Gates are at Core of Airport Battle

The four airports out of a list of 100 airports* that saw the greatest decrease in fares. Southwest Airlines began operating in the Philadelphia market in May 2004. In order of percentage change in average domestic itinerary fare** from 2d quarter 2000 to 2d quarter 2007:

U.S. Average Domestic Itinerary Fares                   Pct. Change       Pct. Change

Airport/City Name                 2Q 2000 2Q 2004 2Q 2005 2Q 2006 2Q 2007       2000-2007         2006-2007

Philadelphia                    $421.74    $322.07     $289.64     $331.74     $309.88          -26.5                 -6.6

New York JFK, N.Y.                 460.03     284.61     292.06     341.80     335.57            -27.1                 -1.8

Pittsburgh                          417.99     347.40     319.96     333.91     299.30          -28.4             -10.4

Denver                             442.37       323.92     335.82 334.19     311.62          -29.6                 -6.8

U.S. Avg. Dom. Itinerary Fare     346.35       309.56     306.75     341.75     326.22              -5.8                 -4.5

*List of the top 100 airports was based on 2006 U.S originating domestic passengers.

**Fares based on U.S. domestic itinerary fares, round-trip or one-way for which no return is purchased. Averages do not include frequent flier fares.

Source: Bureau of Transportation Statistics

An ugly, long-simmering dispute erupted last week over which airlines get to use certain boarding gates at Philadelphia International Airport. It's a controversy that can be explained best as a simple fact of life at all big airports:

The more gates an airport has, the better are the chances that airlines will compete vigorously with one another, leading to lower fares.

There's no better example - anywhere in the country - than the way some ticket prices plummeted and passenger counts soared in Philadelphia after Southwest Airlines arrived in 2004. Southwest started with just four of the airport's 120 gates but would not have come, it says, without assurances of getting many more.

Against this backdrop, the dispute exploded last week when US Airways threatened to abandon its dream of flying between Philadelphia and China and to reduce flights to Europe next summer if the airport allowed Delta Air Lines to move from four gates in the airport's Terminal E to three gates in Terminal A-East.

At stake for travelers may be lower fares and a wider variety of carriers in Philadelphia, perhaps at the near-term cost of expanded global service for this region.

US Airways has tried for the last 18 months to stop Delta's move, which it contends will create an unworkable shortage of gates in A-East, one of only two concourses with access to the federal immigration facilities that inbound international travelers must clear. A-East has housed both domestic and international flights since it opened in 1991.

Without more control over A-East, US Airways says, it will be unable to operate a flight to Beijing starting in 2009 and 20 or more flights to Europe each summer.

US Airways leases 68 of the airport's domestic gates, all of those in Terminals B, C and F. It also has access to 17 gates for international flights in the A-East and A-West concourses.

"We looked at the logistics of bringing in the China flight in the late afternoon," when other Europe-bound aircraft also are at its gates, said Andrew Nocella, US Airways senior vice president for planning. "As we looked, we didn't see a place to park it."

US Airways president Scott Kirby, speaking to reporters and industry analysts in late October, cast the airline's situation in stark terms for the region: "We've been up-front for a while with saying that we wanted to grow international service in Philadelphia, and we made a compromise with our operation this summer. . . . We wanted to demonstrate our long-term commitment to the city and to turning Philadelphia into a true international gateway."

US Airways' threat brought an angry response from Sen. Arlen Specter (R, Pa.), one of dozens of regional leaders who wrote letters of support to federal officials that helped the airline win the China route in September. Specter said he told US Airways chief executive Douglas Parker in a meeting in the senator's office that the airline's gripe "sounds like extortion."

Delta's move was its own idea because it will be renting less space and will be getting space inside security checkpoints for a Crown Room membership lounge, spokeswoman Susan Elliott said. Delta has told customers and employees that the move was scheduled to take place overnight between Wednesday and Thursday.

The airport's steadfast commitment to Delta's move flows out of a long-term plan that the airport was required by the U.S. Department of Transportation to draw up in 2000 to demonstrate that it was trying to increase competition among airlines. The plan was updated annually through 2004 and is available on the airport's Web site,

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Philadelphia International was among just a few dozen big airports required to have the plans because it was identified as a "fortress hub" of US Airways. The designation means that the airline's size - US Airways has long had almost two-thirds of the flights and passengers here - gave it such market power that it kept fares high and competition limited in the 1990s.

As part of Philadelphia's competition plan and other pledges, the airport promised to build more gates to encourage low-fare service and to no longer let carriers hang on to gates if they used them only a few times a day. The construction of the A-West international terminal and the addition of four gates in Terminal D now used by AirTran Airways are among the plan's goals that have been accomplished.

Ironically, one small carrier the plan was meant to help was America West Airlines, then a bit player here. Today, the Arizona carrier is on the other side of the fence after merging with US Airways in 2005 and saving it from bankruptcy liquidation.

The airport's competition plan also envisioned drawing more airlines with a "hardstand" ramp area, in which planes would park 1,000 yards from the terminal and load or unload their passengers using the airport's large, high-level buses called passenger transport vehicles.

But hardstanding planes is one of many relief proposals by the airport that US Airways has rejected, saying it would diminish the quality of its service.

The most important aspect of Philadelphia International's competition plan was to replace an agreement, first signed in 1974, that gave major airlines 30-year leases on gates in exchange for a promise to cover all the airport's capital and operating costs.

A new use-and-lease agreement with the airlines, signed in 2006 after two years of negotiation, gives the airport control of all 120 gates. Now it leases them for months at a time to one carrier or makes them "common use," available to all carriers.

Southwest Airlines entered the picture in mid-2003, when it let airport director Charles J. Isdell know that it would bring its lower fares and frequent flights to Philadelphia if it could get the gates it needed.

Within months of starting service in May 2004, Southwest was leasing eight gates - its initial four in Terminal E and four in Terminal D that formerly belonged to US Airways and Continental Airlines.

Ron Ricks, Southwest's executive vice president for airports, law and public affairs, recalled last week that the airport had two other plans on the drawing board that clinched Southwest.

One is a major project, now underway and scheduled for completion in mid-2009, to create a single 14-lane security checkpoint for Terminals D and E, new ticket counters and a food-and-retail area just past security. With that, passengers connecting from one Southwest flight in D to another one in E won't have to clear security again in E, as they do now.

The second project, to add a semicircular extension to the end of the E concourse, won't be completed until 2010 or later. When it is, Southwest will give up its D gates and have 13 gates available to it in E, providing room to grow beyond the 67 flights to 19 cities it will have next spring, Ricks said.

"It would give us the capacity to double our schedule, which we intend to do," he said.

US Airways has spent recent months trying to persuade Isdell and political leaders to stop Delta's move, arguing that the region benefits more from being an international gateway than it does from having more domestic flights by discount airlines. If the airline can't efficiently operate flights to China, Philadelphia will miss out on business with the world's fastest-growing economy, US Airways officials said.

Airline executives also point out that US Airways has made a long-term commitment to Philadelphia, agreeing to support the overhaul and expansion of its Terminal B-C complex in the late 1990s, the construction of A-West a few years later, and other projects, at a cost of more than $1 billion. The airline receives roughly a quarter of its revenue from the Philadelphia hub.

But the city is sticking to its long-range plan.

"I hope US Airways is not not going to go to China as a punitive measure to the Philadelphia community," Isdell said. "We're just trying to be fair to all our carriers, with great deference to US Airways. But they can't have their way all the time."

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