MIA's South Terminal set to open amid high expectations

$1.1 billion facility will see phased-in opening process


Aug. 27--JOHN COSPER,

deputy aviation director

Two years late and hundreds of thousands of dollars over its original budget, Miami International Airport's South Terminal will begin opening this week, offering passengers much more spacious and modern surroundings that rival other major facilities nationwide.

Walls of expansive glass windows frame the five-story terminal, which will feature a huge rotunda for dining, rows of shops -- that will be ready later -- and colorful artistic touches.

Totaling 1.7 million square feet, with 15 new gates in J and 13 gates in H, three checkpoints and a massive new federal inspection station for international travelers, the $1.1 billion terminal is equivalent to a new mid-sized airport, Miami-Dade Aviation Director Jose Abreu said.

"Opening the South Terminal really is a major event in this airport's history," Abreu said, citing it as MIA's first new terminal since the airport was built in the 1950s.

Still, the South Terminal's emergence has been beset by years of delays stemming from a shortage of construction workers, cost overruns largely tied to changes in plans, and time-consuming squabbles between the airport, contractors and consultants.

The terminal's opening -- which will be phased in, with Delta Air Lines arriving Wednesday, Air France Friday, Lan Airlines next Tuesday and others following through late October -- is critical to MIA's complicated, layered expansion plans. It is essential to allow carriers to move out of Concourse A, so that it can be closed Nov. 10 to ramp up construction of the $2.66 billion North Terminal, Miami-Dade Aviation Deputy Director Max Fajardo said.

Yet, the South Terminal's opening comes as the airport is still struggling to regain passenger volume lost since the Sept. 11, 2001 terrorist attacks. The terminal is expected to be used by about a quarter of the airport's passengers, or about 8.1 million of MIA's 32.5 million travelers logged in 2006. MIA's traffic peaked at more than 34 million in 1997 and has only been on the rise since 2004.

Meanwhile, exploding construction costs have contributed to boosting the airport's massive, long-delayed capital improvement program to $6.2 billion, and will raise the airport's projected cost per passenger so high that MIA risks losing future traffic.

Per-passenger fees MIA charges to airlines -- which Abreu had hoped would be hovering in the low $30s by 2015 -- could rise to $37 to $38 in 2015, from $17.01 currently. MIA's terminal costs are paid by the airlines based on their levels of aircraft seats as well as the space they lease.

The higher fees could drive airlines to reduce flights or fly elsewhere. And that prospect could lead agencies to lower their ratings on the airport's bonds used to fund the capital improvement program, thereby making borrowing more expensive, adding to the costs.

BOND DOWNGRADE

In fact, Moody's Investors Service downgraded the airport's bonds from A1 to A2 -- its third-highest U.S. airport rating -- in November of last year, because of such concerns. The rating agency said: "Airline costs will rise significantly enough to potentially erode future traffic and revenue."

Moreover, high costs at MIA are a major reason the airport has had trouble attracting low-cost carriers, which have made Fort Lauderdale-Hollywood International Airport their base. Per passenger costs there are currently $4.36.

MIA's dramatic South Terminal -- consisting of an improved Concourse H and a new Concourse J -- was first conceived 10 years ago. It was created to appease a half-dozen major carriers, who sued the county, objecting to having to pay a share of construction costs for American Airlines' North Terminal, which is currently slated to open in 2011.

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