Pittsburgh airport faces industry challenges



Pittsburgh has little chance of becoming an airline hub again, analysts say.
PITTSBURGH (AP) -- On the verge of losing hub status and with no indication that industry star Southwest Airlines is landing here anytime soon, Pittsburgh International Airport is searching for a new identity.
There may be no other major airport where the shifting structure of the airline industry has manifested itself more clearly than here. The industry looks vastly different than it did just 12 years ago when Pittsburgh International was built for $1 billion.
It has been known for months that struggling US Airways, which controls 80 percent of all traffic out of Pittsburgh, would demote the airport from a hub to a so-called "focus city," though no one was quite sure what that meant.
Last week the mystery ended.
In an attempt to defend the airline's two other hubs -- Philadelphia and Charlotte, N.C. -- US Airways said it would slash a third of its flights out of Pittsburgh in the fall (240 daily flights to 65 destinations, compared with the current 373 daily flights to 102 cities).
The market
A little too far west of big travel markets in the East, but too far east to be considered a logical hub for connecting flights west and south, Pittsburgh has little chance of ever regaining hub status, industry experts say.
"The population in that region just isn't that big," said Michael Boyd, a Colorado aviation consultant. "But that's a moot point because no airline wants to open a hub, period. No one has the resources, and it's just not a great market."
No one is predicting the demise of the airport. With a metropolitan population of 2.4 million, Pittsburgh International is tough to ignore.
But the situation in Pittsburgh has become extremely fluid.
Major and low-cost airlines have stepped in to pick up slack for US Airways.
And the state's approval of slot machine gambling is expected to help pay down a $650 million debt obligation -- one of the reasons US Airways said it was packing its bags. The airport spends about $62 million every year to pay down debt.
Uncertainty at Pittsburgh led Moody's Investors Service last year to downgrade the airport's credit rating to two notches above speculative grade, a rating it reaffirmed this year. It is the lowest rating for any hub airport in the country right now, said Edward Roche, an analyst with Moody's.
Lower prices
But there is a silver lining for Pittsburgh, according to industry experts.
"One of the causes for higher fares in Pittsburgh has been the domination of US Airways," Roche said. "You assume low-cost airlines will see nice yields with less pressure."
Already airport officials say new competition is pushing down ticket prices.
That may not be enough to halt what the U.S. Department of Transportation calls the "Southwest Effect."
Airport officials estimate that 750,000 passengers every year hop in their cars and drive out of the Pittsburgh metro area for Cleveland or Columbus, Ohio; or Baltimore -- all airports served by Southwest. The Allegheny County Airport Authority this month approved a $360,000 media campaign to reverse that flow by highlighting increased competition in Pittsburgh.
Airports such as San Jose, Calif.; Nashville, Tenn.; and Raleigh-Durham, N.C., have thrived after losing hub status. Those airports, Boyd points out, have been on the winning side of the Southwest Effect, which drives down prices and boosts traffic radically.
When Southwest came to Raleigh-Durham in 1999, four years after American cut the airport as a hub, the cost of the average round-trip ticket dropped by $140, said Mindy Hamlin, airport spokeswoman.
Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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