NCPA - National Center for Policy Analysis

More Help For The Airlines

September 27, 2002

In the wake of September 11, airlines suffered curtailed flights and plummeting passenger traffic -- for an industry that was already losing money. Congress responded with $5 billion in cash and $10 billion in loan guarantees.

Now, airlines are back asking for more relief, but critics say their $7 billion losses this year are largely the result of their own pre-9/11 actions, and their arguments don't stand up.

  • Airlines complain that post-9/11 security costs total at least $4 billion a year -- but the biggest chunk of that figure, 40 percent, comes from a government tax that is added to passenger tickets.
  • The figure also excludes $350 million in savings from a federal takeover of airport security.
  • The industry doesn't address many airlines' failure to control costs, principally labor -- since several airlines handed out fat raises to union workers as recently as the spring of 2001.
  • For example, if US Airways had labor costs as low as super-efficient Southwest Airlines, it would have turned a profit in the second quarter, according to an analysis by Standard and Poor's.

The industry sought similar relief in 1994, citing nearly $13 billion in losses. Congress didn't give in, and the industry went on to make sizeable profits in the 1990s.

Source: Editorial, "9/11 Doesn't Excuse Airlines' Bad Business Decisions," USA Today, and Editorial, "A Two-Ended Bargain," Dallas Morning News, both September 27, 2002

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