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Sunday, January 09, 2005

A closer look at airport expansion

Several months ago the Governor endorsed an idea put forward by Northwest Airlines to expand the main terminal and reserve it for Northwest (and partner) flights only. Other airlines would be relegated to an expanded Humphrey terminal. I wasn't too impressed with the plan at the time, and today the Star Tribune takes a closer look.

Once again, it looks like government money will be shoveled at a private business in order to help them maintain their monopoly status. Northwest already controls 80 percent of the gates at the airport, and as a result we pay higher fares than average. Low-fare airlines have not been able to get a foothold in this market, to the detriment of competition.

Of course, Northwest and supporters of this plan say that it is needed to secure the 16,000 jobs Northwest provides the state. However, the airline industry is not a good place for investment. I don't have figures handy, but I believe that the cumulative profits of the entire airline industry from inception is below zero. Airlines have short boom cycles followed by long bust cycles where they hemorrhage money, and we are in one of those bust cycles. While I don't like the government playing favourites with any industry, putting money into an industry like the airline industry seems like a bad investment. Why not something like biotech or nanotechnology if we are throwing around tax- and fee-raised money? Why not invest in early education, which has one of the highest returns on the dollar of any kind of public investment?

I think it is time to say no to Northwest's plan to control our market even more tightly than it already does. Let's aim for competition, not giving more money to a monopoly business.

3 Comments:

At 7:20 PM, January 09, 2005, Blogger R-Five said...

I agree with you on all points, and I'm on the right!

A. We are running deficits, not surpluses.
B. The current facility is adequate. If traffic increases, airlines can run more flights off hours or use larger planes in peak.
C. No subsidy guarantees that Northwest will prosper or stay in Minnesota. Especially Northwest.

 
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