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Southwest objecting to higher landing fees
Saturday, October 25, 2008

A top airline is upset over the hefty fee increases, as much as 191 percent, all carriers will be facing at Pittsburgh International Airport in January as part of a 2009 budget adopted yesterday.

Steve Sisneros, manager of properties for Southwest Airlines, Pittsburgh's second-largest carrier, said the increases, approved by the Allegheny County Airport Authority board, will dramatically push up the carrier's costs locally.

He said Southwest already is working with airport officials to try to find ways to mitigate the increases.

"I don't expect these numbers to be final. But to be truthful, they are very concerning," he said.

The increases approved yesterday will raise landing fees for all airlines from about $2.50 per 1,000 pounds to about $3.37, or 34.8 percent. Terminal fees will jump from $110.01 to $149.59 per square foot, or 35.9 percent. Ramp fees will climb a whopping 191 percent, from $197.47 a lineal foot to $574.74.

Overall, the airport's cost per passenger, a standard industry benchmark, will go from $11.19 to $16.62, a jump of 48.5 percent.

Authority Executive Director Bradley D. Penrod said he's not surprised by Southwest's reaction. "It concerns me that we had to do what we had to do."

The increases came even though the $88.9 million operating budget for 2009 approved by the authority constitutes only a 1.7 percent increase over this year's spending plan.

But no amount of cost containment, authority officials said, could offset the ongoing effects of the dramatic US Airways cutbacks in Pittsburgh, where the airline has dropped hundreds of flights over the last seven years and eliminated its once thriving hub.

The rates paid by the carriers are pretty much a function of volume: As flights decrease and fewer travelers use the airport, the costs to the airlines increase, and vice versa. The authority is projecting that boardings will drop from 4.75 million this year to 4.1 million next year, less than half of what they were in 2001.

A big chunk of the fees go to pay off $62 million in annual debt resulting from the construction of the midfield terminal, built for US Airways and opened in 1992. Over the past few years, the authority also has taken over operation of the US Airways automated baggage system, jetway maintenance and other services, Mr. Penrod said.

He described the increases as a "worst case" that the authority will work to mitigate. For 2008, the authority imposed increases ranging from 33 percent to 64.5 percent but then cut them in March after a restructuring that reduced this year's $62 million debt payment by $10 million.

Mr. Penrod said the authority would look at similar options next year, contingent on the state of the markets and the economy as a whole. "Given the current market, we'll get into January and see what the opportunities are. If we can do [a restructuring], we will explore that. This is a worst case," he said.

Mr. Sisneros said he did not know whether the increases would force Southwest to cut service in Pittsburgh, where it has 24 daily flights. The airline also is facing increases in other cities where carriers reduced capacity to compensate for high fuel costs.

US Airways, meanwhile, has no plans to cut service further in Pittsburgh next year beyond that already announced, which included the end to 11 weekly nonstop flights to Florida.

Spokesman Morgan Durrant said it was too early to predict whether the fee increases would cause the airline to reconsider, adding it was not a great time to raise fees given the economy.

"We're going to take a long hard look at [the increases] and then decide where we're going to go from there," he said.

Mr. Penrod said other airports also are raising fees to compensate for cuts in capacity. He said airports in Las Vegas, Orlando and Cincinnati, for example, have seen overall flights reduced by more than 20 percent.

Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262.
First published on October 25, 2008 at 12:00 am