Talk that low-cost carrier Southwest Airlines might enter the Wichita market has the usual cast of government bureaucrats, centralized planning advocates, and their boosters in a tizzy.
The Wichita Eagle’s Rhonda Holman has Wichita director of airports Victor White saying that if the necessary subsidies are offered, the popular airline will consider serving Wichita.
(Oops. White actually used the word “incentives,” not “subsidies.” There are some who believe there is a difference in meaning between the two words. These are the types of nuances you have to become comfortable with when politicians and government bureaucrats try to direct and control economic development.)
Holman’s editorial makes a case for subsidizing another low-cost airline at Wichita’s airport, citing some remarkable economic development statistics:
Two recent studies supported the view that Southwest would build on the current affordable airfares program in leveraging low fares and boosting ridership at Mid-Continent — forecasting 33.5, 37 and 39 percent increases in airport activity and 7,000 additional direct and indirect jobs over such a carrier’s first three years in Wichita, as well as $29.5 million annually in savings for travelers.
As I pointed out a few weeks ago, these numbers are not believable. As I wrote two weeks ago, while more air service options are good for Wichita travelers, we need to be suspicious of the lofty claims of thousands of jobs and huge economic impact like the numbers claimed in this case. A few years ago I reported on a whopper of a economic impact figure given for the Wichita airport. It turned it the figures was based on some unrealistic assumptions, and used numbers likely to be counted a second time as part of someone else’s economic impact.
In the present case, the claim of 7,000 jobs to be created is a very large number. According to figures provided by the Greater Wichita Economic Development Coalition, only one company in the greater Wichita area has over 7,000 employees. The company with an employee count nearest 7,000 is Cessna, with about 6,000 employees.
Can anyone seriously claim that adding one more airline to the many already serving Wichita will result in the addition of more jobs than what exists at Cessna?
This is particularly true in that while there is one (or maybe two, depending on your definition) low-cost airlines receiving subsidies to serve Wichita, the other major airlines pretty much meet the discounters’ prices. This was the rational for bringing a low-cost airline to Wichita: by bringing in even one, it would force all other airlines to lower their fares.
This goal being largely achieved, it’s hard to fathom that adding one more discount airline would have a huge impact.
These economic development studies deserve scrutiny, and not just by eco-devo boosters and their cheerleaders who believe the government should heap money on anyone or anything that hints they might locate in Wichita — or leave Wichita. I asked Jeremy Hill of Wichita State University’s Center for Economic Development and Business Research if I could see the study that purportedly supports paying for more airline service. He, citing a non-disclosure agreement, would not send me the report or comment on its content. So I have a request pending at city hall.
There’s another angle to this story that hasn’t been reported in the Wichita Eagle news stories and editorials: Charleston was able to obtain Southwest Airlines service without paying a subsidy. The State, South Carolina’s largest newspaper and owned by the same McClatchy Company that owns the Wichita Eagle, reports that there was a lot of wooing, but there were no economic incentives.
In the Charleston situation, there evidently won’t be the massive state-supplied subsidy as we have in Kansas. But Southwest will still get a leg up: A USA Today story quotes a Charleston airport official saying “Southwest didn’t want a state subsidy, but was interested in the airport’s incentives a temporary waiver of landing fees, up to $10,000 to market new flights, and up to $150,000 for other start-up costs.”
Correction: The Wichita Eagle reported in its May 13 article that Southwest service in Charleston is not contingent of state subsidies.
When I became Mayor in 2003, the City of Wichita was already subsidizing Airtran on a two year contract. The contract called for a subsidy of $2.5 million dollars the first year and $500,000 for the second year. The $3 million dollars subsidy was being paid by the residents of Wichita only. Out of fairness to our taxpayers, I requested for the State of Kansas to support our airport low cost airfare inititiave by funding the project out of the Kansas Lottery Revenues that are granted for economic development issues. The State agreed to do just that for a period of 5 years.
It is my believe that our City can not support both Airtran and Southwest airlines and if we did lured Southwest to our City, then, we would lose Airtran, who has been our loyal partner since 2002.