passengers.

And at least one independent expert who studies airport expansions agrees with the more conservative FAA estimates.

Different Conclusions

The estimates in the Bradley plan were made in 2010, and the FAA estimates are from late 2011, released early this year.

The discrepancy could be partly because the number of passenger trips fell sharply from a peak of 7.4 million in 2005 to 5.3 million in 2009, the depth of the recession, and the recovery had only barely begun in 2010. At the time, many people were predicting a more robust recovery.

When asked about the discrepancy, Judd Everhart, spokesman for the state Department of Transportation, said the report's estimates were old and "reflected the appropriate market and economic conditions at the time, and when Bradley traffic was on the rise."

Everhart declined to comment on why the report was released with outdated growth forecasts.

Kenneth Currie, executive vice president of InterVISTAS, the Bethesda, Md., firm that did the forecast in the Bradley expansion plan — but not the whole report — said that in 2010, economists didn't anticipate as slow of a recovery, high fuel prices and consolidation of the airline industry.

"If you went back and looked at what economists were saying about economic growth and unemployment and fuel prices in 2010," said Currie, who did not work directly on the Bradley forecast, "I think you'll find that they were remarkably bullish compared to what actually happened."

Changes in the airline industry, such as reduced flights to small and midsize hubs, combined with the slower-than-expected recovery, may have made predictions especially difficult.

Another possible reason for the discrepancy, according to University of Hartford economics Professor Jeffrey P. Cohen, a Federal Reserve visiting scholar who studies the economics of airport expansion, is that the people preparing expansion reports for airports tend to favor expansion.

"One might have more confidence in studies of the economic impact of airport expansions in which the authors are less likely to have a political or economic stake in the results," Cohen wrote in a paper and reiterated in a recent interview.

Everhart, the DOT spokesman, said, "If we do expand, the justification would have to be there. ... We would probably want some kind of commitment from airlines long before we put a shovel in the ground."

Cohen said it's the big airports where traffic is growing, not cities where there aren't enough people day-in and day-out going to most destinations to fill the larger planes that cost less per passenger to fly.

"What I would expect is that the bigger flights like the cross-country flights, or even those that go halfway across the country, would gravitate to Boston and New York," Cohen said.

That trend appears to have already taken root. Large airports gained passengers faster than medium airports in seven out of the last eight years, according to FAA data. And when airlines lost passengers, especially in 2008 and 2009, the valleys were deeper for medium airports than large airports.

Before the recession, in 2004-05, Bradley outperformed airports of similar size, posting traffic gains of more than double the average. But suddenly in 2006, passenger traffic fell by 6.4 percent, nearly 500,000 trips — a bigger hit than at other airports.

Last year brought a measure of hope. In 2011, a year for which the Federal Aviation Administration has preliminary statistics, Bradley grew by 5 percent, much more than other medium-sized airports, which grew on average by about 2 percent.

Mark Daley, the airport's chief financial officer, said some medium-sized cities, such as Pittsburgh, where U.S. Airways abandoned its hub, and Cincinnati's airport, where Delta scaled back its hub, have been left with vast unused space. "What they are experiencing is what we want to avoid here, which is why we are reassessing the demand. We are not building this terminal on spec," he said.

The airport management has hired consultants to prepare a new traffic forecast, Daley said.

The Big Picture

The airport was operated until this year by the state Department of Transportation, which commissioned the expansion report. Now the newly created Connecticut Airport Authority will take over Bradley and the other state-owned airports.

The incoming executive director of the authority, Kevin Dillon, has not endorsed or rejected the expansion plans. But Dillon said he believes the broad area surrounding Bradley is an affluent market for air travel with significant potential for airlines.

"It's a market they're interested in," he said.

Dillon said changes in the industry related to the overall economy, jet fuel costs and consolidation are all factors that complicate the picture and make a careful analysis worthwhile.

"A lot of people are trying to look into the crystal ball and see what the future holds, but ... you still want to be prepared for the future."

Airports Bradley's size have a chance to attract new routes by keeping operations costs low for airlines to operate at the airport — fees such as rent and landing costs. That's all the more reason to be careful about borrowing too heavily to improve infrastructure, experts say, as the debt service on those projects is passed along to airlines in fees.

"If a smaller airport can keep that cost lower than big hubs, there's still attraction for that airport," said Tom Rossbach, an airport planning consultant at HNTB, a firm headquartered in Kansas City.

Airports should avoid going "too grandiose or have rose-colored glasses on forecasting," Rossbach said. "If you over-build, you may over-burden the airlines to a point to where they don't like the cost per plane passenger, and that, in turn, could drive carriers away."

Overall funding levels for planned terminal expansions at airports have fallen more than 26 percent between 2009 and 2011, according to FAA statistics. At medium-sized airports like Bradley, the story is worse — planned expansions have fallen 30 percent.

One optimist is Oz Griebel, CEO of the MetroHartford Alliance, who has been a consistent booster of Bradley and its importance to the region's economy for years. There's no question that people within an hour's drive would prefer to fly out of Bradley, he said, but since demand would be needed to initially attract more appealing routes, "it's kind of a chicken-and-egg-type thing."

A great deal of growth has been lost, Griebel said, since the airport has lacked a marketing director for the past four years. "I don't think you can overstate the damage that has been done to Bradley's marketing efforts by the void that's been there."

The authority appears to be committed to doing all it can to manage growth. But, said Cohen, the University of Hartford economist, the fact that passengers must change planes for most destinations from Hartford is an irritant that even causes some close-in customers to make the long drive to the bigger cities.

"We're small, and that raises the prices here, in addition to the variety of flights you get other places," he said, adding that if high-speed rail ever arrives in Hartford and Springfield, that could further erode the business case for more service at Bradley.