Newark airport’s AirTrain replacement cost balloons

Newark Liberty International Airport’s long-awaited train system has blown past its budget by $1.45 billion to $3.5 billion.

The Port Authority of New York and New Jersey voted Thursday to hike funding more than 70% for the new AirTrain EWR project from its original $2.05 billion price tag.

The project will replace the existing system that shuttles over 30,000 passengers every day at the New York City-area airport.

The higher budget will cover rising inflation and construction delays from the pandemic, according to a statement from the authority. Larger risk premiums for large infrastructure projects and supply chain strains have also driven up costs.

Agency officials warned of a larger price tag for the AirTrain last year as it faced mounting costs for labor and construction materials. A separate modernization project at John F. Kennedy International Airport ballooned by $1 billion to nearly $4 billion in early 2023 for similar reasons.

The pandemic forced the Port Authority to put the development on pause, which resulted in a cost escalation, said Jim Heitmann, chief operating officer of the Port Authority. 

“Within those five years the world experienced this unprecedented rate of inflation,” he said in a Thursday board meeting. There was an “unprecedented higher increase particularly on construction contracts and then on top of that, extra-sharp risk premiums on these mega projects over a billion dollars.”

The authority also signed a $1.2 billion contract with a joint-venture firm of Tutor Perini Corp. and O&G Industries Inc. to build and design the system. The funds will help construct a 2.5-mile long elevated rail structure alongside three new AirTrain stations. Port Authority has completed 80% of the multi-phase procurement process so far, according to the release.

The AirTrain operates between terminals and connects the airport with rental car facilities, hotel shuttles, parking lots, and rail lines operated by New Jersey Transit and Amtrak. 

The updated budget will be offset by deferred spending from the PATH rail-extension project and other initiatives in the agency’s capital plan through 2026.

The Port Authority — which oversees the air and seaports in and around New York City — proposed a $9.4 billion budget for 2025, with about $3.6 billion diverted to capital funding for various infrastructure improvements. That spending plan included a broad 25 cent rate hike on bridge and tunnel tolls. 

Construction on the AirTrain is slated to begin in 2025, and is expected to be ready for passenger use in 2030.