Groupthink Blocks Sound Economic Development Choices | Eastern North Carolina Now | There comes a moment in every economic development bubble when reality hits a community like a two-by-four smack to the head. That happened Feb. 3 in Charlotte, when the Charlotte Observer reported that the merger between US Airways and American Airlines will result in US Airways early next year...

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    Publisher's note: The author of this post is Michael Lowrey, who is an associate editor for the Carolina Journal, John Hood Publisher.

    CHARLOTTE  -  There comes a moment in every economic development bubble when reality hits a community like a two-by-four smack to the head. That happened Feb. 3 in Charlotte, when the Charlotte Observer reported that the merger between US Airways and American Airlines will result in US Airways early next year dropping its flight between Charlotte and Rio De Janeiro.

    It wasn't supposed to be like this. Charlotte Douglas International Airport wasn't supposed to lose a prestigious international route when the two major carriers merged. No, sir, the airlines' management had said that Charlotte would see more flights after the merger.

    And those additional flights wouldn't just travel to unglamorous places like Moline, Ill., or Ft. Wayne, Ind.  -  a lot of that growth was supposed to come from international flights, especially to Central and South America, just like Delta Air Lines does through Atlanta. Or at least that's what longtime airport head Jerry Orr had told the city.

    Obviously, the merging airlines did not agree. And less than two months after the merger became final, they gave the Charlotte-Rio flight the axe. Charlotte-Rio, which US Airways introduced in 2009, isn't even close to being a keeper for the combined carrier. American Airlines flies to Rio from Miami, Dallas, and New York City, so the combined carrier has no need to fly from Charlotte.

    The loss of the route has a wider significance. If it's so easy to scuttle this route, it's hard to imagine what other nonbeach markets in Central or South America the airline might add from Charlotte in the future. In other words, Orr was very wrong, and the optimism about a key aspect of the city's economic development vision was misplaced as a result.

    There are several valuable lessons that communities can learn from this fiasco.

    Businesses involved in mergers have every reason to be selective about telling the truth. Simply put, they're trying to spin the deal as being in the best interest of everyone: shareholders, employees, and communities. That also extends to convincing regulators that a deal would have no adverse antitrust consequences. So it's critical for local government and business leaders not to buy into the hype and carefully examine developments.

    Unfortunately, here is where many communities fail, and often fail more broadly in setting their economic development policies. The economy is constantly changing, and what worked yesterday may not work today. Many people think they know an industry but really don't  -  just because you fly a lot doesn't make you an expert on the airline business. A real understanding of what's happening requires more knowledge than that.

    The situation in Charlotte, unfortunately, is typical in one key aspect. Many economic development disappointments share this feature: Groupthink by the local establishment. In the Queen City, Jerry Orr was regarded as the authority on commercial aviation, and for many years his word was enough for the city's government and business leaders. A tame press played along.

    That sort of groupthink can happen anywhere. The Randy Parton Theatre debacle in Roanoke Rapids resulted from a group of local officials failing to ask difficult yet obvious questions about the project, the sort of questions that would occur to anyone outside the group and the area. And there have been plenty of transportation projects throughout the state that were supposed to be game-changers but instead turned out to be busts.

    So always ask questions, challenge assumptions, and read up on what's happening with your local industries. Look at it as a productive use of your downtime while you're changing flights in Charlotte to anywhere but South America.
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