PHL could need 20 new gates by 2040, and other takeaways from its $556 million budget proposal

Philadelphia International Airport officials are focusing attention on expansion of international destinations, infrastructure upgrades, and cargo needs at the facility.

The officials presented the aviation department’s $556 million budget proposal for 2025 to Philadelphia City Council on Thursday. The proposal is about $11 million more than fiscal 2024.

The city’s department of aviation, which manages Philadelphia International Airport and Philadelphia Northeast Airport, operates without local tax dollars. The department’s operating expenses are funded through different revenue streams including aircraft landing fees, terminal building rentals, concessions revenue, and other facility charges.

Philadelphians voted to create a stand-alone aviation department within the city government in 2022. Before that, the aviation division operated under the Department of Commerce.

Mayor Cherelle L. Parker proposed a $6.29 billion city budget last month. Budget negotiations are ongoing, and City Council and the administration face a deadline for agreement before July 1.

Here are some takeaways from the airport’s budget proposal.

Improvements are underway at the airport to receive visitors in 2026 when Philadelphia will be host to FIFA World Cup soccer games, the baseball All-Star Game, and the 250th anniversary of the Declaration of Independence.

Upgrades include passenger waiting areas, garages, roadways, and signage, according to the budget proposal. The proposal also noted restroom makeovers, which have been ongoing since 2012.

Beyond 2026, the PHL is in the midst of updating the airport’s master plan, which began in 2019 and has identified the need for around 20 more gates by 2040.

“We’re constrained by land and water,” said Api Appulingam, the aviation department’s chief development officer, referencing I-95 and the Delaware River. “When we build, we essentially have to build on top of what we currently have. We’re looking at how do we do that in a strategic manner without interrupting any of our current operations.”

Many terminals at PHL were built in the 1950s and don’t support the needs of today’s passengers, with the exception of Terminal A-West, she said, which opened in 2003 and expanded international opportunities. Planning will be done in 2027 or 2028 and then move into the design phase of the facilities.

“We’re looking at what do we need to move around to be able to build new terminal facilities,” she said. “We’re hopeful and optimistic that we will have a plan that is going to start rebuilding our terminals one by one.”

The aviation department’s prepared testimony identified a gap in nonstop service to Central and South America from PHL and said it’s looking for a carrier to better serve these destinations. The airport also is looking to increase capacity to Asian destinations from Philadelphia.

“The Asia market from PHL is rebounding, and carriers are expressing interest in serving the Philadelphia market,” reads the submitted testimony.

PHL passenger travel increased in 2023 over the prior year, but the airport is still recovering from the pandemic, The Inquirer reported in January. Last year, the airport had almost 17 million seats on flights, compared to nearly 20 million in 2019, according to data from Cirium, an aviation analytics company.

As of January, PHL had service to 28 international destinations, with three more in Europe starting this summer by American Airlines, but some international flights offered before the pandemic have not returned.

During the pandemic, airlines retired some older planes. American Airlines, which did so, hasn’t replenished its fleet yet, Saeed said.

“There’s every indication from American Airlines that as soon as they start receiving equipment, they’ll bring all these routes back, and we’ll be back to where we need to be,” Saeed said.

While PHL continues expanding its cargo operations infrastructure, it is expecting a decrease in freight and mail cargo in fiscal 2025.

There is an “ongoing global decline in cargo tonnage,” the submitted budget testimony notes, with PHL anticipating a decline of about 17% in the coming fiscal year compared to 2023. The U.S. Postal Service has decreased its air cargo service by 90% in two years, moving much of its business from air to ground transportation as a cost-cutting measure, according to the Associated Press.

“During the pandemic, we saw a great deal of uptick in cargo traffic primarily because people were home and they were ordering stuff online,” Saeed said. “That particular part of the business kind of plateaued toward the end of the pandemic.”

During the pandemic, some cargo that had historically traveled on ships was diverted to air because of backups at ports. That contributed to the cargo growth, too, said Kate Sullivan, chief commercial officer at the aviation department.

While there is a current shift toward a “down cycle” for cargo, Sullivan said, the industry is typically “cyclical,” and there is an expectation that the cargo load will increase again in the future.

“We do expect over the next couple of years the numbers to start to go up again, and we are looking to be in a position to take advantage of capturing more of the cargo through our catchment when that happens,” Sullivan said.

PHL has been working to expand its cargo operations in recent years after a report in 2017 indicated that the airport was bringing in only 9% of the $53 billion generated annually in air cargo activity within a 400-mile radius of the airport.

The 5-to-10 year expansion project, announced in 2021, is expected to add more than 1 million square feet of cargo facilities.

Saeed said efforts to move people experiencing homelessness from the airport have resulted in “quite a bit of reduction in activity at the airport in past months as we’ve been supported by [the] office of homelessness as well as [the] police department.”

As shelters took in fewer people in Philadelphia during the early days of the pandemic, in order to create safer conditions through social distancing, some housing-insecure people migrated to the airport, The Inquirer reported in 2020. The number of people experiencing homelessness has increased since the pandemic, putting a strain on airport facilities.

“[The] airport is not an optimal place for shelter and there are better options,” Saeed said.

The city and Philadelphia police took steps to clear people experiencing homelessness from the airport in late February and early March, The Inquirer reported last month. The Office of Homeless Services provided emergency shelter to those who were displaced.

“Services being made available to folks who are looking for a place to be has been instrumental in our ability to be able to handle that,” Saeed said. “It also creates an environment in which people who work at the airport and people [who] travel to the airport have appropriate facilities and accessible facilities for their own experience as well.”