Ted Simons: Good evening, and welcome to "Horizon." I'm Ted Simons.
Ted Simons: For the fourth time in as many years, Phoenix Mesa gateway airport is expanding, and there's more growth on the way. Here to talk about the former Air Force base's second life is Mesa mayor, Scott Smith. Good to see you again.
Scott Smith: Great being here, thank you.
Ted Simons: Another expansion. What's going on out there?
Scott Smith: We're growing. And we're growing by leaps and bounds. We had a planned growth, and we're running five to 10 years ahead of that. It's been incredible since Allegiant came in around three years ago, and it's been constant growth. We'll run a million people through that terminal this year. From zero as recently as 2008. So we're just struggling to keep up. It's a great problem to have.
Ted Simons: I want to talk about Allegiant in a second, but as far as the expansion, that's the passenger terminal?
Scott Smith: We're adding baggage space, additional space for rental cars and for security, and we're expanding now so we can get to eight gates with the expansion we just started yesterday. Then we also got news from the FAA that they had approved a $6 million grant for the final expansion. Another expansion that will be finished in 2013.
Ted Simons: That's a final expansion for this particular operation.
Scott Smith: This site. We're on the west side of the gateway airport. All interInc. mingled with ASU Polytechnic. The ultimate plan is to move to the east side of the airport which is completely undeveloped. It was the old part of the Air Force base, and to build a big new terminal over there that will handle 3-4 million passengers a year. We'll be maxed out on the west side, but hopefully we'll be able to start construction on the east side within a few years.
Ted Simons: Where do we stand as far as this particular expansion and what you see happening here a couple years?
Scott Smith: The new expansion would be done about 2013, and it will enable us to have 10 gates and handle about 1.5 million passengers. Only 50% more than we're already doing right now. We'll grow into that, we believe, pretty quickly.
Ted Simons: FAA grants, how much have we -- have you received and are there matching funds involved? How does that work?
Scott Smith: This comes out of the transportation trust fund. It's appropriated monies, and the FAA provides 95% of the money to airport enhancements, such as terminals, and the local, state and local need to come up with the additional 5%.
Ted Simons: We have, what, close to 10 million for one of the expansions and close, to what --
Scott Smith: The other two have been 6-7 million. It's well over $20 million in federal grants.
Ted Simons: I know this last grant needs to have matching funds from local and state. I'm guessing local is pretty well taken care of?
Scott Smith: Yes.
Ted Simons: How about state?
Scott Smith: If it doesn't get appropriated, we'll figure it out. It's 2.5%.
Ted Simons: As far as convincing the feds this needs to be done, is gateway the fastest growing hub in the country?
Scott Smith: It's great to go back to Washington and sit with the FAA and have them ask you excited questions about gateway airport. It is one of the great stories in commercial aviation in the United States right now. They're excited to see how it's growing, they're excited to see the impact it will have not only on the east valley but the entire Phoenix region.
Ted Simons: You mentioned Allegiant airlines, that is still the lone airline out there. Correct?
Scott Smith: That's correct. Allegiant serves 30 cities from direct -- with direct service from gateway. They just announced yesterday they're going to commence service to Las Vegas, which will make 31 cities. There's over 80 flights a week, and as I said, a million passengers this year.
Ted Simons: OK. Let's talk about those flights. Almost daily.
Scott Smith: Almost daily.
Ted Simons: From Mesa gateway to Las Vegas. Don't we have enough flights to Las Vegas already? What's going on here?
Scott Smith: You know, with Las Vegas, it was the number one preference of passengers coming through Phoenix Mesa gateway airport. And the thing about a reliever airport, such as Gateway, it doesn't take people away from Sky Harbor. The whole purpose is to grow the market. To grow. And we've done studies, for example, in Allegiant, they found in the cities they started flying, sometimes they have increased the number of passengers coming into the Phoenix area by two or three times. So we haven't taken away any passenger traffic from Sky Harbor. We make the pipe bigger. -- we make the pie bigger. I think if we fly to Las Vegas and we're successful, I hope we cut some passenger traffic out of Sky Harbor, because we can then replace it with maybe another daily flight to London, maybe to Paris, maybe to Asia, and get -- and expand the great economic impact Sky Harbor already has on the area.
Ted Simons: What kind of response are you getting from Phoenix?
Scott Smith: Phoenix has been a great partner. They were not an original partner of the authority, but they came in a few years ago and they are an incredible resource for us. They've helped the airport authority all along the way, and I think they understand that gateway represent as real opportunity. Not only for gateway, but for Phoenix Sky Harbor. And they've been a great partner.
Ted Simons: A partner I guess to a certain degree, but what if you, and I know you're trying to get other airlines in there, what about stops to Dallas? What about stops to the West Coast? How much -- I'm trying to figure out where Mesa gateway as it grows, where it fits in the valley's dynamic in terms of air travel.
Scott Smith: Think of other areas; about about Los Angeles. I remember when you couldn't fly from Phoenix to Burbank. Or Phoenix to Ontario. LAX was your only option. Think how it is now. Where at a drop of a hat, we can fly to Burbank, Ontario, Orange County. I rarely go into LAX anymore. The market has expanded. All those airports have helped grow the overall market. We hope the gateway airport, and we think and know gateway airport will do the same thing in the Phoenix area. It's another option, and any time you can grow air travel, your economy grows, and people have more choices. And we know that creates growth.
Ted Simons: I think some people will be questioning, that's been out there for quite a while, that big piece of property and all that potential. When times were good it seemed like not much was happening. It's pretty rough economic climate right now. And all of a sudden it's boom time. I know there was a problem with leaked aviation fuel, was that clean-up -- slowing the process? It seems like this has exploded out of nowhere. Where was this years ago?
Scott Smith: Its time came. In everything you have a right time, and it happened out there. First of all, the area around it grew. Gateway used to be literally in the middle of nowhere. The most important thing is the completion of Luke. When that opened about little over three years ago, all of a sudden the entire east valley was connected with a loop system into the really great freeway system are in our valley and that wasn't so far out there. Now if you get on the 202 or 101 from the east or west, north or the south, it's not a very long jaunt, and gateway became part of the community rather than being out there. That's when Allegiant decided to start flying because they had easy access. It's interesting how a freeway creates the impetus and is really the tipping point in the growth of an airport. That's really what the final piece was.
Ted Simons: And in terms of -- last question here, in terms of the growth of the airport, how big -- this is a former Air Force base. How big can this thing get?
Scott Smith: We have only scratched the surface. The gateway planning area, including the airport, ASU Polytechnic, is the size of the city of Tempe. It's over 35 square miles. Most undeveloped. With first solar going out there, we have Cessna, Beechcraft, we have other businesses coming out, the growth of ASU Polytechnic. Even in these bad times we have barely scratched the surface of the potential of that area. And over the next 15, 25 years you're going to see some great things in the gateway area.
Ted Simons: There's certainly a lot of things happening right now. Mayor, good to have you.
Scott Smith: Thanks for having me.