Chamber Of Commerce Wants $200,000 To Guarantee Airline Profits

This is ridiculous:

Bismarck-Mandan Chamber of Commerce officials are requesting money to bring a low-cost airline to Bismarck.

The chamber plans to request $200,000 from the city of Bismarck through the Vision Fund. The money would be used to guarantee a new airline would make at least $200,000 in profits in its first year. It would only be paid to the airline if it did not make that amount. The chamber will make its request in the next two weeks, chamber President Kelvin Hullet said.

According to the article, Bismarck Mayor John Warford is skeptical pointing out that this would amount to tax dollars going to a new airline to guarantee profits while it competes with existing airlines already serving the city. That’s an excellent point, though I wonder why political leaders like Mr. Warford don’t make it more often.

Why should any single business get special treatment from the government when it moves into a community to compete with existing businesses for customers and employees? Government-run “economic development” is crony capitalism, and it has no place in a free market.

Besides, as we learned earlier this month, airline boardings are at record levels in North Dakota with every single airport in the state (with the exception of Fargo’s) seeing an increase. If an airline can’t serve North Dakota without a subsidy at this peak in business, then that airline has no business serving the state.

Update: Kelvin Hullett from the Chamber of Commerce responded to this post via email saying that their intent is not to guarantee profits. Here’s part of what he sent me:

Rob: The newspaper reporter did not interpret the revenue guarantee correctly in the article this morning. We are NOT guaranteeing a profit of $200k…nor would we to anyone. Please see below.

A revenue guarantee represents the worst case scenario. It is insurance policy to ensure an airline won’t lose money on a new route. This is a pretty common tool within the industry to assist in bringing new service online. From our research, Airlines today are not looking for subsidized routes, they are seeking out profitable routes. We have every reason to believe a new low fare carrier will be very successful and profitable in our community. As opposed to guaranteeing a “profit” for the service, this is a way to ensure the route will break even in a worst case scenario.

So they’re not guaranteeing profits, they’re just guaranteeing against losses. That still sounds like a subsidy. I’ve worked for small businesses all my life. I run a small business of my own right now. I’d love to be guaranteed not to lose any money. I wonder how much I have to pay to the Chamber of Commerce to get them to back me?