Denver Approves Airport Project With $1 Billion Cost Overrun
Denver International Airport can go ahead with completing overdue renovations of its iconic terminal building with approval an additional $1.1 billion in funding for the project that some liken to Boston’s Big Dig, which was known for delays and cost overruns.
The funds, which were approved by the Denver City Council in a 10-to-3 vote late on Monday, allow the airport to begin work on the third and final phase of its Great Hall project. But the approval comes at a price: The final price tag for the Great Hall, at least $2.35 billion before any additional cost overruns, will be at least three times higher than originally budgeted. And the timeline has been blown out: Work won’t wrap until 2028, seven years later than initially planned.
But airlines, city and airport officials all agree: Updating Denver airport’s Great Hall must be done.
“We can’t leave the kitchen renovation halfway done … it simply has to be completed,” said Denver City Councilmember Kevin Flynn at the Monday meeting.
The Great Hall project is viewed as critical for both security and growth at the Denver airport. The largest component relocates the existing security checkpoints from exposed locations on Level 5 — locations that the airport deems a security risk — to larger and more secure spaces on Level 6. That move is made possible by reconfiguring the existing check-in area layout on Level 6 to reflect the wide use of digital media that weren’t available when it opened in 1995.
Phase 1 of the Great Hall project opened in October, and work on Phase 2 is underway. The project is just one aspect of a larger expansion of the Denver Airport that also includes adding 39 new gates on its three concourses, additional carriages to the concourse train, and other needed updates to the 25-year-old facility. When all of the work is complete, airport officials say the facility will be able to handle roughly 100 million annual passengers, which is double the original design capacity of 50 million. The Denver airport handled 69 million travelers in 2019.
The Great Hall project has a tortured history. First envisioned as a $1.8 billion long-term concession with the city on the hook for just $770 million, work began in 2017 by private operator Great Hall Partners that was led by Spanish infrastructure firm Ferrovial. After numerous disagreements over cost increases and delays, Denver fired the concessionaire in 2019 with work only partially compete. The airport was able to restart work on the first phase in 2020 but the budget and timeline were already busted with Phase 1 and 2 alone estimated to come in at the original $770 million cost. In addition, long-time airport CEO Kim Day left abruptly last summer, with some saying the Great Hall fiasco contributed to her departure.
“It is essential that we finish the full buildout of the terminal now so we can prepare [Denver airport] for the future,” said airport CEO Philip Washington in a message thanking the city council on Monday.
The Denver airport, which rose to be the third busiest in the world during the pandemic, anticipates recovering to 2019 passenger levels this year. It handled 53.5 million passengers year-to-date in November, or 85 percent of 2019 levels, the latest airport data show.
Denver is only expected to keep growing. Both United Airlines and Southwest Airlines — the airport’s largest and second-largest operators each with a hub or base there — signed leases for additional gates and outlined big growth plans in early 2020. While that growth was put on hold with the arrival of Covid-19, both carriers maintain that their long-term plans in Denver are unchanged.
“Absolutely,” United CEO Scott Kirby said in October when asked if the airline still planned to get to 700 daily departures in Denver. United will have 90 gates at the airport when the concourse expansions are complete.
In addition, Denver has emerged as hub of innovation for United. The carrier launched a connecting bus trial with Landline that operates as essentially a United Express flight but on wheels last March. While the service to nearby Breckenridge and Fort Collins, Colo., appears off to a slow start, Kirby remains committed to continuing it. And at the airport, United plans to test a new United Club “Lite” lounge concept in a nine-gate eastern extension of Concourse B due to open later in 2022.
And Southwest will operate 10 percent more departures, including on 22 new routes, from Denver in January compared to two years earlier, Cirium schedule data show. The Dallas-based carrier has connected Denver to 11 of the 18 new destinations — including Fresno Calif., Miami, and Steamboat Springs, Colo. — that it has added during the pandemic.
Neither Southwest nor United’s expansion plans are conditioned on the Great Hall being completed. In fact, both carriers opposed to the original concession, though. Through the Denver Airlines Airport Affairs Committee that includes representatives of both airlines and others, they backed funds for the final phase in testimony to the city council in December.
“We need to make sure our airport is ready for … continued growth, because we’re just going to get busier,” said Denver City Councilmember Chris Hinds at the hearing on Monday.Subscribe Now to Airline Weekly