Allegheny Airport Authority will shake up leadership roles
By Timothy Puko
Published: Monday, Feb. 11, 2013, 12:01 a.m.
The Allegheny County Airport Authority could spend more than $300,000 annually to try to buck a trend that's lasted for years and afflicted air travel across the country.
The authority will add two executives primarily to attract flights to Pittsburgh International Airport, which, according to authority data, has lost more than a quarter of the 213 flights it had just five years ago. Nationally, departures have dropped by 17 percent since 2007 even though the number of fliers has remained constant as airlines have become more efficient, according to federal data.
“I don't know that the number of people involved in it is really going to have an awful lot to do with success,” said William R. Lauer, an airline analyst at Allegheny Capital Inc., Downtown. “The addition of some sort of a central planner, a government employee who wants to jump up and down and try to create an opportunity where the market doesn't see it, isn't a terribly effective way to do business in what is essentially still a free-market structure.”
The leadership shakeup involves reassigning former Chief Executive Officer Brad Penrod and hiring a marketing guru to fill that post. The CEO is paid $214,465 annually, according to the authority. Penrod will become president and chief strategy officer. James Gill, former chief financial officer, will become executive vice president.
The authority is adding another executive position, director of corporate and community relations, at $113,500 a year.
“The other way wasn't working. We're going to try something new here,” said Allegheny County Executive Rich Fitzgerald, whose administration pushed for leadership changes at several county departments and authorities. “This was a consultation that I had, that we all had, with board members, the community and a whole lot of people. This was not Rich Fitzgerald doing this unilaterally by any means.”
Since 9/11, airline consolidations and bankruptcies have put pressure on airports across the country, experts said. Decreasing competition among the airlines has given them the leverage to shift more of the business risks for flight routes onto mid-market airports such as Pittsburgh International.
About 8 million passengers used the airport last year, less than half of its peak traffic in 1997.
It struggled to draw passengers since US Airways eliminated its hub there.
Experts said it's hard topredict whether Pittsburgh can trigger a revival when so many airports are fighting for a shrinking number of flights. The best-case scenario is finding a small, low-cost airline that can grow here or catch some other unique, ground-floor opportunity in a shifting market, experts said.
Bijan Vasigh, an economics professor at Embry-Riddle Aeronautical University, said he hadn't heard of other airports shaking up executive staff to help.
“Airports are under tremendous pressure of keeping their current clients,” Vasigh said. “To have that vision, they really need a plan. ... It seems like the airport authority understands that and (is) being proactive. I absolutely think that's a good thing for them.”
Authority and county leaders have long searched for ways to lower gate fees and compete against other mid-size airports to lure more flights from increasingly demanding airlines. One difference now is that the leadership has stabilized the finances, said Dennis Davin, a board member and the county's Economic Development Director. The airport might soon get more than $20 million a year in gas drilling royalties and shed more than $60 million in annual debt payments, helping improve its position to work with airlines.
The authority will conduct a national search for a new CEO who will concentrate on communicating with airlines to draw new traffic. The authority last week hired former county councilman Vince Gastgeb as director of corporate and community relations, in part to work the local business side, add customers and get more help courting airlines.
That kind of communication is essential, said Michael Miller, vice president of Washington-based American Aviation Institute. Governments and businesses have to put up their own money to draw new routes and keep the ones they have, he said.
“Airports across the U.S. are more sophisticated in their marketing, and Pittsburgh needs to keep pace,” he said. “If a community wants a route, it can't expect somebody else to pay for it.”
Even if the new leadership makes good decisions in a shifting market, it's going to be five years or more before they show a transformative effect, Vasigh said. Making the right decisions is a big challenge, especially in such a competitive market, he added.
“It's going to be challenging because results are slow to come,” Gastgeb said. “I think that's why we see the traffic count down. But I think with the right focus we can turn this around.”
Timothy Puko is a staff writer for Trib Total Media. He can be reached at 412-320-7991 or email@example.com.
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