Dive Brief:

• The LINXS consortium, led by Fluor Corp., broke ground earlier this month on the $4.9 billion automated people mover (APM) system at Los Angeles International Airport (LAX), Curbed Los Angeles reported. The APM is expected to transport up to 30 million passengers per year between airport terminals.
• LINXS, which also includes ACS Infrastructure Development, Balfour Beatty, Bombardier Transportation, Dragados USA, Flatiron and Hochtief PPP Solutions, is expected to have the APM operational by 2023. The design and build phase is just under $2 billion, but LAX payments to LINXS during the 25-year operations and maintenance phase bring the total contract value for LINXS up to almost $5 billion. 
• The APM project is only one part of the $14 billion of construction activity at LAX. Other projects include a $1.6 billion American Airlines terminal, a $1.8 billion Delta terminal and the new $1.6 billion Midfield Satellite Concourse, which will connect 12 new gates to the Tom Bradley International Terminal via a 1,000-foot tunnel. 

Dive Insight:

Massive airport projects continue to provide plenty of work for contractors in that niche, which tend to be large firms like Fluor, usually as part of a consortium of other companies. For instance, LaGuardia Gateway Partners, a private consortium that includes Skanska USA, is working on the $4 billion Central B Terminal project at New York City's LaGuardia Airport, and a team including Ferrovial is underway with a $650 million renovation of Denver International Airport’s Jeppesen Terminal.

But as big as these projects are, they represent only a fraction of the work that a leading advocacy group says U.S. airports demand. Just a few weeks ago, Airports Council International released its latest report on the physical state and capacity of airports in the U.S. and Canada and found that they currently have a need for $128 billion of infrastructure during the next five years. Terminal projects account for 56% of that amount, which doesn’t include the $92 billion of debt from past projects that airport authorities are still carrying. Airports also require work that will improve traffic, modernize and upgrade existing facilities, support aircraft innovation and beef up security. 

And the projected price tag keeps climbing year after year. The current $128 billion figure is 28% higher than what the ACI projected in 2017 and 80% higher than 2013's estimate. 

The key to being able to perform the necessary airport work without raising taxes, the ACI said in its report, is by “modestly adjusting” the cap on the Passenger Facility Charge (PFC) that airports are allowed to charge per ticket. Existing PFC purchasing power has been diminished by 50% since it was last increased in 2000. The current PFC is $4.50 per flight, with a maximum charge of $9 for multi-leg trips. Round trips net airports a maximum of $18.