July – August 2017 Commentary

Detroit development officials should support a new airline that seeks to provide service from inner-city airfields like the Coleman A. Young International Airport, rather than convert the 264-acre property into an industrial park.
Detroit Airlines
Illustration by James Yang

Aviation – Ready for Takeoff

Detroit development officials should support a new airline that seeks to provide service from inner-city airfields like the Coleman A. Young International Airport, rather than convert the 264-acre property into an industrial park. The aviation industry is growing around the world, and more air services are expected with the introduction of VTOL (Vertical Takeoff and Landing) aircraft by the likes of Uber and Air Space X — the latter based at Detroit City Airport.

Inside the Numbers

The new airline, Metropolitan Airways, says it will work closely with the Detroit City Council, the Mayor’s Office, and local community groups to fund public improvements in the surrounding neighborhood, hire and train local residents, and promote tourism. In addition, the airline says it will offer FAA-approved job training, work to restore the Davis Aerospace High School at the airport, and support the Detroit Chapter of the Tuskegee Airmen and the Friends of City Airport.

Despite a lack of reinvestment at the airport, driven by Mayor Duggan’s plan to convert the facility to industrial uses, it has seen a steady increase in the use of private aircraft in recent years. Numerous prominent businesspeople including the Ford family, the Nicholson family, Dan Gilbert, Tony Soave, other well-known executives, and sports and entertainment stars like Madonna, Sir Paul McCartney, and Beyoncé use the airport.

Catering to business travelers and general passengers, Metropolitan Airways plans to offer daily service starting in the fall of 2018. The airline would utilize AVRO RJ-100 aircraft and initially would offer daily flights between Detroit and Houston Hobby International Airport, Las Vegas McCarran International Airport, and St. Louis Mid-American Airport. More cities would be added in the future, including locations in Canada and Mexico.

Detroit native Marcus K. Channey, founder, CEO, and chairman of Metropolitan Airways Inc. in Las Vegas, says the plan is to have its base of operations at Detroit City Airport. “I grew up on the city’s west side, attended elementary and middle school in Detroit, and it has long been a passion of mine to give back to the city and train and hire local residents for aviation-related positions,” Channey says. “We’ll give back 2.5 percent of what we earn each year to support educational and redevelopment projects in the area around the airport.”

The company currently has 16 employees. The plan is to add 40 management personnel by the time the airline is operational, as well as pilots, flight crews, and ground crews. The AVRO aircraft have very low engine noise levels, can take off and land on Detroit City Airport’s main runway (two runways total), and are lighter than competing aircraft — meaning they use less fuel.

“I feel about airplanes (in 1925) as I did about autos 30 years ago.” 
— Henry Ford, Founder, Ford Motor Co.

The airport’s grounds could also be used for more research and testing of autonomous ground vehicles and the future integration with VTOL aircraft.

The city would benefit by improving the airport rather than letting it wither for purposes of redevelopment. The city also hasn’t explained how it would repay more than $25 million to the FAA for grants that have been extended to maintain the facility. Rather than close the airport, the city should work to transform the operation into a state-of-the-art commercial and private air service, as well as a test center for next-generation ground and air travel.

Government Pension Reform

The Mackinac Center for Public Policy, a nonpartisan research and educational institute in Midland, reports the state could save more than $2.5 billion annually if the cost of school system retirement matched that of the private sector. Currently, 37 percent of school system payroll goes to cover retirement benefits, while the private sector averages 5 percent to 7 percent of payroll.

Other reforms, such as insurance and paid leave, could save Michigan taxpayers even more. Lawmakers can bring the public benefit costs in line with the private averages by passing statutes that would lower costs. A ballot initiative also could be put in front of voters that would reduce public sector benefits, if approved.

Given Michigan has a low unemployment rate, the competition for the best talent is being waged across the entire job market. If private employers are losing out to the state for the top workers, it lowers the potential for economic growth, new business opportunities, investment, and employment taxes and other levies. 

By bringing public and private benefits in line, the money saved could be used to invest in infrastructure improvements across the state — including roads, bridges, and schools. As it stands, retirement, paid leave, and insurance coverage for state and local municipal workers costs $5.8 billion more than private sector averages. If savings via reform could be used to rebuild our infrastructure, the state would be much more economically competitive.

Insurance The Money Trail

Earlier this year, the Michigan Campaign Finance Network reported that Sam Theis, the husband of Rep. Lana Theis, chair of the House Insurance Committee, received $80,000 from the Michigan Insurance Coalition, a group that represents the state’s largest auto insurers. The group has long tried to change Michigan’s no-fault insurance system to gain access to some $20 billion in the catastrophic claims fund.

The most generous benefit in the nation, the fund provides lifetime medical care for people critically injured in automobile accidents. Michigan insurance ratepayers pay into the fund annually and the money, when disbursed, saves families and individuals from declaring bankruptcy. The claims can easily reach into the millions of dollars.  

The insurance companies have long tried to rewrite the law so they could gain access to the billions of dollars in the fund — never mind the fact that the money belongs to the ratepayers. As Oakland County Executive L. Brooks Patterson noted, the $80,000 contribution the Michigan Insurance Coalition provided to Sam Theis’ Leading Michigan Forward Fund raises serious questions about potential improprieties.

“There’s no way to put enough lipstick on that pig,” Patterson wrote. He adds that Rep. Theis kept one of his deputies waiting all day to voice concerns about proposed changes to the auto no-fault insurance system. He was still sitting there when the Legislative session concluded later in the day. “That $80,000 donation raises many questions,” Patterson wrote. “Certainly, the mere appearance of impropriety has the potential to erode public trust.”