American Airlines Scoffed At Biofuels, Now Hopes For Rich Government Subsidies

A year and a half ago American Airlines CEO Doug Parker was scoffing at United’s investments in biofuels being good for the environment. There was real evidence for his position, that current biofuel technology is simply too resource-intensive to be useful.

Now, though, American has done a 180.

  • They’ve had two government bailouts and are lobbying for a third. The large U.S. airlines have all been partly-nationalized, with the Treasury Department receiving stock warrants, and American in particular pledged their frequent flyer program to the Treasury as collateral for a government-backed $7.5 billion loan.

  • Joe Biden is now President, and Biden has greater environmental priorities than the previous administration.

American’s CEO along with officials from other airlines met with the White House Climate Advisor, economic adviser and Transportation Secretary on Friday over reducing emissions and investment in biofuels.

Parker, who received government subsidies to rescue America West and then took over US Airways which itself had received federal subsidies after 9/11, knows that his path to profit is taxpayer wallets rather than customer wallets.

So on the day of the White House meeting, American announced a new partnership for biofuels.

As Captain Renault said to Major Strasser in Casablanca, “I have no conviction, if that’s what you mean. I blow with the wind, and the prevailing wind happens to be from Vichy.”

Not only is American bending to the prevailing wind of the new administration they’re looking for even more handouts,

U.S airlines and renewables companies have been lobbying the Biden administration to back a big increase in subsidies for lower-carbon aviation fuel, arguing new incentives are needed to help fight climate change and will also make their recovery from the pandemic much greener.

I almost wish American Airlines and Qatar Airways hadn’t had a rapprochement, because the trolling campaign from Qatar CEO Akbar Al Baker would have been priceless – that the Doha-based carrier can compete against any airline in the world but can’t be expected to compete against larger governments.

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 InsideFlyer.com, 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. Sure – because dementia Joe and his administration are all about green energy, and AA wants to keep the government subsidies rolling in. Makes perfect sense.

  2. I agree that action is needed to reduce emissions from aviation (huge from an individual perspective). But I agree that the government doesn’t need to subsidize bio fuels.

    Instead, a more effective market based solution would be a tax on jet fuel (currently largely subsidized and excluded from all manner of typical taxation) that reflects the global costs related to the carbon pollution it produces. From there, airlines can pursue any strategy they want (electrics, hybrids, bio fuels, hydrogen, synthetic fuels, etc.) to reduce their emissions and the associated pollution taxes.

    That’s fairer, market based, and let’s all of the potential technologies develop instead of picking bio-fuels as the winner.

  3. Reading all the hype about bio fuels and sustainable aviation fuels, oddly enough I don’t seem to find any information regarding the cost (UN-subsidy) vs conventional Jet A, etc.
    anyone care to enlighten me? Thanx

  4. Tax and “market based” are polar opposites. Using taxes to modify behavior is a common government trick but that doesn’t mean it becomes “market based”.

    If you want to really go after the carbon emitters, look at the production of meat. Not only in the shipment of it, but all the way down to producing the food required to grow it, and the water required to grow that food, plus the cost of knocking down large amounts of the amazon jungle to make room for large fields to graze cattle in. Estimates show roughly 15% our carbon emissions come from this activity alone, and if you include total emissions including methane it could approach 50% of global warming contributions.

    But hey, let’s focus on the shiny penny that accounts for 2% of global emissions. K, makes total sense. I don’t see any of these woke folks calling for going vegan, so we’ll continue to pay higher prices for travel while killing the planet by eating a cheeseburger. But at least they’ll feel super good about flying in their first class seat or private jet (looking at you John Kerry) powered by algae (and thousands of gallons of fresh water). It takes 2,500 liters of water to produce 1 liter of biofuel.

  5. Aviation fuel that reduces the environmental impact of flying jetliners through the stratosphere nd over the Arctic are costly, currently. Surprise. The ever growing environmental impact of commercial aviation is probably the biggest challenge the airlines ( and airline passengers) face. It is going to take a lot of effort and creativity to solve. Anybody with better ideas must be keeping them to themselves.

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