If you have not heard, PenAir is stopping flights to and from Crater Lake - Klamath Regional Airport today — Monday, August 7, 2017. For businesses and residents of Klamath County this is a major bummer. PenAir started service only 10 months ago after Klamath had no commercial air service for over two years. Now PenAir is also saying goodbye.
There seems to be an ongoing pattern: an airline comes to service Klamath Falls and then the airline departs, leaving our community without commercial service. Why is that? What is going on? Why do they come and then leave?
Not to get all economicy on you, but the root cause airlines leave Klamath Falls is two-fold. First, there is a problem with demand for air service. There are just not enough people who choose to fly in and out of Klamath Falls to make servicing the Klamath Falls profitable. Second, there is a supply problem: aircraft are expensive and in limited supply. What’s worse, pilots are now in short supply. Therefore when airline companies are faced with this dilemma — low demand in a particular geography and a limited supply of something needed to conduct business — airlines are extremely careful to deploy their limited resources to get the best return possible. Klamath Falls has proven that it does not work in that equation well enough. For example, if Airline ABC only has enough planes and pilots to service two of three cities, which two cities does it choose: Medford, Bend, Klamath Falls?
The only chance of another airline coming into our airport in the near future is if someone subsidizes the cost of doing business in Klamath Falls. Unless you have a rich uncle who really desires air service to and from Klamath County, that someone is the government. This means people who never will use the air service from Klamath Falls end up paying, through their taxes, for air service to and from Klamath Falls. In essence this is redistribution of wealth, but from the poorest (people who do not or can not afford to fly) to the richest (those can and do fly). But this approach has been tried before. Only the Federal Government has the budget to do such a thing. The problem with this approach is that every two years Congress is up for re-election. This uncertainty means that while today’s Congress may give the go-ahead to subsidize Airline ABC to serve Klamath Falls, the next Congress may not. When the subside is revolked, the airline can not afford to service Klamath, they then pack their bags (and planes) and leave.
The real solution to our problem is not through government intervention but through growing our local economy enough to make it so attractive that airlines would lose money if they did not service our community. That is a long, difficult task. It isn't a quick fix, so politicians shy away from such things. Politicians love to talk about economic growth or economic development, but in reality real, sustainable economic growth takes years, if not decades. Moreover, it takes good, local and state economic policies that will encourage growth. Unfortunately, at the State level, Oregon is currently on an anti-growth, anti-business policy agenda:
- Energy: Coal to Clean, passed in 2016, will continue to increase electricity rates in the name of saving the planet.
- Wages: Minimum wage rates artificially rise every year until they become $12.40/hour in 2022. These rate increase ripple through our local economy with inflationary pressures that negatively effect the cost of labor in our region.
- Increased Tax Threats: Ballot Measure 97 and like taxes for small business to large corporations discourage business expansion in our state.
- Other employer mandates: Predictive Scheduling, Mandatory Sick Leave, etc
All of these things make Oregon less attractive for new business. What’s worse they make Klamath County even less attractive. This is exactly why local leaders should work hard to find ways of making business operations in Klamath Falls/County the most affordable in all of Oregon. This does not mean adding more and more tax levies on the local community to solve budget problems. It means the exact opposite. It takes extreme courage and political will to fight the tax levy trend. For example, one of the highest property taxes paid in the County is the County Library Assessment at 49¢/$1,000. The cry from library advocates is that libraries are for the children. Decreasing library service therefore would hurt the children. But every public school has a library. Oregon Tech has a library. Moreover libraries are really 19th century thinking. Most students can find everything they need (and more) not at the local county library but on their cell phone, tablet or computer. The internet has made the idea of the library mostly irrelevant. To continue to over-fund the library so we can feign care for children is really a waste of tax payer dollars. Libraries are an idea that has come and gone like the horse-drawn buggy. So let’s demand lowering the tax to 29¢ or even 19¢. Let’s return that money back to home owners and businesses and see what happens to our local economy, while at the same time see that no child was harmed in the process.
Klamath Falls and Klamath County governments need to work together to find ways to lessen the cost of local government so businesses here will expand and new ones will be highly motivated to move into the area. Then our community can grow to a point where an airline (or airlines) will see an adequate demand for air service and return with a solid foundation, not a propped up one. But as I said, most politicians do not like that solution, because it is not politically expedient and could also be costly at the ballot box.