New $1.1B terminal could cost Pittsburgh International a shot at lower fees |

New $1.1B terminal could cost Pittsburgh International a shot at lower fees

Theresa Clift
Kristina Serafini | Tribune-Review
Steven Phillips (in green) and Cordell King, employees of Joe R. Pyle Complete Auction & Realty Service, try to open an unclaimed briefcase as Dawn Romitz, manager of terminal operations, looks on in Pittsburgh International Airport's Heavy Equipment Building on Tuesday, Oct. 4, 2016.
Stephanie Strasburg | Tribune-Review
People gather around auctioneer Thomas Abbott as he starts the bidding on a minivan during a public auction at the Allegheny County Airport on Saturday, September 14, 2013. Items up for auction through the Allegheny County Airport Authority included vehicles, miscellaneous outdoor equipment, used office furniture, jewelry, electronics, clothing and more.
Kristina Serafini | Tribune-Review
Unclaimed cell phones sit in a box inside Pittsburgh International Airport's Heavy Equipment Building on Tuesday, Oct. 4, 2016. Abandoned vehicles, used Airport Authority vehicles, unclaimed clothing, jewelry, electronics and other items will be up for auction on Saturday.
A computer rendering of the departures curb of the redesigned Pittsburgh International Airport.
A rendering of the redesigned Pittsburgh International Airport at night.
A computer rendering of the atrium as viewed from the security checkpoint area of the redesigned Pittsburgh International Airport.

Pittsburgh International’s new $1.1 billion terminal would replace an outdated and oversized facility, but as envisioned it could cost the airport the chance to attract new flights from some cost-sensitive carriers, industry experts say.

Every airline that serves the airport must pay to use its runways, plane mechanics and gates.

This year, the airport expects to collect nearly $54.9 million from airlines at a rate of $12.85 per departing passenger. Fees charged to airlines, known as the cost per enplanement, bring in about 40 percent of the airport’s operating budget.

Airport officials say the per enplanement fee will drop by about $3 when the new terminal opens in 2023, and that without the project, the fee would increase because of the rising cost to maintain a facility that opened in 1992.

Some industry experts say that the airport is missing a chance to lower the fee even more and to compete with 53 other airports that in 2015 charged cost per enplanement fees lower than the $9.73 rate that the airport expects to charge in 2023.

“Having a lower fee should be the primary objective. The airport is in wonderful condition,” said Satish Jindel, a transportation consultant in Franklin Park, noting that the airport was named “Airport of the Year” in 2017 by trade magazine Air Transport World.

A lower fee can also mean lower airfare prices for passengers, especially on ultra-low cost carriers, Jindel said.

“If your (cost per enplanement) is lower, cost for the airline carriers is lower, so it may be easier to attract additional airline carriers,” said Moody’s senior analyst Kathrin Heitmann, who worked on a credit analysis report about the airport published May 30.

The report lists “high, albeit declining, CPE” as a credit challenge. The airport’s highest rate was in 2013 at $14.50, the report said. Since then, it’s been decreasing slightly each year.

The fee is one of the factors airlines consider when deciding where to introduce or expand service, according to airline representatives and analysts.

Of the 85 airports Moody’s ranked in 2015, 17 had an enplanement fee higher than Pittsburgh International’s $12.89. Pittsburgh’s current rate of $12.85 is higher than comparable airports. The median rate for medium-sized origin and destination airports like Pittsburgh is $8.10, according to the report.

Just as the airport is paying off debt it took on to build its signature X-shaped terminal in the early 1990s, it’s preparing to take on hundreds of millions more in debt for the new project.

Without the project, freed of debt payments, the airport might have been able to reduce the enplanement fee to about $5 — a big difference to airlines compared to $9.73, said William Lauer, chief investment officer at Allegheny Capital, a Downtown-based private financial services provider.

“That’s an enormous difference, said Lauer, who studies the airline industry. “It’s why Charlotte is what Charlotte is compared to Pittsburgh.”

Moody’s ranked Charlotte as having the lowest enplanement fee in the country, of the 85 airports it ranks, at $1.33. A hub for American Airlines, the airport has 163 nonstop destinations compared to Pittsburgh’s 68.

Hubs aren’t the only airports capable of keeping fees low.

Hollywood Burbank Airport had the second-lowest enplanement fee on the list, at $2.29. The airport in Flint, Mich., had the third lowest at $2.38.

Both of those airports serve fewer nonstop destinations than Pittsburgh. A low CPE does not guarantee a greater amount of air service, but Lauer and Jindel said it helps to attract more flights.

Pittsburgh International spokesman Bob Kerlik said the airport’s current fee is not a barrier to attracting air service, pointing out the airport’s list of nonstop destinations has surged from 37 to 68 in 2- 12 years.

It is also one of only nine airports in the country served by all three ultra-low cost carriers — Spirit, Frontier and Allegiant, which are the most sensitive to the airport fees.

The key is to keep those airlines from leaving or dropping routes, Jindel said.

Spirit began serving the airport in May. Frontier has so far cut three of the five destinations it started offering in June 2016.


Airport officials, who spent years weighing options for the new project, say their research determined leaving the airport as it is, without building a new facility, was not an option.

At a minimum, the airport would have needed to rebuild the parking garage and International Arrivals Facility, according to an airport presentation.

In March, several airlines that operate at the airport asked officials to consider that as an option.

That choice would have resulted in a fee of $10.63, according to an airport presentation. Rebuilding the airside terminal would result in a fee of $12.18.

Knowing that, the eight airlines consulted got on board with rebuilding the landside terminal.

Kerlik said the international arrivals area requires arriving passengers to walk too far. The garage is expensive to maintain and has only 1,000 covered parking spaces, fewer than other airports in regions with snowy weather, he said.

“Doing nothing should have been an option,” Jindel said. “Walking is not a problem there. Try going to airports in Atlanta, Chicago and Philadelphia.”


Airline representatives were tight-lipped about how much the enplanement fee would need to decrease to make a difference, but several said the fees are a factor in deciding where to add service.

“A $3-plus decrease in (cost per enplanement) will certainly incentivize more Allegiant growth at PIT,” Dustin Call, Allegiant manager of airport affairs, said in an email.

An Allegiant spokeswoman added: “Of course lower costs at any airport have the potential to stimulate growth for us. We are a very cost-sensitive airline. However, we are completely supportive of the airport’s modernization plans.”

An American Airlines spokesman said: “Cost, including (cost per enplanement), is one of many factors in making air service decisions.”

The enplanement fee is always a factor in the airline industry, but for Southwest, the main factor for service is the supply and demand for flights to that market, an airline spokesman said.

All three said they support Pittsburgh International’s $1.1 billion makeover.

Pittsburgh International has the capacity to take on additional debt, Heitmann, the Moody’s analyst, said.

“From a ratings perspective, we would need to take a closer look when more details come out of the plan and how they expect to achieve the reduction in (cost per enplanement),” Heitmann said. “I wouldn’t say it’s not feasible, but we need more information.”

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

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