PIT: Microcosm of an Industry: There's life after US Airways, but Airmall security remains a moving target

Cover Story

PIT: Microcosm Of An Industry

There's life after US Airways, but Airmall security remains a moving target

By Jodi Richards

September 2004

PITTSBURGH — Despite the challenges dealt to PittsburghInternational Airport by US Airways and the general state of the industry,executive director Kent George isn’t skipping a beat. With its hubairline dramatically reducing service, the airport is poised and preparedfor the future, which centers around an airport that supports its origination and destination community and where connecting traffic is “nothing but gravy,” says George .

George, the Airports Council Inter-national-North America’s incoming chair, is optimistic when talking about the future of air traffic at PIT, which can be a challenge when dealing with a carrier that recently announced more cuts at his airport. US Airways, which once operated a hub at PIT, has cut nearly one-third of its flights here.

Looking at the big picture, George says the troubles that US Airways encountered didn’t occur simply as a result of the events of 9/11, “that just accelerated it. It was because the industry was changing to meet the needs of the traveling public, and that the legacy carriers could not continue to operate as they did in the past. And the low-cost carriers, which have now about 30 percent of the market, were starting to dictate the paradigm shift. And now the legacy carriers have to come into line with what the public demands.”

Executive director Kent George says PIT is focused on the future of its O&D market. International airport 1Kent GeorgeInternational Airport 2

According to George, the agreement that financed and was the basis for the building of the midfield terminal complex was put together in 1988. It became effective in 1992 and runs through 2018, concurrently with existing bonds, of which there are some $640 million currently outstanding. “The document cannot be changed and neither can the terms and conditions within that document be changed in any way for the current or future airlines,” he says. “It is the funding document for the airport revenue bonds that built this facility.”

US Airways originally occupied 53 gates at PIT, 38 of which were exclusive use, and 15 that were preferential use. As of mid-August the airline had ten exclusive use gates, with the remainder being preferential. “We can recapture any gate that we need, except for those ten, on a 30-day notice,” says George. “We’ve never been confronted with a shortage of gates for new carriers.”

No Dramatic Shift
When it comes to what PIT will do differently in terms of future agreements with airlines, George says there isn’t too much that will change. He explains, “If an airline came to your hometown and said ‘I want to make you our major hub; I want to run 30 million people through this airport by the year 2000; and, I want you to build with us a new terminal complex to meet those needs.’ There is not one community in the country that would not turn around and say ‘let’s get busy.’”

George adds that the airport’s main focus should be on meeting the needs of its origination and destination traffic. “So what you do is you use GARBs (general airport revenue bonds) for those facilities that meet the needs of the O&D market — the market in the area — and some growth, of course. But, the facilities for the hub carrier that provides the connecting traffic should be paid for either directly by the airline or through special facilities bonds. The community should not be responsible for them.

“We at Pittsburgh did everything when they built the terminal building utilizing GARBs. And so, consequently, the signatory airlines are responsible for that.”

The airport has used various resources to reduce the debt service, including refinancing, recapturing on the passenger facility charge, and working with the state legislature to provide funds through a new gambling law. “We will be reducing our yearly debt service from about $62 million to $35 million; which is to the benefit directly of the carriers,” says George.

As PIT moves forward, its focus will continue to be on its O&D market. “We will get connecting traffic,” he says. “We may get a good bit of connecting traffic. But that connecting traffic is nothing buy gravy. We’re set up to operate as an O&D airport and no longer as a hub.”

Fortunately, according to George, PIT is about twice as big as it needs to be for an O&D market, so capacity should not be a problem for the airport as it is at others. However, adds George, “any normalcy hasn’t been able to be realized at Pittsburgh because our primary carrier has not found any normalcy.”

Airport

Impact on Community
The biggest challenge, according to George, has been the indecision on the part of US Airways and the impact on the employees and the community. “When you look at this, I wish US Airways had responded in more of a business-like manner,” he says. “One, working with the community; recognizing that you’re in bankruptcy and that you have to make some very tough decisions. But two, any airline in this predicament needs to be more straightforward with the community and the airports they serve.”

George says US Airways employed some 11,000 people at PIT when it first started experiencing difficulties. Now, there are some 7,000 remaining at PIT, with more possible cuts to come. “It has seemed like death by a thousand cuts that has been going on here in Pittsburgh. From the people that work for US Airways to my people that work here. The indecision, the little dribs and drabs of doing this and doing that. It’s really tough on the people; it’s tough on the community.”

Looking Beyond US Airways
PIT is not reinventing the wheel when it comes to bringing in new carriers or getting existing carriers to add flights, says George. “There are no new steps.

The Airmall, the marvel of airport retail, remains inaccessable to non-ticketed passengers. The Airmall, the marvel of airport retail, remains inaccessable to non-ticketed passengers.

“We have been very active in talking with every single carrier out there. It’s very difficult to do that in a fishbowl environment like we are. The press wants to know what we’re doing; the business community wants to know what we’re doing. But they’re working with us now. In the very beginning they weren’t. They didn’t respond because they took US Airways for granted. You can’t ever take your air service for granted. You’ve got to continually work at it.”

Since the airport authority was formed five years ago, the airport has obtained service from low-cost carriers such as AirTran, ATA, America West, USA 3000, Spirit, and Independence Air, which has stimulated the market. “We have good service. We’ll get the O&D passengers to the top 40 business markets they’re going to go to and have non-stop service out of Pittsburgh with or without US Airways.”

Security and Shopping
Security is and continues to be a difficult matter to discuss, says George. “Everybody wants to do what is best to avert anything like 9/11. However, we have to watch the way we’re doing it, and utilize as most effectively and efficiently the technologies that are out there.

“I think it is ridiculous that we are emphasizing security procedures on 285 million people in the United States when technology is out there where we can address the 1,000 bad guys that are out there. Now does that mean we only emphasize the 1,000? No, it doesn’t. We need security for those other folks too. We’ve got to get away from inconveniencing and trampling on the rights of those 285 million.”

George says he’s amazed at the number of travelers who still try to carry guns, knives, mace, and pepper spray through the security checkpoints. “It is beyond belief how anybody can continue to do that. And if you’re that dumb to carry it, then you should be punished for it and we should make examples of it.”

He stresses that airports are a service industry and they need to get back to providing a pleasant service and experience to travelers.

BAA USA operates the Airmall within PIT, which features 110 retail options. Most recently, the airport has been working with the TSA to develop a pilot program that would allow non-ticketed persons the opportunity to shop at the Airmall. George says the plan is still very tentative, but would allow non-flyers access to the mall at non-peak times of the day. Also, non-flyers would be subjected to more security measures than ticketed passengers.

Access to the Airmall is important for the future of the airport, says George. “Those individuals not only shop at the 110 different facilities, but they also use parking, buy food, and do other things.”

At its peak, says George, the Airmall saw some 10 million customers, with some $90 million in sales. In 2003, with 7.3 million customers, total sales were some $74 million. “So the sales per passenger is still holding very strong,” he says.

In April of 2001, mall operator BAA performed a survey, which according to George, indicated that 3 to 4 percent of total sales was attributed to shoppers that were not traveling. “That might not seem like much,” he says, “but if you take 3 or 4 percent of total sales of the Airmall and run that range from $74 to $90 million, that could be the margin for a lot of companies.”

Pittsburgh’s security plans call for two in-line baggage screening locations, with the south side of the terminal entering the testing phase in late August. In-line screening on the north end is still in the planning phases as the airport waits on further decisions from US Airways.

As for passenger screening, George says the authority is looking at all options, but he believes the currently proposed opt-out program will not work for PIT. “The opt-out program as proposed by the TSA is not an opt-out program; it does not come close to meeting any definition of what a true opt-out program would be ... if you’re going to opt-out, you really need to opt-out within the guidelines established and not be completely controlled by the same bureaucratic process that is occurring now.”

Loading