No runway extension at Owen Roberts; new airport for Little Cayman
More than $120 million investment will be required at Cayman Islands airports over the next two decades to meet the growing demands of the islands’ tourism industry, according to a master plan for redevelopment.
The bulk of that cost – some $90 million – will be for the severely overcrowded central airport in Grand Cayman.
The plan also recommends a new publicly owned airport for Little Cayman, projected to cost $20 million.
It calls for an expansion of the existing terminal building at Owen Roberts International Airport – starting with the departure hall – which it warns is inadequate for current passenger volumes and a barrier to future growth.
It suggests an extension of the runway to accommodate larger jets used on long-haul routes is not currently affordable without a concrete commitment from an airline, such as British Airways, to fly direct to Cayman.
Proposals for U.S. Customs pre-clearance and boarding bridges are also dismissed as too expensive, though they could come back into the mix if passenger numbers increase beyond projections.
The report suggests the plan should be completed in phases over the next 18 years under the direction of an experienced general contractor, to be hired by the Cayman Islands Airports Authority.
The vast majority of the funding is expected to come from the passenger facilities charges – currently $13 – levied by the airlines on every departing visitor at the airport.
Revenue from this charge currently nets the CIAA around $6 million every year.
The report warns that the scope of the project would be severely restricted by any shortfall in expected passenger numbers or by the failure of airlines to pass on the passenger charges to the CIAA, something which has been a problem in the past.
On the plus side, a surge in visitors if Health City is a major success would create additional revenue.
The report suggests the CIAA needs to capitalize on the construction of the new terminal building to maximize its profits from retail and food and beverage concessions, providing additional revenue streams that could fund any shortfall in construction costs.
The Outline Business Case produced by consultants PwC along with an airports masterplan, compiled by its technical consultant WSP Canada Inc., provide a blueprint for development of the islands’ airports infrastructure over the next 20 years. A public meeting has been scheduled for Monday evening at Mary Miller Hall in Red Bay to officially present the reports and invite feedback.
The business case suggest the payoff for the Cayman Islands economy of developing its airports will run to nearly $700 million, largely from additional visitor spending from a steady increase in passenger arrivals. If Health City is completed and medical tourism becomes a “third pillar” of Cayman’s economy, that figure could rise to $2.4 billion, the consultants speculate.
“The Health City medical tourism initiative, if progressed through each of its planned phases, would have a transformational impact on tourism numbers,” it states.
The report suggests Health City could help passenger numbers more than double to 2.6 million every year. Currently, around one million people pass through the terminal each year.
It warns that capacity issues at Owen Roberts International Airport must not be a barrier to the success of the medical tourism project and suggests close liaison to ensure the airport development is in sync with the progress of Dr. Shetty’s project.
Little Cayman’s privately owned airfield is highlighted as an additional cause for concern. The airfield does not meet regulatory standards and currently operates on a “use at your own risk” exemption of airworthiness, with the CIAA having no role.
The report says this situation is untenable in the long term and suggests that $20 million be invested in either building a new airport on government land or buying the current site and developing new facilities there. It warns there are pitfalls to both scenarios and suggests Environmental Impact Assessments would be required.
The limited availability of funding means the required works across all three of the islands airports are recommended to be staggered over 18 years. Work on Little Cayman’s airport would not be completed till 2025, according to the report, with Owen Roberts International Airport the immediate and pressing priority.
The airport is running at double its intended passenger capacity, and with arrivals on the increase, the consultants warn, the future growth of the tourism industry depends on immediate expansion.
“Capacity issues are acute both in terms of passenger flows and plane movements. This is particularly evident during peak tourism transport hours. The unanimous feedback from industry stakeholders is that the adverse impact on visitor experience, particularly during the crucial departure process, is undermining the Cayman Islands tourism product.”
The report also points out that the success of the planned Kimpton hotel and other new tourism developments are contingent on developing Owen Roberts airport.
It suggests the works begin with the expansion of the departures area and the addition of a new lounge, retail and restaurant area on the second floor. It also recommends work on the airside, including strengthening the runway and adding plane parking stands, largely to accommodate an expected switch in plane type from British Airways.
Phase two would see the relocation and expansion of the baggage claims area and customs facility.
The third stage would involve expanding the immigration area.
The total investment is pegged at $122 million, with an additional $40 million in life cycle costs over the course of the project, which spans from 2015 to 2032.
The PwC report outlines an initial $40 million in spending, mostly on Owen Roberts, to bring the airport up to scratch within the next two years.
It suggests the funds would likely be covered by the passenger facilities charges but warns that if costs escalate or the expected passenger numbers don’t materialize, aspects of the development may have to be shelved.
“The economic appraisal indicates substantial potential benefit, principally derived from investment in ORIA releasing constraints on the tourism sector and supporting further investment in Grand Cayman.
“However, the risk analysis also identifies significant risk of cost escalation and project delays driven mainly by the complexity of the project.
“While the financial analysis indicates that the master plan is affordable, the results are highly sensitive to timing delays. Effective program management will be crucial to success of the project, and it will be necessary to secure external support in this regard.”