What the Airlines Want to Get Out of Donald Trump Today

Airline CEOs are gathering in Washington today to have a little sit down with the President of the US. This is one in a series of meetings that Trump is arranging with business leaders, and the focus is apparently supposed to be on job creation. Still, the airlines haven’t been happy with the way government has treated them over the last 8 years, and they’re bound to have a laundry list of hopes and dreams for Trump to… likely ignore. That won’t stop them from trying. Here are some of the issues that I expect will be at the top of the list.

Stopping Norwegian
After years of stalling, the feds finally approved Norwegian’s Irish subsidiary to be able to fly to the US. The Open Skies agreement between the US and the European Union says that’s exactly what should have happened, but labor in particular is not fond of this plan and continues to hope that the Trump Administration will overturn the approval. Why? Well, they say Norwegian will have foreign workers operate the flights for less money and without the protection of US labor standards. This should be right up Trump’s alley since it’s a jobs issue, and this will kill good American jobs! Or will it?

Trump’s press secretary was asked about this, and the response makes it seem unlikely that there will be any reversal here. He specifically mentioned the number of US-based (not low-paying foreign) jobs involved with Norwegian, not to mention all the jobs created to build the airline’s all-Boeing fleet. The airlines might want this to happen, but it’s not likely.

Block the Middle East Carriers
We all know that the big 3 US carriers are concerned about the continued, subsidized growth of the Middle East big 3 airlines (Emirates, Etihad, and Qatar). Emirates fanned the flames recently by announcing a flight from Newark to Athens that’s not going to make money on its own. The growth of Middle East airlines, especially in fifth freedom markets that aren’t nonstop to their home markets, appears to be high on the list of things the airlines want stopped, but will it happen?

Just thinking about all the Boeing airplanes on order at those airlines… it’s going to be hard for the administration to do something that would hurt that relationship. Airplane orders = jobs. Plus, not all the US airlines are on the same page. FedEx relies on its ability to hub in the Middle East for cargo, and it’s afraid that will go away in a fight. Further, JetBlue and Alaska/Virgin America love feeding these guys and don’t want to see them blocked from growing.

On the other hand, if the big 3 can swing a narrative that US jobs are at risk, then Trump could be swayed. I just don’t know if it’ll be enough of a threat for him to bother. It will undoubtedly be easier to ignore this spat.

Fix Airports
The airport funding system in the US effectively requires that the users of airports pay for improvements. That may explain why some of the big airports in the US have a pretty poor passenger experience. (Just ask the President, who likened LaGuardia to something that should be in a third-world country.) It’s difficult and expensive to fix, and it’s hard to do something that will put financial pressure on the airlines and travelers.

In theory, I’d imagine Trump could goad Congress to allocate a bunch of federal dollars to pour into big airports in order to improve the experience without hitting the airports’ rates and charges. I don’t know anything about the various mechanisms that might be involved, but you’d imagine it would be a slog to get through. Would he bother trying? It seems like a stretch considering how much spending he’s committing to other gigantic projects like building that wall (since the Mexicans aren’t paying for it). This would create good construction jobs, and he’s clearly in favor of that. It would fit nicely as a piece of the infrastructure push he promised to make, but it’s unclear what types of projects will float to the top of that effort.

Fix Air Traffic Control
Attempts to modernize the air traffic control system have been around forever, and they almost succeeded in the last Federal Aviation Administration (FAA) re-authorization go-around. In the end, nothing happened, and Congress just kicked the can down the road. The problem is that there is no consensus on what to do. American and United (along with the industry lobbying group A4A) think that air traffic control should be put into a non-profit corporation to give it more independence. Delta says the current structure is fine as it is.

This isn’t really a jobs issue, so I imagine it’s going to be a tough sell. But when it comes time to re-authorize the FAA again, maybe it will finally happen.

Don’t Kill Travel
Though there are plenty of things the airlines may want Trump to do, there are other things the airlines want Trump to avoid doing. Killing travel, for example, would be at the top of that list. The uncertainty around who can enter the country and when is something that has the real potential to stop visitors from wanting to come here. I was surprised when one of our Cranky Concierge clients canceled a trip to the US because he didn’t like to visit “politically unstable” countries. This is the kind of perception that is the worst possible outcome for the US. Travel creates a tremendous number of jobs and is vitally important. The airlines are likely to ask the President to simply “do no harm.”

I do expect that to fall on deaf ears. Trump made a lot of promises during the campaign, and some of those are going to hurt air travel (among other things) if implemented. The airlines are smart to ask, and having the President’s ear this early in his term is a nice, positive sign. But I wouldn’t get my hopes up if I were them.

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53 Comments on "What the Airlines Want to Get Out of Donald Trump Today"

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christophe.bottega
Member

Love the picture !

christophe.bottega
Member

” I was surprised when one of our Cranky Concierge clients canceled a trip to the US because he didn’t like to visit “politically unstable” countries ”

While the politically unstable might not be the best chosen words, when you read at the world press before and after Trump’s election, it’s clear that this customer might not be the only one. It would be interesting to look at pricing tendencies, load factors and seat offerings to/from the US in the next few months…

Joey Jaidee
Guest

Just wondering from what country were these clients??

Harrold
Guest

If I was a foreign traveler from any country other than Western Europe, I would think very hard about a visit to the US right now.

Jimmy
Guest

The President prefers to call it being “unpredictable”, but unstable may be the right word.

Scott
Member

Except for what I have already planned, I’ll be avoiding the United States. The latest rumour is that all visitors are going to be required to hand over passwords to email/social media. Uh No – not happening

Dave
Guest

“The latest rumour” is one of the stupidest things I have ever heard.

Chris
Guest

Except, it’s not a rumor as the Homeland Security Secretary stated – http://www.nbcnews.com/news/us-news/us-visitors-may-have-hand-over-social-media-passwords-kelly-n718216

Tim Dunn
Member
The President is interested in creating American jobs, first and foremost. He has made that abundantly clear. The primary themes of the meeting are likely to revolve around those topics. Airlines will throw in issues that involve job protection and will show the enormous economic impact of the airline industry to the US economy, but I suspect he realizes that already. The problem with NAI is not that they buy US airplanes and have US-based crew but that they won’t put in writing their commitment to maintaining US workers as part of their commitment to building a network in the… Read more »
A
Guest
I’ve always thought the argument that the ME3 buy Boeing jets is a classic strawman. What the US legacy carriers are arguing has nothing to do with who builds aircraft. It’s changing the subject and not at all related. In a free market an airline should buy the best aircraft for their needs and we have to assume that is what has been happening at both the ME3 and US carriers. Now if the Boeing orders do come up and the US carriers try to refute it I think Trump has a very good response. US carriers have by no… Read more »
Tim Dunn
Member

The issue of whose aircraft an airline buys is what the Middle East airlines have used to justify their invasion of Europe and the United States. It is not an argument the US carriers have used.

The A380 wouldn’t exist without the ME3 but Europe has sold its airline industry down the river in order to be able to able to say they build the world’s largest passenger aircraft even though it still loses money.

Your statement is absolutely correct that the best airplane should be ordered and jobs should be protected regardless of the industry.

Harrold
Guest

If the service on the ME3 flights wasn’t so darn gone good I just might agree with you.

Protecting the jobs of surly and grumpy union employees is getting harder and harder to justify these days.

Oliver
Guest

Coach or Premium class?

Jon
Member
@Tim Dunn I agree for the most part, but the anti-ME3 sentiment rests on subsidization of those countries, while ignoring our own subsidies via government-funded airport rebuilds (including roads surrounding the airports), We waive corporate development taxes (we call it “TIF” instead of “subsidy”) and pit municipalities against each other to the benefit of private corporations (see: Wright Amendment). Claims that we don’t subsidize in the US but the ME3 are subsidized willfully ignores reality. The subsidies in Qatar may be more obvious, but since the Postal Air Service days the legacy airlines have received almost constant subsidies from US… Read more »
Joey Jaidee
Guest

How,specifically,has the US government subsidized the USAirlines?

When I think of a subsidy I think of money changing hands.

Jon
Member
A subsidy can include policies and tax-offsets that other businesses would have to pay that airlines did not. This is preferential treatment by the government that benefits private company shareholders. A subsidy. If your definition is that of outright giving cash to the carriers directly, then the ME3 also do not fit that definition. Most notable in the US are the Kelly Act which the US used to spur our passenger aviation industry, airport funding received from both states and the federal government, and government policies that do not tax certain aviation services and fees, which allows the airlines to… Read more »
Tim Dunn
Member
The Kelly Act was over 90 years ago, well before deregulation and Open Skies. The only real subsidy to airlines was post 9/11 when the US government paid for the hardened cockpit doors which are required in the US and many parts of the world now. Airports are paid for by user fees including taxes just as roads are whether to or from airports or any other building. You are correct that cutting off demand for Middle East oil by pumping in the US and exporting it and all of its refined products is the most effective way to shut… Read more »
Kilroy
Guest

Roads in the US aren’t really paid by user fees. Gas, taxes, and vehicle fees don’t come close to covering the cost of maintaining roads in the US, and they are rarely implemented at any level below the state level. Most of the road miles in the US are maintained by municipalities and counties, not the feds or states.

The reality for many states is that roads aren’t being maintained well. That means that either fuel taxes need to go up and/or concessions need to be granted to operate more roads as toll roads, whether privately or publicly maintained/run.

Chris
Guest
While the United States government does not DIRECTLY subsidize airlines, the effect is the same. For example, the Essential Air Service program provides subsidies for airlines serving rural communities. There’s also the Fly America Act, which since 1974 has required federal agencies to use U.S. air carriers to transport passengers and cargo when such travel is funded by the government. Ironically, the Fly America Act allows government employees to travel on an ME3 via a code share with Jetblue since the government’s still buying “American.” That’s gotta drive Delta insane. Let’s not forget the bailout after 9/11- the Air Transportation… Read more »
David M
Guest

The EK/B6 codeshare might drive DL insane, but they do the same thing. For one example, DL has the contract for LAX-TPE and offers nonstop service. But nonstop service on that route is operated by China Airlines, not Delta. Delta also sells government fares on other partners, including KLM. United does the same thing with Star Alliance partners.

David SF eastbay
Member

As far as Norwegian goes, to do anything to stop then, the whole cruise ship industry would need to be shut down. The big players are based in the US but register ships in places like Malta to take advantage of their laws and hire tons of foreign workers.

Itami
Guest
I agree that the Boeing card is probably what will make the ME3/NAI topic such an uphill battle for the US3. When it comes down to it, the US (like most other countries) will prioritize manufacturing and manufacturing jobs over other sectors. As for airports, I think a lot of the doomsaying and handwringing is overblown. Anyone who uses LaGuardia as a shorthand for US airports as a whole lives in a bubble. The infrastructure at hubs like MIA, DEN, DTW, and PDX was more than adequate when I was there. Even megahubs like ATL and DFW were fine, if… Read more »
Jon
Member

I agree with your airport assessment. Other than LGA and JFK, what airports are in such terrible shape that government-funded renovations are necessary? I mean, are there terribly designed airports, or airports that don’t work as well post-9/11 (I’m looking at you, MCI)? Sure. But the only one that I can think of that’s downright dysfunctional is LaGuardia.

andreas_akerman
Member

At the same time, Trump hasn’t been shy to jeopardize the recent deal between Boeing and Iran Air. (How would the Iranians even come to the U.S. for the delivery flight home?) They clearly wanted to buy from both Boeing and Airbus, but based on the Trump administration’s recent actions, I would be surprised if Iran Air doesn’t grow the Airbus order instead.

Itami
Guest

A very valid point. Clearly it becomes a question of whether loving manufacturing can outweigh hating Iran.

Also, let’s not forget that Trump is mainly a hawk towards countries too poor to sport Trump-branded properties. That also probably counts in the ME3’s favor.

Eric Morris
Guest

I wish one of these execs told him to kill TSA and the US empire. KSM wrote a letter saying they attacked us for we do to them in the Middle East.

http://www.zerohedge.com/news/2017-02-09/911-mastermind’s-letter-obama-here’s-why-we-attacked-america

ex-New Yorker
Guest

I wouldn’t hold up KSM as having a legitimate point of view. He’s a savage. There’s no excuse for 9/11 and we don’t have to legitimize the barbarian point of view.

Jeff
Guest

While Trump likened LaGuardia to an airport that belongs to a third-world country, the source of that quote was actually former Vice-President Biden, who first made that observations two years prior.

DougYWG
Guest

Lots of my fellow Canadians have declared that they will now avoid travel to the U.S. They still can travel, they choose not to. What would be the number one source of visitors to U.S.A.? Umm…perhaps, Canada, maybe? Time will tell if they really mean it. Me? I’m in Minneapolis as I write.

MB
Member

US bankruptcy protections = ME direct subsidies in my opinion

Tim Dunn
Member
All of the currently existing US airlines have either not filed for bankruptcy or used Chapter 11. Do you understand what chapter 11 bankruptcy involves? C11 is a swap of debt for equity. There is no subsidy when a company restructures its debt for equity in the new company. Companies don’t just walk into court and dump debts; they exchange equity in the new company for the harm/loss that they have caused other companies. In the case of labor, nearly all US airline labor groups received hefty bankruptcy settlements in the form of new stock, most cashed it out shortly… Read more »
Scott
Guest

And, unless the government holds debt in the company (news flash, they don’t) the only thing the Gov’t provides is the Bankruptcy Court to hold the hearings.

Jon
Member

Exactly. Only the silly idiot shareholders who bought stock in the company are left holding the bag.

Joey Jaidee
Guest

Yeah they gave us about$12,000 in stock that we couldn’t sell as it was put in our 401k for us taking a 35%haircut and having our pension stolen.

Great deal for the employees-NOT!!!!

Joey Jaidee
Guest

By the way to make certain of the point the frontline employees were not able to sell their stock. It was dumped into the 401k.

Ted
Guest

“seems like a stretch considering how much spending he’s committing to other gigantic projects like building that wall (since the Mexicans aren’t paying for it).”

Dave
Guest
For the record, US airlines have been subsidized by regulation, research or outright grants day-in and day-out by the federal government almost since the day they were formed. The 747, which most of them just recently stopped flying, was Boeing’s attempt at building the C5-A galaxy. Jet engine technology, metallurgical developments, air traffic control, high altitude flying etc., all were built on federal research and development. Until 1978, every route in the United States was a near monopoly tightly regulated by the government to constrain competition. Many international routes, including Asia and South America are effectively a form of subsidy… Read more »
Scott
Guest

The lack of open skies agreements and restrictions by other countries is a subsidy? d’ohkay. This is also the first time I’ve ever heard of regulation being a subsidy. Most consider regulation a cost.

Jon
Member

Politics. There’s a reason why Delta, AA, UA want new regulations limiting competition by Gulf states. LaGuardia and Love Field are great domestic examples of pro-incumbent regulation via “perimeter” rulings. Any expensive regulation that the legacies are already implementing voluntarily that they can enforce on their competitors is a regulation they’ll support.

The Telecom industry is also rife with regulations that actually support the baby-bells and big cable vs price-competition. Most recently, regulations designed to hamper community broadband network deployments, as well as often proposed legal regulations that are costly to implement for all but the largest telcos.

Scott
Guest
So I am sitting in the swamp, 2 blocks from the White House. I can tell you there is zero appetite from Congressional Republicans for a massive infrastructure spending program. Right now, the R’s on the Hill are trying to figure out how to repeal/replace/repair the ACA and then they want to do comprehensive business tax reform. There is simply no room (time) for infrastructure while these two issues are being debated. When (if) they do get around to an infrastructure bill they need to figure out a way to pay for it. Option A is to increase taxes and… Read more »
Joey Jaidee
Guest

Maybe if they weren’t so busy whoring themselves they would be able to do more than one thing at a time!!!!

Jon
Member

That escalated quickly…

Donald
Guest

” (since the Mexicans aren’t paying for it).”

yet.

Tim Dunn
Member
Scott, the Japanese prime minister is supposedly (seriously) preparing a package of investment in the US – many speculate to ward off hostile action against Japan because of the perpetual trade surplus Japan has with the US. Let’s see how it pans out but if Trump is truly serious about reworking trade agreements, there might be a whole lot of countries looking to do deals with the US in return for keeping access to their largest market. Trump is all for building pipelines to connect Canadian oil fields with the Gulf of Mexico – but he made it clear that… Read more »
Tim Dunn
Member

correction.. the US airline industry was indeed regulated before 1978….

USBT
Guest

Well there’s a video of the first 20 minutes of the meeting and reports of what were discussed. ATC and the state of US airports got a good airing.

The ME3 apparently was barely mentioned. Which isn’t surprising as *all* the US carriers’ CEOs were there except Doug Parker (including FedEx and UPS). So if Ed Bastian had brought it up he’d have gotten into a right old slanging match in front of the Donald. Trump did acknowledge the issue im passing in his preamble

iahphx
Member
From published accounts of today’s meeting, it sure seems like Trump is receptive to the complaints by the US carriers over the subsidies to the Middle East carriers. He even called the situation “very unfair.” https://www.bloomberg.com/news/articles/2017-02-08/u-s-airline-chiefs-set-to-talk-jobs-traffic-control-with-trump If Trump is as good at dealmaking as he claims to be, the obvious move is to eliminate the ME3’s Fifth Freedom rights. There is absolutely no reason for these rights to exist in today’s aviation world. Even if these carriers weren’t subsidized, it would be a bad one-sided deal for America. While I personally don’t think this move would go far enough (the… Read more »
USBT
Guest

“If Trump is as good at dealmaking as he claims to be, the obvious move is to eliminate the ME3’s Fifth Freedom rights. There is absolutely no reason for these rights to exist in today’s aviation world. Even if these carriers weren’t subsidized, it would be a bad one-sided deal for America.”

Except that US carriers also fly 5th freedom. Not as much as before. But if Emirates were forced to give up MXP/ATH-JFK would United give up HKG-SIN and NRT-ICN, and Delta give up NRT-SIN and NRT-PVG?

None of those are necessary given current aircraft.

iahphx
Member

There’s no reason the US airlines would need to give up unrelated Fifth Freedom rights. These OpenSkies deals are bilateral.

I would also note that foreign airlines don’t fret much about the Fifth Freedom rights held by USA airlines because these unsubsidized aren’t particularly harmful to them. It’s only when a foreign airline has an open checkbook from their gov’t that Fifth Freedom rights become “dangerous.”

Bernardo Ng
Guest
Ok look. The reality of things is that our legacy carriers have been around for a very long time. American Airlines was founded in 1926 as Robertson Aircraft with a DH-4 biplane carrying mail from St. Louis to Chicago. Delta Airlines started out as a crop duster. With a Huff Daland Dusters, in Macon, GA. In 1924. And United Airlines started out as Varney Airlines in 1926 in Boise, Idaho as an air mail carrier. All of our airlines have been around for a very long time. Sir Tim Clark, Tim Hogan, or Akbar Al Baker weren’t even born and… Read more »
Bill Hough
Guest

I’m sorry, but what does an airline’s longevity have to do with anything? Some long-lived airlines like PA, EA and Swissair couldn’t sustain themselves in the long run and went bust. The US airlines that have made it this far seem intent on degrading their product and alienating their customers, while on EK the coach experience is at least tolerable. Why should I be sympathetic to DL, UA or AA?

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