Metro's Competition

Arguments supporting privatization include the belief that privatization leads to increased competition and therefore lower prices and better service. It is uncertain how much local competition would exist for a privatized Metro airport. Currently, Detroit City Airport (reopened to commercial air service on July 6, 1988) and Windsor Airport are the only other area airports offering commercial air service and both offer a small fraction of service available at Metro. Both lack sufficient terminal and runway space to accommodate a large increase in traffic. Their locations also preclude significant expansion.

Other airports could be built to offer competition. Selfridge Air National Guard Base could be converted to commercial operation. Additionally, Oakland-Pontiac Airport has an excellent location for commercial service to compete with Metro, although its general aviation traffic of 380,000 annual movements makes it one of the busiest airports in the U.S. and unlikely to accommodate significant commercial passenger traffic. [31]

Prior to the construction of Metro, Willow Run Airport was the primary commercial airport in the Detroit area. Currently, there are no passenger facilities at Willow Run which is a busy cargo airport. Since it was a passenger airport (primarily before the jet era), it is possible commercial passenger service could be added. But facility limitations and distance from Detroit make it an unlikely competitor for all of Metro's service.

However, even with limited service at other local airports, an effective element of competition does exist. Flights leaving Detroit City Airport, for example, go to other major hubs in Chicago, St. Louis and Nashville. At these hubs, like Metro, passengers may connect to many other cities. An over-priced, inefficient hub could be bypassed by passengers departing from Detroit or connecting through Detroit.

If Metro were privatized, it is conceivable the owner of the airport would be compelled to establish landing fees comparable to other hubs. If landing fees were not competitive, and the existing contracts requiring airport revenue to equal airport costs had been nullified, the airlines would have greater opportunity to enter and exit the market.

Airlines would be able to reduce operations at Metro, resulting in an unprofitable operation at the airport for its operator. To the extent that there is an elasticity of demand for airline service at Metro, higher landing fees charged could result in a loss of supply and therefore revenue for the airport operator. Therefore, the airport would need to keep reasonable fees to maintain its hub status.