MSP Airport’s Post-Pandemic Strategy
If you’re an veteran traveler, you know a few things about the Minneapolis-St. Paul International Airport. First, it just works. Anybody that’s ever put up with the ramp congestion at LAX, flow control delays to O’Hare, and the sweaty grime of LaGuardia or Kennedy, appreciates an airport where even heavy snow rarely pushes back flights more than an hour off advertised departure.
You also know that it’s a workhorse, not a show horse. It doesn’t dominate the horizon with its distinctive profile like Denver International, impress with its spacious modernity like SFO or Detroit Metro, or get you from car to plane in minutes like Kansas City. But compared to the old days, when its prominent feature was sky-high hub airfares, what was once Wold Chamberlain Field has come a long way.
In a summer of travel horror stories, the news from MSP is what we’ve all come to expect—some bad days here and there, but in general still an airport that outperforms most of its national peers and many of its international ones. That doesn’t mean status quo, though. The airport still has fewer flights, workers and passengers than before the pandemic (see box below), and it’s facing facilities challenges with meaningful impacts.
MSP is also dealing with the ripple effects of a financial shortfall that accumulated during the first two years of the pandemic, due to a loss of fee revenue tied to passenger boardings. Despite that, it completed several major capital improvement projects on an expedited basis during the same period, and more change is to come in the near and long term.
MSP’s key tenants seem to be heading in different directions: Delta Air Lines is retrenching, temporarily, having bought out too many employees in 2020 (a phenomenon CEO Ed Bastian referred to as “juniority”), and is unable to operate a flight schedule that meets customer demand; Sun Country Airlines, the No. 2 airline at MSP, is in growth mode, doubling-down on a strategy with MSP at the center of its universe.
“Business destinations haven’t come back. … Business travelers are the most profitable, and their return may be key to whether Delta resumes certain flights.”
Henry Harteveldt, Atmosphere Research Group
Constant reinvention
The dilemma at MSP is how much reinvention to push, and how fast. The airline industry tends toward the volatile and is resistant to long-term planning, reinventing itself every decade with major changes to its business model. Our airport that was designed to suit Northwest’s needs 20 years ago is overbuilt for 2022 in some ways and underbuilt in others.
MSP sits in the bottom third of American hub airports in airlines’ operating costs, explains Brian Ryks, CEO of the Metropolitan Airports Commission since 2016. It’s a status that is central to the airport’s attractiveness. “We never want to be turning away air service,” says Ryks, “but if you build too much too fast, your cost to carriers goes up too much.” (Airlines pay large fees for every plane that lands at MSP.)
Still, MSP decided not to pause near-term capital projects during the pandemic, using the dearth of demand to more comprehensively rebuild its road network, and pressing ahead on major renovations at Terminal 1.
T1: the Big Dig
The most visible work at MSP remains the headhouse renovations at T1. The baggage claim level, dark and dated, is being completely rebuilt with larger carousels, new bathrooms with artist-designed mosaics, and a multilevel lighted sculpture called “The Aurora.” The terminal has been expanded by 15 feet, TSA stations are redesigned, and numerous cosmetic changes have been made to the midcentury modern feel of the space. Work will be complete in 2024.
In mid-2020 Delta suspended use of gates G7-22. The G gates were built by Northwest Airlines in 1972 and expanded in 1984, consisting of a linear pedestrian path with pods containing groups of gates. Those pods have proved inadequate for Delta’s needs, even though the concessions were remodeled around 2010, with the most attractive food and beverage amenities in the airport.
“NWA built the G concourse for DC-9s,” small aircraft (125 seats or fewer) dating from the early jet age, says Mary Loffelholz, a Delta vice president who manages MSP for the airline.
Delta and the MAC redesigned gates G17-22 at the far end of the concourse, moving bathrooms out of gate areas to the pedestrian corridor, eliminating dining amenities that blocked circulation, and building a multilevel Sky Club, the airport’s third. “Our expansion added [gate seating] and concession space to improve the customer experience,” says Loffelholz. “Our new club [opening mid-2023] will rival LAX, with a four-season outdoor deck.”
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The plan is to strategically renovate the other G gate pods, applying the same design strategy, and connecting the gaps between the pods to create a continuous space. It will be a model for future renovations at MSP, replacing carpet with terrazzo, adding brighter lighting, and relocating bathrooms from gate area to corridor, says Bridget Rief, MAC vice president of planning and development.
Delta may need more space within gates, but it does not need more gates than the 100 or so at its disposal in T1; the airline is operating substantially fewer flights at MSP than Northwest was two decades ago (see chart, below). “For the foreseeable future, we have enough gates to support our operations,” says Loffelholz.
The key to Delta’s goals at MSP is actually the expansion of T2—a terminal Delta has no plans to ever use.
T2: Second in name only
Terminal 2, which longtime Minnesotans still refer to as “the Humphrey,” has always been second banana at MSP. It still is, but it’s poised to take on a bigger role in the future. Dominated by Sun Country and Southwest Airlines, T2 needs to present a value proposition to the mostly budget-oriented carriers who call it home. It’s been extended to 14 gates but can be built out to 32 according to the MAC.
The plan has long been to house only Delta-aligned carriers (Delta, Air France, KLM, Delta Connection) at T1, but there are nowhere near enough gates at T2 to accommodate its current airlines (besides Southwest and Sun Country, there’s Allegiant, Condor, Frontier, Icelandair, and JetBlue) plus Alaska, American, and United, now housed at T1.
The MAC has also been waiting as Sun Country refined its business model under new ownership and an initial public offering. Previously the carrier indicated it had limited growth prospects at MSP and looked to established new beachheads in places like St. Louis and Portland, Ore. “It made it a bit difficult for us to plan,” says Ryks. “They are confident their model is working here, and demand shows it.” The MAC would like to add a handful of gates over the next five years to accommodate Sun Country’s growth and would need a dozen more at least for the non-Delta T1 carriers.
Business travel’s agenda
Pass through MSP today and the airport is thick with leisure travelers; that’s not uncommon in summer. Business travelers, however, are in short supply and business destinations boast fewer flights than in a normal year. Delta has announced it will operate a schedule below demand due to staffing constraints until at least next year.
Prior to the pandemic, MSP had a strong reputation with business travelers. “MSP has added the primary amenities business travelers need,” notes Henry Harteveldt, travel analyst and president of Atmosphere Research Group: “Wi-Fi, food delivery, local food and shopping with character.” It will also soon have a third SkyClub and the private Escape Lounge, which is affiliated with American Express, with access for certain cardholders.
Right now those lounges are mostly full of holidaymakers because business travel is not back. “People were optimistic in March, but the timeline to normalcy looks like it extends into 2024,” says Harteveldt. “Client service travel looks to return strong, but conference attendance is likely diminished on a permanent basis due to cost and the ability to attend online.”
Business travel at MSP is Delta. Its MSP hub fluctuates with Detroit as Delta’s No. 2 hub in scale. Detroit rises and falls with the auto industry, MSP with the region’s Fortune 500 community, which spans a much wider range of industries.
“MSP is an important cog in the wheels,” says Loffelholz. “It’s an incredibly strong business community that supports the route structure.” But about 20 Delta destinations from MSP remain off the route map, all of them business destinations.
“Business destinations haven’t come back,” says Harteveldt. Many are served by regional carriers that are so short on pilots that many can only operate a fraction of their previous service. “Business travelers are the most profitable, and their return may be key to whether Delta resumes certain flights.”
And that’s a problem. “We’ve put our resources in places where we’re confident there are passengers to support them,” says Loffelholz. The Twin Cities have lagged behind other regions in employees returning to the office. “We’ll be able to support the markets when [businesses] are ready.”
“Delta’s commitment to us is all of that air service will come back,” says Ryks, but the work-from-home phenomenon and corporate reluctance to return to the office may leave MSP shortchanged.
Sun Country’s growth engine
Into that breach comes Sun Country, the smallest of 11 mainline airlines in the country, but unequivocally looking to grow at MSP.
“I love MSP, I’m a homer,” says CEO Jude Bricker. “But we need more gates and hangar capacity since all our planes are here overnight.”
In his early days at the airline in 2017, Bricker was unsure whether Sun Country had saturated the MSP market with its 737s heading south each morning. “I felt like there was a ceiling at MSP, but my thinking has evolved. We’ve found more demand in leisure markets here than in new markets.”
He says Sun Country has cut some midweek service due to aviation fuel prices, but adds that the airline still sees more demand than it can service in peak periods. “We are growing as fast as anyone, but behind where we thought we’d be” due to the pandemic, he says. The airline will add Grand Cayman and five new 737s late this year, but overall capacity will be a function of worker availability and fuel costs.
“It’s good for MSP to have a major hub, but until recently, the leisure customer has been ignored.”
Jude Bricker, CEO, Sun Country Airlines
Sun Country assiduously avoids hand-to-hand combat with Delta; it deliberately doesn’t fly to Delta’s hubs and rarely offers the kind of frequency business travelers demand. But Bricker is more than willing to add two to three weekly flights to destinations Delta has abandoned, like Syracuse. “We are looking for leisure travelers. Business travelers find us incidentally.”
An example of the competitive dynamic at MSP is Asheville, North Carolina, a city of less than 100,000, which has never been served from MSP until 2021. Allegiant felt there was potential and added a couple of weekly flights, Sun Country followed on the same days of week, defending its turf, which then caused Delta to add a weekly service. It likely won’t all last, but for now, a city that never had MSP nonstops has three airlines serving the route and prices are down substantially.
Wide horizons
Long term, the MAC wants to see all “paused” service return to MSP, particularly international destinations. The sore thumb on that list is Dublin, source of a hard-won Aer Lingus service that came out of the MAC’s Regional Air Service Partnership (RASP) efforts, which combined corporate, chamber of commerce, and airport know-how to pinpoint services MSP could justify.
Medtronic’s two headquarters cities, Minneapolis and Dublin, had no flight connecting them, but a growing corporate demand. A joint effort convinced Aer Lingus to fly here. The flight ended when the pandemic began, but unlike Delta’s “paused” Asian and Canadian routes, Aer Lingus has not announced intentions to restore it.
“The airlines know where travelers are going,” says Ryks. “What they don’t know is what business is planning.” The RASP is an effort to get ahead of that curve. “Aer Lingus demonstrated demand, so we want to be more aggressive on air service development going forward.” It’s no secret the MAC would love to see British Airways and Germany’s Lufthansa at MSP, but when it comes to Midwest air service, most non-Delta allied international flag carriers focus only on Chicago O’Hare, maybe Detroit.
Though the MAC lost $300 million in revenue during the lockdowns, “and we have to reprioritize based on that reality,” says Ryks, it cannot move too slowly. “Trends change, the industry evolves. Look at the A/B concourses—at one time they seemed essential. It’s very difficult to plan long-term in airports.”
The No-Go Places
MSP International is still short 23 nonstop destinations compared to pre-pandemic, as of July, 2022. The reasons why are explained earlier in this piece. Some of these destinations are in airline schedules to be resumed in fall or next year, but that’s not always been a reliable indication of whether a flight will actually be resumed.
Aer Lingus Dublin
Southwest Oakland
United San Francisco
Delta Albany NY, Dayton OH, Edmonton, Canada, Great Falls MT, Helena MT, Kalamazoo MI, Lansing MI, Lexington KY, Lincoln NE, Marquette MI, Midland/Bay City MI, Norfolk VA, Peoria IL, Richmond VA, Rochester NY, Saskatoon, Canada, Seoul, Syracuse NY, Tokyo, Tulsa OK
MSP AIRPORT
An illustrated Guide to what’s coming and going.
Base Map Courtesy of Metropolitan Airports Commission
1) The main concourse of T1 (pre-security) is being dramatically remade with a floor-to-ceiling atrium, dramatic public art installation, and a modernization of the 1960s international-style balcony.
2) The gaps in the G concourse will gradually be filled in, expanding gate areas, relocating bathrooms, and updating materials in a terminal designed by NWA for DC-9s but now home to much larger Delta jets.
3) The back end of the G concourse has already been remade with a high-ceilinged atrium, a Delta Sky Club (with deck), and new furnishings, to justify the long trek from security, because G20 is inevitably your destiny.
4) The airport’s new transportation center is actually part of the Silver Ramp and features the state’s highest escalator and access points to all ground transportation including a portal to the Blue Line LRT.
5) The new 5,000 space Silver Ramp is the new third piece of T1’s parking colossus, this one clad in arresting terra cotta “baguettes” which appear to reflect the sky.
6) MSP’s Intercontinental Hotel, opened in 2018, is a showpiece, but currently difficult to use by the (temporary) closure of its TSA-managed entrance to the terminal.
7) Concourses A&B exclusively for Delta’s regional carriers are far too large for the airline’s needs. They were designed by Northwest in an era when regional flights were more pervasive. Don’t be surprised to see B torn down one day.
8) The baggage claim concourse is the most dramatic change to T1. Tiny round carousels, dim lighting, and low ceilings have been replaced by a much more spacious experience. Nostalgists can experience the last bits of the old vibe through 2023.
9) E and F concourses are the original gate piers at MSP—dating from the early 1960s—and lack adequate circulation or seating to not feel cramped. The MAC has plans to tear down both piers and rebuild them, but it would require a significant relocation of airlines displaced from the F.
