In its zeal to defend taxpayer subsidies to bribe airlines to fly in and out of Pittsburgh International Airport (PIT), the Allegheny County Airport Authority has consistently, and unwittingly, made the case for not subsidizing them.
To wit, a Post-Gazette story last week details the $5.25 million in state taxpayer dollars that will be paid to Aer Lingus over two years for direct flights between PIT and Dublin.
And the Airport Authority, as it invariably does, defends the subsidies by noting the “great demand” for such flights, replete with great economic rewards.
In the case of the Aer Lingus flights, that demand will be fueled by the myriad Pittsburgh-area businesses that have operations in Ireland, officials say.
Additionally, Airport Authority CEO Christina Cassotis told the P-G that PIT prioritized Ireland after pooling publicly available “T-100” data from the U.S. Department of Transportation. That metric can estimate how many people travel between Pittsburgh and Dublin each year through ticket samples, Cassotis says.
And that can also be used to “model” how many people might use the new flights for connecting flights to other locations in Europe, such as Amsterdam, over the existing options British Airways already offers, she noted.
So, the Airport Authority, in conjunction with Aer Lingus (we can only suppose) determined that between Pittsburgh business interests and connecting flights, there was sufficient demand to support the Pittsburgh-Dublin flights.
But that should be the argument against subsidies, not for them.
Pittsburgh and Pennsylvania taxpayers have absolutely no business subsidizing airlines, let alone the business interests of any company. Neither should it be subsidizing access to connecting flights from Dublin to other foreign outposts for travelers, business or private.
That, in reality, exports local dollars, as Allegheny Institute President-emeritus Jake Haulk often has detailed. Flawed economic impact studies purportedly showing great economic benefits to the region from subsidized foreign flights only undermine benefit claims. And we’ve still seen no accounting to support those studies’ claims.
The bottom line in all this is elementary, as yet another artificial intelligence (AI) summary concludes:
“Subsidizing airlines often creates market distortions by favoring established carriers, reducing competition and misallocating taxpayer funds, rather than fostering efficient, demand-driven growth. These bailouts can lead to ‘subsidy traps’ where airlines rely on government support and can inflate ticket prices for non-residents.”
Furthermore, “Instead of direct subsidies, some argue for allowing market forces to dictate service and for the government to focus on infrastructure development or supporting competitive market conditions,” the AI summary found.
From the same AI assessment, here are some of the key problems with subsidizing airlines:
- Market distortion and unfair competition: Subsidies often, unfairly advantage large, established carriers over smaller, more efficient competitors. For instance, recent bailout funds significantly benefited nine major carriers, with the largest receiving the biggest amounts — even while they reduced services.
- Inefficiency and “subsidy begets subsidy”: Reliance on government aid can hinder, rather than help, economic growth. In many cases, these, subsidies do not produce the promised economic benefits, leading to a vicious cycle where one subsidy requires another.
- Misallocation of public funds: Funds used for airline subsidies could often be better spent elsewhere. Furthermore, subsidies can create high costs per passenger, in some cases with routes costing more in subsidies than the value of the service provided.
- Reduced incentives for efficiency: When airlines are shielded from market forces by government funding, they may not operate efficiently.
- Negative impact on non-residents: Subsidies for local residents can actually increase ticket prices for non-residents, as carriers may increase prices to capture the subsidy, leading to reduced tourism.
In our view, the specifics of this assessment are spot on.
So, if AI, based on all available information, can come to such a logical and correct conclusion, why can’t those who keep foisting these airline-subsidy schemes upon taxpayers do the same thing?
Well?
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
