Smart people at the time warned that allowing Delta to become a monopoly at CVG would lead to higher air fares, but the allure of jobs, economic growth and prestige that comes with being a hub for a major airline was too enticing to resist for the CVG airport board at that time. Although their work did have some positives for the local economy, it lead to higher air fares for our local passengers.
Corruption on the CVG Airport Board
Since the airport was owned by Kenton County the CVG airport board was appointed by the county’s judge-executive which lead to abuses. The airport board had long been plagued by a lack of accountability, cronyism, secret deal-making and political favoritism. An Enquirer investigation that started in fall 2013 began exposing the board's problems of excessive spending on travel, post-meeting meals and alcohol and a failed attempt to fire airport CEO Candace McGraw, and prompted an investigation by Kentucky Auditor Adam Edelen (Delta Air Lines praises changes at CVG, March 2015). The full audit report can be read here. Adam Edelen’s audit prompted a bill to reform the governing structure of the CVG board, specifically the appointments to the board.
Bill Restructures CVG Airport Board
The Kentucky General Assembly passed the final version of a bill including the amendment that remakes the Kenton County Airport Board. The Senate vote was 37-0, while House vote was 95-2.
The bill creates a new 13-member board. Kenton County would get eight seats on the board, while Boone County, which houses the airport, gets two appointments. Grant and Campbell counties each get a single appointment as does the Kentucky governor.
But the latest language included a provision that gives the Kenton County fiscal court final approval over any of the appointments from the other counties. Kenton County owns the airport, having bought the land in the late 1940s.
In addition, Kenton County can take a suggested nomination for one seat apiece from the city of Cincinnati and Hamilton County, but those nominees would need to be from Kentucky (CVG board overhaul a done deal, March 2015).
Kenton Judge-executive Kris Knochelmann appointed a task force to look at restructuring the board shortly after winning election in the fall. He was acting on the recommendation of state Auditor Adam Edelen, who recommended that the board be restructured in the wake of his special investigation (CVG board overhaul a done deal, March 2015).
Edelen said he was glad that the new bill would correct what he called "a broken governance structure."
"It was clear from day one that a single elected official should not have the authority to make appointments to the board," Edelen said in a statement. "More of the regional stakeholders will have a seat at the table to lean an asset that is so critical to Northern Kentucky and the Commonwealth (CVG board overhaul a done deal, March 2015)."
Delta Praises the Changes on the Airport Board
Surprisingly the main beneficiary of the monopoly at CVG; Delta Air Lines was among those supporting changes to the board that oversees Cincinnati/Northern Kentucky International Airport. CVG's dominant carrier praised the Kentucky General Assembly's decision to restructure the airport board, and also commended those who lobbied to make the changes happen, including new Kenton County Judge Executive Kris Knochelmann.
"We support the effort to bring more regional representation to the board," Delta spokesman Trebor Banstetter told The Enquirer. "We applaud Judge Executive Knochelmann for his leadership on this issue (Delta Air Lines praises changes at CVG, March 2015)."
CVG Airport Board Reforms Meal Spending Policies
Knochelmann also has played a critical role in another major board change. The Kenton County Airport Board plans to approve a new travel policy next month – a step toward ending lavish spending by board members attending out-of-town conferences and meetings with airline executives (Change is in the air at CVG, March 2015).
Knochelmann was in the board room last week pushing for more reform. His presence at the March 16 finance committee meeting helped steer board members to agree on a new policy that caps the amount of money they can spend on travel. It is rare for the Kenton County judge-executive to attend a committee meeting, and Knochelmann has told board members he does not plan to attend many monthly board meetings.
Knochelmann declined to say exactly why he attended the committee meeting. But it was known some board members were pushing for the travel policy to remain status quo – lax guidelines that led to excessive spending and other problems with the board (Change is in the air at CVG, March 2015).
Knochelmann recommended the board implement a daily, or per diem, cap on the amount of airport money that can be spent on meals. He received support during the meeting's discussion from board members Mike Schlotman and Nathan Smith.
In a committee meeting earlier this year, it was recommended that each board member should be allowed to choose either a per diem or continue to expense meals like they always have. The current policy does not limit spending on meals. Board Chairman Bill Robinson did not weigh in on the issue during last week's meeting until the entire committee agreed to recommend to the full board changing to a per-diem policy (Change is in the air at CVG, March 2015).
"I have been extremely impressed to see the amount of change that Kris has already brought to the board," said Smith, Kentucky Gov. Steve Beshear's appointee to the airport advisory board.
"I thought Kris made excellent points – saying we would be more in line with most public boards rather than having a situation where there aren't many rules."
Smith, a leading Northern Kentucky Democratic operative, has been outspoken about board reform (Change is in the air at CVG, March 2015).
More Reform Needed with Travel Policy
The recommended new travel policy, however, still may need changes, Knochelmann said.
Currently, there is no limit on the number of board members who can attend the same out-of-town conferences and meetings, and the proposed new policy does not recommend changing that. The board has been known to send more members to conferences than some of North America's largest and busiest airports.
"The board needs to evaluate that a little closer," Knochelmann said. "It probably requires some thought, and not simply permitting every board member to attend every meeting. It's something that probably should be based upon (conference) topic; and if they've been to the conference before (Change is in the air at CVG, March 2015)."
Free Market Competition Lowers Prices
Although restructuring the airport board and tightening of their spending policies was a step in the right direction, what CVG really needed was free market competition to lower their air fares. It’s no surprise to libertarians that new data released last April provided tangible evidence that discount airlines are working to lower overall fares at CVG.
The airport dropped to No. 3 in the federal airfare rankings during the fourth quarter of 2014. That ended a 3 1/2-year streak of CVG ranking either No. 1 or 2 – and the run stopped thanks mostly to the rapid growth of Allegiant Air and Frontier Airlines in 2014 (CVG unseated as No. 1 – and it's a good thing, April 2015).
In assessing CVG's latest airfare rankings, San Francisco-based travel expert Henry Harteveldt called Delta's cuts "a mixed blessing."
He added: "Cincinnati-area residents may see fares to leisure destinations fall, but fares to business destinations may remain relatively expensive (CVG unseated as No. 1 – and it's a good thing, April 2015)."
An airport typically needs to have low-cost carriers account for 15-20 percent of overall seats to stay out of the nation's top-10 rankings for highest airfares, according to airline experts and airport officials. Allegiant and Frontier accounted for 11 percent of seats in the fourth quarter, according to airport.
CVG officials project low-cost carriers will account for 16.5 percent of all seats at the end of the second quarter. In the coming weeks, Allegiant Air plans to start seasonal flights to Savannah-Hilton Head (May 8) and Austin, Texas (June 4) from Cincinnati data (CVG unseated as No. 1 – and it's a good thing, April 2015).
Incontrovertibly the free market is working at CVG but more competition is required for our business routes.
How did CVG stack up?
CVG's four main regional competitors – Dayton, Columbus, Louisville and Indianapolis – all experienced a year-over-year increase in average roundtrip ticket prices during the fourth quarter of 2014. Dayton's fares were up 15.2 percent from fourth quarter 2013, the largest increase in the U.S. Here's a look at the latest fares for each airport (with airfare ranking):
• CVG: $485 (No. 3)
• Dayton: $431 (No. 26)
• Louisville: $422 (No. 31)
• Indianapolis: $421 (No. 33)
• Columbus: $411 (No. 39)
(CVG unseated as No. 1 – and it's a good thing, April 2015)
JetBlue Could Provide Competition for Business Routes
It's believed JetBlue is the airline Cincinnati USA Regional Chamber boss Brian Carley was referring to in an Enquirer story, when he said CVG could land a new carrier later this year. A deal is not imminent, but CVG could be closer than ever to landing JetBlue.
CVG has aggressively pursued JetBlue for nearly three years and talks recently heated up about the low-cost carrier starting nonstop flights to Boston. Several Cincinnati companies – many that have long lobbied for more nonstop flights to Boston – have been involved in the ongoing efforts to lure New York-based JetBlue (Is the runway finally clearing for JetBlue at CVG?, May 2015).
The Enquirer has reported several times since fall 2012 about CVG's ongoing interest in JetBlue. In March 2014, The Enquirer exclusively reported that a Procter & Gamble representative had met with JetBlue officials, and that executives from Kroger, Macy's, GE Aviation and other top Cincinnati companies had planned to meet with the airline (Is the runway finally clearing for JetBlue at CVG?, May 2015).
As for CVG, airport officials and business leaders have long pointed to 2016 as a breakthrough year for Cincinnati to land a major airline.
CVG's contract with the airlines is set to expire on Dec. 31, and the airport will have a new agreement for the first time since 1974. In the new deal, dominant carrier Delta Air Lines' years-long control over business decisions and ticket prices at CVG should begin to loosen – potentially making the airport more attractive to competing carriers (Is the runway finally clearing for JetBlue at CVG?, May 2015).
Free Market is the Best Medicine for CVG
Northern Kentucky is finally cleaning up the problems with CVG. We’ve restructured our airport board, addressed some of the spending issues, and made progress with luring low cost air carriers to reduce air fares. More work needs to be done in regard to bringing competition into CVG in order to lower air fares, particularly for our business routes. Jetblue would be an excellent addition for CVG if our airport officials can seal the deal.
History shows that numerous attempts at luring other airlines to CVG failed (Can Frontier survive where others dared fly?, February 2013). I’m not so sure I share the optimism the Enquirer has regarding the future of our airport considering that some of airport’s current management came from the now defunct airline Comair, and was responsible for managing Comair into the ground (Delta to Close Regional Carrier Comair in September, July 2012). Leadership at Comair was deficient at the upper management level. Judge Adlai Hardin ruled that Comair failed to negotiate “in good faith” with the flight attendant union and therefore denied voiding their contract which I thought spoke volumes of the executive’s attitudes toward their employees (Judge Denies Comair Plea to Void Flight-Attendant Pact, April 2006).
Libertarians wouldn’t be surprised at the reduction in air fares once competition was added to CVG. Monopolies crush competition so that they can charge the highest cost for goods and services at the expense of the consumer. What happened at CVG is a perfect example. However when Delta ran into financial difficulties they began cutting flights which was detrimental to our local business and industry. Had there been more competition another airline could have filled the vacuum and provided the flights to our local passengers. Instead when the monopoly suffered, so did the consumers. A libertarian understands how the free market fundamentally works, and that it should be free and unfettered in order to work best.