The return of Qatar
The Allegheny County Airport Authority is touting the return of Qatar Airways’ cargo flights to Pittsburgh International Airport as subsidy-free. But that’s a wee bit of a misnomer.
You may recall that Qatar first arrived at PIT in October 2017 with a sweetheart deal that incentivized it to not meet volume goals. That is, taxpayers paid Qatar to fail.
And fail spectacularly it did, not coming close to the monthly average of 480 tons of cargo needed for the Airport Authority to not have to play Santa Claus with public dollars.
The payday for Qatar was equally spectacular — $1.48 million. Again, to fail.
A “restructured” deal for the second year capped the failure subsidy at $780,000. Three months after that contract expired, in September 2019, Qatar pulled out in December 2019.
And, yet again it’s apparent that Qatar was incentivized to fail, no matter with a smaller carrot tied to the public stick.
The authority now is calculating how much the public will have to pay the airline. But, rest assured, an authority spokesman tells the Post-Gazette, “we expect the amount will be less than a quarter of the first-year cost.”
Feel better? Don’t. Do the math. That means the subsidy that the newly returned and “unsubsidized” Qatar soon will be paid will be something under $320,000 for its second-year failure.
Yes, indeed, the new contract has no Santa clause. But given when Qatar will be paid (expected in the new year), it’s still being subsidized.
And even in this new and technically unsubsidized deal, there’s the same red flag that helped to ground Qatar before.
Its new partners in the resurrected venture are freight forwarders Unique Logistics International, Apex Logistics International and Expo Group in Bangladesh.
Marc Schlossberg, executive vice president of sales, marketing and air freight for Unique Logistics, tells the P-G that the biggest problem locally is not the cargo coming in but the cargo going out and there’s not nearly enough volume.
“You have to fly both ways,” he told the newspaper, “If it’s empty one way, it doubles your cost. That’s always been a challenge.”
Continued the P-G: “If Pittsburgh truly wants to be a cargo hub, more local companies need to step up and route their cargo through the airport, not the major gateways, as many do now, (Schlossberg) said.”
Thus, the new problem looks a lot like the old problem – not enough demand.
The Airport Authority, in its initial agreements with Qatar, attempted to juice that demand. It failed and incentivized that failure. If the new deal fails, it will fail without the public backstop, which is as it should be.
But the bottom line remains that Qatar never should have been subsidized in the first place and certainly not in a deal that attempted to command the marketplace and offered a hefty payday for failure.
By the way, the Airport Authority’s announcement of the new Qatar deal, posted in its blueskypit.com house organ, makes no mention – zip, zilch, nada – of the prior taxpayer subsidies.
And it even goes as far as quoting a PIT official as crediting the original Qatar experience to “jumpstarting” cargo at the Findlay Township facility.
That same airport official claims the “initial Qatar Airways Cargo flights illustrated to the cargo and business community that service can work and that Pittsburgh is a cargo solution to the worldwide freight ecosystem.”
We guess there are parallel universes and then there are parallel universes.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (email@example.com).