The Des Moines airport could delay a new terminal for 15 years. (Photo by Perry Beeman/Iowa Capital Dispatch)
The Des Moines airport got a bump in traffic over the Fourth of July holiday, but is still doing about one-third of its usual business, a top official said.
Because of the shortage of paying customers, the airport has been forced to siphon $6 million from savings meant to pay for a new terminal, said airport Executive Director Kevin Foley. Fewer passengers means less money spent on ticket fees, parking, food and beverages and taxis.
Foley estimates final July traffic figures will come in at about 33% of 2019’s record levels. The airport had been growing steadily the past few years until the COVID-19 pandemic dropped the number of passengers early this year. The airport had 24% of its normal traffic in June and 5% in the spring, when the pandemic first spread in the area.
Almost all the travel now is personal, with the more lucrative business class seats going largely unsold as corporations turn to Zoom instead of travel, Foley said.
Still, the airport is attempting to stay on schedule to open a new terminal in 2028, part of a $500 million project that is still $200 million short of full financing, Foley added. The airport has a $62 million cash reserve meant to cover part of the cost of the new terminal.
Industry groups predict it will take airports around the globe two to four years to regain their 2019 traffic levels. Foley said judging by the U.S. response to the Great Recession, it could be five or six years in Des Moines.
“We are going to have to start over,” Foley said of the air travel industry. “We are losing regional airlines. The industry will look different, but I don’t know how different.”
However, because the airport was already running out of room for current operations and space for expansion before the pandemic, the airport authority can’t afford to delay the terminal project, Foley said.
There also is a larger economic consideration. “We are a tool that allows the economy to grow,” Foley said. “If that tool is broken, we will hinder the economy.”
A 2014 study found the airport is a $644 million boost to the local economy, supporting more than 7,100 jobs.
The airport already has spent $50 million moving roads, relocating small-plane operations, and other work needed to prepare for the construction of a new terminal north of the present structure. The current terminal was built in 1948.
The airport received $23 million in federal pandemic aid, enough to cover operations through January or February, Foley said. No one has been laid off. “We have to stay operational whether we have one flight or 100,” Foley added.
Construction projects totaling $14 million, most of them involving pavement, were delayed.
Foley led local lobbying for Congress to allow airports to increase plane ticket fees to pay for new terminals and other infrastructure. Those talks are on hold now as Congress navigates pandemic stimulus packages.
The Des Moines airport would use that money to back bonds for the terminal project.
Airport officials also hoped to get a significant amount of cash from gambling revenues, but that also is in question, Foley said. Casinos closed for weeks due to the pandemic, reducing revenues and tax payments.
In a small bright spot, the Iowa Department of Transportation provided a $1.25 million economic development grant to pay for part of the $4.5 million first phase of the new entrance to the airport complex off Fleur Drive. It will be located where the exit is now.
The airport had grown to a record 2.9 million passengers in 2019. Foley said he expects U.S. plane travel to rebound fairly quickly when the pandemic subsides.
By 2025, the airport could be handling 3 million passengers, which will test baggage handling, security, airplane parking and other systems. In the best case, that means three years of using a terminal stretched for space, and it could be much more if financing for a new terminal can’t be arranged, Foley said.
If the airport is forced to raise its own cash to build the new facility, it will take 25 years to put the money in the bank, Foley said.
Tom Mahoney, chairman of both the Greater Des Moines Partnership and ITA Group Holdings, wrote in a column for the Partnership last week that the new terminal is needed for Greater Des Moines to add nonstop flights and encourage new businesses to locate in the area.
“With pre-pandemic passenger numbers at the Des Moines International Airport surpassing 2.9 million in 2019, the airport was approaching critical mass that was on the verge of stretching current facilities, making wait times longer and ultimately harming our ability to attract new direct flights due to gate constraints and a lack of ease of entry into the market,” Mahoney wrote.
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