MAC delays building, cuts spending, after terrorist attacks

MINNEAPOLIS (AP) -- The Metropolitan Airports Commission will slow the $3.1 billion expansion of the Twin Cities airport, has cut $4.2 million in spending and has decided to defer work on planned retail expansion at the main terminal.

The commission is expected to announce even more deferrals later this week as it joins with Northwest Airlines in feeling their way through a new travel economy created by the Sept. 11 terrorist attacks on the East Coast.

Northwest has already announced it will respond to decreased demand by cutting 20 percent of its flights and laying off 10,000 employees.

MAC officials say their predicament is unprecedented and although they're not exactly flying blind, one Northwest manager said last week, "It will take a lot of Braille" for the MAC and the carrier to find their way.

John DeCoster, Northwest's regional director of airport affairs, asked the Airports Commission to "challenge every operational aspect" of running the airport, because the ground rules have changed.

Officials of the New York-based Fitch bond-rating agency said that passenger traffic rebounded "fairly quickly" after the Gulf War and major air crashes, but the Sept. 11 attacks "clearly differ from past events" and their continuing effect on air travel is unclear.

DeCoster predicted that the effect on the airline industry will last far longer than six months to a year. "It's not just a Minneapolis phenomenon but world-wide," he said.

Steve Busch, the MAC's finance director and a 21-year veteran of the agency, said with weary humor last week, "I should have retired three months ago."

Busch recently helped the MAC cut $4.2 million from this year's spending because of lagging revenues from flagging air travel, unexpectedly high utility bills and high snow-clearing expenses.

Now the agency is analyzing computer scenarios to see which parts of its expansion program it can slow down or defer next year. Big chunks of its income depend on the number of Northwest flights and their passenger loads. The MAC says that Northwest accounts for 80 percent of the airport's takeoffs and landings and 75 percent of all passengers who use the airport.

"We need each other," said Nigel Finney, a MAC deputy executive director. Airports and airlines "have to work as a system. ... It all comes back to how many people are getting on airplanes."

Although Northwest and other airlines have cut flights by 20 percent, that probably won't reduce MAC revenues by 20 percent, he said, because of the terms of the agency's agreement with the airlines.

The carriers using the airport guarantee the costs of running the airfield, and annual estimates of that expense are reflected in fees that airlines pay to land there. If those fees produce less money than needed, airlines must make up the difference at year's end.

That's why Northwest each year pores over the MAC's budget, suggesting changes even in seemingly minor categories to limit the amount that must be recovered from airline fees.