Youngstown-Warren Regional Airport (YNG) has had a difficult time securing passenger service from a commercial airline. a.) A few years ago, the Port Authority offered an incentive to United with guaranteed revenue equal to approximately $1.5 million, but United declined saying it was not sufficient. Suppose United anticipated that it would cost $1 million to offer flights from Youngstown, so with a guaranteed revenue of $1.5 million, their anticipated profit would equal $500,000. Given that they still chose to decline offering service from YNG, what do you know must be true? Put this in terms of implicit costs and economic profit. b.) In 2019, YNG’s only commercial carrier, Allegiant Air stopped offering service from YNG, despite the fact that it was known to be profitable. Allegiant Air’s service from YNG was known to be profitable. Why would Allegiant Air pull service from YNG even if it had been their service from YNG had been generating a profit? Note, Allegiant started offering service from CLE after they pulled service from YNG. c.) What could or should the Port Authority or YNG do to increase the possibility of securing commercial service in the future? You don’t need to know the specific situation of YNG to answer this – what could or should any area with a small airport do to secure service?
Youngstown-Warren Regional Airport (YNG) has had a difficult time securing passenger service from a commercial airline.
a.) A few years ago, the Port Authority offered an incentive to United with guaranteed revenue equal to approximately $1.5 million, but United declined saying it was not sufficient.
Suppose United anticipated that it would cost $1 million to offer flights from Youngstown, so with a guaranteed revenue of $1.5 million, their anticipated profit would equal $500,000. Given that they still chose to decline offering service from YNG, what do you know must be true? Put this in terms of implicit costs and economic profit.
b.) In 2019, YNG’s only commercial carrier, Allegiant Air stopped offering service from YNG, despite the fact that it was known to be profitable.
Allegiant Air’s service from YNG was known to be profitable. Why would Allegiant Air pull service from YNG even if it had been their service from YNG had been generating a profit? Note, Allegiant started offering service from CLE after they pulled service from YNG.
c.) What could or should the Port Authority or YNG do to increase the possibility of securing commercial service in the future? You don’t need to know the specific situation of YNG to answer this – what could or should any area with a small airport do to secure service?
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