Atlanta terminal has bumpy ride to reality

Atlanta terminal has bumpy ride to reality

May 17th, 2012 by Wire Service in Business Around the Region

Passengers wait to board a plane to Tokyo, the first flight to leave out of the new Maynard Holbrook Jackson Jr. International Terminal at Atlanta's airport on the first day it begins operating flights Wednesday in Atlanta.

Photo by Associated Press /Times Free Press.

ATLANTA - On a stage beneath a Swarovski crystal chandelier in the Atlanta airport's new international terminal, city leaders past and present gathered recently to laud the complex.

They praised both the aesthetics - which add some form to an airport best known for function - and the practical benefits. From now on international passengers can claim their bags in the new terminal and leave from there, rather than having to recheck them for the ride to Hartsfield-Jackson's main terminal.

"Travelers will love the efficiency, especially when they only have to claim their bag one time," said Mayor Kasim Reed, adding dryly: "And it only cost us about a billion and a half dollars to make that happen."

His comment underscored the reality that, while fliers focus on learning how to use the Maynard H. Jackson Jr. International Terminal, its opening Wednesday culminates a tortured history of cost increases, delays and legal snarls.

"It's been a long, tough, laborious process," Reed acknowledged recently.

Both the mayor and Hartsfield-Jackson's top executive, general manager Louis Miller, inherited the city-managed terminal project when they arrived in their jobs.

"There was no shortage of challenges," said Miller, hired by Reed in 2010 after a prior post at Tampa International.

By then there had already been conflicts over the terminal pitting hometown carrier Delta Air Lines against the city, a design team against airport management, and even the previous airport manager against the previous mayor.

'Explosion in costs'

Planning started more than a decade ago. In 1996, then-Hartsfield general manager Angela Gittens said the airport would need an international terminal, as planners began developing a new master plan.

Two years earlier, Concourse E opened to serve international flights, but it was connected to the outside world only via the distant main terminal, creating a cumbersome arrival process.

Then-general manager Ben DeCosta in 2000 officially launched planning for an east side terminal with separate access off I-75, designed specifically for international passengers.

After the 2003 death of former Mayor Maynard H. Jackson, the Atlanta City Council voted to change the airport's name to Hartsfield-Jackson and put Jackson's name on the international terminal.

It was then expected to open in 2006.

But in May 2005, airport officials said the new terminal would be delayed until 2009 and the cost would rise from $688 million to $828 million.

Three months later, DeCosta fired the design team led by architecture firm Leo A Daly, saying its plans were "overdesigned" and "luxurious." The design team sued the city for $60 million. The terminal opening was delayed until 2010.

The airport's financial underpinnings became shakier when Delta, Hartsfield-Jackson's biggest tenant, filed for Chapter 11 bankruptcy protection in September 2005, on the same day as eventual merger partner Northwest Airlines.

Two months later, airport officials said firing the first design team would drive up the cost of the terminal by at least $150 million to top $1 billion.

That rose to $1.5 billion after a new design firm, Gateway Designers, was selected.

"When a major facility is planned, whether it be an opera house in Paris or a new terminal in Atlanta, you can plan on the original estimate going up about two-and-a-half or three times," said Colorado-based aviation consultant Mike Boyd. "That kind of explosion in costs, whether it's good, right or bad, that's pretty much in line with other places."

In late 2008, after a reorganized Delta acquired Northwest, CEO Richard Anderson turned his attention to the international terminal's growing price tag, which airlines eventually pay for through lease payments and other fees used to pay off city-issued bonds.

Insisting costs must come down, Delta raised the possibility of moving some flights elsewhere. The airport threatened to halt work on the international terminal. DeCosta sought higher lease payments from Delta and more airport control over gates. Ultimately, the airport cut the project cost, which ballooned as high as $1.7 billion, to about $1.4 billion.

Shirley Franklin, Atlanta's mayor for most of the terminal's development, negotiated a new lease deal with Delta in late 2009 that kept the carrier's rates roughly the same, though it would be renting more total space with the opening of the terminal and its gate concourse.

After successor Reed took office, DeCosta decided to step down when his contract expired in June 2010.

Final entanglement

Reed's administration, eager to leave conflicts behind, hired Miller and also negotiated a settlement in February 2011 with the terminal's first design team. The city paid the team $1.25 million to settle the claim, though it also collected a $10 million insurance payment.

Later that year, Franklin - who had impressed Anderson during the 2009 lease negotiations - was named to Delta's board of directors and remains on it now.

All along, work on the complex proceeded relatively smoothly, providing 3,000 planning, design and construction jobs at a time when metro Atlanta's economy was laid low by the real estate bust.

But a final entanglement awaited. When it came time to fill the new complex with shops and restaurants, the city decided to rebid the bulk of concessions contracts at Hartsfield-Jackson - a package worth $3 billion in revenue over 10 years, with the airport getting a portion of the take.

After the first wave of proposals came in, the city last September abruptly started over because too many were missing documents.

The city finally approved new concessions contracts in January 2012, but questions about political connections between the mayor and some of the winning concessionaires, among other issues, led to protests and appeals from losing concessionaires.

In the past few months, the losing concessionaires' protests and appeals have all been denied, settled or dropped, though lawsuits still are possible.

Amid the concessions challenges, Reed chalked it up as a learning experience.

"At the end of the day we're going to be much better because of this," he said.