San Francisco is the most popular destination without direct-flight availability for travelers from Indianapolis International Airport: About 175 people per day fly to the California city, and that number jumps to 250 if nearby San Jose and Oakland are included.
There was a time when such strong demand would be incentive enough for an airline to offer the service. No more.
A wave of airline mergers and a focus on limiting costs have led to the elimination of dozens of flight options and tamped-down competition for remaining routes—leading to much higher fares and less-convenient travel options. That’s bad for the state’s economy and a shame given the potential of the $1.1-billion investment in a new airport terminal.
Enter the Indiana Economic Development Corp., which worked out a deal with United Airlines to launch a daily direct flight to San Francisco starting in January. The state will guarantee $1.5 million in revenue to United to support the route. It’s the first deal of its kind for Indiana.
While high-powered local tech executive Scott Jones justifiably worries the flight times aren’t ideal for venture capitalists based in California (IBJ, Sept. 16), we applaud the IEDC and its deal-making partners for their efforts.
This is a big way for economic-development boosters to support many local businesses at once—and encourage formation of new ones—affordably. The state will pay United only if the airline’s revenue on the route falls short of $1.5 million.
San Francisco was a wise place to start. The Indianapolis airport has offered direct flights there three times: U.S. Airways in the early 1990s; ATA in the early 2000s; and Northwest and Airtran through seasonal service in 2006 and 2007.
The flight should attract both business travelers and the leisure travelers that dominate at Indianapolis International Airport. (The airport’s top destinations in 2012 tell the story: Orlando, Tampa, Denver, Atlanta and Las Vegas.)
Other business-critical cities such as New York and Washington, D.C., may be a logical next step: Airlines still offer direct flights there but mergers have wiped out much of the fare competition, pushing prices higher.
The state also should consider joining the U.S. Justice Department in its challenge to a merger between U.S. Airways and American Airlines. The track record for such mega airline mergers suggests the deal will be unequivocally bad for competition and for consumers.
After acquiring Airtran in 2010, Southwest has eliminated competing direct flights, raised fares and dropped Airtran’s direct service from Indianapolis to New York’s LaGuardia. Delta’s 2008 purchase of Northwest—the largest carrier at the time in Indianapolis—was a much larger blow, eliminating direct flights to eight markets including Austin, Texas; Hartford, Conn.; Denver; Philadelphia; and San Antonio.
The state has taken an important step to reconnect its largest airport to major financial centers. But the federal government can do much more by preventing the airline industry from consolidating into monopolies.•
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