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Airport's $1.1B redo: Unknowns & serious questions

| Saturday, Oct. 7, 2017, 8:06 p.m.
A computer-rendered aerial view of the redesigned Pittsburgh International Airport.
pittransformed.com
A computer-rendered aerial view of the redesigned Pittsburgh International Airport.

Myriad economic unknowns raise serious questions about the efficacy of spending $1.1 billion to reconfigure Pittsburgh International Airport, say Frank Gamrat, a senior research associate at the Allegheny Institute for Public Policy, and Jake Haulk, its president.

The Allegheny County Airport Authority last month announced an ambitious plan to ostensibly right-size the complex for current market realities. Built nearly 30 years ago to US Airways' hub specifications at a cost in excess of $1 billion, the facility has been rendered obsolete by those realities, officials argue. They plan to build a new landside terminal connected to the existing airside terminal, which would be repurposed or demolished. The existing terminals' tram, people-mover, escalators and elevators, all said to be near the end of their useful lives, would be eliminated. A new parking garage would be built along with ancillary infrastructure.

Authority officials say the $1.1 billion project — using no local taxes, they insist — will save about $23 million annually. While one aviation consultant questioned the rationale of such an equation, Gamrat and Haulk say there are a number of other potential hurdles.

For various reasons, political and economic, some proposed funding sources, such as gambling proceeds and shale-gas royalties, might not be sufficient or stable. There also will be needed maintenance on the existing airside terminal, plus other costs. “Will revenues from operations and fees keep pace?” Gamrat and Haulk ask. “Where are the costs and revenue forecasts?”

Tapping the passenger facility charge (PFC) does not appear to fit Federal Aviation Administration criteria for doing so. Reducing Pittsburgh International's capacity from 30 million to 18 million passengers a year “is not enhancing capacity” and does not do much “to enhance national transportation security, reduce noise or furnish opportunity for enhanced competition,” all part and parcel of using PFC funds.

Passenger numbers, relatively flat over the past eight years, are now about 10 million short of the reconfigured airport's projections. It would take an expanding population and economy to reach the 18-million-passenger goal. But Greater Pittsburgh's population continues to slip and employment gains and per-capita income (adjusted for inflation) have been anemic. That's hardly a recipe for driving up air-travel demand, Gamrat and Haulk say, adding that public subsidies for some low-cost carriers haven't done much to bolster passenger counts.

“Surely ... the failure of the massive spending ... for the current terminal configuration to produce a self-funding facility would lead planners to be cautious about claims for huge new projects,” they say.

Reasonable 20-year projections for operations revenue and spending, along with non-operating revenue and debt-service loads, “should be an absolute must” for proceeding with the reconfiguration plan, Gamrat and Haulk say. And given the state's precarious finances, airport officials should not count on any state bailout should funding for a reconfigured Pittsburgh International fall short, they add.

Colin McNickle is a senior fellow and media specialist at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

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