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Posted at 1:26 PM ET, 12/ 2/2010

Free marketeers for ... airline subsidies?

By Peter Galuszka
It never ceases to amaze how Richmond's business elite, while espousing free markets, are at heart state capitalists, sort of like Lee Kwan Yew of Singapore.

The latest ripple: The business community has arranged for $600,000 in public money to go to a "Save Low Fares Richmond" campaign to keep such cheap-fare carriers as JetBlue and AirTran from bolting from the capital city's anemic airport.

Now comes the latest twist. JetBlue has the chutzpah to ask Greater Richmond to pay subsidies so that JetBlue will restart its now discontinued flights from Richmond to JFK Airport in New York. The carrier ended the flights in November because of low ridership. The idea is that if Richmonders want cheap air service, the public will have to come up with dollars to bankroll a private air carrier.

This isn't a new idea. Eugene, Ore., for instance, has paid subsidies to keep carriers operating at its airport. Like Eugene, which is not far from Portland, Richmond suffers from simple geography. Both are just too close to a major metropolitan area. Washington, with Dulles and Reagan National, should be a short ride away, but Interstate 95 and Beltway congestion can make the 90-mile hike a tough option.

Richmond is a bit up a creek, having spent about $250 million to upgrade its airport with new terminals and parking. For years, Richmond passengers had to pay hefty fares to traditional carriers such as Delta and U.S. Airways. Then AirTran and JetBlue showed up offering much cheaper fares, and all fares went down.

It all worked well -- until the recession. Richmond has suffered the most of any Virginia metro area, losing chip-maker Qimonda, mass retailer Circuit City and mortgage firm LandAmerica. Tobacco giant Philip Morris shifted its corporate structure. Demand for business travel dwindled.

After JetBlue pulled some of its flights, Richmond's business elite worried that AirTran would do the same once it is gobbled up by Southwest Airlines in coming months.

Kim Scheeler, president and CEO of the Greater Richmond Chamber of Commerce, says he wants to sit down and talk with JetBlue, whose CEO pitched the goofy subsidy idea. "If someone asked me to raise X million dollars," Scheeler said, "I'd be hard-pressed to do it, just because of the economy"

There's a problem with that statement. It's not just the economy that's the bad actor here; it's also the free market that conservative Richmonders profess to love. Politicians they back enthusiastically, such as soon-to-be-House Majority Leader Eric Cantor from Henrico County, constantly tell us that the government needs to get off our backs.

The same crowd decries government regulation. But if it were before 1978, when airlines were deregulated. Richmond wouldn't be in the pickle it is today. Back then, the federal government required flight service to second-tier cities and had a say in setting fares.

So, we've come nearly full circle from dereg to government subsidies, sort of like the Soviet Union's Aeroflot or Lee Kwan Yew's Singapore Airlines. Who knows, maybe service would be better.

Peter Galuszka blogs at Bacon's Rebellion. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.

By Peter Galuszka  | December 2, 2010; 1:26 PM ET
Categories:  HotTopic, Local blog network, economy, taxes, tourism, traffic, transportation  
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