The passenger terminal proposed for IAG has 2 gates and costs 27.5 million which is pretty darn cheap. Although there is currently no regularly scheduled passenger service, charter airlines frequent the air field. The current terminal is bad even for third world bus stations. That drives many charter airlines to Toronto and Hamilton instead of Niagara Falls. It costs between 4,000 and 7,000 USD to land a charter flight at Toronto Pearson plus you have to take whatever time slot they have around [3AM or some other God forsaken hour!]. Hamilton charges less [about 50% less than Pearson]. Also, most charter carriers currently fly into these Canadian airports and spend most of their time into Canada and a day trip to Niagara Falls. With a decent facility at Niagara, this would be reversed.

Also, Niagara would be a great place to attract some limited scheduled service. Skybus, Allegiant and other niche carriers could operate there. Myrtle Beach Direct Air is doing well there and has even upgraded its plane to a larger and newer variant [737-400].

Finally, extending the runway at BUF would be extremely expensive because you would have to place it over the Thruway or divert the Thruway a bit. It would cost way more than the last extension and it would be cheaper to build a terminal at Niagara.

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