Sunday, February 10, 2019
TKC MUST READ!!! NEW KCI DEAL 'RESIDUAL COST AGREEMENT' THREATENS TO RUIN KANSAS CITY AIR TRAVEL AND SEND COSTS SKYROCKETING!!!
Special thanks to AWESOME KANSAS CITY INSIDERS who have once again blessed our blog community with detailed analysis, insight and EXCLUSIVE INFO on the horrific new KCI deal and how it impacts this town and anyone who dares to travel using the proposed new facility.
To wit . . .
TKC BLOG COMMUNITY EXCLUSIVE NEWS!!! THE NEW KCI DEAL DECIMATES THE CURRENT FINANCIAL STRUCTURE OF THE AIRPORT AND REPLACES IT WITH A SKETCHY CORPORATE SCHEME!!!
Mayor Sly has always favored privatization but this latest deal sells out KCMO voters and taxpayers in historic fashion.
Here's the word . . .
KCI: Another Promise to Voters Betrayed
The big promise of the new airport was no tax dollars in the deal. That’s now a punch line. But you may remember another promise: We will still own the airport. Not really. KCI is owned by KCMO, meaning it belongs to Kansas Citians. The airport is managed, in theory, to prevent the public from being taken advantage of by air carriers charging exorbitant prices or outright fixing of ticket prices. The is not a baseless concern. Airlines have recently settled lawsuits against them for tens-of -millions of dollars when they were charged with ticket price fixing. They were accused of doing this by manipulating access to the airport gates and other facilities they control at various airports.
The risk is losing control of the KCI in all but name, creating a situation ripe for fleecing passengers. How could this happen? A thing called a Residual Cost Agreement with the airlines, which is what the airport is now proposing. Under this type of agreement, the airlines agree to pick up all KCI operating expenses, including about four billion dollars of bond payments. In return, airlines get control of gates, certain passenger fees, baggage systems and other operating arrangements that effectively put them in control of the airport. For ponying up this money, they also agree to contracts that expire in only five to nine years, although bond payments go on for 35 years. This not how the airport is operating now. The current system is a Compensatory Cost Agreement in which airlines basically pay for what they use but don’t get broad operational control of the airport.
The city doesn’t have four billion dollars for a new airport. It’s wooing airlines to pay for it, effectively selling control of the airport to the highest bidder. What’s could happen? “You have to fly the airline that dominates. The airlines that are not dominant in a market almost always only fly you to their respective hubs, the airports THEY dominate. So if you fly them, you end up taking a connecting itinerary almost everywhere you fly.”
“In the past decade, mega-mergers reduced nine large U.S. airlines to four — American, United, Delta and Southwest — with the result that travelers are increasingly finding their home airport dominated by just one or two players.”
You end up being shuttled to the most profitable airports for the airline that issued your ticket, not necessarily the route most cost effective for you. Bottom line? Don’t look for this deal to increase airlines competition or lower the costs of flying. Another promise to voters betrayed.
Developing . . .