Is it a tale of woe that could not come at a worse time for Arnold Palmer Regional Airport in Westmoreland County? Or is it a rather fortuitous development?
Spirit Airlines, the airport’s only carrier and mere months out of Chapter 11 bankruptcy reorganization, warned investors this past week that it might run out cash within a year and be forced to liquidate.
“Because of the uncertainty of successfully completing the initiatives to comply with the minimum liquidity covenants and of the outcome of discussions with our stakeholders, management has concluded there is substantial doubt as to our ability to continue as a going concern within 12 months from the date these financial statements are issued.”
And it comes smack-dab in the middle of Palmer’s $28 million expansion project now set for completion in 2027. The project is being paid with a combination of federal, state and county tax dollars.
Per the Tribune-Review, “the new terminal will be more convenient for residents and travelers alike … and will provide more opportunity for people to visit Westmoreland County and the Laurel Highlands as airport officials seek to attract new flights.”
Again, and depending on your outlook, the Palmer expansion project couldn’t come at a better time – if Spirit somehow regroups and the expansion attracts a new airline or airlines. Or at a worse time – if Spirit indeed folds and no other airline or airlines bite(s).
Spirit has struggled for years. But so, too, has the airline industry this summer with falling consumer confidence that has resulted in lower leisure travel demand and a capacity glut. Many airlines and airports were counting on a continuation of the spring surge in leisure travel to continue to climb out of the travel industry’s COVID-19 malaise.
Some airlines, including Spirit, have blamed Trump administration tariffs for dampening any growth outlook. Spirit says tariffs have forced it to consider canceling Airbus orders, recounts Jake Hardiman, writing at simpleflying.com. As have issues with Pratt & Whitney engines. Spirit’s capacity is down 26 percent over a year ago; pilot furloughs now number in the hundreds, Hardiman says
But Jake Haulk, president-emeritus of the Allegheny Institute, reminds that “low-cost carriers come and go, get merged with more profitable carriers” (something Spirit tried and failed to do in the face of government anti-trust objections) “or fade into the dustbin of many failed carriers.”
Haulk, a Ph.D. economist, also categorically rejects the tariffs argument as “by far the lamest excuse yet.”
“With falling fuel prices, airlines are getting a break,” he reminds. And Haulk speculates that “too many flights and reports of close calls for several flights this year have no doubt deterred travel.”
Back to the Arnold Palmer challenge.
Indeed, the facility had the foresight to upgrade what by most accounts was a regional airport that had become seriously long in the tooth. And that indeed should help it attract another carrier that can either replace or complement Spirit.
The former would preserve carrier service while the latter would create a more competitive environment that should lower price points.
But what airport officials, and in possible coordination with state officials, should not do is pervert the marketplace by dangling taxpayer subsidies for either a “saved” Spirit and/or another carrier to replace or compete with Spirit.
It must use fundamental business principles and practices to facilitate air travel at Palmer. And upgrading the Unity Township airport is just that sound move.
But attempting to command the market by allowing Spirit or any airline to offload onto taxpayers any of the costs and risks that they alone should bear should be a nonstarter.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
