To the Editor:
Why is March 1 a critical date for the Rhode Island Airport Corporation's initiative to extend the runway at T.F. Green Airport?
Because its the deadline for the Rhode Island Airport Corporation to ask the Federal Aviation Administration (FAA) for short-term funding to start construction on the proposed runway extension. The Airport Corporation wants the FAA to kick in $27 million to pay the interest on a construction loan to extend a T.F. Green runway and for other improvements.
Not one dollar of this $27 million would go to actual construction. There are other potential grants for that. And the Airport Corporation needs to borrow over $100 million in a short-term loan to help fund the airport expansion project. That's what the $27 million is for to pay the interest on that construction loan.
A benefit cost analysis (BCA) is required to get the $27 million. To be successful, this analysis needs to show that the airlines and/or the airport itself will see more dollars coming in resulting from this project than there are costs going out. Airport Corporation management points out that the benefit of the longer runway is that airlines would be able to fill up planes headed nonstop for the West Coast from Green on hot days rather than leave a few seats empty.
That is the only benefit that can be put in the BCA, according to the FAA review criteria. How much would that lone benefit generate? Probably a few thousand dollars per year.
What about the costs to the airlines? If the runway is extended, then every flight landing from the south or taking off to the north would require more ground time to taxi around the airport. This is because the runway would be longer. Time is money, and these ground maneuvers by the planes eat up any potential benefit. For the next 30 years, all the airlines would incur higher costs to taxi around the airport.
The Greater Providence Chamber of Commerce has been touting the runway extension as an economic boon to our regional economy. This is called a multiplier effect. But the FAA does not allow multipliers in the BCA report. Filling up hotels in the local area is not a benefit that can be counted. Generating tourism dollars for Newport cannot be included.
The governor has asked the General Assembly for its approval of a $170 million debt program to build the extension and make other improvements at T.F. Green Airport. Given the Airport Corporation's average bond ratings with downgrade warnings, this debt could generate as much as $300 million in paybacks to bondholders over 30 years. Downgraded bond ratings spin off more bond interest payments to the investors. The resulting debt service adds up to $10 million per year, or $27,000 per day over the next 30 years.
The fact is, Southwest Airlines does not need a Green runway extension because it uses a ridged hub-and-spoke system. Southwest uses T.F. Green as a spoke, feeding passengers to its Baltimore hub. Then it fills its California flights in Baltimore, taking passengers from Green, Boston, Manchester, Hartford, and Albany. They are all spokes. Don't forget, Southwest is a low-cost airline. That's how it keeps its costs down, through hubs and spokes.
Southwest's $13,000-per-day share of the cost for the proposed extension generates no benefits for it. Nor would JetBlue need an extension, should it decide to fly from Green. Its airplanes are designed for short runways. JetBlue operates off of Logan Airport's 7,000-foot runway during normal wind conditions.
Here is another problem. The General Assembly would have to approve the governor's Capital Budget in time for the Airport Corporation to add that variable to the required analysis. There is no way the General Assembly can turn around a $170 million request for additional borrowing by March 1, 2012. The general treasurer would have to give her blessing before March 1 to get the ball rolling. The General Assembly would need to hold a hearing and then a floor vote. The timing is simply too tight.
Given these many requirements and indisputable considerations, the Airport Corporation Board cannot scapegoat the Warwick City Council for this debacle. The Airport Corporation can only blame itself for its naivety in thinking that the FAA would pour millions into this project without a sound Benefit Cost Analysis in place, not to mention General Assembly approval for the borrowing plan.