Armbrust: Pittsburgh has really suffered some severe traffic declines over the past few years. How have you been able to navigate the associated revenue decreases?
Penrod: We’re very fortunate to have a wonderful staff and a flexible board and we have adjusted the organization, which was related to US Airways de-hubbing Pittsburgh back in November ’04. We were able to do a very well-timed and -executed master planning process. We had looked earlier in ’04 on some terminal resizing efforts and did that in early ’04. That was actually very easy to implement once US Airways had de-hubbed. What that did was allowed us some flexibility. We resized in essence what was usable by the carrier base we had and as US Airways did their changes over the last couple of years, we were able to react accordingly to where others have gone from only being on two gates; now there are times when non-U.S. air carriers are on as many as eight to nine gates at one time. We did scenarios on what certain projects would mean in cost-savings.
Whenever you take parts of the building out of service, there’s still maintenance responsibilities to preserve the building over the long term, so whether it’s fire protection, fire detection, there’s still an expense that goes with that but janitorial and other staff indeed went away. We don’t heat the building as much in the wintertime in those places that aren’t open to the public, and we don’t cool it as much in the summertime. We recognized about a million in savings just on costs associated with resizing the building.
Armbrust: What percentage of the total original facility is totally operational now?
Penrod: Out of the 75 airside gates that we had with jetway access, there are now 47 that are open or are used. That number serves us well on a daily basis.
Armbrust: How about on the non-aeronautical revenue side, like with the concessionaires with those kinds of traffic declines? Have you had to renegotiate any deals?
Penrod: We have not. BAA is obviously the operator of the AIRMALL® for us. They do a wonderful job. What we have realized is the hubbing environment is a different animal than a very strong O&D environment. Working with BAA, we acknowledged that certain operating hours that used to be incumbent upon the retailers and food and beverage operators is different than what’s required today. There is no reason to have places open if there’s no traffic past the front door after 8:00 at night and at the same time, whenever we were making adjustments to the terminal building, some of the locations that were in parts of the building that we were taking as a service to the public, at that same time, those operators had other locations within the building. As those facilities were coming to the end of their agreement, those operators in essence move staff and supplies to other parts of the building that remained very active. We made a very concerted effort to get as much core space around the middle of our building – the middle of the X, if you will, the core – it is possible just to maximize that flow and according to the numbers, that effort has paid off extremely well.
Read about how the lack of multi-year federal funding has challenged Pittsburgh and what he thinks Congress should better understand about airports in the full interview in the December/January issue of ARN. Click Here to subscribe!
