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Archive for June, 2014

Charlotte’s aviation delusions

The Charlotte Observer had an article out over the weekend titled “Domestic growth is strong, but what does the international future hold for Charlotte Douglas?” The answer is a lot less than the what the UPoR and Charlotte Chamber would have you believe.

The cold truth: Charlotte is US Airways’ secondary hub to Europe, which means that it currently gets the second flight a day the airline offers to a destination to Europe; Philadelphia, as the airline’s primary hub to Europe, gets the first flight. Demand for travel to/from Europe is also strongly seasonal. There are limited number of places in which US Airways generates enough traffic to justify two flights a day, much less two flights a day year round. Indeed, though there are as many as 12 flights a day to Europe from CLT this summer, only three of those flights operate year round — US Airways flights to London Heathrow and Frankfurt plus Lufthansa’s flight to Munich.

The merger only makes the situation more complicated for Charlotte, as the merged airline will also have hubs in Dallas/Ft. Worth, Miami, Chicago, and New York City. CLT’s pattern of European service going forward is going to look much like it does now, with a relatively small number of core flights that operate year round (say two to four) supplemented by some summer-seasonal flights. What the UPoR doesn’t says is the number of flights next summer is likely to be substantially less than the number this summer. It wouldn’t surprise to see the 12 flights a day to Europe we peak out at this summer CLT reduced to between six and eights flights a day in summer 2015. I’d love to hear how having summer-seasonal service to a destination in Europe impacts the Charlotte Chamber’s ability to market the city but apparently that’s not something one asks about.

And let’s be clear here: The fact that that Charlotte Douglas International Airport is planning to add new domestic gates soon where the car rental lots are is hugely significant. The airport has for at least the past 15 years wanted to build a new international terminal on the site. To opt instead for domestic gates with the option of maybe adding customs and immigrations in the basement at a later date pretty much says that CLT will see no meaningful international growth for the remainder of the decade.

Then there’s this:

[Interim Aviation Director Brent] Cagle said he expects the number of international flights will grow as the local population expands.

“The future looks bright, but right now we don’t have just quite enough critical mass of (local travelers) to support a massive influx of international flights,” Cagle said. “All the other pieces are there. We’re very cost-competitive; we have a great location.”

A mass influx of foreign flights? ROFL. And Cagle is making a very basic error, as he’s ignoring that American Airlines is pretty weak to Europe outside of London Heathrow, Madrid, and Paris. Or put another away, it’s not just all about us here in Charlotte.

Bonus delusion:

Jeff Edge, head of the Charlotte Chamber’s economic development team, said direct flights to international destinations are a powerful recruiting tool for luring foreign companies. With the growth of Asian-owned firms in the area, he sees such destinations as potentially more attractive now.

“I think Shanghai would be one of our top two or three destinations, from an economic development perspective,” Edge said. “I think a flight to Tokyo would be of great interest to help us draw more out of Japan.”

What a joke. Delta Air Lines doesn’t even fly from Atlanta to Shamghai anymore. And as for Tokyo, airlines hate long thin routes that overfly their own hubs. Which is exactly what a Charlotte-Tokyo flight would be.

Journalistic fail: I always thought journalists were suppose to present both sides of an issue. The UPoR article features an American Airlines spokesman being as non-committal as you’s expect and then Cagle, Edge, and airline analysts Bob Mann all saying how good CLT’s growth prospects are. Where’s the opposing view? The closest thing to real doubt in the article is this:

Going forward, [Chuck Schubert, American’s vice president of network planning] said international service at Charlotte will continue to be oriented toward the Caribbean, South America and Europe. Although some analysts have speculated that Charlotte Douglas could lose much of its Caribbean and Latin American flying to Miami, Schubert said the two hubs have enough of a different base that Charlotte could support much of its network.

That’s it, 20 words of concern in a nearly 1,500 word story. Though I also think that most of the existing flights to the Caribbean, Mexico, and Central America from CLT will remain, using an airline official to rebut concerns about a route or series of routes is questionable, as they’re likely to say everything is fine so as not to scare off traffic even if a route isn’t doing well. That said, no one is now saying that there are meaningful growth opportunities to Latin America from CLT; that just wouldn’t pass the giggle test with the Rio de Janeiro flight ending so soon after the merger.

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The future of Internet TV

Earlier this week, the U.S. Supreme Court invalidated Aereo’s business model. Is this the end of Internet-based-television services? Nope. The Associated Press explains why here.

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Another big nail in the Red Line’s coffin

In addition to the federal government not pick up half the cost because ridership would be too low, Iredell County not being interested because they fear being stuck with the bill for any cost overruns, and CATS not having enough money to may for the commuter rail line in any case, now comes word that Norfolk Southern is sticking to its guns about not allowing CATS to use the railroad’s tracks for the Red Line. Building separate tracks for CATS will up the cost of the proposed Red Line by another $215 million — an over 50 percent increase.

And then there’s the impact on local communities of adding those extra tracks. From the Charlotte Observer:

CATS said that would cause “multiple disruptions to adjacent communities.”

In Huntersville, for instance, CATS said that Main Street might have to be removed completely for the Red Line to exist alongside the freight tracks.

CATS’ solution to Norfolk Southern’s refusal? They’re hoping the state will convince Norfolk Southern to let CATS use the existing tracks. Of course, CATS is also assuming the state will pick up a quarter of the cost of the line. Given that the state now is now using data-driven metrics to rank projects, the much more likely outcome is that the N.C. Department of Transportation just laughs at CATS.

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If you’re flying on US Airways…

It’s a very good idea to look at the fares on American Airlines’ website as well. As Ely Portillo of the Charlotte Observer explains:

If you’re flying from Charlotte to Vancouver at the end of August, you’ll pay $1,500 on US Airways and $877 on its merger partner, American Airlines.

The twist? It’s the same flight, on the same plane. The only difference is which carrier’s website you use to book your ticket.

That’s because even though the airlines merged in December and now sell tickets on each other’s flights, they haven’t yet merged their reservation systems. Because of lags in the computer systems used to display ticket prices, the same flight can appear for hundreds of dollars more or less, depending on whether you search or

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The next step in the Us Airways/American Airlines merger

Cross-fleeting, meaning have a US Airways plane fly an American Airlines route or have an American Airlines plane fly a US Airways route. The idea is to better utilize the combined carriers’ assets, by using the right-sized plane for a particular flight even if it’s from the other airline. Cross-fleeting also has the potential to increase aircraft utilization. The airlines are slowly introducing the concept, but you’ll see an American Airlines 737-800 flying Houston-Charlotte this fall. US airways A319s will also be flying to American’s hub in Miami from places like Newark, Boston, Houston, and Washington Reagan National.

The more interesting cross-fleeting possibilities will come next summer, for European routes.

After the two airlines officially legally become one (as opposed being two separate airlines owned by the same company), we can expect to see the combines carrier move around where different types of planes and the flight crews that operate them are based.

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Charlotte reclaims top spot in annual JLF tax burden list

By The Numbers, the annual cost of local of local government report that I compile, has just been release. And Charlotte again has the hist combined cost of local government in the state. For media wishing to arrange an interview, follow the link for my contact information.c

RALEIGH — Eight of North Carolina’s largest cities now have annual local tax-and-fee burdens topping $2,000 per person. Charlotte regains its No. 1 statewide ranking among the largest cities, with a local government bill of $2,379 per person. That’s according to a new John Locke Foundation report.

Meanwhile, the average North Carolinian paid 4.28 percent of his personal income to fund city and county government in the 2012 budget year, the latest year with available data. That figure is down slightly from 4.32 percent in 2011.

“The typical resident of the median county in North Carolina paid $1,277 in taxes and fees to county and municipal governments in the 2011 budget year,” said report author Michael Lowrey, a JLF Economics and Regulatory Policy Analyst. “That’s up from an inflation-adjusted figure of $1,267 in 2011. But the average North Carolinian actually pays more since many of the state’s more populous counties also have above-average local tax and fee burdens.”

A family of four in the median county would face an average tax-and-fee burden of $5,107. “That’s a significant burden, especially given the high levels of state and federal taxation, along with the still-elevated unemployment levels present in 2012,” Lowrey said.

Local government collected $15.7 billion in property, sales, and other taxes and fees during the budget year that stretched from July 2011 through June 2012, Lowrey reports. “Local government revenues increased by roughly $400 million in that budget year,” he said. “This is not to say that all revenue sources increased. Sales tax revenues grew by $150 million, or 7.5 percent, while property tax receipts increased by $250 million, or 3 percent. Water department revenues and other tax and fee income were essentially flat.”

Among North Carolina’s largest cities, Charlotte ($2,379 per person) jumped two spots to reclaim the No. 1 ranking for largest local government tax-and-fee burden. Before a one-year drop from the top spot, the Queen City had ranked No. 1 for a decade.

Mooresville dropped from the top spot to No. 2 in 2012, while Chapel Hill, Wilmington, and Monroe rounded out the top five. Along with those cities, Durham, Asheville, and Cornelius all had local tax-and-fee burdens of at least $2,000 per person.

Among the list of 35 ranked municipalities with at least 25,000 residents, Jacksonville ($1,241 per person), Thomasville, Indian Trail, Fayetteville, and Asheboro had the lowest local government tax-and-fee burdens.

Lowrey calculates the burden by adding all local taxes and fees collected in the city, then dividing by the total population. “That total includes both municipal and county taxes and fees, so a city’s ranking depends to some extent on the taxes and fees levied by the surrounding county,” he said.

Some commentators have questioned whether communities with higher sales-tax revenues ought to be labeled “high-tax communities” in the annual report. “Localities retain the discretion to determine their overall revenues by altering their property-tax rates and the other taxes and fees they collect,” Lowrey said. “Thus higher sales-tax revenues allow a community to lower it property-tax rates, provide more services, or both.”

Kill Devil Hills, Pineville, and Hillsborough had the highest local per-person tax burdens among the 88 ranked N.C. communities with populations between 5,000 and 24,999 people. The report ranks each of these communities, along with 188 municipalities with populations between 1,000 and 4,999 people. Even residents of 191 municipalities with populations of fewer than 1,000 people can see how their communities rank against their peers.

By The Numbers: What Government Costs in North Carolina Cities and Counties FY 2012 is the 16th such report published by the John Locke Foundation. Lowrey used the most recent data available from the State Treasurer, Bureau of Labor Statistics, and Bureau of Economic Analysis to construct rankings of local government cost on a per-person basis. For counties, he also constructed rankings on a share-of-income basis.

Lowrey highlights a continuing problem that helps skew the rankings. Hyde and Sampson counties and 44 municipalities missed state deadlines to file their State Treasurer’s Annual Financial Information Report.

“Whether those local governments filed the statements after the deadline or not, the information was not available from the treasurer’s office in time to be included in this report,” Lowrey explained. “Without those AFIR statements, By The Numbers cannot include local tax burdens for those communities. Complete reporting would result in a somewhat higher combined county-municipal median tax burden.”

Lowrey also repeated his annual warning against comparing the relatively high per-capita tax numbers in resort communities to those in other N.C. cities. Communities with larger numbers of second homes and resorts — combined with small year-round populations — will see larger per-capita tax burden figures, he said.

The latest report contains another warning. “The state treasurer’s office drastically reformulated how local government financial information is reported with data for the 2012 budget year,” Lowrey said. “It is thus possible that comparisons between this edition of By The Numbers and previous reports might be more difficult.”

Among the 10 most populous counties, Durham (5.66 percent), Mecklenburg (5.44 percent), Guilford (5.02 percent), New Hanover (4.84 percent), Forsyth (4.56 percent), Gaston (4.56 percent), Buncombe (4.52 percent), and Wake (4.44 percent) all ranked among the top 25 N.C. counties in average cost of local government. Union (4.04 percent) ranked near the middle of the pack. Cumberland (3.11 percent) ranked No. 83 of the 98 ranked counties.

North Carolina collected $21.9 billion in state tax and fee revenues from July 1, 2011, to June 30, 2012. That’s 6 percent of state residents’ personal income. Local governments collected an additional $15.7 billion in property, sales, and other taxes and fees. That’s another 4.3 percent of personal income.

“Combined, they represent a state and local tax and fee burden of 10.3 percent,” Lowrey said. “Federal collections raise the total tax burden on North Carolinians to approximately 26.8 percent of personal income, on average.”

Lowrey stresses that a high cost-of-government ranking in the By The Numbers report does not equal a judgment that a city or county is governed poorly.

“By The Numbers is a tool that represents factual data only, without editorial comment or bias,” Lowrey said. “The best way to compare your city or county to others is to find municipalities or counties of similar size and demographics.”

“This report helps taxpayers evaluate whether the services they receive from local government merit what they are paying for them,” he added. “We hope taxpayers will continue to ask about the proper role of local government and its relationship to the state. It’s important to keep these discussions alive and to ensure our local leaders remain accountable to taxpayers.”

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CMUD has a lead issue

Got my water bill yesterday and it also contained the Charlotte-Mecklenburg Utility Department’s 2013 water quality report. And there is something of interest in there: For lead, the EPA has established an “action level” (“the concentration of a contaminant which, if exceeded, triggers treatment or other requirements which a water system must follow”) of 1.5 parts per billion. CMUD recorded lead levels of as high as 7 parts per billion last year and notes that three of 53 sites exceeded the action level. Lead in water comes from corrosion in older household plumbing systems. If you live in an older house, this is something you should you should be concerned about.

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CMPD tracking cellphones?

From the Wilmington Star-News:

In November 2012, Wilmington City Council signed off on a $37,000 maintenance agreement for five separate devices manufactured by Harris Corp., a Melbourne, Fla., company. Among the devices covered in the agreement were a StingRay, which mimics a cellphone tower to locate a cellphone and gather metadata; an AmberJack, an antenna system that can track and locate cellphones, according to Harris documents; a KingFish, which gathers identity codes and shows the connections between phones and numbers being dialed; and three Harpoons, amplifiers for the StingRay devices.

In April 2008, council signed off on a $135,060 purchase agreement with Harris Corp. involving surveillance equipment, but it was not clear whether that money covered in whole or in part the StingRay, AmberJack or Harpoons.

According to a nationwide ACLU investigation, other cities in North Carolina that likely have similar tracking capabilities include the Charlotte and Durham police departments.

And no, I don’t expect the Charlotte-Mecklenburg Police Department to talk about what cellphone-monitoring technologies they actual have and how they use them, though at least in general terms they should.

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Formula 1 follows NASCAR’s lead

What do racing series do when interest — think viewership and attendance — starts to drop? Simple: they resrt to gimmicks. We saw that in NASCAR, with the Chase, and even more so, with its recently tweaking of the Chase. Well it seems that NASCAR isn’t alone: the powers that be in Formula 1, that other really successful racing series, are worried about losing more casual followers. Their solution? Well, a gimmick. As Autosport reports:

The idea is that from next year, once lapped cars have been allowed to unlap themselves, cars will form up on the grid once a safety car period has ended.

There will then be the same procedure of a standing start as happens at the beginning of races.

The hope is that there will be more chance of positions changing, with the spectacle of a standing start producing more drama than rolling starts do.

This is not the solution. These sorts of enhancements merely highlight how little faith series organizers have in their core product. Gimmicks won’t keep fickle viewers with little attachment to a sport for long but risk alienating those that are currently more deeply committed to following the sport.

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Fireball Cinnamon Whisky hurting ABC profits

At least in Wilmington. As the Wilmington Star-News reports:

“Fireball is a more affordable specialty shot. A lot of the business we used to have with something like Jagermeister or products in the $20-24 range have shifted down to $13.95 for Fireball,” [New Hanover ABC Acting Assistant CEO Gary] Cain said. “We’ve seen that cycle before. Something will be really hot for a while and if their price point is not favorable for us, we do suffer a bit.”

Sales of Fireball nationally have nearly tripled since 2012.

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