By Rob Stapleton
Alaska Journal of Commerce

State aviation officials, responding to concerns of airlines operating at Ted Stevens Anchorage International Airport, have modified plans for a connecting corridor, trimming costs by $15 million.

The Airport Operating Center was initially billed as a $46 million project to connect the Domestic South Terminal and the North International Terminal with an enclosed walkway corridor, and a new 911-dispatch center. Costs have now been reduced to $31 million.

Acting airport director Christine Klein said that the state offered the airlines a series of options to reduce or scrap the project, but then decided to go ahead with a modified project plan.

“Due to the concerns of the airline signatories who are experiencing some tough times, we offered a series of options to reduce or scrap the project,” said Klein, who is also the deputy commissioner of aviation for the Alaska Department of Transportation and Public Facilities. “We have decided to go ahead with the project in a somewhat diminished form.”

Alaska Airlines had told airport officials they felt that the construction project was too costly. Projects like this are paid in part by the government agencies, but also through lease and landing fees levied by the state. Construction project costs have been known to result in the state increasing lease and landing fees levied on the airlines.

“The AIAS (Alaska International Airport System) signatory airlines are on record with their opposition to the Airport Operations Project, which included a connector between the Domestic/South Terminal and the North Terminal,” said Kathy Smith, director of corporate real estate for Alaska Airlines. “The AOC project had many costly components and there were significant concerns related to scope, cost and funding. The airlines are working collaboratively with the state to develop a prudent and economically feasible plan for a scaled-down project that would include a connector.”

According to Klein the project will continue with a heated connector between the two terminals, but will not include the operations center, or the facilities offices reducing the cost to $31.1 million.

State transportation officials said the reduction came after they offered the airlines five options. Of those five options the airlines chose an option not to scrap the whole project.

The project was awarded to Davis Constructors, which is billing the airport $250,000 to $400,000 a week, according to Klein. The AOC project costs also includes $4 million for the design. The connector was originally part of a terminal improvement design which was approved by the airlines in 1999.

The decision came a week before the airline signatories were to hold a negotiations meeting over landing and lease fees for use of the Alaska International Airport System. The AIAS system includes international airports in Anchorage and Fairbanks.

Airline signatories last negotiated landing fees, rates and fees two and a half years ago. That agreement will expire in six months.

Kline indicated that one of her goals as the acting director of the airport and as the deputy commissioner of aviation is to stabilize rates and fees, with no increases to landing fees.

Revenues from the AIAS airports are shared with between Anchorage and Fairbanks. Ted Stevens Anchorage International Airport landing fees support Fairbanks, Sitka and Cold Bay airports with $13 million from its revenues.

2007 revenue figures show that Anchorage earns $108.1 million and Fairbanks International Airport earning $ 7.3 million.

On July 14, rumors that the whole construction project might be cancelled rippled through the airport and construction industry.

Airport officials did not comment on how modifying this project will affect its bonding rating, or the construction schedule.

Davis Constructors did not return phone calls regarding the project.

Ted Stevens Anchorage International Airport--the third busiest cargo airport in the world--is also supported by cargo carriers, who make up 72 percent of the airport's landing revenue.

Rob Stapleton can be reached at rob.stapleton@alaskajournal.com">rob.stapleton@alaskajournal.com.