Airlines at Pittsburgh International Airport that were slapped with higher fees in January to offset US Airways cutbacks will get some relief.
The Allegheny County Airport Authority plans to lower rates by 11 percent to 48 percent on March 1 using $11 million in savings generated by a debt restructuring and lower insurance rates.
Even with the rollback, landing, terminal and cargo fees still will be slightly higher than at the end of 2007. But the ramp fee will drop nearly $33 below the rate charged at the end of last year.
The authority usually waits until midyear to adjust rates, but decided to act sooner in this case, authority Executive Director Bradley D. Penrod said.
"This was so significant we thought it was the right thing to do it sooner rather than later," he said yesterday.
Under airport leases, airlines are required to cover any budget shortfalls through rate increases. Conversely, when there are savings, they are passed on to carriers through rate reductions.
Airlines were hit with fee increases ranging from 33 percent to 64.5 percent in January to offset cutbacks by US Airways, which eliminated another 48 flights from Pittsburgh and dropped 18 of its 28 gates.
A number of airlines raised concerns about the increases at the time, including Southwest, Delta and AirTran Airways, the second-, third-, and eighth-largest carriers at the airport.
Mr. Penrod said the authority has worked for several months to address such concerns and eventually settled on the restructuring plan.
In March, with the savings, the landing fee will drop from $3.18 per 1,000 pounds to $2.49, or 21 percent. That is still about 10 cents higher than it was at the end of 2007. Terminal fees will go from $129.17 a square foot to $110.01, a savings of 15 percent, but still about $15 higher than at the end of 2007.
The biggest reduction will be in the ramp fee, which will drop 48 percent from $378.92 a linear foot to $197.47 a linear foot. That makes the rate nearly $33 lower than it was even before the fee increases at the start of the year.
The bulk of the savings will come through a restructuring that will take $10 million off the airport's $62 million debt service payment this year. If not paid off at some point beforehand, the $10 million would be added to the end of the debt service cycle, which runs until 2019.
Airport officials also were able to save $1 million through "very, very favorable" insurance rates, Mr. Penrod said.
Airlines were thrilled with the news.
"AirTran loves it when rates go down, especially airport rents and fees. We view this as a very positive sign," said Tad Hutcheson, vice president of marketing.
"We were very concerned when the airport raised them earlier this year. Now we are extremely pleased that the airport has found a way to lower fees. We think it's great news."
Mr. Hutcheson said low-cost carriers like AirTran and Southwest are particularly sensitive to increases in airport rates. He said AirTran in the past has left markets where fees have climbed too high.
Southwest said it was "very thankful" for the decrease.
"This is definitely a welcomed reduction in cost for Southwest," spokeswoman Whitney Eichinger said. "Having a lower cost is always a plus for us."
She said Southwest would like to see fees go lower.
A Delta spokeswoman said the airline was "impressed by the airport's proactive approach to refinancing its debts, which offers Delta a significant cost savings. We're very pleased with their decision."
The airport authority is considering the same type of restructuring next year to reduce fees to the airlines. By 2010, the authority should be receiving state gambling revenue to offset debt service payments, spokeswoman JoAnn Jenny said.
The first $19.9 million payment for such purposes arrived in December but was used to help plug a deficit in the 2007 county budget. County Chief Executive Dan Onorato claimed the money as partial reimbursement for the $42.5 million the county contributed toward construction of the airport terminal, which opened in 1992.
Mr. Onorato said the plan was to always reimburse the county for that contribution out of the $150 million earmarked for airport debt relief.
