ICYMI: Flying High in the Steel City

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1:44Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Hey, last in March, just a few months ago, I was flying from New York City to Pittsburgh. I landed at Pittsburgh's airport. I noticed a couple of things. One was that there was a lot of construction going on. The whole thing was under construction. The other thing I noticed was there were signs for British Airways and Iceland Air. And I was thinking to myself, why are British Airways and Iceland Air flying into Pittsburgh?

2:22Christina Cassotis:Iceland is in a lot of people's bucket list, but you're right. You wouldn't think of it in not a major airport. Well, it wants to be a major airport, and that's exactly why we're bringing in Christina Kasotis, CEO of the Allegheny County Airport Authority. It's the agency that oversees developments at Pittsburgh International Airport and Allegheny County Airport. She joins us this afternoon. Christina, good to have you on the program. You're at the airport right now in Pittsburgh. First, give us an update on construction. When is this going to be done? Well, first of all, Tim and Isabel, thank you for having me.

2:55We will be done with construction in October when we open to the public the new terminal. So how do you think about Pittsburgh's place geographically and as an airport getting customers outside of the United States to Canada and to Europe? How do you view it as doing that? So first of all, you know, we are a medium-sized market in the United States, and we've got a pretty significant global community here with a number of Fortune 500 companies based, and we think that it's critical to get out into the rest of the world and to connect with the rest of the world. So we have a real effort to make sure that we have the right air service to do it.

3:41I was listening to you talk about British Airways and Iceland. They are actually they've been here. B.A. was here way back in the days of the hub and getting them back made a whole lot of sense. And we keep looking for more expansion opportunities for other airlines to serve our global market.

3:59Christina Cassotis:I'm looking at videos and it looks fantastic. And upon doing my research, you also read that your airport is the first major U.S. airport powered by its own natural gas and solar microgrid. So can you talk to us about how these energy initiatives fit into your long-term vision and why did you decide to do this? Yeah, thank you so much for that question. I think we're the only ones in the world, just to be candid. We decided about five years ago after Atlanta went down for the day and then LAX had a significant disruption in service and had to discontinue operations for a period of time, that since we have the Marcellus Shale, one of the largest natural gas deposits in the U.S., literally under our feet, we actually extract natural gas on site here at the airport, that we should use it to power our own microgrid so that we could have resiliency and redundancy.

4:50And if anything like what happened at Lutton and Heathrow happened in Pittsburgh, we would be able to go into island mode and completely operate on our own. And that's what's happened. And we've been successful with this for four years now.

5:03Christina Cassotis:Does this mean you'll be more isolated when it comes to shortages and outages and all those disruptions that we've been seeing in all major airports around the world? Yes, yes, yeah. So after London, then there were outages in Spain and Portugal. That would not happen here. Not only that, but our microgrid completely powers our airfield, four runways, all the taxiway and runway lights, the terminal, our hotel, and our gas station. And one of the things that happened when Spain in Portugal had their outage is that people could not pump gas. Turns out you could do that here if it ever happened, if the grid really had a major failure.

5:39So we are energy independent. It allows us to be resilient. It has helped us create site-hardened infrastructure. And it's something we're really proud of and look forward to other airports doing throughout the world, because when one airport goes down, it affects everybody. You know, I'm interested in the status of Pittsburgh as a hub airport. I think people who remember years ago was a U.S. Airways hub. I believe too many years ago, TWA had some sort of hub at Pittsburgh, but we're talking ancient history here. Are you actively trying to get airlines to make Pittsburgh a hub again? No. Why not?

6:20It doesn't. Well, because it doesn't. The major airlines in the United States have picked their hub markets. They tend to be very large cities. The way that airline economics work, airports are not why airlines serve you as a city. It's because you have a market. And we have a great global market where there's a lot of air traffic, but it doesn't necessarily support a hub airline. Now, do we have a lot of activity at this airport? Yes, but we serve an origin and destination market. So people begin and end their trips here as opposed to connect through. We certainly have the infrastructure for a hub.

7:00And if an airline ever wanted to come back, we would be thrilled to have them and we have the space. But becoming a hub again is not our future necessarily. Becoming a really strong origin and destination airport like Tampa or San Jose or Portland, Oregon, that's a different business model. And we're doing a really good job succeeding at that.

7:23Christina Cassotis:We've heard from airlines that travel demand remains strong, but we have constraints like labor shortages, capacity constraints, and inflation. Those are all ongoing issues. What is your outlook in the next, say, 12 to 18 months for the sector, particularly to mid-sized airports like yours? Well, I think, first of all, your sources are spot on. You know, of aircraft manufacturers being able to deliver aircraft in a timely manner, engine manufacturers doing the same. There are headwinds in the economy that, you know, a lot of global leaders, including Ed Bastion, have called out saying that, you know, we've got a notable reduction in a non-receptionary environment.

8:14I think that's the language that he used. So what do I think? I think that travel always bounces back. and I have seen travel called DOA so many times in my career, I can't even count. After the Gulf War, after COVID, after 9-11, everybody says, oh, this is it. We're all going to be video conferencing. And travel always comes back stronger. People still want to travel to see loved ones, make business deals. And there's a significant part of the world that hasn't traveled yet. So I think that we will continue to see travel grow despite any short-term impacts due to capacity and or inflationary constraints.

8:55Christina, thanks for joining us. Love talking air travel, love talking airports. I know it is in your DNA, so we really appreciate you joining us. Please do come back soon. That's Christina Kasotis, Chief Executive Officer of the Allegheny County Airport Authority. It's the agency that oversees developments at Pittsburgh International Airport and Allegheny County Airport. I also had a really good hamburger, Isabel, at the Pittsburgh airport.

9:17Christina Cassotis:You have a lot of experience in Pittsburgh. Well, it was 24 hours. And all I got to do when I was there was go to the airport, go to the hotel, do this shoot, then go back to the airport. So the only meals that I actually got to eat were at the airport. Sometimes that happens.

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