Thursday, December 18, 2003

By Mark Belko, Post-Gazette Staff Writer

The Allegheny County Airport Authority has won a key assist from Congress in its efforts to reduce debt costs at Pittsburgh International Airport and possibly reach a deal to keep the US Airways hub.

The federal aviation spending bill recently signed into law by President Bush contains a new provision that allows airports to use revenues from the fees charged to boarding passengers to make debt service payments.

With the change, the airport authority may be able to divert at least a portion of the current $3 fee to help pay down $673 million in debt. The change may also permit the authority to raise the fee and use the revenue collected from the increase to apply against debt.

Up to now, airline passenger fees could be used only to help finance airport capital improvements relating to safety, security and airport capacity -- not for paying down existing debt.

The authority now collects about $18 million to $20 million a year from passengers who board planes at the airport.

US Airways has demanded that the airport debt be cut by $500 million in order to reduce its costs. About $50 million of the $62 million US Airways pays to the airport each year now goes to pay down bond debt used to finance the airport's construction.

Lowering the airport's debt costs would benefit not only US Airways but any carrier that operates at Pittsburgh International, Authority Executive Director Kent George said yesterday. The authority and county have insisted that any debt relief at the airport benefit all carriers, not just US Airways.

George said authority will move quickly to determine exactly how much of the fee can be applied against debt and what must be done in order to gain federal approval to do so. He said he hopes to be in the position to begin diverting revenue to offset debt by the middle of the year.

That would give the authority, state and local leaders some leeway in their negotiations with US Airways, which has committed to maintaining current service levels through Labor Day.

"I'm pretty sure the opportunity to get this money is there. I am not sure what the federal government will require and what strings will be attached to it because it's never been done before," said George, who was instrumental in getting the language inserted into the Federal Aviation Administration reauthorization bill.

George said it would be "pure supposition" to estimate how much of that could be used to pay down debt, and also declined to say whether the authority would seek authorization to raise the fee to further offset debt.

The development comes at a time when US Airways and county Chief Executive-elect Dan Onorato are trying to jump-start negotiations aimed at reducing the airline's debt costs.

Onorato is trying to put together the first formal negotiating session of airline officials, Gov. Ed Rendell, and county and airport authority representatives since September.

The relationship between Onorato and US Airways got off to a good start last week when the airline agreed, after Onorato requested it, to resume nonstop service from Pittsburgh to London this spring. Airline executives have said that their early discussions with Onorato have been positive and have focused on how to fix the debt problem, not on past disagreements.

The potential new kitty of money would be in addition to roughly $95 million in reimbursements the authority is seeking from the federal government for construction costs related to the building of the $1 billion midfield terminal.

Officials believe some of those costs are eligible for reimbursement and could be recouped. The authority, which wants to use that money to apply against the debt, so far has offered to reduce airport debt by $25 million a year for five years for US Airways and other carriers, well below what the region's dominant carrier is seeking.

E-mail this story   Print this story