Those Patriotic Airlines

If there is any silver lining at all to the events of Sept. 11, it is that the sudden crisis has ended America's decade-long greedfest and liberated us to do something useful with our lives besides just making money. The stock market, which was falling of its own weight, has nearly collapsed. Wall Street will try to blame the terrorist attacks rather than its own excesses, but the horrific violence simply nudged an already teetering market over the edge. Likewise, the recession that had been looming for months appears to have arrived full-blown, accelerated, if not precipitated, by the new guerrilla conflict with fundamentalist Islam.

The abrupt end of the good old days has caused Americans to sober up, reexamine their values and priorities, and reorder their lives in a less materialistic direction. The mad money chase is suddenly unfashionable everywhere -- everywhere, that is, except the boardrooms of the US airline industry. There, in the words of the great philosopher Yogi Berra, it's déjà vu all over again.

No sooner did rescue workers begin sifting through the wreckage of the World Trade Center, than the airlines began dispatching their lobbyists to Washington in search of comfort, succor, and dollars. The industry that sought deregulation, reveled in it, and was ultimately victimized by it -- flight security, remember, had been ceded to individual cost-conscious airlines -- now wanted government help in the form of a massive economic bailout. And federal officialdom was more than happy to give it.

Within days of the appalling tragedy, a $15 billion preliminary package to aid commercial aviation had breezed through Congress and was on its way to the president for signature. It contained $5 billion in direct grants and $10 billion in loan guarantees, the grants allocated according to "seat miles" (company passenger seats multiplied by miles flown), giving the bulk of the cash to the largest carriers. The loan guarantees, to be disseminated by a federal board that includes corporate-friendly types like Fed Chairman Alan Greenspan and Treasury Secretary Paul O'Neill, will also reportedly go to the largest airlines, the ones most likely to emerge from the crisis intact -- those, in other words, that need it least.

Notably absent from the aid package, however, was any help for the many airline employees who lost their jobs in the wake of the hijackings and found themselves suddenly bereft of both income and work-related health benefits. Callous industry layoffs began almost immediately after the terrorist incidents took place and before the financial ramifications were even fully clear; they reached nearly 100,000 in little over a week. Companies madly shedding workers included Northwest, Delta, American, United, Continental, America West, and US Airways. (Southwest Airlines was an admirable exception.) These paragons of the once-friendly skies could have bitten the bullet in the short term and protected their work forces; they chose instead the currently fashionable tactic of implementing prompt layoffs in anticipation of possible future business losses, and Congress, in effect, concurred.

Nor was there much concern expressed for the families of the victims. The bailout legislation strictly limited the air carriers' legal liability for injury and loss of life on Sept. 11, and it banned punitive-damage suits altogether. Congress did, on the other hand, agree to pick up the tab for any post-crash increase in insurance costs incurred by the airlines. Democratic Rep. Jay Inslee of Washington had it about right when he asked pointedly, 'Why in this chamber do the big dogs always eat first?"

The question raised by the congressman is worth pondering, especially in light of the recent financial history of the nation's airline industry. Until this year's economic slump, America's large air carriers were doing quite nicely, thank you. During calendar 2000, the top 10 airlines realized nearly $3 billion in overall profits, led by Delta ($1.3 billion), American ($800 million), and Southwest ($600 million).

To hear industry investment analysts on Wall Street tell it, however, American carriers are economically at death's door and will need even more assistance from taxpayers to survive beyond year's end; the bailout just approved, they warn, may be just a down payment. The airlines themselves are equally insistent on their precarious situation and rightful position at the head of the handout line. Drastic financial measures would be required, said Delta Airlines Chairman Leo F. Mullin two weeks after the hijackings, if his and other carriers were to avoid becoming "the first economic casualties of the war."

Even accepting the hyperbole that the terrorist hunt constitutes a "war," the Delta spokesman was overstating his case on behalf of a company engaged in selfish corporate behavior. The Atlanta-based airline, which has already announced plans to cut 13,000 jobs (or 15% of its work force), stands to receive up to $800 million under the pending federal bailout. On top of that, Delta enjoyed four highly lucrative years in a row from 1997 to 2000, during which time it accumulated a tidy $4.3 billion in profits. The company claims to have lost $1 billion in the weeks following Sept. 11, but its boom years, combined with its federal aid money, suggest that it remains (barring mismanagement) several billion in the black. In short, there is no reason why this flag-waving corporation couldn't have absorbed some temporary losses. Instead, it rushed to exploit the emergency atmosphere and protect its bottom line.

It seems quite clear that America's airlines are using the present situation to cover their mistakes and write off business losses that, as the Washington Post has reported, mostly relate to the general 2001 economic slowdown, a pre-terrorist reduction in business travel, rising fuel costs, and the need to repay debts incurred in buying expensive new fleets of jets. You would suppose Congress could see through this charade, but apparently not. It is about to take us down the same road travelled a decade ago, when another compliant Congress joined an earlier Bush administration to bail out the savings and loan industry at a cost of $153 billion.

Congressional representatives, it must be remembered, are a privileged class, part of the American élite. As such, they are among those who most use the air-transport system and are most receptive to its pleas for corporate welfare. Members of Congress now work a three- or four-day week in Washington and spend the remainder of their time commuting to and from their districts; they are the ultimate frequent flyers. Few other Americans are airborne nearly as much. According to a 1999 survey by the Travel Industry Association of America, just 13% of us travel on a plane in any given season of the year. That's a lot, but not enough to justify the giant bailout that appears to be coming. Let's hear no more nonsense about rugged free enterprise and entrepreneurial risk taking; we now live in a corporatized society where businesses, if large enough, are not allowed to fail -- or even to lose money.

Wayne O'Leary is a writer in Orono, Maine.

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