"USAir, RDU in tiff"

Monday, September 27, 2004

USAir, RDU in tiff
Airport wants bankrupt carrier's gates, which others might want
By Chris Baysden
The Raleigh (NC) Triangle Business Journal


MORRISVILLE - Raleigh-Durham International Airport wants bankrupt US Airways
to give up two of the five gates it leases - a maneuver that analysts say
would better position the airport to attract additional service from
existing or new carriers. 
 
Concerned over US Airways' deteriorating financial condition, RDU's staff
informed the carrier on Aug. 25 that the airport wanted as of Oct. 31 to
terminate the airline's lease on two gates in Terminal A and on a
6,000-square-foot maintenance facility. 

"The authority concluded the best thing for it to do was make the opening
move," says Airport Director John Brantley, who adds that US Airways
representatives have asked to meet with RDU officials regarding the gates.
"At this point in time, we don't know what their intent is." 

The airport doesn't have any other carriers lined up to take over the gates
or the maintenance building, says RDU spokeswoman Mindy Hamlin. She says the
airport staff doesn't believe the two gates are being used to capacity. 

Some airline consultants interpret RDU's move as a carrot that could entice
carriers to add service at the airport. Two gates currently are not being
used in Terminal A, and if successful in getting the gates free from US
Airways, RDU would have a total of four gates to offer other carriers. 

"That's the only reason an airport would try to get gates back from an
airline that has a viable lease on them," says Mark Sixel, president of
Eugene, Ore.-based Sixel Consulting Group Inc. "That's a smart thing to do."


Sixel and David Beckerman, director of consulting services for Washington,
D.C.-based Back Aviation Solutions, both say that Southwest Airlines could
be a candidate for expanding its service at RDU, where the carrier currently
leases four gates. 

Southwest spokeswoman Brandy King says the airline has no requests for
additional gate space at RDU and that its four gates can accommodate some
future growth. Southwest, RDU's busiest major carrier, enplaned 471,742
passengers over the first eight months of 2004 - a 12.4 percent increase
compared to the 419,857 passengers it enplaned in the same period a year
ago. 

"If we continue to grow at a rapid pace, we'll re-evaluate the situation and
the need for additional gates," King says. 

RDU also could be positioning itself to make a run at a new carrier. Both
Sixel and Beckerman say a top target could be JetBlue Airlines. The New
York-based low-fare carrier expects to start receiving at least 100 new
Embraer 190s next year. RDU is of a size that suits the 100-seat planes,
Sixel says. 

JetBlue spokesman Todd Burke says, "Raleigh is a city of interest to us,"
but he adds that there are no formal talks between RDU and the airline
regarding adding new service. "I don't see Raleigh-Durham happening in the
immediate future," Burke says. 
 
RDU has a 30-day verbal agreement with US Airways for the gates the carrier
leases, says Jim Tatum, the airport's attorney. The agreement rolls over
each month and, under North Carolina law, the airport has to give US Airways
at least seven days notice to terminate the lease. 

If RDU and US Airways can't negotiate a gate arrangement that suits both
sides, the airport could pursue legal action. But that would require going
through the bankruptcy court, Tatum says. 

Asked about the situation, US Airways spokeswoman Amy Kudwa says, "We are
very much aware of the airport's concern, and we will be meeting with them
within the week to address this outstanding issue." She declined further
comment. 

US Airways pays a total of $43,842 per month - or $60 per square foot - for
the five gates it leases in Terminal A. The airline also pays the authority
$7,500 per month for use of the maintenance building. 

US Airways, which employs 97 people at RDU, is slated to pay the airport
about $2.3 million in rent and landing fees this year - or about $200,000
per month. 

Rejigging gates isn't a common occurrence at RDU. It's been four or five
years since RDU has taken a gate away from an airline and leased it to
another carrier, says Hamlin. That redistribution also involved US Airways,
which lost one of the six gates it had at the time to Delta. 

RDU has a total of 49 gates in both terminals. Only half of the 26 gates in
Terminal C are being used, but the 13 unused gates are located in the north
concourse area, which will be demolished this fall as part of a $350 million
Terminal C redevelopment project.


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