It only took the passage of a $1.9 trillion economic relief passage including tens of billions of dollars in airline subsidies, for a New York Times opinion to question the wisdom of such spending.
A Critical Look At Airline Bailouts In The New York Times
The piece comes from the always-feisty Andrew Ross Sorkin in his DealBook column.
He notes the upside to bailouts:
- 75,000 jobs saved
- Kept airlines from filing bankruptcy
- Kept airlines operational, which will jumpstart growth as the pandemic subsides
But the downside: these jobs have cost over a million dollars EACH to save. For only one year!
I never knew the airline industry was lucrative. It seems the workers don’t either…
Sorkin notes how much airline executives and stockholders have benefited from bailouts:
“The truth is that shareholders of the airlines have been the biggest beneficiaries. That includes airline executives, many of whom have been paid in stock for years and stood to lose millions of dollars if their holdings were wiped out. Airline chiefs collected tens of millions per year in compensation before the pandemic, in part by boosting their companies’ share prices by regularly buying back tens of billions in shares. That meant setting aside less money for a rainy day — or, in this case, a pandemic.”
He also notes that airline stocks have recovered much of their pandemic losses.
“It is fair to say that we socialized the airline industry’s losses and largely privatized the gains.”
And then he asks, was this really necessary?
“The question isn’t whether airline employees should have been helped, it’s whether airline shareholders should have been. The airline bailouts weren’t simply a job-protection program, as advertised. In case you’re not convinced, there’s this: United invested $20 million into an electric helicopter company last month that went public through a special purpose acquisition company, or SPAC. Does that sound like a company that is in such dire straits that it requires a taxpayer-funded bailout? It received a third rescue payment after it made the investment.”
It’s a well-argued point. I’d say the only point he glosses over is that government intervention (particularly lockdowns) destroyed the airline business in 2020. But guess what? Lockdowns destroyed or severely hurt a number of businesses, including all three of mine.
Am I bitter over this? Yeah, guilty as charged…and I even to stand to benefit from the airline bailouts, hopefully by more travel stories to write and more clients to consult.
But I’m not just a blogger or a luxury travel advisor. I’m an American taxpayer with two young children. I sounded this alarm early on and I am disgusted today.
I read all the regulatory filings and see what is going on behind the scenes with airline executives buying and selling airline stock. It’s payday.
Sure, we’ll still have our airlines to ferry us around. With devalued frequent flyer programs. And limited service onboard due to “safety” concerns. And surly employees who are more scared of a baby without a mask than the fact that their babies and grand babies will be saddled with a staggering debt bill.
Anyway, it’s nice to see Sorkin and the New York Times join the team questioning the wisdom of airline bailouts. But it’s a little late…