Bonds

With passenger volume expected to keep growing, Phoenix Sky Harbor International Airport is aiming to build its first new terminal in decades, while spending billions of dollars in the interim to address aging infrastructure. 

Airport officials told the city council last week the terminal would be built on the site of two previously demolished terminals and that planning and environmental work will take several years with construction not expected to commence until after 2030. 

“To continue providing excellent customer experience at America’s Friendliest Airport, the council and I are moving forward with plans to build a cutting-edge terminal at the airport’s west end,” Phoenix Mayor Kate Gallego said in a statement

A projected increase in passenger traffic is spurring Phoenix to move forward with constructing a third terminal at its Sky Harbor International Airport.

Phoenix Sky Harbor International Airport

It would mark the airport’s first new terminal since 1990. While there is no preliminary cost estimate, the city said the project will be financed with bonds, passenger facility charges, and other airport funds.

“The airlines are anticipating big increases in passenger traffic in 2024 and 2025 … about 10% each year,” Jay DeWitt, assistant aviation director, told the city council, adding that traffic is subsequently projected to grow about 2% a year. 

Passenger traffic at the airport’s two terminals was up 9.7% in March compared to March 2023 with American Airlines and Southwest Airlines as the dominant carriers.

Over the short term, Aviation Services Director Chad Makovsky said more than $3.5 billion will be spent over the next six years “to really maintain and modernize our aging infrastructure as we work to keep pace with dramatic growth.” 

That plan includes about $935 million of bonds that are expected to be issued around 2026, according to a Phoenix Finance Department spokesperson. 

The city’s Civic Improvement Corporation most recently issued $96.54 million of senior lien airport revenue refunding bonds subject to the alternative minimum tax in 2023.

Phoenix has $610.25 million of senior lien airport revenue bonds and $1.25 billion of junior lien airport revenue bonds outstanding. The senior bonds are rated Aa2 by Moody’s Ratings and AA-minus by S&P Global Ratings, while the junior bonds carry ratings of Aa3 and A-plus respectively.

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