Off the Cuff By Chris A. Porter cporter@prescottaz.com WNI Web Developer and PVtrib.com webmaster shares his perspective on technology, local and national politics, and life in the Quad-city area.
Thursday, July 16, 2009
Rural air gets a boost; smart move, more industry welfare or just plane crazy?
I'll be the first to admit, I've grown a bit concerned regarding the magnitude of failed industries Americans have been persuaded to bankroll via bailout packages approved by our elected officials over this past year. Heck, what do I know? I'm a techie, not some self-proclaimed economic guru. This is all part of a bigger plan to turn things around financially, right? I mean, aren't these politicos all supposed to know exactly what they're doing? That's why we elect and reelect them, RIGHT?
However, I recently read an AP story that has my skepticism meter pegged at "they're all seemly making this up as they go" levels. Hmm. Unsettling trend...
The House Appropriations subcommittee approved a 40% increase to the budget of Essential Air Service, a program that provides subsidies to certificated air carriers servicing small communities like Prescott. This provides an additional $53 million, totaling $173 million, in the upcoming budget year for small airlines to fly routes that are mostly unprofitable.
In our current era of economic malaise, I'm trying to wrap my head around how subsidizing flights that are nearly always empty can in any way be justified as a sound investment for America's financial future. In my limited understanding, said government program came as a response to the passing of the Airline Deregulation Act in 1978 which allows US carriers to determine their own pricing for specific air services, even if said services are unprofitable in the long term.
The Bush administration tried unsuccessfully to trim down the budget of this widely-criticized program by attempting to cut around 50% of the scheduled stops, especially those located near larger international airports, as well as making local governments served by these subsidized air providers contribute to the overall operational costs.
The program has garnered support from many current senators and lawmakers who petitioned the White House budget director to increase its funding citing factors such as higher fuel prices and industry drop off. President Obama included the increase to the program in his February submission.
I suppose I'm sort of at a loss here, logistically speaking. If a program continues to lose money operating using a proven unprofitable business model, why, again WHY are our elected officials so resigned to continue throwing more money at it rather than addressing the root of the issue? To a conscientious observer like myself, the whole thing reeks of industry welfare. And for what? Simply for the convenience of having air service nearby? As far as I'm concerned, no thanks, feel free go ahead and divert this money elsewhere.
This project subsidizes airlines covering small communities throughout 31 states. Many, like Prescott, are located within 100 miles of a major airport. Often the subsidies far outweigh the actual operational expenses due to low passenger turnouts annually. Feel free to correct me if I'm mistaken, but what this seems to scream at me is that without subsidy, it is impossible for these carriers to compete in a normal business environment without being propped up in some way by taxpayers! The current model is not financially viable, so our elected officials continue to support it anyway? What gives?
Unless my powers of observation are murkier than I imagined, didn't we just do something similar recently with a certain bankrupt unnamed automaker? Again, I'm no financial genius, but at what exact point does the support of our nation's failed lower industry business models magically turn into overall economic growth? Is this akin to some sort of reverse osmosis theory? Will there be any explosions? Help me out Washington, because apparently I'm just not seeing this 'big picture'.
What I am seeing looks like government waste - plain and simple. Sure, it might sustain a few jobs here and there, but do those jobs outweigh the seemingly endless stream of taxpayer dollars being funneled into a failing part of the transportation industry? Why not eliminate the barely used routes? If the same amount of fuel is being burned and the subsidies are paying out the same amount of money to air carriers regardless of whether they're flying three or thirty passengers, then why not cut out the less utilized routes and simply divert those underused travel bucks into areas catering to lucrative, highly populated destinations, therefore making air travel into frequently utilized airports *gasp* MORE efficient? Crazy talk to some, I'm sure. I don't know who's benefiting the most from this current system, because it definitely doesn't seem like it's us taxpayers.
There are going to be some that criticize my indifference to the usefulness of these airlines, especially since Prescott's nearby airfield hosts Great Lakes Air, a subsidized carrier. Here are a few reasons why I don't find this particular service necessary:
Routes: The Prescott-to-Phoenix route never made much sense to me. Based on my own personal experience, driving to Phoenix even via shuttle has always proven to be much faster than flying in from Prescott. Low ridership has been a telling indicator. I'll be the first to admit, Prescott and the Quad-City areas can benefit from many things: however, limited commercial air service doesn't seem to even make our 'community needs' short-list.
Delays: To keep receiving subsidies, sometimes the carriers that participate in the Essential Air Service program need to switch to more lucrative routes. If this is done on short notice, then it can introduce new problems regarding where planes are coming from/going to, which can cause severe delays. Again, based in personal experience, it has been a constant problem.
Limited destinations: The handful of smaller hub destinations these carriers provide air service to is great only if you do a lot of business in those areas or have friends/family nearby. If not, flying into many major international destinations from Prescott can cost you a day (via multiple stops/layovers) and up to 4 times more money than departing from an international airport.
What do you think? Does increasing funding to a federal program supporting air carriers that seem to simply bleed money away yearly in order to service smaller communities at a loss sound like sound fiscal strategy to you? Is this game plan eventually going pan out and help to turn us around economically in the near future?
As always, your thoughts are welcome and appreciated.
