Pandemic Blues: Airlines will See Rates Climb Despite Pittsburgh International Airport Budget Cuts

Nov. 21—For the first time in seven years, airlines won't be seeing a cut in their rates to operate out of Pittsburgh International Airport. Blame the COVID-19 pandemic.

The cost to board a passenger at the Findlay airport will jump to $12.75 in 2021, up from $9.29 this year, thanks to the dramatic plunge in passenger traffic caused by the virus.

Rates are going up even though the board of the Allegheny County Airport Authority, which operates Pittsburgh International, is slashing spending in the 2021 budget it approved Friday.

The $109.9 million spending plan represents a 4% drop compared against the $114.4 million budget approved this year.

Christina Cassotis, the authority's CEO, said the new budget does what's needed to keep Pittsburgh International and the Allegheny County Airport in West Mifflin running and safe but contains little in the way of frills given the hit both have taken because of the virus.

"We're all dealing with the reality in front of us," she said.

Traffic at Pittsburgh International plunged 96% in April. It has since rebounded a bit but still was down 64.9% in October compared to the same month last year.

Given the steep declines, it was inevitable that the cost per enplanement, an industry benchmark, would increase. The rate is pretty much a function of the amount of traffic that comes and goes through the airport.

Typically, a higher traffic volume equates to lower rates for the airlines.

"The CPE is hardly relevant in an environment where you have a dramatic decrease in passengers because of the pandemic," Ms. Cassotis said.

Pittsburgh's had been higher for a number of years because of the debt associated with the construction of the midfield terminal, which opened in 1992. Virtually all of that has been paid off.

Debt retirement, combined with revenue from natural gas drilling on airport property and state aid, has allowed the authority to cut rates to the carriers in recent years.

Amid the pandemic, the authority sliced nearly $10 million in spending in this year's budget, shutting down parts of the parking lot as well as some of the moving walkways and restrooms throughout the terminal. It also put in place early retirement and voluntary furlough programs.

However, it added back $5.4 million of that back to the 2021 budget in anticipation of an increase in traffic. For 2021, the authority estimates that passenger volume will be down 35% compared to pre-pandemic levels.

The authority is not anticipating any furloughs in the new budget, Ms. Cassotis said. It has cut back on technology investments and won't buy any new vehicles. And in a pandemic irony, it has eliminated all travel.

"There are things we'd like to do that we can't do," she said.

Ms. Cassotis believes the airlines will pay more attention to the budget cuts the authority has made than to the increase in the cost per enplanement.

"We can control costs and budgets, but we can't control the number of passengers who come through the airport," said Eric Sprys, authority executive vice president and chief financial officer.

The last time the airlines saw rates climb was in 2013 when the cost per enplanement was $14.57. The projected CPE for 2021 will be about the same as it was in 2017.

Authority board members also approved a $49.9 million capital budget for next year. That's $2.6 million more than this year's $47.3 million capital plan, although about $12 million in spending in that budget was suspended because of the pandemic.

The new budget, Ms. Cassotis said, will add back some of those suspended projects. About 30% of the spending plan is funded by state or federal grants.

Nonetheless, the biggest project on the drawing board — a $1.1 billion airport modernization that includes a new terminal for ticketing, baggage and security — is still stalled at the gate.

At one time, the authority had expected to start site work in April. Ms. Cassotis said Friday it is now hoping to do so next year but hasn't set a date. Much likely will depend on the bond market and the ability of the airlines, which would pay for the improvements, to bounce back from the pandemic.

Mark Belko: [email protected] or 412-263-1262.

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