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US Market Constructiion Update
Airport Construction

In recent years, the situation at most U.S. airports was one of insufficient capacity for dealing with ever-increasing demand. An overstrained airtransportation system was causing service and safety concerns to planners in the air-transport industry. FAA data shows an increase in runway near-misses from 231 in 1999 to 431 in 2000. This increase was placing a heavy toll on airport operations, and led to a growing number of flight delays, as evidenced by one out of four flights being cancelled, delayed, or rerouted last year.

To deal with this problem, projects at various stages of competition were seen at almost all airports in the United States. There were new and expanded terminals, ground transportation systems, cargo facilities, parking garages, tunnels, and runways being planned and built to deal with the great personal and commercial demand. These capital expenditures were estimated to be $8 billion, with $3.2 billion coming from an FAA grant.

The economic slowdown has greatly changed the outlook for airports. Even before September 11, business travel had decreased as a result of the slowdown. U.S. air travel decreased by 22% in 2001 compared to 2000, with much larger cuts in business travel. These decreases have had impacts on airport concessions and shopping revenues, which dropped by 7% and 8%, respectively. Late rent payments and threatened lawsuits from businesses against airport lessors have been the result.

Since the terrorist attacks, the situation has deteriorated further. Many cities, including Atlanta; Boston; Dallas; Detroit; Fort Lauderdale, Fla; Manchester, N.H.; Miami: Orlando: Raleigh, N.C.; Salt Lake City; San Francisco and Tampa have halted expansions or placed them under review. A few plans, including a $2.7 billion project in Houston (a current economic bright spot) will go through.

One reason for the pause in construction is the anticipated new security measures to be implemented in U.S. airports. Administrators want to know what structural changes will be needed, and tenants want to know how the new requirements will hurt already lowered foot-traffic estimates. Also, $3.2 billion in earmarked government funds has been put on hold.

In addition to airports, airlines are under a tremendous amount of strain. Since the attacks, almost 160,000 jobs related to air travel have been cut.

Reprinted with permission from 2001-2002 U.S. Construction Markets Update, FMI Corporation, 919.787.8400. For more information, visit www.fminet.com or call Angela Blackburn at 919.785.9220.

 



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