BA to return. So do our doubts
British Airways (BA) has announced, and the Allegheny County Airport Authority has confirmed, that the airline will resume its publicly subsidized nonstop flights between Pittsburgh International Airport (PIT) and London’s Heathrow Airport on June 3.
But the same questions we long have been posing about this flight remain valid today. As do our conclusions.
It was after a 20-year absence that British Airways resumed flights at PIT in 2019. In a two-year deal, the authority agreed to pay BA $1.5 million each year. The airline received the first installment but then halted the service in March 2020 because of the Covid-19 pandemic. That service suspension was characterized as “permanent” at the time by BA.
But the lifting of a travel ban between the United States and Europe appears to be the impetus for the flight’s resumption. It is expected to return under the original financial agreement, meaning, once service is resumed, it will be paid the second $1.5 million of the original $3 million agreement.
Why that public “juicer” was needed to lure British Airways back to PIT remains a good question. After all, BA predicted the four-day-a-week flights would be profitable. And all parties involved touted the return as no less than a financial be-all and end-all, producing tens of millions of dollars in economic benefits for Pittsburgh.
More on that in just a bit.
So, what was the utilization of this flight in the under a year that it did fly? Nobody’s really said.
And Christina Cassotis, CEO of the authority, says anew that “it’s important that this flight succeeds.”
Does that mean a new round of public subsidies beginning in June 2023 if it doesn’t?
And what of the effects of the seemingly never-ending Covid variants, one of which – Omicron — now is running through the U.K., if not the world?
Back to those multimillion-dollar “benefits” touted upon British Airways’ 2019 return and repeated still in news stories — $50 million in annual economic benefits, to be exact.
At the time of the original BA return announcement, the Allegheny Institute raised serious doubts about that claim (in Policy Briefs Vols. 19 & 18, No.’s 14 & 31, respectively):
“British Airways’ return to Pittsburgh has been hyped as a ‘win’ for PIT,”
a summary of one study began. “However, concerns about the poor track record of subsidies to carriers provided by the airport and the poor quality of the estimates of economic impact create very serious doubts on the advisability of subsidizing British Airways flights at PIT.”
That is, the economic benefits surely were overstated, as they are wont to be in such government-subsidized deals.
Additionally, one study concluded:
“For some reason, the so-called [travel] gurus apparently do not understand that air travel demand depends on the size of the population and its income in the collection area that are disposed to fly—especially overseas.
“In a region with little or no population growth and slow employment gains with those heavily concentrated in lower income jobs, overseas air travel demand is not likely to be growing rapidly, if at all.
“Artificially stimulating demand by subsidizing travel is a dreadful misuse of tax dollars since much of the benefit will go to people who would have traveled without the subsidized fares, as well as to the carrier. …
“Unless the British Airways flights to PIT are carrying a much higher percentage of passengers from outside the country than local passengers, the taxpayers are actually ponying up to send more tourist dollars out of the region than are coming in from abroad.
“And that is definitely the expectation of British Airways. It forecasts approximately 70 percent of travelers on its Pittsburgh flight will be U.S. citizens, primarily from the Pittsburgh area. Thus, British Airways gets the fare revenue of the passengers that leave the country immediately and then they go to England or Europe to spend lots of money.
“Compare that to the planes flying from London to Miami, Orlando, Tampa, Las Vegas, New York and Phoenix for example. They are no doubt carrying a large percentage of foreign tourists to the U.S. rather than the other way around.”
Concluded another institute study:
“(T)he most probable effects of the subsidy will be to damage competitors while increasing the net outflow of resources from the region, it is hard to see any upside to handing over tax dollars to the airline.”
And nothing has changed that assessment, no matter how much PIT and other public officials cheerlead to the contrary — including the “I told you sos” of Christina Cassotis, and the “economic driver” promises of Allegheny County Chief Executive Rich Fitzgerald.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).