Pittsburgh International Airport's rate rise OK'd by authority
Per passenger cost goes up to pay debt
October 13, 2012 4:00 AM
Travelers head to their terminal at the Pittsburgh International Airport. Costs per passenger are increasing for airlines.
By Mark Belko Pittsburgh Post-Gazette
It will cost airlines more to operate out of Pittsburgh International Airport next year.
After two straight years of rate cuts, airlines will see the airport's cost per passenger increase by 38 cents to $14.66 under a 2013 budget of $159.6 million approved by the Allegheny County Airport Authority board Friday.
James Gill, the authority's chief financial officer, said the increase is a direct result of a $50 million bond issue floated earlier this year to help pay for improvements and upgrades at the 20-year-old airport terminal.
The increase is necessary to raise enough money to cover the annual $3.8 million debt service payment on the bond issue that starts next year. Without the debt payment, the cost per passenger would be $13.73 in 2013, or 55 cents lower than it is this year, Mr. Gill said.
Also factoring into the increase are estimates that Pittsburgh International passenger boardings will drop by 50,000 to 4.1 million next year. As enplanements drop, the cost per passenger increases.
The airport has been criticized for its cost per passenger, considered among the higher ones in the country. The cost is mostly the result of debt related to the construction of the $1 billion midfield terminal, which opened in 1992. The per-passenger cost increased dramatically as US Airways cut flights in Pittsburgh and then eliminated its hub in 2004.
Mr. Gill said the airport's cost per passenger would be far higher -- as much as $22.20 -- were it not for $30.9 million in revenues that will apply to offset charges to the airlines next year. Sources for that money include passenger facilities charges, an annual earmark from state gambling revenues and a portion of the money generated from airport car rentals.
"We've certainly applied every tool that we can to try to contain that cost," he said. "There's not many rabbits left in the hat to pull out."
Mr. Gill said the bond issue was needed to keep the terminal "in top operating condition." He said some maintenance had been deferred in the past so that the authority could use revenues to help keep the cost per passenger as low as possible. He noted that all airlines were aware of the bond issue and generally supported it.
The bond issue will help to fund a rehabilitation of the tram that carries people between the terminal's landside and airside buildings, replacement of the airside roof, and restroom upgrades.
US Airways and Southwest Airlines, the airport's two largest carriers, declined comment Friday on the increase in the cost per passenger.
Airlines should get some relief at the end of 2018 when the bulk of the midfield terminal debt is paid off. At that point, the cost per passenger should drop to about $8.
Minus the debt service, operating expenses under the new budget will increase 1.56 percent.