With an offensively misleading campaign against Gulf Carriers by suspect interest groups, it is time for a counterattack. Not because I love Gulf Carriers and certainly not because I hate U.S. carriers — but because the truth must be exposed. Today’s topic: 10 ways U.S. taxpayers subsidize U.S. airlines.
Under this taxpayer-funded federal program, 163 rural communities receive air service that is not otherwise commercially viable. While the goal of linking small communities to larger hubs is admirable, this represents a pure subsidy to airlines who provide this service and is antithetical to “free market” principles.
Since 1974, federal agencies have been required to use U.S. carriers for both cargo and passenger transport when Uncle Sam is footing the bill for travel. While codeshare agreements have broadened the definition of what it means to fly on a U.S. carrier, this program has subsidized U.S. airlines for decades.
All those taxes that are embedded into your ticket prices are not the only dollars that go toward airport construction. Take LaGuardia Airport in New York City–the $4BN initial phase of renovation program is being funded half by private entities…and half by the Port Authority of New York. That’s hardly the “free market” at work.
Consider the immense protection airlines have in seeking bankruptcy protection, allowing them to shed obligations like pension guarantees onto taxpayers. American, Delta, and United have all used U.S. bankruptcy laws to shield themselves from unwanted debt and labor costs. See this WSJ story.
We have shrunk from six major legacy carriers to just three. This has been done with the blessing of the U.S. Department of Justice. Essentially, the federal government has picked winners and losers in the airline industry, rubber stamping an era of mergers with only questionable due diligence on the ramifications to consumers it would have.