Palm Springs International Airport is breaking ground on a nearly $94 million baggage handling system designed to triple the airport's baggage processing capacity, a major fix for a terminal that has been bursting at the seams for years. The airport currently needs to process about twice as many bags as its existing system can handle, according to airport spokesperson Jake Ingrassia.
The project, covered by KESQ, is expected to wrap up construction in late 2028 and serve the airport for the next 15 years. It replaces a system that cost roughly $7 million to install and that, according to The Palm Springs Post, suffered chronic capacity bottlenecks that forced airport staff to haul luggage by hand during peak travel windows. Increasing passenger volumes put pressure on that older setup, making a replacement the airport's top near-term operational priority.
Federal Dollars Cover Most of the Bill
The nearly $94 million upgrade is funded overwhelmingly through federal infrastructure money rather than local tax dollars. In September 2026, the airport secured a final $5.5 million grant from the Federal Aviation Administration, pushing total federal funding for the project to $66.5 million, or more than 70% of the total cost, per details shared on the airport's Instagram account. That total includes a $21.55 million Airport Infrastructure Grant the FAA awarded in August 2025, the same report from the Post notes.
The new system will increase capacity and improve reliability, addressing strain that has built for years as travel to the Coachella Valley has boomed. Palm Springs International Airport set an all-time annual passenger record in 2025, welcoming more than 3.3 million travelers, a 2.4% increase over 2024, according to the airport. March 2025 alone saw nearly 500,000 travelers pass through the terminal, the single busiest month in the airport's history.
A Terminal Built for a Fraction of Today's Crowds
The airport's main terminal was originally built to handle around 1.5 million passengers annually, less than half of its 2025 volume and roughly a quarter of the 6.4 million annual travelers projected by 2042, according to the Small Business Exchange. The same report notes Palm Springs' population grew 5% between 2021 and 2024.
PSP handled about 3,800 fewer commercial flights than pre-pandemic levels in 2025, a 6% decline, according to Patch, as airlines shifted toward larger mainline aircraft instead of regional jets.
Part of a Much Bigger $2.2 Billion Plan
The Palm Springs City Council approved a sweeping 20-year, $2.2 billion Airport Master Plan in January 2025, according to city documents. The plan includes terminal gates and a Federal Inspection Station. Capital development materials reviewed in April 2026 set a target completion date of December 31, 2027, for an international arrivals center, timed to prepare the airport for international travelers ahead of the 2028 Los Angeles Summer Olympics, per the Post.
The stakes for getting this right are significant for the regional economy. An economic impact update presented in September 2026 found PSP generated $2.55 billion in total regional economic activity in 2025 and supported more than 16,500 local jobs, according to Citizen Portal. Air visitors spent more than $1.1 billion at Coachella Valley hotels, restaurants, and retail businesses in 2025, the same report found.
Airport Leadership
Executive Director of Aviation Harry Barrett Jr. was PSP's executive director when the airport announced its record year. Victoria Carpenter was named interim executive director.
Canadian flight capacity to PSP dipped slightly in early 2026, while domestic capacity growth more than offset the reduction. Canadians account for a large share of winter visitors, while domestic growth has offset reductions in Canadian capacity.
Hoodline previously covered PSP's fall prep, and construction on the baggage system now begins against that backdrop of sustained growth. With completion targeted for late 2028, the airport will need to manage several more peak winter travel seasons while the new system is being built.
