San Francisco's Difficult Airport Renovation Decision

(MoneyWatch)  It appears that the San Francisco Airport has decided to go ahead with a $383 million renovation of the old international terminal. When it's done at the end of 2010, the new Terminal 2 will house Virgin America along with some other airlines. The airport says it needs the capacity, but that's a gamble right now. I'm glad I'm not the one who had to make this decision.

On the surface, it seems like a smart move. Virgin America is growing quickly, Southwest and JetBlue have entered the airport in recent times, and even Allegiant has announced plans to start flying there. Virgin America flies out of the current international terminal and the airport is still running out of room. The empty Terminal 2 seems like a natural place to renovate to insure that there's enough room in the future.

BUT . . . there are issues here. First of all, who wants to take bets on whether or not Virgin America will even be around in 2 1/2 years to take possession of the new terminal? That's a long way off, and the airline has already had to go back to the well for more cash in its short life. It's far from being a certainty.

What will the world of air travel look like at the end of 2010? Will fuel have gone up further? If so, capacity may not be such an issue, because people won't be traveling as much. Why would SFO want to make the situation even worse by having to increase landing fees to pay for the terminal?

Don't think that I'm against the idea, however. SFO will need this space at some point. The hard thing here is determining when it will be needed. The airport has decided to make a bet that by 2010, air travel will be growing and hopefully the economy will have turned around. If that happens, then the airport will be in good shape. If not, it could end up backfiring. Like I said, I'm glad I didn't have the make that decision.