Hot Flash - October 13, 2003
Pittsburgh - Unpleasant Options
The future of Pittsburgh is up in the air.
Eventually, however, gravity will take over. And one thing is certain: under almost any scenario, Pittsburgh is going to have a lot fewer people wearing out the concourse carpets in the future. The days of PIT experiencing nearly 10 million enplanements are not likely to return anytime soon.
Great Airport. But A Shrinking Airline Industry. Pittsburgh International is arguably one of the best facilities in the nation. But it takes an airline, not bricks and mortar, to make an airport a hub. Right now, the nation's a little short on airlines, and it's even shorter on airlines that want to open a major hubsite operation. If US Airways yanks its hub at PIT, the chances of seeing another carrier come in and establish a hub serving 90 to 100 markets nonstop are only slightly higher than Hillary Clinton sending Rush Limbaugh a get-well card.
It's time for the circus to stop and hard realities to be considered. No matter how much huffing and puffing comes from various senators, congressmen, governors and the rest of the political cast of thousands, this is an issue of economics, not civic hubris. It makes no difference how many "extensive analyses" are done, outlining in glorious detail and colorful pictographs the traffic patterns and the great economy of Western Pennsylvania. That won't do diddly to attract another hubbing airline. Nor will it expand the number of target airlines to which the airport will need to see about increasing service - something that's clear without spending tens of thousands on grandiose coffee-table studies. Those things are simply distractions from facing the music: gaining another large hub operation at PIT is a lost cause. Some replacement service to some large markets, yes. A big hub, no. To tell the County anything different, as some are doing, is the intellectual equivalent of telling fairy tales.
No Hub - A Lot Fewer Nonstop Destinations. The structure of the airline industry points without doubt to PIT at best being a smaller US Airways hub. At worst, if one can call it that, Pittsburgh International will settle down to around 4.8 million enplanements.
What needs to be understood is that without a connecting hub operation, Pittsburgh can only support nonstop service to somewhere between 25 and 30 big markets. Beyond that, it gets real dicey.
A simple glance at the US Airways service pattern just in the Northeast gives a pretty good idea of what to expect should Allegheny County and the airline fail to come to terms. Other than hubs at CVG and CLE, service in the Northeast and Mid-Atlantic will pretty much be relegated to the large East Coast cities. Forget service to mid-size commercial centers such as ALB, BUF, BDL, and CMH. Without the cross-feed of a large connecting hub operation, there simply is not enough traffic to support such service at PIT. Not to mention the fact that there likely isn't an airline that would apply assets to such O&D markets.
Then take a look at the smaller communities that depend on US Airways' hub for access to the rest of the air transportation system. If US Airways closes down PIT, these places are in deep yogurt. Airports in places like Parkersburg and Johnstown can look forward to a great future as GA facilities, because other hubbing airlines won't get near them. The economics simply don't work.
Options. The crux of the current matter is airport costs. US Airways wants them down. The County apparently has minimal wiggle room in this regard - they built the right airport in the right place with the right plan in 1992. Unfortunately, the world and the airline industry have changed. Something has to give. This boils down to the following scenarios:
Agreement With US Airways. This is the best outcome. Cutting to the bottom line, if the County has to take a haircut over the cost of PIT, it's better to do it by retaining the US Airways hub than losing it. If the hub goes, so does the connecting traffic that helps keep per-passenger costs down.
US Airways Pulls Down Hub. First, that won't do much for the per-passenger costs of the facility, making replacement service tougher to recruit. Furthermore, the economic impact to the region will be very unpleasant. Here's a simple rule that some folks may be missing: having a hubbing operation is good. Losing it is bad.
Replacement Hub. Not in the cards, particularly one with 100+ nonstop destinations. There isn't an airline with the billions - yes, billions - necessary establish such an operation at Pittsburgh. But bad advice is in full supply in this regard. One silly analyst told the city something to the effect that nobody can predict with certainty that another big hub wouldn't be established at Pittsburgh. Right. That's also true about a meteor strike.
Entry of Low Fare Carriers. Without question, this would happen to some extent to fill the US Airways vacuum. But it isn't a panacea. True, in the absence of US Airways' hub, Southwest could consider PIT. But if the per-passenger costs are $7 bucks or even higher, it's possible that the carrier will take a pass. Other low-fare carriers may well add service, with or without a US Airways hub reduction. But it will be predominantly to large destinations, such as DFW, IAH, MCO, NYC, and PHX, most of which in any case will retain service from other carriers. In short, entry of low fare carriers will tend to depress yields, and could deter additional access to major carrier hubsites. Low fare carriers won't take risks to serve secondary markets from PIT, and they won't materially increase the number of nonstop destinations, either. And don't look for any connecting traffic over PIT generated by these carriers. The large city-pairs they might serve over PIT are mostly already served with a host of other low-fare service, including nonstops. Midway tried that with a hub at RDU. It put the carrier right into the tank.
Bottom Line - It's US Airways, Or It's Less Access To The World. This situation is not the "fault" of anyone. It's simply an outcome of a shrinking airline industry. As unpleasant as it might be, there are not many options open to Pittsburgh at this point. It's clear that US Airways wants to keep its hubbing operations at the airport, albeit a smaller one than seen in the past. In that regard, Pittsburgh is lucky.
Just take a look at St. Louis.
Pittsburgh - Unpleasant Options
The future of Pittsburgh is up in the air.
Eventually, however, gravity will take over. And one thing is certain: under almost any scenario, Pittsburgh is going to have a lot fewer people wearing out the concourse carpets in the future. The days of PIT experiencing nearly 10 million enplanements are not likely to return anytime soon.
Great Airport. But A Shrinking Airline Industry. Pittsburgh International is arguably one of the best facilities in the nation. But it takes an airline, not bricks and mortar, to make an airport a hub. Right now, the nation's a little short on airlines, and it's even shorter on airlines that want to open a major hubsite operation. If US Airways yanks its hub at PIT, the chances of seeing another carrier come in and establish a hub serving 90 to 100 markets nonstop are only slightly higher than Hillary Clinton sending Rush Limbaugh a get-well card.
It's time for the circus to stop and hard realities to be considered. No matter how much huffing and puffing comes from various senators, congressmen, governors and the rest of the political cast of thousands, this is an issue of economics, not civic hubris. It makes no difference how many "extensive analyses" are done, outlining in glorious detail and colorful pictographs the traffic patterns and the great economy of Western Pennsylvania. That won't do diddly to attract another hubbing airline. Nor will it expand the number of target airlines to which the airport will need to see about increasing service - something that's clear without spending tens of thousands on grandiose coffee-table studies. Those things are simply distractions from facing the music: gaining another large hub operation at PIT is a lost cause. Some replacement service to some large markets, yes. A big hub, no. To tell the County anything different, as some are doing, is the intellectual equivalent of telling fairy tales.
No Hub - A Lot Fewer Nonstop Destinations. The structure of the airline industry points without doubt to PIT at best being a smaller US Airways hub. At worst, if one can call it that, Pittsburgh International will settle down to around 4.8 million enplanements.
What needs to be understood is that without a connecting hub operation, Pittsburgh can only support nonstop service to somewhere between 25 and 30 big markets. Beyond that, it gets real dicey.
A simple glance at the US Airways service pattern just in the Northeast gives a pretty good idea of what to expect should Allegheny County and the airline fail to come to terms. Other than hubs at CVG and CLE, service in the Northeast and Mid-Atlantic will pretty much be relegated to the large East Coast cities. Forget service to mid-size commercial centers such as ALB, BUF, BDL, and CMH. Without the cross-feed of a large connecting hub operation, there simply is not enough traffic to support such service at PIT. Not to mention the fact that there likely isn't an airline that would apply assets to such O&D markets.
Then take a look at the smaller communities that depend on US Airways' hub for access to the rest of the air transportation system. If US Airways closes down PIT, these places are in deep yogurt. Airports in places like Parkersburg and Johnstown can look forward to a great future as GA facilities, because other hubbing airlines won't get near them. The economics simply don't work.
Options. The crux of the current matter is airport costs. US Airways wants them down. The County apparently has minimal wiggle room in this regard - they built the right airport in the right place with the right plan in 1992. Unfortunately, the world and the airline industry have changed. Something has to give. This boils down to the following scenarios:
Agreement With US Airways. This is the best outcome. Cutting to the bottom line, if the County has to take a haircut over the cost of PIT, it's better to do it by retaining the US Airways hub than losing it. If the hub goes, so does the connecting traffic that helps keep per-passenger costs down.
US Airways Pulls Down Hub. First, that won't do much for the per-passenger costs of the facility, making replacement service tougher to recruit. Furthermore, the economic impact to the region will be very unpleasant. Here's a simple rule that some folks may be missing: having a hubbing operation is good. Losing it is bad.
Replacement Hub. Not in the cards, particularly one with 100+ nonstop destinations. There isn't an airline with the billions - yes, billions - necessary establish such an operation at Pittsburgh. But bad advice is in full supply in this regard. One silly analyst told the city something to the effect that nobody can predict with certainty that another big hub wouldn't be established at Pittsburgh. Right. That's also true about a meteor strike.
Entry of Low Fare Carriers. Without question, this would happen to some extent to fill the US Airways vacuum. But it isn't a panacea. True, in the absence of US Airways' hub, Southwest could consider PIT. But if the per-passenger costs are $7 bucks or even higher, it's possible that the carrier will take a pass. Other low-fare carriers may well add service, with or without a US Airways hub reduction. But it will be predominantly to large destinations, such as DFW, IAH, MCO, NYC, and PHX, most of which in any case will retain service from other carriers. In short, entry of low fare carriers will tend to depress yields, and could deter additional access to major carrier hubsites. Low fare carriers won't take risks to serve secondary markets from PIT, and they won't materially increase the number of nonstop destinations, either. And don't look for any connecting traffic over PIT generated by these carriers. The large city-pairs they might serve over PIT are mostly already served with a host of other low-fare service, including nonstops. Midway tried that with a hub at RDU. It put the carrier right into the tank.
Bottom Line - It's US Airways, Or It's Less Access To The World. This situation is not the "fault" of anyone. It's simply an outcome of a shrinking airline industry. As unpleasant as it might be, there are not many options open to Pittsburgh at this point. It's clear that US Airways wants to keep its hubbing operations at the airport, albeit a smaller one than seen in the past. In that regard, Pittsburgh is lucky.
Just take a look at St. Louis.
