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Pellston‘s Palace

Anne Stanton - April 26th, 2010
Pellston’s Palace
Locals love it, but is quiet airport a boon or a boondoggle?
By Anne Stanton
On a Yahoo website, a woman asked how to get from Mackinaw City to the
Pellston Regional Airport without having to pay taxi fare.
A man suggested she take the shuttle bus service, Wolverine Stages, to
Pellston airport. “By the way, when you get to Pellston, you’ll see just
what a $7.5 million log cabin can look like.”
Pellston, with a population of 700, is known as the “ice box of the
nation.” But just north of this economically weary town is a gorgeous,
lodge-style airport that rises out of the fields with majestic timbers and
a bevy of tall, fluttering flags.  
The airport is proudly regarded by many of the residents. Just 18 miles
north of Petoskey, it spares thousands of people a year from making the
two-hour drive south to Traverse City’s airport, although many do because
tickets are typically cheaper. Yet the ornately appointed airport has
received a bit of notoriety lately, as the lead example of government
waste in a USA Today article, “72 passenger-a-day airport gets $7.5M for
terminal.” (12/14/2009).
Actually, the price tag on the airport terminal wasn’t $7.5 million, but
$8.4 million when accounting for state and local spending. The airport is
poised to spend another $7.7 million this year (possibly less) on a
building that will shelter snow-removal and aircraft rescue fire-fighting
equipment. This with an airport terminal that’s empty as a pocket, except
for two flights a day.

NORTHWOODS CHIC
The two-story terminal is decorated in northwoods chic with three stone
fireplaces. Visitors can wait in one of multiple sitting areas with
leather couches, overstuffed chairs, large-screen televisions, and free
wi-fi.  The log motif extends to the pay phones and work stations. Even
the blinds are wooden. Visitors often take pictures of the intricately
carved woodwork and massive stairwell.
Residents have mixed feelings about the airport.
 “I really wonder how Pellston managed to spend so much money on such a
gorgeous terminal with so few available flights.  Somebody got in on a
boondoggle, I think.  At least with that gorgeous lodge look, it could be
converted to a hotel,” said Jennifer Tobias, owner of Bondurant, a home
décor and apparel shop in Petoskey.
Tobias said she opts to fly out of Traverse City for two reasons. The
tickets are cheaper and weather is less likely to be a problem.
“I live in Petoskey, so the Pellston airport would hands down be the best
place for me to use.  I never do. …First and foremost, the fares to and
from Pellston are exorbitant.”
Others like Ami Woods prefers Pellston and willingly pays the higher
ticket prices.
“The airport is gorgeous, the staff is always friendly and, all in all, I
can honestly say I have always had a good experience. I find that the most
amazing convenience is the location. Where else can you call ahead on a
direct number to the airport, speak with a human being to confirm a flight
schedule, and then if it’s delayed, stay home and wait!  Nowhere.”
Plus the parking at Pellston is free, and it’s eminently comfortable.

LODGE VISION
Passenger Pat Connors of Indianapolis, who relaxed on a long leather
couch, said his ride to the airport had to drop him off at 9 a.m., but he
didn’t mind waiting until the next flight six hours later.  “I love this
airport!”
Kelley Atkins, airport manager, came up with the lodge-style vision along
with Emmet County Controller Lyn Johnson and a county commissioner. They
concluded it would cost less to build a new 34,500 square-foot terminal
than to replace the dilapidated 13,000 square-foot terminal.
Their plan coincidentally coalesced after the 9/11 terrorist attack. The
government’s response to the tragedy included a gush of new money for
low-priority airport projects, including the Pellston terminal.  A total
of $3.5 billion was spent on 5,700 low-priority projects since 1998,
according to the USA Today article.
The money for these projects is funded with aviation taxes, including a
7.5 percent tax on passenger tickets and a domestic flight segment tax at
$3.40 per passenger.
Atkins credits Congressman Bart Stupak, who regularly uses the airport,
for successfully persuading the FAA to allocate the money to Pellston;
Stupak cut the ribbon at the terminal opening, although Senators Stabenow
and Levin were also very supportive and could have been there too, Atkins
said.

MISLEADING HEADLINE
Atkins said the USA Today article’s headline that cited “72 (average)
passengers a day” was misleading. Although the airport was slow in 2009,
it was busy when the county applied for the funding — up to 14 flights a
day.
The airport’s two-a-day flight schedule is a casualty of the airlines
trying to stay in the black by cutting flights and increasing ticket
prices, Atkins explained in an interview that also included Beth Piehl,
the county’s communication director. We sat in Atkin’s office, which is
situated in a low-slung brick building next to the terminal. The office is
modest, while the conference room, like the terminal, has beautiful
overstuffed chairs and a fireplace.
Atkins is proud of the interior decorating and points out that an airport
is a showcase for the region it serves.
“We live in Michigan. Michigan is struggling. So we want to do everything
we can to stick out. We designed something we felt was gold-plated, that
would be good for the image and the economy of Emmet County. The goal was
to inspire people to relocate and bring their businesses here.”
Added Piehl: “You hear visitors say, ‘Have you ever seen Pellston Airport?
It’s beautiful!’”
“We wanted something unique,” Atkins continued. “I don’t think it’s at all
a waste of taxpayer money. I always looked at it as something to be proud
of. Someplace else was going to get it (the funding), if we didn’t get
it.”

A BIT LAVISH...
Atkin’s assertion on the FAA’s willingness to fund the terminal raises a
philosophical question. “It’s the age-old question you hear. Do you blame
the bank robber or the bank that has the bad security?” said David
Williams, vice president of policy for the Washington D.C.-based Citizens
Against Government Waste.
“It seems to be a bit lavish, especially at a time when everyone is trying
to be modest about how they spend their money. It seems this airport is
going in the exact opposite direction. Airports need to be showcases, but
at what expense?”
Williams said there have been multiple news stories popping up across the
country about small airports, which receive an annual grant of $1 million
from the FAA if 10,000 passenger tickets are sold. Pellston qualifies each
year for the funding; the money was rolled into the $7.7 expenditure this
year on the snow removal/fire fighting structure (the state and county
will pick up 5% of the total cost).
Williams said he just saw a CNN report about a West Virginia airport that
gives plane rides at the end of the year to reach the 10,000 mark. “They
take people up for a little sight seeing tour for free or else they charge
them $10 or $15 for a 15-minute ride.”
The FAA spokeswoman was unable to provide comment before press time.
 
MONEY MAGNET?
Pellston airport not only receives FAA money, it’s also subsidized by
Emmet County. Each year, the airport runs in the red, with its bottom line
showing a deeper crimson each year due to Delta cutting back
flights—something over which the airport management has no control.
In 2007, the airport ran short by $518,321. In 2008, the shortfall
increased to $598,885. In 2009, the deficit was $463,082. Emmet County
taxpayers made up the shortfall. Although with that said, it’s also true
that budget shortfalls occur at airports across Michigan. There are 236
airports in the state that are open to the public.
Upper Peninsula columnist Carole Williams complains that taxpayers are
picking up the bill, largely for the wealthiest of its residents. The
richest of the rich have clustered in Friendship Township, Bay Harbor
Resort, Harbor Springs Petoskey, and nearby lake communities.
“According to Stupak, rural airports like Pellston are essential to the
necessary business travel that occurs in and around smaller communities,”
wrote Williams. “ … The same can be said about Escanaba’s Delta county
airport, which, unlike Pellston, has no nearby airports. However, millions
of dollars aren’t funneled to that city and it’s most likely because
Pellston’s nearby areas, such as Harbor Springs, Petoskey and Mackinac
Island, cater to upper crust millionaires, while Escanaba and its nearby
communities are primarily home to low to middle-income working class
people.
“This is also true of the Copper Country’s Houghton County airport, which
serves a four-county area and two universities in the twin cities of
Houghton and Hancock. The terminal buildings at both facilities have the
ambiance of a hospital emergency room and their vending machine menu
leaves much to be desired.”
In contrast to Pellston’s airport, Cherry Capital Airport in Traverse
City— now the state’s fourth largest — operates in the black with three
airlines. Although it serves about 10 times the numbers of customers as
Pellston, it’s terminal area is only three times as large (120,000 square
feet).
 
WORTH THE TAXES?
Atkins said people of all income levels benefit from the airport. Taxpayer
subsidies make sense because the airport brings in visitors who spend
money in the area for hotels and restaurants. Local businesses need an
airport for delivery of food and supplies. Many visitors buy vacation
homes and even relocate their businesses to Petoskey.
The Michigan Department of Transportation Bureau of Aeronautics computed
the airport brought in an additional $35.9 million to the region. But its
2008 report raises questions. Its figures show that 112 people worked at
the airport, including 42 restaurant workers at the well-regarded Village
Inn. Yet sluggish business forced it to close last year. Smokey’s Grille
took over in November and hopes that its new liquor license will boost
business.
The state survey computed the income for these 112 workers at $44,142 per
person. Yet the average wage in Emmet County in 2005 was $29,869,
according to Emmet County’s Northern Lakes Economic Alliance.
Atkins said he doesn’t mind the publicity from the USA Today article.
Flights at Pellston have historically been up and down, and he has no
doubt they’ll eventually be an upswing. If that happens, however, it could
mean using more tax money to enlarge the holding area, since it was
designed to hold only about 53 people.

Up North Robbery?
The sky-high cost of flying from the region

When it comes time to buying a ticket, locals are often forced to pay
more, sometimes hundreds of dollars more, compared to flying out of
Detroit, Flint, Saginaw, or Grand Rapids.
Anyone who flies must do the math. A higher ticket price versus the cost
and time (lost wages) of driving, parking, eating, and possibly staying at
a hotel. There’s also the risk of what to do and where to stay if the
flight is canceled.
The economics usually favor flying locally unless the flight involves more
than one person, said Leelanau County’s Bob Pisor, who wasn’t surprised
that Cherry Capital Airport was named one of the “Top Five Airport
Rip-Offs” by a 2009 Forbes study.
The study calculated that the average cause of the Traverse City airport
flight came out 41 cents per mile on average. It came in second in the
country behind Cincinnati/Northern Kentucky International Airport, which
averaged 48 cents per mile.
Stephen Cassens, Cherry Capital’s airport’s director, said the survey
wasn’t fair because all the flights originating from Traverse City are
short — to Detroit, Minneapolis, and Chicago -- compared to much longer
journeys originating at other airports. Longer flights have lower per mile
costs.

AT THEIR MERCY
People get angry at the airports for the high prices, but, in fact, they
are completely controlled by the airlines, he said. The irony? If people
don’t buy high-priced tickets and business is too slow, the airlines
simply leave.
“So the carriers will continue to serve it as long as they can make money.
If they can’t, they’ll take their equipment and move it somewhere else.
They are very mobile. It’s different than a stamping plant that would have
to pack up their equipment. For an airline, they just say, ‘I’m not flying
there tomorrow and their airplane will not come this way,” Cassens said.
Cassens said Flint is able to offer extremely low ticket prices because it
has a low-cost carrier, AirTran Airways
“Air Tran is a premiere airline; my son used to work for Air Tran, I
know. It’s a top-notch airline. Grand Rapids just landed AirTran, but
they had to put up quite a bit of  money to do it -- $4 million to get
them in there to fly. AirTran is in Flint and Flint draws off Oakland
County for its commuters.”
Cherry Capital would love to get in AirTran, but it would have to show a
base population of seven million to draw off of, Cassens said.
“We only have 90,000 in the Grand Traverse region. We have a little ways
to go.”
With the flights stalled in Europe due to the volcano, customers can
expect ticket prices to go higher in order to cover the huge losses,
Cassens said.
“The loss in April, internationally -- 10% or more has already hit. It’s a
huge economic hit and will have to be recouped somewhere. They still have
to pay bills of pilots, insurance, maintenance; It’s a real problem. The
economic impact of this is going to be huge.”


 
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