U.S. airports are spending record sums on construction to cash in on a surge in travel while the industry is flush from years of low fuel prices.
Airports spent $5.42 billion on construction in May, according to a preliminary estimate released by the U.S. Census Bureau on Monday, a 75 percent increase from a revised estimate of $3.1 billion a year earlier.
“We’re at record airline traffic right now,” said George Ferguson, an airline industry analyst for Bloomberg Intelligence. “In every market I look at, airlines are adding a lot of capacity.”
Airlines have booked healthy profits in recent years, but those margins are beginning to narrow as oil prices rise, and both airlines and airports are fighting for market share, Ferguson said. For airlines, that could mean buying more planes. For airports, it may mean updating terminals, he said.
New York’s oft-maligned LaGuardia Airport, which former Vice President Joe Biden once called a “third world” facility, is in the middle of an estimated $8 billion renovation. Los Angeles International Airport is trying to woo fliers with a $14 billion update that includes a $118 million “curbside appeal” project.
Between 2017 and 2021, U.S. airports could need nearly $100 billion in infrastructure upgrades and maintenance, according to a report from the Airports Council International. Of that spending, 63 percent is intended to accommodate growth in passengers and freight.
©2018 Bloomberg L.P.