I’m not proud of Wichita’s airfare subsidy

In today’s Wichita Eagle, editorialist Rhonda Holman gives Wichita a big pat on the back for its subsidy given to a low-cost air carrier. She goes so far as to mention a recent New York Times article that tells how Wichita was one of the first cities to do this.

It reminds me of how a few years ago Sam Williams, a Wichita advertising executive and onetime Chairman of Fair Fares, likened Wichita’s subsidy to the role of Kansas during the Civil War.

It’s all a little over the top, to say the least. But this is all in the spirit of the claims made to support the necessity of the subsidy. At one time, subsidy supporters claimed that the value of the subsidy would be $4.8 billion per year to Kansas. I think that number is larger than the state’s general fund spending at the time, and certainly not supported by any reasonable interpretation of facts.

Whether the subsidy paid to AirTran is a success is hard to say. If your inclination is towards ever-increasing government involvement in commerce, you probably like the subsidy. Never mind that it may not be providing the benefits we really need.

But when a city will loan money to a private condominium association to make repairs to its building, what’s a few million dollars paid to an airline?

At one time it was thought that the subsidy would be temporary. All that was needed, leaders such as former mayor Bob Knight said, was to give AirTran a jump start, and in a few years it would then be able to sustain itself without continued subsidy. Now, however, the subsidy is a permanent fixture, even though Holman raises alarm as to whether the state of Kansas will continue its $5 million annual contribution to the subsidy.

My question is this: will AirTran ever report a profit on its Wichita service, thereby reducing the subsidy it receives?

What, are you kidding?

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20 thoughts on “I’m not proud of Wichita’s airfare subsidy”

  1. “Whether the subsidy paid to AirTran is a success is hard to say.” – It isn’t hard to say when one has a closed mind and ignores the facts and evidence as illustrated by the title of the blog.

    The fact of the matter is that the subsidy has provided a large benefit to the community. Probably it’s not as large as some supporters wildly espouse; however, it has been very beneficial.

  2. The AirTran subsidy is simply a government-mandated redistribution of wealth. I see little or no benefit accruing to Goodland, Kansas or Atchinson, Kansas taxpayers who are required to pay taxes to subsidize a Wichita airline. Perhaps an airline subsidy for a Denver airline might provide lower air fairs for potential Goodland, Kansas passengers, and likewise a subsidy for a Kansas City, Missouri airline might provide lower airline fairs for potential Atchinson, Kansas airline passengers? It is my understanding that the new proposed Wichita airport terminal will be paid for by fees imposed on the airlines that use the facility. If local Wichita area officials are serious about lowering costs for all of the airlines flying in and out of Wichita, and not just the AirTran carrier, perhaps scrapping the new airline terminal might provide the free market “incentives” needed to reduce Wichita air fairs.

  3. @JT – To a certain extent, what you’re saying is true. There is little benefit to those in Goodland or Atchinson and that would be a good argument against state support of AirTran; however, Sherman County and Atchinson County are already receiving benefits at the expense of Sedgwick County taxpayers, so why shouldn’t they help us help them? Approximately 20% of the state’s wealth is produced in Sedgwick County, 1 county of a 105. Our tax dollars are sent to the state and redistributed in part to those counties that can’t economically support themselves.

    As to the terminal, it is being funded from 3 main sources of revenue. PFC income, federal grants, and operations income from leases to airlines and vendors, and parking revenue. The terminal leases have little to do with the air service operations of an airline. For those with short memories, remember the Vanguard experience and it’s easily seen why AirTran’s service is important to the community.

  4. I have been reading Pat’s answers and explanation to many of the topics discussed on wichitaliberty.com and it appears that she is either an employee or paid consultant for the City of Wichita. I tend to think a paid consultant or very good friend of the Mayor.
    The answers are very defensive of the current City leadership while glossing over some obvious facts. Her details of how things work within the City of Wichita are fairly accurate.
    While it is true that the budget for the airport terminal construction included federal grants those grants assumptions were inflated. Never in the City’s history has Wichita ever received the federal grant money that was assumed in the airport budget and the Passenger Facility funding is limited not only by the federal government but also by competition. The airport terminal project is terribly underfunded and the City is going to have to downsize the project again; add more taxpayer money; or blame it on George Bush!

  5. @ Henry – You make some very good points about the terminal funding of which I would agree and I wasn’t trying to gloss over any facts. You are correct that the terminal funding is heavily reliant upon receiving federal grants which have not yet been appropriated. Perhaps that is why the construction of the terminal project has been delayed.

    Regardless, the funding of the terminal project is based upon financial assumptions that may or may not be realistic. All debt financing whether for a pubic institution or private institution is based upon assumptions about cash flow, bond markets, etc. When one borrow money to purchase a new house or car, they typically take out a mortgage to finance the purchase. Taking out mortgages includes the assumption of one’s ability to make the payment. At the end of the day, my hope is that the city acts responsibly in the financing of the project.

    Lastly, I don’t believe my answers are always defensive of the leadership but rather that the issues are much more complicated than given credit for here in this blog. Most of the issues that the council have to deal with are seldom as black and white as they are portrayed to be in this forum. I appreciate that this blog provides a venue to raise legitimate questions on council actions; however, it would be better if the issues were fully framed instead of just the standard Libertarian approach to government.

  6. @ Henry And, btw, I don’t always agree with the council’s actions. Sometimes I get upset with them, but I always understand that there are a number of competing interests in any decision and that they represent far more in the community than my own interests or opinion on things.

  7. @Pat- How do we know for sure that Sherman County and Atchinson County are receiving more taxpayer money out of the state treasury than Sedgwick County? Is there any reasonable reason why taxpayers would trust the wisdom of state officials to decide who gets money out of the state treasury, how much, plus the authority to decide the merits of competing projects? Perhaps it would be a better choice for our state to reduce taxes for everyone and place the decision making process for local projects or programs back into the hands of local officials who are more directly accountable to their local taxpaying constituents?

  8. So where’s my bailout? Where is my enticement money at? Whatever happened to competition and capitalism? Give a multi million dollar companie more money to come here just to make more money? I want to open a business that people in the city would use. Do you think they will give me tons of “Federal” Reserve notes to make it happen and keep it afloat even if it does not make a profit? HELL NO THEY WOULDN’T! Wichita and Kansas needs an enema!

  9. @JT – I don’t think that it’s a case that they receive more money than Sedgwick County, rather it’s that they receive a greater amount than what they contribute. In other words, compare the total tangible property valuation of a particular county, for instance Sumner County, which has a total valuation of approximately $350 M with Sedgwick County which has a total valuation of $30 B. When considering the state-wide mill levee of 1.5 mills, then the difference is readily seen.

    These more rural counties still have educational, health care, judicial, law enforcement and transportation needs. Often times, the cost for these services and goods exceed the cost for the same service here in Sedgwick County because of the transportation delivery cost to the remote counties.

    I’ll have to see if I can find some budget numbers for one of the western counties to illustrate my point and post it here.

  10. @ JT – btw, I would also need to include the aid or monies that go back to the school districts and muncipalities in a particular county for a total picture.

  11. This is the factual evolution of the airline subsidy. In the 2001 legislative session Rep. Mayans based on input from Bernie Koch of the Wichita Chamber introduces legislation ( dubbed Air Mayans) to have the State of Kansas fund lower air fares at ICT. The House passes the legislation after several attempts and Senate President Dave Kerr kills the initiative after consultation with Ron Ryan and Bob Knight. Knight preparing for a run for Governor contracts with Airtran and agrees that the City will pay Airtran 1 1/2 million dollars the first year and $500,000 the second year. Mayor Mayans is elected in 2003, and refuses to pay Airtran additional funds over what Mayor Knight had agreed. Airtran said that they would leave if the City didn’t pay more. Mayans sets up special committee and meets with Gov. Sebelius at the Chamber. Later, Mayans appoints Allen Bell (City of Wichita) to negotiate with the Gov’s staff for funding from the lottery revenues. The idea was to have the entire state fund the lower airfares not just our local taxpayers since most of the lottery revenues are derived from Sedgwick County. Sen. McGinn directs the successful passing of the bill in the Ks. Senate. The City of Wichita gets legislative agreement to fund $5 million a year for 5 year for lower airfares. Delta sues the City for providing the incentive and running the airport….a clear conflict. City of Wichita agrees to give control of the money to REAP and Sedgwick County to avoid farther legal challenges.
    Now, State is in financial trouble and will try not to extend the agreement. Airtran has always been very secretive with their financial results in ICT. They have made money.

  12. State Rep. Scott Schwab, R-Johnson County, tried at the end of this last session to defund the AirTran subsidy. When he offered the amendment, just about every Wichita-area Republican state representative went down to the podium and spoke out against the attempt. Steve Brunk, whose conservative credentials are unchallenged, stood there and actually wagged his finger at Schwab, declaring “Shame on you Scott, shame on you!” Jason Watkins, the golden boy of the right wing, bluntly called Schwab a liar. I was in the House gallery and watched the whole thing. It was grand entertainment, watching the “conservatives” eat each other alive.

    There’s your conservative values, ladies and gentlemen. It’s your party that’s in charge in Topeka, and they’re the ones who pass and defend these programs.

  13. I’m sorry, but I consider our airport to be a vital transportation infrastructure for our community. We have basically agreed as a society that government should use tax-payer dollars to fund transportation networks. Subsidies given to a particular airline is just allowing the transportation infrastructure to work for efficiently for our community. With ICT being caught in a Catch 22, meaning that many people were driving to KC and OKC to catch cheaper flights, but if those people flew out of ICT that would increase the competition for airfares and drive down cost, but people weren’t doing that. People needed the egg before the chicken in order to take the incentive to fly locally. That it was the Fair Fares was all about and it has been a success. I see no problem with government doing this as it generates results for the general good of our community.

    Wichita did this back during the very early days of it’s history by paying railroad operators to lay track and come to Wichita, even through it wasn’t going to be profitable. They needed the subsidy to make it worth while. By doing that it eventually brought in 3 railroad operators to the area and therefore Wichita grew into a city and became the largest city in the State with opportunity and business. If that was not done, Wichita would probably be no larger than Newton.

    You kill our airport, you kill the business climate in Wichita. The reason why the JoCo State Rep. wants to kill it is because they have a HUGE bias against Wichita.

    And to answer the tax question. Yes, Sedgwick County is a net tax exporter. We pay more in taxes than what we receive in dollar benefits. The rural counties and towns are living off of us.

  14. @ Cybex – In the past and once again you’ve attempted to give credit to Mayans about the subsidy. That is not accurate. While Mayans played a role, he hardly was the architect of the program. Quite frankly it was Chris Cherches and city staff who forwarded the proposal.

    @ JW – You are correct. People tend to forget that we subsidize virtually every part of our transportation system whether it’s road, rail, air or boat.

  15. Joe,

    I’m not attacking the airline subsidy, just the hypocrisy of those so-called “conservatives” who rant and rage against com-you-nist gub’mint programs right up until it’s *their* com-you-nist gub’mint program that’s about to be defunded.

    I know Bob Weeks is a Republican, and suspect that most of the people who post here (and go to “TEA Parties,” etc) are Republicans as well. The corporate cash that helps keep the above-named Republican state reps in office is from the same corporate cash used to pay for the TEA parties, and used to gin up “death panel” bs at town halls around the nation. If these so-called “libertarians” had an ounce of intellectual honesty, they’d reject Koch/AFP money, change their party affiliation, resign from their officer positions in the Republican Party (or the affiliated clubs like Pachyderms), and spend their time and resources trying to get actual Libertarians elected to public office.

    But it’s not really about that, is it?

  16. Thomas,
    So the liberals using agent provocateurs, union thugs, La Raza and even police to bully, spit and beat up opponets of another big government eugenics program was ok? I am not “republicrat”, democrat or libertarian. 10 years ago when I filled out my voter registration ( when I turned 18), I put down independent. I do not agree with Mr. Weeks 100% of the time but I am very appreciative of his newsletter. I find it way more interesting than that piece of toilet paper known as “The Wichita Eagle”.

  17. “Benjamin” pushes the “government eugenics” lie. Why? Is it to change the subject from the embarrassment of Republican hypocrisy? Or is it because he actually believes the lie? Whichever is true, it doesn’t really matter. Benjamin is either the symptom or the cause of what the entire right wing has been doing for the past several years. When facts are against you, make crap up, and repeat the made up crap so many times that the gullible buy it.

  18. Pat, I am not sure whether you are blinded by the facts or you just don’t like conservative and educated Hispanics like former State Legislator and former Mayor Mayans. Please, read the front page of the Wichita Eagle (Feb. 1, 2001) “Vanguard considers coming back” “The move comes as Rep. Carlos Mayans, R-Wichita, leads effort to pass legislation that would use some Kansas lottery revenues to provide airlines with a financial incentive to lower airfares from Wichita Mid Continent”. Read, The Wichita Chamber Impact publication (02.19.2001), “One recent success resulting from the legislative unity came when Rep. Carlos Mayans, this year’s delegation chairman, successfully proposed an amendment to the Kansas lottery to provide funding for low airfares”. Read, Phillip Brownlee, editorial “Pass It” dated Feb. 22, 2001, Mr. Graves and Mr. Kerr “have resisted a plan by Rep. Carlos Mayans to use $4 million of lottery proceeds”. Read, the Topeka Capital-Journal, (March, 1, 2001) Legislator reach lotto compromise, “the major agreement Wednesday was the Senate conferee’s acceptance of provisions backed by Rep. Carlos Mayans designed to reduce airfares at Wichita’s Mid Continent Airport.

  19. No, I’m not blinded by the “facts” as those reported by the media. I am however aware of the facts and stand by my statement.

  20. HAHAHA! Mr. Witt, I guess I am “right wing” if that involves believing in free market healthcare that does not involve insurance companies but rather a capitalist form of healthcare. I do not have health insurance and have not had it for over 6 years. Guess who’s CHOICE that is??? Mine. That is how I would like to keep it. If you want the government to control one more thing in your life, wipe your ass and burp your wallet for money then go ahead. Would you like some info from the bill? I can show you all parts that involve eugenics. By the way.. you can take the ” ” quotation marks off my name because my name is Benjamin. If you want me to show you all about eugenics and how the goverment has been doing it for years and how it is implemented into the bill then let me know. Heck! if you want to have a live debate then we can do that as well. I am young, born at night but not last night.

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