14

Jun
2014

Focus on Competition not Control of the Airport Board

How the Cincinnati/Northern Kentucky International Airport Ended Up in Kentucky

During the run-up to World War II, the federal government began building new airports across the nation. Cincinnati was on their radar screen, according to the 1997 book “Creating a World Class Airport” by former Cincinnati Post reporter Richard L. Rawe, but political leaders were short-sighted. Cincinnati politicians didn’t want to abandon the fog-prone Lunken Airfield, but they also couldn’t agree upon a location for a new airport north of the Ohio River. As a result, Hamilton County voters rejected a bond issue that would have financed the project.

A U.S. representative from Newport named Brent Spence spotted an opportunity. He wrote a headline-grabbing newspaper column, “Kentucky Could Get Cincinnati Airport,” and set into motion events that would reshape the face of Northern Kentucky for decades to come.

Business, political and newspaper leaders in Kenton County, then the political and financial epicenter of Northern Kentucky, rallied behind Spence’s idea. The effort was led by the Covington-Kenton County Industrial Association, the Chamber of Commerce of its day (Kenton County keeps tight grip on CVG, 2013).

Kenton County Finances the Construction of the Airport

Boone County didn’t have any money, so the Kenton County Fiscal Court purchased the land in Boone County because it was more suitable for an airport than any of the land in Kenton County. Land was flat and cheap, but Boone County was still largely rural, undeveloped and decidedly lacking in political muscle. County leaders agreed to the airport, but only if Kenton County paid for the 950-acre site and took on the legal and political risk.

The project moved forward, with the backing of Frankfort. The state legislature created the airport board, and in 1943 Kenton County appointed the first members: seven business leaders from the Covington-Kenton County Industrial Association. They oversaw construction and signed 20-year leases with CVG’s first carriers – Delta, American and TWA.

Today, Kenton County remains the political power behind CVG: its name is on the dotted line when it comes to dealings with the federal government, such as bonds and grants, and its judge-executive appoints 13 of the 18 board members. The county doesn’t receive a dime in revenue. Frankfort and Boone County benefit from the payroll taxes, and the airport keeps the profits from concessions, landing fees and parking (Kenton County keeps tight grip on CVG, 2013).

Excessive Spending by the CVG Airport Board

The CVG Airport Board has recently been under scrutiny for their excessive spending and secret meetings. The board that oversees the Cincinnati/Northern Kentucky International Airport (CVG) has spent more than $102,000 on food and alcohol served after each monthly meeting during the past five years, an Enquirer analysis of airport documents shows. The post-meeting events not only were paid for with public money, but potentially violated Kentucky open meetings laws.

The airport board apparently is the only public agency board in the area – and possibly in the entire state of Kentucky – to conduct such events with alcohol, according to a review by The Enquirer (5-year food, alcohol bill for CVG board is $102K, 2013).

Airport documents detail how the food included full buffets with such menu items as carved strip steaks, crown roast of pork and Chilean sea bass. Each post-meeting event also featured alcohol including top-shelf bourbon, scotch and vodka, as well as beer and wine. The food and liquor expenses are in addition to the more than $120,000 The Enquirer previously reported that the board spent on travel and dining since 2011 (5-year food, alcohol bill for CVG board is $102K, 2013).

The Irresponsible Spending Leads to an Audit

The revelation of the spending led Kentucky State Auditor Adam Edelen last to open a “special examination” into board spending and governance practices.

“Is there a legitimate business purpose? That is the question that boards of public agencies should ask themselves,” Edelen’s spokeswoman Stephenie Hoelscher said. “Just based on things we’ve seen in past special examinations along these lines, boards need to demonstrate sensitivity when they are spending public money (5-year food, alcohol bill for CVG board is $102K, 2013).”

It is worthy to note that since the Edelen began the audit of the board, the CVG Airport has been added and classified as a special district headquartered in Kenton County on The Kentucky Citizen Auditor Initiative website. The Enquirer as well as Edelen contend the airport board is spending “public money” but the airport board is funded through money from landing fees from airlines (which pay them out of passengers’ airfares), as well as parking fees and rents from concessionaires (5-year food, alcohol bill for CVG board is $102K, 2013). Edelen classified the airport board as a “taxing” special district on their website, but I’m curious as to why it earned that classification.

Violations of Open Records Laws

The monthly dinners/social hours were held in a separate dining room adjacent to the airport board room. The public was not allowed to attend, and previous requests by reporters to gain access to the dining room were denied.

“If a quorum of the board is present, and they talk about any airport business, it’s a meeting under the open meetings law,” said Jon Fleischaker, a Louisville-based lawyer for Dinsmore & Shohl who helped write the state’s original open meetings and open records laws. “Not only that, but it is a special meeting, and they have to undergo a special procedure. And they are obviously not doing that.”

Fleischaker added that he has not heard of a public board having such private dinners “for years.” “The law is very clear about social gatherings ... if there is a quorum and business discussed, that is an open meeting subject to the law,” he said (5-year food, alcohol bill for CVG board is $102K, 2013).

Kentucky open meetings laws require the agency to cite at least one of three specific reasons for going into executive session: to discuss personnel matters, to hear legal counsel, or to discuss real estate negotiations.

During a meeting last December Larry Savage did not cite any of these reasons before calling a motion for the private session. Board member and attorney Mark Arnzen failed to cite a specific reason either, but offered the justification that a private discussion was needed for “the purpose of discussing and proposing an investigation with respect to the alleged recording, transcription, dissemination of the phone conversation that took place between employees of the airport and the chairman and vice chairman (CVG board votes to hire investigator for butt-dialed call, 2013).”

“If they didn’t cite any part of the law that entitles them to do it, I don’t know what they are relying on to go into closed session,” said Fleischaker.

“If in fact what they were talking about in closed session is whether to hire special counsel and who to hire, then I think that has to be in open session. That is not a personnel matter, that is a vendor decision. To go into executive session just to discuss whether to have an investigation strikes me as highly questionable (CVG board votes to hire investigator for butt-dialed call, 2013).”

Three armed airport police officers stood guard outside the room while the board met in private. One of the officers, Chief Kevin Murphy, would not answer a reporter’s question about why this was necessary (CVG board votes to hire investigator for butt-dialed call, 2013).

Campaign Contributions for a Position on the CVG Airport Board?

The problem may be a systemic one for our political structure. Not surprisingly the board members have historically contributed to the Kenton County judge-executive campaigns. The Kenton County Judge-executive wields tremendous influence over the airport board: He appoints all seven executive committee members and six of the 11 advisory members. It’s one of the most coveted political appointments in the region because the board oversees the Cincinnati/Northern Kentucky International Airport, and members – or those aspiring to become members – have always donated to judge-executive candidates. As a group, airport board members, the airport attorney and their spouses were the single-largest contributing group to Arlinghaus’ re-election campaign (CVG board big givers to Arlinghaus campaign, 2013).

This should be considered a conflict of interest in our campaign finance laws.

CVG Airfares are Second-highest in U.S.

The board’s mismanagement of the airport for the last 35 years has led to higher airfares for local passengers due to the monopoly Delta was allowed to establish at our airport (CVG Needs Competition to Lower Fares, 2013). Delta still dominates at the airport despite massive cuts since 2005 at the airline's once-thriving hub. Delta accounts for 74 percent of current passenger traffic at CVG (Cheaper vacation fares from CVG? Yep, CVG, 2014).

The Cincinnati/Northern Kentucky International Airport continues its run of having some of the nation's highest ticket prices – despite landing a long-coveted low-cost airline last spring. CVG's average ticket price of $510 ranked second-highest among the nation's top 100 airports during the fourth quarter of 2013, according to data released by the Bureau of Transportation Statistics. It is the sixth consecutive quarter CVG has ranked No. 2 (CVG airfares remain second-highest in U.S., 2014).

CVG had ranked No. 1 for the highest average ticket price for five consecutive quarters prior to its current run at No. 2 (CVG airfares remain second-highest in U.S., 2014). Ticket prices have motivated leisure fliers to bypass CVG and drive to Dayton, Louisville, Columbus, Lexington and Indianapolis to catch cheaper flights to the beach (Cheaper vacation fares from CVG? Yep, CVG, 2014).

CVG Debate Focuses on Control Not Competition

It is unfortunate that the emphasis of the debate about CVG is focused on who controls the airport board rather than luring competition into CVG in order to lower airfares (Tensions flare at CVG board meeting, 2014). As experts previously predicted, the arrival of low-cost carrier Frontier Airlines last May hasn't had much impact on across-the-board fares at CVG. Frontier became CVG's first discount carrier since the late 1990s, when the airline started a daily, nonstop flight to Denver (CVG airfares remain second-highest in U.S., 2014). Clearly more work needs to be done in order to lower airfares.

These are the issues the airport board should focus on:

  • Courting new airlines to fill the airport’s gates and compete for travelers.
  • Restoring the convenient transcontinental travel that is so important to the European companies and multinationals that do business here (Restructure CVG Board, 2013).

Achieving these objectives will lower airfares and provide a tool for our local officials to lure business and industry here that need convenient access to flights for business travel.