Without a doubt the private consortium recently awarded the concession to rebuild and operate New York–LaGuardia’s Central Terminal Building owe JFK International Air Terminal (JFKIAT) a huge debt.
For if it wasn’t for the overwhelming success of its operation of Terminal 4 at John F Kennedy International Airport (JFK) it is doubtful whether the Port Authority of New York and New Jersey (PANYNJ) would have elected to put the future development of such a key facility at LaGuardia in the hands of private investors.
Terminal 4 is the only non-airline, privately operated terminal at JFK and was the first public-private partnership (PPP) or P3 projects of its kind at a US airport when PANYNJ awarded JFKIAT the contract to transform the former International Arrivals Building into a new state-of-the art facility.
JFKIAT – then comprising a consortium made up of the Schiphol Group (40%), LCOR (40%) and Lehman Brothers (20%) although now it is 100% owned by Schiphol USA – initially invested $1.4 billion on creating Terminal 4, which opened for business in May, 2001.
The company – operating under the terms of a 42-year lease after which time the terminal and everything on its site returns to the ownership of PANYNJ – has since overseen a $1 billion, two-phase expansion and renovation programme.
Phase one of the upgrade, completed in 2013, added nine wide-body gates for Delta Air Lines, a new inline baggage system, a centralised passenger security checkpoint, an expanded Customs and Immigration facility, a new domestic baggage claim and a host of new and exciting food & beverage and shopping options.
Phase 2, completed early last year, added 11 regional jet gates for Delta Air Lines that has allowed Terminal 4 to accommodate a number of new services and as a result, passenger numbers are soaring. Indeed, a record 19.5 million passengers used the now 36-gate terminal in 2015, and de Graaff, who points out that Delta paid for the 11 new regional jet (RJ) gates in Concourse B, predicts that over 20 million will pass through the terminal this year.
He says: “The two big factors behind the upturn in traffic are the opening of the 11 new gates that has allowed Delta to move its regional operation from Terminal 2 and the growth of international traffic.
“A lot of our international carriers are growing, either by increasing frequencies or upgauging aircraft on existing routes or launching new services.”
New arrivals include Air Serbia, Thomas Cook and Westjet while he notes that seven A380s currently serve T4 operated by a combination of Asiana, Etihad, Emirates and Singapore Airlines.
Delta accounts for just over half of Terminal 4’s passengers with Emirates, Caribbean Airlines, Virgin Atlantic and Virgin America completing the top five of its 32 airline customers today.
Gert-Jan de Graaff has no doubt that JFKIAT’s track record since T4’s opening persuaded PANYNJ to try and replicate the success of the project at LaGuardia.
“We were the first P3 project in the US and I believe that it is a model that the Port Authority likes because it is now going down the same road at LaGuardia with Terminal B,” he enthuses.
“The model provides the best of both world’s because instead of giving up total control of a key asset it is entrusting it to a dedicated, fully committed and focused private operator determined to get the best out of the business with an eye on passengers and improving the passenger experience.
“I am 100% convinced that the Port Authority decided to go for a P3 project to develop LaGuardia because of our success with Terminal 4. It has had a good experience. It likes how we conduct our business, co-operate with them and have continually rising airline and passenger satisfaction scores every year.”
With more than 70,000 passengers passing through T4’s doors on a daily basis, it is already the busiest of JFK’s six terminals, accounting for more than a third of its yearly traffic.
Funding for its investments has primarily come from revenue bonds issued by the PANYNJ, which has effectively acted as a guarantor for the projects without taking on any of the financial risk.
“In essence all the investments in T4 are made by JFKIAT and this will continue to be the case until we hand the facility back to the Port Authority in 2043,” says de Graaff.
Until then as part of the concession agreement JFKIAT will pay PANYNJ ground rent for Terminal 4 and what de Graaff calls a “significant” part of its annual profits.
Passenger enhancing facilities
JFKIAT’s investment in expanding Terminal 4 tells only half the story, however, because in addition to raising the facility’s passenger handling capacity and operational efficiency, it has also invested significant time, effort, and money on enhancing its retail and F&B facilities and improving customer service standards.
Indeed, its concession partners have invested over $100 million on opening more than 70 new outlets since 2012, with a New York centric theme being behind many of the F&B additions.
And it is clearly doing something right as T4 won ACI-NA’s 2015 Griesbach Award of Excellence for its commitment to providing an “unmatched concessions and retail programme”, and JFKIAT enjoys one of the highest passenger spends per enplanement in North America of $28.
New retail and F&B facilities introduced in the last year include the opening of the first ‘So Chocolate!’ and ‘The Scoreboard’ shops in the US in collaboration with concessionaire, Paradies Lagardère, while food and beverage master concessionaire SSP America plans opening its next new concept, a 4,000sqft area called NYC Street Food in the final quarter of 2016.
The terminal’s retail lounge has also hosted a number of special events that have included it becoming the temporary home to a one-of-a kind 1,500sqft airplane replica that de Graaff notes fit in with its philosophy of providing passengers with an exciting and friendly airport experience.
“We know passengers spend a lot of time in our terminal, so we are strong believers in making the airport experience as pleasant and enjoyable as possible,” says de Graaff.
“I often joke that all airport terminals should be based on the philosophy of don’t worry, be happy! This means that passenger processing should be fast and efficient and the building should be intuitive and easy to navigate, but it also means that it should be a happy place where there is lots to do and enjoy.”
Working with JFK’s other terminals
New York-JFK has a total of six terminals with the other five all operated by airlines – Terminal 1 (consortium comprising Air France and Lufthansa); Terminal 2 (Delta); Terminal 5 (JetBlue); Terminal 7 (British Airways); and Terminal 8 (American).
Each terminal operates as a separate entity with responsibility for landside infrastructure such as roads and car parks and the airfield – with the exception of the FAA managed runways – falling to the PANYNJ.
So is communication between all the different parties involved in the airport’s operation ever a problem?
“It is one of the challenges we face, but in all honesty I think it is more of a problem for passengers who are sometimes confused by the set-up,” admits de Graaff.
“There is, of course, some co-operation between the various terminal operators and I believe that we lead the way in this regard because our goal is simply to give passengers the best airport experience possible and we are not competing with them for traffic as we don’t run an airline.”
All six terminals are linked by the AirTrain JFK, which certainly helps with connectivity, particularly for transit passengers that need to transfer between facilities for onward flights.
In a bid to eliminate or reduce any passenger confusion about connections, de Graaff points out that JFKIAT has invested well in wayfinding signage while a number of customer service staff are on hand throughout the terminal to help and assist passengers.
Route network and future development
He believes that JFKIAT’s status as the only independent terminal operator at JFK ensures that it has to provide the airlines with almost unbeatable services as “making our airline customers happy is essential to doing business with them in the future”.
JFKIAT’s boss admits that this goal is helped by the terminal’s “state-of-the-art” facilities and insists that it will continue to invest in upgrading the terminal through new infrastructure and technology throughout the concession, which runs until 2043.
In terms of attracting new carriers, he genuinely believes that T4’s combination of facilities and services make it the terminal of preference for the airlines, although airline alliances and existing agreements at JFK, of course, mean that getting new customers isn’t that easy. As a result, both JFKIAT and their own route development teams and sometimes this involves working together to woo a new airline customer.
What next for infrastructure development? De Graaff reveals that JFKIAT is about to start a revamp the existing Arrivals Hall, wants to significantly improve the security screening area and has been talking to PANYNJ for the last 18 months about a possible 15-gate extension to Concourse A.
“It is absolutely our intention to realise the Concourse A project and in the next five years if possible,” says de Graaff.