Tax money for airlines

Tax money for airlines
$15 billion bailout warrants a review of the system

Sept. 27 2001

Having just bailed out the airline industry to the tune of $15 billion, U.S. taxpayers now have a right to ask what they will get in return. Better service should be the answer.

Within days of the World Trade Center’s destruction, the major U.S. airlines announced that fallout from the Sept. 11 terrorist attack had pushed the industry to the edge of bankruptcy. In response, Congress quickly passed a bill giving $5 billion to the airlines, offering another $10 billion in loan guarantees and limiting the airline’s liability for losses in the attack.

The considerations shown the taxpayers, however, were less generous. The bill specifies, for example, that the executives of airlines getting loan guarantees cannot take raises for two years if they are now making more than $300,000 per year.

That should reassure laid-off workers and harried passengers no end, but there is no guarantee that the airlines will not be back next year asking for more.

What is needed instead is a complete review of the U.S. transportation system. The airlines constitute an essential component of that system, but their importance is not reflected in either the industry’s unsteady financial history or in the level of service it delivers.

The airlines serve three markets: long-haul travel between major hubs; short-range flights between major population centers such as New York and Washington; and places like Southwest Colorado — the "spokes" that feed passengers into the hubs.

They have different needs, face different challenges and offer different opportunities. Why try to serve them with the same system?

Security is only one example. Adding an hour for enhanced safety has much more impact on a short commuter hop than on a cross-country flight. And, how can the cockpit be secured on a 19-passenger plane when it is the co-pilot who loads the luggage?

Disparities permeate the system. Real competition exists only between the hubs, but developing consistent air service is most crucial in less populated areas. The best served regions are those where alternatives could be most easily developed, such as more high-speed rail service in the densely populated coastal corridors where it makes sense.

Rescuing the airlines from bankruptcy was necessary, but that was only half the job. Many were in financial trouble well before Sept. 11. Now, with taxpayers’ money at stake, we should look at restructuring the entire system to fit the needs of the nation, not the airlines.