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Deal With United Would Clear Funds for New Denver Airport Baggage System

Posted on: Thursday, 8 December 2005, 18:00 CST

By Kelly Yamanouchi, The Denver Post

Dec. 8--As the Denver City Council weighs a deal that would forgive some of the debt on United Airlines' troubled automated baggage system at Denver International Airport, airport officials are planning for a new baggage system that could cost $275 million to $300 million.

Airport co-manager Vicki Braunagel said Wednesday that is one reason she wants to retire some existing debt. The agreement with United would erase about $184 million of $600 million owed by United for the system.

A new baggage system would be needed because airport officials expect growth, Braunagel said. At DIA, the fifth-busiest airport in the nation, traffic has been up about 2.5 percent this year compared with last year. Southwest Airlines is set to begin flying to Denver on Jan. 3.

The new baggage system is part of a five-year master plan. Plans have been for a conveyor system funded by DIA that is decidedly more traditional than the United automated baggage system.

The high-tech automated baggage system relied on advanced technology that never worked as expected.

United stopped using that system in October. Though the airline has been obligated to pay the debt, Braunagel said, "If United doesn't survive for any reason in the future, this is DIA debt. It has to be paid.""This is still a very fragile industry and it's an industry that is still in transition," Braunagel said. "My nervousness is probably what drives this deal." City Council expected to consider the debt deal on Monday.

Frontier Airlines raised concerns about the debt retirement deal because of Frontier's needs for more gate space at DIA. The airline plans to add 14 planes to its fleet in the next two years.

Frontier Airlines spokesman Andrew Hudson said that in the same time period United is obligated to add 200,000 connecting passengers in exchange for having the debt forgiven, Frontier's projections are to add 1 million connecting passengers.

"There is at this point not a way for us to grow (in Denver)," Hudson said. Frontier decided last year to hold off on an expansion of Concourse A.

"The price that the city and their contractors put on the expansion we felt wasn't fiscally reasonable for us or for the airport," said Frontier spokesman Joe Hodas.

"It's an uncomfortable situation. ... I'm not convinced we're getting enough in return," Councilwoman Jeanne Faatz said. "I'm still weighing whether it's a good deal or not." Braunagel said Frontier was a "primary beneficiary" of a deal in 2000 to reduce expenses of airlines operating on Concourse A.

"The fairness aspect, we think, is really being met," she said.

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Source: The Denver Post

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