Airline Lobby Group Warns Something Entirely Normal May Happen If Governments Don’t Fork Over Money

The head of world airline trade group IATA says so far governments have provided subsidies to carriers totaling $160 billion. But that’s not enough and they believe governments need to hand over more,

For the coming months, the industry’s needs are evaluated at US$70 – 80 billion in additional aid. Otherwise some airlines will not survive.

Unless all airlines get more money, some airlines might fail. Which would be ok, and even healthy for the airline industry.

Propping up zombie airlines just means more carriers competing aggressively for historically low numbers of passengers. It means fare levels where no airline can earn a profit. Subsidizing airlines to keep them all alive means delaying the recovery of the industry.

And airlines do not survive all the time, every single year. The planes they operate still exist, and they’re sold to other airlines or to aircraft leasing companies who place them with established carriers or with new airline startups looking to try another business model. The airports still exist, too, and so do air traffic controllers and pilots. In other words the world doesn’t lose out on aviation because an airline goes out of business.

In the U.S. airlines of significant size usually survive and simply restructure in bankruptcy (employees even retain their seniority!). That means instead of taxpayers being the lenders of first resort, airline investors and creditors take haircuts. That’s exactly the way that it should be, though to be sure there are flaws in the bankruptcy process (retirement funds should be treated as pay and prioritized for repayment, or if not then employees should get a piece of the newly formed company).

  • American Airlines has gone through bankruptcy (and predecessor US Airways did twice)
  • United Airlines has gone through bankruptcy (and predecessor Continental Airlines did twice)
  • Delta Air Lines has gone through bankruptcy (and predecessor Northwest has done so as well)

In fact it’s the twice-bankruptcy US Airways and Continental Airlines that took over only once-bankruptcy American and United.

The best support for airlines is bringing the virus under control. When you count up airline subsidize, it’s worth including all of the money spent on vaccines, and by the way airlines are going to get a good chunk of vaccine cargo business as well. Instead of spending money propping up airlines and paying employees not to work, taking the money and accelerating production and distribution by even a few days will pay better dividends for this industry and society as a whole.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. The airline industry has lobbyist that have the ear of the congress and on here the airline personnel whine about how necessary they are. There will always be air travel because someone with deep pockets will figure out how to make it work. Some will, some won’t. That’s the way the system works. The airlines received a bail out for full employment for 6 months. Small business got 4 weeks. The US is approaching 100,000 small business failures and closures since 3/1/2020. My banker tells me they are expecting a flood of failures late December and January. These are real people who have put years and in some cases all of their life savings into their business and through no fault of their own are losing everything. And the airline industry has become so spoiled that they think they are special and should receive better treatment than the taxpayer. People like “Jetting Julia” who worked for AA and has a YouTube channel and posts about using her “flight benefits” to travel while being unemployed. Why should the airlines be flying her and her boyfriend all over the country for free? Every pound costs money. This just shows the arrogance the airlines and their personnel have for the American Taxpayer. They need to let the airlines fail and it will all sort itself out. And maybe on the backside we’ll have F/A’s that actually want to do their job and not sit on their bottoms playing candy crush.

  2. Well done AGAIN OneXMarine!! The focus MUST be on those hundreds of thousands of Americans outside the Prima Donna airline industry employees who are and will suffer far more than those featherbedders. It’s way past time the airline cabal gets a lid put on it and made to fend for themselves like everyone else!!

  3. Are you guys all talking to your representative and senator? The airlines do, if you don’t, then lawmakers will only hear their whining and will act on it.

  4. @Lrdx – Of course I am but they push back saying they don’t want to lose the “competitiveness” of the airlines if some fail. What a crock!

  5. One X Marine. You are so dumb. Airlines have to fly to bring our mail, your medications, your donated organs, military alive and dead, food, water, toilet paper, Everyone’s daily needs. We get free flights only if there is a seat and that was few and far between before this virus. As a person that gets the benefit of “free” travel, I personally buy my tickets if I need to get anywhere I need to be. And to IP… The Prima Donna airline industry gives jobs to hundreds of thousands of people not only here in the US but worldwide. The difference between other countries and the industry is they are still compensated by their countries to provide flights no matter how many people an A380 holds. In the US no more.
    I think anyone complaining is just jealous.

  6. @skygal1 – Who are you to call anyone dumb? Do you think that if 1 airline fails that all will follow? If AA were to fail, and based on your response I suspect you are, United, Southwest, Delta, and others will pick up the slots and life will continue. They have planes, pilots, and F/A who will be happy to pick up the routes. There are cargo carriers, UPS, FedEx, and others that will deliver all the products you mention. And if something critical were to become in short supply somewhere the US Military have 1000’s of aircraft and they will get it delivered. The airlines are their own worst enemies with the attitude that you are more important than the rest of the people in this country. What makes you think you deserve anything more than all of the hardworking men and women out of work now through no fault of their own. The business owners who have invested their lives in their business. You produce nothing, you don’t even provide a basic service any longer. You have your unions that protect the lazy and incompetent, while driving up your wages with threats of strike. You support the democratic party which wants to do away with fossil fuels, which if you don’t know makes aircraft fly. You should be ashamed of yourself and crawl back under the rock you came out from under or pilot, which ever is the case.

  7. Socialism for corporations, brutal capitalism for everyone else.
    No thanks. Support the workers directly instead.
    Corporations can pull themselves up by their bootstraps.

  8. @skygal1 Is $500,000 per airline job saved for just 6 months a good way to spend taxpayer money?
    It’s ridiculous! Let the market decide. Airlines can fail and the country will not be worse off for it.

  9. Except, many, and I mean MANY other companies did receive billions in special loans. Many of those loans don’t even have to be paid back. The airlines are not the exception, here. The banking industry received billions. So many companies received so much money, it is disgusting. Small business owners were the ones that got screwed. With small businesses shutting down, there will be another huge wave of unemployment. Why do people not realize that Covid is far from being over? We could have another whole year of recession, before things even begin to become “normal”.

  10. OneXMarine- Your handle says who you probably are. A big Trump supporter who has some over the top retirement from the military at an early age but who is comfortable denying others even a job.

  11. @JimC – I am a republican and select Trump over that bumbling fool who can’t finish a sentence. I only served 2 years in the Marines with a tour of duty in Vietnam. I am 40% disabled and get a small pension monthly. I’m 71 and still work everyday 12 – 14 hours a day.. I own my business and employ 17 people. I pay 100% of my employees health, dental, and life insurance. They have vacation and sick days. I have millions invested in my company and run the risk of losing it all because of this virus. I would guess you are an airline hack who has never worked a honest job in your life. The US is closing in on 100,000 small businesses that have closed and will not reopen. Chase bank is predicting a rash of closings in late December and January will be a flood of closings. These are hard working men and women who maybe got 4 weeks of PPP while the airlines got 6 months of PPP and now want another 6 months. The airlines are self serving people who have a greater than the rest of us attitude. Regardless if my companies fail or not I’ll be fine as I’ve invested well over the years and have saved. I’m looking forward to the day when the airline personnel are standing on the street corner with a card board sign. Bite me!

  12. @JohnB – you are spot on. The reason unemployment keeps rising is because of small business shutting down. It’s going to get worse before it gets better.

  13. As OneXMarine knows well, there is an old saying in the Corps: “there is always that 10%” who just don’t get it. Classic example is the ridiculous response from SkyQueen 1 or whatever the handle is. In fact, besides being a Marine combat veteran I spent 30+ year with a major airline. I am sure that speaking on behalf of the thousands who spent their working lives building and maintaining one of the top airlines in the world, it’s gut wrenching what the cabal of self entitled employees and senior management has done the past two decades. That said, there is zero tolerance for the sorry state of the industry and, thus, no support for yet another handout.

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