San Francisco International Airport’s $1 billion Terminal 3 expansion shelved indefinitely

Delayed Takeoff

San Francisco International Airport’s $1 billion Terminal 3 expansion shelved indefinitely

Inside Terminal 3 at SFO, where the third and final phase of a massive modernization project isn’t kicking off anytime soon. (Gregory Varnum/Wikimedia Commons/CC BY-SA 4.0)

While San Francisco International Airport (SFO) never came close to pulling the plug on its $1 billion Terminal 3 expansion and renovation scheme over the last 12 months of pandemic-prompted financial uncertainty and dramatically decreased passenger traffic, all hope present during the airport’s previous two six-month delay announcements (one last April and another in October) has darkened.

As reported by The San Francisco Chronicle’s SFGate website late last month, the massive so-called T3 West project at the seventh busiest airport in the United States has been placed on hold indefinitely with no immediate plans to begin construction (originally slated to kick off last June). Led by Gensler, T3 West is the third and final renovation phase of the 1970s-era terminal.

As noted by SFGate, this “significant” change in status for T3 West came to light during a February 10 meeting of the Board of Supervisors’ Budget and Finance Committee and is the latest seismic snag to impact SFO’s $7.4 billion ten-year Capital Improvement Plan, which got underway in 2019. In a November 2020 press release, SFO announced the postponing of the final phase of the $2.4 billion Harvey Milk Terminal 1 for at “least six months.” Unlike T3 West, that project was already well underway, with the first phase reaching completion in July 2019 and an additional nine gates opening in the South Check-in Lobby in May of last year. Per SFO, another seven gates at Terminal 1 and a post-security connection to the International Terminal are still slated for completion this coming May although the final phase, which involves the construction of a new North Check-In lobby area that was due to wrap up in April 2023, has been, as mentioned, pushed back.

As detailed by the airport in November, by delaying the final phase of Terminal 1 along with a handful of other major projects and roughly 20 smaller ones, either partially or in full, will “defer approximately $550 million of debt service resulting from issuance of Airport General Revenue Bonds, which are used to finance construction projects at SFO.”

In 2019, San Francisco International Airport welcomed around 56 million passengers. A year later, that number plummeted to by 70 percent to 16.4 million passengers as travelers opted (or were required to) to remain non-airborne during the COVID-19 crisis. Per figures from a San Francisco Examiner report shared by SFGate, 2020 airport revenues plummeted by 22 percent compared to the previous year, creating a $136 million budget shortfall for SFO. Just yesterday, Chicago-headquartered United Airlines, which operates a major hub out of SFO, announced it would furlough up to 3,139 workers based at the airport. Coincidentally, United operates out of Terminal 3, where new gates and a slew of fresh amenities could now be a very long way off.

As noted by the San Francisco Business Journal, a key revelation to come from the early February meeting of the Board of Supervisors’ Budget and Finance Committee was the decision to allow several current Terminal 3 commercial and retail tenants to renew their leases through the end of 2023. It was assumed that these tenants would have been temporarily displaced by planned construction work at the terminal. It now appears that they will not be displaced at any point in the near future.

“We should know within that time frame [by December 2023] what our schedule will be for that project,” SFO spokesperson Doug Yakel relayed to the Business Journal. “(We) will make future adjustments to lease agreements as needed once this project comes back into focus.”

Other major West Coast airports have been impacted differently by the fallout from the pandemic than SFO, with some confidently moving ahead with planned improvement projects. The Seattle-Tacoma International Airport, for example, recently announced that the Miller Hull Partnership and Woods Bagot (designer of Boarding Area B at SFO Terminal 1) will co-lead the design of a planned $340 million redevelopment of Concourse C. The expanded concourse is expected to open in 2027. Meanwhile, Sea-Tac, trailing just behind SFO as the eighth busiest U.S. airport by passenger boardings, is set to debut a new International Arrivals Facility (IAF) this summer.