Airport Authority a case study in market ignorance

Airport Authority a case study in market ignorance

As the Allegheny County Airport Authority was patting itself on the back for its 20th anniversary, word of another, predictable failure of command economics and corporate wealthfare was reported.

As the Post-Gazette documented it, that much ballyhooed partnership with a travel agency to market and sell charter trips between Pittsburgh and Shanghai, China, has crashed and burned. Figuratively speaking, that is.

Trade tensions are being cited, in part, for the failure. But that’s a convenient excuse, a ruse. There never was a market for these flights, despite government’s latest attempt to create one with your money. And, oh, seems nobody could find a jet to make any 2019 flights.

It was a year ago this month that China Eastern Airlines bowed two charter flights, a service that Airport Authority CEO Christina Cassotis called “a huge step forward for the future.”

The deal was replete with a huge bolus of public money. The authority agreed to pay up to $560,000 to subsidize the flights. VisitPittsburgh, the region’s publicly funded tourism promotion agency, agreed to put up an additional $300,000. A nonprofit chipped in $50,000. All to an airline controlled by the Chinese government, mind you.

But as we’ve come to learn, repeatedly, with these highly touted “deals,” all that glitters is not gold. It’s not even fool’s gold. Heck, it struggles to meet the metallurgical standard for pot metal.

Indeed, the writing was on the wall for Cassotis’ latest subsidized failure. To wit, the flights that debuted in August of last were a year past the originally envisioned start. Why? Even then, a jetliner could not be secured to make the trips. Ticket sales also lagged.

But by hook or by crook, the inaugural flight from Shanghai to Pittsburgh – on Aug. 3, 2018 — was described as “packed.” After all, it had to be in order make all the planned associated woot-wooting and hoot-hooting not look silly.

Unfortunately for the cheerleaders of command economics, the return flight that same day was only 30 percent filled. And as the P-G’s Mark Belko reports, “The same was the case for the Shanghai-to-Pittsburgh leg Aug. 11, 2018.”

The nonprofit head who called the 2018 failure “quite successful” told the newspaper that the only way to get the flight back for 2019 would have been to spend twice as much as those nearly $1 million in subsidies last year.

The marketplace isn’t just speaking, it’s shouting.

Oh, and just for the record, the Airport Authority would not confirm for the newspaper how much it actually paid out for this latest failure; the subsidies were tied to ticket sales.

Surely – surely – and on top of subsidized failures that just mount and mount, Cassotis has learned her lesson, right?

Nope.

Said the Airport Authority in a statement: “We continue to believe in the strength of the China market and are excited about future opportunities to offer nonstop service from Pittsburgh to Asia.”

As we noted last summer regarding such machinations:

“It is not now, nor has it ever been, in the proper purview of government to become any kind of perverted alms-giver to those alms-unworthy enterprises whose default position is to off-load any amount of financial risk that, in pursuit of profit, they alone should bear.

“That Allegheny County officials keep insisting otherwise reflects quite poorly on their judgment. A public so repeatedly despoiled should take great umbrage at so consistently being treated as rubes.”

Then as now.

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