President Trump’s Big Beautiful Deal For Airlines: Advance Bulk Purchases Of Tickets At A Discount

The federal government is a huge buyer of travel and negotiates fare contracts route by route with the nation’s airlines. These are good fares in normal times, though in many cases above market during current times.

President Trump has an idea to help the airlines make it through to the future, while getting a deal for taxpayers: pay up front for several years of travel, but get a bigger discount from the airlines for doing it. He spitballed his plan during the $484 billion coronavirus bill’s signing yesterday.

[W]e’re the biggest user of the airlines, United States government, and one of the ways we can help the airlines is buy tickets at a very large discount, maybe 50% off or maybe more, and you buy into four or five years worth of tickets and you infuse them with some cash.

And in the meantime, we’re flying the people of our country for a fraction of the cost than it would be when the airlines get back. They will get back. So we’re thinking in terms of as additional, because the airlines are all set right down, but as an additional incentive where we buy tickets in advance at a very big discount, which I’ve liked really from the beginning. And we’re not up there.

Look, the fact is that the airlines are going to be fine the way it is now, but I like that as an additional help for the airlines. I like it both ways. I like it for us too. We’re the largest user of the airlines. So you buy tickets. I don’t know. This sounds good, right, if we get a good discount?

This means taking the risk that airlines are still here when it comes time to fly on these pre-purchased tickets. And it’s not a very good deal for the airlines – it means cash now, but lower profits later. But why do they need cash now?

  • Airlines continue to access financial markets to raise liquidity (and at lower cost thana “very large discount” on future travel represents)

  • The federal government is already giving them money without a requirement of free travel in exchange

It’s far less complicated to administer what the Treasury Department is already doing, which is taking warrants in exchange for aid. That’s giving money to the airlines, while getting something in return for taxpayers. It doesn’t require tracking advance ticket purchases and assigning them to specific trips.

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. While tickets are a stupid thing to do, if airlines don’t fare better soon, the next bailout could be something along the lines of a massive ‘gift card’ purchase where the gov’t pre-pays $X and every ticket they buy is charged against that amount (or a large percentage of it). I’m not a bailout person (nor a Trump person), but that sounds like something better than handing the airlines free money.

  2. He’s had a lot of idiotic ideas, daily really, but this one isn’t all that bad. It’s the classic hedge fund approach — leech on to the struggling business while it’s down. If we tolerate it in the private sector, why not with the government?

  3. @ Gary — No surprise. Anything to create fake prosperity. Maybe the US Govt can also pre-book rooms from Trump’s DC hotel for Trump’s next four inaugurations.

  4. It’s amazing how political insults work their way in. Having said that it makes good business sense to “prepay” for services. Is there a risk of course as in any investment however it does provide discounted cost to .gov and the airlines.

    No issue here.

  5. Beats the hell out of just handing these idiots my cash. I fail to see the downside. Don’t let Trump Derangement Syndrome addle your brain in a business situation.

    And whatever “deal” Trump makes should be available to anyone else, at the same rate.

  6. The federal government already gets huge discounts from the airlines for their employee business travel. Usually north of 50%. So this literally would just be handing the airlines more money.

  7. I’m definitely on the “detest” side when it comes to Trump but I don’t see why this is so unreasonable — or, at least, would not have been unreasonable before the airlines were bailed out anyway.

    It also raises the question of whether there might be some way to do this privately as well — for instance, a hedge fund buying up tens of thousands of future seats which they would be allowed to resell over the next five years. Sort of like buying “seat futures”. Or, perhaps, a five-year 30 percent discount on the airline’s price on all seats in exchange for some amount of cash today. Indeed, you could even imagine this kind of market functioning to the benefit of airlines in good times — they could pre-sell a certain amount of their future flying as a hedge against a downturn (with the investor assuming the risk).

  8. I think the airlines should improve profitability by charging more for fat people like Gary.

  9. I’ll wager my 401k that tRump had no clue as to the amount of business the Airlines have/had with the Gov’t until one of his “advisors” told him. As most of us know he is totally disconnected with the real world.

  10. I think this is a bad idea for the rest of us non federal government travelers:-(

    The airlines having spent the future income before it comes time to fly the government employee now ‘free’ will have (or at least have to try) to charge the rest of us more 🙁

  11. This is a smart move by President Trump that helps the airlines and helps the federal government save tons on the expensive air travel it pays for every year. I hope it is implemented. The big issue with the federal government is it requires refundable fares in most cases which are several times the cost of the cheapest economy ticket. It would be wise if the airlines sell the discounted economy tickets to the federal government but allow them to be cancelled and rebooked at no cost. Banks did a similar thing when it purchased billions of dollars of miles at a discount from struggling airlines.

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