Thursday, March 15, 2012

Rust Belt Disconnect

Pittsburgh is dying. Don't pay attention to the hype. Livable Pittsburgh is increasingly isolated. Airline deregulation is crushing the renaissance in Southwestern PA:

Pittsburgh is another example of a major city whose culture and economy is increasingly determined not by its underlying fundamentals but by the dictates of an ever more concentrated, yet failing, airline industry. After it lost most of its steel industry in the 1970s, the city did everything the apostles of the so-called new economy said must be done to compete in the emerging global economy. When the city played host to the G-20 Summit in 2009, President Obama hailed Pittsburgh’s transformation “from a city of steel to a center for high-tech innovation—including green technology, education and training, and research and development.” That same year Forbes named Pittsburgh one of America’s best cities for job growth, while the Economist lauded its cosmopolitan cultural amenities, such as the topflight Pittsburgh Symphony Orchestra and the Pittsburgh Opera.

But Pittsburgh’s renewal as a vibrant, creative, international city is now in doubt, due to the downscaling of its international airport, which now stands largely empty. Pittsburgh International was able to offer more than 600 daily nonstop flights after the city went deeply into debt to turn it into a showcase during the 1990s. But when US Airways merged with America West and concentrated its hub operations in Philadelphia and Charlotte, Pittsburgh service tumbled. US Airways’s daily flights have plunged from 542 to sixty-eight, causing the shuttering of half the gates at the airport as well as sections of two concourses.

K&L Gates, one of the country’s largest law firms, used to hold its firm-wide management meeting near its Pittsburgh headquarters, but after flying in and out of the city became too much trouble, the firm began hosting its meetings outside of New York City and Washington, D.C. The University of Pittsburgh Medical Center, the biggest employer in the region, reports that its researchers and physicians are increasingly choosing to drive to professional conferences whenever they can. Flying between Pittsburgh and New York or Washington can now easily take a whole day, since most flights have to route through Philadelphia or Charlotte. A recent check on Travelocity showed just two direct flights from Pittsburgh to D.C., each leaving shortly before six in the morning and costing (one week in advance) $498 each way, or approximately $2.62 per mile.

Emphasis added. Wow. Where do I start? I picked up on this story via Aaron Renn's Twitter feed. Referencing the above piece, Carol Coletta (ArtPlace) commented: "This is the most serious challenge for mid-size cities in U.S."

If this bit about Pittsburgh is indicative of the troublesome trend, then Coletta's comment comes across as hyperbolic. I would go so far as to call it a red herring.

The authors of the article in The Washington Monthly toil for the New America Foundation. The best thing I can say about the analysis is that it works as a polemic. But the assertion about Pittsburgh's renewal now in doubt is bunk, unsubstantiated.

Back in the world of data-driven analysis, Pittsburgh is enjoying record job growth. Best ever. The regional workforce is hitting historical highs. I'm not about to start wringing my hands over airline deregulation.


Anonymous said...

I don't want to be overly cynical but the media as a whole just doesn't pick up on the meaning of things. This is why they just stick to just helping find and present information and leave out the "here's what it means" portion.

In this case, the hub and spoke system died when the Y-fares died. And that was more or less at the time of the bursting of the tech bubble. A decade later, despite everything that's gone on the media as a whole still dwells on hub and spoke.

Pittsburgh does have some challenges because of the death of it's hub. But those are two things that are not huge deals to the region as a whole :
1) They're not going to be able to attract jobs that are heavily dependent on having a slew of flights everywhere. The problem with that being much of a problem, so to speak, is that they weren't likely to get them. Those sort of jobs even when PIT was a US Air hub more likely to choose being located next to DFW or Hartsfield or DEN.
2) Airport bond payments - If they've borrowed a lot to finance those expansions over the years and still owe money on those bonds, the airport authority could be struggling.

Neither of which I see as being a a huge deal for metro Pittsburgh as a whole. Especially when Google, just google "direct flights from PIT", makes it easy to see that PIT still has a butt ton of direct flights. They may not be a hub but they still have 30 direct flights within the US plus Toronto.

Jim Russell said...

Anonymous 12:56PM, I greatly appreciate your comments. Thanks for bringing up some of the problems Pittsburgh does face concerning the airport.

BrianTH said...

I agree the airport authority's construction bond payments are a real issue (although one which gambling money, refinancing at lower rates, and simply time are helping with).

Otherwise, aside from a few anecdotes as in this article, I see little reason to believe the airport is not accommodating the flight demand that actually exists. Which means that although the airport is not a prime driver of economic growth, as it was once hoped it would be, it is not a constraint on economic growth either, as is amply demonstrated by the relevant statistics.

Mihir said...

It's funny how the article argues that the dismantling of hubs in Rust Belt Cities are hurting them, but doesn't mention that even smaller Sunbelt or Sunbelt-like cities like Nashville, Raleigh-Durham, and Columbus lost their hubs and seem to be doing fine. I agree - it's a red herring.

Of course these are highly educated state-capital/university towns that have grown up and moved up the value chain from being just another Baton Rouge, Columbia (SC), Lincoln (NE), or Tallahassee, but the point is that losing their hub didn't kill them.

Austin never even had a hub to speak of.

Jim has mentioned connectivity being more important for mid-sized cities like Pittsburgh, rather than having to have a hub (e.g., PIT-Dulles flights that build on Pittsburgh's deep connection to NoVA and can tap into overseas flights). To that extent, what metros in the 1,000,000 to 3,000,000 or so range can do is maintain and develop strong air links to large, global business centers like NYC, Boston, DC, Chicago, SF, LA, DFW, Houston, Atlanta, Seattle etc. In that regard I think Pittsburgh is doing just fine.

Also, I'd say we're at a point economically where, the Chiquita Cincinnati-to-Charlotte story notwithstanding, local business development will drive the attraction of more flights as much as the other way around. A good example is how the Greenville and Charleston, South Carolina areas successfully recruited Southwest Airlines because both metros had done the hard work of developing robust local economic bases. That means cities like Pittsburgh should continue to work on building their economic base, and the airlines will follow.

Just as Jim argues that companies wanting to hire talent may locate closer to "talent generators" like Pittsburgh rather than move them to "talent magnets" like Silicon Valley or Austin, airlines are currently going after business travelers wherever they are, rather at least as much as businesses are relocating to cities where there are already lots of flights. Why do you think Southwest Airlines has pretty much moved beyond serving secondary airports in congested markets to now competing directly in congested airports with lots of business travelers? They are busy going after traffic in Boston and New York as much as they used to go after Providence and Long Island.

Anonymous said...

The failure of midwest hubs (is Cleveland's Continental hub a closure waiting to happen?) shows the need for better rail service. If we had passenger rail between Cleveland and Pittsburgh airports, for example, the not-quite-full direct flights that each now has might be a lot easier to retain.