December 14, 2017

Air Travel Cronyism Falls Short in Senate

It’s that time of year again, when millions of Americans travel to visit friends and family for the holidays. The experience will be a headache for many, thanks in part to the government’s security theater, though also due to unfriendly airline practices. But believe it or not, it can get worse.

It’s that time of year again, when millions of Americans travel to visit friends and family for the holidays. The experience will be a headache for many, thanks in part to the government’s security theater, though also due to unfriendly airline practices. But believe it or not, it can get worse.

High-profile public relations disasters, often dealing with overbooked flights, show that the airline industry has room to improve customer service. However, it has improved on many metrics since the industry was deregulated in 1978, most notably on affordability.

Even taking into account recent fee increases, the post-deregulation cost of flying has dropped considerably, despite rising fuel prices. Low-cost carriers like Southwest and JetBlue brought greater price competition to the market and helped drive prices down. This could only occur once the government stopped controlling all aspects of the industry, like who could compete, what routes they could fly and what prices they could charge.

There’s little threat of full-scale reregulation of the airline industry, but there are efforts underway to thwart competition. For instance, legacy U.S. carriers have been clamoring for several years for the government to protect them from foreign competition.

Bilateral Open Skies agreements allow airlines from partnered countries to operate routes between their countries and restrict government interference. They opened international markets to U.S. carriers and greater competition. But Delta, American and United, along with their unions, have argued that the governments of Qatar and the United Arab Emirates are providing unfair subsidies and that their state-run carriers should have their U.S. routes frozen.

This is ridiculous. As my colleague Gary Leff, the author of the famous blog “View from the Wing,” tells me, “U.S. airline employment is at a long term peak. And Delta has no problem taking advantage of subsidies — fuel tax breaks in Georgia, subsidies for its oil refinery in Pennsylvania, and having moved pension obligations onto the federal Pension Benefit Guaranty Corporation in bankruptcy. Delta even shares revenue on routes across the Atlantic with Alitalia which had been subsidized by Etihad. Delta owns a stake in the most subsidized Chinese airline, China Eastern.”

“The issue,” he adds, “isn’t free markets versus subsidies but ‘subsidies for me but not for thee’ while lobbying the federal government to pick the pockets of American consumers despite U.S. airlines earning nearly half the world’s commercial aviation profits.”

What none of the U.S. airlines say, according to Leff, is that Open Skies treaties with the UAE and Qatar benefit the United States. These airlines bring not just tourism and business, but partner with U.S. carriers Alaska and JetBlue, supporting jobs. As he notes, “the Open Skies treaties notably don’t forbid subsidies, where they talk about ‘fair competition,’ they specifically refer to removing barriers to flights by foreign airlines, not adding barriers as American, United and Delta lobby for.”

It’s notable that instead of filing a complaint through the Department of Transportation for independent review, the U.S. airlines lobbied for political intervention. They pushed for executive action under the guise of enforcing Open Skies agreements. Thankfully, the Trump State Department this week announced it won’t reopen the deals or freeze routes, rejecting the special interest pleading in the same fashion as did the Obama administration.

Recently, Sen. Johnny Isakson — a Republican from Delta’s home state of Georgia — attached a provision to the tax reform bill that would impose a corporate tax rate on foreign carriers whose home country doesn’t have a tax treaty with the United States and isn’t served by an American carrier at least twice per week. That would have broken an international agreement that carriers pay no taxes on gross income they earn when flying into the United States in exchange for the U.S. airlines benefiting from the same treatment abroad.

The tax would have hit as many as 14 countries and territories instead of just the two frequently targeted: Qatar and the UAE. More importantly, it could have kick-started a round of retaliatory tax hikes on U.S. airlines, which all similarly benefit from various taxpayer subsidies, with consumers ultimately caught in the crossfire.

Preserving international competition in air travel is to the benefit of both consumers and the numerous other U.S. airlines that have benefited from the opening of international routes. Thankfully, this protectionist tax hike was removed before the Senate passed the bill.

While the cronies are defeated for now, I would stay alert. U.S. airlines won’t give up the fight to thwart foreign competition, even if it means playing dirty and dirtier tricks.

Now, that’s a tax reform bill I could cheer on, but I don’t plan on holding my breath!

COPYRIGHT 2017 CREATORS.COM

Who We Are

The Patriot Post is a highly acclaimed weekday digest of news analysis, policy and opinion written from the heartland — as opposed to the MSM’s ubiquitous Beltway echo chambers — for grassroots leaders nationwide. More

What We Offer

On the Web

We provide solid conservative perspective on the most important issues, including analysis, opinion columns, headline summaries, memes, cartoons and much more.

Via Email

Choose our full-length Digest or our quick-reading Snapshot for a summary of important news. We also offer Cartoons & Memes on Monday and Alexander’s column on Wednesday.

Our Mission

The Patriot Post is steadfast in our mission to extend the endowment of Liberty to the next generation by advocating for individual rights and responsibilities, supporting the restoration of constitutional limits on government and the judiciary, and promoting free enterprise, national defense and traditional American values. We are a rock-solid conservative touchstone for the expanding ranks of grassroots Americans Patriots from all walks of life. Our mission and operation budgets are not financed by any political or special interest groups, and to protect our editorial integrity, we accept no advertising. We are sustained solely by you. Please support The Patriot Fund today!


The Patriot Post and Patriot Foundation Trust, in keeping with our Military Mission of Service to our uniformed service members and veterans, are proud to support and promote the National Medal of Honor Heritage Center, the Congressional Medal of Honor Society, both the Honoring the Sacrifice and Warrior Freedom Service Dogs aiding wounded veterans, the National Veterans Entrepreneurship Program, the Folds of Honor outreach, and Officer Christian Fellowship, the Air University Foundation, and Naval War College Foundation, and the Naval Aviation Museum Foundation. "Greater love has no one than this, to lay down one's life for his friends." (John 15:13)

★ PUBLIUS ★

“Our cause is noble; it is the cause of mankind!” —George Washington

Please join us in prayer for our nation — that righteous leaders would rise and prevail and we would be united as Americans. Pray also for the protection of our Military Patriots, Veterans, First Responders, and their families. Please lift up your Patriot team and our mission to support and defend our Republic's Founding Principle of Liberty, that the fires of freedom would be ignited in the hearts and minds of our countrymen.

The Patriot Post is protected speech, as enumerated in the First Amendment and enforced by the Second Amendment of the Constitution of the United States of America, in accordance with the endowed and unalienable Rights of All Mankind.

Copyright © 2024 The Patriot Post. All Rights Reserved.

The Patriot Post does not support Internet Explorer. We recommend installing the latest version of Microsoft Edge, Mozilla Firefox, or Google Chrome.