Local leaders say they don't expect to spend $9 million they promised to Delta Airlines should its new Pittsburgh-to-Paris route fail to live up to expectations.
"The subsidy that everybody's blowing on I would analogize to life insurance on a healthy 20-year-old," said Airport Authority Chairman Glenn Mahone. "You're probably not going to have to pay off."
Delta on Thursday announced that it will begin offering year-round nonstop service five days a week to Paris from Pittsburgh International Airport beginning in June.
The service will be assessed after the first year, and Gov. Ed Rendell's office and the private Allegheny Conference on Community Development each offered to pay Delta as much as $2.5 million through June 2011 should Delta fail to make its revenue projections. Each has pledged up to an additional $2 million in the third year, although Allegheny Conference CEO Michael Langley said if the service struggles in the second year, there likely would be no third year.
Nevertheless, Langley and Mahone say they expect the flights to be self-sustaining.
"Delta is taking a significant amount of risk by coming in," Langley said. "We in the private sector say, 'We understand. This is a deal we're willing to invest in.' ... (It) is absolutely the right kind of investment we should be making to move this region forward."
But airline promises have fallen short before.
Pittsburgh International Airport, built to US Airways specifications in 1992, is twice as large as it needs to be given that airline's two bankruptcies and dramatic downsizing. On the international front, Northwest Airlines and partner KLM trumpeted a Hartford-Amsterdam route in July 2007 that they cancelled after 15 months. Connecticut authorities had reduced landing fees and offered $650,000 in marketing and advertising to the carriers.
"We've all been there before,"said Charlie Leocha publisher of Tripso.com , a Web site of travel news and commentary. "US Airways made lots of commitments to Pittsburgh. Any time an airline makes a commitment to you, hang on to your municipal wallet. They have a way of setting up systems that end up biting the airport authority or the municipality."
Even so, international service is looking increasingly promising to major U.S. airlines, Leocha said. Despite an industry on track to lose at least $5 billion this year, amid volatile fuel prices, major U.S. carriers over the past year have shrunk their domestic networks, while growing international flights.
"The legacy carriers have all determined that long-haul international routes are their bigger money-maker," he said. Fuel costs per passenger tend to be less on longer hauls. Ground crew jobs internationally are the responsibility of airports, not carriers.
And, he added, "at present there is no low-cost competition (such as Southwest Airlines) for trans-Atlantic flights."
US Airways, which until November 2004 connected Pittsburgh with London and Frankfurt, will begin flying from Philadelphia to Birmingham, U.K., and Oslo, Sweden, in May, and to Tel Aviv in July. Atlanta-based Delta is offering the Parisian routes as part of a seven-month-old joint venture with Air France, which will connect passengers to other cities in Europe.
The news occurs one week after Delta became the world's largest airline through its $2.8 billion acquisition of Minneapolis-based Northwest Airlines.
The merger gives Delta more flexibility in deploying aircraft for the new routes, said Steven Lott, spokesman for the International Air Transport Association in Washington. It recently announced new routes to Lyon, France; Mumbai, India; and three medium-sized cities in Brazil.
"But the challenge for any airline is to expand into new markets at a time when we face a drop in traffic and a global recession," Lott said.
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