Denver Airport Woes Add Up to Distressing Start

The image that most people recall of Denver International Airport is of high-speed rail cars flipping luggage into the air and sending the shredded contents raining onto steel tracks.

Denver officials assure that the problem has been fixed and promise that future passengers will get their bags in one piece.

But when the airport finally opens Tuesday--16 months behind schedule and nearly $3 billion over early cost estimates--it will be anything but the multi-hub technological marvel they once guaranteed would generate jobs and revenue for 100 years without spending local tax dollars.

Denver International is not yet finished and will limp along for the foreseeable future as the city tries to make its bond payments and fend off federal investigations that threaten its economic stability.

And passengers may still have to wait for their bags.

The $193-million automated baggage system, which has been the butt of jokes for over a year, will handle only outbound bags at United Airlines’ Concourse B. All baggage arriving at the 53-square-mile facility will, for months to come, be moved by a $57-million backup system of old-fashioned tugs and carts.

Adding to the eve-of-opening jitters here is the potential impact of the “sticker shock” awaiting passengers who book flights in and out of the $4.2-billion airfield, crowned by gleaming white Teflon-fiberglass spires meant to mimic the snow-draped Rockies to the west.

United Airlines, which commands DIA’s only hub and 70% of its passenger traffic, has added a $40 surcharge to round-trip tickets here to help defray increased operating costs. Other carriers are planning to match that fare hike. Taxi fares from downtown will average $40. Rental car agencies have increased daily rates by at least $3. Most of the nearest hotels are 15 miles away--at 64-year-old Stapleton Airport, the congested facility that DIA is replacing.

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“The increased ticket prices could dampen traffic significantly,” predicts Paul Dempsey, director of the transportation law program at the University of Denver. “The big question then will be whether the number of passengers passing through will be lower than the city’s estimate of 36 million.”

That is only one of the questions weighing heavily on the minds of airport bondholders. No wonder. The only thing pledged as security on their bonds are airport revenues.

As it stands, the new airport--which city officials predict will generate a profit of $20 million in its first year of operation--has a BB rating, the lowest investment-grade rating with Standard & Poor’s, the nation’s leading bond-rating agency.

Also of concern is a Securities and Exchange Commission probe of allegations that Denver failed to provide enough information to bond buyers about the troubled automated baggage system that is blamed for two of four delays in opening DIA.

That investigation has been broadened to include recent interviews with the airport’s original guiding force, former Denver Mayor and current U.S. Secretary of Transportation Federico Pena, and other former key airport figures as far away as Germany and Kuala Lumpur, Malaysia.

At least a dozen other federal and local government investigations are examining allegations of shoddy workmanship, minority contract irregularities, misappropriation of airport funds, cronyism in awarding airport contracts and attempts to influence city officials.

“Mayor Wellington Webb is taking a big gamble by opening the airport only a few months before the mayoral election in May,” said Paul Talmey, a Denver political analyst. “All these investigations are potential vampires ready to suck the political blood out of his reelection campaign.”

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A more immediate concern for Webb and the city is whether financially ailing Continental Airlines will continue to honor its $59-million lease and gate commitment at DIA. The carrier, which has reduced its daily flights from 100 to 15 because of higher operating costs at DIA, now only needs three or four of the 20 gates it has leased.

If Continental does not pay for its unused gates, it could more than wipe out the airport’s projected profit in its first year of operation, city officials said. Denver filed a lawsuit against Continental on Wednesday to propel negotiations to guarantee a revenue stream from all 20 gates.

It all adds up to a distressing start for the first major airport to be built in 20 years, according to Gordon Yale, a Denver securities expert.

“While I do not think it is inevitable that this project will fail, it will certainly not, in the short-term, produce what it was supposed to,” Yale said.

“Instead of serving as a magnet for traffic, it has driven traffic away,” he said. “Instead of three hubs and competitive air fares, it will have one hub and among the highest fares in the nation. Nor has it made us an international gateway, or sparked a real estate boom.”

City officials prefer to emphasize the airport’s positives: five all-weather runways, 15,000 covered parking spots for automobiles, computer-operated subway trains, vendors offering everything from gourmet coffee to designer suitcases. Above all, the airport offers almost unlimited room for expansion.

They are also making an all-out effort to ensure that there are no major hitches on opening day, when 1,600 reporters from around the world are expected to cover the event. Embarrassing problems, city officials fear, could send potential passengers to other Colorado airports, and skiers to competing slopes in California and Utah.

The Utah Ski Assn. already has taken advantage of DIA’s setbacks. In November, the group mailed pithy flip-up postcards to thousands of skiers across the nation. The front of the postcards warned: “In Denver, you could lose your luggage.” Inside, over a photograph of Utah skiers hip-deep in snow, it read: “In Utah, you could lose yourself.”

Diane Koller, DIA’s director of marketing, dismisses references to the airport’s troubled history, saying: “If people are happy coming through the place, what happened in its past life won’t be of much concern to them.”

Nothing has created more concern at DIA than its ballyhooed automated baggage system, which was designed to move 1,000 bags per minute using a network of computers, lasers and 3,550 cars and 22 miles of underground track.

The system marks each piece of luggage with a bar-code tag and places each in its own rail car. A computer reads the code and sends the car to its proper destination.

When DIA opens, however, the system will only operate in a limited area at half of its maximum capacity. The city could not afford to postpone opening the airport until the system was fully operational because of looming bond payments.

Airport officials have yet to deal with vibrations that rattle portions of the main terminal’s $12-million terrazzo floor as the automated baggage cars clatter along tracks in a tunnel below.

“We have to meet a contractual obligation to minimize the vibration by August,” said Laurie Cant, a spokesman for BAE Automated Systems Inc., which built the high-tech network. “Right now, we’re interested in getting the baggage system up and running.”

BAE plans to extend the system to arriving flights at United’s Concourse B by mid-July and to Concourse A by Aug. 30. The city has not decided whether to install the system on its third concourse, Concourse C.

In any case, most of the airport’s 18 carriers will have to make the best of the conventional backup baggage system.

Among them is American Airlines, the second largest carrier at DIA, whose officials worry about serious bottlenecks of luggage in tunnels originally designed to house only the automated system. They fear snarls could result in delays, mishandled luggage and a competitive disadvantage.

“If the tug-and-cart system doesn’t work, we’ll see customers going to United Airlines,” said John Hotard, a spokesman for Ft. Worth-based American Airlines. “If the customers leave and our flights dry up, we can’t rule out the possibility of pulling out of DIA.”

Given all the problems, it is not surprising that city officials have approved a request by elders of the Cheyenne and Arapaho tribes to bless the new airfield.

Construction of the airport, according to the elders, disturbed the spirits of ancestors buried in the surrounding wind-swept plains. The ceremony to be held sometime next month, they say, will bring peace to those spirits.

Times researcher Ann Rovin contributed to this story.