Port Authority Needs $3B to Move Forward on New York's JFK Overhaul

Tue August 25, 2020 - Northeast Edition
Conde Nast Traveler



With passenger numbers and revenues mere fractions of what they were in 2019, airlines and airports are rethinking some of their largest expenditures amid the ongoing pandemic. Specifically, the wide-sweeping billion-dollar renovation projects under way at hubs across the country.

One of the latest airport projects with an uncertain future? The $13 billion overhaul of New York's John F. Kennedy Airport.

According to the Port Authority of New York and New Jersey — the agency that runs JFK — without a cash infusion from a second government COVID-19 relief bill, the airport's construction could be indefinitely delayed or require parts of the project to be halted.

"The Port Authority is funded by travel-related activities and has suffered a $3 billion loss," New York Gov. Andrew Cuomo wrote in a recent letter to congressional lawmakers. "Without federal assistance construction at LaGuardia and John F. Kennedy Airport and other improvements could very well be stopped or delayed."

The agency has requested $3 billion from Congress to cover its deficit, which it calculated based on projections that it will continue to lose revenue into 2022.

Because its construction hasn't yet begun, JFK's redevelopment is one of the projects most at risk, according to the Port Authority, along with new AirTrains for LaGuardia and Newark airports.

The ongoing massive construction at LaGuardia, along with a new Terminal One currently being built at Newark, are less likely to be halted, but aspects of those plans could nonetheless be in jeopardy as well if federal funding doesn't come through.

The initial plan to overhaul JFK was announced by Cuomo in October 2018, with the goal to prepare for a projected influx of 100 million annual passengers by 2050, as well as to streamline the airport's disparate network of buildings by demolishing several of the older isolated terminals and building larger, more connected facilities in their place. Other terminals also would see renovations and additions.

The ground-breaking was supposed to happen this past spring, with the first new gates opening in 2023 and the development completed in 2025.

That timeline is unlikely to come to fruition; the largest parts of the projects have already been delayed as officials await federal relief funds. Construction on brand new buildings for Terminals 4 and 6 — future homes to Delta and JetBlue, respectively — have been put on hold.

Ground-breaking on JFK's new Terminal 1 building, which is funded by a consortium of international airlines — Lufthansa, Air France, Japan Airlines and Korean Airlines — was scheduled for earlier in 2020. The $7 billion project will instead be delayed until early next year, the director of the consortium said.

One aspect of JFK International's overhaul is moving its timeline forward: the $344 million renovation of Terminal 8. That project, under way since last winter, is funded entirely by the partner carriers who will occupy the facility, American Airlines and British Airways. In fact, 90 percent of the JFK revamp is being funded by private investors, such as airlines, with the Port Authority putting up the rest of the money.

In the first federal COVID-19 relief bill, the Port Authority was given $450 million in government aid, earmarked specifically for its three airports. Even so, the agency contends it no longer has the funds to back its portion of the project.

Traffic across the three New York–area airports is still down by almost 90 percent, which means a major loss in fees and other passenger revenues that go to the Port Authority. Most experts predict that demand in the air travel industry won't recover to 2019 levels until at least 2023, with some predictions stretching as far as 2025.

"We are asking Congress to provide the Port Authority with direct financial assistance to offset its massive revenue losses so we can ensure critically important capital construction projects can move forward," said Rick Cotton, the Port Authority's executive director in a July statement, noting that budgets for the agency's improvement projects leverage a combined $10 billion in private money.

What's more, he added those private investments could "easily be lost" if any of the various construction projects are compromised.

Experts say that U.S. airports also need a second round of relief aid just to cover their operating costs as passenger numbers continue to lag. Earlier this summer, industry group Airports Council International, North America, asked Congress for an additional $13 billion in emergency funding (in the first federal relief bill, U.S. airports received $10 billion). At this point, however, any type of federal stimulus money is uncertain, as Congressional negotiations for a second COVID-19 relief bill have been stalled since early August.

In the meantime, airports across the country are facing similar delays on major construction work due to revenue losses. For instance, Orlando International Airport was forced to scale back a $3 billion new terminal facility, while Dallas-Fort Worth Airport and San Francsico International each postponed billion-dollar-plus terminal construction projects.