The cheerleaders for bad public policy are out in full force in advance of Tuesday’s resumption of British Airways’ nonstop service between Pittsburgh International Airport (PIT) and London’s Heathrow Airport.
There’s at least one glowing story in local media (with others sure to follow) that labels the hefty public subsidy for the flight “a bargain.” After all, some other airports have paid, or were willing to pay, far more to turn taxpayer dollars into venture capital.
There’s the industry strategist who touts all the “air service wins” at PIT but, conveniently, omits the plethora of publicly subsidized failures. WOW. OneJet. Qatar. Others.
There’s the trumpeting yet again of the annual economic impact of the flights – why, it’s a veritable perpetual income machine, some are wont to boast — never mind the study repeatedly cited redefines the word “bogus.”
And there’s the usual cadre of public officials junketing in London in advance of the return inaugural flight to glad hand, back slap and brace snap. Oh, yeah, we’re doing the people’s business, too, they defend themselves.
Sigh.
Basic questions abound with this latest taxpayer-subsidized air service to end all taxpayer-subsidized air service. The primary one is this:
If there’s such the “pent-up demand” for British Airways’ service to PIT — as the lead talking point goes — why should the public be paying $1.5 million a year for the next two years to secure it?
And why shouldn’t Corporation A and Corporation B, touting how much the service will benefit their operations, pay the premium above and beyond the voluminous ticket sales they envision?
Devotees of publicly subsidized “progress” argue that spending $3 million for an economic impact return approaching $114 million is a no-brainer.
But that latter number — $57 million a year — is based on a highly suspect economic impact assessment that Allegheny Institute President-emeritus Jake Haulk disemboweled last summer (in Policy Brief Vol. 18, No. 31) last summer.
In fact, many, if not most, of the study’s assumptions are grossly inflated – from projections as to how full each flight will be, to spending and who will spend it, to job creation and the types of jobs and how much they will pay.
So eviscerated was the study by Haulk that it should be hanging from a tripod like some whitetail in deer season.
As Haulk, a Ph.D. economist, further assessed the return of British Airways:
“(W)ith the most probable effects of the subsidy being to damage competitors while increasing the net outflow of resource from the region, it is hard to see any upside to handing tax dollars to the airline.”
And do remember that in a perversion of perversions, the British Airways subsidy most assuredly led to the previously subsidized Delta Air Lines pulling out of Pittsburgh.
The bottom line, as Haulk and Allegheny Institute Executive Director Frank Gamrat reminded last November (in Policy Brief Vol. 18, No. 41), is that if “demand is truly there, the airlines will create supply and assume the risk attendant to the commercial-carrier business.”
Allegheny County Chief Executive Rich Fitzgerald told the Post-Gazette that he hopes the return of British Airways “sends a signal that Pittsburgh is back.”
“Pittsburgh is a vastly different city than we were in 1999 (when British Airways ended service). There’s much more economic growth, much more economic impact. We didn’t have Google, all the autonomous vehicle companies, Facebook … There are just so many things that are more positive today than there were in 1999.”
Added Christina Cassotis, CEO of the Allegheny County Airport Authority, “I think we’ll do better than what (British Airways is) hoping for because there’s so much pent-up demand.”
Well, again, if all that Fitzgerald and Cassotis say is true, it’s the perfect argument not to throw $3 million in public money at British Airways. Heck, travelers should be demanding ticket auctions be held because of all the sold-out flights.
Stated the headline on the P-G story billboarding British Airways’ return: “Too much to ignore – British Airways takes a chance on a resurgent Pittsburgh.”
But what’s really too much to ignore are the economic facts that make this deal – and all similar subsidized deals that preceded it and those that surely are to follow — the marketplace perversion and taxpayer slap it is.
Back to WOW Air.
It was in November 2016 that Cassotis called the $800,000 in public subsidies to the WOW an “investment that will pay off.”
But the airline, based in Iceland, stopped serving Pittsburgh on Jan. 11. And, on Thursday, word came that WOW had ceased operations worldwide, leaving passengers on two continents stranded.
A few days after WOW bugged out of Pittsburgh, the Airport Authority said it would seek a return of $187,500 of that $800,000 and nearly $378,000 in landing and gate fees that would have been waived had the airline honored the two-year deal running through this June.
Inquiring minds wanted to know if WOW ever paid up.
“No,” authority spokesperson Bob Kerlik emailed this scrivener on Thursday.
One can only imagine that recovering the money will be like milking blood from a turnip now that WOW has bellysmackered into the desert of publicly subsidized, low-fare air carriers.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
