Wednesday, March 18, 2009

à chacun ses avions

So, if you saw the PG's "Top 50 in Business" section yesterday, there was a full page ad on the back touting the new Delta flight from Pittsburgh to Paris starting in June. It sparked a question. The original news article on this said that the new flights would split between Pittsburgh and Raleigh departures. In November the news quote was that:

The service is expected to start with four to five flights a week, with at least two of those originating in Pittsburgh.

Yet the ad yesterday said clearly that the new service would run a full 5 flights a week:

"Departing flights leave Pittsburgh 5 days a week at 6:15pm...."

So I looked up the original press release which also clearly said it was going to be 5 days a week as well... so I don't know where the 'at least two' came from early on. But I noticed something else. The original announcement was all about new flights to Paris from both Pittsburgh and Raleigh. I didn't know that the planned Raleigh flights to Paris have already been canceled even before they began. Worth noting especially as we think about whether this flight will be around for the long term. It also gets back to that big ad in the paper and why it might have been there.


and just an odd question if anyone knows the answer. I lost a postcard I got in the mail last month. I swear it said there was a community meeting in Lawrenceville on the topic of homeowners and mining rights for natural gas or something like that. It was some commercial thing it seemed to me. I think it already happened but I don't have any of the details. So I am curious if anyone knows about this, if anyone actually went, and if it really is true someone thinks there are gas exploration options in Lawrenceville of all places. How can any parcel have enough space for that?


Blogger Pittsburgh Conservative said...

On the airport issue, I have a question that I can't seem to get a fair answer to. Why are the gate fees at PIT so high? I know that they were recently proposed to be cut, but wouldn't it be an incentive to slash the fees (or even eliminate them) to draw in as many flights as possible?

I would think that attendant services (fueling, de-icing, etc.) and the job creation potential of having full gates would more than mitigate any loss in fees, plus the airport would be closer to full capacity, so parking, tenant rents, etc. would increase. I realize that the airport would lose some revenue, but in light of the heavy subsidy it currently receives, wouldn't this be a bit of a wash in the larger context of revitalizing the airport?

Is there an FTA mandate or some other requirement that gate fees are charged? Or is it just a management decision?

Wednesday, March 18, 2009 8:18:00 AM  
Blogger C. Briem said...

Do I think the airport is basically writing off any chance of returning to a hub operation by such high fees.. sure. And airlines have disincentives to add flights here? absolutely.

But when it comes to the airport's budget... You are making an argument that number of flights at the airport is elastic with respect to those fees. Nobody doubt's that lower fees might increase the number of flights, but whether it's enough to offset the lower fees is another question. If elastic, lower fees can increase revenues, but if inelastic it's the other way around.. i.e. lowering fees will have to lower the total revenue collected.

I am almost sure that demand for flights at the airport is inelastic at this point... i.e. serving the local population that really has to use the airport no matter. Sure, lowering fees will make it more attractive for airlines to put more flights in here, but it wouldnt be enough to offset lower collected fees. I know it sounds good, but it's just not a market with much potential market to draw from.. the few folks who go up to Cleveland for flights are not going to make much fo a dent in the top line revenue. There are markets that such an argument may make sense for, but I just doubt it's this case. You would have to believe that the couple dollars per flight that the fees work out to would be enough to make some huge number of people all of a sudden start to use the airport that aren't now and thus give airlines reasons to add flights. I don't see it.

So if that is true, the aiport is stuck with supporting a big fixed cost operation.. big big airport, debt to payoff.. all for the larger USAirways hub operation it was built to spec for. Subsidies not withstanding, they have to pay the rent so to speak, and if not via the fees in question... then how?

Wednesday, March 18, 2009 8:38:00 AM  
Anonymous johnnyg said...

Whatever news report you listed was clearly wrong. The Pittsburgh and Raleigh flights were announced the same day, but were never linked. And Raleigh already has London service on AA, so the Paris flight is not as crucial to that market.

Sorry you missed the Raleigh cancelation. That was a few weeks ago. Today in the Sky over at USAToday reported it.

The ad has nothing to do with fears of losing the flight. You might have also noticed the big billboards around town. The Conference promised big money to support the flight, including advertising. The ads were always in the cards. Those guarantees are why the flight will begin and last for at least two years. Delta cannot lose money on the flight with the subsidies.

Wednesday, March 18, 2009 11:24:00 PM  
Blogger C. Briem said...

Not linked per se, but Delta accounced them together in the same PR even. Looks like the Raleigh flight was cancelled in December. I probably missed it because it was announced the Christmas Eve... great time to put out bad news.

I wonder if the conference will buy up and resell tickets vice just paying the subsidy if sales lag. Maybe Ken and I could go on a Parisian vacation... er, business trip, together.

Seriously though, I do wonder what opt out provisions are conceivable. It is a horrible time to be adding air service. Prices to Europe are down a lot in last few weeks. Tough market.

Wednesday, March 18, 2009 11:54:00 PM  
Anonymous johnnyg said...

Yes. I read the PR when it came out. Always better to get things from source documents, I'm sure you agree?

Delta reported 2 weeks ago that 350 persons, on average, leave PIT for Europe every day of the week. I would imagine that it is higher in summer.

Wags like you need to stop looking at this as a PIT to CDG flight and realize that it is a long spoke to the Delta/Air France/KLM world hub at CDG. You get to avoid the East Coast, or long flights in the wrong directions to Detroit, Chicago or Atlanta.

Anyhow, looking at it as a flight to Europe means that approximately 2,450 persons leave PIT each week for Europe. Delta plans to use 757s configured for up to 174 pax, 5 days a week. That's 870 seats a week. So, to be full, Delta only needs to capture approximately 36 percent of the weekly traffic from PIT to Europe. My wild-guess guess is that they break even selling 70 percent of those 870 seats--it could be less. That's 25 percent of those 2,450 leaving for Europe on a weekly basis.

I see in today's PG that Delta dropped the price, so maybe it won't work. But the above numbers suggest to me that it should be a profitable flight.

Thursday, March 19, 2009 11:58:00 AM  

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