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Looking to grow its airport, Pittsburgh invests $3M in startup OneJet | TribLIVE.com
Allegheny

Looking to grow its airport, Pittsburgh invests $3M in startup OneJet

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Nate Smallwood | Tribune-Review
A OneJet plane arrives at Pittsburgh International Airport on Thursday, May 25, 2017.
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Nate Smallwood | Tribune-Review
A OneJet plane arrives at Pittsburgh International Airport on Thursday, May 25, 2017.
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OneJet
OneJet, a business-oriented carrier, uses seven-seat Hawker 400s for nonstop flights from Pittsburgh to Milwaukee and Indianapolis.

Pittsburgh International Airport and Allegheny County officials have invested $3 million in a small startup airline that caters to about 1,700 business travelers a month.

They say it’s worth it.

Officials awarded $3 million in grants and loans to OneJet to persuade the carrier to base its operations in Pittsburgh and add 10 regional flights on its seven-seat jets.

State gambling tax revenues, which can be used for a range of public investments, provided $1 million. Allegheny Airport Authority CEO Christina Cassotis allocated the amount in June without a public announcement. The Trib found it through a request under the state’s Right-to-Know Law.

It’s the largest incentive the airport has awarded to an airline. It’s the only time Allegheny County has given a loan to an airline, said Amie Downs, a county spokeswoman.

By offering nonstop service to regional destinations that larger airlines don’t offer, Cassotis and industry experts say OneJet is playing a key role in the Pittsburgh airport’s comeback strategy.

“Smaller airports have no choice (to grow) except giving some kind of incentive,” said Bijan Vasigh, economics professor at Embry-Riddle Aeronautical University in Daytona Beach.

A $1 million county loan is also included in the incentive package. The county’s redevelopment authority board approved the loan in March.

The grant and loan add to the $1 million in county and state loans that OneJet disclosed to the public in a June news release.

CALIFORNIA AIRLINE LANDS IN PITTSBURGH

OneJet was created about two years ago in California with the goal of restoring flights that linked medium-sized airports before a series of large airline mergers ended them.

Pittsburgh, which lost nonstop flights to more than 70 destinations after US Airways closed its hub in 2004, was a prime candidate.

OneJet launched service in Pittsburgh in spring 2015 with flights to Indianapolis and Milwaukee. When OneJet looked to expand a year later, Indianapolis, Memphis and Pittsburgh became contenders to serve as a “base of operations” for the airline’s planes and crew.

“I wanted to make sure he picked Pittsburgh,” said Cassotis, who began running the airport in January 2015. “So we created an incentive offer that would allow him to benefit from picking Pittsburgh… to base his operations here and to grow here faster than he would in any other market.”

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Jim Rohr, former PNC Bank chairman, and Thomas Tull, co-owner of the Pittsburgh Steelers, invested a combined $500,000, which sweetened the deal.

It worked. Pittsburgh’s offer was more enticing than the incentives proposed by the other two cities, OneJet CEO Matthew Maguire said.

The $1 million OneJet incentive did not go to the Allegheny County Airport Authority’s board for a vote.

The board in April 2016 voted unanimously to allow Cassotis to execute such agreements, up to any amount, without a board vote. She used that authority in June for OneJet, followed by November agreements in which she granted $800,000 to WOW Air for service to Iceland and $500,000 to Condor for service to Germany.

Cassotis said she grants incentives only to airlines adding nonstop flights to places the airport doesn’t already serve. That’s why Spirit Airlines, which began flying from Pittsburgh to Myrtle Beach and Dallas-Ft. Worth on Thursday, didn’t get one, she said.

The OneJet agreement does not guarantee the 10 destinations will be ones the airport does not already serve nonstop, but the five destinations announced so far are new. Maguire said he expects the majority of the rest to be, he said.

The Redevelopment Authority of Allegheny County’s board approved a seven-year, $500,000 county loan to OneJet last year and a three-year, $1 million loan in March, said Robert Hurley, the county’s economic development director.

“They did another $1 million because they were happy with what the first $1 million got them,” Maguire said.

WORTH THE RISK?

Airline industry experts say that although giving public money to startup airlines can be a gamble, the OneJet deal is the type of creative investment Pittsburgh International needs to make to rebuild after losing its hub status and more than 70 percent of its departing flights.

“It would appear to me this should work very well,” Mike Boyd, an aviation industry consultant and president of the Colorado-based firm Boyd Group International. “It’s not the same thing as getting British Airways into town, but it’s part of the mix. A strong, business-focused market like Pittsburgh is somewhere where this makes sense.”

OneJet’s 14 daily departures aren’t playing a massive role in growing daily traffic — the airport had more than 600 daily departures at its peak, and is down to a weekday average of 184 — but it’s still a good public investment, Boyd said.

Vasigh agreed.

“In a matter of two or three years, I think the money will be going back to the coffers of the government,” Vasigh said.

OneJet carried 1,700 passengers to and from Pittsburgh last month, according to an airport report. That helps restaurants, hotels and rental car companies, Vasigh said.

OnJet uses the county’s low-interest loans to expedite aircraft purchases, Maguire said. It has five planes based in Pittsburgh and plans to double that number by the end of the year, he said.

Maguire said each plane creates at least 10 local jobs.

The airline employs 80 people, with 50 of those in Pittsburgh, Maguire said. He expects the number in Pittsburgh to jump to between 80 and 100 employees by the end of the year, he said.

“If you look at the payroll being created, it’s middle and upper-middle class, mechanics and pilots,” Maguire said.

Corporations such as PNC and Aetna that travel to other medium-sized cities for business send employees on quick OneJet flights, avoiding hours in the car or at a connecting airport, Maguire said.

The carrier’s seven-seat planes have slightly higher fares than a connecting flight would cost, but they provide a convenience that corporations are willing to pay for, he said.

The flights are timed to offer the Pittsburgh-based travelers more convenience, leaving in the morning out of Pittsburgh, Cassotis said.

OneJet currently serves six cities to and from Pittsburgh: Milwaukee, Indianapolis, Cincinnati, Louisville, Ky., Hartford, Conn., and Richmond, Va.

Flights to Albany, N.Y., are scheduled to start June 21, and Maguire said he plans to announce three more destinations within the next month.

“Everything starts and ends at Pittsburgh,” Maguire said. “Pittsburgh is our home and they treat us very well. It really puts Pittsburgh in the driver’s seat.”

Theresa Clift is a Tribune-Review staff writer. Reach her at 412-380-5669, [email protected] or Twitter @tclift.


This story has been updated to reflect that the state was the source of gambling tax revenue.

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