Monday, March 26, 2018

JetBlue Selects Developer for Proposed John F. Kennedy International Airport (KJFK) Expansion: Airline must compete for right to build out terminal as part of $10 billion airport overhaul

The Wall Street Journal 
By Paul Berger
March 26, 2018 5:30 a.m. ET

JetBlue Airways Corp. has selected Vantage Airport Group and RXR Realty LLC to lead its proposed multibillion-dollar terminal expansion at John F. Kennedy International Airport.

JetBlue’s planned expansion, estimated to cost between $2 billion and $3 billion depending upon the final design, is intended to add gates that can accommodate modern, wide-body planes.

The airline currently operates out of JFK’s Terminal 5, which has 29 narrow-body gates. The expansion could add 12 larger gates, according to Steve Priest, JetBlue’s chief financial officer.

Mr. Priest said the airline received bids from 10 companies to partner on the development. JFK is among the busiest airports in the country and private companies saw “potentially great returns on a long-term lease in a high-demand environment,” Mr. Priest said.

JetBlue is in talks with the Port Authority of New York and New Jersey, which operates JFK, about whether and when the development can proceed.

The proposed expansion comes as the Port Authority embarks upon a $10 billion redevelopment of JFK, which has struggled to serve growing passenger demand with its cramped and sometimes-outdated terminals. The airport’s troubles were exposed in January, when a snowstorm resulted in days of confusion as thousands of passengers suffered excessive delays and many were separated from their luggage.

JFK served almost 60 million passengers in 2017, up from 49 million in 2012, according to Port Authority figures. The bistate agency projects that it will need to serve 100 million passengers annually by 2050.

Unlike most airports nationwide, each of JFK’s six terminals is operated by a different airline or private company. The Port Authority is weighing expansion and modernization proposals from each of its operators in a bid to join up a Balkanized terminal layout and to smooth operations. This summer, the agency expects to decide which projects can proceed and in what order.

The agency plans to invest $1 billion of its own funds, mainly to improve roadways and other infrastructure. It expects the private sector to shoulder the remaining $9 billion.

The airport’s redevelopment is a priority for New York Gov. Andrew Cuomo, who also pushed for an $8 billion overhaul of LaGuardia Airport currently under way.

Vantage is among the lead firms in the consortium developing LaGuardia’s Terminal B, in a $4 billion public-private partnership with the Port Authority. The Canadian firm, which manages and develops terminals, has more than 20 years’ experience working on airports.

The project would mark the first airport development for RXR, one of the Tri-State area’s largest real-estate developers. A spokesman for RXR noted the firm has significant experience working on public-private partnerships in the region.

RXR CEO Scott Rechler is a former vice chairman of the Port Authority and an ally of Mr. Cuomo’s. He is currently chairman of the Regional Plan Association, an influential urban planning group.

JetBlue plans to expand across the site of its former home at Terminal 6, which was demolished in 2011. It also wants to expand into the footprint of Terminal 7, where British Airways currently operates.

The British airline, part of International Consolidated Airlines Group SA, declined to comment. Earlier in March, a spokeswoman said British Airways was reviewing options with the Port Authority and that it would remain at Terminal 7 until at least 2022, when its lease expires.

Mr. Priest said JetBlue is “respectful” of British Airways. Though he added: “Frankly, just developing Terminal 6 doesn’t really give JFK the opportunity to go forward and advance the governor’s vision.”

The winning consortium, known as JFK Millennium Partners, beat competition from private-equity firm Oaktree Capital Management and Spanish infrastructure group Ferrovial SA for the right to join with JetBlue on the development.

Original article can be found here ➤

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