WILMINGTON — Here in the Port City, local officials have joined with five other North Carolina communities to pursue scheduled air service to Raleigh-Durham International Airport.
And how are they pursuing this goal, which for some would be an expansion of existing service and for others the restoration of service to airports now largely deserted?
Are they wooing the commercial carrier with economic and survey data that demonstrate a viable market for scheduled service?
No. In fact, the Tennessee-based company involved, Corporate Airlines, says quite clearly that it’s not interested in supplying service to the six communities (Wilmington, Kinston, New Bern, Hickory, Moore County, and Fayetteville) if the decision is to be purely based on the market.
“If we have to do it on our own dime, the risk is too great,” the president of Corporate Airlines said.
Instead, the six cities are asking for a $3.6 million grant from a new federal program called the Small Community Air Service Development Pilot Program. It makes grants to some 40 recipients each year that will, in turn, subsidize carriers for up to three years. As my Carolina Journal colleague Michael Lowrey explained in a news story last week, the six N.C. communities are proposing to supplement the federal money with local and private money, pushing the potential subsidy for Corporate Airlines up to $5.4 million.
I’m no expert on airline economics. Lowrey quotes one, however, to the effect that in situations similar to the six communities in this case, scheduled service is very difficult to maintain. The markets would have to experience a major upswing within the three years of subsidy for the service to continue. Betting on this eventuality would appear to involve significant risk.
The case shows how problematic the prospect of “federal funding” for local projects can be. In reality, unless some communities across the country are perpetually ripped off by others, federal funding over time represents little more than a roundabout way to spend local dollars. All federal funds are local funds, cycled through Washington so that politicians can get their sticky fingers on it and then graciously give it back (minus shipping and handling charges, of course). But because local officials don’t have to vote to raise the funds directly, federal grants seem like free money. Worse, the local pols use the prospect of federal subsidy to persuade local taxpayers to fork over additional bucks to “leverage” all that free money.
The inevitable result is that activities, businesses, or projects that would never be able to raise money privately or through the local budgeting process get funded — and, all too often, blow right through it. We end up with failed projects (like the Global TransPark, substantially funded “from Washington” and now one of the six airports seeking this new round of federal largesse). We end up with underperforming projects, like most mass transit systems. We end up with subsidized activities — like scheduled air service into small airports — that do little to benefit average taxpayers and much to benefit a privileged few who are likely to use it.
One of the best things that Congress, the White House, and the rest of the federal government could do to help local communities in North Carolina is to stop helping local communities in North Carolina and the rest of the country. Let state dollars, for the most part, stay in the state. Let local dollars, for the most part, stay local. Washington should be responsible for only those few tasks that local levels of government cannot perform, either because of constitutional restrictions or obvious economies of scale.
Running planes up and back to Raleigh three times a day to serve a few business travelers and corporate CEOs is about as far away from a legitimate federal activity as you can get.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.