Critic Says "Back Door Deal" Needs More Scrutiny
It's one heckuva deal for Northwest
Airlines... a $239 million savings on airport charges at
Minneapolis-St. Paul International Airport, in exchange for the
airline keeping its headquarters in the Twin Cities once the
airline emerges from Chapter 11 bankruptcy protection.
The Minneapolis-St. Paul Star Tribune reports the controversial
plan was approved by a split Metropolitan Airports Commission (MAC)
on Wednesday. The commission says the plan -- which will also cut
costs for other airlines operating from MSP, to the tune of $40
million -- is needed to keep the airport competitive.
The commission approved the plan in an 8-4 vote. Charges such as
landing and gate fees would be reduced through 2020 under the
agreement, with the airport relying on charges on parking, food,
and rental car operations to make up for the difference.
Dissenters say the agreement needs closer review before it hands
airlines flying from MSP a 27-percent reduction in per-passenger
costs.
"It's a back-room, back-door deal between the MAC and Northwest"
that needs greater public review, said Rep. Frank Hornstein, author
of a House bill that calls for legislative approval of the
agreement.
Under the new plan, MSP would offer per-passenger costs 44
percent below average at other hub airports, according to the
commission.
For Northwest, in particular, the plan is appealing... not only
because it cuts future costs in operating from the Twin Cities, but
also because it comes close to offsetting a $290 million loan
Northwest received from MAC 15 years ago. The deal essentially
hands Northwest the money to repay most of the original loan.
In exchange for the cost-savings, Northwest must commit to
keeping its headquarters in Eagan, MN, and hub at MSP... even if
the airline later merges with another carrier. If the airline moves
either operation, the deal's off.
Commissioners voting against the plan argued it extends too far
into the future. One took issue with the proposal to hand over an
additional 25 percent of concessions revenue to airlines if those
revenues exceed forecasts -- saying if that increase comes, it will
be because of efforts by the commission, and not the carriers.
Commissioners Daniel Boivin of Minneapolis and Pat Harris of St.
Paul voted against the plan, saying they want stronger wording on
airport noise relief. "We are turning the operation of the airport
over to Northwest Airlines," Boivin said.
MAC acknowledges the plan would mean reduced income for the
commission... which would mean less money available for new
construction, early debt payments, and soundproofing homes under
flight paths. The latter is a particularly thorny issue, given the
number of lawsuits before MAC calling for continuation of that
program.