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Airports Turn to Oil and Gas Drilling to Boost Bottom Line

/ Source: CNBC.com

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Like other airports, Pittsburgh International supplements its revenue from airlines with fees from parking, concessions, advertising and other sources.

But now that the FAA has given its approval, "other sources" for PIT is oil and gas drilling. It has a deal with Consol Energy that came with a $50 million signing bonus and the promise of payments and royalties of an estimated $25 million annually for at least the next 20 years.

"Other airports have other advantages. They may have better flight patterns or be close to major markets," Allegheny County Executive Rich Fitzgerald told CNBC. "But we have this natural gas that others may not have."

Federal Aviation Administration rules restrict how airports can spend drilling dollars and other non-aeronautical revenue.

"So we can't take this new money and put it into the jail or the court system or the park system," said Fitzgerald. The county is using the cash to reduce landing, terminal and ramp fees paid by airlines. "That makes us more desirable and will help us attract more airlines and more flights to our airport," he said.

Pittsburgh International isn't the first airport to dig deep in the ground for extra revenue. Drilling contracts generate cash for Dallas/Fort Worth, spokesman David Magaña told CNBC.

DFW received a $186 million bonus from Chesapeake Energy for a natural gas exploration lease signed in 2006.

"We had plans for as many as 300 wells on airport grounds," Magaña said, "but we stopped at 112 in 2010 because of the drop of natural gas prices in the market."In 2008, when drilling began, DFW earned $33.9 million in royalty revenue. In 2013 royalties were $5.3 million.

"We certainly earn more money from other things," said Magaña. "For example, we probably earn about $120 million a year on parking. But the gas revenues are a bonus that allows us to do things we wouldn't have done."

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