ECONOMIC, AIRLINE UNCERTAINTY: Makes Columbia airport expansion plan unwise

by John O’Connor, Eng.D, P.E.

An award-winning civil engineer questions the wisdom of expanding the airport

How many Columbia citizens have questions about the current financing of our regional airport operation? How many are uncomfortable with the rationale being offered for promoting the expansion of this facility?

How many of us would be willing to invest significant amounts of our personal resources in a business enterprise confronted with so much economic uncertainty?

The Columbia Daily Tribune has reported on a proposal offered to the City Council to increase hotel and motel lodging room taxes from 4% to 7%. Assuming this was Columbia’s most critical need, the $3.3 million annual revenue from this increased tax could be used to fund bonds for the construction of a new, $17 million (at least) airport terminal facility that would accommodate larger planes for an increased number of travelers.

Even while acknowledging the potential benefits of increased air transportation accessibility in helping attract new businesses and facilitating tourism, properly informed Columbians might seriously weigh the financial implications of continuing to subsidize such a speculative investment.

Columbia’s Mayor reportedly explained that a better airport could be needed in upcoming years as MU moves to the Southeastern Conference and fans of teams from visiting schools travel greater distances to Columbia than fans of Big 12 teams. “Obviously, an improved airport terminal — an improved situation at the airport — is definitely good for tourism,” McDavid said.

If we understand the current financial situation correctly, all Columbia taxpayers already subsidize airport operations with a half-cent transportation sales tax. For years, our fellow Americans also chipped in Federal matching grants to an airline so Columbia could have airport service; a subsidy which has now subsided.

One might question why it is that the costs of our regional air services are not primarily being paid for by those who use those services. Sound business practice might show that, as user demand evolved, revenues for improvements would become available.

As it stands, the large contingent of Columbians who rarely or never fly are called upon to subsidize airport maintenance and development. In the long run, would bus or rail service serve them better?

Status of U.S. Airlines

Recent national news reports indicate that airlines, including the well-established, major carriers, have or are in the process of

• declaring bankruptcy (currently, American Airlines)

• undertaking consolidation (Delta/Northwest, United/Continental)

• paring seating capacity (Delta cut ‘as much as 5 percent’ this past winter)

• ‘pulling back’ domestic routes (eliminating less profitable, short-haul routes)

• improving aircraft fuel efficiency (newer planes, slower speeds)

• vigorously working to increase efficiency (mainly, by shedding capacity)

• attempting to contain labor costs (airlines are labor intensive)

• repeatedly raising fares and fees (airlines imposed 10 broad fare increases in 2011)
  

At the heart of the industry’s problems is the volatile, but inexorably increasing, cost of jet fuel. A major portion of airline operational expenditures, fuel costs are accelerating the replacement of older planes with more fuel-efficient aircraft.

Air carriers are particularly wary of the potential for a rapid rise in fuel costs to eliminate profitability.

While passenger travel is optimistically projected to increase, declines in air freight revenues are feared. Air has long been an expensive way to ship products.

In today’s economic climate, it seems unwise to assume that the expenditure of millions to expand Columbia’s airport facilities will either stimulate passenger traffic or guarantee uninterrupted service from our sole passenger air carrier. For business reasons, Delta canceled flights during this past winter to many smaller airports, Columbia’s included.

Unfavorable developments outside the company’s control could ultimately result in the total suspension of air service to less profitable destinations.

Columbia could very well be among those destinations, continued tax subsidies -- or not.

The founder of Columbia-based H₂O'C Engineering, Dr. John O’Connor was Professor of Civil Engineering at the University of Illinois, Urbana-Champaign; Chair and C.W. LaPierre Professor of Civil Engineering at the University of Missouri-Columbia; and Chief of the Illinois State Water Survey.

Dr. O'Connor is a Fellow of the American Society of Civil Engineers (ASCE); recipient of both the ASCE Simon Freese Award and Fulbright Award. He has also served as Chair of the Fulbright Awards Committee for Australasia.