DALLAS — The Metropolitan Washington Airports Authority has approved a new use and lease agreement with airlines serving its two airports that includes a $1 billion capital construction program at Reagan National Airport for facilities to accommodate an increasing number of passengers.
The agreement, which goes into effect Jan. 1, allows the MWAA to use up to $300 million of revenues from Reagan National over 10 years to offset operating costs at Dulles International Airport.
Passenger loads have been declining at Dulles, meaning less passenger facility fees that can be used for operating costs. The airport accommodated 23.6 million passengers in 2010 but the total fell to 21.9 million in 2013. Passenger totals are expected to be down in 2014 before rebounding slightly next year.
The airports authority is currently wrapping up a $5 billion capital upgrade at Dulles set for completion in 2016, with about $200 million in uncompleted projects remaining. MWAA is expected to issue $101 million of revenue bonds in 2015 to complete the program with assistance from cash balances and passenger facility charges.
The construction schedule has not been announced. Funding will include federal grants and contributions from the airlines, which have not yet been approved, MWAA officials said.
The ability to shift revenues generated at Reagan National to operational expenses at Dulles will give airport management more flexibility in operating the two-airport system, said Margaret McKeough, the airports' executive vice president and chief operating officer who led the negotiations with the airlines.
"We have achieved that through provisions in this new agreement, which give us new financial tools that were not previously available," McKeough said.
MWAA's $5 billion of outstanding airport revenue bonds are rated A1 by Moody's Investors Service and AA-minus by Standard & Poor's.
The capital construction program includes a new enclosed commuter airline concourse, which will be built on the site where the MWAA offices are now located. The indoor facility will eliminate the need to bus passengers on the regional carriers from the terminal to 14 outdoor boarding positions.
Other projects in the program include a new parking garage and relocation of security checkpoints to provide more shopping and dining options for passengers.
The work at Reagan National is needed not for additional flights but instead to accommodate a passenger load that has been growing recently.
Passenger growth accelerated this year as a result of the merger of US Airways and American Airlines in late 2013.
The Department of Justice required the two airlines to give up 34 landing slots at Reagan National that were given to Southwest Airline, JetBlue, and Virgin America Airlines. The three airlines fly larger planes than the small commuter jets used by US Airways at Reagan National.
Reagan National had been serving 15 to 18 million passengers a year for more than two decades, but the total went to a record 20.4 million passengers in 2013. The passenger load is expected to top 22 million in 2015 as a result of additional long-range flights with larger airplanes.
