Private Businesses Can’t Just Charge Whatever Price They Want In North Dakota

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Written By:
Rob Port

Apr 5, 2012
10:08am

Subsidies for North Dakota’s rural airports, through the federal government’s Essential Air Service program, are ridiculously huge. In Jamestown, as one example, every flight leaving the airport takes with it $1,993 in federal subsidies. Given that each flight averages just four passengers, we’re talking about nearly $500 in subsidies per passenger per flight.

This is money the federal government pays the airline to provide air service in Jamestown. We are bribing an airline to provide this air service. But that, apparently, isn’t enough for airport bureaucrats in Jamestown. See, despite the thousands in subsidies each flight is already receiving, they think airfare prices out of Jamestown are too high. So they’re demanding that the politicians do something about it.

Airfare from Jamestown Regional Airport to some locations has decreased, and airport officials are continuing their efforts to keep fares competitive.

“We will do what we can. We’re going to keep pushing until we have the (fare) parity or at least, close to it,” said Jim Boyd, Jamestown Regional Airport Authority chairman. …

To get it fixed, Jamestown Regional Airport Authority members and JRA staff enlisted the help of North Dakota Gov. Jack Dalrymple, R-N.D., and the state’s congressional delegation, Sens. Kent Conrad and John Hoeven and Rep. Rick Berg.

“We’ve been working very hard to get this resolved as soon as possible,” said Matt Leitner, airport manager. “Our objective is to ensure fare parity with our competitors.”

Here, from the same article, is how fares in Jamestown compare with other airports in the region:

* For an April 30-May 4 round-trip flight to Denver, flying from Jamestown would cost $428.60 compared to $532.20 from Fargo and $512.20 from Bismarck.

* However, for flights to Baltimore and back on those same days, a Jamestown departure would cost $649.40, compared with $471.20 from Fargo and $623.20 from Bismarck.

* Flying to John Wayne Airport in Orange County, California, on those days would cost $437.20 from Bismarck, $623.20 from Fargo or $780 from Jamestown.

A significant difference, to be sure. Enough of a difference to make it worthwhile for travelers to drive either to Fargo or Bismarck for their flights. Which makes sense. It’s economies of scale. Jamestown averages just four passengers per flight. Bismarck and Fargo, obviously, average far more passengers thus the airline can charge cheaper fares in those markets.

The amount in subsidies flights out of Jamestown are receiving, it would be cheaper to just bus passengers from there to either Bismarck or Fargo. But we can’t do that. It is apparently a political imperative that we have flights out of Jamestown, whatever the cost to taxpayers, and whatever government-price rigging is necessary to make it happen.