Airport to be debt free — for now
For the first time since 1992, Pittsburgh International Airport will be free of the suffocating debt that came with the construction of the midfield terminal. But it won’t last long.
The Allegheny County Airport Authority plans to pay off the remaining $77 million of debt, about half related to midfield, by the end of the year.
With board members giving the go ahead Friday, the authority will be retiring the vast majority of the debt five to seven years early, although a portion stretched to 2031.
But it is not doing so to rid itself of a burden. Instead, it is preparing for a new round of borrowing — to the tune of $1.1 billion.
Authority officials are clearing the decks so they can get ready to fund a billion-dollar modernization that includes the construction of a terminal for baggage claim, ticketing and security, CEO Christina Cassotis said Friday.
“We would like to start with a clean slate,” she said.
The midfield debt has been an albatross around the airport’s wings for the last three decades.
It led to Pittsburgh International having significantly higher per passenger costs than most other airports. Those high costs were cited as one of the reasons US Airways dismantled its Pittsburgh hub in 2004 and moved more flights to Charlotte and Philadelphia.
The authority, Ms. Cassotis said, will use mostly cash reserves to pay off the debt early. It will be reimbursed by the airlines over the next few years before the new debt kicks in related to the modernization.
Airlines now pay $10.35 to fly a passenger out of Pittsburgh. The authority has been using state gambling and oil and gas revenues to lower the cost, which was as high as $14.97 in 2011.
Ms. Cassotis said the airlines could see more per passenger cost reductions in the next couple of years because the authority won’t be making major capital investments in the existing terminal with the new project looming.
She also insisted that the billion dollar investment in the modernization, which is expected to be completed in 2023, should not significantly boost costs to the airlines.
“We expect the cost to be similar to what we have now,” she said, based on costs being adjusted for inflation.
That would apply whether the authority was investing in a new terminal or making major upgrades to the existing landside building to make it state of the art, she said.
With the opening of the new terminal, the landside building will be closed and slated for repurposing or demolition.
As she has said in the past, Ms. Cassotis expects the $1.1 billion price tag for the modernization, which includes a new parking garage and new roadways, to increase.
Just how much is still to be decided, she said.
The authority is working with the airlines to determine final costs and how they will be allocated. It hopes to have a new long-term lease agreement signed with the carriers by the end of the year.
As for the status of the talks, “It’s not perfect but it’s going well and we’re hopeful that we can get an agreement soon,” Ms. Cassotis said.
“The art of this is getting a deal everyone can live with.”