Fast forward a year and Vockrodt writes that the new Aviation Department director, Pat Klein, was unaware of Federal Aviation Administration (FAA) guidelines on conducting an environmental assessment. He writes,

Klein said there had been an assumption that the city could put out solicitations for certain construction work before the FAA approved an environmental assessment in October, and then signing those contracts shortly afterward.

“What we’ve been told initially by the FAA is they don’t think that’s a smart idea,” Klein said. “They think we should hold, so we’re in discussions with them to do that. That’s a three-, four-, five-month lag on our schedule, which could be the difference between summer or winter of 2022.”

Now we learn that even before construction has begun, the project’s opening is being delayed 11 months to October 2022 and will cost much more than originally planned. Delays and increased costs such as these are not surprising for such large projects. After all, the Aviation Department itself has been all over the map on costs for years. Changes in costs and timelines can be forgiven. Not knowing FAA rules on construction suggest a deeper problem of management.

The Kansas City Star editorial board rightly called for more transparency in the construction of the new airport terminal. The Show-Me Institute has also called repeatedly for more transparency in the airport process since 2013, when the Council first took up the matter.

It’s difficult to be confident that the City will suddenly adopt a position in favor of transparency after years during which the process was opaque. We remain confident, however, given the Aviation Director’s unfamiliarity with FAA guidelines, that transparency remains the highest need.

The post Kansas City Airport Stumbles Along appeared first on Show-Me Institute.

But looks can be deceiving. For one thing, passenger growth at the airport (1%) lagged behind the national average (4%). This mirrors Saint Louis’s overall economic performance in the last year, which, while improving, is growing at a slower rate than much of the rest of the country. Look back further than last year and the situation is worse. STL’s traffic is still 12% lower than it was just before the recession. In fact, there were fewer passengers and flights from STL in 2015 than there were in 2010, after the recession had ended.

The only category where the airport is has had success is in adding non-stop destinations, which increased from 55 to 60 in the last five years. But even here, improvement isn't necessarily as impressive as it first appears. Most of the added destinations are seasonal options, bound for resort destinations in the Caribbean. STL flies to fewer national, year-round destinations than it did five years ago.

Why is STL having such a difficult attracting more flights and more passengers? The culprit may be a slow Saint Louis economy, which airport managers have little control over. However, the airport is still dealing with a hangover from the new (and ultimately unneeded) runway it built in the early 2000s. That has made the airport more expensive, and therefore less attractive for additional airline service. For example, low-cost airline Allegiant recently chose to use Mid-America Regional Airport for new flights to Florida.

While it’s easy to blame things outside the airport’s control, STL’s leadership can make the best of a difficult situation. That means resisting the impulse, so prevalent in civic affairs, to try spending their way to health with lavish improvement projects. Providing efficient and plentiful air service is better than less service and more luggage shops. Bringing in more freight traffic may allow the airport to use extra room it thought it would need for the TWA hub. If STL leadership can implement a cost-effective, customer-oriented strategy, it will help not just the airport, but the entire Saint Louis region.

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Allegiant’s business model  is to provide the cheapest possible flights for travelers going from Northern climates to warmer destinations in the South and on the West Coast. To maintain cost-competitiveness, the airline charges a low base price and then adds extra charges for various amenities passengers can decide to buy. This makes Allegiant typical of Ultra Low Cost Carriers.

But the attention to costs does not stop there. Allegiant often eschews larger airports for smaller, secondary airports in metropolitan areas. For instance, instead of flying out of Saint Louis International Airport, Allegiant flies out of Belleville, a little-used airport some miles distant. These secondary airports have lower costs than large hubs, and Allegiant can use that advantage to stay cheaper than the competition. Aside from its primary holiday destinations, Allegiant avoids the nation’s largest airports. As the map above shows, it even avoids busy medium-hub airports where possible.

How then did MCI, a busy, medium-hub airport, entice Allegiant? Part of the answer is likely low price: whereas most medium-hub airports cost an airline more than $10 per passenger, at MCI the cost is only $7.75 per passenger. Not only is that much cheaper than most airports of its size, it’s cheaper than most small- and non-hub airports, as the chart below shows:

The low price makes it more affordable for Allegiant to take a chance serving MCI. In fact, holiday destinations aside, MCI is the busiest airport that Allegiant serves.

The addition of Allegiant to MCI underscores the reality that at airports, like everywhere else, costs matter. While expensive improvement projects may excite local leadership or spruce up the city’s front door, higher costs make an airport less competitive in its main mission: providing airline service. Residents and city leaders should remember that as they plan terminal improvements at MCI. 

The post Allegiant Shows How Kansas City’s Airport Benefits from Low Costs appeared first on Show-Me Institute.

The challenges again would be educating the public on why we think we need a new single terminal. So many people—and around the country—think that aviation revenues should be spent fixing potholes or schools, where as you know airport revenues have to stay on the airport. And because we’re a department of the city that’s a tough sell.

First of all, I can think of no one who claims that aviation revenue should be used elsewhere in the city. It appears to be a red herring argument and it gives short shrift to the arguments that people have made against building a new terminal: Namely, that it will increase fees and therefore risk costing us flights, and that MCI is a great and convenient airport just as it is,

But even more importantly, VanLoh's claims that airport funds stay at the airport is wrong, and he knows it. After all, he signed the documents moving $10 million dollars from the Aviation Department to the City Finance Department, And he agreed to the amendment that extended the loan, too.

If the Aviation Department wants to convince Kansas Citians of anything, they first need to start speaking honestly about how they operate.

The post Aviation Administrator Still Denying Reality appeared first on Show-Me Institute.

In the United States, due to significant financing advantages given to publicly owned airports and onerous federal regulations, all but one of the 502 commercial service airports in the United States are publicly owned, most by local municipalities. That one private airport is Branson Airport in southern Missouri. As the case study points out:

The success of Branson Airport may be uncertain, but one of the features of private enterprise is that individuals and companies risk their own capital, not of that of their fellow citizens, in hopes of a larger return.

The other six commercial service airports in Missouri are all publicly owned, the largest of which are Lambert-St. Louis International Airport (STL) and Kansas City International Airport (MCI). However, they also can benefit from partial or full privatization. The most basic level of privatization, contracting airport services, already is in place at both Lambert and Kansas City. These contracts allow the airports to attain services through competitive bidding from the private sector. MCI is one of the few airports to privatize its security screening through TSA’s Screening Partnership Program (SPP).

However, airports in Missouri can go much further in privatizing operations. This includes privatizing the management of airports or even leasing the airports to private entities through the Airport Privatization Pilot Program (APPP). Kansas City considered this option for MCI once before. This program is actually the only way a municipality can use proceeds from its airports on other public goods. However, the program requires a complex negotiation between the local municipality, the FAA, airport workers, and the airlines. As the case study states:

Should Kansas City pursue the APPP route of privatization, the city could expect significant proceeds from the sale. However, it would require complex and lengthy negotiations with the potential buyers, airlines, and the FAA in order to participate in a program with no record of long-term success.

The full or partial privatization of airports can have many benefits for air service in the state, whether it is simply reduced costs or financial gain from an airport sale. The case study “Government Privatization in Missouri: Successes, Risks, and Opportunities” outlines some of the possibilities that might allow Missouri to create an example of airport privatization for the rest of the nation.

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The City of St. Clair, located in Franklin County, has an airport problem. Namely, the city is losing money on its small, general aviation airport. As the St. Clair Missourian reported last week, the airport has only four remaining tenants and use of the airport is at an all-time low.

So why not simply put up the “for sale” sign? For the last five years, the city government has been trying to do just that. But due to stringent federal regulations, the sale of even a miniscule airport can be an odyssey for local governments.

In theory, when a municipality builds and maintains an airport, whether that be Lambert-St. Louis International Airport or St. Clair Regional Airport, that government is free to do what it pleases with its property, including selling it. However, if a city has accepted federal money to upgrade its airport, as St. Clair has many times, federal regulations, known as the FAA’s grant assurances, tightly restrict that freedom.

Two of the more cumbersome assurances for a city like St. Clair are Nos. 5 and 25. Assurance No. 5 obligates St. Clair to maintain it as a public airport and not dispose or sell any part of the airport without FAA approval. The FAA will only give approval if St. Clair can show that closing the airport improves aviation in the area. In addition, the dispensation to sell the airport does not free St. Clair from reimbursing the federal government all recent federal grants. This will cost the city more than $750,000.

Assurance No. 25 prevents any revenue from the airport from being used for non-aviation purposes. According to the assurance, money from the sale of an airport is airport revenue. So to sell, St. Clair will have to submit a report on fair market value of its airport to the FAA, and put all sale proceeds from the sale into an escrow account for other regional airports to use on aviation-related purposes. The FAA has already rejected a number of St. Clair’s valuations as too low, further delaying any possible sale.

St. Clair’s experience trying to sell its own money-losing airport should act as a reminder to Missouri municipalities on the complications of having a public airport and accepting federal dollars. It is better to support the development of private airports or lease existing airports to private owners than to spend money and time begging the federal government to let them get rid of a bad investment.

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Most federal funds for airports come from two sources:  PFCs and the Airport Improvement Program (AIP). The AIP funds are distributed to airports on a needs basis. PFCs are collected per ticket and then given to airports based on each facility’s total passengers. This means that busy airports, such as MCI, stand to gain substantially if the PFC rate is increased. Van Loh wants the federal government to increase the rate on PFCs in return for large airports (like Kansas City’s) receiving fewer or no AIP grants. This means less federal funds based on need in exchange for more funds based on passenger level.

However, it is an unfounded assertion that if the PFC rate increases from $4.50 to $8, as Van Loh proposed, MCI would no longer need the federal government. First, the PFC is a federal tax, and as such, receiving PFCs is receiving federal aid, just in a different form. Second, assuming higher-priced tickets do not impact demand, Kansas City International Airport would have only received an extra $20 million in 2012 if the PFC rate was raised to $8 per ticket. From 2010 to 2012, Kansas City International Airport received an average of $20 million in AIP grants per year. A chart of AIP grants and PFCs for the last seven years shows this:

Therefore, exchanging more PFCs for lower AIP grants will not increase the airport’s income on average. It would, however, increase the stream of income immediately, helping to finance a new terminal in the short term.

Either way, the Kansas City Aviation Department is not getting the government out of its business.

The post Federal Funding By Any Other Name appeared first on Show-Me Institute.

KCAD is taking a risk by relying on the AIP to cover additional airport expenses. The Airport and Airway Trust Fund (AATF) funds both the AIP and 75 percent of the FAA’s operating budget. Sequestration has frozen growth in the FAA’s federal funding, requiring it to reach further into the AATF. More for the FAA means less for the AIP, which the FAA proposed to cut by 38 percent in 2013. To make matters worse, the FAA plans to cut grants to most large airports, such as Kansas City International Airport (MCI). The FAA has proposed an increase in the other federal programs to cover the gap, but this requires congressional action.

Should there be a reduction in the AIP without commensurate increases in other funds, it might require the Aviation Department to seek alternative funding sources for its proposed $1.2 billion terminal. This would likely mean greatly increasing landing fees. While the airlines pay these costs, they will respond by either raising ticket prices and/or reducing service. Should this not cover the increased debt, the KCAD will be hard-pressed to maintain the airport without local subsidies.

While federal law disallows the use of airport funds to support a city’s other expenses, there is no barrier to a city funding an airport. With the future of federal funds uncertain, airport planners should fully consider the effects of potential higher landing fees or taxpayer subsidies.

The post Uncertainty In Airport Funding appeared first on Show-Me Institute.

“You should do everything, including underwriting flights, to get as many highways in the sky as you can,” said John D. Kasarda, director of the University of North Carolina’s Kenan Institute of Private Enterprise and author of “Aerotropolis: The Way We’ll Live Next.”

Sounds a lot like Saint Louis so far. But (emphasis added):

There doesn’t appear to be support for the idea if it involves public money.

“I don’t agree with subsidizing flights or subsidizing certain airlines. We should work to lower the costs of all of the airlines at the airport,” said Allegheny County Executive Dan Onorato. He said the county doesn’t have money to provide such backing.

Pennsylvania and the Allegheny Conference on Community Development agreed to provide up to $9 million if Delta Air Lines’ flight between Pittsburgh and Paris missed revenue targets. They paid the maximum $5 million after the first year of service, but it’s unknown whether they will owe money for the second, which ended June 1.

Onorato appears to be taking the principled stance of not letting the government pick winners and losers at the airport. As to the airport, at least, Allegheny County taxpayers can be proud of its executive’s fiscal prudence.

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Kansas City has considered this idea, and it would be wise for St. Louis to consider it as well. The idea that only the government can operate our airports may be deeply imbedded in public opinion, but private operators could certainly undertake airport operations if given the opportunity. Hopefully (and apparently), Branson will show us the way.

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