Southwest Airlines is "very concerned" about the fee increases it is facing at Pittsburgh International Airport in January because of cutbacks by US Airways at its former hub.
But at the same time, Whitney Eichinger, a Southwest spokeswoman, said yesterday the sharp hike in fees isn't expected to affect the airline's plans for growth in Pittsburgh next year, although it could have some impact long term if fees continue to rise.
"I think it's a concern, definitely. We're still planning on growing in Pittsburgh and we have a great relationship with the people in Pittsburgh," she said. "Although this is a large concern to us, we'll work through it."
The Allegheny County Airport Authority board authorized sharp increases in landing, terminal and ramp fees to the airlines operating out of Pittsburgh in approving an $87.4 million budget Friday for 2008.
Starting in January, landing fees will jump from $2.39 per 1,000 pounds to $3.18, or 33 percent; terminal fees will increase from $95 a square foot to $129.17, or 35.9 percent; and ramp fees will rise from $230.23 a lineal foot to $378.92, or 64.5 percent.
The authority said it was forced to raise rates because of the US Airways cutbacks. The carrier, which has been retrenching in Pittsburgh since Sept. 11, 2001, will eliminate 40 more daily flights and drop 18 of its 28 airport gates in January.
Those moves will cost the airport an estimated $5.5 million in revenue next year. To help offset the losses, the authority will close 27 gates at the ends of two of four concourses, saving about $1 million. But that won't be enough to prevent fee increases.
Under airport leases, the airlines are required to cover any budget shortfalls in the form of rate increases. When there are surpluses, the money is returned to the carriers in the form of fee reductions.
Low-cost carrier Southwest has been growing rapidly in Pittsburgh since its debut in May 2005.
Since then it has gone from 10 daily flights to 23 and has become the airport's second largest carrier behind US Airways. Last month, it carried 15.5 percent of all traffic, behind US Airways' 39.5 percent.
While in Pittsburgh earlier this month, Southwest Chief Executive Officer Gary Kelly said the Dallas-based carrier "will probably" add one to two flights in Pittsburgh next year, although he did not identify the routes.
Ms. Eichinger said she doesn't expect the fee increases to affect those plans. She said, however, that airport fees, if they continue to go up, conceivably could affect the airline's long-term plans for growth.
"I don't think we're quite at that point yet," she said.
Ms. Eichinger said landing fees are right behind fuel at the top of Southwest expenses. The average landing fee for the airline currently is about $5, higher than next year's estimated $3.18 at Pittsburgh. She did not know the averages for the terminal and ramp fees.
She said Southwest will continue to discuss the fees with airport officials.
The airport authority is "very aware of the cost implications" of the fee increases to all carriers, not just Southwest, Executive Director Bradley D. Penrod said.
But he added there's a good chance the rates will come down at some point during the year. The authority, he said, typically takes a conservative approach to budgeting and could end up returning money to the airlines.
He pointed out, for example, that the authority budgeted a $120 a square foot terminal fee for 2007. The actual rate ended up at $95 a square foot.
"We anticipate that the actuals are going to be significantly lower than what the estimate is. [The airlines] know we are very good stewards of airport money," he said.
For 2008, the authority did not budget a $12.4 million payment expected later in the year from a slot machine revenue-backed economic development and tourism fund to reduce airport debt. Once received, that could help to bring down costs to the airlines.
In all, the airport is expected to receive $150 million from the fund over the next decade for debt reduction.
And while fee increases are shared by all airlines, there are landing fee discounts available to carriers that initiate service to new cities or markets that lack competition. That could be a way for Southwest or other carriers to lessen the impact of the adjustments, particularly if they are looking to replace lost US Airways' service.
Two other airlines, AirTran Airways and Delta Air Lines, have expressed concern about the fee increases; however, neither expected them to have a big impact on the potential for growth here.