By Joel Warner
By Michael Roberts
By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
"It would put Concourse A carriers at a competitive disadvantage," says Sam Addoms, president of Frontier Airlines. "That would be ridiculous. If the BAE system places us at a cost disadvantage, you can't pass it on to your passengers." Addoms believes the manual baggage system is working adequately and says he fears smaller carriers like Frontier will be hurt most by the new charges.
Vicki Braunagel, DIA's deputy director of aviation for administration and finance, insists that carriers on A have no choice but to foot the bill for the automated system. "It's a capital cost," she says. "Just like we bought the land for twelve runways and the cost is being borne now, even though we won't build those runways until well into the next century."
Braunagel says the city is negotiating with Continental over what exactly to do with the baggage system on Concourse A. However, a source at Continental who asks not to be identified makes it clear the airline doesn't want to use the automated system--especially without more carriers on A to share the cost. And Continental could have the final word. Among the items being discussed by the airline and the city: turning over management of Concourse A's manual and automated systems to the carrier in what would essentially be a repeat of the United deal.
The carriers on Concourse A will have to pay more than $1 million in debt service on the BAE system this year alone. To actually get the automated system up and running would require even more money. "We're trying to figure out what makes the most sense," says Braunagel. "Should we spend the money now or wait until we have somebody who actually wants to use the automated system?"
The money BAE has cost the city is a continuing source of irritation to Denver officials--and it is the fuel for what could one day explode into a massive lawsuit. So far, though, neither side seems to have the energy--or the legal ammunition--to go to court.
Especially frustrating for city officials is the realization that Denver could have saved hundreds of millions of dollars if it had simply bypassed the BAE system at an earlier date. Because of the city's decision to stick with the automated system, as well as massive change orders from the airlines, the cost of the airport rose from the originally planned $1.93 billion to well over $4 billion. By contrast, the tug-and-cart system that Mayor Wellington Webb eventually used to get the airport open cost $63 million.
"The airport could have opened with a manual system early on," says George Doughty, the city's former aviation director who had a falling-out with Webb and left Denver in 1992. "If they'd made a decision in November of 1993, they could have opened DIA in the spring of 1994. Webb just wasn't focused on the main issue of getting DIA open. They were up to their ass in alligators, and they forgot they needed to drain the swamp."
The city was roundly criticized for not listening to the airlines when it built the airport, adds Doughty. "Unfortunately, the baggage system is the place where we listened to the airlines and gave them everything they wanted."
The tension between the city and BAE reached critical mass in the summer of 1994. City officials were hosting meetings with BAE and United Airlines executives that quickly turned into screaming matches. The city blamed United for many of its troubles, since it was the huge carrier's insistence on a fully automated system that led Denver to contract with BAE in the first place.
Denver threatened to sue BAE last fall, demanding that it pay the city $90 million in damages, an amount that would cover the cost of the alterations to the automated system in Concourse B as well as construction of the manual system. BAE responded with a $40 million claim against Denver, maintaining that the city was to blame for the failed baggage system due to its frequent changes in construction plans.
A stalemate ensued, and after weeks of angry negotiations, Denver agreed to drop its claims if BAE got a one-way system running for United by DIA's February 28 opening date. The agreement also called for BAE to have its automated system in Concourse B "substantially complete" by the end of the summer and its system running in Concourse A by August 31. Some observers say the city's decision not to sue BAE was made under pressure from United, which works with the company at several airports across the country and was concerned about BAE's financial health.
Today BAE maintains its system in Concourse B is functioning properly and says it hasn't been able to work on the system in Concourse A because the manual system was installed directly over its machinery. Airport officials acknowledge that the manual system in A would have to be rerouted to allow access, a process that could take several months. As a result, they haven't held BAE to its August deadline on that concourse.
When Denver turned management of the automated system over to United, it also gave the carrier authority to determine whether BAE had fulfilled its agreement with the city to create a fully operational system in Concourse B. That means the legal future of the baggage system is now in United's court.