If the defnition of insanity really is “doing the same thing over and over again and expecting a different results,” then it's time to send Huntsville International Airport executives to counseling. Yesterday, the airport authority voted to pay airlines serving the airport $6 million to lower fares and improve customer service.
The Huntsville International Airport Authority approved a resolution Tuesday morning that will offer more than $6 million in credits and incentives to airlines that lower fares and improve customer service.
The goal is to get airlines to lower fares enough to prevent the local market from driving to Birmingham or Nashville airports, both of which are served by low-cost carriers.
Specifically, the airline will be paid (via “incentives” and “credits”) to:
- Improve customer service: $1 million
- Compete with each other to increase air traffic to and from the airport: $2 million
- $3 million to be shared by all airlines to increase traffic. If the increase in passengers exceeds the goal, the airlines get an extra $15 per passenger as a reward.
Pay attention air travelers! There's a bounty on your head and the airlines are going hunting for you – using public money.
Now, other than the fact that we're using public money to subsidize private companies to improve customer service (really?), let's look at how well these schemes have worked in the past.
I found this very enlightening grant proposal from 2009 where the Huntsville International Airport is requesting a $1.5 million federal grant (to be combined with $1.8 million in local funding and fee waivers.(page 24) It was to be used to help lure AirTran.
The grant proposal is a 109-page PDF, but well worth the time to download and review. In it, the airport details previous efforts to increase passenger traffic and lower fares by subsidizing new carriers.
In 2004, the airport received a grant to subsidize now-bankrupt carrier “Independence Air” (it stayed 16 months) and in 2007, handed out “incentives” to Allegiant Air, which stayed less than a year.
So naturally, in 2009, the airport wanted more money to “do the same thing over and over.” And, although the grant application cites the airport's “successful implementation” of the 2004 grant as a reason to get another one, page 14 contains this nugget:
However, the program proved to be less successful than originally anticipated. Initially carriers were willing to participate in programs to lower fares, but the response was mediocre at best. Additionally, theairport was successful in attracting Independence Air to provide low cost service; unfortunately, the company went out of business in 2005.
Just months after low-cost airline AirTran launched bargain flights from Huntsville, airport officials warn the carrier could pull out unless passenger traffic picks up.
AirTran no longer serves Huntsville, but that's because it was bought by Southwest Airlines just a few months later. What's that noise? The sound of $3 million being flushed down the toilet... Actually, it was more than $3 million – keep reading……
But the money wasn't wasted – not really, explained the airline industry consultant that the HSV/Madison County Airport Authority had hired to help them lure AirTran in the first place. Without AirTran, he said, Southwest wouldn't give the city a second look and warned that people had darn well better fill up those planes:
Southwest will stay in Huntsville if the Baltimore and Orlando routes are profitable, he said.
“We need the flights we have today to do well if we want to keep Southwest here,” Hylton said.
The airport and the city are providing AirTran a cash and in-kind package worth $4.5 million to help provide service to Huntsville.
Two weeks ago when the Southwest deal was announced, AirTran had burned through $1.5 million of $2 million that the city routed through the Industrial Development Board to cover AirTran's monthly operating losses.
The City Council in May agreed to send $2 million to the Industrial Development Board to subsidize AirTran's operations. The city's $2 million came from the Airport Authority, which repaid a $2 million loan from the city in 1992 to buy land for expansion. The Federal Aviation Administration later reimbursed the airport for the land purchase.
About $364,000 from a $1 million federal grant to help market the low-fare carrier had been spent at the time of the announcement.
In addition, the airport is waiving about $1.5 million in landing fees for AirTran.
But… oops! Southwest took a pass on Huntsville.
So what is the Airport Authority planning now? Hey, if
$3 million $4.5 million in bribes didn't work. Let's try $6 million!
Albert Einstein was right: this is total insanity.