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.
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.
Pittsburgh International Airport (PIT) has failed to live up to its potential since construction was completed nearly two decades ago. As we wrote in a previous Policy Brief (Volume 11, Number 8), it was built to handle approximately 30-40 million passengers as the key hub in the US Airways system. Passenger traffic reached its peak in the late 1990s when about 21 million passengers passed through the airport but had fallen to 8.2 million in 2010. In January the County Executive claimed that he would make increasing activity at PIT a priority in 2011.