High Air Fares Are Ice on Wings of Memphis Economy

Yesterday, I participated in a panel discussion sponsored by New America Foundation in conjunction with Washington Monthly to follow up the article in the magazine’s recent issue, Terminal Sickness, which addressed the adverse price that Memphis, St. Louis, and Cincinnati are paying in high fares.  The panel was called: Is It Time to Re-Regulate America’s Broken Airline System? The moderator for the panel was Paul Gastris, editor-in-chief, Washington Monthly, and other members of the panel were Jim Oberstar, former Minnesota Congressman and former chair of House Committee on Transportation and Infrastructure; Phillip Longman, senior fellow in Markets, Enterprise, and Resiliency initiative at New America Foundation, and Josh Marks of the American Aviation Institute.

To read coverage of the panel in The Commercial Appeal and Washington Post, click here.

I did not answer the question posed by the panel’s title, because in truth, those of us in Memphis don’t care what the solution is as long as there is one.  In the question and answer part of the program, I made the point that the only thing more frustrating for Memphians than the excessive air fares is the feeling that no one cares, and because of it, we are anxious to be part of a discussion with cities like St. Louis and Cincinnati about what can be done so that our communities’ fragile economies are not set back by the boulder that we are left to push up the hill in the form of high air fares.

- – - -      Tom Jones

The following are my comments:

First of all, I want to thank Phillip, Lena, and Washington Monthly for this article because it gave voice to the more than a million people in the Memphis region who are too often told how lucky we are to be paying some of the highest fares of any hub in the country.

The thing is: I don’t think that our leaders are unaware or unconcerned about the problem but there is a tendency to justify the fares because they feel powerless when it comes to knowing what to do about them.  In today’s political environment, there is always the risk that if you identify the problem, the public will expect you to solve it.

At the same time, economic development officials seem scared to say anything that would make our primary carrier upset, the logic being that if the airline is cutting 25% of our flights after telling us that it loves Memphis, we don’t want to see what they could do if they rejected us.

Memphis and the other cities mentioned in the article are like the frog sitting in the pot of water that gets hotter and hotter until the frog is boiled to death.

The impacts from the high fares come slowly, and as a result, we accept a decrease in service and adapt.  Then there’s an increase in fares, and we adjust.  In this way, the impacts are defined more at a personal level than an economic one, and every person in our region has a high air fare horror story.

There are the stories from thousands of us who have driven 120 miles to Little Rock – and even 210 miles to Nashville – to save several hundreds of dollars, although sometimes it is even to board a Delta flight that flies back through Memphis to our final destination.

There’s the $750 ticket that I bought recently with a week’s notice for Cincinnati; there’s my friend who takes the overnight, discount megabus from Chicago to Memphis because it’s too expensive to fly in; there’s the $900 ticket to Austin for a Memphis law firm that regularly works there; there’s the small business that wanted to consolidate its operations to Memphis but decided against it because the added costs of air travel didn’t make it financially possible; there’s the national music organization that relocated from Memphis because it was too expensive for its members to fly in for its meetings; there’s the consultant for local government who had to renegotiate more money into his contract because he was unaware that flights into Memphis would be well beyond his normal budget, and there’s our mayor who drove eight hours to St. Louis for a 90-minute meeting rather than pay the $976 for the 75-minute flight.

These are stories that create a disconnect between people working on economic development and the people they are serving.  At the time of the Northwest and Delta Airlines merger, the Tennessee commissioner of economic and community development told us that the value that the merger would bring to Memphis’ economy was well worth the price.

The headline about the commissioner’s comments was: “Northwest-Delta Merger: Good for Tennessee.”

The next day, the headline on the front page of our daily newspaper, The Commercial Appeal, said this: “Airline merger may be trouble for Pinnacle Airlines.”

Delta’s CEO reassured us at a special breakfast meeting that Memphis would remain a vital part of Delta’s strategies for the future.

And yet, over and over, we have been given a steady diet of spin when serious scenario thinking would have served us better.

Delta’s 25% cut in flights and the discontinuing of the year-round direct flight to Amsterdam took place as construction on a new $72 million air traffic control tower was ending and as construction on a parking garage and passenger transfer facility costing even more was just beginning.

As Memphis Flyer reporter John Branston has written: Except for the few hours when Delta flights are landing and departing, the airport is eerily quiet.  Despite more than a decade of reports that the airport authority is talking to Southwest Airlines, the old axiom has become true again: if you die in Memphis and go to heaven, you have to go through Atlanta.

Mayor Wharton has said: “The whole world is about competition, and we’ve got to find a way to be much more competitive.  I can’t relocate my headquarters, but the business community can, as we are seeing.  But to pay a high fare and have to go through Atlanta, that is kicking a man when he’s down.  That violates the Eighth Amendment against cruel and unusual punishment.”

There’s little optimism in Memphis that things are going to get better, and it’s worth remembering that all of this is taking place in a region with one of the lowest median household incomes of the 50 largest MSAs. In the first decade of this century, there was little argument that the economy was struggling, as our region lost 50,000 jobs.

Memphis is similar to the other cities mentioned in the Washington Monthly article. We have been beaten hard by the global recession and the mergers of companies that take decision-making outside of our borders.

Our economies remain fragile, and a lot of things have to be done right for us to improve our trajectories.  High air fares are ice on our wings at the exact time that we need for our economy to take off. It unlevels the playing field at the exact time that we need our best opportunity for new jobs and economic growth.

The repercussions to our economy are pervasive.  If I have employees in Memphis, it is too expensive and now inconvenient to fly them anywhere.  If I am a supplier in Memphis, it is too expensive to see my customers unless I can drive to them.  If I am a professional, it is expensive to connect with a peer group elsewhere.  If I am a young entrepreneur or young professional, it is an expensive place if I need easy and affordable connectivity.

In other words, at the time every city needs to connect easily and freely with the rest of the world, we have a major barrier to entry, and the greatest irony of all is that in the city where FedEx invented modern global commerce, our citizens are priced out of full participation in the global and even the national market because of air fares.

It creates an almost insurmountable barrier for Memphis.  Here’s what a colleague wrote to me recently when the conversation turned to her working out of Memphis. She now lives in Chicago:

“I could almost commute to New York City from Chicago.  It’s such a cheap and easy flight from Chicago.  Think how much bigger my potential pool of employees, colleagues, clients is than if I lived in Memphis or if I were confined to Chicago.

“Already, I am advantaged in being in Chicago.  The market is much bigger than the Memphis market.  There are more people to buy from, sell from, learn from, collaborate with.  Now add New York City to my market. Then compare that to Memphis.  It’s terribly unfair and getting more unfair every day.”