"Pittsburgh: Good news or bad in losing hub?"

Friday, May 7, 2004

Good news or bad in losing hub?
Some say US Airways' plan means lost jobs; others see it as opportunity to
attract new airlines
By Dan Fitzpatrick and Mark Belko
The Pittsburgh (PA) Post-Gazette


Pittsburgh may be getting the worst of all worlds with the downgrading of US
Airways' local operations from a hub to a "focus city," according to some
airline observers and local officials.

Others disagree

The move, part of the airline's new survival plan unveiled without any
specifics earlier this week, could stick the region with fewer overall
flights, comparatively high fares and sharply reduced employment, the
bad-news side fears.

Former Allegheny County Chief Executive Jim Roddey believes the employment
could fall as low as 2,500, from about 8,000 now and nearly 13,000 three
years ago.

But the new county chief executive, Dan Onorato, believes a smaller US
Airways will clear the way for other airlines, particularly low-fare
carriers such as Air Tran Airways and Southwest Airlines, to increase
operations here with US Airways no longer so formidable a foe at Pittsburgh
International.

"Other airlines will be able to compete" with US Airways no longer
controlling some 87 percent of traffic at the airport, Onorato said. The
airline "won't have the monopoly control they had in prior years."

Pittsburgh Regional Alliance President Ronnie Bryant, part of an Allegheny
Conference on Community Development effort to ensure adequate air service at
the airport and even expand it, yesterday said preliminary talks with other
carriers have been "very positive."

"This market has the potential to be very attractive to mainline and
low-cost carriers. In our early discussions, we have been very
well-received," Bryant said.

Still, airline observers believe local officials will confront a hard sell
if they hope to lure a significant number of new carriers and service to
Pittsburgh. The region is only the 30th-largest airline market in the
country and could go lower.

Not counting the out-of-town travelers who use the airport solely as a
connection point, Pittsburgh's total of 6.9 million local passengers trails
40 other U.S. cities, lessening its attraction. "You are not that big of a
market," said Colorado-based aviation consultant Mike Boyd.

Pittsburgh is "not the giant vapor hole that other airlines will be rushing
into," he said. "It may be the small apple or no apple. It may be US Airways
or nothing."

Part of the problem is that while US Airways is shrinking, it's still going
to be the biggest airline by far at Pittsburgh International -- big enough
to keep some other carriers from coming in and setting up shop, Boyd and
others said yesterday.

The airline hasn't said how many daily flights it may pull -- in fact, it
reiterated plans to maintain existing service levels through September --
but observers speculate the number could fall from 379 to as low as 150 or
200.

Even at that lower level, the number of daily flights by US Airways would
more than double or nearly triple, depending on the final count, the total
number of flights offered by all other airlines at the airport combined.
Moreover, the flights U.S. Airways does abandon most likely would be those
where it already confronts competition, freeing it to keep the most
lucrative routes to itself.

It's hard to envision many other carriers rushing into such an environment
just to take up the slack for the lowest-fare, more marginal routes, said
airline analyst Darryl Jenkins, who heads George Washington University's
Aviation Institute.

The local economy is not strong enough or big enough to attract a lot of new
attention, he said. To be sure, history shows that cities can bounce back
from the partial withdrawal of a large, dominant air carrier, but only if
the local traffic is large enough to support the replacements.

Two examples of that are Nashville and Raleigh, N.C., both of which lost
their status as American Airlines hub in 1995. When American left, traffic
took a big hit in both places, with the Raleigh-Durham International Airport
losing 3 million passengers in one year and the Nashville International
Airport losing 2 million.

Raleigh rebounded with the arrival of Southwest Airlines in 2000 and demand
for travel from the region's cluster of high-technology companies and
medical outfits. "Even though it was a bad thing that happened, good things
resulted," said Mindy Hamlin, the airport's spokeswoman.

The story was the same in Nashville, where traffic dipped as low as 7
million once American left but came back up to 9.2 million before 9/11. Last
year, it was 8.2 million.

"It worked out very, very well," said airport chief operating officer Hugh
Smith, who noted that people now drive as much as 250 miles to use the
Nashville airport, due in large part to Southwest. If Pittsburgh can attract
a new low-cost carrier, "you will be able to pull people in from a great
distance," Smith added.

County Airport Authority Executive Director Kent George said the agency and
local officials have been trying to move the airport away from its reliance
on connecting traffic to one built around its local market for more than a
year, and that it "will continue to talk with every other carrier out there,
along with carriers serving Pittsburgh."

But the outcome in Pittsburgh could be much like it has been so far in St.
Louis, where American, which accounted for three-fourths of all flights at
Lambert International Airport, in November slashed its daily flights from
417 to 200 and stopped its direct flights to London and Paris.

Since then, city and aviation officials have been trying to recruit other
airlines to fill the void, but so far, they've only landed one -- Frontier
Airlines, which started Nov. 1. And only 47 of the 217 lost flights have
been filled by Frontier, Delta Airlines, Northwest and American.


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