Oct. 1—Pittsburgh International Airport is seeking authority to use fees paid by passengers to help finance its proposed $1.4 billion modernization project.

Allegheny County Airport Authority officials are petitioning the Federal Aviation Administration to dedicate much of the $4.50 passenger facility charge paid by each boarding traveler at the airport to the effort.

The passenger facility charge, or PFC, is but one source of revenue the airport is relying on to help pay for the modernization, which includes the construction of a new landside building for ticketing, security and baggage claim.

Other sources include a $6 customer facility charge paid by people who rent cars at the airport, state gambling monies, revenues generated by natural gas drilling and grants.

They would supplement the biggest source of revenue for the construction — the rates and charges paid by the airlines operating from the Findlay airport.

Those carriers would be responsible for paying off the bulk of the $832.7 million bond issue floated by the authority in August to help cover the $1.4 billion cost.

But the authority also is looking to other sources to cover nearly $500 million in construction costs and future debt service payments related to it.

It plans to apply an estimated $345 million in PFC revenues toward the project. That includes $70 million that will go directly to fund construction to reduce borrowing costs and $275 million in future collections to help pay off the debt.

The authority still needs FAA approval to use PFCs for the project, but Eric Sprys, executive vice president and chief financial officer, doesn't believe that will be an issue.

He said it is not uncommon for airports to use the passenger facility charge for such capital improvements.

"This project meets their eligibility requirements, and we put that in the application," he said.

He refused to speculate on what would happen if the authority were denied the use of the PFCs for the modernization, calling it an "unlikely scenario."

However, in the documentation included in the $832.7 million bond issue, the authority stated that if the FAA denied the PFC application, it "intends to address any shortfall through a number of different means, including but not limited to increases in rates and charges" to the airlines.

Should the FAA approve the application, the authority plans to use future PFC revenues primarily to pay off the debt associated with the modernization, Mr. Sprys said.

While PFCs can be used for capital projects, the authority in the past also has earmarked them to help pay off the debt associated with the construction of the midfield terminal, part of which is being replaced in the modernization.

The same goal is at play this time around, Mr. Sprys said.

"The entire project is designed to keep costs low to the airlines," he said.

Last year, the authority approved an increase in the customer facility charge paid by those who rent vehicles at the airport from $5.50 to $6 with the terminal modernization in mind.

The fee is tacked on to every car rental and is levied daily for up to seven days.

At the time of the increase, the authority indicated that the revenue would be used to help pay for the car rental facilities that will be part of the new 3,300-space parking garage being built in the modernization.

According to the bond issue, about $61 million in customer facility charges will be used for the construction and another $54 million will go to help pay off the bonds.

In addition, the authority plans to dedicate the $12.4 million it receives annually from state gambling revenues toward construction and a portion of it to pay debt service once the new landside terminal and associated improvements have been completed.

It also intends to use some of the royalties it receives from natural gas drilling on airport land toward the project. Between 2016 and 2020, those revenues have ranged from $4.5 million to $9.5 million a year.

The authority has been using the funds to offset airline rates and charges.

Mr. Sprys said the $832.7 million bond issue provided better rates than the authority expected, resulting in a savings of $5 million in interest charges compared to estimates.

It probably will be the first of three — and the largest — the authority plans to issue related to the modernization.

The bond issue doesn't detail how much rates and charges will increase for the airlines to pay for the new terminal, although authority officials have insisted in the past that they won't be significant given efficiencies and lower maintenance costs.

So far, six airlines — Southwest, American, Alaska, Delta, Spirit and United — have signed the new lease tied to the modernization.

The overall cost of the project still stands at about $1.4 billion. On top of that, $90 million will go for improvements to the airside building, where travelers get on and off planes.

That work includes renovations to the gates, HVAC improvements, and upgrades to the flooring, jetways, flight information display screens, lighting and center core.

The new landside building will be tucked between the C and D concourses of the airside building. The authority is hoping to start the work this fall, with completion scheduled for the end of 2024 and the opening in early 2025.

Once the new terminal is operating, the authority plans to demolish or repurpose the existing landside building. It also will discontinue the tram that now whisks travelers between landside and airside.

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

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