Airports Entrepreneurial Ingenuity Is Commendable If
Written by Michael Lewis on July 23, 2009
By Michael Lewis
You have to admire the ingenuity to make lemonade out of lemons.
That’s what’ll be required to save just-bankrupt General Motors.
Apparently, it’s also what’s required to save Miami International Airport.
Hence, administrators’ menu of ultra-creative ideas to close a $500 million annual gap in needed airport revenues within six years. The aim is to nearly double income so that the airport can pay rapidly rising bills.
Bills are soaring because bond repayments on an ongoing expansion begun in the 1990s are coming due.
You can’t blame current administrators for a massive program that spiraled out of control to $6.2 billion as we built and built to support the rapid air traffic growth we forecast but never got.
Nor will you be able to blame future county administrators decades hence for ballooning repayments for $3 billion in baseball stadium bonds to meet new fan demand that we’re unlikely to see.
Those who made the bad judgments and left the repayments to the future are, or will be, long gone, as are the General Motors executives who turned a global giant into a global disaster.
Not to equate the airport with a disaster. It isn’t. It works well, better than ever. We can be proud of the spotless new terminals.
But now we must pay for them absent what we once assumed: that rapidly rising passenger and freight loads would just keep expanding.
Local government committed the same fallacy, assuming construction work and housing prices and tax collections would keep rising as they had during the recent boom. They didn’t, and governments are looking at higher taxes to fund the salaries, benefits and programs they added during boom days.
That same fallacy is built into a stadium bond repayment schedule based on tourist taxes rising to 6.9 times their present annual total by the time all bonds must be repaid. Anyone who has lived through Miami’s boom-and-bust cycles and hurricanes knows we can’t count on ever-rising tourism and tourist taxes.
Rising taxes and death have always seemed the only two sure bets. They are, but they don’t maintain the same rates. Health miracles, better lifestyles and prosperity slashed death rates, just as disasters, economics and global disruptions have whacked tax collections.
So the county aviation department’s aggressive turn to entrepreneurism has a vital reason: to cover mistakes of the past without harming the future.
Proposals the department tossed into the county commission’s lap June 30 could all meet the first aim: raise money to help pay debt.
All also aim to meet the second: avoid high landing fees that would drive away vital aviation traffic.
But there are more ways to harm our future than driving out air traffic. And some of the proposals cross the line from helpful to harmful.
While all money-raising plans carry caveats, the bid to install slot machines in Miami International concourses in order to raise $17 million to $20 million a year should die now.
To get a slots license, the airport must arrange to hold horse races. Of all the peculiar businesses government could get itself into, promoting its own horse races ranks first.
But right behind it has to be running a gambling operation that every person flying through this county must visit. That’s just not Miami.
The airport vows more fundraising ideas to close the $500 million gap. Pray they don’t include dealing drugs in the terminals or mugging passengers, both of which would be very good fundraisers. Those are creativity beyond the pale, as are running races or pushing slots.
At the positive extreme is an in-house consultancy to serve foreign airports and governments at a profit to taxpayers. Our aviation department is often sought out for expertise and has given it freely. Why not monetize it? That kind of creativity, managed properly, has no down side.
Other positive plans are to develop on airport lands everything from hotels to service stations, shopping centers and even a pet hotel.
As with most undertakings, these deals with private enterprise can be structured well or badly.
Think, for example, of the City of Miami’s seemingly endless string of giveaway leases for which it often was paid late or never.
On the other hand, the city’s low-cost lease to film "Burn Notice" has been a big winner for the community, if not a big fundraiser.
Fact is, governments have been iffy entrepreneurs. Hence, the concerns with General Motors under a federal thumb or an aviation department that is looking at oil drilling and rock mining as fundraisers. Those endeavors require strong safeguards.
An intriguing meeting today (7/23) between industry players and the airport could have a private firm pay to redevelop the 50-year-old central terminal and reap the profits.
Because the airport so vastly overbuilt, that terminal could wind up as a shopping mall with few or no gates in use for planes.
Since we won’t always be in recession, that deal might become the most ingenious fundraiser of all, building for the future at no public cost and pulling in the most money for the airport in the bargain.
Who says creativity stops where government starts?
Now, it’s time to start planning for those bake sales to pay off Marlins Stadium.