I delivered these remarks to the Wichita City Council as they were preparing to vote on extending AirTran Airway’s subsidy for another two years. The extension passed with only one dissenting vote.
Mr. Mayor, Members of the Council:
I speak today in opposition to the continuation of the subsidy the City is paying to AirTran Airways.
There are several reasons why I believe this subsidy should not be continued. The primary reason is that the subsidy, since it is paid to one company and one company only, is not fair to the other companies. Yes, it is true that fares are lower. But is that a legitimate reason to enrich one company at the expense of others?
If creating an environment of unfair competition is good and correct, why should we not do this in other markets?
If we feel that gasoline prices are too high, why not select a chain of gasoline stations and pay it a subsidy so that it could lower its prices?
If we feel that a chain of grocery stores has too much market power and their prices are too high, why not create and subsidize stores to compete with them?
If we feel that the commissions that real estate companies charge are too high, why not pay one of Wichitaâ€™s major firms a subsidy so that they could reduce their commissions?
Let us all hope, then, that we do not find ourselves running, or being an employee of, a business whose prices the City believes are too high.
But the situation is even worse. Through the Fair Fares program, the City has organized the potential customers of the subsidized business to ensure that they purchase from it. For the companies that pledged to Fair Fares: How would they feel if the government started a public body for the purpose of organizing their customers, and then used its powers of persuasion to compel them to buy from a competitor at the same time the City is subsidizing the competitor?
All of this is in direct opposition to the American principles of limited government, individual liberty, and fair markets.
The distortion of the market that the subsidy creates has another aspect: By creating an environment of unfair competition, we make it unlikely that any airline will consider starting service to Wichita unless they too receive a subsidy.
If the Council feels that we must subsidize an airline, consider this alternative: why not subsidize one of the other established airlines, one that that flies to many destinations? Or, why not rotate the subsidy every year to a different airline? After all, if fares can be lowered if any airline reduces their fares, it shouldnâ€™t matter which airline does it.