In a meaningful sense U.S. airlines are no longer private businesses, they’re vassals of the state. And that’s not surprising. While the largest carriers have given only a small potential ownership stake to the U.S. government in the form of warrants in exchange for subsidies this year, they’ve been effectively converted from commercial enterprises working to satisfy customers into political creatures working to satisfy “the powers that be,” as American Airlines CEO Doug Parker calls them.
Speaking to a group of American Airlines pilots at the end of last week, a recording of which was reviewed by View From The Wing, Parker said lobbying in DC is “frankly where I’ve been spending all of my time.” He’s been making “trips to DC and back for the past month and a half” though not while politicians have been gone during the party conventions.
Last summer Parker described the seminal moment in his career as obtaining government subsidies from the Air Transportation Stabilization Board after 9/11, when the government was reluctant to provide support. He took over US Airways which was also bailed out by the federal ATSB. And he took over American Airlines with the support of the government’s Pension Benefit Guaranty Corporation which preferred to see a merger prior to exit from bankruptcy, precluding the airline from offloading pension obligations.
Doug Parker testifying on the need for subsidies to the US airline industry in 2001
Right now the greatest potential returns come from seeing politicians rather than passengers as the customer, and right now the product that he has to sell is continued air service to small towns and avoiding layoffs.