Time to rethink Tucson airport financing in recessionary times


Published on Monday, July 21, 2008

The heavy tax imposed on the airline industry by OPEC – Organization of the Petroleum Exporting Countries – is causing service cutbacks affecting Tucson’s economic development. It is difficult to sell the region to major companies because our airline service is inadequate.

Business people frequently demand the ability to be able to travel to a destination and be back home in the same day. Even tourists are drawn to non-stop destinations which are becoming increasingly rare, especially to "spoke" cities.

Tucson International Airport is scheduled to experience a 41 percent loss of non-stop destinations in the six months between March and November.




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Tucson suffers from the popular travelers’ opinion you can’t get there from here. It is a problem we will always endure being so close to a hub like Phoenix.

Airlines looking for candidates to cut back can figure Tucson is close enough to drive to or from Phoenix. They could cut the Tucson flights and still pick up a large portion of the Tucson-bound traffic.

The costs of airport operations would normally be passed on to the surviving flights. But that cannot be done today because airlines are cutting back service. They have fewer flights to levy charges on. Increase their landing fees and that many more will just stop landing here. And yet, where will that money come from?

This problem is not unique to Tucson, so let’s look at what some airports in other cities are doing.

Advertising, parking lots and concessions are traditional ways airports raise money. Branson Airport in Missouri will be selling naming rights among other things. It costs close to nothing to sell naming rights and it can yield impressive revenues. Airports around the country will probably get on this bandwagon.

The closest airport to Washington, D.C., is named for Ronald Reagan. Nice, but no revenue. Suppose they called it Pepsi International Airport? Sky Harbor? Again, nice but no revenue.

Tucson International? Uninspired and no revenue. Here comes my best suggestion. Brace for impact! How about Raytheon Tucson International or Honeywell Tucson International? They’re here. The public exposure would be incomparable.

Not only can the name of the airport be sold, but individual terminals can also be named. Consider Kalil International Terminal. Law firms are advertising in dignified venues. How about the Snell & Wilmer Terminal. FedEx has a big operation at the airport. Would they pay for the name FedEx Freight Terminal?

There’s also that old standby, the "Your-Name-Here" terminal. This could catch on to the point of naming separate rooms: the Wells Fargo Lobby, the Jim Click car rental corridor, the Americare men’s room.

In Las Vegas, 1,300 slot machines were positioned around McCarren International Airport. The machines yielded a reported $41 million last year. Of course, Las Vegas is different because it’s a gambling capital. But installing them in Tucson also means more competition. Tucson’s airport could place slot machines in the sterile area effectively restricting them to ticketed passengers who may have a few simoleons left after paying for their tickets. The machines would not compete with the reservation casinos and would service a high percentage of non-residents coming and going.

Tucson will never be Vegas on the Rillito and we wouldn’t want it to be, but those slots make money.

Tucson has a strong place in the history of aviation. Perhaps an appropriate museum of aviation with an emphasis on the roles Tucson has played would attract travelers, especially outbound passengers who are experiencing delays. But "museum" sounds so stale and stuffy. We should call it an exposition.

One method I hesitate to mention and certainly do not endorse, but I understand Chicago’s O’Hare airport imposed a sales tax only on transactions at the airport. All those out-of-towners who don’t vote there, trapped in the terminal until their flight departs, pay a 10 percent sales tax. But Tucson isn’t O’Hare and raising the tax to that level would probably impair sales.

These aren’t the only good ideas. And some of them may not be feasible here for various reasons. But thinking innovatively to raise new money beats the more usual but unimaginative method of raising more money, increasing the sales tax. I have listed these ideas in the order of the most effective and feasible first. But they are all worth considering.

E-mail comments for publication to editor@azbiz.com. Contact Lionel Waxman at territorial@waxmanmedia.com. Waxman’s Flashpoint commentaries are published in The Daily Territorial.

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Comments

Advisor wrote on Jul 19, 2008 2:52 PM:

" It was a bad idea to begin with.

As insiders know, it was for economic globalization and the 3 other artificial aviation growth schemes (jet taxis, cheap business jets & cheap personal jets).

The expansion of over 6,500 US airports to accommodate the flights killed any chance of real long-term transportation relief (e.g., a viable national world-class bullet train system [GAO-02-185 and others].

AIRPORTS are the result of economic engines (small business).

...NOW if we can only kill the other unnecessary expansions and put our money into meaningful relief. "

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