Colin McNickle At Large

More airline subsidies (& more nonsense)

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The command marketeers at the Allegheny County Airport Authority are at it again, throwing more public money at yet another airline to reduce its start-up risks. Sound economics and/or good public policy this is not.

China Eastern Airlines will offer two nonstop flights this year – Aug. 3 and Aug. 11 — from Pittsburgh International Airport to Shanghai, China. And like so many highly touted examples of faux progress before it, these flights will be heavily subsidized by public agencies.

To wit, the Airport Authority will pay up to $560,000 (that’s half-a-million dollars plus $60,000). But wait, the purveyors of the involuntary public investment in a business have put up even more: VisitPittsburgh, the region’s publicly funded tourism promotion agency, will pay an additional $300,000.

That’s $860,000. That’s more than three-quarters of a million dollars. That’s just $140,000 shy of a million bucks. To a carrier controlled by the Chinese government, mind you.

Airport Authority CEO Christina Cassotis calls this latest example of airline corporate wealthfare “a huge step forward for the future.”

“We are the first U.S. market to tap into China’s fast-growing tourism market with this type of business model,” she said of the “charter-to-scheduled service model” being employed.

Maybe there’s a reason for that?

These flights originally were to begin last October. They were delayed to allow a tour operator to sell more tickets. That should have been a red flag.

And, if it’s such a “fast-growing tourism market,” why are subsidies required?

Allegheny County Chief Executive Rich Fitzgerald even plays the Amazon card in rationalizing this deal, saying it could help the region land Amazon’s “HQ2.”

And he notes that UPMC, Pitt and Carnegie Mellon University all have ties to China. Well, if he’s implying there’s also a business market demand for these flights, let these entities buy the tickets to cover the costs.

Class, here’s how this is supposed to work. Why, yes – a business studies a market, concludes there is a potential to turn a profit, then it risks its own capital in pursuit of that profit.

The oxymoron of government-created “markets” is a recipe for failure. Can you say ObamaCare?

Other airlines are into the Airport Authority – the public kitty — to the tune of about $2.5 million or more. And one of those deals – with Qatar Airways – incomprehensibly incentivizes the cargo carrier to fail.

Yet, time and time again, we are told “this is how business is done.”

But where does it all end?

When the real marketplace is so perverted that no airline will fly into Pittsburgh without subsidies?

When the real marketplace collapses under the hubris of governments and public authorities mistaking paid “progress” for demand progress?

It was a year ago last Friday that President Donald Trump invoked Pittsburgh as he pulled the United States out of the highly dubious Paris Climate Agreement.

The president reminded that he was elected to represent “the citizens of Pittsburgh, not Paris.”

To which Pittsburgh Mayor Bill Peduto, an avowed climatist, took great umbrage.

And on Friday’s anniversary, the Post-Gazette went back to the mayor for an update. His words are instructive, and not in a constructive way.

Peduto, who’s administration says it will continue to adhere to the Paris accord, claims Trump’s remarks galvanized America’s mayors to act on climate change. And he cited Pittsburgh’s own “Climate Action Plan Version 3.0.”

That would be a plan heavy on divesting, operationally and financially, away from fossil fuels but a plan largely bereft of any meaningful cost-benefit analysis.

Peduto also told the P-G that the president’s year-ago comments were rooted in the Erstwhile Steel City’s past as a leader in fossil fuels while he and his climatist brethren are concentrating on the future and renewable fuels.

Never mind how it is that fossil fuel past that created such great and beneficent philanthropic institutions, those that such “enlightened” contemporary leaders continue to lean on and tap.

There’s word out of Harrisburg that the state Department of Community and Economic Development (DCED) has created a “wholly new economic development program” as part of Pennsylvania’s bid to entice Amazon to build its second headquarters outside Seattle in the Keystone State.

Just don’t ask for any details. For, as per usual, a public agency using public dollars to grant public incentives to a giant and very profitable company wants to keep “investors” – taxpayers – in the dark.

There has been much speculation that the commonwealth has offered Amazon $1 billion in some form or another. But nobody’s giving up the ghost; DCED claims its incentive plan is confidential proprietary information.

Actually, it’s public information.

Greater Pittsburgh’s offer also is being kept hush-hush. And despite a state Office of Open Records ruling that such an offer also is public information, those behind it are using even more taxpayer dollars to fight the ruling in court.

This is bad governance and horrid public policy prosecuted by those who treat their bosses – taxpayers – as annoyances.

And there’s word from Grant Street that People’s Natural Gas — which not long ago approached Pittsburgh about some form of cooperation to help fix the city’s long in the tooth water and sewer system but was rebuffed – now is considering building a new water plant to serve the city.

Whether its intent is to build a separate, parallel and private water-delivery system or is to leverage the city into cooperating is unknown. But the Post-Gazette says the utility has had conversations with members of City Council and it was Mayor Peduto who revealed People’s continuing interest to the P-G.

All that said, the mayor and an activist group appear to be adamant that Pittsburgh’s water and sewer system remain publicly owned. The latter has taken to demeaning the People’s entreating, even going as far as raising a red flag about profit-siphoning.

Really? As if the train wreck and political machinations of the Pittsburgh Water and Sewer Authority (PWSA) were an asset serving the public interest? Given the near-collapse of the system and the state Legislature forcing the PWSA to fall under state Public Utility Commission oversight, it is the definition of a public liability.

Colin McNickle is a senior fellow and media specialist at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

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Colin McNickle
Colin McNickle

Colin received his B.G.S. from Ohio University. The 40-year journalism veteran joined the Institute in October 2016. That followed a 22-year career with the Pittsburgh Tribune-Review, 18 as director of editorial pages for Trib Total Media. Prior that, Colin had a long and varied career in media — from radio, newspapers and magazines, to United Press International and The Associated Press.

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