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** S M A A C **

MSP Long-Term Comprehensive Plan May be an Attempted End Run

Last Sunday (November 21), Suzanne Ziegler wrote a very nice story about the Metropolitan Airport Commission (MAC) Long-term Comprehensive Plan (LTCP) Update. MAC obscured several issues by planning more MSP expansion, including:
Economic forecasts
State and Federal government plans and policy
Safe rates and capacity of MSP

While it is valuable to know what MAC prefers, a long-term plan is not likely to be useful for programming MSP capital budgets because of the limitations of the need projections -- and doubts about why the plan was written. MAC is involved in approving a 5-year Capital Improvements Plan and the 2010 projects budget. Both documents revive 2005 to 2010 projects that were postponed or abandoned because of Northwest Airlines’ bankruptcy (2005) and merger with Delta (2008).

MAC Deputy Director for Planning and Environment, Dennis Probst told SMAAC the LTCP should be updated every five years, but it has not been. Perhaps the reason for the update now is context for the more immediate future and to have the Met Council “bless” more MSP expansion before a new Governor’s appointments to both bodies?

Delta/NWA and MAC negotiated various changes in MSP development and financing for 2005-2010 (-2012 for gate leases) including various fee and lease reductions. We doubt that all “non-Delta carriers” will move to Humphrey. We expect major airlines, US Airways, United and American and their regional affiliates to remain at Lindbergh.

MAC subsidizes operating costs for Delta/NWA and other airlines at MSP by sharing airport revenues from parking and concessions. Landing fees were reduced. Leases have been stripped of “depreciation” -- that is, monies put aside to repair or replace the facilities and equipment when needed due to wear and tear.

MAC brags that they levy no taxes. They have landside business deals and revenue proportional to airside operations, so MSP is said by the Commission to be self-sustaining. But that depends on continued use as a major hub to manage debt.

As of now, Delta/NWA and MAC are discussing the gate lease renewals, with Delta saying they have no plan for renting fewer gates at the Lindbergh Terminal – that is, not moving the hub or part of the hub elsewhere. But MAC may be committed to building gates at Humphrey before Delta is contractually bound to gates in 2012. Delta may view their contracts with MAC as easily amended, which was Northwest Airlines’ experience.

Delta collects a 35 to 40% fare premium from local flyers, which more than covers lease and landing fee payments made by Delta at MSP. Minnesotans are paying for Delta’s hub operations at MSP. High fares are especially an issue for economic growth as small businesses in Minnesota are disadvantaged compared to their competitors in non-hub cities.

We doubt this is a viable 20 year financial plan.

FAA has no realistic plans for ground or air traffic control systems supporting more gates at MSP, particularly if rates (operations per hour) should increase as a result of more aircraft at MSP. New FAA air traffic control systems are scheduled no earlier than 2017 (assuming MSP is the first airport equipped with Next Gen ATC).

Talk of increasing passenger capacity by use of larger aircraft is just talk. Delta has suggested they have plans to increase seat capacity on regional (collector) flights by re-allocating the merged fleets and crews. This would be counter to the current trend of schedule reductions. The seat capacity mentioned is from about 70 to about 100, this 43% increase in seats is more than the projected increase in passengers through 2030.

James R. Spensley, President

 
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