Passenger Trains > U.S. Airline Industry Has Received $155 Billion of Your Money

U.S. airlines accused of hypocrisy in subsidy

By HUGO MARTIN
APRIL 12, 2015

The war of words between three state-owned Persian Gulf airlines and three major U.S. carriers has turned into a war of numbers.  American, Delta and United airlines have complained that Etihad, Emirates and Qatar Airways have an unfair advantage when competing against U.S. airlines because they have received as much as $42 billion in subsidies over the last decade from their owners, the oilrich United Arab Emirates and the Qatar government.

The U.S. carriers have asked federal officials to renegotiate a socalled Open Skies agreement that allows foreign carriers access to U.S. markets.

But now a congressional report has surfaced that says the U.S. airline industry benefited from $155 billion in support from the U.S. government from 1918 to 1999.

The money came in the form of federal subsidies to serve outlying markets, loan guarantees to purchase new aircraft and investments in runways, control towers and radar systems, according to the previously unpublished report, which was unearthed by Wikileaks in 2009.

The Business Travel Coalition, an advocacy group for business travel managers, and the U.S. Travel Assn. point to the congressional report as evidence of hypocrisy by the U.S. airlines.  “The big three U.S. airlines have constructed themselves an enormous glass house,” U.S. Travel Assn. spokesman Jonathan Grella said in a statement.

Representatives for the U.S. airlines have fired back, saying the funding from the U.S. government to build control towers and runways is not the same as the interest free
government loans, grants and exemption from government fees received by the Persian Gulf carriers.

“It is laughable that a two decade old unpublished paper examining U.S. aviation since 1918 is being trumpeted as evidence that U.S. airlines are supported the way that the United Arab Emirates and Qatar routinely subsidize their airlines,” said Jill Zuckman, a spokeswoman for the U.S. airlines and their supporters.

SOURCE: http://www.latimes.com/business/la-fi-us-airlines-accused-of-hypocrisy-in-subsidy-debate-20150410-story.html

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I find it more than a little interesting that this was an unpublished paper and had to be unearthed by Wikileaks.  It's almost as if great lengths were being taken to hide this info from the American public.

Gee, I wonder what rail passenger service in America would be like if IT had received $155 BILLION in taxpayer money?

Only 115 billion? I would have guessed it higher. If they are considering every airport terminal, runway, radar system, Air traffic control, the list goes on. Then there are all the bailouts over the years.

Posted from iPhone

$155 billion up until 1999.  

God only knows what the subsidy has been from 1999 to 2015.

Private enterprise?  Surely you jest.  This is the farthest thing from private enterprise as one can get.

But remember, folks, Amtrak is supposed to either operate free of taxpayer subsidies or be "privatized."

Would that be "privatization" as defined by our so-called "private enterprise" commercial airline industry?


 

CA_Sou_MA_Agent Wrote:
-------------------------------------------------------
(snip)
>
> Would that be "privatization" as defined by our
> so-called "private enterprise" commercial airline
> industry?
>
>

Politicians have agreed that air service to remote places is a public benefit.  And that stationing federally supported TSA etc agents in remote places is in the public good.  I don't think there's been any similar agreement for rail services.

(But if you look carefully, that "United" or "Delta" flight is likely to be a contractor operating a small plane with very low paid and often very tired crews. THAT might be a model for Amtrak, version 2...)

Lackawanna484 Wrote:
-------------------------------------------------------
> (But if you look carefully, that "United" or
> "Delta" flight is likely to be a contractor
> operating a small plane with very low paid and
> often very tired crews. THAT might be a model for
> Amtrak, version 2...)

The race to the bottom:

http://www.pbs.org/wgbh/pages/frontline/flyingcheap/

Lackawanna484 Wrote:
-------------------------------------------------------
> CA_Sou_MA_Agent Wrote:
> --------------------------------------------------
> -----
> (snip)
> >
> > Would that be "privatization" as defined by our
> > so-called "private enterprise" commercial
> airline
> > industry?
> >
> >
>
> Politicians have agreed that air service to remote
> places is a public benefit.  And that stationing
> federally supported TSA etc agents in remote
> places is in the public good.  I don't think
> there's been any similar agreement for rail
> services.

That doesn't change the fact that public money was used to develope infrastructure for the airline industry while the private rail carriers struggled to compete. Who is to say that the same outlay of  public money, if applied towards the railroads over the years prior to Amtrak, would not have also contributed to the public benefit?
>
> (But if you look carefully, that "United" or
> "Delta" flight is likely to be a contractor
> operating a small plane with very low paid and
> often very tired crews. THAT might be a model for
> Amtrak, version 2...)
 

I can't put my finger on it now, but there was an economic analysis published a few years back that claimed that, over its lifetime, the airline industry as a whole was not profitable without government subsidy.  A large part of the argument was based, IIRC, on foregone property taxes on airports, FAA airport controllers, and bailouts when the economy turned to crap. 

And then there's the TSA, (Theatricical Security Administration) which wasn't even included.

So that is slightly less than $2 billion per year. For that price I think we have a pretty spectacular air transport system, warts and all. I wish we could get a rail system half as spectacular even for something like $1 billion per year. Of course a lot of the $2billion was invested when a dollar was worth much more. But still......

Isn't TSA paid for through the security fee that we pay on each segment in an airline ticket?

Best I know local airports are owned and operated by local government agencies and they operate at a surplus.  Best I know, airlines that use the facilities pay fees and if it is anything like car rental fees, it is not a bargain.?  Do foreign airlines pay more to use US fcilities.
Best I know airlines also finance their own aircraft as bonds are routinely issued with the airplane as collateral.  Best guess any interest free loans to buy aircraft are to buy Boeing aircraft.  I have no information to back this up but I always guess airline charging bag fees or  checking bags at the gate are to avoid airport fees for
bagage handling. 

Bob

Jishnu Wrote:
-------------------------------------------------------
> So that is slightly less than $2 billion per year.
> For that price I think we have a pretty
> spectacular air transport system, warts and all. I
> wish we could get a rail system half as
> spectacular even for something like $1 billion per
> year. Of course a lot of the $2billion was
> invested when a dollar was worth much more. But
> still......

How much has Boeing and other commercial plane builders added to the economy over the years?

Of course, the relevant question is what should policy be now going forward? I'd be for keeping subsidies for everyone at a minimum on the Federal level.

Jishnu Wrote:
-------------------------------------------------------

>
> Isn't TSA paid for through the security fee that
> we pay on each segment in an airline ticket?

the security fee covers less than 30% of the cost which now runs about 7 billion annually.

robj Wrote:
-------------------------------------------------------
> Best I know local airports are owned and operated
> by local government agencies and they operate at a
> surplus.  Best I know, airlines that use the
> facilities pay fees and if it is anything like car
> rental fees, it is not a bargain.?  Do foreign
> airlines pay more to use US fcilities.
> Best I know airlines also finance their own
> aircraft as bonds are routinely issued with the
> airplane as collateral.  Best guess any interest
> free loans to buy aircraft are to buy Boeing
> aircraft.  I have no information to back this up
> but I always guess airline charging bag fees or 
> checking bags at the gate are to avoid airport
> fees for
> bagage handling. 
>
> Bob

the local politico like there is here in Philly can't even fund their school system properly with it going bankrupt ... could ya imagine if these nit-wits had to deal with the running, maintaining and funding Philly international ...

Posted from Android

prrmpup Wrote:
-------------------------------------------------------
> Jishnu Wrote:
> --------------------------------------------------
> -----
>
> >
> > Isn't TSA paid for through the security fee
> that
> > we pay on each segment in an airline ticket?
>
> the security fee covers less than 30% of the cost
> which now runs about 7 billion annually.

TSA is actually somewhat complicated since it is not just airport security. I actually have no idea how to even find out how the TSA costs are allocated to air vs. ground. Do you have details of TSA's accounts handy to share? Thanks. For example is part of TSA funded out of airport fees? How much of it is fudned out of general funds?

A more easily discoverable number is probably what part of the FAA budget comes from general funds and what are those general fund money used for.

The FAA budget and the weather service also have adjustments for military aviation. The idea is the services are shared resources. Trying to tease out costs could be difficult

Posted from Android



Edited 1 time(s). Last edit at 05/04/15 12:45 by Lackawanna484.

Woweee, $155 billion over 81 years = about 3-4 months of the current Pentagon budget. 

The airline industry also had the benefit of hundreds of DC-3 / C47 aircraft available for purchase at extremely favorable terms in the 1940s. And a steady supply of well trained pilots courtesy of the Marines, Navy, Air Force, etc.

Not unlike police departments getting an avalanche of military equipment, often free.

Lackawanna484 Wrote:
-------------------------------------------------------
> The FAA budget and the weather service also have
> adjustments for military aviation. The idea is the
> services are shared resources. Trying to tease out
> costs could be difficult
>
> Posted from Android

I agree. Frankly I think that those $155 billion were some of the best spent money with incredible overall returns to the economy. Of course it is possible that I will be shunned from this august group for even thinking so.

Jishnu Wrote:
-------------------------------------------------------

> I agree. Frankly I think that those $155 billion were some of the best spent money with incredible
> overall returns to the economy. Of course it is possible that I will be shunned from this august
> group for even thinking so.

Makes sense to me....and it's hard to take a train to Hawaii!

Jishnu Wrote:
-------------------------------------------------------
> I agree. Frankly I think that those $155 billion
> were some of the best spent money with incredible
> overall returns to the economy. 

And, of course, ipso facto we'll never know what the "incredible overall returns to the economy" would have been had $155 billion been invested in passenger rail projects.

Maybe it's high time we stop fooling ourselves and call a spade a spade.  Any industry that requires $155 billion in taxpayer funds to stay afloat is not by any means a "private enterprise" industry.   

Perhaps we should rank stockholders of United and Southwest in the same subgroup as "welfare queens" and people who have to rely on Section 8 housing and food stamps?

Welfare for the rich is quite prevalent in this society.  

  ​

CA_Sou_MA_Agent Wrote:
-------------------------------------------------------
> Jishnu Wrote:
> --------------------------------------------------
> -----
> > I agree. Frankly I think that those $155
> billion
> > were some of the best spent money with
> incredible
> > overall returns to the economy. 
>
> And, of course, ipso facto we'll never know what
> the "incredible overall returns to the economy"
> would have been had $155 billion been invested in
> passenger rail projects.
>
> Maybe it's high time we stop fooling ourselves and
> call a spade a spade.  Any industry that requires
> $155 billion in taxpayer funds to stay afloat is
> not by any means a "private enterprise" industry.
>   
>
> Perhaps we should rank stockholders of United and
> Southwest in the same subgroup as "welfare queens"
> and people who have to rely on Section 8 housing
> and food stamps?
>
> Welfare for the rich is quite prevalent in this
> society.  
>
>   ​

Welfare for the middle class, too.  Why should mortgage interest, state taxes paid, nanny costs, etc be deductible? (Hint: middle class voters come out in large numbers, and would not be happy to lose these entitlements.)

The tax code has always been used to promote what the elites view as socially responsible developments (like extra deductions for building low income housing, or having kids, etc). And, collecting tax revenue.