Airport Authority offering incentives for airlines to expand service

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Officials at Pittsburgh International Airport are hoping they've got a deal some airlines can't refuse: Take a gamble on nonstop service to coveted cities such as San Diego, Seattle, New Orleans and Jacksonville, and see landing fees waived or marketing support increased.

The Allegheny County Airport Authority again is offering such incentives to airlines that are willing to start service to a dozen destinations in the United States and Canada, and 11 others in the Caribbean.

For the second straight year, San Diego, Seattle, New Orleans and Jacksonville top the list of cities targeted for nonstop service from Pittsburgh. There's one newcomer to the list this year -- Myrtle Beach, S.C. -- but others are holdovers from 2013.

They include Milwaukee; San Antonio/Austin, Texas; Calgary, Alberta; Kansas City, Mo.; Salt Lake City, Utah; Love Field in Dallas; and Oklahoma City/Tulsa, Okla.

Airport officials are celebrating the departure of Nashville, Tenn., from the list this year. Southwest Airlines started a daily flight to that city last fall, allowing the authority to check it off the list.

The airport targeted cities for service this year based on a survey of business travelers and travel planners, data from the U.S. Department of Transportation, and information from the Allegheny Conference on Community Development.

San Diego and Seattle have been coveted destinations for some time. Pittsburgh has not had nonstop service to either city since 2007, when US Airways dropped the flights after shutting down its hub.

Cities such as New Orleans, Oklahoma City and Tulsa are targeted in part because of the Marcellus Shale drilling boom in the region. Austin, meanwhile, has been a popular destination for high-technology firms. Milwaukee is a top business stop, and Myrtle Beach is a popular leisure destination, particularly for golfers.

An airline willing to offer nonstop service at least five times a week to one of the targeted destinations qualifies for a waiver of all landing fees the first year and a 50 percent reduction the second year. It also is eligible for $140,000 in marketing support over two years or as an alternative, the waiver of landing fees for an additional four months.

"We want to make sure that it's a sustainable flight long term. Our incentive program reduces their risk early on so that it makes it attractive for them to get started and then build the market up and then the incentive goes away down the road," said Bradley D. Penrod, airport authority president and chief strategy officer.

As part of the deal, an airline must commit to operating the route for at least two years.

Southwest received a waiver of landing fees and $70,000 in marketing support in exchange for starting service to Nashville last year. It also earned a smaller reduction in landing fees and $60,000 in marketing support after adding a daily nonstop flight to Houston's William P. Hobby Airport last spring.

The addition caused average fares to Houston to drop, authority spokeswoman JoAnn Jenny said. The only other airline to fly nonstop to Houston from Pittsburgh is United.

William Lauer, an Allegheny Capital Inc. principal who has followed the airline industry for years, said such incentives can be effective in helping carriers to reduce costs on specific travel legs.

But he added that the authority also runs the risk of attracting "vagabond airlines" that may operate the route as long as subsidies are available and then shut it down once they end.

Mr. Lauer said the better strategy would be to reduce overall costs on a permanent basis, an effort the authority has started with some of the money it has received from Consol Energy Inc. as part of a deal to drill for natural gas on airport land.

"That's the best thing they could do with it," he said.

Mark Belko: or 412-263-1262.

Mark Belko: or 412-263-1262. First Published January 10, 2014 1:34 PM

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