Some quotes and my remarks from the April 19, 2005 meeting of the Wichita City Council, where the AirTran subsidy was considered. Representatives from Delta attended and spoke.
Allen Bell, Economic Development Director for the City of Wichita:
Previous contracts had a dollar amount cap on them. The new contact, we refer to it as a no-cap contract. There is not, in the terms of the agreement, a specific dollar amount that is the not-to-exceed amount. In place of that there is a termination clause that allows the City to terminate its contract with 75 days notice for whatever reason. And the reason, of course, the major reason, would be that we know that within that 75 days, we will deplete the funds that the City believes is appropriate to spend on this.
I was startled to hear this information, that the new contract has no dollar cap, as this has not been, in my memory, reported. It has been reported that AirTran sought a no-cap contract, but that Wichita would not agree to that. But it turns out that the city has agreed to what, in effect, is a no-cap contract. Yes, I believe Mr. Bell when he says that Wichita can cancel the contract, with notice, if the city believes it will spend more than the $2.5 million it has committed to. I would submit, however, that if the City spends the $2.5 million and realizes it needs to spend more to keep AirTran in town, the City Council would vote to do so. Therefore, the no-cap contract is in effect.
Councilmember Schlapp extracted an admission from the Delta representative that Delta is not profitable on the Wichita route now, but they believe they will be soon. Ms. Schlapp concluded that there is no need, then, for a subsidy to Delta.
Mayor Mayans said we have been discriminated against, rate-wise.
Mayor Mayans: “Many of us, actually, are opposed philosophically to government interventions, because we feel that sometimes tilts the playing field.” The Mayor says one thing, but acts in a different way. What good is it to have a philosophical belief if it doesn’t guide your actions?
Mayor Mayans and the Delta representative disagreed on who made telephone calls to whom and at what time. (Mayor Mayans: “So you didn’t call me back!” “Communications is a two way street!” Delta: “My recollection of it differs slightly from yours.” “I don’t recall it was my responsibility to get back to you.”) It is disheartening to realize that major public policy decisions may be made based on incomplete information, because someone didn’t get a telephone message.
Councilmember Martz:
“I guess to me, when I look at competition, if you’re losing money, then you ought to raise your rates enough so that you’re not losing money.”
“I’m a firm believer in competition.”
“I would prefer not having any financial help from the city, but rather through pure competition, all carriers reduce their rates to a level that they number one, can make a profit, at the same time make it economical for the citizens of the whole state of Kansas to be able to fly in and out of Wichita …”
Like the mayor, Mr. Martz says one thing but acts in a different manner. His advice to airlines on how to set their fares is misplaced. We have to assume that businesses act in their best interests, and let it go at that.
Sam Williams, Chairman of Fair Fares, who evidently is so well-known to Council members that he doesn’t introduce himself when he started to speak:
“You know, Kansas in 1861 became a very important state in the history of this country, just before we went into the great dark area of the civil war. You know, we were a key state. What we did at that time had a lot to do with what happened and where we went from there. I would submit that little old Wichita, Kansas is doing that to the airline industry right now. Because of your vision, you are looking at different ways to bring fair pricing in an industry that is kind of broken, in getting them to look at themselves, us to look at ourselves, and how can we partner together to do this. Kansas again is a key, integral part of a change in this country.”
First, to equate our state’s role in the civil war with subsidizing an airline is ludicrous. Second, I feel very sad that Kansas may become the leader in subsidies, and that business leaders applaud this. Mr. Williams, I would ask you if you would welcome a governmental body deciding whether the rates that your business charges are fair, and if not fair, subsidizing your competitor?