New Denver Airport

The automated baggage handling system at the new Denver International Airport has been plagued by serious mechanical and software problems and has yet to successfully pass the tests necessary for it to be certified operational. In previous tests of the system, bags were misloaded, were misrouted, or fell out of telecarts, causing the system to jam. The contractor is making changes to the system to overcome these problems. However, the airport is installing an alternative, conventional baggage handling system that can be used until the automated system is operating. The alternative system is estimated to cost about $51 million. This briefing report discusses (1) problems with the baggage handling system that delayed the airport's opening, (2) the added costs resulting from the delay, and (3) the adequacy of expected revenues at the new airport to cover the cost of running the facility and to service its debt.

GAO found that: (1) the airport's automated baggage handling system has serious mechanical and software problems and has not passed any of the tests necessary for certification; (2) the airport plans to install an alternative, conventional baggage handling system while the contractor modifies the new system to correct these problems; (3) the alternative baggage system is expected to cost about $51 million; (4) although Denver airport officials believe that an alternative system can be completed by the airport's February 1995 opening date, the airport cannot open until it has an operating baggage system; (5) it is uncertain whether the automated baggage system will eventually serve the entire airport or work in conjunction with the conventional system; (6) since January 1994, the airport's deficit has grown between $18 million and $19 million monthly because revenues generated from the neighboring airport have been insufficient to cover the new airport's construction costs; (7) the total cost of the airport's delayed opening will be about $360 million if the airport opens in February 1995; (8) the new airport should be able to meet its financial obligations if the forecasted number of enplanements are realized and if cost estimates are correct; and (9) the Denver airport should be able to meet the airline industry's user fee cap if current traffic, revenue, and cost projections are accurate.