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Sure, let’s give the airlines billions in bailouts…so they can continue to squeeze us in every way

March 17, 2020 by jimmycsays

The New York Times headline triggered memories of the Great Recession:

“Here Come the Bailouts, Starting With the Airlines”

Yes, collectively they are asking for more than $50 billion in direct relief, and some carriers are asking for billions more in loans.

This is coming from the industry that has progressively narrowed airplane seats and tightened rows to such an extent that most flights of more than a couple of hours are uncomfortable.

…and from the industry that has steadily raised prices well above the rate of inflation; that is charging customers hundreds of dollars to rearrange flight plans; that has attached high baggage fees; and that has generally made flying an experience to be endured instead of enjoyed.

A few weeks ago, I flew on cut-rate airline Allegiant to and from St. Petersbug, FL, and the gate space at KCI was so tight that people had to step over and elbow by each other to get carry-on bag tags from an agent near the front desk…What that signaled was that Allegiant cuts corners on everything, including gate-space rental.

The only thing good about flying now is that you still get where you’re going fast…most of the time, anyway.

The government and the public learned a lot about inequity in bailouts a decade ago, however, and the government is now in position to at least attach significant strings to bailouts.

In an Op-Ed piece in The New York Times yesterday, Tim Wu, an author and contributing opinion writer, laid out a strong case for holding the airlines’ feet to the fire in return for bailouts.

The commentary had an agreeable title — “Don’t Feel Sorry for the Airlines.”

Wu pointed out that airlines have been incredibly successfully financially the last decade or so, partly because of consolidation and mergers. (The same thing is happening now in the newspaper business, where the two or three big companies left standing will have customers by the throat.)

Tim Wu

Wu posed this John-F-Kennedy-type question: ” As the government considers what we, the public, should do for the airlines, we should ask, Just what have they done for us?”

Wu proceeded to outline some “terms” the government could affix to any bailout agreements:

We cannot permit…airlines to use federal assistance, whether labeled a bailout or not, to weather the Coronavirus crisis and then return to business as usual. Before providing any loan relief, tax breaks or cash transfers, we must demand that the airlines change how they treat their customers and employees and make basic changes in industry ownership structure.

Beginning with passengers, change fees should be capped at $50 and baggage fees tied to some ratio of costs…We should also put an end to the airlines’ pursuit of smaller and smaller seats, which are not only uncomfortable and even physically harmful, but also foster in-flight rage and make the job of flight attendants nigh unbearable.

…Those are excellent suggestions and exactly what the federal government should demand in exchange for relief.

But will this administration show any backbone when faced with pressure from an indispensable industry?

The handwriting is on the wall. In a White House briefing Monday, President Trump said:

“We’re going to back the airlines 100 percent. We’re going to be in a position to help the airlines very much.”

If you take a flight between the upcoming airline bailout and the November election, think about those words when you’re crammed into your seat with your hat on your lap and trying to sleep with your chin on your chest.

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Posted in Uncategorized | 8 Comments

8 Responses

  1. on March 17, 2020 at 6:46 pm Tom Shrout

    Hear, hear! Flying is horrible. This 72-year-old, 6’4” body doesn’t fold up like it once did.


  2. on March 17, 2020 at 9:53 pm lluper

    Great points!
    Another thing that should be done is getting paid back!
    GM and FCA (Fiat Chrysler Autos) did not pay their bailouts back to taxpayers!


  3. on March 18, 2020 at 1:41 am Tom Gorenc

    Thank you, Jimmy, as always.


  4. on March 18, 2020 at 7:46 am Bill Hirt

    The 2008 bailouts still leave a bad taste in many people’s mouths. Many corporate CEOs now seem to think losses should be socialized and profits privatized. Ninety-six percent of the airline profits over the past 10 years has been used to buy back stock. Company stock buybacks need to be prohibited again like they were pre-Reagan. One economist has pointed out we have bankruptcy laws for a reason and that it helps correct bad behavior by management. Bailouts without strings for better conditions and workers are just giveaways.


  5. on March 18, 2020 at 8:19 am jackmokan

    The consolidated airline industry is an oligopoly that has plenty of access to capital. If they hadn’t returned so much capital to shareholders they would have had a financial buffer for times like this. Demand will return and if it doesn’t none of this will mater!


  6. on March 18, 2020 at 9:04 am jimmycsays

    I didn’t get into the stock buyback aspect of this, but you guys — Bill and Jack — did.

    Wu homed in on American Airlines and how it used most of its profits from the golden decade…

    “American blew most of its cash on a stock buyback spree. From 2014 to 2020, in an attempt to increase its earnings per share, American spent more than $15 billion buying back its own stock. It managed, despite the risk of the proverbial rainy day, to shrink its cash reserves.

    “At the same time it was blowing cash on buybacks, American also began to borrow heavily to finance the purchase of new planes and the retrofitting of old planes to pack in more seats. As early as 2017 analysts warned of a risk of default should the economy deteriorate, but American kept borrowing. It has now accumulated a debt of nearly $30 billion, nearly five times the company’s current market value.”


  7. on March 19, 2020 at 9:56 am Jim Pedley

    Has anyone for a single moment since congress and the administration began talking about an “aid package” to battle the effects of the pandemic believed that the result of said package would not be the furthering of the upward redistribution of wealth in post-Reagan America?

    Leave it to corporate America and its gun-bearers in government to cash in on yet another lethal emergency facing the American people.


  8. on March 23, 2020 at 4:57 pm Dan

    And then after this is all over, they’ll still file for bankruptcy – again, since most of them have at least once in the past.



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