A new, secretive subsidy for British Airways

A new, secretive subsidy for British Airways

There was a little something missing from the Allegheny County Airport Authority’s news release last week that British Airways (BA) will, beginning next spring, increase the number of days it flies between Pittsburgh International Airport (PIT) and London’s Heathrow Airport from four days to six.

That would be that the two additional flights, bowing this coming April and May, will cost the public an additional $500,000. That’s on top of the $3 million bribe that the Airport Authority gave to British Airways over two years to restore service to PIT after a 20-year absence.

In a Post-Gazette story, an authority spokesman revealed (we assume only when asked about any additional subsidies) that the extra half-million-dollar sweetener was an option included in the original $3 million deal. Funny, but we don’t remember the Airport Authority revealing that back then.

And nobody mentioned that option money when county and business officials took a recent junket to London to seek expanded service, now did they?

“These additional flights are a vote of confidence in the strength of this market and the region,” Allegheny County Chief Executive Rich Fitzgerald is quoted as saying. “During our recent trip to London we were able to showcase our region, and we look forward to the additional opportunities our community will have because of those efforts.”

Well, if BA is so darn confident in the strength of the Greater Pittsburgh market – that, statistics show, continues to be quite stagnant – why do its palms have to be greased with more public money?

Hmmmm?

Additionally, Fitzgerald says the existing BA flights have been “full.” Well, if that’s the case, and there’s such a great demand, why do these flights have to be further subsidized.

Well?

As Airport Authority CEO Christina Cassotis is quoted by her in-house public relations organ, “Pittsburgh is a global brand, and we need to tell that story whenever and wherever we get the chance. That’s vital to building partnerships and increasing international air service. Thanks to our partners at British Airways for taking the time to understand and believe in this market.”

We guess it’s a little easier to “believe” when you’re getting a giant wad of public cash to do so, right?

British Airways’ director of network and alliances, Neil Chernoff, is quoted as saying the airline “is delighted to be increasing our flight frequency from Pittsburgh to London next summer. As the only airline to operate a direct route between Pittsburgh and London Heathrow, these additional flights will give our customers even greater flexibility when travelling to Britain and beyond.”

Again, while pocketing a cool half-million dollars. And it appears that these two additional flights are not guaranteed past October 2023, the P-G also notes.

Without even mentioning in its official news release the latest in a long line of airline subsidies that appear will never end, the Airport Authority appears to set up a defense of this latest spate of corporate wealthfare.

Without publicly releasing it, the authority cites a study that it says projects “direct, indirect and induced economic impact of the additional flights” to be “$12,342,000 ($12.34 million).”

If said study is anything like a prior study that claimed millions upon millions of dollars of economic benefits from the returned BA flights a few years ago, we can almost guarantee that said benefits are wildly – and, in the local media, widely, and without question – overstated.

It was penned back in 2010 but an assessment of such subsidies by CBS MarketWatch scribe Brett Snyder remains just as spot-on today:

“One of the favorite airport tricks these days is to throw out subsidies to try to get airlines to start flying new routes. Historically, this is a plan that has failed miserably. The airline comes in until the subsidy runs out and then runs away screaming. …

“As a general rule, if you as an airport think there’s some insanely large untapped market that nobody knows about, you’re probably wrong. The airlines do this for a living, and if there’s a missed opportunity, they’re likely to find it.

“In nearly all cases, it’s best to just work on lowering your operating costs as much as possible to try to attract service for the long run. Otherwise, you’ll just end up paying for service for a couple years and then end up with nothing.”

Or, as seems to be the case with British Airways, paying perpetual subsidies and at great public expense.

But back to how we began this commentary to end it:

That the Allegheny County Airport Authority chose not to includes news of this latest subsidy in its official news release on the additional British Airways flights speaks volumes.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).