NYTimes.com Article: Pittsburgh, Once a Showplace Hub, Feels US Airways' Woes

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Pittsburgh, Once a Showplace Hub, Feels US Airways' Woes

September 14, 2004
 By JOE SHARKEY





In the sprawling US Airways club at the Pittsburgh
International Airport early Saturday afternoon, Fox News
was blaring from the television, mostly to itself. Except
for a reporter and a few employees, the club was empty. So
was the long, gleaming terminal, where planes waited at
fewer than half a dozen of the more than 100 departure
gates.

Airline employees said the solitude probably had something
to do with the fact that Saturday was the third anniversary
of 9/11, but they acknowledged that the Pittsburgh airport
had become a shadow of its former self. Before 9/11, US
Airways - which accounts for about 80 percent of the
flights in Pittsburgh - had more than 500 departures from
here daily, including nonstops to Europe. This fall,
departures will number about 240.

Nick Liparulo, a Westinghouse executive, wandered into the
lounge shortly after 2 p.m. He sank into a seat to read the
paper. He was headed for a meeting in Madrid. Not long ago,
that would have meant boarding a US Air nonstop from
Pittsburgh to London, then a hop down to Spain. But now he
had to fly first to Philadelphia and wait several hours
before continuing to Europe.

"This worries me on a couple of levels," said Mr. Liparulo,
who flies over 100,000 miles a year on US Air and thus
belongs to its highest frequent-flier status level. One
worry is the damage US Air's reduced presence is doing to
the business climate in Pittsburgh, where more than half a
dozen Fortune 500 companies have their headquarters and
dozens of international companies have large offices. "It
used to be you could fly from here direct to London or
Frankfurt," he said.

"The other is personal: Pittsburgh is my home, and I travel
a lot on business," he said. With US Air now offering far
fewer nonstop flights across the board, "I have to start
taking two flights to get anywhere, even domestically," he
said.

US Air has trotted out a lot of excuses for its troubles
over recent years. Last year, the chief executive at the
time, David Siegel - the one who took his golden parachute
this April, a month after swearing to employees that he
would not - told analysts that Pittsburgh airport had
become "uncompetitive." He meant the fees charged by the
airport for each departing flight were too high.

Simple arithmetic explains a lot. In 1992, largely on
behalf of US Air, its prized major tenant, the Allegheny
County airport authority took on about $650 million in debt
for a 2.1-million-square-foot terminal that resembled a
shopping mall. The terminal, with its Air Mall of more than
100 stores, became the model for modern domestic airports.
Many frequent fliers regard Pittsburgh International as
among the best in the world.

Some people fault Pittsburgh for putting all of its eggs in
one basket with US Air, but in 1992, with good times
starting to roll in air travel, no one could have foreseen
the wreckage of today's domestic airline industry.

The current debacle has major implications for a viable air
transportation system in the United States, where an
increasing number of small and even midsize cities are
losing air service as big hub-based airlines shrink or
teeter at the edge of liquidation.

Conventional wisdom in the industry says that the
disappearance of a US Air would at least cause a
much-needed reduction in domestic overcapacity and create a
more efficient system. Don't count on it, says Michael
Boyd, president of the Boyd Group, an aviation forecasting
and consulting group. Instead, cutthroat competition will
grow only fiercer on desirable routes. Small markets would
lose even more if US Air disappeared.

"We did a down-and-dirty study on what would happen,'' Mr.
Boyd said, "and in all the major markets where the real
competition is, where all the passengers are and where US
Air is now a big player, someone else would come in and
fill that capacity within seconds."

North-south routes, including those to Florida, would
become more intensely competitive, with continued downward
pressure on fares as surviving airlines continue their
death struggle for market share, he said.

"If US Air goes to airline heaven, the real hit will be on
smaller airports that are dependent on connections to
Pittsburgh, Philadelphia or Charlotte as their gateways" to
the rest of the country, he said. Charlotte, N.C., is now
US Air's largest hub.

On Sunday, I flew on US Air from Pittsburgh to Philadelphia
just as the airline was skulking again into bankruptcy
court. US Air accounts for about 70 percent of the flights
in Philadelphia, where air fares have traditionally been
among the highest in the country, a condition that has long
angered local corporate travel buyers. (The same is said of
Charlotte, by the way). Last May, sensing real opportunity,
Southwest Airlines barged into Philadelphia with low fares.


US Air's panicked reaction was to introduce sharply reduced
Go Fares - but only on routes where Southwest competes.
That failed to greatly impress Kevin Mitchell, a longtime
US Air critic who is the president of the Business Travel
Coalition, an advocacy group based near Philadelphia. Mr.
Mitchell said US Air was going to see increasing trouble in
Philadelphia as discount carriers increased the pressure.

"They're in an unsustainable situation here," he said. "As
you ride around Philadelphia you see billboards advertising
their Go Fares. But of course those fares only apply on
routes where they compete with Southwest or Frontier or Air
Tran. Everywhere else, you still pay the Gotcha Fare, like
$600 to Pittsburgh."

Mr. Mitchell said he had no faith in the ability of US
Air's management to turn things around.

"You could take the management of US Airways and put them
in Dallas at Southwest Airlines for two years, and they'd
wreck Southwest," he said.

On the Road appears each Tuesday.

E-mail:
jsharkey@xxxxxxxxxxxx

http://www.nytimes.com/2004/09/14/business/14road.html?ex=1096170690&ei=1&en=5cabafa99c8df945


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