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LOSS OF AIR SERVICE BETWEEN PITTSBURGH AND LONDON
Tuesday, October 12, 1999
House of Representatives, Committee on Transportation and Infrastructure, Washington, D.C.
The committee met, pursuant to call, at 11:32 a.m., in the Pittsburgh International Airport, Airside-Concourse C, Gates 59 and 61, Pittsburgh, Pennsylvania, Hon. Bud Shuster [chairman of the committee] Presiding.
The CHAIRMAN. This hearing will come to order. We certainly want to thank everybody for providing us the opportunity to come here to Pittsburgh to learn as much as we can about what I consider to be an extremely important issue.
Last August, British Airways announced that it will be ending its flights between Pittsburgh and London on October 31st, the last British Airways flight for London will depart from Pittsburgh. This will end a vital air link between Western Pennsylvania and one of our most important international destinations.
US Airways has said that it's prepared to assume the responsibility for providing this service. Unfortunately, it's blocked by the restrictive bilateral aviation agreement between the United States and Great Britain, an anachronism if I have ever seen one.
Instead, the route rights will be transferred to Las Vegas, and Virgin Atlantic will fly from Las Vegas to London. Under the bilateral, both U.S. and Great Britain have the right to switch a route.
With many other nations in the world the U.S. has an open skies agreement. In fact, we have an open skies agreement with over 20 nations, and open skies or nearly open skies agreements are being put in place for about 38 countries around the world.
The British continue to hold the restrictive agreement, known as Bermuda II. Under Bermuda II, airlines are strictly limited in the routes they can fly. If there were an open skies agreement, US Airways would be able to fly from Pittsburgh to London.
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The lack of an open skies agreement is not only bad for Pittsburgh, it hurts consumers in both countries who have less air service, less competition, and higher airfares as a result. The British seem to cling to Bermuda II in order to protect the near monopoly position that British Airways has at London Heathrow.
The U.S. Department of Transportation, our Department of Transportation, should redouble its efforts to negotiate an open skies agreement, and it's time for us to get tough with the Brits on this issue in particular.
There is no reason in the world, since we are the largest market in the world, that we cannot, if forced, respond forcefully in order to bring them to the table to open up their skies. If they don't do that, the Department of Transportation should sit down with the Brits and negotiate at least a mini deal that would allow US Airways to fly from Pittsburgh to London.
I understand that our negotiators are scheduled to meet with the Brits on October 18th. The Pittsburgh to London route should be one of the highest priorities in that meeting, and we would certainly urge the Secretary of Transportation to do so. I've spoken with him personally about that, and we're please that we have representatives from the U.S. Department of Transportation here today.
Before I recognize other members of the committee for an opening statement, I would say that we're going to adhere to the committee rules and follow the five-minute rule. Each witness will be limited to five minutes of oral testimony but, of course, can submit a complete statement should he like to do so, and, likewise, members will be limited as well so that we can move along expeditiously.
With that, I'm pleased to yield to distinguished ranking member of our committee, Mr. Oberstar, from Minnesota.
Mr. OBERSTAR. Thank you very much, Mr. Chairman. It's a delight to join you and members of the Western Pennsylvania delegation. It's good to see you back in your original home area, born and raised out here, but a Pennsylvanian through and through. This is not the first time we have come jointly to the rescue of Pittsburgh. Once again, I'm honored to join with you.
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When Chairman called last week and said he would like to have a field hearing on this, and it was within hours of the announcement of the British government's decision to award service suspended by—terminated by British Airways to Virgin from London to Las Vegas, I knew the situation was serious. I readily agreed to join in. An in-depth review, once again, of the rather dismal relationship we have with the U.K.
Pittsburgh has too often been on the losing end of route decisions. In 1991, then I was Chair of the Aviation Subcommittee, but at the urging of the then ranking member Shuster and my good friend Bill Clinger and the Pennsylvania delegation, we advocated for US Airways to receive the designation of the U.S. carrier under the just recently negotiated U.S.-Italy bilateral to serve Pittsburgh, Milan, Rome. The other competing carrier, United, was advocating Chicago, Milan, Rome. They were advocating 747 service, USAir 767 service.
Our argument, Pittsburgh, Pennsylvania, and the Chairman, then ranking member Shuster all argued with me that if decisions are made to continually give lucrative international routes to the largest carriers in the American fleet, then indeed we will see the decline of domestic carriers as smaller carriers are deprived of lucrative, fast-growing, international service in favor of larger carriers who continually will dominate the airways.
Indeed the decision was made to award to United. Ultimately United abandoned the route. US Airways was deprived. We are determined that such decisions would not be repeated in the future.
The Chairman noted that the United States, under the Bush administration and under the Clinton administration, has negotiated some 38 open skies bilaterals with our air treaty partners. In each of those open skies bilaterals, American carriers have achieved more than 60 percent of the market share. The one market that we do not dominate is the U.S.-U.K. market because it is such a restrictive bilateral.
In the last year, service into the U.K., U.S. carriers transported over six and one-third million passengers, or a 37 percent market share. The U.S.-E.U. Market is annually a $20 billion market. The U.K. portion of it represents half, $10 billion of that market share.
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For a carrier as significant as US Airways and a market as important as Pittsburgh, the heart of the industrial land of America, be denied access to that market is shameful. We need a better bilateral with the U.K. We need to follow the model, at least, of the Netherlands where we have an open skies arrangement and where we have access to all of Europe. And it should be a bilateral which is fair, equitable, and open to all.
Now, I must also observe that when US Airways had the chance to add service between Pittsburgh and London, it chose instead to offer service between Charlotte and London. I hope that Mr. Wolf will discuss that matter when he testifies. That is very significant, and we are here to help. We are here to do all that this committee can under the leadership of our distinguished Chairman. I'm happy to be with him. Thank you.
The CHAIRMAN. Thank you.
Congressman Mascara.
Mr. MASCARA. Thank you, Mr. Chairman.
[Mr. Mascara's prepared statement follows:]
[insert here]
The CHAIRMAN. Thank you very much, Congressman. I want to emphasize when I say it's time to get tough with the Brits, I have a very high regard for Secretary Slater. When I urge them to get tough, I by no means want to suggest that I think previous Republican administrations have been tough enough. I think there's a long-standing problem here with both Republican and Democratic administrations, and now is the time for us to really exert our muscle.
And with that, I'm very pleased to recognize my good friend, Senator Santorum.
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TESTIMONY OF HON. RICK SANTORUM, A U.S. SENATOR FROM PENNSYLVANIA
Senator SANTORUM. Thank you very much, Mr. Chairman, and let me first thank you for holding this hearing.
When I wrote to you last week and called you last week once the announcement was made, I never suspected you would be able to respond so quickly in having this hearing at this time, and it just shows the true love that you have for this area and the true concern that you have for the future of the economy of this region that you would put this together in such a quick basis and respond to the need of this community.
As the ranking member noted, having been born and raised in Glassport, brought up here in Allegheny County, I know it's going to be very near and dear to your heart, so it's very impressive, and we congratulate you and thank you for doing this.
If there was any other chairman and any other committee, I would say that most of this would be dog and pony shows, but the fact that Bud Shuster—I would argue if not the most powerful chairman in the House but certainly one of the most powerful chairmen in the House and the committee that can get things done.
When he comes here and he says this, we sort of like the old, what was it, Paine-Webber commercials, when he speaks, people listen. To have you here and to put this high on your agenda I know is going to get the attention of those of the Department of Transportation, and to have this be a bicameral hearing where you have both senators—I know Senator Spector is not here, but I can tell you that he feels just as passionately about this as I do, so I speak on behalf of both of us.
It's also bipartizan. There is strong bipartizan support across the Pennsylvania delegation for a renegotiation of the Bermuda II agreement to get the kind of service that Pittsburgh deserves and, frankly, Pittsburgh desperately needs. We deserve it. We deserve it because we put an investment in this airport.
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Commissioner Dawida is behind me, and the County did a tremendous job, the State, the federal government in combination of a billion dollars has the best airport in America. Don't ask me, ask travelers, because that's what they rate this airport, the best airport in America. The best airport in America should have the best service in America, and we don't. There's only one thing we can do about that, and that is to appeal to our Department of Transportation to help us get that.
We've done our part here on a local level. We've also done our part here in the local level in investing in our economy and try to make it a global economy.
I can't tell you the number of people that I talk to from the Senate, and I'm sure Frank and Bud and others who talk to your colleagues that come through Pittsburgh, the first thing they say is,''Gee, this isn't the Pittsburgh we thought it was.''.
It's because a lot of people have worked hard and invested a lot to make this a town that is on the verge, in fact, I would argue even faster verge, is now participating fully in the global economy.
To do that, though, you have to have access to markets, and access to markets means not just Internet access, but also acces transportation-wise to provide the kind of services people need if they're going to have a global business. We don't have that here.
The ranking member, Mr. Oberstar, who I have a tremendous amount of respect for, hit the nail on the head. I can't tell you the number of times Senator Specter and I have written letters to the Department of Transportation asking for routes, not just for here in Pittsburgh, but for Philadelphia for US Airways. Time and time and time again they go to the, quote, major carriers. We get denied service here. That is not going to be healthy for the airline industry in the long term. It is not healthy for Pennsylvania and our economy.
So, again, to have you here and to be as supportive as you have been is just vitally important. This is absolutely necessary to raise public visibility for this issue, but also public pressure.
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I know some of my colleagues from the House, Congressman Klink and Congressman Doyle, are going to be up here. Again, I join with them to do whatever we can. And I think, Congressman Shuster, you're right. This has not been an issue that I can just point the finger at the Clinton administration any more than I can point to them on issues of trade, which I don't think they're being strong enough on. Republican administrations, whether it's open skies agreement, or open markets agreement when it comes to trade, have not be been tough enough in protecting our interests.
When the administration comes to us and says, Well, give us fast track, give us open markets, give us the opportunity to negotiate trade deals, I'm willing to do so; but I'm only willing to do so if they go to the table and they get tough and protect our interest in doing that.
This is, to me, very similar to what they're asking for when it comes to fast track. If you want credibility from the congress that you're going to go into these negotiations and get the kind of agreements that are going to be beneficial to this country and to the people working here, then you're going to have to prove to us that you're going to go there and negotiate in our interest, not negotiate in global interests only.
So, I am pleased, I'm encouraged, and I hope that this message today, this hearing today, will send a very strong, bipartizan, bicameral message to the Department of Transportation that it's time to get serious about opening skies and giving opportunities to men and women in this community who work darn hard and deserve it.
The CHAIRMAN. Thank you very much, Senator Santorum. We certainly appreciate your testimony. Do any members have any questions?
Mr. Oberstar?
Mr. OBERSTAR. I concur.
The CHAIRMAN. Mr. Mascara?
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Mr. MASCARA. I concur.
The CHAIRMAN. It was an excellent statement. Thank you very much.
Senator SANTORUM. Thank you, Mr. Chairman.
The CHAIRMAN. Our next witnesses are Congressman Ron Klink and Congressman Michael Doyle. Would you please come forward.
It doesn't seem quite right to be welcoming you to your own territory, but since it used to be my territory too, I would exert that privilege. We're happy to have you here.
Congressman Klink, would you like to proceed first?
TESTIMONY OF HON. RON KLINK, A REPRESENTATIVE IN CONGRESS FROM PENNSYLVANIA
Mr. KLINK. Thank you very much, Mr. Chairman. It is, first of all, a pleasure again to work with you on yet another issue. I remember how hard all of us, Ranking Member Oberstar and Frank Mascara and others, worked on the Pittsburgh to Paris route. It took a lot of work. It took some negotiations, first of all, in the treaty and then getting that gate space here for US Airways, and everybody worked on that long and hard together. It has beard fruit. Similarly, I think that this is something that is very much worth our effort.
I was very troubled when I first heard about the suspension of service between Pittsburgh and London on October 31st by British Air, because we have watched what has occurred here, which has been an incredible increase in the amount of usage of this flight. I was just looking at the figures for this year.
53 British-associated companies are doing business in Pittsburgh. From January to June of 1999, we had 52,000 passengers on the Pittsburgh to London flight. That's a 15 percent increase from the same period last year. Over six million tons of cargo were exported from Pittsburgh to the United Kingdom in the period from January to June of 1999. That's nearly an eight percent increase.
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The fact is that this is a regional airport. Whether the goods are coming into this airport or whether they're being shipped out of here, 50 percent of the United States is accessible from the Greater Pittsburgh International Airport by one-day truck route, once it gets here, by ground transportation.
We really serve the largest population base in this entire Northern American region, and they can get to the Pittsburgh airport, and it is a new, billion-dollar airport.
I was very troubled by the fact, first of all, we're living, as was said, under this Bermuda II agreement. We need to have an open skies agreement for the bilateral. To talk about the fact that now we're going to lose this for a Las Vegas to London route flown by Virgin Atlantic Airlines is really an insult. I'm very encouraged by what I've heard the Chairman, the ranking member, Mr. Mascara, and Senator Santorum say before us, we've got to work together to try to continue to encourage the administration to be stronger.
We know that in just a few days, October the 18th, the administration is going to begin negotiations with the British government regarding international cargo issues, and I think all these, Mr. Chairman and ranking member, should get together to make sure we encourage them to take full advantage of this and move farther toward an open skies agreement.
We've heard from more corporations, more companies than I have time to list here. We've heard from Carnegie-Mellon University. We've heard from government entities, the Pittsburgh Convention and Visitors Bureau. We have no idea how many jobs are going to be lost if this route is lost to us in the hotel industry and rental car company and restaurants and tourism business. We know there is no industry in this world that is a better value-added industry than tourism. We're starting to attract people, not only to Pittsburgh, but Pittsburghers want to go to London, and people from this region. This is something that we have to be able to work on.
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So, Mr. Chairman, in conclusion, I'll submit my whole statement for the record. This anti-competitive Bermuda II agreement must go. An open skies agreement must be reinitiated, and I encourage you and Mr. Oberstar to include us in whatever way you can to draw more members into this so we can push the administration. It sounds to me by the statements that Secretary Slater has made so far that he doesn't need pushed very far. I think he's on our side.
Thank you for the expeditious way in which you scheduled this hearing, and, again, it is always a pleasure to work with the Chairman.
The CHAIRMAN. Thank you very much. Congressman Doyle.
TESTIMONY OF HON. MICHAEL DOYLE, A REPRESENTATIVE IN CONGRESS FROM PENNSYLVANIA
Mr. DOYLE. Thank you very much, Mr. Chairman, and welcome back to Pittsburgh. I was just thinking if you would have stayed in Glassport, I wouldn't be here today.
The CHAIRMAN. If I might tell you, I got in trouble with some of my Republican friends some years ago when that kind of a statement was asked me in a press conference that if I were here perhaps I would be running against Joe Gaydos at that time. My response was, if I still lived in Glassport, I would probably be voting for Joe Gaydos. That's not out of your time.
Mr. DOYLE. We appreciate your being here, and thank you very much for holding this hearing and granting me the time to address these important issues. Your interest is important to a successful resolution of this critical issue at hand, and I trust that this hearing will prove significant in raising the profile of these matters to further encourage pressure for them to be addressed at the highest levels.
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And I also want to thank ranking member, Mr. Oberstar, for his interest and his presence here today, as well as my good friend, Frank Mascara, for his continuing support and aggressive efforts to organize this important hearing.
Mr. Chairman, we're here today because a tenable situation has developed in that our Pittsburgh International Airport and the hundreds of thousands of people that it serves throughout this large metropolitan area and beyond is in danger of being shut out from a basic service. Direct air service between Pittsburgh and London is scheduled for elimination at the end of this month, which is a hardship we should not have to tolerate.
This develops from a decision announced in August of this year that British Airways would terminate its daily nonstop service between London and Pittsburgh as of the end of this month after more than a decade of continuous operation.
Most recently the British government has apparently decided to discontinue all service from Pittsburgh to London, and as we all understand today, instead transfer that right to operate a route to Virgin Atlantic who will not reinstate Pittsburgh service but instead operate a Las Vegas-London route. This could mean a complete lack of direct Pittsburgh to London service, which is simply unacceptable.
We need to strive to continue growth throughout our region, and we are making great strides in revitalizing our economic and transportation infrastructure. An airport with frequent, convenient air service to a wide variety of both domestic and international destinations is essential towards continuing this growth.
The airport passengers and workers are both hurt when an important part of this service, in this case the route between Pittsburgh and London, is cut off. Adding to the frustrations is the fact that there's a qualified party ready and willing to take over the Pittsburgh to London service.
As we all know, US Airways has been seeking authority for several years to operate nonstop between Pittsburgh and London. They recognize that the route is economically viable and have a strong interest in providing this service.
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Just this past August, I joined with my congressional colleagues from Southwestern Pennsylvania in writing to Transportation Secretary Slater urging him to grant US Airways' application and then work to convince the British government to authorize the service rights. The personal involvement of Secretary Slater is critical because there is a larger national issue that surrounds our specific problems.
All questions regarding commercial airline service between the United States and the U.K. are governed by the Bermuda II accords, which were agreed to in the late 1970s. Unfortunately, the Bermuda II accords are now outdated and have proven to be severely anti-competitive as evidenced by the highly restrictive provisions which will prevent any U.S. carrier from serving the Pittsburgh-London market after British Airways ceases its service.
It has been suggested that the Bermuda II accords act merely to artificially restrict competition to protect British Airways. All consumers and U.S. airlines have an interest in having U.S. airlines share a level playing field with British airlines. As I understand it, even major British competitors, such as Virgin Atlantic, favor adjusting or eliminating Bermuda II provisions in order to open up travel between the U.S. and the U.K.
Mr. Chairman, I would suggest that the Transportation Committee that you so ably lead should seriously examine these accords and that you could play a critical role in guaranteeing that there's fair and open competition. Obviously, Secretary Slater and the Department of Transportation, a representative of which I'm happy to see is with us today, will also play a defining role.
Our government is scheduled to engage in discussions with the British government dealing with all international cargo aviation issues later this month. I would urge the secretary to bring the issues of further liberalization of the U.S.-U.K. market to the table, as well as specifically pushing for replacement of the Pittsburgh-London service, so our workers, consumers and communities will regain this vital air service link. All of our American air travelers, airlines, and industry-related workers will benefit from our strenuous efforts.
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I want to thank the committee for its indulgence, and, again, commend the Chairman for his timely attention for scheduling this hearing. I'm hopeful that this can bring about a more satisfactory resolution of this impending problem.
Thank you very much, Mr. Chairman, for being here today at our time of need.
The CHAIRMAN. Thank both you very much for your testimony. And I think the forcefulness of your testimony certainly demonstrates the 100 percent bipartisan support that there is behind this effort.
Mr. Oberstar?
Mr. OBERSTAR. I concur, Mr. Chairman. I am delighted to see the delegation united, as we always have been, on these issues and standing firm. We'll, under the Chairman's leadership, do everything humanly possible for Pittsburgh.
The CHAIRMAN. Mr. Mascara?
Mr. MASCARA. I concur that this certainly has been a bipartisan effort. And I want to thank my colleagues for being here today and providing testimony here today. I'm sure we're all on the same page, and thank you for your support.
The CHAIRMAN. Thank you very much. Thank you, gentleman.
The CHAIRMAN. Our next witness is Mr. Bradley Mims, the acting assistant secretary for Aviation and International Affairs, U.S. Department of Transportation.
Mr. Mims, thank you so very much for being with us today and please proceed.
TESTIMONY OF A. BRADLEY MIMS, ACTING ASSISTANT SECRETARY FOR AVIATION AND INTERNATIONAL AFFAIRS, U.S. DEPARTMENT OF TRANSPORTATION
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Mr. MIMS. Good morning and thank you, Mr. Chairman. Joining me here today is Mr. Paul Gretch. He's the director of the Office of International Aviation at the U.S. Department of Transportation.
Thank you, Mr. Chairman, members of the subcommittee. I appreciate the opportunity to discuss recent developments in international aviation, including those affecting our aviation relationship with the United Kingdom.
I would like to begin my remarks by noting that at the beginning of this decade, the aviation industry was in the midst of a terrible crisis. The U.S. airlines alone had lost about $13 billion during that period. Traffic growth had either slowed or stopped in many of our international markets, and most of our aviation relations were governed by restrictive bilateral accords. We were parties to no open skies agreements and to only a handful of truly liberal aviation regimes. I am pleased to report that we are fortunate to be in a much different situation today.
Nations around the globe have replaced regulation with liberalization. Liberal aviation regimes are now the norm. We are trading new rights and opportunities, not restrictions. Competition has increased in virtually all of our major international aviation markets, and we have begun to provide the aviation industry with the framework that it needs to meet the demands of international commerce in the 21st Century.
These are major changes to the structure of the aviation industry, and they are already producing enormous public benefits. Our aviation industry is growing, prospering, and innovating at unprecedented levels. Our aviation markets are growing. Since 1992 traffic between the U.S. and foreign destinations has increased by 35 million passengers; service by U.S. airlines in those markets has increased by 161,000 flights, and consumers paid about 17 percent less for commercial air service than they did in 1992.
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Our economies are growing rapidly as civil aviation is beginning to move toward its full potential as one of the world's principal engines for economic development.
Our important trade and tourism industries are growing as increased airline activity has helped spur an enormous increase in worldwide travel, tourism, business activity, and new markets for goods and services. Consumers have much better service and freedom of choice. Our airlines have much greater freedom of opportunity.
In short, we have made enormous progress in creating fair trade and international aviation services in recent years, and we're very proud of that record. And we have done that together. We've done that between the Congress with the administration and people in the various communities around the country. We are very, very proud of that. The joint efforts have paid rich dividends.
Since President Clinton assumed office, we've signed over 70 new aviation agreements. Each agreement removed limitation on airline activity in the markets covered by the agreement. Many of these agreements represented major liberalizing initiatives to remove restrictions on airline operations. 38 of the current U.S. agreements established open skies immediately or in a phased-in basis, and 14 are European open skies agreements serving over 20 million passengers.
Move to the U.K. Our aviation relationship with the U.K. stands in stark contrast to the worldwide trends toward aviation liberalization. Indeed, it is one of our most restrictive aviation relationships. Its basic principle, now more than 50 years old, is that government should protect their airlines from competition at virtually all costs. This principle, of course, is the essence of Regulation 101 and managed trade. Both have been soundly rejected by virtually all modern economies except for the United Kingdom in this important sector.
They ignore the needs of the people and pose unjustifiable costs to our consumers and airlines and to deny U.S. communities the enormous benefits that improved service and competition would bring.
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Just look at the impact the outdated U.S.-U.K. relationship has had on many of our communities. St. Louis and Dallas-Fort Worth cannot receive service to London's Heathrow Airport. Continental can't provide its home airport, Newark, service to Heathrow although its competitors can. Delta cannot provide its home airport, Atlanta, with service to Heathrow. United cannot enter the Denver- London market. American cannot provide San Jose with service to London. And now US Airways cannot provide Pittsburgh with service to London.
Mr. Chairman, I would basically say the situation here at Pittsburgh is a poster child for the evils of Bermuda II. I mean, you can't imagine that the situation where foreign airlines stop service to a U.S. city where a willing domestic carrier can now replace it. That's just not acceptable. We hoped that a proposed alliance between American Airlines and British Airways would create an incentive for—.
The CHAIRMAN. Mr. Mims, while I'm going to adhere to my five-minute rule, I'm going to yield to you three of my five minutes—.
Mr. MIMS. Thank you, Mr. Chairman.
The CHAIRMAN. —because what you have to say is so important.
Mr. MIMS. Thank you, sir.
However, as you know, that liberalization has yet to occur. In light of the British inability to develop a negotiating position earlier this year, we dismiss the American Airlines-British Airways request for antitrust immunity. We remain committed to eliminating the hardships created by our outdated, 1977, vintage Bermuda II aviation agreement with the British.
I know that British Airways has announced that it will drop the Pittsburgh-London nonstop service at the end of the month. I know that Pittsburgh is struggling to cope with the potential effects of the loss of that service. I appreciate the efforts of so many civic leaders to deal with that situation.
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The secretary and I will continue to work with them and others to open the U.S.-U.K. market and to find solutions to problems faced by communities like Pittsburgh under the existing U.S.-U.K. aviation regime.
Secretary Slater is committed to this approach. He has met with Deputy Prime Minister John Prescott on two occasions this year to discuss both the benefits of a new aviation agreement and the huge costs imposed by the existing ones. He has emphasized these points in supplementary contacts with U.K. officials, and I have reemphasized them as well.
Moreover, in dismissing the immunity application filed by American and British Airways, Secretary Slater called on the British to continue to work with us to liberalize our aviation relationship.
As has been mentioned before, we will re-engage with the British on the subject of aviation liberalization. In September, the British created a new opportunity for all-cargo service between Prestwick and third countries. The British have also discussed the possibility of a more liberal U.S.-U.K. aviation all-cargo regime, a regime that will benefit our shippers, our communities and airlines, such as Fed-Ex, Polar Air Cargo and UPS.
Next week, Paul Gretch and Mary Street of the DOT staff and our representative from the State Department will be meeting with their U.K. counterparts. That meeting will focus on the U.K. all-cargo proposal, but the British have agreed to review with us the prospects of moving forward on all aspects of our relationship.
You can be sure that we will be pressing our case for the elimination of restrictions on airline opportunities in the U.S.-U.K. You can be sure that we will be pressing our case for an aviation regime that allows Pittsburgh and other U.S. communities to receive this service that they need and deserve. Specifically, we will press for ways to restore now Pittsburgh's service to London.
At this early stage, I can't predict the results of our new contacts; however, I can assure the committee that Secretary Slater and I are committed to the goal of liberalizing this relationship.
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In conclusion, we're proud of the successes we've achieved; however, we have not lost sight of what remains to be done, in particular with the U.K., our friend and ally in so many other spheres.
Thank you, Mr. Chairman. I would be pleased to answer any questions.
The CHAIRMAN. Thank you very much. I hear you clearly saying that Secretary Slater will put Pittsburgh to London on the agenda in the upcoming meeting. My question is, will that be a priority item on the agenda?
Mr. MIMS. Mr. Chairman, as far as I'm concerned, it will be a priority item on the agenda.
The CHAIRMAN. Thank you very much. And let me point out that while we are certainly pleased with your testimony and the efforts of the administration, we do have an aviation vehicle moving through the Congress right now called Air 21. I have instructed my staff to look at Air 21 and see if, indeed, once you use your best efforts to bring about some more freedom in the skies with Great Britain, if we fail to do that, it's time for us to look at legislation to see if there are other ways in which we can get Great Britain's attention.
I assure you that I will use whatever capability that I have, and I'm sure my colleagues will join me, to use Air 21, our aviation legislation, as a vehicle to get Great Britain's attention, if that's what it comes to. I hope it doesn't, but I won't be a bit bashful about proceeding in that direction.
Thank you very much.
Mr. Oberstar.
Mr. MIMS. We appreciate that, Mr. Chairman.
Mr. OBERSTAR. Thank you, Mr. Chairman. I appreciate very much your statements. It's good to see Mr. Gretch since he's the negotiator here with you. Thank you for being here on behalf of the secretary. It's a very strong statement. I know the secretary is firmly committed to tough negotiation. He, indeed, broke off negotiations with the British when they refused to budge in the past. Of course, this had an adverse effect on British carriers as well as on U.S., but I think it's important that we stay firm.
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In looking at the overall market between the U.S. and the world beyond in a broader sense, do you have any figures on what has been the effect on Pittsburgh of the expanded bilaterals that we have negotiated in this administration service from Pittsburgh to other points than the U.K. and Europe?
Mr. MIMS. I don't have those figures, but I will get them in very due time, Mr. Oberstar.
Mr. OBERSTAR. I think it will be useful to show.
Mr. MIMS. I'm working on that right now.
Mr. OBERSTAR. Looking closer at this market, Pittsburgh and U.K., E.U., there are some 32 million passengers annually between the U.S. and Europe, of which 15, 16 million are between U.S. and the U.K. Within that market, Pittsburgh's share has been-- these are approximation numbers because they're not firm yet for 1999—but 108,000. Of that, 106,000 go to Gatwick and only 348 to London Heathrow.
I think there's a very clear message that British Airways was providing service but not to the prime distributional airport in London. Will you make—you or the secretary—make that issue a key cornerstone of your negotiation with the British?
Mr. MIMS. We do intend to do so. That has been one of the sticking points that we've had with the U.K. overall is British Airways' reluctance to give up slots at their premiere airport.
Again, in an effort to create greater competition in the international sphere with our partner in the U.K., we are definitely looking to get more flexibility and get more carriers into Heathrow Airport.
Mr. OBERSTAR. This has been an important growth market. Its increase has been 56.8, call it 57, percent in just the last year, Pittsburgh-London, but most of that growth occurred in the Gatwick Airport which limits where passengers can go because they don't have the same access. They have to go all the way across to London to get to Heathrow if you plan to go to the continent.
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With a market growing that fast, why did British Airways drop the service?
Mr. MIMS. They are looking for greater yields, from what I understand. They are looking to—and this doesn't make much sense to me, but—.
Mr. OBERSTAR. 97 percent load factor?
Mr. MIMS. They are convinced that they can get greater yields from other locations. I'm a little baffled by the logic as well.
Mr. OBERSTAR. Was the U.S. Department of Transportation or U.S. State Department consulted by the British government in the aftermath of BA's decision to terminate their service here?
Mr. MIMS. No, they weren't.
Mr. OBERSTAR. Was there any opportunity for input from the U.S. in the aftermath of that decision to advocate for a Pittsburgh service?
Mr. MIMS. No, not at all.
Mr. OBERSTAR. It was entirely a decision up to the British government?
Mr. MIMS. Up to the British government. Again, we hanged out Bermuda II as a poster child in this kind of situation. If we had a different kind of relationship with the British, this kind of thing would never have occurred.
Mr. OBERSTAR. Did the British government—find my question here—exercise the same kind of protectionist attitude when US Airways was seeking service from Charlotte to London Heathrow?
Mr. MIMS. Yes, they did.
Mr. OBERSTAR. Instead they got the service to Gatwick, and then they didn't get the service right away?
Mr. MIMS. Right. It took a lot of cajoling on your part and our part to get that service.
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Mr. OBERSTAR. Those are important steps. Thank you, Mr. Mims.
The CHAIRMAN. Mr. Mascara, do you have any questions?
Mr. MASCARA. Thank you, Mr. Chairman. These agreements, I understand, do not need Senate approval. These are made by the President of the United States, transportation department?
Mr. MIMS. By the administration, yes, sir.
Mr. MASCARA. We all seem to agree that the current bilateral system is not acceptable, and it no longer is sound and stifles growth and world trade economy?
Mr. MIMS. Yes.
Mr. MASCARA. As you prepare to enter the negotiations with the British, are we prepared to insist to decline to engage in negotiations of bilateral agreements and that they should be multi-lateral agreements, and are we prepared to impose some sanctions?
Mr. MIMS. We're moving towards establishing a multi-lateral system. And if I can expound a little bit, Mr. Mascara—.
Mr. MASCARA. I have five minutes, go ahead.
Mr. MIMS. Secretary Slater at the end of this year, on December 5 through 7, is calling all of the ministers of transport together in Chicago. This is the first occasion—it's the first time in 55 years that we have called the ministers of the world together to begin to talk about our aviation relationships and the course that our aviation relationships should take in the 21st Century.
Again, doing things in a bilateral manner is rather inefficient, and some would characterize them as unfair in many instances. If all the states or many of the states from around the world came together to create a plural-lateral regime or multi-lateral regime, we think that over time such a regime would operate more efficiently and have more just results in its outcomes between the various states that are involved.
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Again, we're calling all the ministers of transport throughout the world together December 5 through 7 to begin to sketch out a framework for creating a multi-lateral system.
Mr. MASCARA. We're still held to a bilateral—.
Mr. MIMS. Until we all come together to agree how this system is going to work, yes, we are still held, and we will still work—.
Mr. MASCARA. So the ministers will hopefully come out of that meeting saying that we will now engage in multi-lateral agreements and not in a bilateral agreement?
Mr. MIMS. It will be the first of many meetings that we will begin to reconstruct the way we deal with each other throughout the world.
Mr. OBERSTAR. Will the gentleman yield?
Mr. MASCARA. Yes.
Mr. OBERSTAR. I just want to point out that historically that policy was advocated when Franklin Roosevelt in 1944 as the United States was approaching the end of World War II. The meeting is known today as the Chicago Conference, where 157 of the free world's carriers gathered in Chicago. It was Roosevelt who proposed that, in his words, ''We not let the dead hand of protectionism govern the post-World War aviation system,'' and Winston Churchill disagreed because the United States was the only nation prepared to engage in free international travel.
Out of that came the bilateral system that we have today. If we can break that cycle in the December conferences, that would be an extraordinary step forward.
Mr. MIMS. We intend to do that. Thank you, Mr. Chairman.
The CHAIRMAN. Thank you very much, Mr. Mims. Thank you so much for your testimony.
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Mr. MIMS. Thank you.
The CHAIRMAN. The next panel, would you please come forward, the Honorable Brad Mallory, Secretary, Pennsylvania Department of Transportation and the Honorable Jack Wagner, the Pennsylvania State Senator, the Honorable John Pippy, Pennsylvania State Representative.
Mr. Secretary, please proceed as you see fit.
TESTIMONY OF HON. BRAD MALLORY, SECRETARY, PENNSYLVANIA DEPARTMENT OF TRANSPORTATION; HON. JACK WAGNER, PENNSYLVANIA STATE SENATOR; AND HON. JOHN PIPPY, PENNSYLVANIA STATE REPRESENTATIVE
Mr. MALLORY. Thank you, Mr. Chairman and committee members. At the outset, let me take advantage of this opportunity to thank you and your committee for your unlocking of the federal highway trust funds, and I get to thank you on many occasions, Mr. Shuster, Mr. Oberstar, you less frequently. Of course, I've thanked Frank on many occasions as well. On behalf of Governor Ridge, thank you, because you have literally saved the highways and bridges of Pennsylvania, let alone the nation, no small thing.
I might add, more to the point here this afternoon, that a committee which was capable of accomplishing what you did should be taken very seriously by the United Kingdom when you speak of doing what you need to do so to ensure that this situation is corrected.
As you know, our Pennsylvania economic market is strongly woven into the global marketplace today, and for us to continue to grow it's imperative that the transportation system exists to support this growth.
Governor Ridge believes that this termination of air service from London to Pittsburgh would be a significant blow to our region's ability to reach its fullest potential and has been in personal contact with U.S. DOT, Rodney Slater, to that point to raise our understanding, shares our views.
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As we now know, for more than a decade, British Airways provided Pittsburgh and the southwestern section of Pennsylvania with nonstop air transportation service to London. However, after more than 10 years of service, British Airways announced that they're stopping the provision of this valuable air service.
We have some two million people in this region and more than 40 London-based businesses, obviously, well situated for growth in this marketplace. But nonstop service to London is important not only for those businesses but for a host of U.S. companies in the Pittsburgh area that do extensive business in the U.K. Given that marketplace, we are underserved presently by trans-Atlantic service, and this additional loss of service will further hamper our region from reaching its full potential in the international marketplace.
The value to the Pittsburgh area of this service is enormous. The Commonwealth believes that daily air service to London provides something in the vicinity of more than $268 million of economic benefit per year. This is an enormous impact. It's real, it's significant.
We also know that Pittsburgh to London is well traveled by both business and leisure travelers. January through June of 1999, we saw a 15 percent increase over the same period of the previous year. That equates to 292 passengers per day. That traffic is virtually all origin and destination traffic here at Pittsburgh; and, of course, those of you who are familiar with this marketplace know that we are primarily a connecting hub airport. The British business is not that kind of business. It is origin and destination business.
We cannot afford to leave these passengers who origin and destinate here stranded with the pullout of British Airways. Any alternative to direct, nonstop service is unacceptable.
Now, it's particularly unacceptable because we have someone ready to fill the void here. The Commonwealth of Pennsylvania is extremely fortunate to have two major hub airports in this state and for US Airways to be the predominant carrier of both. US Airways has an extremely strong network in this state. It carries more than 66 percent of the in-plane passenger market in Pennsylvania and 15 commercial service airplanes. They're uniquely qualified to bridge the Pittsburgh to London gap left by British Airways.
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Also, let me remind you that this is US Airways' busiest hub in terms of daily departures. A London route would provide a major economic impotence for the Pittsburgh region as well as quick connections to London for residents of 72 cities served by this hub. Nonstop daily flights from Pittsburgh to London would also complement US Airways' existing international service from Pittsburgh to Frankfurt and Paris.
We're here today, as you have so ably pointed out, because of the restrictions of the Bermuda II agreement. What we are asking the Department of Transportation to do is, fortunately, not unique. In 1991, the department held a proceeding in Detroit, Michigan, intended to assure the air service needs of the market were met with pending European service by Pan-Am. Also in 1991, the Department held another proceeding in Miami wanting to ensure that Miami passengers had continuous service to Heathrow.
Finally, in 1993, the U.S. DoT, found a compelling need to authorize replacement service by an American flag carrier so that city service to London was not demoted to a foreign flag monopoly.
British Airways, in their decision may not—the motivation behind it may not be apparent to us or readily clear to us; however, it's clearly within their business right to do as they see fit in this regard. But it is contrary to the public interest and good to allow this corporate decision to result in the loss of critical air service without allowing another carrier who is ready and willing to fill this critical need and begin the service.
Governor Ridge urges the Department of Transportation to immediately seek the modification to the current Bermuda bilateral agreement between the U.S. and the U.K. as is necessary to avoid a loss of air service from Pittsburgh to London. Thank you.
The CHAIRMAN. Thank you very much, Mr. Secretary.
Senator Wagner.
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Mr. WAGNER. Thank you, Mr. Chairman. Mr. Chairman, I'm delighted to be here with Secretary Mallory and my colleague in the general assembly, John Pippy. John and I represent the airport area in the House and the Senate, and we come here in a bipartisan, unified effort representing the Senate and the House of Pennsylvania.
I would first like to thank you, Mr. Chairman and Congressman Oberstar and Congressman Mascara, for convening this public hearing at Pittsburgh International Airport in regard to the potential loss of air service between Pittsburgh and London. You have picked the appropriate location in the international terminal in this magnificent new airport.
Like Secretary Mallory, I would further like to thank Chairman Shuster and the committee along with the Secretary of Transportation, Rodney Slater, for your ongoing help and support to make Pittsburgh International Airport one of the finest airports in the world, and for your support over the past several decades, Mr. Chairman, to improve the transportation infrastructure in Pennsylvania, especially Western Pennsylvania. I thank you, and the citizens of Western Pennsylvania thank you.
Mr. Chairman, as you know, in past years Southwestern Pennsylvania did not need a sophisticated transportation system to compete with the world. Our inland waterways and our railroads and our work ethic was enough to outcompete the world.
That is certainly not the case today. We live in a worldwide economy that requires connections to world markets. For the past ten years, one of those economic lifelines has been air travel between Pittsburgh and London and the European market. Our economic success is dependant upon that connection.
Heinz, Bayer, ALCOA, USX, PPG, and many other companies, along with our growing convention and tourism industry, depend on direct connections from Pittsburgh to London to ensure business success.
According to my count, approximately 50 British companies are located in the Pittsburgh area, and many more American companies in our area do extensive business in the United Kingdom. To say the least, immediate restoration of Pittsburgh to London service is critical to the economic success of these companies and the jobs they represent to our region.
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The reason the new airport is called ''Pittsburgh International'' is our reliance on and our connections with other countries. Governor Ridge and many of us are doing all we can to increase international business in Pennsylvania. We cannot move in the opposite direction as is suggested. That would send the wrong message about Pittsburgh—a very negative message—to the world. With no flight from Pittsburgh to London, we would be land locking Western Pennsylvania to the United Kingdom. We cannot permit this to happen to our companies and to our people.
Mr. Chairman, we are very proud of our magnificent airport, and we are very proud of US Airways. Both have served the companies and the people of Western Pennsylvania, Eastern Ohio, and Northern West Virginia quite well. Pittsburgh International is our front door to the world. US Airways has their strongest domestic route system, as Secretary Mallory indicated, with 500 daily flights and 72 cities connected. If you consider the population of Western Pennsylvania, several million people, and the 72 cities with US Airways' connections to Pittsburgh, this represents tens of millions of people, possibly 50 to 100 million people. There is no logical reason why the Pittsburgh to London flight should be terminated, when it serves so many people, companies and jobs, especially suggesting that a British Airway firm, Virgin Airlines, is the alternative. And that flight would be from London to Las Vegas.
What has happened to the midwest? What has happened to the eastern markets? This is not good not just for Pittsburgh, but not good for America. US Airways has the desire, the commitment, and the capability to take over the Pittsburgh to London flight, Mr. Chairman, tomorrow.
Mr. Chairman and members of the committee, exceptions have been made before in regard to the Bermuda agreements. If ever a strong case could be made for a region and an airline, it is this one. I urge the President, the Vice President, and the Secretary of Transportation not to take no for an answer. Please initiate immediate restoration of service between Pittsburgh and London and, hopefully, with US Airways. Thank you.
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The CHAIRMAN. Thank you very much, Senator.
Representative Pippy.
Mr. PIPPY. Good afternoon, Mr. Chairman, members of the committee. A special hello to Mr. Mascara who is my Congressman. It's a pleasure to have you as a congressman, and it's also good to see that you're on the transportation committee.
Good morning, Chairman Shuster, members of the committee. I am Representative John Pippy of the Pennsylvania House of Representatives. I would like to welcome you to the 44th Legislative District that includes all of the Pittsburgh International Airport.
Gentlemen, it is an honor to be able to address you today on an issue that is of the utmost importance not only to U.S. Airways, which has more than 12,000 employees based in our region, but also to Allegheny County and all of the Southwestern Pennsylvania.
Transatlantic service from Pittsburgh to London is critical to the continuing commerce, trade, and job creation in our region. To stop this service to London would not only be a step backwards in the relationship between the U.S. and UK, but will also be devastating to the businesses and workers of this region.
Allegheny County and Southwestern Pennsylvania have undergone a transformation in the past few years. As a member of the Pennsylvania House Transportation Committee, I have seen firsthand the amount of money invested by the State and Federal government to improve the infrastructure of this region. Hundreds of millions of dollars have been dedicated to our region to promote business and commerce. Leaders from government, business, and academia have worked together so that not only does Western Pennsylvania produce world class goods and services, but those goods and services produced in our area are given the opportunity to reach global markets.
Chairman Shuster, under your leadership, this committee has played a major role in the upgrade of Pennsylvania's infrastructure. I know that you and the Members of this committee understand that in order for our region to take full advantage of the Mon-Fayette Expressway, the Southern Beltway, the Findlay Connector, a new convention center, high speed MAGLEV, our world class research universities and companies, we must have access to the global marketplace.
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As Senator's Specter and Santorum have both written, ''Service to London from Pittsburgh would create a strong and highly competitive single-carrier network in the U.S.-London market and would help transform Pittsburgh, with its access to U.S. Airways' extensive domestic network, into a significant transatlantic gateway. Pittsburgh is U.S. Airways' largest domestic network hub with over 500 daily departures.'' .
I cannot overemphasize the role U.S. Airways plays in the economy of our region. Currently, the Commonwealth of Pennsylvania is working with Allegheny County and U.S. Airways to put together a package that would locate a new maintenance and training facility for U.S. Airways at Pittsburgh International Airport. This project will cost over $600 million with a potential state share of over $100 million.
There are over 50 British companies that have business in Pittsburgh and hundreds of local Pittsburgh companies that are doing business in the UK. British Airways has seen over a 14 percent increase in passengers and over 7 percent increase in cargo. It is obvious that transatlantic service to London makes economic sense. We as a region must be given this opportunity.
As I have shown, Western Pennsylvania is moving ahead and achieving its goal to be a key player in the international market. We cannot allow the service from Pittsburgh to London to be terminated. This service is integral to the businesses of western Pennsylvania and to the entire district geographically. This region has grown dependent on the Pittsburgh-London route and is now left with no alternative.
U.S. Airways was prepared to compete for access to London from Pittsburgh in the past and is now ready and able to fill the gap.
In the best interests of our children, our communities, our region, and our country. I ask that you help us in giving U.S. Airways and Western Pennsylvania a chance.
Chairman Shuster, members of the committee, thank you for the opportunity to speak today.
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Mr. MASCARA. Thank you, John.
The CHAIRMAN. Thank all of you very much for your testimony. I'm pleased you mentioned the possible US Airways expansion somewhere in the country. Just as we are here today to support US Airways, we're confident that US Airways will be there tomorrow to support Pittsburgh.
I'm pleased to yield to Mr. Oberstar for any questions.
Mr. OBERSTAR. Thank you, Mr. Chairman. I want to thank the panel for acknowledging the splendid leadership service, extraordinary in fact, of our chairman. It's good that all of you in Pennsylvania appreciate his leadership on this committee would amend TEA21 and what it will mean when we eventually get to lock horns with the other body on Air 21, all of which will continue to benefit Pennsylvania as a whole, Pittsburgh in particular. It's been a great pleasure to serve on this committee. Thank you, Chairman Shuster, as our lead.
An underlying issue, and I take note of the very significant statistics that you have offered about the importance of service, air service, hundreds of millions of dollars and billions of dollars of airports impact. I'm sure you've done a study as Minneapolis, St. Paul, has. That airport has an $8.5 billion impact on the metropolitan region, and I imagine Pittsburgh is in that same range, especially with your billion-dollar expansion and terminal and airport runway improvements.
But if your access to overseas markets is restrained, limited, then you not only have limitation on your ability to grow but also have increased costs. For example, in this market, because of the limitations of the U.S.-U.K. bilateral, round-trip, business-class service from Heathrow to New York averages $4,370. But if you want to fly to Amsterdam in that same destination, it's $1,485. So you can fly cheaper to Amsterdam and a business-class ticket to London from there than you can from New York to London. The reason for that is the restrained market because this is a protected market under the U.S.-U.K. bilateral. It costs vastly more to fly into that market so the stakes are high, not only for growth, but for individual business travelers.
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If you can save 60 or 70 percent on a ticket in a market that has competition as compared to one that is limited, then your businesses can grow. I just want to add that dimension. I think it's one you ought to be insisting on. We should have in this market a real competitive force. That should be the objective of our bilateral negotiations.
Thank you, Mr. Chairman.
The CHAIRMAN. Thank you, Mr. Oberstar.
Mr. Mascara, do you have any questions?
Mr. MASCARA. Thank you, Mr. Chairman. I have no questions, but it's good to see Secretary Mallory. Brad, we worked together before you were secretary. Senator Wagner and Representative Pippy, all of whom with I've worked closely with on transportation projects here in Southwestern Pennsylvania.
And Representative Pippy, you mentioned the interchange, and I might throw in the Findlay Connector, which hopefully will connect with the Mon-Fay Expressway someday.
All of that was as chairman of the Regional Planning Commission here in Pittsburgh. It's good to see that all of you are still working for transportation projects here in Southwestern Pennsylvania in attempting to solve the problems we have here in Southwestern Pennsylvania, and I just want to thank all of you for participating in today's hearing.
Thank you, Mr. Chairman.
The CHAIRMAN. Thank you very much, Congressman. Thank you all again for your testimony.
I'm pleased to call the next witness now. One might describe him as the man of the hour, Mr. Stephen M. Wolf, Chairman, CEO, of US Airways.
Mr. Wolf, please proceed as you choose.
TESTIMONY OF STEPHEN M. WOLF, CHAIRMAN, US AIRWAYS GROUP
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Mr. WOLF. Mr. Chairman and members of the committee, while I submitted testimony to the committee last week relative to this matter, I thank you very much for inviting me to participate here today.
I commend you, Mr. Chairman, for calling this hearing on the issue of critical importance, the loss of nonstop air service between Pittsburgh and London.
A truly remarkable group of people has assembled here today; a broad spectrum of civic leaders, elected officials, consumer advocates, an impressive number of US Airways' own dedicated and hard-working employees representing all parts of our airline. We've all joined together because we care about jobs. We care about economic growth, trade, tourism, and the continued development of Pittsburgh, Western Pennsylvania, and, indeed, the entire Commonwealth.
All of us in this bipartisan endeavor know that after years of unwavering support, Pittsburgh's critical nonstop air link to Europe's financial and commercial center will be severed later this month by a foreign air carrier which candidly admits that its sole basis for ceasing this service is its own economic self-interest.
The U.S. Government, represented here today by senior officials from Washington, has the obligation, indeed the duty, to ensure and advance the rights and interests of U.S. consumers and U.S. communities in the global marketplace.
I will not burden you with the recitation of the numerous flaws and inequities of the anticonsumer, anticompetitive Bermuda II agreement. Suffice to say, Bermuda II has led to the unconscionable circumstances that have brought us together today.
The only carrier with the authority to operate service between Pittsburgh and London, British Airways, will not do so any longer after October the 31st. The only carrier ready, willing, and anxious to provide the service, US Airways, cannot do so under Bermuda II. Absent such a critical link to Europe's financial center, Pittsburgh and Western Pennsylvania risk being left behind as a global marketplace moves forward into the 21st Century.
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I think I speak for everyone in this room when I say that it is unconscionable that, through no fault of their own, this service is being taken away from them. It is unconscionable that the people and businesses of Pittsburgh and Western Pennsylvania are totally dependant on the business decisions of a foreign flag carrier. It is unconscionable that the 43,000 dedicated and hard-working employees of US Airways are prevented from restoring and enhancing nonstop Pittsburgh to London service.
Our bipartisan coalition to ensure the restoration of nonstop Pittsburgh to London service will make clear to all that the status quo is simply unacceptable. Together we can make a difference. Together we will make a difference.
Finally, or perhaps most importantly, I wish to express on behalf of all of us our sincere appreciation and respect to you, Chairman Shuster, and the elected leadership of the Commonwealth for leading this crusade to the result of restoration of this vital air link between these two great cities.
I thank you for your time. I'd be happy to answer any questions you might have.
The CHAIRMAN. Thank you very much, Mr. Wolf. We certainly appreciate, not only your testimony, but your emphasis, not only on what is in US Airways' interest, but what is in the interest of the entire community and for that, for your statesmanlike approach to this, we are very, very grateful.
Mr. Oberstar.
Mr. OBERSTAR. Thank you, Mr. Chairman. I very much appreciate your kind words rightly chosen for our chairman and the leadership he has given on this issue, and as you know, his dedication. Once he sets his mind on an objective, get out of the way. He'll pave you over or run you over, but he won't be stopped.
You have had a great and distinguished career in aviation, and I recall the years when former member Bill Clinger and I worked with you and former speaker Newt Gingrich, who was the ranking Republican on our investigations and oversight and aviation subcommittees, worked together with you in your role with Flying Tigers to break open the Japanese stranglehold, Korean stranglehold on cargo service.
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It is your innovative leadership at the time and persistence on specific aspects of those bilaterals that turned that market around, 70 percent Japanese and Korean domination to now 70 percent U.S. domination in the marketplace.
I turn your attention also as Chairman of United Airlines to the same international trade issues and, again, raise objections to restrictive bilaterals, and here now in your further iteration with US Airways, which you have turned around to a very competitive carrier, the same issue confronts us.
I want to understand that if we break the lock of United and American and BA and Virgin on the U.S. marketplace so other carriers can enter, that would be US Airways' firm determination to serve this market and, hopefully, not just Gatwick but London Heathrow.
Mr. WOLF. Congressman Oberstar, shortly after joining, then USAir, US Airways in 1996, I directed that we file immediately for service from Pittsburgh to London, specifically Heathrow, but also Gatwick.
As you know, Bermuda II, even though the U.K. may be our closest ally in the world, Bermuda II is the most restrictive air agreement the country faces. There is no basis for that award being given to us at that point in time. That still is an act of filing, and from our perspective, we're still seeking that route.
We very much would like to fly into Heathrow. Bermuda II, amongst its many idiosyncracies, only allows two U.S. carriers to fly to Heathrow. They were Pan-Am and TWA, and eventually United and American when they obtained those authorities.
All of the U.S. carriers must go to Gatwick. We serve Gatwick today. We're asking for Gatwick service out of Pittsburgh today, but ultimately, it certainly is our desire to serve Heathrow Airport from all destinations we fly from the United States of America.
Mr. OBERSTAR. Is it accurate to say that the only service Pittsburgh would have to London is US Airways' service to Philadelphia and then on again to Gatwick and not Heathrow?
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Mr. WOLF. Yes. We also fly to London Gatwick, once again from Charlotte. In any and all cases, we're talking about secondary service. We think this community, this city, the environment, and Southwestern Pennsylvania should have its own nonstop service from Pittsburgh. All we want to do is replicate that which has existed for some number of years.
Mr. OBERSTAR. So the market limitations are evident, and they're due to the bilateral that we need to break in order to have effective, nonstop service and choice of service.
Do you welcome a third carrier on the market? British Midlands is advocating opening the bilateral.
Mr. WOLF. I welcome the opening of the market, and as many U.K. carriers and U.S. carriers that want to fly there and do so successfully. I welcome them.
Your comment a moment ago, Congressman Oberstar, about the market shift in Korea and Japan, I mean, it is baffling today to think the two U.K. carriers that serve U.K.-U.S. market, British Airways and Virgin Atlantic, carry about 60 percent of the market up against all the U.S. carriers, United, American, Delta, Northwest, US Airways, et cetera. How can they carry 60 percent and we are allocated to approximately 40? It's because Bermuda II so heavily favors them and restricts us. And yes, we want the market open, and British Midland and whomever would like to fly, they're welcome to do so.
Mr. OBERSTAR. And this is not a slot-controlled market that London Heathrow is.
Mr. WOLF. This is not a slot-controlled airport, and it's a secondary restraint. When U.K. carriers are given the authority to fly to the United States of America, or for that matter any foreign carrier from any foreign land, is given the authority to fly to the United States of America, being a slot-controlled airport or a not slot-controlled airport, they are given the slots that they're required if they go to O'Hare or if they go to Kennedy.
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We have a secondary constraint, whether it is around the world, getting slots after we get the right to fly. Pittsburgh is not a slot-controlled market. Gatwick is a slot-controlled market. So if we are able to successfully obtain this authority, we certainly want the slots to land the airplane on the other end.
Mr. OBERSTAR. To show good faith, Mr. Chairman, we need to persist, as we have done in our bill that passed the House, in breaking the slot-controlled market situation in the U.S.
The CHAIRMAN. Absolutely, I should inform the audience that as a result of what we've heard so far today, I've not only instructed the staff to craft legislation for Air 21 to deal with the issue in the event that the best efforts of the department fail, but, perhaps, even more importantly whispered to Congress Oberstar, who is the aviation expert on the committee, that I'm passing the ball to him to really focus on this. Working together, we're going to help the administration, I think, in communicating to the Brits just how serious we are.
Thank you.
Mr. Mascara.
Mr. MASCARA. Mr. Wolf, it's good to see you again.
Mr. WOLF. It's good to be here.
Mr. MASCARA. My association with US Airways goes way back, probably a lot longer than I would like to admit to. I did have the opportunity to fly the maiden flight to Frankfurt a number of years ago as then chairman of the Regional Planning Commission in Pittsburgh. I just want to say, little did I know then that I would be back here someday trying to gain access to an airport in London.
Having said that, I thought perhaps I could take a moment and follow up on Chairman Shuster's reference to the maintenance facility here in Pittsburgh. Without putting you on the spot, how are those talks going, and do we look like we're in good position here in Pittsburgh for a $600 million maintenance facility? I apologize. I needed to say that.
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Mr. WOLF. Congressman Mascara, I can't say it's as high on my wish list to be able to negotiate with you and the Chairman on that matter today. It remains a front-burner issue for the company. It's being approached from the perspective of considerable health on the part of all participating parties. There's a strong, vested interest in keeping those jobs here and the work activity here. We have received quite recently a rather comprehensive proposal, and we're going back and forth with the County right now trying to sort out some issues ourselves. It's moving along in very good spirit on the part of all participants.
Mr. MASCARA. So we're making some progress?
Mr. WOLF. We're making some progress.
Mr. MASCARA. Thank you, Mr. Wolf.
The CHAIRMAN. Thank you very much.
Mr. WOLF. Mr. Chairman, could I just say one more thing? You mentioned to the representative of DoT that bringing up this important matter and making it a priority issue is something that you really wanted them to focus on. They do have an obligation to represent the interests of all the U.S. carriers, but I would say in bringing this up next week, and we are meeting with the British in London on Monday and Tuesday, there's no other city in the country that is losing existing service.
So while they may speak on behalf of all U.S. carriers, this should be a priority event. Pittsburgh is losing service to London after it has had it for some number of years, well over a decade, in determination it has significant economic consequences of a negative nature, we want to avoid that. So the priority should be on reinstating existing service and then, as best they can, getting additional service from all other points in the country. I appreciate you bringing that to their attention. Thank you very much.
The CHAIRMAN. Thank you very much, Mr. Wolf.
The CHAIRMAN. Pleased to call our next panel composed of the Allegheny County commissioners and the mayor of Pittsburgh. I understand Chairman Dawida will speak for the commissioners, and the other commissioners are welcome to join the panel, and the Honorable Tom Murphy, the Mayor of Pittsburgh. I see Commissioner Bob Cranmer is here also. Welcome, Mr. Dawida, Mr. Cranmer and Mayor Murphy. We're certainly glad to have you here.
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Mr. Dawida, would you like to proceed.
TESTIMONY OF MIKE DAWIDA, CHAIRMAN, ALLEGHENY COUNTY COMMISSIONERS, ACCOMPANIED BY BOB CRANMER, ALLEGHENY COUNTY COMMISSIONERS; AND HON.TOM MURPHY, MAYOR OF THE CITY OF PITTSBURGH
Mr. DAWIDA. Thank you members of the House Transportation Committee. I have great respect for the Chair. He's done marvelous things for this community, as has Congressman Mascara. The one thing I can say about Congressman Oberstar is, I'm the only person here that, I believe, ever voted for him. I once went to law school in Minnesota at Augsburg University. I won't tell you how long ago that was, but it was a good vote then, and I believe it would be a good vote now.
With me today are Commissioner Bob Cranmer and the mayor of the city, Tom Murphy, who will comment following my remarks.
The people of this community are grateful to you to address the loss of the Pittsburgh-London service and the transfer of this authority in accordance with the antiquated Bermuda II accord to new London-Las Vegas authority. This action by the British government without the granting of a new Pittsburgh-London route is patently wrong.
14 years ago, British Airways began this direct service, which was granted under the Bermuda II accord, the opportunity to do this flight. It's still in effect, and those unrealistic rules do not take into account today's global economy. The anticompetitive nature of this agreement unfairly affects our communities.
In 1998, British Airways flew 102,757 passengers and over 9 million pounds of freight between Pittsburgh and London. This activity is significant in that all the passengers were generated locally with no assistance or feeder patterns from any other carriers.
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So far in 1999, 85,465 passengers or a 7.4 percent increase and over 6 percent increase in cargo goes out from British Airways. That's a 68 percent load factor. That indicates that the British Airways abandonment of the Pittsburgh-London service was not based on purely economic factors.
As the Southwestern Pennsylvania region approaches the final flight in 18 days by British Airways, the community is wondering how this could happen. We have over 50 companies with direct ties to Great Britain, including BAA who runs the retail at this particular airport. Hundreds of local companies conduct business with Great Britain and Europe through that flight. Recently we received and got a new plant which is the largest steel tube producer in America coming to us from Europe, and I might happen, the negotiations occurred when I went on a British Airways flight to London and then to Italy.
We have grown internationally, and we believe that we need and want this flight. We estimate that the cost to us of losing this flight will be over $50 million a year.
In light of these facts, we do not believe the British government could logically deny our ability to establish a Pittsburgh-London route by our Allegheny County hometown carrier. With the existing demand demonstrated by British Airways' current service, we believe it is appropriate and fair that US Airways could take this flight over and would succeed monumentally. Instead of losing $50 million, we would gain many millions more in our economy.
Thank you for the time in addressing this issue, and I would like to introduce the Mayor of the City, Tom Murphy.
Mr. MURPHY. Thank you. I just really want to second what Mike said and to say you're well aware of the transformation this region is undergoing, probably none more remarkable in the country going from a region based entirely in steel to one of a far more diverse economy.
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In the efforts that we've all undertaken to build the economy here, I think we all recognize the various pieces that need to fit together, and our ability to communicate and connect directly to the international markets is a critical part of that. Your help is greatly appreciated. You've given us so much in the past. This is equally important to everything else that we're accomplishing here. So thank you for being here today.
The CHAIRMAN. Thank you very much.
I wonder if there's anyone in the room from British Air or the British government. Raise your hand if you are. I assure you that the courtesies of the people of Western Pennsylvania mean that you will not need a police escort. Anybody here?
I'm sure the message of today will, indeed, be communicated to both the British government and British Airways. I have no doubt of that.
Mr. Oberstar.
Mr. OBERSTAR. I just want to thank the witnesses and concur with the Chairman's statement. Philadelphia may be the City of Brotherly Love, but Pittsburgh is not lacking in courtesy. We certainly are here to advocate the British, not be punished, but they be required to serve. They're doing a disservice to this entire metropolitan area as you all have stated so firmly and so vigorously.
I think the significant fact that you cited, Mr. Dawida, of a $50 million loss of revenue into this area is in itself a very serious matter and has to be taken into account by the negotiators.
I want to take this opportunity again to emphasize with the Department of Transportation that when they meet in the next few days with the British, they should not just talk but set forth a plan for action to break the stranglehold of the British government on the U.S.-U.K. bilateral. Thank you.
The CHAIRMAN. Thank you, Mr. Oberstar.
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Mr. Mascara.
Mr. MASCARA. Welcome, gentleman. It's good to see you. All of whom I have had the pleasure of working with for a lot of years. It seems almost like a transportation oxymoron for British Airways to abandon this when the County and the City is undergoing Renaissance III or whatever term.
Mr. MURPHY. We haven't come up with a name yet.
Mr. MASCARA. The billions of dollars that are being invested in the City and the billion dollars that was invested in this airport—and, again, I was on the transportation commission when we built the southern expressway into this airport, so we have well over a billion dollars in here—that British Airways would abandon a flight to London. I mean, the only word I can think of is a transportation oxymoron.
I want to congratulate all of you on the hard work that you've been doing over the number of years to make Pittsburgh and Allegheny County a better place to work, live, and play.
Mr. CRANMER. If I could make one point to the committee. It was about one year ago that I led the delegation of local business leaders to the United Kingdom, and I had the pleasure to meet with the chairman of British Airways at that time, and we discussed the growth and the flight and how well it was doing, and he indicated to me that they were looking to increase service. So when this announcement came out some time ago, I was flabbergasted or astounded that they were reversing themselves because he had acknowledged to me they were pleased with the flight, they were pleased with the growth, and they were looking to invest in it.
When you look at the amount of business that is done between Western Pennsylvania and Great Britain, so much of it is fueled by the existence of this flight. And when you look at the flight to Frankfurt, it's the same case.
So, we must push this very strongly to maintain the tie. Thank you.
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The CHAIRMAN. Thank you very much. I want to thank all you gentleman. Mayor Murphy, Mr. Cranmer, Mr. Dawida, thank you very much for your testimony.
Pleased to call the next panel, Mr. Dave Hohman, the president of the Pittsburgh Building and Trades Council, and Mr. Tom Fullart, the legislative committee chairman of the International Association of Machinists.
Mr. Hohman, would you like to proceed.
TESTIMONY OF DAVE HOHMAN, PRESIDENT, PITTSBURGH BUILDING AND TRADES COUNCIL; AND TOM FULLART, INTERNATIONAL ASSOCIATION OF MACHINISTS
Mr. HOHMAN. I would like to thank the panel and Chairman Shuster for inviting organized labor to the table today. I know of no other labor organization in the State that has more gratitude to the committee and you especially. I think most of the business management of the building trades unions carry a statue of you around in their car because when we were in desperate need of jobs, you made them appear, and we thank you very much for that.
Organized labor does have a vested interest in this community and US Airways staying in this community and being a viable partner in the community. US Airways is the largest employer in this area and probably two other states in this large region. We watched the steel industry go away. We don't want to see another one of our large industries go away and create vast unemployment in our region.
I think for this reason, it's time that we stand behind our big companies and help them grow in a period when we need to grow as a city and a region. I appreciate you having this important meeting here in Pittsburgh today.
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The building trades have a vested interest, too. We put and committed up to $40 million of our pension money for development of the cargo area out in the front of the old terminal. Some of that work has started right now. One of our contractors right now is out there as we speak constructing those facilities.
Also is a board member of the Greater Pittsburgh Convention Bureau, I don't want to compete with Joe McGrath who is coming up behind, but I know the effort that he has spent with his organization to make Pittsburgh a destination point and make it a place for visitors to come and visit the many attractions we have as well as our cultural district.
I'll make my statements very brief because we had a great panel here today to explain the needs for it, and I appreciate you adding organized labor to the table. Thank you.
The CHAIRMAN. Thank you very much.
Mr. Fullart.
Mr. FULLART. Chairman Shuster, Representative Oberstar and my congressman and representative, Mr. Mascara, thank you for allowing the members of the I.A.M. Local 1976 here in Pittsburgh to present our testimony today.
Echoing those who have preceded me, the termination of this service from Pittsburgh to London is a devastating blow to this community. Pittsburgh has the most modern and world-class international airport. It's the largest in the hub network serving 112 communities with 500 departures, and that includes the highly successful international service to Frankfurt and Paris.
As US Airways employees, who are part of the very fabric of these communities, who are strongly committed to Pittsburgh, and who are strongly committed to the Commonwealth of Pennsylvania, our employer announced a few years back a rationalization of its aircraft fleet, from several different types to a more standard fleet with the purchase of numerous newer aircraft. At the urging of the members of the I.A.M. And its leadership, we have as a community made significant progress in the efforts to secure public and private financing which will ensure that our community and our state can construct the necessary facilities to maintain this new aircraft fleet.
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Construction of these modern facilities will secure 5,000 family-sustaining jobs in this area, and it will provide a promise for growth in additional jobs and similar jobs in the very near future. There are several reasons that our area is so attractive to this type of economic develop. The county government is becoming more streamlined and less bureaucratic. Individual municipalities are looking more toward a metropolitan future and less towards individual desires. The work ethic of this area's work force is stronger and more committed than it ever has been. Area labor and management relations, labor and management have unified their goals. The survival and prosperity of each has become a concern of the other. These are the factors that poise Allegheny County for growth in the very near future.
The loss of Pittsburgh-London air service is a factor that may arrest these efforts. The withdraw of this international access for our region places us at a very competitive disadvantage with other communities who would vie for what we're trying to accomplish here.
Mr. Chairman, we don't fear competition with any of these other communities if we're competing on a level playing field; however, we must strenuously object to the British placing us at a competitive disadvantage by withdrawing the access to London from our community. The denial of this access to London is a direct result of the archaic Bermuda II agrement.
It is urgent and essential that the U.S. Government act to restore the Pittsburgh-London service, and the time and place for that is the cargo negotiations next week. Our employer, US Airways, as you heard and we reiterate, stands ready to provide the essential link between our community and the United Kingdom. As US Airways employees, we feel that no less than immediate restoration of the Pittsburgh-London service would accomplish this.
The CHAIRMAN. Thank you very much. I might inform you and the audience that I was with Mayor Rendell of Philadelphia last night, and he has already weighed in in support of what we're attempting to do here. So it just shows the extent of the support we have. We're on the side of the angels of this issue, and I assure you we're not going to let up.
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Mr. Oberstar.
Mr. OBERSTAR. Thank you, Mr. Chairman.
I very much appreciate your presentation today of organized labor, both the building trades and machinists union, two great labor organizations, of whom I have had a very close relationship for many years.
Your members benefit when your carrier expands and grows. Your members, Mr. Hohman, benefit when airport investments are made and runways are extended and expanded, even when you have to invest your own pension funds to contribute to that growth is a tremendous benefit to those jobs. I think it's quite appropriate—I've never heard of this—card carrying union members having a statue of a member of congress in your car. If you're going to have one, this is the best one to have.
Thank you, Mr. Chairman.
The CHAIRMAN. Thank you very much.
Mr. Mascara.
Mr. MASCARA. Thank you, Mr. Chairman.
You can put me in that car, too. It's nice to see both of you, and certainly it's appropriate that you're here to provide testimony. It's good see that you're on the side of the page as Mr. Wolf and US Airways and that you're working together to preserve this route.
I just wanted to go back in history a little bit to remind everybody that it was built by union labor on time.
Mr. HOHMAN. And under budget.
Mr. MASCARA. And under budget. So I want to congratulate you, gentlemen, for the role that you play here in Southwestern Pennsylvania.
The CHAIRMAN. I want to make sure the court reporter got that into the record.
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Thank you very much, Mr. Mascara.
Gentlemen, thank you very much.
Mr. HOHMAN. Thank you for having us.
The CHAIRMAN. I'm pleased to call the next panel, Mr. Joseph McGrath, president of the Greater Pittsburgh Convention and Visitors Bureau, and Mr. Tom McConomy, Chairman of the Greater Pittsburgh Chamber of Commerce and Vice Chairman for the Pittsburgh Regional Alliance.
We're happy to have both of you gentleman here today.
Mr. McGrath, would you proceed at your pleasure.
TESTIMONY OF JOSEPH McGRATH, PRESIDENT AND CEO, GREATER PITTSBURGH CONVENTION AND VISITORS BUREAU; AND THOMAS A. MCCONOMY, CHAIRMAN, GREATER PITTSBURGH CHAMBER OF COMMERCE, AND VICE CHAIRMAN, PITTSBURGH REGIONAL ALLIANCE
Mr. MCGRATH. Thank you, Mr. Chairman. It's a pleasure to be here. As you heard from others, it's a formidable group here.
Congressman Oberstar has been a family friend for years, even prior to my start in this business in Duluth, Minnesota, in travel and tourism. I know he's always been a friend of the travel industry and the aviation industry. Congress Shuster, certainly you have been a friend to Western Pennsylvania throughout your career. Certainly, Mr. Mascara, we thank you very much for your contributions to building this world-class airport.
I am the president of the Greater Pittsburgh Convention and Visitors Bureau which is a sales and marketing organization representing some 700 businesses in Southwestern Pennsylvania.
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I'm here today to emphasize the crucial role that London-Pittsburgh direct flight plays in growing and also in maintaining the international travel market in Southwestern Pennsylvania.
That market in the Pittsburgh region is a $2.7 billion industry, and the business and leisure international visitor marketplace plays an important part of that total overall expenditure.
According to a 1997 survey of international visitors to Pittsburgh by Purdue University, the United Kingdom led all countries for international visitation to Pittsburgh and has consistently placed in the top five countries for inbound travelers to this region.
Destination Marketing Limited, a London-based agency that markets and promotes travel to the United States, reports that the total number of holidays taken by the British has grown from 53 million in 1990 to over 70 million in 1998 with further growth anticipated in future years.
So you can clearly see that with British Airways' own traffic counts and the general growth that has occurred, that this is an important segment to our tourism market.
Greater Pittsburgh Convention and Visitors Bureau has worked for more than a decade to develop the U.K. market and to bring Southwestern Pennsylvania to the serious attention of British tour operators and travel agents. We have worked hard to convince these folks that our product is substantial and to dispel the prevalent misperceptions of Southwestern Pennsylvania and of Pittsburgh.
We have participated in countless sales missions alone and with the governor, the mayor, and county commissioners, as well as the Department of Commerce in this state, to interest international travelers in this destination and particularly stressing the regional cultural and historic ties to the United Kingdom.
We have sold our clients on the region's new identity as a center for technology, medicine, education and tourism. We have persistently built upon the common ground of a shared language, shared culture and a shared history.
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As a result of this persistent effort, we have finally reached a milestone and are now in 16 United Kingdom travel agency and tour operator manuals as a destination. But now that work is in jeopardy. The time and money spent is truly going to be lost, and the momentum lost as well.
Without direct service, tour operators have no incentive to develop itineraries and packages to this area. Let me quote from a couple of those. On a recent marketing mission to London in September of this year with the Pittsburgh Symphony, I quote,''Pittsburgh may be considered ...in 2000 when direct service to London is restored...'' according to Funway Holiday of the United Kingdom. ''Clients need direct service for stopover and shopping packages.'' says Major Travel PLC of the U.K.
And just last week we had the opportunity to show the editor of ''Golf Monthly'' and the managing director of Whole World Golf, which are major travel distributors and wholesalers, the product of Pennsylvania for golfers. They were enormously impressed but expressed their significant concern over the loss of direct service and their ability to sell this destination without it.
Additionally, the product known as fly/drive packaging, those that combine efficient and economical direct flight options with local car rentals, would be directly impacted by the loss of the London direct flight. The Purdue study found that fly/drive packages are a particularly appealing product in the U.K. market. The termination of direct service would devastate this particular market segment.
The U.K. leisure travel market is a significantly lucrative market. Destination Marketing Limited again reports that the median spending from the U.K. travel parties in the U.S. is $1,238. This translates into dollars spent on hotels, cabs, restaurants, services and retail stores. It translates to spending at our museums and cultural attractions, the zoo and festivals.
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The CHAIRMAN. Mr. McGrath, as a life-long friend of Congressman Oberstar, without his objection, I would be pleased to yield you two minutes of his time.
Mr. MCGRATH. Thank you, Mr. Chairman. I conclude my remarks by saying the termination of the direct service to the U.K. sheds a negative image on this city, reflects directly on our standing as a destination, directly cuts off the tremendous source of convenience and accessible international visitors to this marketplace.
Thank you, Mr. Chairman, members of the committee.
The CHAIRMAN. Thank you very much.
Mr. McConomy.
Mr. MCCONOMY. Mr. Chairman, Mr. Oberstar, Mr. Mascara, thank you very much for letting me speak at today's hearing.
Our community has had ties to the United Kingdom for over 300 years as evidenced by the very names of our city, and state: Pittsburgh, Pennsylvania. To this day, the ties between Greater Pittsburgh and the United Kingdom have remained strong, particularly business ties.
Fifty-three British firms have established successful businesses in the Pittsburgh area, including British Nuclear Fuels, part owner of Westinghouse Electric; Smith Klein Consumer Healthcare; Caparo Steel; Morse Diesel International; General Electric Company through their recent acquisition of Fore Systems; Kvaerner Metals and Siebe Appliance Controls Division.
And, if one purchases anything while at Greater Pittsburgh International Airport today, one should remember that British Airport Authority operates the AIRMALL at which such purchases are made.
In addition, hundreds of local companies are doing business in the UK. Companies such as Mellon Bank, Buchanan Ingersoll, Reed Smith Shaw & McClay, WABCO, Mine Safety Appliances, Tuscarora, Salem Corporation, Respironics, Pittsburgh Corning, Michael Baker, General Nutrition, and Cable Design Technologies. In addition, such companies as H.J. Heinz, Kennametal, Alcoa and PPG have sizable operations in the UK. My own company has two manufacturing operations in the UK and operates a third facility under contract for Thames Water.
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All of these companies headquartered in the UK or in the Pittsburgh region send their people across the Atlantic regularly. The direct air connection between Pittsburgh and London is an important asset to them.
One of the primary missions of the Pittsburgh Regional Alliance is to attract businesses to the Pittsburgh region. An early question posed by prospective employers is about the availability of air travel connections, including international air travel connections, so they are an important asset in attracting jobs.
The loss of a direct connection between Pittsburgh and London would not only represent a significant inconvenience to existing Pittsburgh area businesses, but would also create a new hurdle in attracting new businesses to our area.
In addition to the effect the loss of direct Pittsburgh-London service would have on regional corporations doing business internationally, the negative impact on businesses that provide accommodations for travelers such as hotels, restaurants and car renters would be substantial.
Since British Airways began direct service from Pittsburgh to London in 1985, the number of passengers flying that route has increased at an annual rate of 9.6 percent. In the first half of 1999, the number of passengers grew by 14.8 percent compared to the first half of 1998, so the growth rate is increasing, not decreasing.
In addition, despite no intensive sales effort to attract cargo traffic, British Airways carried over 9.27 million pounds of cargo in the Pittsburgh to London route in 1998. There is no reason to believe that British Airways' decision to abandon Pittsburgh is based on economic necessity.
Despite the long and close relationship between the Pittsburgh region and the United Kingdom and the growth of its traffic, British Airways no longer wants to maintain service between Pittsburgh and London. That is a significant disservice to our business community and the economic health of our region.
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The Pittsburgh region is in the early stages of an economic metamorphosis. It needs the continuation of a direct air link to London. U.S. Airways stands ready to fill the void that British Airways appears ready to create. On behalf of the Pittsburgh business community, I urge that action be taken by our elected representatives through your committee and by members of the administration to convince the British government to allow a U.S. carrier to fill that void if British Airways persists in their announced intention to abandon Pittsburgh.
Thank you for allowing me to speak on behalf of the Pittsburgh regional business community.
The CHAIRMAN. Thank you very much. We very much appreciate both of your testimony.
Congressman Oberstar.
Mr. OBERSTAR. Thank you, Mr. Chairman. It's good to see Mr. McGrath again, knowing his father and his family for over 35 years. You are providing the Pittsburgh area a distinguished service that your family has provided the Duluth area. Again, we've met many times on tourism issues.
I want to compliment both of you on excellent presentations and the detailed Regional Alliance business relationship presentations. It's one of the best statements of the case I've seen anywhere.
It does raise just one question. That is, given the extensive contacts explained in detail in this presentation—I just want to have the Pittsburgh-based companies doing extensive business in the U.K. and the U.K. businesses doing extensive business in the Pittsburgh regional area attested to British Airways, Virgin Atlantic and to the British government on the loss of service or appealed for the restoration of service to the Pittsburgh area.
Mr. MCCONOMY. Many of them have, and we're asking the remainder to do so as well.
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Mr. OBERSTAR. I think it would be very significant for both your British partners as well as the U.S.-based companies to appeal directly to the British government to loosen the stranglehold on the London Heathrow and on the U.S.-U.K. bilateral.
It's not sufficient for U.S. companies to ask the U.S. Government to negotiate. We need to have similar appeals and pressure brought on the British government to do the same in the upcoming talks and some urgency to get that going.
Mr. MCCONOMY. We will pursue that.
The CHAIRMAN. Mr. Mascara.
Mr. MASCARA. Thank you, Mr. Chairman.
I guess I'm asking this rhetorically. We've sat here all day and listened to how beneficial it was, the economic benefits, of flying to London from Pittsburgh. You gave some statistics, $2.7 billion in the business and leisure industry. One of the commissioners said there's a 68 percent load factor.
To the person they were saying that this is lucrative, that there is economic benefit to flying in and out of Pittsburgh. My question is, and I ask it rhetorically—perhaps the staff could sift through the testimony that was given here today—why? Why would they want to leave an established route that provides economic benefit? It just puzzles me.
It might be in the international relations field and way out of the business field. It still troubles me while I'm sitting here, and I'm looking for an answer. If anybody would like to take that on, I would like to hear from you.
Mr. MCGRATH. Congressman, I'm confused as well. I can tell you I wrote to British Airways about 18 months ago when they chose to change the configuration of the aircraft that they had serving Pittsburgh and go from a 747 to a 767. I received a response from an official of British Airways suggesting that they were changing to the 747 and going over Montreal because that was the benefit to the customer but in the spring they would restore direct service with the 767.
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So that was business logic they explained for that move at that time, and I think similar logic might apply here. There is no substantiation from a business standpoint of why you would not have direct service between these two marketplaces.
Mr. MASCARA. So there's no economic necessity to leave Pittsburgh?
Mr. MCCONOMY. We see none.
The CHAIRMAN. Thank you, gentlemen.
As this hearing comes to a close today. I want to thank everybody for the quality of testimony which we have received. We have built a record here today based on the facts. It's an overwhelming record that says the arguments are on our side, and, indeed, we intend to pursue them fully.
Some years ago somebody told me that the Chinese had a single character which represented both the word ''crisis'' and the word ''opportunity.'' I think that's what we have here today. You certainly have a crisis for the Pittsburgh area and Western Pennsylvania, but out of it could welcome an opportunity, an opportunity for a U.S.-based carrier to get the rights it should have and to provide the kind of increased improved service that the Pittsburgh region deserves.
So I know that you know we are all committed to doing everything in our power, and I thank all of you for your tremendous support today.
With that, if there's no further business, this committee stands adjourned.
[Whereupon, at 1:31 p.m., the committee was adjourned.]
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