Airport Corridor Free Rides

The Airport Corridor Transportation Association (ACTA) provides free, on-demand shuttle bus service for employees in the airport corridor area. According to the ACTA, 80,000 riders per year travel to 150 employers in a roughly one mile radius of the Robinson Town Centre. The cost of the service is stated to be $750,000 annually, about $9.40 per ride. 80,000 riders per year is the equivalent of about 220 riders per day. $750,000 dollars in cost per year is $2,054 per day.

Assuming three buses operating for 17 hours per day means on average there are 4.3 riders per hour of bus operation. With two buses, the ridership per hour of bus operation would be 6.5.

No wonder the cost per ride is so high. Let’s hope the taxpayers are not covering that cost. After all, they are already heavily subsidizing the bus riders (probably $3 to $4 per ride) who arrive on the 28 Flyer and the 29 Robinson bus. Presenting a transfer from the PAT bus gets a free ride on the ACTA shuttle at the IKEA bus shelter. And then the riders can request individual pickups when they are ready to come back to IKEA.

No one is opposed to helping folks get to work but at some point, the cost of the ride needs to be borne by the beneficiaries of the service. 150 employers who are benefitting by having employees able to get to work should be willing to make a contribution to the service. If they put in $5,000 apiece per year that would cover the cost. And if they were willing to pay for the cost, they would certainly demand major changes to reduce the outrageous costs. Over $2,000 per day to carry 220 people cannot be close to what an efficient operation would cost. $20 per hour for drivers would cost less than $800 per day. Fuel might cost another $100. And those are generous allowances. Surely, $2,000 per day is far too high.

And to be completely politically incorrect, why can’t passengers chip in a dollar or two a day? Two bucks per day should cover half of reasonable expenditures.

Thus, the appeals for state dollars to pay for the service, while not surprising, is not appropriate or justified.

Olympics in Pittsburgh?

Will gold roll into the Pittsburgh area with the blazing Olympic torch? Preposterous idea? Not according to the Mayor and the County Exec who suggest that the Olympic Committee’s request for bids be considered.

Let’s think about what this means. The Committee says the City (region) will have to come up with $3 billion and have 45,000 hotel rooms. That is now. What will be the price five years from now? Moreover, according to an official who keeps track of such things, the area will need 60,000 hotel rooms and there are currently only 24,000. How far out one has to cast the net to reach 24,000 rooms is not clear and, with no idea what many of the 24,000 look like, the notion that 60,000 will be ready by 2024 seems highly unlikely.

And three billion dollars? Where does that come from, Marcellus gas? For a City in financial distress, the notion seems incredible.

But one thing is for sure. Unless many more international flights and as well as more domestic destinations and flight origins are available in 2024 than there are currently at Pittsburgh International, the possibility for hosting an Olympiad is too remote to contemplate.

Then too, for the Olympic Games to be held in the Pittsburgh area, virtually every neighboring county would have to be involved offering sites for events. Soccer stadia, velodromes, tennis arenas, sailing venues, equestrian sites, kayaking sites, gymnastic arenas, etc. Massive amounts of land acquisition, infrastructure development and disruptions in many communities would be necessary.

There is a reason the summer Olympics games are held in large cities. There is more money, more people to be spectators, lots of hotel rooms, and bigger international airports with dozens of international routes.

Perhaps the Mayor and the Chief Exec are planning to grow Pittsburgh back to where it was 60 years ago. Then too, Philadelphia got the same Olympic Committee letter and that area is many times larger than the Pittsburgh area in terms of population and money and has a much busier international airport. It will be interesting to see how eager they are to bid and if they do how will Pittsburgh compete with them.

Airport Area Deep with TIFs

On the heels of yesterday’s editorial on the resurgence of activity for tax increment financing, Allegheny County Council is scheduled to debate the merits of moving forward with five TIF plans this week, four of them in the airport area.

The op-ed pointed out the qualities of the best TIF projects and from the documentation in the papers for Council it seems that all four airport-area projects will be warehouse/office/flex space and the proceeds of the financing will be directed toward infrastructure, such as environmental remediation, roads, and water, storm, and sewer projects.

The projects are expected to add about 1.8 million square feet in space at total build out. Of course, the use of tax increment financing requires the utilization of prevailing wages, which will add to the price tag of the construction.

People’s Airline Coming to Pittsburgh?

Plans to revive the old People Express evidently include flights into and out of Pittsburgh International. Great. We have always supported the idea of competition as a way to hold down fares and improve service. And, to the extent the new carrier will offer service to cities not currently being served, that is even better for Pittsburgh area travelers.

But wait. There is a big fly in this ointment. To get the as-yet-to-get-off the ground carrier to commit to Pittsburgh, the Airport Authority is offering the airline free landing and gate fees. Not a good thing. If the carrier is planning to be competitive, and possibly take business away from existing airlines by offering very low fares via the free landing and gate fees, then this is a bad move by the airport. Indeed, the move could be counterproductive if the new carrier, with its enormous costs advantage, forces existing carriers to reduce the level of service and thereby reduce landing and gate fee revenues.

Three cheers for competition. Raspberries for subsidized competition that harms the unsubsidized competitors.

Effects of Merger up in the Air

No, we’re not talking about a City-County merger: that idea has not surfaced since the 2008 Nordenberg report was unveiled and got a lukewarm response. Nor are we referring to the proposed idea of the County Executive to create a SEPTA 2.0 in southwestern Pennsylvania out of PAT and other regional carriers: when the Exec traveled to Harrisburg this week to talk mass transit, he just pleaded for more money for the Port Authority.

Instead the subject is a possible merger between US Airways and American Airlines, and what, if anything, it would mean for Pittsburgh International Airport. One analyst stated there could be a "moderate increase" in Pittsburgh’s business but conditioned that upon whether "landing fees can come down". Duplication of flight destinations or maintenance could mean less potential for positive effects. Another analyst bluntly stated "don’t believe for a second that it’s going to do anything to increase any kind of traffic out of Pittsburgh."

In 2001 US Airways had 12,000 employees in Allegheny County, representing about 2% of total employment and making it the fourth largest employer in the County. Ten years later it does not even appear in the County’s financials on its list of top ten principal employers. Passenger volume fell 33% through the decade while operating expenses rose 22%. On a per passenger basis, operating expenditures have climbed from $3.42 to $6.23. Fees dropped in the 2012 fiscal year but the airport’s "cost per enplanement" was still characterized as high when the fee reduction was announced.

What Is To Be Done With Pittsburgh International Airport?

The new terminal at Pittsburgh International Airport (PIT) was constructed in the early 1990s at the behest of US Airways to strengthen Pittsburgh’s status as the principal “hub” in the airline’s system.  Nearly twenty years later PIT sits grossly underutilized and still has about $450 million in outstanding debt from that construction.  US Airways, after two bankruptcies in the early 2000s, has all but abandoned the airport, dropping from more than 500 flights a day to fewer than 50 by late 2010.  Recently the County Executive has promised to make PIT his top priority in the last year of his term.  While the object is to increase utilization by increasing the number of flights at PIT, how does that happen and how can the airport and surrounding property begin to pay the dividends needed to justify the huge investment in the new terminal?


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Lingering Problems at Pittsburgh International

The Allegheny County Airport Authority has released its budget for 2010.  And while it contains a very slight increase in expenditures over this year’s budget it has been necessary to boost airline charges to cover expenditures and to reverse a decline in revenues. These higher costs will ultimately be passed along to passengers or lead to lower profits for the airlines.

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County Catches Parking Privatization Bug

The County Chief Executive wants to explore the possibility of turning some 13k parking spaces at Pittsburgh International Airport over to the private sector. The hope is that a private interest would be attracted to the possibility of managing and profiting from airport parking and would give the County a massive up-front payment, something to the tune of $500 million or so. That money could then be used to retire a big chunk of debt related to the airport and hopefully lower the fees the airlines operating at the facility are now paying to help retire the debt. Those fees are very uncompetitive in comparison with other airports.

It is a good idea that should be explored. Much like the Pittsburgh proposal to turn over parking garages and lots to a private operator in order to get money to retire debt and shore up pensions, the County would have to work through a separate entity to get the deal done. In the case of the County it is the Airport Authority. The Authority would likely have to complete a valuation of the assets and determine bidding procedures, etc. Though some have been optimistic that the parking could fetch $500 million, considerations like staffing, maintenance, ability to increase rates, applicable FAA regulations, and private ownership (which would entail having to pay property taxes) might lower the number.

Another thing to keep in mind is the $110 million left from the gaming disbursement for retiring debt at the Airport. If a bid is pursued, is successful, but brings in less than the $500m, that money could be used to close the gap. If the bid brings in at least $500m (or more), there will be a strong temptation to use that money for other purposes (the County intercepts all of the money according to state law) that don’t involve paying off airport debt.