July 16, 2008

Erie International Airport Runway Extension Plans Remain Clear for Takeoff

By Jim Carroll, Erie Times-News, Pa.

Jul. 16--Airlines plan to ground planes and cut thousands of flights this fall, but turbulence in the aviation industry has not shaken plans for an $80.5 million runway extension at Erie International Airport.

The Erie Regional Airport Authority on Tuesday agreed to borrow $4.8 million toward its $6 million share of the runway project costs. Authority President Louis Porreco said the economic crisis now facing commercial aviation has not lessened the need for the 1,920-foot runway extension.

"Absolutely not," Porreco said.

Soaring fuel costs have put commercial airlines in an economic crisis, and many plan massive service cutbacks to try to at least slow their financial losses.

Of the air carriers that serve Erie International Airport, Continental Airlines said it will reduce seating capacity by 11 percent this fall; Northwest Airlines said it will reduce capacity by 9.5 percent; and US Airways plans an 8 percent cut in capacity.

But at least one nationally known expert said Erie International Airport should escape those impending service cuts this year. And Porreco said the airport's budget for its share of the runway costs allows for the possibility of cutbacks in 2009 and 2010.

Michael Boyd, a Colorado-based aviation consultant who has previously worked on air-service projects in Erie, said, "The bad news is that the airline industry is cutting back substantially this fall. The good news is that Erie has already had its cuts."

Boyd, in a phone interview, said he was referring to the loss in September of Delta Air Lines service to Atlanta, and US Airways service to Pittsburgh in January.

Boyd said there is no guarantee that Erie would not lose more service in the future, but no cutbacks are on the horizon now.

"As it stands today, Erie's schedule shows no further departure cuts or capacity cuts," Boyd said.

Boyd said there could be some loss of capacity on weekends and schedule tweaking, but he anticipates no loss of weekday service business travelers rely on.

And Boyd said the runway extension will be an asset. "That is going to help you."

Porreco, the airport authority president, said there is no reason to believe the airport will experience significant reduction in air-service capacity -- certainly nothing that would threaten the future of air service there.

Passenger service is important because the airport plans to pay its share of the runway project with passenger facility charges -- the $4.50 fee that the Federal Aviation Administration gives the airport for every passenger who boards a commercial airliner in Erie.

Porreco said airport officials put together a conservative spending plan -- one that allows for the possibility of a 10 percent reduction in passenger traffic in 2009 and another 5 percent reduction in 2010, and then only a 1 percent a year growth rate after that.

The budget is also based on the current $4.50 passenger facility charge, and not the $6 charge for which airports have been lobbying.

At a special meeting Tuesday, the airport authority approved getting a $4.8 million commercial loan from ErieBank. Terms give the board the option of tax-exempt interest rates: 4.17 percent for 36 months, 4.45 percent for 60 months or 5.02 percent for 132 months. Rates for the 36-month and 60-month options will be readjusted after those time periods end.

Authority member Sumner Nichols said the board decided to go with a commercial loan instead of a bond issue because of the favorable rate and the financial flexibility that it gives the airport. The airport authority will add another $1.2 million in passenger facility charge revenue it has accumulated to the $4.8 million loan to come up with its $6 million share.

Erie County Council has committed $21.5 million to the runway project. Erie County Economic Development Director Robert Spaulding said the next opportunity for council to take final action on that would be at its Aug. 12 meeting.

The FAA will contribute up to $48 million toward the project, and the state Bureau of Aviation has committed up to $5.7 million.


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