The conversation with [Southwest Airlines chief executive Gary] Kelly, which [Mayor Sly] James initially denied but Southwest confirmed, happened early in the week. James, through a spokeswoman, said the conversation was about cost sharing among airlines for a baggage handling system at the KCI terminal, a $20 million element in the project but a fraction of the overall cost.

I don’t know why the mayor would have initially denied speaking with an executive at Southwest. However, it is the sort of tactic that proponents of the new single terminal have been employing since the very beginning. Remember that proponents of the new terminal told us that there is no correlation between ticket prices and the fees airlines pay to fund airports. But Spirit and Allegiant Airlines have made it clear there is a connection.

Then we learned the price for the terminal was going way up. Cat Reid’s story on November 1 for KSHB indicated that this wasn’t a big deal for the airlines:

The director of the Kansas City Aviation Department, who has been meeting with airline executives across the country, said they have “no anxiety at all” about the $1.9 billion price tag on the new terminal.

But that wasn’t true. The airlines did have problems with the $1.9 billion price tag, and are asking to have their own consultants look at the price.

Fox 4 reported on November 15 that Mayor James said the price problem was specific to a dispute about paying for the new baggage handling system. But that wasn’t true, either. While there is a dispute regarding baggage fees, Steve Vockrodt reported on December 2 in the Star that, yes, the price itself was a point of contention.

Part of the reason why airline buy-in is so important is that Kansas Citians have been told all along that the airlines would be footing the bill without taxpayer funds. But this might not end up being the case—finance department representatives said they might use the general fund to cover initial costs. Now the city council is acting to make sure that those previous promises are honored.

Regardless of whether officials are misleading the public or simply do not know what they are doing, the airport project appears to be a mess. But civic leadership is willing to look the other way. Good public policy is unlikely to result from such an awful process.

The post What Is Going On with the KCI Project? appeared first on Show-Me Institute.

To us, one of the main selling points of the proposed new terminal is the expectation that airlines would add more direct flights out of here, and maybe even some international flights.

Two days later, Star reporter Steve Vockrodt authored a piece that made clear there was no guarantee of new flights should voters approve a new terminal. Vockrodt clarified:

A new terminal, by itself, won’t lead to more direct flights to more destinations.

“That’s probably fair,” said Steve Sisneros, senior director of airport affairs for Southwest Airlines, the dominant airline flying in and out of KCI.

The editorial board did eventually correct their error, stating on October 15 that, “There are no guarantees that more flights will be added by the airlines if voters agree to construct a new single terminal.” The next day, Vockrodt caught pro-terminal mailers making the same mistake.

In that October 15, the Star editorial board again endorsed a new terminal vote, but seems to have made a second error, stating that, “if nothing is done, the number of flights out of KCI will continue to dwindle.”

Dwindle? According to the Aviation Department’s own statistics, enplaned passengers (those boarding an airplane) are up 4.5% over last year. Likewise, air carrier operations showed an increase in flights of 5%. Southwest Airlines—the biggest carrier at MCI—saw an increase of enplaned passengers of 5.6% over last year. Passengers and flights are increasing, not dwindling.

Two emails obtained by the Show-Me Institute (see links at the bottom of this post) and sent by Mark Nevins of the Dover Strategy Group—the company running the yes vote campaign on the airport—indicate that members of the Star editorial board are apparently committed to supporting the effort with regular editorials. In an October 8 email, Nevins links to a supportive op-ed and writes that single-terminal backers “can expect to see more of these kinds of generally supportive editorials in the weeks ahead.” Then in an October 15 email Nevins reiterates that the Star “will continue to publish editorials supportive [sic] Question 1 on a regular basis through Nov 7.” I hope the editorial board is not simply working as a mouthpiece for the yes campaign. Of course, that could explain why the latter’s misleading claim about increasing the number of direct flights also appeared in a Star editorial. It might also explain why the Star is running editorials pushing the new terminal regularly—so as to make them more a part of the campaign than an expression of editorial board views.

This same editorial board has decried the airport bidding process as “marked by distrust, misinformation, unnecessary secrecy and conflict.” It would be a shame to learn that in its zeal to promote a single terminal, the Star editorial board has contributed to the very atmosphere of distrust that it decries by helping spread misinformation about the airport.

The post Is the Fate of Kansas City’s Airport Terminal In Its Star? appeared first on Show-Me Institute.

The post Crosby Kemper III discusses American Royal’s Move to Kansas appeared first on Show-Me Institute.

In fairness, my colleague Joe Miller recently wrote that there are some reasons why a city might rightfully consider building a new terminal. The cost of current maintenance may be more expensive than a modern replacement, or a new terminal may be needed to accommodate increased traffic. Neither of those apply to MCI. While our traffic is up moderately, no one is arguing that we need to build for increased capacity. In fact, the new terminal proposal from the Aviation Department would reduce the number of gates we have now.

No one is arguing that the costs of maintaining the current MCI are prohibitive, either. Supporters of a new terminal seem to have strictly cosmetic concerns.

As for doing what we want airports to do, MCI is serving admirably. Consider the recent developments.

• In 2014, MCI picked up service from Spirit Airlines, and Seaport Airlines added service. Southwest announced that service to Ronald Reagan National Airport in Washington, D.C. has been approved.
• In 2015, Spirit started offering direct nonstop flights to Los Angeles. Allegiant Airlines will be flying nonstop to Florida from MCI, and Southwest offers new direct service New York LaGuardia, and Orange County, California. American Airlines added nonstop flights from Kansas City to Miami.
• And in 2016, Frontier Airlines will add flights to Atlanta, Chicago, and Philadelphia. Southwest recently expanded service in the form of direct flights to San Antonio.

In January, the Star catalogued some of MCI’s gains, including that annual traffic has grown each year since 2012 with the terminal we have now. Supporters of a rebuild point to possible (but by no means certain) increases in traffic as a result of a new terminal. But as Miller concluded in 2014:

To sum it up, the airlines (and common sense) say that building an expensive new terminal will not increase demand for air travel. Quite the contrary, the higher costs to airlines and passengers may mean fewer flights. Even if we agree with business leaders that MCI requires more amenities, certainly there is a cheaper way of providing these than a $1.2 billion new terminal plan. The cost is so much greater than the supposed benefits that the plan looks more like a vanity project than a sound investment.

In short, Kansas City’s airport is doing well. It has won high marks for its convenience; we’re unlikely to suffer the long waits seen at other airports because MCI does not use the TSA for security. Importantly, airlines seem eager to come and expand their service (despite their claims to the contrary). It is unlikely that Kansas City could improve on this. In fact, in taking on mountains of debt we risk losing the competitive advantage that many of us now take for granted. 

The post MCI Is the Envy of its Peers appeared first on Show-Me Institute.

Supporters of a new terminal lamented this pause and argued that voters were not sufficiently informed of what was before them. Some even propose a more aggressive public education campaign. Sadly, this is what serious policy discussions often come down to—not thoughtful exchanges of ideas, but rather an uncompromising proposal stubbornly marketed and shouted in various ways at a busy public. And if they still don’t agree . . . shout louder!

In fact, after years of public debate, voters in Kansas City (and everyone who uses the airport) knew exactly what was being asked of them. Few issues have been discussed in more or at greater length than the airport. There have been numerous public meetings, TV and radio segments, and print news articles on the matter. A group of citizens even collected signatures to make sure the public had a vote. The public knew exactly what was being proposed.

Because MCI is a cheap airport for airlines to serve, we get more service. We have more direct flights than other markets our size. American Airlines and Southwest continue to expand service and in recent years we’ve attracted additional smaller discount airlines such as Allegiant and Spirit. These are not warning signs of a failing airport.

There are risks to taking on big builds. In Sacramento, San Jose, and Cincinnati, localities invested heavily in new airports. They increased airline fees to pay down the debt and saw airline service decline. This is a simple enough economic reality: when you charge more for something, you sell less of it. It really is that simple. Any effort to improve MCI must make sure that we retain our competitive advantage: a cheap and convenient airport.

Those in St. Joseph and across the region have a stake in the matter, but they won’t have a vote. Frequent travelers would be well served to make sure their friends in Kansas City are educated on the benefits and risks of a new terminal.

The post An Informed Public: Poor Policy’s Worst Enemy appeared first on Show-Me Institute.

At the latest meeting, the Aviation Department told the Council that building a new terminal would cost less than refurbishing the existing terminals. The department claims that refurbishing the current configuration would cost more than $1.1 billion dollars, while a slate of new terminal plans would cost less than $1 billion.

Two things are interesting to note here. First, the Aviation Department’s cost of refurbishing the terminals has escalated dramatically from July 2013, when the initial new terminal plan was proposed. At that time, keeping the existing design was supposed to cost up to $785 million, not more than $1.1 billion. This is likely due to the scale of the refurbishment now proposed, which is more extensive than what the department had previously recommended. The cost escalation underscores the fact that the scale of the refurbishment is directly related to the cost. Certainly, fixing up the existing terminals could cost less than $1.1 billion, but that would mean a different and possibly less desirable end product.

The second interesting point is the cost of the new terminal plans, which range between $900 million and $1 billion. The Aviation Department claims that these are not “Taj Mahal” plans, that is to say they are cost effective. However, the department said the same thing for the plan that they proposed in 2013, which was $1.223 billion. The ability to find more than $200 million in savings indicates that either the “old” new terminal plan was in fact more expensive than was necessary, or that the “new” new terminal plans have lowballed cost estimates (or are insufficient).

We will continue to follow this story as the Aviation Department prepares a final recommendation. 

The post New Terminal Plans on the Table in Kansas City appeared first on Show-Me Institute.

The plan is still in its public comment period, so I’d like to offer the questions that I have:

1. Is the district serious about reining in administrative bloat?

The Department of Elementary and Secondary Education publishes administrator/student ratios for every district in the state.  For 2015, Kansas City had significantly more administrators on a per pupil basis than surrounding school districts, and even more than St. Louis. By a lot.

Those extra administrators represent serious money that could be spent in the classrooms that actually educate children.  To its credit, the plan calls for reducing administrative costs by $750,000/year, which is a good start.  But getting down to Liberty or North Kansas City levels of administrators would involve even deeper cuts than that.

2. How much smaller can the district get?

As the Star reports, the district has shrunk to only 14,228 students.  That doesn’t even put it in the top 10 districts in the state by enrollment.   Peak enrollment (in the early 1970s) was almost 73,000.

3. Students are fleeing in droves to attend public charter schools. Are we going to rethink the organization of the district in response?

As I detailed earlier this week, 41 percent of students within the boundaries of the Kansas City School District attend public charter schools, and enrollment is only growing.  There might be a not-too-distant date in the future when the vast majority of students attend public schools in Kansas City that are not operated by the Kansas City Public Schools.  Taxpayers still have an interest in these schools, and our community should play some role in their governance, but what should that role be?  New Orleans offers an interesting possible future for the city.

4. Does this plan come anywhere close to meeting the needs of the district and the children who live in it?

Probably the most striking thing that I took away from reading the report is just how little it actually wants to do.  Moving a couple of attendance boundaries, closing a high school, creating new programs within existing schools . . . these are things districts have to do all the time to adjust to student movement and community change.  Given the exodus of students, the woeful performance of schools, and the hollowing out of the tax base from tax increment financing, how can that possibly be enough?

The post Questions for the Kansas City Public Schools Master Plan appeared first on Show-Me Institute.

While the share of the city’s property that either gets tax subsidies, qualifies as a non-profit, or is owned by the government is large individually, looking at these issues together shows the scale of the problems confronting Saint Louis’s tax base. In fact, about half of the city’s property by area is either tax exempt or receives tax breaks. Property tax exceptions are basically the rule. The map below demonstrates this:

As we discussed in previous posts, these areas include some of Saint Louis’s most economically important and profitable institutions, such as BJC Healthcare, Washington University in Saint Louis, Busch Stadium, the Eighth Circuit Court, and IKEA. In total, around 40% of the city’s property by value either is tax exempt or receives special tax breaks.

Who is left paying the full property tax rate? For the most part, residential areas on the city’s South (and especially Southwest) side have fewer exempt properties and tax breaks. In terms of value, utilities, casinos, manufacturing and distribution companies, as well as a handful of large businesses downtown appear to pay full property tax rates. However, as the map below shows, when it comes to parcels paying full real property tax levels, the city is hollowed out:

The next post on this issue will discuss some the negative results of this reduced real property tax base, as well as strategies for improving the base. 

The post Saint Louis Property Taxes, Part 4: All Together Now appeared first on Show-Me Institute.

On Tuesday, Allegiant Air announced it will start nonstop service from Kansas City to Orlando, Southwest Florida and Tampa in mid-November. The Las Vegas–based low-cost airline is operated by Allegiant Travel Co.

In an interview on KMBZ radio, Bill Grady asked airport administrator Mark VanLoh if this new service announcement raised questions about the real need for a new terminal. Mr. VanLoh replied, “I don’t see how the two are connected.”  

In fact, the two are very much connected.

The news of Allegiant Air is not only good news in and of itself, but it demonstrates exactly why Kansas Citians ought to be skeptical of taking on an unnecessarily large expense at the airport. Allegiant Air is a “low-cost” airline. According the The Memphis Business Journal: 

Allegiant often serves smaller markets like Orlando-Sanford International Airport instead of Orlando International Airport to avoid pricey landing fees.

Advocates of spending a great deal of money at the airport tell us that only travelers and airlines will pay the price. That is largely true. They also tell us that the prices airlines pay to serve an airport have little to do with ticket price; that may also be true. But pricey landing fees of the type that would follow an expensive rebuild or remodel may chase away airlines like Allegiant. And they would be a disincentive for bigger airlines like Southwest, too. A Southwest vice president said as much to the airport advisory group, “Higher costs can lead to less service, not more.” They have left other airports over similar price increases.

If Southwest wants to pour hundreds of millions of dollars into a new KCI, that might be welcome. But if improvements require issuing bonds resulting in higher fees to airlines, city leaders should think twice. A shiny new airport is of no use if airlines choose not to service it.

The post How a Cheap Airport Helps Kansas City appeared first on Show-Me Institute.

This week, the city received a status report on the negotiations. Nothing is final, but refurbishment plans have been shelved as “too expensive,” and the city and the airlines are now looking for a cost-effective new terminal plan. While most news outlets appear to take that as meaning a new terminal is definitely going to happen, that assumption is premature. If Southwest and the other airlines do not like the terminal plan that comes out of negotiation, refurbishment plans can be unshelved.

However, at this point it looks as though the city and airlines are looking at new terminal options, but it generates more questions than it answers. Will it be the same as the terminal plan from last year? Will it be a more modest proposal? Is Southwest planning to make the kind of investments it has made in Houston, Fort Lauderdale, or Dallas? Will Kansas City voters, many of whom enjoy the convenience of the current layout, support such a new terminal plan?

One new terminal proposal under consideration

Old New Terminal Plan (2013)

We don’t know, and likely won’t know, until earlier next year. However, the flying public in Kansas City and the airport itself will be best served by a terminal system that is cost-effective and user-friendly.

The post New Airport Terminal Coming to Kansas City, Maybe? appeared first on Show-Me Institute.

Now that a year has passed we can return to the plain facts. The CEO of Southwest Airlines, the carrier with the largest MCI service, was recently in town to showcase a Missouri-themed airplane. While here, as the Star reported, he said of the MCI terminal:

“I agree and Southwest agrees we definitely could stand to make some improvements. The question still remains exactly what is the best way to do that in the most cost-efficient manner,” Kelly said.

Air travelers are sensitive to price, something Kelly said is evident each time oil prices climb and the cost of flying jumps.

“It absolutely kills traffic,” he said.

People use airports to get on and off planes. They do not go to airports to eat at fancy restaurants or to buy socks or baseball caps. MCI is a highly regarded airport by passengers exactly as it is, and any changes need to be sensitive to the costs and convenience to airlines and travelers.

MCI is a relatively cheap airport for airlines to serve. One benefit is the many morning flights out of MCI because Southwest parks their planes here overnight. If airport fees rose to cover the costs of a new terminal, these planes might find cheaper accommodation elsewhere. Same for those midday direct flights to LaGuardia that originate from the West Coast. They stop here because MCI is a cheap place for them to fuel up and collect passengers. If fees rise, they may choose to connect in other cities and cost us the direct service.

Going forward, it is still tough to know who to believe on even the simplest details of the negotiations. Aviation Department Director Mark VanLoh recently told a Northland chamber group that he expects to have a recommendation before the city council by the end of summer. That seems unlikely. According to Austin Alonzo, Southwest’s CEO said, “We’ll get there, and I think patience is probably the right thing because it is a pretty complicated question.” The Star reported that the deadline for a final recommendation is May 2016.

The post Shocker! Airlines Want to Keep Costs Down appeared first on Show-Me Institute.

Branson Airport (BKG) made news in 2009 when it became the nation’s only privately constructed and operated commercial airport. Unfortunately, in large part due to poor timing, passenger levels were far below expectations and the project has been in financial trouble for the last couple years. The airport’s problems trebled when Southwest decided to halt service to the market last year.

Stripped of its only major airline, Branson Airport management has been trying to lure new service. To do that, the airport plans to use $1.5 million of private money and $500,000 of public money (courtesy of Taney County) to create a revenue guarantee for prospective airlines. If an airline agrees to serve Branson Airport and fails to turn a profit, this guarantee will make up the difference.

We’ve seen the use of revenue guarantees before in Missouri, notably at Columbia Regional Airport. The Columbia region provided a revenue guarantee to American Airlines, which prompted Delta Airlines (who was already serving the airport) to end service. In essence, publicly funded airline revenue guarantees take the risk of providing airline service from the private sector and give it to taxpayers. This is a questionable use of public resources, and it subsidizes air travel.

Even though Branson Airport is a private operation, a revenue guarantee would not be the first public support it has received. The city of Branson has paid a set amount to the airport for every out-of-town passenger that it has brought in, and Taney County helped the airport secure initial financing. With the airport on the verge of financial collapse, and the county now preparing to subsidize commercial air service, the question becomes whether the public should be invested in bailing out this private venture. Especially with nearby Branson-Springfield National Airport (SGF) growing briskly in the last couple years, it may be in the interest of the taxpayer to let the airport sink or swim on its own.

The post Airline Revenue Guarantee Could Make Touchdown in Branson appeared first on Show-Me Institute.

You don’t have [all the information] yet. We don’t even have it yet. I know what I want because I want a new airport.

With those words at Thursday morning’s Northland Regional Chamber of Commerce meeting, Aviation Department Administrator Mark VanLoh nicely summed up the reason that Kansas City taxpayers have been embroiled against their will in a discussion about building a $1.2 billion new terminal: He just wants it.

VanLoh has been criticized for his clumsy public campaign for a new terminal. And now, perhaps as part of a new approach to getting what he wants, he is revising history. At Thursday’s meeting, he clearly gave the impression that the airlines had to be dragged to the negotiation table.

What the 2013 [plan] did . . . was bring the airlines to the table because they saw something in Kansas City. Something was going to happen and they wanted to be part of it. And we welcome them to the table; we are meeting to this day with the airlines. I know the mayor’s Terminal Advisory Committee recommended a new terminal based on the evidence they had. And of course the Aviation Department recommends a new terminal based on what we know, but we wanted to get back with the airlines.

This does not square with the reported facts. In November 2013, Austin Alonzo of the Kansas City Business Journal reported that “Southwest was not satisfied with its minimal inclusion in vetting the airport proposal before VanLoh presented it to the City Council earlier this year.” The Kansas City Star reported that the airlines then sought to use their lease extension agreement to secure participation in future airport planning.

VanLoh is also overstating his role as champion of the people. He said on Thursday morning that the airlines were surprised to learn how passionate Kansas Citians are about the airport’s convenience, and that the Aviation Department would fight any design that didn’t preserve that convenience. Yet in April 2013 testimony before the city council, VanLoh’s consultants argued that the airport offered a “poor passenger experience.”

That’s when Mayor James advised the Aviation Department that they wouldn’t curry favor with the public by beating up on the airport. The talking point was removed. But even in Thursday’s chamber presentation, VanLoh argued that the perception Kansas Citians have about short walking distances is an “optical illusion.” Regardless of MCI’s convenience, it certainly isn’t the public’s belief that VanLoh is championing. He is merely doing whatever he thinks it takes to get what he wants.

VanLoh said that he expects to have a recommendation before the city council by the end of summer.

The post VanLoh Just Wants a New Terminal appeared first on Show-Me Institute.

Here are five good reasons to reject ATAG’s call for the creation of a new terminal at KCI:

No. 1: It is hugely expensive compared with the alternatives.

The Kansas City Aviation Department has stated that repairs could cost as little as $241 million if only two of the three terminals are repaired ($360 million for all three). That being the case, KCI could perform two major repairs over the next 30 years instead of building a $1.2 billion new terminal and still save hundreds of millions of dollars. The necessary service amenities such as Wi-Fi or electrical outlets can be added at a significantly lower cost and do not justify a new terminal.

No. 2: A new terminal will not bring new flights to KCI.

During ATAG meetings, the airlines and aviation consultants stated that the number of flights a city receives is mostly based on underlying economic factors, not the quality of the airport terminal. Paraphrasing a Southwest Airlines representative, if airport terminals determined air service, no one would ever fly from LaGuardia Airport. Promises of increased business travel or businesses choosing Kansas City based on airport terminals have never been more than anecdotes.

No. 3: The airlines are not happy with the plan.

The Kansas City Aviation Department claims the airlines were consulted, but representatives for the airlines disagree. Last year, Southwest representatives openly complained that the Aviation Department had not consulted with them. At a later ATAG meeting, they warned that the new terminal plan was too expensive and might result in reduced service. Only now, months after debate about the new terminal plan began, have the airlines truly been brought into the decision-making process through a new airport-airline contract signed last month.

No. 4: It will lead to less flights and higher costs to Kansas City residents.

The supporters of the new terminal plan presume that airlines and passengers at other airports will bear the entire cost of building a new terminal, with no consequences for KCI. However, if nothing else, KCI users will immediately pay higher parking fees, part of the new terminal plan. In addition, the idea that costs do not matter for airport service goes against both the warnings of airlines and the experiences of other airports such as Sacramento International Airport and Lambert-St. Louis International Airport. A more expensive KCI could certainly see less airline service – in leading to higher landing fees, reduced service, and steeper airfares.

No. 5: Who wants it anyway?

Whether it is the plentiful parking or the short security lines, residents are concerned that the terminals they like are being replaced so they can be corralled into a shopping mall. Groups like Save KCI and others have made their voices heard at both ATAG meetings and through city legislation preventing the demolition of the existing terminals without a public vote.

The new terminal plan proposes to make KCI an expensive, high-debt airport. The plan, if implemented, will risk KCI’s competitiveness without attracting new passengers. The plan was created without the approval of critical stakeholders, the airlines, and without proving that the plan was either necessary or cost-effective. ATAG might not have done its job to ground this irresponsible plan, but residents, who will get to vote on the matter, certainly should.

Joseph Miller is a policy researcher at the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post Five Good Reasons To Reject New KCI Terminal appeared first on Show-Me Institute.

I was able to attend the Advisory Group presentation before the Hispanic Chamber of Commerce last week, and the slideshow contained four statements that are either incorrect of very misleading. These include (1) the ‘firewall’ between airport funds and the city, (2) whether city funds can be used by an airport, (3) that all city bonds require a public vote and (4) that no airport has ever defaulted and that the city is not a guarantor.

The Show-Me Institute has conducted a great deal of independent research into the Aviation Department’s claims and the wisdom of large airport projects in general. We would welcome the opportunity to present our findings to the Advisory Group, so that they need not lean so heavily on presentations from the department whose claims they are investigating.

That same day, Fowler forwarded the message to a city staffer with this addition:

Can you have your folks at the city look into these matters, please ?

I am sure this group is looking for exceptions to the general rule and will try to discredit what we have heard in testimony from the Aviation Department and the City finance group.

These are certainly policies and broad statements about the legal ramifications of the airport revenue bonds. Whether there are exceptions, loopholes, etc may be called into question.

Maybe have [the City Attorney] look into potential exceptions, etc.

A few days later, on Feb. 2, Fowler forwarded my note to one of the consultants at Frasca and Associates, who is working with the advisory group, with this addition:

Please see the email we received from a special interest group contesting certain facts we have heard from either the Aviation Department and/or representatives of Kansas City.

Which one of these points would you be credentialed to respond to or could research without much additional time (so we don’t blow our Frasca budget) and which ones would you suggest are more legal issues best handled by independent attorneys ? In other words, are some of these questions Kansas City airport-specific, Missouri law-specific or are they all generic facts around most public airports ?

I would like to discuss this during our planned call on Feb. 4, but wanted to give you advance notice that we need answers on these asap either from you or someone else who is independent. We may be able to get our FAA representative to clarify as well and we intend to pose to him too.

Two weeks after that, on Feb. 17, Fowler sent this note to the same city staffer to whom he initially forwarded my email:

Can you please confirm back to me that someone from the City has followed up with Patrick Tuohey on his email below so he feels like we are paying attention to his messages.  I don’t want him ever saying he reached out to us and nobody ever responded.

Let me say loudly that we reached out to them and nobody ever responded. On March 24, I again sent to advisory group leaders Berkebile and Fowler the following note:

On January 30, I sent the note below indicating that the Show-Me Institute has compiled a good deal of independent research on the proposed new terminal. This research includes matters that ATAG has never covered, including financing and the impact of debt servicing.

My note received no response. Therefore, I am asking that the original January 30 email be considered testimony and be distributed to all members of the Advisory Group and included in whatever testimony is made public.

As of this writing, we have heard nothing. They received our note but apparently were more interested in circling the wagons — and seemingly protecting the Aviation Department from being contradicted — than actually collecting information on the new terminal proposal. Perhaps as a result of failing to accept pertinent testimony, Kansas City Mayor Sly James stated falsely in his State of the City address that funds raised at the airport must remain at the airport.

We cannot know what other groups have asked to present information to the Advisory Group and been rebuffed or ignored. We do know that some groups, such as airport concession operators, have not been heard from and we know that the consultants downplayed important testimony from Southwest Airlines. Observers of the advisory group have complained that it gives the appearance of being one-sided and uninterested in legitimate public dialogue. These internal communications only confirm those fears.

The post Airport Advisory Group Not Really Interested In Input appeared first on Show-Me Institute.

The editorial claims that critics who oppose the “new, as yet undesigned, terminal” are chanting a “everything-is-OK mantra.” First, if we are concerned about facts, while the design of the airport is far from final, the new terminal plan is not some blank slate. The design is a centralized terminal where Terminal A now is located, with plans for at least 37 contact gates, a new parking garage, and new facilities. These plans are readily available, and I encourage the writers at the Star to read them. The estimated cost is more than $1.2 billion, necessitating issuing airport revenue bonds, which requires a public vote. That chance to vote on whether the proposal is funded is the reason for the public discussion in the first place.

Second, who has the “everything-is-OK mantra?” Some oppose the new terminal plan because they find the current layout convenient. Others criticize the plan because its expense will reduce MCI’s competitiveness and financial health. That is not the same as thinking that the airport does not require any upgrades or repairs. The editorial does not name any group that says this, instead constructing a straw man to lambast.

After attacking phantom critics, the Star editorial draws a false equivalency between Southwest Airline’s statements on why it chooses to fly out of a certain airport and a consultant’s (Frasca & Associates) opinion about why Southwest does that. Southwest Airlines transported the most passengers in the U.S. last year and provides 3,700 flights per day. It is also the largest carrier at MCI. Frasca & Associates is a consulting group that the city hired. Their opinions about the airline business are not equal. The facts are that building a $1.2 billion new terminal without expecting any real increase in demand for flights will make MCI the most expensive medium hub airport in the country. Airport users will have to pay for this honor, through higher airport fees, reduced airline service, or higher ticket prices.

Separating facts from emotion is important in any debate, but so is separating facts from logical fallacy. The question is not whether we plan for the future, but whether the $1.2 billion new terminal plan is acceptable. Many might argue that making MCI a convenient, competitive airport is more important than making “it over to impress future guests.”

Come to think of it, is vanity an emotion?

The post Separate Facts From Straw Men In Debate About Kansas City Airport appeared first on Show-Me Institute.

First, the consultant criticized the airlines’ statement that the airline industry has experienced considerable stress since 2001 and would attempt to use their limited resources where they make the most profit. The consultant claimed that, “In fact, the airlines are now experiencing record profits.” This point is shortsighted. Airlines have managed profitability in the last couple of years. However, in the last two decades, the airlines lost so much money that Warren Buffett joked, “If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright.” The airlines only reached this profitability after massive consolidation, keeping just the most profitable flights, and closing airport hubs. Airlines, especially MCI’s largest carrier, Southwest, have learned their lesson and will likely remain cost-conscious in the future.

Second, the consultant objected to the airlines’ view that terminals do not create demand. They stated:

…a new or expanded terminal can address certain deficiencies and open up new air service opportunities…For example, the lack of international gate capacity…

This point is strange, as the consultant admits that growth in international travel at MCI is essentially flat (0.7 percent growth) and will remain so. But, according to the consultant, Kansas City can be like Pittsburgh, which has a flight to Paris. Unfortunately, Pittsburgh had to pay $9 million in subsidies for that honor, so maybe Kansas City does not want be like Pittsburgh. As Southwest officials stated, MCI has adequate capacity and its price competitiveness means more service. Compared to non-hub peer airports, MCI has more non-stop destinations.

Third, consultants disagreed with the airlines about the importance of landing costs for airlines. They stated:

In general, airport costs (i.e., terminal rents and landing fees) comprise roughly 3 to 6 percent of an airline’s total costs.

The consultants claim that fuel is most important to airlines and operation costs can decrease at a more efficient, new site. However, this is irrelevant. If a new terminal is built that makes MCI more expensive to operate out of, the airport could certainly lose flights. Perhaps the consultants at Frasca & Associates should call Southwest officials and tell them that 3-6 percent of their costs don’t matter and they should not have refused to sign a lease agreement with Sacramento International Airport after that airport’s costs increased.

The consultants make several other points that are equally not insightful. Perhaps it need only be pointed out that airlines understand the aviation industry. The airlines also decide where their airplanes actually go, making their viewpoint on why they choose specific airports especially important.

The post On The Airline Industry, Don’t Trust The Airlines, Just Listen To A Consultant appeared first on Show-Me Institute.

These revelations pushed some of those who had supported the new terminal to call for a new plan. But in the past week, those who still support the new terminal plan started to push back. As the Kansas City Star reports, transportation consultants working for the terminal advisory group stated that upgrades might attract more flights. These consultants also stated that the new terminal plan has the increased amenities and power outlets the business community demands.

Adding to this, business leaders stated at the most recent meeting of the Airport Advisory Group that unnamed businesses chose not to invest in Kansas City because MCI is not a welcoming “front door.” Those business leaders went on to say, like the aforementioned transportation consultants, that major repairs are necessary to draw more business travelers and investment to Kansas City. In other words, business travelers choose travel destinations based upon which airports have Cinnabons and Sbarros.

However, these arguments are less compelling when one notes that, with 51 cities in reach by direct flights, MCI has relatively good service compared to airports in peer cities. This is largely due to MCI’s price competitiveness.

In addition, the evidence shows that a city’s economic climate, not the state of its airport terminals, is most important for determining travel demand. As to the need for more amenities like food options and electrical outlets, building a $1.2 billion new terminal to address these matters is like using a jackhammer to drive a nail.

To sum it up, the airlines (and common sense) say that building an expensive new terminal will not increase demand for air travel. Quite the contrary, the higher costs to airlines and passengers may mean fewer flights. Even if we agree with business leaders that MCI requires more amenities, certainly there is a cheaper way of providing these than a $1.2 billion new terminal plan. The cost is so much greater than the supposed benefits that the plan looks more like a vanity project than a sound investment.

The post MCI’s Competitiveness Harmed, Not Helped, With New Terminal Plan appeared first on Show-Me Institute.

As the article rightly points out, the aviation director initially supported an even more expensive South Terminal Plan. That approach lost favor with KCAD because the Missouri Department of Transportation (MoDOT) would not build the required highway alterations. When selecting a new design, KCAD gave the public three options: the South Terminal Plan (which it already knew it could not do), the current design, and a mirrored option of the current design. So much for alternatives. Even today, after months of Airport Advisory Group meetings, the Aviation Department has yet to create serious renovation alternatives to its desired plan.

The Star article does not point out how the department has repeatedly contradicted itself about cost estimates and construction timelines. First, the airport was going to cost a minimum of $1.2 billion, then it was $900 million, or $965 million. MCI repair costs are shown as less than $200 million in a bond report, but then KCAD claimed the amount is $600 million or even $700 million. The new terminal planning documents call for the new terminal to open by 2019, but the aviation director then claimed that construction will not happen until 2020. At what point should the public conclude that the Aviation Department will say whatever number they think will get a new terminal?

Although the Star article downplays it, the opposition of the airlines has done the most damage to KCAD’s credibility. Before their testimony, the Aviation Department said that critics were wrong: wrong that the debt could harm the airport financially, wrong about how much money a new terminal could generate, wrong that the airport could continue in its current form, even wrong about the convenience of MCI. However, since Southwest representatives essentially vindicated the critics and warned against the risks of the new terminal plan, KCAD’s position has become untenable.

Most residents know that the airlines understand the aviation industry and that if they do not support the new terminal, it is probably a bad idea. What most residents probably do not know is that the ability of MCI to finance the $1.2 billion terminal plan depends on the airlines signing a new contract that makes them responsible for paying the terminal’s immense debt. If the terminal is built and the airlines refuse to sign, then MCI will be in Sacramento International Airport’s current position, scrambling to cut costs and find new revenue sources as its debt payments mount. It seems impossible that KCAD devised a new terminal plan and took that plan public without ensuring that its tenets/source of financing actually wanted it. Yet that is what happened.

It is good to see the Star arguing for change in KCAD’s performance and a new plan for MCI. Whether or not the aviation director is replaced, Kansas City would be well served by an open discussion about the future of Kansas City International Airport.

The post Kansas City Star Calls For New MCI Plan, Airport Leadership appeared first on Show-Me Institute.

The Show-Me Institute has written about the new terminal plan numerous times. We have questioned the need for a new terminal and the lack of reasonable alternatives to the Aviation Department’s plan. We have expressed concern about the cost of a new terminal and the impact of those costs on the airport’s financial viability and competitiveness. We pointed out that many residents like the current layout, ranking No. 1 in overall airport satisfaction in a J.D. Power & Associates survey. In response, we hear that cost per enplaned passenger does not matter, that the current terminal is falling apart, and we are simply standing in the way of a modern MCI.

But as yesterday’s Terminal Advisory Group meeting confirmed, Southwest and the other airlines that serve MCI agree with our position, and yes, costs matter in the air travel business. Their points were:

• The current system meets the airlines’ needs now and for the next 10 years. If customers need more, the airlines can pay for that in the future.
• Airlines have mobile assets and are risk adverse. They will go where they can make the most money.
• The new terminal plan will increase costs and that “higher cost can lead to less service, not more…”
• “The terminals do not generate or impact demand” for flights.
• The example of the billion dollar new terminal at Sacramento International Airport (as the Show-Me Institute publicized), and its subsequent financial and competitiveness issues, are a cautionary tale for MCI.

Essentially, the airline representatives all but said that the $1.2 billion new terminal plan is harmful and unnecessary. Apologists for the new plan are already going for damage control, stating that the airlines are just one voice among many. One Advisory Group member went as far as saying that there is tension between the airlines looking for low costs and the city looking to provide the best experience for is customers.

But the airlines are not just a voice, they are the airport’s tenants and main source of revenue. In addition, as market-driven entities, the airlines’ incentives are more in line with airline customers than city officials. Above all, travelers want cheap, convenient flights, not a shopping mall. If city officials are prudent, they will heed the warnings of the airlines and ground the new terminal plan.

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