It’s no surprise that the state Republican Party last week welcomed into its flock Delegate Elliott Pritt, a one-time card-carrying Socialist Party USA member, given how enamored the state GOP is with the welfare system.
Corporate welfare, that is.
That includes legislation passed in the regular session to transfer $482 million of unspent federal pandemic relief funds to the state Economic Development Authority to entice businesses to locate in West Virginia — money that could have addressed some of the many pressing crises facing the state and its people, and in apparent violation of federal guidelines forbidding use of American Rescue Plan Act funds for general economic development (HB 2883).
Likewise, shortly after Spirit Airlines announced it was ending service to Charleston effective May 4, Gov. Jim Justice and other state and local officials gathered to announce that a new low-cost carrier, Breeze Airways, would launch twice-weekly flights to Orlando, Florida, and twice-weekly seasonal service to Charleston, South Carolina, effective May 31.
Why would Breeze enter a market that Spirit is abandoning, using the same business model of non-daily nonstop service to Orlando, and non-daily nonstop seasonal service to South Carolina?
Easy. The state is paying them.
Suspecting there might be some kind of deal in place, your humble correspondent filed a Freedom of Information Act request for any financial incentives, rewards or assistance that the state is paying to bring Breeze to Yeager Airport.
What I got back was a copy of the air service agreement that the Department of Tourism signed with Breeze.
It essentially guarantees that any time a Breeze flight fails to generate a specified amount of revenue, the state will make the airline whole by paying the difference between the flight’s actual revenue and the specified per-flight revenue.
We don’t know what those revenue floors are for flights to and from Orlando and to and from Charley South, since that information was redacted in my copy of the agreement.
We do know the state’s total obligation to Breeze is not to exceed $2.5 million, with the Kanawha County Commission expected to kick in $500,000 of that amount, according to Tourism.
A hypothetical worksheet showing how the payments to Breeze are to be calculated also redacted dollar amounts, but projects revenue shortfalls for each of the first four flights to and from Orlando.
Under the agreement, the state will make quarterly payments to Breeze, and if any quarterly payment exceeds $312,500, the parties are to meet to assess the performance of each Breeze route. That seems like a lot of money for an airline that will provide only twice-weekly roundtrips to Orlando, half the number of flights that Spirit provided (Breeze will temporarily provide four flights a week from late June to mid-August, according to its website), and twice weekly roundtrips to Charley South each May through August.
Under the agreement, Breeze is to provide the twice-weekly flights to Orlando for at least 44 weeks each year.
Under the agreement, Breeze also says it will “endeavor to add” one additional flight in the next 12 months, with another additional flight within six months after that, and another additional flight two months after that.
The agreement doesn’t specify whether that would consist of additional flights to Orlando, or flights to other destinations, although the Governor’s Office news release suggests that would be three new routes, “including potential service to New York City and the West Coast.”
(I’m no commercial aviation expert, but I feel certain that direct, non-stop Charleston to the West Coast service would burn through the $2.5 million pile of guaranteed money in no time.)
As for flights to New York City, the closest Breeze currently comes to the Big Apple is Islip, in eastern Long Island, about a two-hour drive or Long Island Railroad ride from Manhattan.
However, according to the agreement, “Breeze has started and will continue to put forth reasonable efforts to acquire operational permissions” to offer commercial flights to one of the three primary New York City airports (Newark, JFK or LaGuardia).
When and if Breeze begins scheduled service out of one of those airports, under the agreement, Charleston is to be one of the first three nonstop destinations.
If Breeze fails to make Charleston one of the first three destinations, and fails to provide at least two weekly roundtrips to NYC year-round, the state’s per-flight revenue guarantees are to be cut in half, according to the agreement.
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The agreement is certainly nothing like the way Justice described Breeze’s entry into the Charleston market at his presser, which made it sound like Breeze executives were climbing over seatbacks to get a chance to offer flights to Yeager: “CRW is absolutely knocking it out of the park, and it’s a testament to West Virginia’s resurgence as a top destination for tourism, and as the best place to live, work and raise a family. I’m so proud to welcome Breeze Airways to Almost Heaven, because I know that they will find success here, but above all, they will find a new home among our hills.”
(It’s like bribing the coach to put Johnny on the ball team, and then bragging about how your kid made the squad.)
Of course, Big Jim knows a little bit about air service minimum revenue guarantees.
You may recall that in 2012, Delta Air Lines sued Justice’s Greenbrier resort for failing to pay $4 million in minimum revenue guarantees for air service into the Greenbrier Valley Airport from Atlanta and LaGuardia from 2010 to 2011.
That the agreement with Breeze puts such a high priority on providing flights to and from NYC has Justice’s fingerprints all over it.
That the agreement is with the Department of Tourism and not Commerce or Economic Development is also a little fishy.
The agreement starts out by saying that Tourism “is charged with developing strategies and activities designed to continue, diversify, and expand the tourism base of West Virginia,” and that “the state recognizes that supporting expanded air travel options into CRW will promote and grow the tourism industry in West Virginia.”
Again, I’m not an expert on commercial aviation, but it seems to me the flights in question are much more likely to promote West Virginians’ partaking of major tourism destinations out-of-state, than to encourage Floridians or South Carolinians to come vacation in West Virginia.
Of course, it would have been absurd to have Commerce or Economic Development foot the bill for Breeze subsidies, given that the non-daily flight schedule and lack of hub-and-spoke connections makes the airline virtually useless for business travel.
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There’s a good reason that Justice and other officials didn’t disclose the minimum revenue guarantees at the Breeze Airways announcement: Under the agreement’s confidentiality provision, they were not allowed to.
The provision states: “To the fullest extent permitted by law, the parties shall keep the financial terms and all other terms and conditions of this agreement strictly confidential, and shall not disclose such information to any third party unless required by applicable law.”
The confidentiality provision does recognize that one applicable law requiring public bodies to disclose public records is the West Virginia Freedom of Information Act.
It may say something about the current state of news media in West Virginia that both sides apparently felt comfortable in assuming no one would file a FOIA for the agreement.
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Personally, one irksome thing about the Breeze Airways subsidy is the Justice administration’s inaction on legislation passed in 2017 to encourage the expansion of the thrice-weekly Amtrak Cardinal train to daily service (HB 2856).
The bill directed the Tourism Secretary, then designated as the commissioner of Tourism, to enter into compacts with other states on the Cardinal route to improve the quality and frequency of service. It also authorized the commissioner to set up a special revenue account where funds to help provide daily service could be deposited.
(Amtrak lobbyists were pushing the legislation, wanting to see a show of support for daily service from the states served by the Cardinal. West Virginia was selected to spearhead the legislation, since it has more Cardinal stops than any other state, and Southern West Virginia has comparatively few other long-distance transportation options.)
While the bill passed by overwhelming margins of 32-1 in the Senate, and 95-5 in the House, nothing ever came of it.
That Justice’s ally-turned-rival, Sen. Joe Manchin, D-W.Va., is a strong advocate for daily Cardinal service may have played a role in the administration’s inaction.
I may be biased on the subject, but I think daily Cardinal service, which has been projected to at least double ridership, would serve West Virginians far better than non-daily air service to Disney World — particularly for the many residents who simply can’t afford airfare or theme park passes.
A 2011 study by the Amtrak Office of Inspector General put the additional cost for daily Cardinal service at $2.1 million a year (for the entire route, not just West Virginia), primarily to cover costs of capital improvements demanded by host railroads to provide additional capacity to accommodate daily Cardinal runs.
What a lost opportunity.
Editor's note: This article has been updated to clarify the terms of the agreement between Breeze Airways and the state Department of Tourism.
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