Tag Archives for subsidies.
American Airlines revealed that in June the airline made a contribution through its PAC to an objector to the certification of the Presidential election: Sam Graves from Missouri. However American defended this saying that he may have went along with stopping the democratic process and calling into question the election – but he supports government subsidies for airlines.
he last round of subsidies started after American Airlines was already cash flow break even starting in March.
And, it turns out, that the current round of airline payroll subsidies are actually the reason why American Airlines overscheduled its operation and is now cancelling flights.
Delta Air Lines has plenty of cash. They never furloughed any employees. Travel is recovering and they’re expecting to return to profitability this summer. They’re even making large bonus payments to management employees.
Against this backdrop, Hunter Keay from Wolfe Research asked Delta CEO Ed Bastian during the airline’s earnings call whether they would turn down ‘PSP3’ the third government airline bailout that will offer them about $3 billion in exchange for continuing to pay employees through September.
The hotel industry is asking for a $15 – $29 billion bailout, with 40% earmarked for hotel investors to make mortgage payments to big lenders. This is being pitched as something that ‘goes well with infrastructure’ which the federal government is preparing to spend $3 trillion on. Of course, the hotel buildings already exist and aren’t new infrastructure.
The American Hotel and Lodging Association’s chief lobbyist complains, “You have whole segments of our industry that did not receive any financial assistance whatsoever.” It’s not fair that everyone else has been taking your money and hotels haven’t been able to do so yet.
Despite a years-long campaign against government subsidies for airlines, Delta CEO Ed Bastian thanked Congress for subsidies at the JP Morgan Industrials Conference and criticized foreign governments for not ponying up as much cash as the U.S. has given to its airlines.
Americans may be on the verge of receiving $1400 in Biden Bucks, but U.S. commercial airlines are getting $14 billion – including $3 billion for American Airlines. And according to the CEO of American, who has spent much of the last year working Capitol Hill, Republicans were ready to break ranks with their party to ensure that subsidies would flow to the airline industry.
In fact, from Parker’s telling at an internal meeting with employees, the Republican Party may not have tried to remove these subsidies because it would have caused some of their members to defect and create bipartisan support for part of the legislation.
American Airlines CEO catapulted from securing Air Transportation Stabilization Board subsidies for America West, to taking over government-subsidized US Airways, to getting the federal Pension Benefit Guaranty Corporation on the side of acquiring American Airlines from within bankruptcy. Then he spent all his time in D.C. realizing there’s more revenue in taking money away from taxpayers than selling to customers. U.S. airlines will receive over $79 billion in federal support in a year.
As I put it about anti-Gulf carrier coalition member Delta, the U.S. airlines have always believed in subsidies for me, but not for thee.
Congress passed the American Rescue Plan which includes $14 billion for commercial airlines, and requires them not to furlough workers through September 30.
Previous bailouts included $50 billion in the CARES Act ($25 billion in payroll support and $25 billion in subsidized loans) plus suspension of the domestic air travel excise tax for 2020 and then an additional $15 billion in December 2020. This brings total commercial airline subsidies to $79 billion, separate from funds for airports, airline contractors, and cargo carriers.
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 – with a new President whose environmental priorities open up the possibility for new subsidies.
Delta Air Lines is paying out bonuses to management employees to compensate them for pay cuts mandated in 2020 as part of the airline’s pandemic belt-tightening, which in some cases can exceed $250,000 per person.
These bonuses are being paid out while Delta is receiving payroll funds from the federal government, and aren’t being offered to the airline’s frontline employees who earned less in 2020 than in 2019,.
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 »
