Saturday, June 16, 2012

The Great Alaska Airline Ticket Spree ...

You will recall UAA's recent offer of free air fare from 18 communities throughout the state to Anchorage for Thanksgiving.  That is the offer that many in rural Alaska are viewing simply as way of obtaining round trip tickets for a Thanksgiving vacation to Anchorage for the price of $127.  That is also the offer that some restaurants and diners in rural Alaska -- already dealing with a difficult economy -- view as undermining their traditional Thanksgiving sales.  (The $2 million in promised benefits to Anchorage are simply a state subsidized transfer of spending that otherwise would occur mostly in other parts of the state.)  

It struck me the other day that the program also fails another simple red faced test.  UAA says that it will spend "about $400,000" on the airline tickets.  In return, UAA will sell an additional 1500 tickets at $127/ticket.  So, in order to generate an additional $190,000 in sales, UAA is going to transfer roughly double that, $400,000, in state funds to the airline industry.  If that is what the Legislature intended, they easily could have just cut a check for $400,000 to the state's airline industry and removed the middle man; they didn't need UAA to act as a reappropriator.  But more importantly, future legislators -- and donors -- need to keep in mind that, at least in some instances, UAA apparently actually needs for its own use only half of the funds that are being given to it.