Thursday, March 16, 2017

Everybody gets paid along the way

Today the Aviation Board voted to expand the scope of the new terminal at MSY.
The latest estimate for the new North Terminal puts the total cost at $993 million. The price tag includes about $136 million to expand the terminal to 35 gates. That figure that has risen by nearly a quarter since its initial design phase last fall in order to add more space and make it more efficient, including additional ramp space for airplane movement and baggage facilities.
This pushes the completion date into 2019 so they're not gonna make it in time for the big Tricentennial now.  But that's the price of progress, right?

So back in January, we noticed that this expansion became possible after the city announced it had "hit its triggers" in terms of additional airlines and flights over a relatively short period.
"In 2016, the growth of the Louis Armstrong International Airport exceeded our
expectations yet again," Landrieu said. "With increased service via 17 airlines and 59 non-stop destinations, including 7 international destinations, we have hit the triggers
for additional expansion.”
How did they do that, we wondered.  What sorts of things does the city do for the airlines in order to ensure these triggers are met? Nobody was really saying anything about that.  At least not in the local press, anyway.  But if you go look at the cities we were out-competing like Pittsburgh, for example...

It used to be that airports provided a fairly standard waiver of landing fees and marketing help to entice airlines. But now they and their partners are offering much more, as the competition for new routes intensifies.

That’s especially true in mid-sized markets like Pittsburgh, where a nonstop flight to a sought-after destination like London is seen not only as a way to cut travel times but as a driver for economic development.

“The secret’s out. Local airport service is one of the pillars of economic growth. Everybody knows that and everyone out there is trying to improve air service,” said Blair Pomeroy, a longtime aviation strategy consultant who has worked for airlines in the past.

While incentives always have been part of the efforts to attract coveted service, what has changed is the willingness by cities or airports to offer cash subsidies or risk sharing schemes to minimize the carrier’s financial exposure, Mr. Pomeroy said.

“Now it’s part of the game. You want a new flight to a big city, you’re going to have to come up with launch incentives, marketing, and risk sharing,” he said.
In other words it's kind of like fighting over a major league sports franchise. Ownership is going to locate wherever they're sucking down the most public money.  As it turns out in this case, New Orleans was offering British Airways just a little bit more. 
In addition to Wow and Condor, the airport authority has offered cash incentives to British Airways to start coveted nonstop service to London from Pittsburgh International, CEO Christina Cassotis said.

She would not divulge the amount but described it as “substantial.”

The airport lost out last month when British Airways awarded a London nonstop to New Orleans, with the city’s tourism bureau chipping in $1.4 million a year for three years to help with the flight.

Mr. Pomeroy believes New Orleans offered more than the county airport authority to attract the flight. But Ms. Cassotis said money was not the reason Pittsburgh didn’t get the route.
One supposes this means NOTMC coughed up the $1.4 million.  NOTMC is one of those agencies that takes in gobs and gobs of public hotel/motel tax money that could be funding city services and turns it into a bonanza for "tourism leaders" and their friends and benefactors. Count the airlines among that number too. 

No comments: