"Hub loss doesn't ring death knell for airports"

Sunday, September 7, 2003

Hub loss doesn't ring death knell for airports
By Jim Ritchie
THE PITTSBURGH (PA) TRIBUNE-REVIEW


Pittsburgh International Airport would not wither and die if financially
troubled US Airways chose to pull its hub. The loss would result in fewer
nonstop flights and, at least temporarily, fewer overall flights.
 
Ultimately, though, it could lead to more airline choices and lower prices. 

The scenario has played out at other airports that lost hubs -- in
Raleigh-Durham, N.C., Kansas City, Mo., and Nashville, to name a few. 

"Raleigh-Durham may be the poster child for Pittsburgh," said Mike Boyd, a
Colorado-based aviation analyst. 

Raleigh-Durham International Airport was abandoned by American Airlines in
the mid-1990s. After serving 9 million passengers in 1994, it logged just
5.9 million the following year. 

"In the mid-1990s, when they started phasing out the hub, the demand was
still there," said airport spokeswoman Mindy Hamlin. "Several airlines
started business here between 1995 and 2000. They stepped in to meet the
demand." 

Traffic last year was a healthy 8.5 million passengers -- although that's
down from the pre-9/11 high of more than 10 million in 2000. 

Airlines that moved into Raleigh-Durham include discounters Southwest,
AirTran and America West. AirTran and America West already offer limited
service at Pittsburgh International. 

The good news in Pittsburgh is the size of the region's local traveling
market -- those who aren't passing through the airport to catch connecting
flights. It's a respectable 4 million of the 10 million people who board
planes here each year. 

The local traveling market is what attracts airlines -- especially
point-to-point carriers such as Southwest. 

Nashville International Airport lost its American hub in 1994, cutting its
annual passenger count from nearly 9 million to 7 million, said Allison
McAfee, airport spokeswoman. At the time, Southwest was an emerging carrier
and moved to fill the void. 

"Southwest was very young, and we saw a quick takeover from them of those
routes we had lost due to the American downsizing," McAfee said. 

Now, Southwest uses Nashville as a quasi-hub, operating 215 of the airport's
399 daily commercial flights in July. American still uses the facility,
offering 79 flights daily in July. 

Kansas City lost three hubs in the past 20 years, first Braniff
International in 1982, then a reincarnated Braniff in 1989 and Eastern
Airlines in 1991. 

The airport attracted Southwest and a second low-cost carrier, Frontier.
Fares have decreased because of the competition. 

"Today," analyst Boyd said, "Kansas City has really good air service." 

Southwest, the gold standard of discounting, is being pursued by the
Allegheny County Airport Authority, which runs Pittsburgh International. 

The idea of Pittsburgh International losing US Airways was unthinkable
several years ago. Passenger levels were high; the airline's stock was
soaring; and no one imagined the airline would leave the $1.2 billion
award-winning airport Allegheny County built for it in the early 1990s. 

Today, a US Airways exit is possible. Chief Executive David Siegel has
threatened to pull the Pittsburgh hub unless the Airport Authority shaves
$500 million off the $673 million in bond debt owed for building the
airport. 

The airline is the dominant carrier at Pittsburgh International --
accounting for nearly 80 percent of all flights among major carriers -- and
pays for most of the airport debt through various fees. But as part of its
Chapter 11 bankruptcy restructuring, US Airways can walk away from the
obligation after Jan. 5 -- and has said it will do so unless it gets a new
deal. 

Local politicians and labor leaders say the airline's demand is unrealistic.
The state has offered $263.9 million in taxpayer-financed improvements and
reduced costs at Pittsburgh and Philadelphia international airports. In
return, state and local officials want US Airways to guarantee it will keep
high-paying jobs -- those that pay $20 or more an hour -- at Pittsburgh
International. The airline, which emerged from Chapter 11 bankruptcy
protection on March 31, says it can't guarantee jobs. 

Instead, the airline offers the prospect of job growth at Pittsburgh
International through its planned MidAtlantic Airways regional jet
subsidiary, which it could base here. MidAtlantic jobs would pay much less
than comparable positions at US Airways. 

The two sides haven't met since June, leading observers to speculate that US
Airways is preparing to take off from Pittsburgh. Losing the hub would cost
an unknown number of the airline's 7,292 jobs based here. The number lost
would be determined by how many of its 401 daily flights US Airways moves to
other airports. 

The 100-plus nonstop daily flights now operating out of Pittsburgh
International would drop to about 30, analyst Boyd said. 

"You will not lose service to New York or to the majority of major
connecting hubs out there," he said. "What you will lose is service to
mid-sized cities like Toledo and Syracuse." 

AirTran, based in Orlando, Fla., and another successful discounter, JetBlue,
based in New York, have placed multibillion-dollar orders for jets, and
local officials, including Airport Authority Director Kent George, hope they
consider Pittsburgh. 

Boyd says JetBlue is a possibility, but AirTran, which already operates at
the airport, is a long shot for expansion because it was not successful
during its attempt to grow here a few years ago. 

"You can write AirTran off," he said. 

George declined to comment, citing the negotiations with US Airways. 

AirTran went toe-to-toe with US Airways in Pittsburgh a few years ago,
launching nonstop flights to the city's four top destinations --
Philadelphia, New York, Chicago and Atlanta. 

The airline kept only its Atlanta flights because of poor response. Local
leaders and the carrier blamed the city's business community for lack of
support. It since added a flight to Orlando. 

AirTran has not ruled out giving Pittsburgh another chance. 

"I wouldn't say it would completely prejudice us away," said Kevin Healey,
vice president of planning. 

When US Airways yanked its 130 daily MetroJet flights from Baltimore
International in 2001, AirTran moved in and now has 30 daily flights there.


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