Privatizing BWI
Dennis Lane blogs about the possible privatization of BWI airport and suggests this doesn’t make sense since the airport generates positive revenue for the State of Maryland. This isn’t quite true.
The Maryland Aviation Commission reports revenue and expenses for FY2008 and FY2007 on their website. Generally, airport revenue and expenses are attributed to the Transportation Trust Fund (certain fees go in and out of a general fund). In 2007, BWI and Martin airports lost $25M in FY2007 and earned $3M in FY2008. And this does not include capital expenditures, which I am not going to sort through since they are collected in the Maryland budget. Income is broken down by airport, though expenses are not, so it is difficult to determine exactly what BWI’s financial position would be independently. However, it is clear BWI’s profits are not going to be a barn-burner unless costs can be cut across the entire enterprise and/or a better management agreement is negotiated with BAA Maryland, which manages the airport on behalf of the Maryland Aviation Administration. This is unlikely given BAA’s ongoing tenuous financial position.
Regardless, BWI is an interesting candidate for privatization. Selling off assets in a downturn is difficult to recommend as the State of Maryland will likely use the proceeds to offset costs in the operating budget. Sell it and spend it budgeting does not bode well for the future. The state would be better off selling the airport to a private interest or on public markets and using the proceeds to recapitalize the woefully underfunded pension system.
BAA Maryland is a subsidiary of BAA Airports, the British firm that also manages Heathrow, Gatwick, and Stansted in London.
Two Parables of a Twenty Dollar Bill
There are two important stories about a twenty dollar bill worth telling. The first is best told by Bardach:
Two friends are walking down the street when one stops to pick something up. “What about that—a twenty-dollar bill!” he says. “Couldn’t be,” says the economist. “If it were, somebody would have picked it up already.”
Source: Eugene Bardach, A Practical Guide for Policy Analysis: The Eightfold Path to More Effective Problem Solving, 2nd ed. (Washington: CQ Press, 2005), p. 53.
This is a common story in the economic world and it simply means that if there is an advantage to be had, someone already has it. But it is only half the story.
When I was an undergraduate, about ten of us were walking from the dinning hall to the dorm, I at the back of the group. I saw on the ground ahead of us a twenty-dollar bill. I watched as each of my friends stepped over it and picked it up when my turn came. Then I said, “Hey, everybody! Mr. Jackson does not like being stepped on!”
The lesson is sometimes there are twenty-dollar bills on the ground. It just happens nobody has noticed them yet.
The MTA and Underprovision of Services
As everyone who reads my Twitter knows, I ride the Maryland Transit Administration’s 995 page back and forth from Columbia to DC four days a week. This morning, the bus left Brokenland Park and Ride at capacity…and four people waiting for the next bus. This is pretty good since over the past two weeks, we’ve left behind between eight and 21! And this is a week with many on vacation. Of course, the MTA does not know this because turnaways are not recorded.
Back in January, the MTA cut service between Howard County and DC and Howard County and Baltimore, despite rising ridership over the past several years.
The sad fact is that many of these people who got out of their cars to enjoy a simpler ride into work are going to get right back in their cars, increasing both pollution and net commute time because MTA fails to provide the service advertised. Combined with chronic lateness on the return trip, MTA has essentially abandoned their role in Maryland’s smart growth plans.
