Saturday, December 17, 2011

Messages in the sky

Just reading the Trib's story today: Pittsburgh International Airport eyes Ohio market with ad blitz

It just gets me pondering the airport's recent history.  A decade ago USAirways' economic impact on the Pittsburgh region was arguably at apogee.  It was at or near peak employment here, in number of flights and just sheer Schlitz. There was angst, but also potential, over the potential merger of USAirways with United, a deal that would be disallowed.  The high level of angst probably lead to the brief groupthink that allowed even a moment of credulity to the Mystery buyer of USAirways that would be shown to be a hoax. Remember when one Emil Bernard was supposedly planning an $8bil offer to buy USAirways in the fall of 2001 despite having no known assets other than a house in NJ. I know leveraged buyouts were once all the rage, but that would have been a greater leverage ratio than even LTCM. 

How long is a decade?  Today the wikipedia entry for USAirways starts out with the description the company as a Tempe, AZ based firm.  Like.. ouch.  If you read through it in more detail you really have a hard time finding much of the Pittsburgh history that we all associate with the name "USAirways".  There is but a brief wiki entry for Allegheny Airlines that barely fills in the gaps.

What's it mean?  We have parsed that by some measures the October 2011 employment in the region was an all time high for an October ever.  The all time all time employment high in the region by the same data was actually June of 2001, not coincidentially contemporaneous with that peak USAirways employment.  So to consider the region's growth trend over the next decade, or lack of growth more honestly, you have to look at it in context to the freefall of what was at a point in time the region's largest private sector employer.  We could parse the "largest" or "private sector" in that statement some other time, it was clearly a large local employer that would shed a lot of jobs quickly.

Beyond the direct impact of the USAirways jobs here, did it matter?  It was a few years later in 2004 I tried to make the point that the economic research does not bear any clear connection between airline service and regional competitiveness.  Economists study literally everything somewhere, but you will be hard pressed to find someone who finds causality between expanded air connectivity and future growth.  It falls into that category of so often repeated things it takes on self-referential type of credibility.  There is correlation between air service and growth, for sure, but can you really not say that causality the other way around? i.e that growth increases service and not vice versa.  Which way it works makes a big difference for policy of course.  For Pittsburgh you have have to ask if we are typical or counterexample since clearly recent employment growth and population gains have correlated pretty strongly with ever decreasing airline service, certainly less connectivity that there was a decade ago.

So rereading the that 2004 PG article got me thinking of what is up with former PG biz writer Dan F. who's local stuff was always insightful and who left for the WSJ's Atlanta office.  Looks like he is now in New York City still working for the WSJ.  I suspect for a biz/finance writer, I would think covering Wall Street for the Wall Street Journal is a big step up.


Anonymous BrianTH said...

As I understand it, recently passenger volumes are up and relative fares are down, so I'd tend to agree the airport is not serving as a constraint on local economic growth.

That said, USAir driving out its competition on the Philly route and instituting monopoly pricing isn't good.

Sunday, December 18, 2011 8:43:00 AM  
Anonymous MH said...

Megabus could be about $50 or less to Philly. It takes six hours, but you'd save the drive to the airport and security so you'd really only be losing maybe three hours. Unless you happen to live in Moon or something.

Sunday, December 18, 2011 10:15:00 PM  
Anonymous BrianTH said...

Megabus is a welcome addition on routes like that for multi-day leisure travelers.

But it won't work as a substitute for business travelers who want their travel days to also be partial working days, including perhaps a same-day return. And when talking about possible constraints on economic growth, that is a significant problem.

Of course what we really need is a decent high-speed rail service--this is the precise sort of distance where that approach makes the most economic sense.

Monday, December 19, 2011 10:10:00 AM  

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