Hazelwood’s biggest issue is that it is being held at figurative gunpoint by Robertson Fire District, a taxing district here in St. Louis that could qualify as one of the most obscure taxing districts we have. Robertson Fire District probably should not exist. The City of Hazelwood’s municipal fire department should be providing fire protection services to the entire city, but can’t because of a special law in Missouri that limits the ability of cities in St. Louis County that annex unincorporated areas to provide fire services in those areas.

Cities must pay taxes for the fire district to provide the fire services, which they do less efficiently than municipal fire departments. And it is much easier for fireman’s unions to get control of a fire district than a city government (though they can do that, too.). Anyway, Robertson has significantly raised its property tax rate—a rate that the City of Hazelwood, not just the residents within the fire district, must pay. These expensive bills from the high-spending Robertson Fire District are the primary reason Hazelwood is making the cuts mentioned at the start of this piece, and considering filing bankruptcy. From a Post-Dispatch story on the topic:

Median employee pay in the [Robertson] district was $116,066 in 2021, according to district salary records.

In 2021, the city paid Robertson $4.5. million out of a total budget of $30 million, and that does not include the cost to fund the Hazelwood municipal fire department, which covers other parts of the city.

The Robertson contract requires the city pay any fire district tax exceeding 99 cents for each $100 of assessed value. That cost has ballooned over the years, Hazelwood City Manager Matt Zimmerman told the Post-Dispatch in April. [Author’s note: The current rate is $2.41, much higher than $0.99, although the district claims it is going to lower it.]

This story is an example of a special law that is harming Hazelwood, and other cities, too. Cities within St. Louis County that incorporate or annex new areas should be allowed to provide municipal fire services within those areas. Frankly, Chesterfield should be operating its own city fire department; it could save Chesterfield residents a lot of money.

There is another special law, however, where Hazelwood gets the better end of the deal and uses that special authority to stick it to taxpayers. This law relates to hotel taxes. Hotel taxes within St. Louis County are pooled and used to fund tourism promotion, the downtown dome, and a few other things. The tax rate paid on hotel rooms everywhere in St. Louis City and County is 7.25 percent, on top of the normal sales tax rate. But a few cities (four to be precise, most near Lambert Airport) are allowed to have a hotel tax on top of that rate, and the most egregious one is Hazelwood, with a rate of five percent. The combined sales and hotel tax rate in Hazelwood is over 20 percent, and that is unjustifiable. (The other three cities’ extra hotel tax rates are all under one percent.)

In other words, throughout St. Louis City and County hotel taxes of 7.25 percent fund regional items, but a special law allows Hazelwood to charge an extra five percent to just promote Hazelwood. That needs to be changed and excessive hotel taxes need to be disallowed.

Live by the sword, die by the sword. I fully agree that Hazelwood’s primary financial problem is derived from a harmful special law that needs to be removed (the fire district law), but the legislature also needs to address the hotel tax that benefits Hazelwood unfairly.

I look forward to the Mayor of Hazelwood supporting both changes, not just one of them.

The post Hazelwood, Bankruptcy, and Special Laws appeared first on Show-Me Institute.

receive bona fide proposals from firms, partnerships, consortiums, etc., with the technical expertise and financial resources to enter into a public–private partnership for the long-term lease, management, operation, and development of the Airport. The Airport Lease RFP shall be in a format acceptable to the FAA and shall be appropriate for submission as part of the City’s final application document.

The Show-Me Institute filed an open records request for the request-for-proposal document (available here), the proposals the city received, and the resulting contract with the winning bid. Those 11 bids are listed below, with links to the full text of each. Note that in two cases the document we received was divided into two parts, perhaps to make electronic transmission easier. Note also that some bids contain redactions, perhaps to protect sensitive information.

• Credit Suisse proposal
• Ernst and Young proposal
• Faegre Baker Daniels proposal
• Moelis & Grow Missouri proposal (part 1 and part 2)
• Hardwick proposal
• Katten proposal
• Lazard proposal
• P3Point proposal (part 1 and part 2)
• RBC Capital Markets proposal
• Stifel proposal
• UBS proposal

The selection committee for the city chose the Moelis & Grow Missouri proposal. The resulting contract with the city is here. We note that Rex Sinquefield, the president of the Show-Me Institute, is associated with Grow Missouri.

Show-Me Institute researchers have not had the opportunity to go through the proposals, but the information is presented above for public review.

The post St. Louis Airport Privatization Documents appeared first on Show-Me Institute.

Wow’s expansion into St. Louis could be more of a curse than a blessing because of the cost to the city’s tax base from taxpayer-funded subsidies. The largest of these will come from the Saint Louis County Port Authority, which will provide $600,000 to advertise Wow’s services over the next two years. However, the fun doesn’t stop there; Lambert Airport (a public entity) will contribute another $200,000, and Wow’s landing fees will be waived for 18 months (a subsidy of nearly $400,000).

Unfortunately, corporate welfare seems to have become standard operating procedure for cities, usually to their own detriment. And while the example of Wow Airlines is not the most dramatic, it does show the pervasiveness of corporate welfare in Missouri. It’s great that a European airline wants to enter the Saint Louis market, but should taxpayers really be subsidizing their neighbors’ travel expenses?

The post Subsidies Are Cleared for Takeoff as Wow Air Comes to Saint Louis appeared first on Show-Me Institute.

In Kansas City, the effort to spend $1.2 billion on a new single terminal has been limping along for years. Beset from the beginning by self-inflicted wounds from Aviation Department leadership and an aversion to open discussion (Mayor James recently tried to require elected officials to sign non-disclosure agreements about competing bids), the effort now appears to be racing toward a November election. Voter support is in no way assured.

In Saint Louis, a consortium of business interests and former city officials are moving forward with a privatization effort that has yet to be the subject of much public discussion. While free-market solutions are a worthwhile consideration for many public services, market decisions are only as good as the information available.

Why the secrecy over matters that are obviously of great public interest? If Kansas City and Saint Louis are developing good plans for managing, developing, or privatizing their airports, their leaders should be confident that they can defend the plans in the marketplace of ideas. If the plans are flawed, isn’t it better to expose the problems while there is still time to make adjustments?

One thing is certain. The longer deliberations are kept secret, the more the inference will grow that the officials leading the efforts have something to hide. It makes for an inauspicious start for what will, eventually and inevitably, become campaigns for public approval.

The post Airport Proposals Fly while the Public Feels Grounded appeared first on Show-Me Institute.

The city and the commission that oversees the airport have endorsed a plan to impose $3 pick-up and drop-off fees on TNCs serving the airport. That means every time a passenger is either picked up or dropped off at the airport by drivers for companies like Uber or Lyft, they’ll pay an additional $3 on top of their regular fare. There are two apparent motivations for the fees: (1) the airport wants to collect as much revenue as possible; and (2) taxis pay a $4 pick-up fee at the airport, and so regulators want to “level the playing field” between taxis and the more popular TNCs. There are also two fundamental problems with the proposal.

For one, taxis pay a special pick-up fee partially because they’re guaranteed fares at the airport. They queue at a designated area where, after waiting their turn, they get a fare. But this designated area wasn’t free to build, and TNC drivers cannot que there for guaranteed fares. TNC drivers respond to passenger requests in real time, and so must find fares “on their own.” Moreover, TNCs impose no special costs on airports like taxis do in terms of a designated waiting area or congestion. So if the TNC business model doesn’t necessitate these extra costs, why should TNCs or their passengers pay for them? Should TNCs be punished for being efficient? The answer may irk you as much as it does me: because of the “convenience of being allowed to offer curbside pickup.”

Secondly, it is not the government’s job to pick winners and losers. By protecting some market participants at the expense of others, policymakers hurt ordinary consumers—the overwhelming majority of society—in two ways. In the present case, consumers must first pay artificially higher prices for a service they demand. Second, economic progress is slowed by propping up failing businesses. Some city officials say that allowing TNCs to operate at the airport could hurt taxis’ business. They’re exactly right. Ford’s Model T hurt the carriage industry, and the advent of electric refrigerators hurt the ice industry—but society as a whole grew richer. The market destroys some jobs as others are created. Imposing fees on TNCs will not “level the playing field”; it will simply protect government-favored businesses from the pressures of the market (i.e., the preferences of consumers).

If policymakers truly want to level the playing field, they should eliminate fees, regulations, and other perks that help some at the expense of others—for both TNCs and taxis. Deregulation has already proved itself effective in the vehicle-for-hire industry. I hope officials keep this in mind going forward.
 

The post Fining Businesses for Convenience? appeared first on Show-Me Institute.

• Learning from failure in education policy
• Joplin’s recovery
• Privatizing Lambert Airport in Saint Louis
• Certificate of Need reform
• Rejecting business-as-usual development subsidies
• The runaway “staffing surge” in K-12 education

Click on the link below to learn more.

The post Show-Me Institute’s June 2017 Newsletter appeared first on Show-Me Institute.

Privatizing Lambert could be a win–win–win proposition for St. Louis. The city could get an infusion of cash; private firms could get the opportunity to pursue profits; and the traveling public could get an improved and more efficient airport. But skeptics point out that a limited number of airports have gone through the APPP, implying that privatization is rarely successful, if not unrealistic.

So, is privatization realistic? Why hasn’t it taken off in the US?

The answers: “Absolutely” and “It’s complicated,” respectively.

Privatization is becoming more common abroad. As of 2016, 41% of European airports were partially or fully privatized, and the Canadian National Airport System (comprising Canada’s 26 largest airports) has been successfully operated by the private sector for decades. According to Airports Council International, the private, market-based approach in Europe has led to “significant volumes of investment in necessary infrastructure, higher service quality levels, and a commercial acumen which allows airport operators to diversify revenue streams and minimize the costs that users have to pay” (p. 1). Privatization has also led to greater competition, which has “pushed airports of all sizes to fight for route development and traffic growth, to become leaner and more efficient… and to find the optimal means of financing investments “(ibid). In short, privatization works; in fact, it works really well.

But European and Canadian airports weren’t privatized through the APPP, which might be why privatization has been faster and smoother abroad. While the APPP is promising, it can take years to finish the application process, and time is money. For perspective, Henry County Airglades Airport had its preliminary application approved in 2010 and has yet to receive final approval from the Federal Aviation Administration (FAA).

The APPP also imposes restrictions that can make crafting a privatization deal challenging. For instance, a 65% majority of airlines need to approve a lease agreement for privatization to go forward. And if the city wants to use proceeds from the agreement on projects outside the airport, it’ll require that same 65% approval. Moreover, private operators must assume any public debt held for the airport unless the FAA waives the responsibility. On top of all this, the passenger facility charge (PFC) airports levy on travelers is capped at $4.50 by Congress, which limits revenue for private operators. (Read this recent Congressional report on the APPP for a more detailed account of the program and its challenges.)

The question isn’t “Should we privatize?” but “How should we privatize?” The FAA has discussed the benefits of privatization and increased competition for decades, and the APPP gives St. Louis a chance to capitalize on those benefits. And while few airports have been privatized through the APPP (note that most simply withdrew their applications), policymakers can work to craft a deal that works for all involved: the city, the airport, airlines, and the traveling public. Look for more soon on what a privatization deal could include to offer the best outcomes for all parties.

The post Putting the APPP in Perspective appeared first on Show-Me Institute.

A forthcoming decision from a St. Louis County Court could restrict the ridesharing company Uber from operating in the region. The Metropolitan Taxi Commission (MTC) is seeking a restraining order against Uber, and Uber claims the MTC has breached anti-trust law. A decision could be issued this month.    

In short, the MTC is trying to stifle competition. Firms like Uber and Lyft provide innovative services consumers overwhelmingly prefer to traditional taxis. In an effort to save their own skins, taxi companies are trying to impose on ridesharing firms the same outdated, burdensome regulations they comply with (rather than push for a reform of current regulations).

But the MTC and taxi companies aren’t alone. Some commentators claim firms like Uber (and others in the so-called ‘gig economy’) are bad for consumers and workers alike, threatening not just public safety, but also the financial well-being of ordinary workers. Despite the lack of evidence for either of these claims (see here and here, respectively), there is a more fundamental  question these detractors ignore: Why shouldn’t  people  have the right to choose to ride or work with Uber?

And by the way, if Uber is dangerous, why are Missouri cities without it continually pressuring regulators to bring it to town? If Uber is bad for workers, why is the President of the Saint Louis NAACP urging the MTC to let it operate, so as to provide jobs for those with fewer economic opportunities? If Uber is so terrible that the MTC is trying to bar it from operating, why are consumers calling out for it?

Economists estimate that Uber produces nearly $7 billion in social value annually. It’s time regulators step out of the way  and let riders and drivers in St. Louis get a piece of that pie.

The post Free to Ride and Free to Earn appeared first on Show-Me Institute.

But not every airport in Missouri need fear the meltdown (or tantrum) of the TSA.  One lucky airport is Kansas City International (MCI), which contracts security out to the private sector and does not use the TSA. MCI is one of a handful of major airports across the United States (including San Francisco) that participate in the Screening Partnership Program (SPP). In this program, the TSA sets standards for airport security, but the airport itself is allowed to contract service out to qualified vendors. Using contractors for screening is mainly touted as a money-saving measure, but it also allows an airport to essentially fire its security team if it isn’t performing. Compare that with the normal operating procedure: no matter how bad things get at Saint Louis-Lambert International Airport (STL) or Chicago O’Hare (ORD), the TSA cannot and will not be fired.

The map below shows airports that are participating in the SPP program.

So why haven’t more airports in Missouri and nationwide opted out of the TSA? In fact, many of them have tried, including Springfield-Branson Airport (SGF) in Southwest Missouri. Unfortunately, for many airports the TSA has held up the application process to join the SPP. TSA officials have argued to Congress that actual TSA officers are better and more efficient than private screeners, justifying their foot-dragging on the SPP program. It seems unlikely that such a claim will survive the summer, and large airports across the country are already telling the TSA that enough is enough.

One of the greatest benefits any airport can provide to the flying public is reliably short security lines. But aside from MCI, commercial airports in Missouri don’t currently have any control over this amenity. TSA’s current failings might finally create an impetus to reform airport security and expand the SPP program, and airports like SGF and STL should take advantage.

The post Be Like Kansas City-Avoid the TSA 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.

The post Lambert-Saint Louis International Airport, Still Taxiing appeared first on Show-Me Institute.

 In 2013, Metro spent about $160 million on its bus system. The performance of that system is questionable, both in terms of total ridership and cost-efficiency. In no Saint Louis County census tract does transit account for 25% of all commuters. No bus route covers its operating costs with fare revenue, and many large buses travel Saint Louis’ streets nearly empty. Why aren’t county residents, even in depressed areas of Saint Louis County, using the bus more often?

Perhaps the better question is why those with any other option would take the bus to begin with. The map above shows the bus routes that currently serve North Saint Louis County.

What is immediately obvious is that, aside from downtown and a couple routes to mid-county areas, buses that serve North County stay in North County. They do not provide direct service to the Central West End, South Saint Louis City, West Saint Louis County, or South Saint Louis County, much less Illinois. Most routes funnel riders to the MetroLink, where they have to transfer to a train, and (if their final destination is not on top of the MetroLink) transfer once more to reach their final destination.

To illustrate how time consuming this process can be, we list rush-hour travel time from a randomly chosen address in Ferguson, MO, to prominent employment areas and compared that to travel time for a car.

Of course a car will be faster than transit, but it is surprising just how much faster it is, even for areas near Ferguson. Take the Galleria, which is about 10 miles (or a 20 minute drive) away. Using transit, the trip would take well over an hour. Why? The fastest transit route includes two transfers, which entails a lot of waiting around.

Unfortunately, there’s no easy solution for making the Saint Louis bus system better. The region has low population density and spread-out work locations. But it’s never going to look better until Metro can provide service that people will actually find value in without breaking the bank. Metro does plan to change routes after the completion of its transit center, and that may improve the situation somewhat. But maybe, before it plans another $5 million bus stop, Metro should consider how many new buses that money could buy them, and why anyone who could park in their free lot would want to use the bus anyway. 

The post Inefficient Bus Service Plagues North Saint Louis County appeared first on Show-Me Institute.

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.

And taxicab commissioners aren’t the only ones. Last week, the Post-Dispatch reported that scores of current and former officials get free parking at Lambert, including former airport commissioners, elected officials, police brass, and industry representatives. According to Lambert Director Rhonda Hamm-Niebruegge, the free parking is a “courtesy.” However, the selective nature of this courtesy leaves open a number of questions. For instance, why honor the mayors of only three Saint Louis County cities? Why give a courtesy to one specific partner from an area law firm? Why do many taxicab commissioners receive free parking? Perhaps there are reasonable answers to these questions (among others), but left unexplained it looks just like another unjustified perk for political insiders.

To its credit, STL officials are planning on phasing out the free parking passes. But parking privilege is not just confined to Saint Louis’s airport. Last year, a city-commissioned parking study (performed to decide where new parking meters should go) found that the city allows any individual employed by the city or county, regardless of their position, to park for free at any metered spot. The city has no comprehensive list of authorized outstanding permits or rules determining which departments and which vehicles are eligible for permits. The study’s authors recommended limiting such permits to positions that require quick access to vehicles (like police officers or emergency response vehicles). Unfortunately, while the city is already well into the process of installing new meters to charge residents, the employee on-street parking policy has not been revised or even reviewed.

Most people understand that free parking is not a right. But it should not be a privilege either, handed out on an ad-hoc basis to entrenched civic insiders. 

By the way, the one member of the Taxicab Commission who does not enjoy free airport parking is Chris Sommers. He is also the only member of the Commission who vocally supports ridesharing in Saint Louis. Go figure. 

The post Parking Is a Privilege in Saint Louis City appeared first on Show-Me Institute.

This statement is simply not true. In fact, Kansas City International Airport (MCI) has contracted for private screening through the Screening Partnership Program (SPP) for more than a decade. Under that program, the TSA sets standards for screening and selects a qualified vendor. Even compensation must match TSA standards. Kansas City is not an anomaly. In total, 21 airports, including San Francisco International Airport, use private screening.

The main reason airports opt for private screening is price. According to a report by the House Transportation & Infrastructure Committee, an airport like LAX (which uses TSA) could cut security costs by more than 40 percent if it moved to private screening. That more airports do not use private screening is largely the fault of the TSA itself, which the Government Accountability Office has consistently criticized for dragging its feet on improving and expanding SPP.

From a security standpoint, multiple studies show that private screeners do as good, or better, jobs than TSA screeners. And while we are now learning this is no high hurdle, at least a private company can lose its contract for bad performance; the same cannot be said of the TSA.

As an airport screening agency, the TSA is failing the flying public. In Saint Louis and elsewhere, perhaps it is time airport screening was privately bid out and the TSA receded to a regulatory role.

The post Private Airport Screening a Viable Option for U.S. Airports appeared first on Show-Me Institute.

Unfortunately, expanding MetroLink in this way will easily exceed a billion dollars, and when one considers that a billion-dollar North-South MetroLink line will likely precede these county-specific projects (and need to precede routes to Florissant and Butler Hill), we are talking multibillion-dollar funding requirements.

But too often, costs like these do not daunt regional planners. The results most often conclude that any rail expansion plan would have positive benefits; just some routes are more positive than others and should be built first. We should not be surprised if that is the case with this study as well. However, as so much money is being spent, I propose the following questions the study could address:

1. How might the bus system in Saint Louis City and County be improved for $1 billion to $2 billion? How much money are we proposing to spend per new transit user?
2. Given the higher-than-expected costs and lower-than-expected usage of the Shrewsbury MetroLink line, does it make sense to extend the MetroLink into areas of the county that predict for even less demand for public transportation?
3. Do planners expect transit-spurred economic development, given the distinct lack of economic development surrounding most existing MetroLink stations in Saint Louis?

And last . . .

4. How exactly will $1 million be spent on this study? Itemization is encouraged.

The post Saint Louis to Spend $1 Million on MetroLink Expansion Study appeared first on Show-Me Institute.

Four years ago, the Show-Me Institute came out strongly against plans to spend upwards of a half-billion dollars to turn Lambert-St. Louis International Airport into an “Aerotropolis.” The plan revolved around the idea that Chinese cargo shipped through Saint Louis could be profitable—but only if the government subsidized it to the hilt. As our readers know, the project died not once but twice that year, and has died each year it has been introduced since.

It’s a good thing it kept dying too, as a story from the St. Louis Post-Dispatch showed last week.

In September 2011, a China Cargo flight carrying 80 tons of manufactured products landed at Lambert and was greeted by dignitaries from across the region. But airport officials said that market disappeared amid a downturn in international cargo. [Emphasis mine]

Imagine if Missouri had committed to the Aerotropolis project and then, poof, the market “disappeared”—which of course assumes it was ever really there. Taxpayers would have been left holding the bag.

The admission about Aerotropolis was part of a larger article about a lease just signed for a new “Mexico Hub” at Lambert, a story my colleague Joe Miller has already detailed. Lambert’s director, Rhonda Hamm-Niebruegge, says that the airport “is not paying a penny” for the new project, and if true, it’s a very good thing. At a time when its passenger traffic is down, the last thing Lambert should be doing is speculating on real estate, especially given its track record.

However, it’s not clear whether the Mexico Hub developer will try to draw on existing government subsidy programs to advance the project. An airport project at Lambert fully financed by the private sector seems very good; the concern is whether this project is too good to be true. One would hope that state and local officials would be chastened after the Aerotropolis debacle if they’re considering handing out tax incentives, whatever their scale.

I certainly hope the Mexico Hub project can move ahead on its own merits and without taxpayer money. Cargo markets have “disappeared” before, and taxpayers shouldn’t be on the hook if history repeats itself. We’ll keep you posted.

The post Lambert Officials Admit: Market for Cargo “Disappeared” Post-Aerotropolis appeared first on Show-Me Institute.

Leasing airport property to a private company for aviation-related business makes good sense. Most airport land is virtually impossible to sell because of federal grant assurance restrictions. Allowing private companies that would benefit from access to the airport to lease adjacent property (rather than letting the land lie fallow) is a win for the private business, the airport, and the local economy. As things stand, far from spending money, the airport should receive about $13.5 million a year in lease payments. There are currently no plans to spend any airport money for the facility.

If the plan to use Lambert as a Mexico Hub succeeds, it could mean lower landing fees for commercial airlines, which can attract more flights. The public at large would benefit from more travel options, as well as from any jobs that a cargo hub would create. In the worst-case scenario—the private company fails—the airport would not be worse off financially. If anything, it would be better off, as the airport would have a new dual-customs facility and freight terminal to attract more business.

However, Saint Louis residents should keep an eye on the project, because all too often local governments will shift the risk of these investments from the private sector to taxpayers. The plan to make Lambert a “China Hub” just a couple years ago is a prime example of this tactic. There is no talk of local subsidies yet, but that could change.

Lambert-St. Louis International Airport, as Saint Louis’ only large airport, is vital to the local economy. Allowing the private sector, rather than local governments, to make the investments and take the risks of building a freight hub is a strategy that the airport, and the public at large, would benefit from.

The post Investment at Lambert Could Bring Mexico Hub to Saint Louis appeared first on Show-Me Institute.

The fact that air traffic grew faster in the rest of the nation than it did in Missouri could be taken as meaning that Missouri is lagging the rest of the nation in growth. But in reality, most of Missouri’s airports—including Kansas City International (MCI), Springfield-Branson (SGF), Joplin Regional (JLN), and Columbia Regional (COU)—grew faster than the national average, in the case of Springfield, Joplin, and Columbia much faster (at 8.4 percent, 11 percent, and 16 percent, respectively). Springfield’s recent growth may be enough for it to regain its small hub airport status, which SGF lost following the recession. The performance of Missouri’s largest airport, Lambert-St. Louis International (STL), dampens the state’s overall numbers. Despite a concerted push to get more flights, STL’s passengers actually decreased by about 0.6 percent last year.

The poor performance of STL compared to other airports in Missouri and nationally may be in part due to a relatively weak recovery in the Saint Louis area. It is well understood that underlying economic conditions mostly determines total airline traffic in large cities. However, Saint Louis did see some positive economic growth in 2014, along with a large increase in employment.

Another factor that may affect STL’s ability to gain both flights and passengers is cost. STL’s cost per enplaned passenger, at almost $15, is about three times the costs at MCI or SGF. Higher costs can mean fewer or more expensive flight options, dampening demand. STL’s elevated prices mainly stem from massive debt taken on to build a new runway in the early 2000s, planned when the airport was still a TWA hub.

STL’s leadership, unlike those at another Missouri airport, see the airport’s high costs as a major hurdle toward increasing traffic and are taking aggressive steps to bring in more revenue and rein in costs. This includes leasing out unused land to local businesses and attempting to attract more national and international cargo shipments.

Whether or not these strategies will succeed is as yet unknown. But perhaps the lesson from STL’s experience for all Missouri’s cities is that if their airport provides what it needs at a low price, it will be in the best position to contribute to, and benefit from, better economic growth.

The post Missourians Take to the Skies With Increasing Numbers appeared first on Show-Me Institute.

This past week, when my flight into Saint Louis was over an hour and a half delayed, I realized I would have to catch a cab home. I usually can persuade my friends to pick me up by offering them Starbucks, but since my flight landed at 1:00 a.m. no one was able to pick me up. With MetroLink stopping service at 12:57 p.m., I was left with no other choice than to get a cab ride back to my apartment in Midtown. After collecting my bags, I went to the taxi stand to find only one company offering cab services. After a 15-mile ride to my apartment, I was stuck with a $44.14 cab fare.

Ridesharing companies like Uber and Lyft operate out of cities like San Francisco and Chicago at much more competitive rates. San Francisco even offers UberPool, which matches you with other riders heading in the same direction with the fare split among several riders.

However, since I live in Saint Louis, a city that is inhospitable to innovative and competitive ridesharing companies, I was unable to seek an affordable option.

The Metropolitan Taxicab Commission (MTC) is a regulatory body meant to protect the consumer. Instead, they protect the cab companies who profit from anti-competitive regulations, while consumers are left without options that are prevalent in a competitive market.

Looking through the ridiculous regulations of the MTC’s code, cab companies picking up customers from the airport must obtain a permit and give one dollar for every fare to the MTC. At this time, the MTC has only granted permits to seven cab companies. With limits on the number of permits made available, cab companies are shielded from meaningful competition and can set prices that would be too high in a market with free entry.

I hope the next time I fly into Saint Louis, UberX or Lyft will be an option because I cannot afford many more $45 cab rides.

The post Blame It On the MTC 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.

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