And the tax breaks went bye-bye too…
Skybus just crashed and burned. Touted as a great “economic development” feat by Columbus, the landing of the airline in Columbus with incentives and tax breaks, and countless hours of government types chasing the airline all came to an end last Friday.
The real question is do we, the people, get our money back?
Skybus files for Chapter 11 bankruptcy protection – Dayton Business Journal:
Skybus Airlines Inc. has officially moved from the tarmac to bankruptcy court.The Columbus-based discount airline, whose board voted to discontinue service Friday after less than a year of operation, filed for Chapter 11 bankruptcy protection in the Delaware district of U.S. Bankruptcy Court.
The airline in the filing listed total liabilities of between $50 million and $100 million owed to between 200 and 1,000 creditors. It said it owes $12.7 million to its top 20 unsecured creditors. It listed assets of between $100 million and $500 million.
The defunct airline’s largest creditor, with an $8.5 million claim, is Chicago’s World Fuel Management, a subsidiary of Miami Springs, Fla.-based World Fuel Services Corp. (NYSE:INT) that provides third-party fuel-management, financing and related services to airlines.
Skybus’ other two largest creditors are Airbus NA, which supplied Skybus’ fleet of A319 jets, and American Express Co. (NYSE:AXP). Airbus carries a $1.9 million disputed claim, while American Express is owed $600,000.
The only Central Ohio creditor among Skybus’ top 20 is the Columbus Regional Airport Authority, which carries a $200,000 claim.
The first Skybus flight left the tarmac of Port Columbus May 22, 2007, after three years of organizing and raising $160 million from Central Ohio and Wall Street investors. The company blamed record-high fuel costs and a flagging economy for its decision to shut down.
If you want to get sick- look at this article about State tax breaks and incentives for NetJets.
So just remember, when you are wondering why there are potholes on your street, homes being foreclosed on, and the price of gas is going through the roof- your elected representation was busy worrying about how to subsidize private jets and airlines that had a business model that wouldn’t fly.
This is a pretty harsh assesment, with a nugget of truth to it. When tax subsudues fail to deliver — which they often do, because the provider of those subsidies often has little to in way of guarantee from the receiver of those subsudies — it is easy to point and say “money wasted.” On the other hand, I think we both agree the state has to do something to incite economic growth.
I tend to like your ideas, like the Dayton open H1-B visa zone, better, because it feeds from the bottom, rather than from the top. This allows more accountability and risk mitigation. However, even these ideas could fail or have unintended consequences, in which case one could again point and say time and money wasted. (By the way, I think the real roadblock for that idea is getting the federal government to OK an immigration policy for one city.)
Very simply, we need a constitutional amendment that prevents government–at ANY level–from setting a special tax rate (rebate, incentive, whatever) to any entity (individual taxpayer, business). All businesses should be required to pay a fair tax rate based on impartial criteria–there should be NO haggling over what community is going to sacrifice schools or roads to the desire for GM or GE to make bloated profits while evading the responsbilities of citizenship.
If nothing else, this proposal advances free markets, since no one can claim it’s a level playing field when the business next door is paying a fraction of the taxes that you are.
Truddick-
That gets a big amen from me. It’s time to declare “economic development” tax incentives unconstitutional.
It seems so obvious that they are a money pit- with questionable accounting.
A true “Fair tax” would mean everyone pays the same- but not the way the “fair tax” people plan it.
Sammy- the H1B visa thing could be for every hubzone- not just our city- but, it’ll never happen- we like keeping poor people poor.
I will take a longer view and say its about the oil boys. Four airlines went bust last week with more on the brink. Yes Ohio is striving to be Alabama and is succeeding beautifully. Strickland and Husted being in love is a bad thing as they are firing money without consideration to the long term view. Look at the Austin Road investment. The costs to construct it are going up at a time when most people will drive less. Dumb, but for the 55 and older group pushing it, it is a hell of good way to fleece the public for retirement dollars.
Netjets – I inclined to think that this might payoff as Warren Buffet’s model of the future appears to be accurate. The rich (decision making elite) will continue to fly while the rest will ride the rails. Buffets Berkshire Hathaway has always taken on more long term approach to the American Enterprise than the short sighted realtor’s or banksters that inhabit the echelons of narcissism we call government.