Brother can you spare 500 billion dimes?
- $25 billion straight up cash, right away
in small unmarked bills
- $25 billion in cheap financing
We’re now way beyond reduced landing fees at airports (moving the financial hardship onto government-owned airports) and a tax holiday on tickets (which would have to be made up by the government to continue funding aviation) but they’re asking for those things also and a rebate on excise taxes they’ve already paid this year too. Don’t forget Congressman Jim Moran after 9/11, “It’s an open grab bag, so let’s grab.”
U.S. airlines are seeking government assistance of more than $50 billion, including a mix of direct aid and loan guarantees, as the industry reels from the coronavirus outbreak, a lobbying group that represents 10 U.S. passenger and cargo airlines said Monday.
The aid, if received, would be the industry’s first bailout since the wake of the Sept. 11, 2001, attacks and the largest ever.
There’s no systemic risk to the economy from an airline failure so this isn’t something the federal government should be considering at all. Airline investors should lose money, the investment is worth less than it was.
From a societal perspective we do care about airlines being ready to fly when people are. The three largest U.S. airlines have been flown successfully through bankruptcy. They still have the planes, the spare parts, the gates and everything else that’s needed.
The only time to consider a government bailout is after equity holders take a haircut. An airline should go into bankruptcy, determine if there’s capital available, and if not only then should a decision be made about whether it makes sense to provide an injection of cash to fund continued operations during a restructuring. (And we should allow foreign investors to put in their cash before taking money from taxpayers.)
Doug Parker testifying on the need for subsidies to the US airline industry in 2001
Remember that funding from the Air Transportation Stabilization Board after 9/11 is what kept American West flying, and US Airways flying, such that Doug Parker and Scott Kirby were able to combine those two carriers and then take over American Airlines – and Kirby was able to go on to become the CEO-in-waiting at United Airlines. In other words these are the same guys that have been spending 11 figures buying back stock and are now asking for another bailout.