Allegehny Airport Authority Putting Final Nail In Its Own Coffin

[BoeingBoy]

Which airlines are (now) seeing sufficient "increased passenger counts" to offset the fee increases and on which routes, or are you just projecting that other airlines will eventually pick up US's give ups?

Some projecting based on the effects of previous service reductions by US. Look at the monthly traffic reports for PIT - other airlines have seen increasing traffic (usually double-digit percentage increases) as US pulls down. Are you suggesting that the people that have been using the flights that US is dropping will just stop flying so the other airlines won't see increased traffic?

How on earth did you arrive at the conclusion "..yields are generally higher @ PIT than PHL" ?

Courtesy of the DOT (the BTS specificly). According to the BTS - PIT = 16.2 cents average yield and PHL = 14.8 cents per the latest data. Perhaps you think they're giving out false data?

You would need to compare equal city pairs to prove otherwise, e.g., PIT-LAX, PIT-ORD, etc. and PHL-LAX, PHL-ORD, etc..

Then it wouldn't be "generally higher yield" (as I said) but "higher yield on specific routes" (which I didn't). The average yield for PIT is higher than the average for PHL according to government statistics.

For a specific route, much depends on the competitive landscape for that route - B6 serving PIT-BOS but not PHL-BOS - whereas the average for all routes from that airport (or those within the top 1000 U.S markets) provides a more balanced picture. But, to pick a few if you insist.....

PIT-LAX: 11.33 cents, PHL-LAX: 9.12 cents
PIT-SFO: 14.37 cents, PHL-SFO: 12.14 cents
PIT-IAH: 17.95 cents, PHL-IAH: 12.73 cents
PIT-DFW: 19.29 cents, PHL-IAH: 13.44 cents
PIT-ATL: 30.99 cents, PHL-ATL: 27.37 cents
PIT-BOS: 23.99 cents, PHL-BOS: 47.86 cents (see the true lcc effect when you discuss specific markets?)

I'd do routes to LGA and DCA, but PHL to those two aren't in the top 1000 domestic markets, so aren't included in the report (which is why PHL's ranking for O&D is so much lower than it's ranking on population).

Jim

 

[88 B.T.D.]

But, to pick a few if you insist.....

PIT-LAX: 11.33 cents, PHL-LAX: 9.12 cents
PIT-SFO: 14.37 cents, PHL-SFO: 12.14 cents
PIT-IAH: 17.95 cents, PHL-IAH: 12.73 cents
PIT-DFW: 19.29 cents, PHL-IAH: 13.44 cents
PIT-ATL: 30.99 cents, PHL-ATL: 27.37 cents
PIT-BOS: 23.99 cents, PHL-BOS: 47.86 cents (see the true lcc effect when you discuss specific markets?)

I'd do routes to LGA and DCA, but PHL to those two aren't in the top 1000 domestic markets, so aren't included in the report (which is why PHL's ranking for O&D is so much lower than it's ranking on population).

Jim

These numbers would support the argument for "the grievance" filed to make the company prove Hub closure necessity, that ALPA National would not sponsor.

 

[BoeingBoy]

Pure my opinion, but I think the PIT cutbacks have been driven by reductions in the fleet more than anything else. When you go from 400+ to about 220 airplanes (East fleet), something has to give. It was obviously not going to be PHL or CLT, so PIT was all that was left.

Jim

 

[Travelpro72]

This whole situation is so unfortunate for many. I don't think it had to end up this way at all but here we are. I do think it came to Usairways fleet shrinking and something had to give. PIT was the only place to really do it. Oh well, it's certainly NOT going to change. I think the County needs to really start brainstorming and figure something out. Raising fees while necessary will shoot them in the foot. They have trouble attracting new service NOW. Being a former burger and a native there I can surely say it's one of the worst run cities and counties in the country. HORRIBLE.

 

[burghlaw1]

Being a former burger and a native there I can surely say it's one of the worst run cities and counties in the country. HORRIBLE.

Although I think the county is actually very well run, you can thank the archaic government of Pennsylvania for most of these issues. They have way too much control over local and regional taxing and planning so that local county and municipal governments have their hands tied. Pittsburgh's biggest employers are charitable, not-for-profit agencies that pay no real estate taxes. The state, in turn, has not permitted any meaningful tax reform to make up for these losses of revenue. Mind boggling if you ask me...

 

[N965VJ]

The Allegheny County Airport Authority has been hosing the owners of private hangars at AGC. They are basically seizing them and leasing them back to the owners under ridiculous terms.

One owner of a 40’x40’ hangar actually had theirs taken down so it would not fall into the County’s hands.

 

[Jimmy Neutron]

Jimmy,

I agree with many of your points, but what do you propose as the solution? The debt has to be paid. Alternatively the aiport authority, I suppose, could default, which would lead to bondholders taking over. I can't vouch for the pros and cons of this course of action. It's the rare case that a government agency files for bankruptcy.

I also disagree with your comments regarding debt reduction to keep the hub here. The fact is that the county and state did offer debt reduction to keep the hub here. They offered about 1/3 of what US was looking for, and began negotiating. David Segal never finished the negotiations. He was too focused on Southwest invading Philadelphia, and the escalating costs of fuel-that ultimately put US back into bankruptcy for the second time. At the end of the day, I think that US abolished the hub in PIT to reduce its high labor costs here knowing that many employees would retire or leave the company rather than transfer to another base. I also don't think US could afford three hubs while in survival mode. And, even if they had arrived at a deal and signed new long-term leases, they could have been abrogated again in the second bankruptcy.

I'm interested in hearing what you have to say.

Burghlaw

I do understand what you are saying, but that does not change the fact that the state and county should have done whatever it took to keep the planes and the jobs here....bottom line is that the debt would still exist either way.....In my opinion the county and state called the airlines bluff and lost.....

Now the debt still exists and it's getting harder and harder for them to find ways to pay it....and the jobs are gone forever....If you remember Seigal gave the county 2 years to come up with a sensible debt solution that would work for the airline and the hub would remain....I distinctly remember the Seigal asking the county more than several times in that 2 years what they were waiting for and telling them that the airline did not want to move the hub, but would do whatever it had to do to get out of the high costs at PIT...

It's just a sad situation....

 

[zethya]

Some projecting based on the effects of previous service reductions by US. Look at the monthly traffic reports for PIT - other airlines have seen increasing traffic (usually double-digit percentage increases) as US pulls down. Are you suggesting that the people that have been using the flights that US is dropping will just stop flying so the other airlines won't see increased traffic?
Courtesy of the DOT (the BTS specificly). According to the BTS - PIT = 16.2 cents average yield and PHL = 14.8 cents per the latest data. Perhaps you think they're giving out false data? ...........................

Then it wouldn't be "generally higher yield" (as I said) but "higher yield on specific routes" (which I didn't). The average yield for PIT is higher than the average for PHL according to government statistics.

For a specific route, much depends on the competitive landscape for that route - B6 serving PIT-BOS but not PHL-BOS - whereas the average for all routes from that airport (or those within the top 1000 U.S markets) provides a more balanced picture. But, to pick a few if you insist.....

Actually it is you who stated that "..With the increased passenger counts other airlines are seeing..." , which certainly implies you feel it's already happening for the currently announced cutbacks. If so, with who? Is WN increasing flights? Is B6 increasing flights? I did not refute the possility that SOME routes will be picked up. Total Passenger Traffic at PIT was Down 2.9% - 9/06 - 9/07.

I am aware of the BTS data. My point is very simple. If you have 5 flights/day on the route PHL-XXX with a 120 seat aircraft = 500 (83% LF) Paid Revenue Seats of say $200/seat average = $100,000 Total Revenue with say a Yield of 30%, that's a profit for the route of $30,000/day to balance against non-associated airport expenses. If you use the same logic for a higher Yielding city pair - i.e., PIT-XXX with 1 flight/day on a 120 seat aircraft = 100 Paid Revenue Seats at $200/seat average with say a Yield of 40%, that's a profit of $4000/day to balance against non-associated, even higher (PIT) airport expenses. The same scenario would apply if the routes were flown with different capacity aircraft (RJ versus 320, etc.). That's why US is loosing $40M at PIT. Additionally, the numbers you present are for ALL airlines on the routes, not just US. That's why the only 2 solutions for PIT are to either add more flights, or reduce costs by salary reduction and/or increase fees. US is NOT lying to the investor community about PIT's loosing ways.

 

[BoeingBoy]

Actually it is you who stated that "..With the increased passenger counts other airlines are seeing..." , which certainly implies you feel it's already happening for the currently announced cutbacks. If so, with who? Is WN increasing flights? Is B6 increasing flights? I did not refute the possility that SOME routes will be picked up. Total Passenger Traffic at PIT was Down 2.9% - 9/06 - 9/07.

"With the increased passenger counts other airlines are seeing..." - yes, as of the latest PIT traffic statistics the other airlines are seeing increased enplanements (and have been as US has reduced service over the last 4-5 years). If you choose to interpret that as me saying that those increased enplanements are due to the latest announcement of more cutbacks, that's your choice but not what I said. Just like asking who has increased flights - I didn't say that the increases by other airlines were due to increased flights. That appears to only be a feeble attempt to disprove that which isn't disprovable - the fact that other airlines are getting more passengers thanks to US reductions. More passengers means lower facility charges per enplaned passenger, or in the case of the recently announced fee increases less of an increase per enplaned passenger - simple math.

I am aware of the BTS data.

Then you already knew that PIT has a higher average yield then PHL, yet questioned my statement. Interesting.

My point is very simple. If you have 5 flights/day on the route PHL-XXX with a 120 seat aircraft = 500 (83% LF) Paid Revenue Seats of say $200/seat average = $100,000 Total Revenue with say a Yield of 30%, that's a profit for the route of $30,000/day to balance against non-associated airport expenses. If you use the same logic for a higher Yielding city pair - i.e., PIT-XXX with 1 flight/day on a 120 seat aircraft = 100 Paid Revenue Seats at $200/seat average with say a Yield of 40%, that's a profit of $4000/day to balance against non-associated, even higher (PIT) airport expenses.

Hmmmm.....I've never heard of a yield in percent. Is that something new?

Seems that you're saying that the flight reductions have contributed to the lackluster financial performance of PIT routes - all that about less flights providing less total profit although the individual flight may be more profitable. I happen to agree - US put it's PIT operation into something of a death spiral. Cut flights, lose passengers to other carriers, drive up facilities cost per enplaned passenger, remaining flights aren't necessarily more profitable (possibly less profitable or losing money). Repeat till little is left of the PIT operation.

The same scenario would apply if the routes were flown with different capacity aircraft (RJ versus 320, etc.).

Not quite. The CASM side of the profit equation gets bigger if you use RJ's. That means that the difference between CASM and Yield decreases (assuming passengers won't pay more to fly a RJ). That, of course, is potentially offset by Load Factor.

That's why US is loosing $40M at PIT.

So they say - now. On the other hand, they said that "Pittsburgh International Airport was now "marginally profitable" for the carrier" in May. Seems that they say whatever justifies their actions. Some chose to believe whatever fits best with their opinion, others wonder what the truth is.

Additionally, the numbers you present are for ALL airlines on the routes, not just US.

Not true - some (but not all) are because US was neither the low cost carrier on the route nor had the largest share of the market, thus no average fare for US was conveniently available. So in those cases I used the average fare for all carriers in the market.

Jim

 

[burghlaw1]

I do understand what you are saying, but that does not change the fact that the state and county should have done whatever it took to keep the planes and the jobs here....bottom line is that the debt would still exist either way.....In my opinion the county and state called the airlines bluff and lost.....

Now the debt still exists and it's getting harder and harder for them to find ways to pay it....and the jobs are gone forever....If you remember Seigal gave the county 2 years to come up with a sensible debt solution that would work for the airline and the hub would remain....I distinctly remember the Seigal asking the county more than several times in that 2 years what they were waiting for and telling them that the airline did not want to move the hub, but would do whatever it had to do to get out of the high costs at PIT...

It's just a sad situation....

Although i remember things differently (I posted this in 2004 http://www.usaviation.com/forums/index.php...mp;hl=burghlaw1, I agree with you that it's sad...definitely sad. Unfortunately, it is also water under the bridge.

 

[Be Careful What You Wish For.]

Although i remember things differently (I posted this in 2004 http://www.usaviation.com/forums/index.php...mp;hl=burghlaw1, I agree with you that it's sad...definitely sad. Unfortunately, it is also water under the bridge.

It's funny to see some of the bombast from posters on your thread.

My how things have changed.

 

[ringmaruf]

According to the BTS - PIT = 16.2 cents average yield and PHL = 14.8 cents per the latest data. Perhaps you think they're giving out false data?

I would wager to say that PHL actually has higher stage-length adjusted yield than PIT. There are all those European flights which carry a very low CASM, but also a lower yield. The same goes for transcons, which PHL has many more than PIT.

PIT-BOS: 23.99 cents, PHL-BOS: 47.86 cents (see the true lcc effect when you discuss specific markets?)

Jim

Well, there was an LCC on PHL-BOS until this month. AirTran flew the route for longer then mpdt expected. It just coundn't compete with the large number of US Frequent flyers in both PHL and BOS. Also, they couldn't get the schedule right, which I'm sure pissed of quite a few of their premium pax, One minute they were at 3-4 roundtrip dailies, and the next moment was when they briefly went up to 7 roundtrip dailies. Still wasn't enough, though for the pax that need to get on that plane every hour, as US offers. There *are* still some business pax out there that need their frequencies in exchange for higher prices, even when LCCs are available on the route.

Pure my opinion, but I think the PIT cutbacks have been driven by reductions in the fleet more than anything else. When you go from 400+ to about 220 airplanes (East fleet), something has to give. It was obviously not going to be PHL or CLT, so PIT was all that was left.

Jim

I agree completely.

I just can't wait to see, though, what sort of tricks and market re-entries that the US Express pro-rate carriers make, since it was stated that US didn't know what the pro-rate carriers would do. (Of course, DoUgIe should have figured that out before issuing the press release, but that's a rant for another day.

Trans States will no doubt keep a few like SDF/BNA, but probably not all of their flying;

Air Midwest wants out of their East Coast flying ASAP (like yesterday);

I've heard two different rumors about Colgan moving its planes out of the PIT hub, since there won't be much conx traffic for them, and instead them moving (RUMOR #1) thier USX planes into upstate New York, with a micro-hub at ALB going to places like BUF/ROC/SYR/HPN/ISP and other cities like BDL/PVD, (much like Commutair tried and failed at, but US has far better name recognition there than CO, so it *could* work. (RUMOR #2) would be for them use some of its LGA slots and expand there, cutting a few frequincies in order to start new markets, like they just did recently when they announced LGA-MDT. I could see new LGA-ERI and LGA-CRW both working. (Of course none of these can be terribly surprising, seeing as how back in the day, US served almost all of these markets, and with lots of mainline jets complementing the turboprops.) Personally, I think that a little bit of all three scenarios will play out--some flying remaining at PIT (in particular, the EAS routes like BFD/JHW, and the aircraft rotating for maintenance like CRW, since PIT-CRW has already gone from 3x to 1x) , some at LGA, and some point-to-point mostly centered at ALB.

And then there's the wildcard with Gulfstream, with them having just been given the award for EAS contracts at DUJ/FKL/LWB/AHN, with service to a combination of PIT and CLT. But of course the DOT went along and gave them the contract, even though Gulfstream explicity said it won't fly the planes without a USX codeshare. So far, haven't heard a darn thing about that. So it's mostly the DOT's fault, since they have a habit of doing this sort of thing. (Anyone remember RegionsAir?)

 

[BoeingBoy]

I would wager to say that PHL actually has higher stage-length adjusted yield than PIT. There are all those European flights which carry a very low CASM, but also a lower yield. The same goes for transcons, which PHL has many more than PIT.

You're correct, there's no stage length adjustment. It's just average fare paid for travel between the included city-pairs divided by average trip distance. The average distance for PIT was 900 miles (about the US average) and for PHL 1,110 miles, so stage length adjusting would change the difference but not eradicate it. Of course, you would also need to stage length adjust CASM and adjust for average load factor, but since the yields are for all carriers that serve the included city-pairs, that gets pretty hard to do.

There's also no international itineraries included in the Air Fare Report - it's strictly domestic, and covers only the top 1,000 city-pair markets.
But there's also few small markets covered - those with relatively little daily traffic - and those generally have relatively high yields unless a lcc serves the market.

Here's how the BTS describes the data that gives average yield for for a city:

In Table 2, the data are summarized by city. The information provided includes the number of city-pair markets with 100,000 or more passengers in the top 1,000 in either comparison period that involve each city (e.g., three for Lubbock), the number of passengers traveling to and from each city in the specified markets, the average fare, average fare per mile (yield), and average distance traveled. The data are sorted by distance.

For PIT there are 21 markets that meet the criteria to be included in the yield calculation, while for PHL there are 40.

Jim