Tag Archives: Georgia

Is the Georgia GOP embarking on a coordinated transportation policy or just a airport power grab?

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Georgia state senator Burt Jones wants the state of Georgia to take over the operation of Hartsfield-Jackson Atlanta International Airport. He has sponsored a resolution that forms a committee to study the feasibility of the State of Georgia taking control of the world’s busiest airport. The rationale for the study and a takeover include the vitality that Hartsfield-Jackson provides to the traveling national and international public; the role the airport plays in the economic development of the state; and the increase in the public welfare, national security, and economic stability such a transfer could bring to Georgians.

I have lived in Atlanta for ten years and like thousands of this city’s residents have flown numerous times from Hartsfield-Jackson International for business and pleasure. Given Atlanta’s role as a headquarters town for a number of Fortune 500 companies, host of a major freight train terminal, a movie making and entertainment hub, and the capital of the largest state east of Mississippi River in terms of land size, I am not surprised that it is a lever in Georgia’s economic growth.

When you combine airport, airline, security, concession, and state and federal activities, Hartsfield-Jackson International plays host to the 63,000 people that make these activities happen. Delta, Georgia’s largest private employer, puts 33,000 people to work statewide and claims an economic impact on the state of $43.5 billion. Hartsfield-Jackson International claims an impact of $34.8 billion on the metro Atlanta economy.

Delta also claims to contribute $200 million a year toward Hartsfield-Jackson International’s operation expenses and that its direct flights out of Atlanta supports $11 billion in foreign direct investment. This foreign direct investment has led to the creation of 42,000 jobs throughout the state.

By law, Mr Jones can make his power grab.  Under the Georgia Constitution, cities have the authority to provide certain services including terminal and docking services such as those provided by an airport. This power is further expressed in state statutes where cities can acquire, construct, maintain, and control airport facilities. The State, however, can enact laws relative to the authority cities have to provide services including, by my reading, airport services.  The General Assembly, by general law, can regulate, restrict, or limit Atlanta’s authority to provide these services. The General Assembly, however, cannot withdraw these powers.

This is where Mr Jones may run into trouble. First, he should explain to the public how the city of Atlanta is failing to meet the State’s public welfare via the way it operates the airport. He should also be made to explain how transferring operations of the airport to the State will increase national security. On the economic front, will State operation of Hartsfield-Jackson International increase the number of employees in Georgia? Will foreign direct investment increase as a result of Georgia taken over operations?

Would Georgia taking control of Hartsfield-Jackson International be constitutional? Under the constitution, Atlanta’s authority to acquire, maintain, and operate an airport cannot be withdrawn. Although the State can regulate and limit this authority, how far can it go in its regulation before it crosses that constitutional line in the sand?

Finally, from the legal to the political, does Mr Jones want to inadvertently escalate tensions between Delta and the State? Delta has already lost a $50 million per year fuel tax exemption because it took a stance on another political issue, the sale of semi-automatic weapons. Is Delta willing to swap out a seemingly amicable working relationship with the city of Atlanta for a potentially hostile working relationship with a landlord that jacked up its rent?

Rather than deal day in and day out with a new and hostile landlord, why wouldn’t Delta exercise its options to move its headquarters elsewhere? It could argue that the State’s takeover was a force de majuere resulting in voiding its 20-year lease agreement. Even if it didn’t move its headquarters wholesale, it could drastically reduce its exposure to Atlanta, including subletting significant number of gates and moving employees to other hubs.

And let’s not forget Amazon who may view Georgia’s political play makers as immature and creating a level of business uncertainty that makes Atlanta and Georgia less welcoming.

Casey Cagle and entertainment politics

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Casey Cagle is tired of attacks on conservatism and wants to make Delta Air Lines the whipping boy for a brand of conservatism that quite frankly does nothing for the masses of Georgians that expect their government to provide an environment that fosters economic growth and public safety. Mr Cagle, who announced earlier this week that he would hamper the shepherding of a bill that would reintroduce a policy of preferential tax treatment for the world’s largest airline, is practicing what I call “entertainment politics.”

Whereas “real politics” applies the various rules of persuasion for moving resources from one group to another group, entertainment politics speaks purely to the emotions of the policy maker and the policy maker’s constituents. In Mr Casey’s case, he did not take too kindly Delta Air Lines’ decision to discontinue a discount issued to members of the National Rifle Association for travel to their national convention. Delta, after being called out as a sponsor of the NRA in the wake of the recent shooting at a Florida high school, decided to quickly dampen any more negative publicity by putting the discount and its association with the NRA on ice. This move got Mr Casey and other conservatives all up in their feelings.

Given that Mr Casey, Georgia’s lieutenant governor since 2007, has thrown his hat in the ring for the governorship, this bold move may be just a play to seal the votes from the social conservative wing of the party. It is bold for five reasons.

First, Mr Cagle put himself way out there. He can’t take back his threat against Delta. Should he win the governorship, he will have to follow through. Delta will face a similar dilemma. To go back on its stance will create bad optics.

Second, whoever wins the Democratic nomination will most likely not get a significant amount of the conservative, gun lobby vote anyway. Mr Cagle did not need to take this action in order to protect his voting bloc from a left wing attack.

Third, Delta has options to move. New York City, Birmingham, Alabama, and Northern Virginia have sent overtures to the airline to move. Mr Cagle may be betting that Delta does not want to incur the legal liability that would result from vacating his lease.  Under section 18.03 of the agreement between the city of Atlanta and Delta, there is no specific “termination fee” described. Besides rent and taxes owed, Delta would have to pay the City’s expenses for taking over the south terminal and other properties plus other fees determined by the city. However, under contract law, the city will have the burden of mitigating Delta’s termination by looking for another tenant.  Delta, under those circumstances, may be willing to take the hit in order to fly off to greener pastures.     

In addition, Delta can argue that Mr Cagle’s action creates a force majeure (unforeseen circumstance) that cancels the contract. The circumstances are unforeseen because Delta did not expect that taken a moral stance on school shootings would be met with such an oppressive move as opposing a tax preference.

Lastly, if Georgia stays a “Red State” (and I see no indication that status will change), then the opposition to a tax preference renewal may continue for years. Rising rates may make the purchase of fuel increasingly expensive making the tax preference all the more important in the next few years. Delta may decide to cut and run.

I believe Delta has more leverage. In the short run, if they stay it will be because their profits were sufficient enough to absorb the loss of the preference. The longer run is another issue. If Mr Cagle backs down, he will likely lose the nomination. Even if he backs down and is able to squeak out a primary win, would he be able to withstand a media onslaught that describes him as a policy maker whose poor judgment may cost Atlanta a major employer and cause businesses to retrench?