3 Links I Love: Georgia Punishes Delta, Boeing Goes Regional, Why Boston is Better than New York

Hawaiian, Links I Love

This week’s featured link:
Pro-gun Georgia lawmakers punish Delta for crossing the NRAAssociated Press
I’ll admit that the Georgia government threats of retaliation for Delta pulling a discount program for National Rifle Association (NRA) members didn’t surprise me. But moving beyond talk and actually taking action because of it? Well that’s just ridiculous. If I lived in Georgia, I’d be pretty embarrassed about how I’m being represented. Even if I backed the NRA, I still would hope that the removal of a discount for a private group wouldn’t result in retaliation from those in public office. That’s a very hostile climate for a business to be in. If I were looking to relocate a business, this would be a real concern… unless I was looking to relocate FROM Georgia.

Two for the road:
Boeing to have 51 percent stake in venture with Embraer: paperReuters
Anything Airbus can do, I can do better? Airbus bought a majority stake in the C-Series aircraft, and now Boeing wants to do the same with the Embraer commercial aircraft line. I just keep shaking my head and how Boeing has handled itself in the regional space, but, well, it’s never a dull moment.

How Boston’s Airport Bounced Back From the Storm That Crippled J.F.K.The New York Times
File this one under the long-running saga “Boston rules, New York drools.” You undoubtedly remember the mess that was JFK after that big storm earlier this winter. Here’s how Boston handled things better. To be fair, JFK has a lot more international airlines with a lot more flights to coordinate, but there’s no question that JFK is a mess that needs help.

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59 comments on “3 Links I Love: Georgia Punishes Delta, Boeing Goes Regional, Why Boston is Better than New York

  1. The Georgia – Delta spat is first and foremost about the state’s Republican and secondarily about raising money from out of state donors.

    That said there’s no fundamental right to the fuel tax subsidies Delta has been lobbying for (which expired in 2015). And the issue is just another reminder of Delta’s position of “subsidies for me but not for thee.”

    1. > If I were looking to relocate a business, this would be a real concern…

      I read that as a reference to amazon’s forthcoming HQ2…

      1. Amazon would be foolish to not notice how a major company in Georgia was significantly negatively impacted simply by making a philosophical decision that the majority of Georgia’s politicians disagreed with. Sounds like a pretty unstable and unwelcome political environment for anybody excepting the far right. Amazon and Washington Post owner Jeff Bezos are certainly not included in that group.

        It would be hilarious if Georgia lost Amazon HQ2 in part because they decided to spite one of the state’s largest employers for simply doing something that their NRA bought-and-paid-for State legislators (and self appointed arbiters of morality) disagreed with.

        Full disclosure, I’m a gun owner and a Republican. But stupid is just stupid and this was galactically stupid in the grand scheme of things. As somebody famous would say on his Twitter… SAD!

    2. CF nailed it.
      “Even if I backed the NRA, I still would hope that the removal of a discount for a private group wouldn’t result in retaliation from those in public office. That’s a very hostile climate for a business to be in. If I were looking to relocate a business, this would be a real concern… unless I was looking to relocate FROM Georgia.”

      The issue is that the Lt. Gov. linked Delta’s decision to remove the NRA discount – which dozens of other companies have also done – with tax legislation. The governor and Atlanta major both said it was very poor form to connect a business decision with politics. Some have called it extortion.

      As for the tax break, Georgia is free to give or take tax breaks but Delta is also free to move capacity on its network; given that no one doubts that Delta is the largest economic driver in Georgia worth by hundreds of times more than the tax break, it doesn’t take a rocket scientist to figure who really gets hurt here. And the fundamental issue is that Georgia taxes jet fuel while other states do not.

      The tax break wouldn’t have just been for Delta anyway. it is for all sales of jet fuel in Georgia. As the largest airline, Delta would have benefitted the most but paying tax on fuel that doesn’t have to be paid in other taxes negatively affects the economics of aviation for all airlines in Georgia.

      As for BOS vs. JFK recovery, we might get another chance this weekend to see if any lessons were learned. the problem at JFK was the silo operation of terminals that serve dozens of foreign airlines. BOS doesn’t have that problem.

    3. Why every time there is a tax break or anything DL is working with the government on, is it tied back to the ME3? The “subsidies” are no where even close to the same scale.
      If my folks give me $300 but buy my sister a $300K house, we are both being subsidized by our parents, but I think it would be hard to argue that they are the same thing if you look even a tiny bit into it.

      But to keep it on topic, it’s a shame the state is punishing a private business in such a way. So much for those free market Republicans.

        1. Georgia taxes jet fuel; other states do not. If anything, the fuel tax exemption would have helped create a level jet fuel cost playing field between Georgia and other states. When you operate the world’s largest hub in a state with a fuel tax that others don’t have, you start looking at alternative airports to connect the 60% of Delta passengers that are just changing planes in ATL. WN also connects passengers in Atlanta and all Georgia airline passengers will pay for the cost of higher jet fuel.

          1. Actually, many states do charge an excise tax or sales tax on jet fuel with the exception of a very few states like Texas. Some of these states have a rebate or cap on the tax which normally benefits the big (ie hub) carriers.

    4. Politicians love to talk principles…less government intrusion…blah blah blah…until one of their pet causes is messed with. Then principles go right out the window.

    5. What concerns me the most about this is the Georgia legislature taking action against a George-based company in defense of a lobbying group.

    6. Gary – I couldn’t care less about the fuel subsidy itself. All I care about is that the legislature was going to pass those subsidies until the NRA thing happened, and then it changed its mind. So it’s the shift in position based upon support or lack thereof of a lobbying group that concerns me.

  2. Delta should consider moving its hub, many cities would be happy to give billions to have it and some have the facilities already in place

    1. Delta isn’t going to move the world’s largest passenger airline hub. Even though some states would love to see Delta move its headquarters, it can’t do that because it has a lease that goes for the next couple of decades.
      Delta can grow elsewhere including at either of two airports up I-75 that have large facilities which are, to many people more attractive and comfortable than ATL. CVG and DTW both know how to keep the lights on and the roads and taxiways plowed, something Georgia struggles to do. OTOH, most every other airline hub including Delta’s other hubs do a better job at those tasks than ATL. Those two issues cost DAL more revenue over just this past winter in ATL than the tax break would have.

      1. How many large scale production facilities does Boeing have in Chicago to justify its decision to move HQ out of Seattle? Delta can move their HQ anywhere in the U.S. to take advantage of subsidies and tax breaks without removing a single flight from their ATL hub.

        1. IIRC, Delta’s lease with the City of Atlanta requires that its headquarters stay in Atlanta.

      2. They may not move the hub entirely, but they can start redirecting growth elsewhere and slowly draw down flights. Even if they cut the hub by 25% it would hurt Georgia a lot.

    2. Totally agree that Delta should consider moving their Hub, it’s time people stop fearing the NRA

  3. RE: Georgia Punishes Delta. It is true that Georgia is not business friendly in this circumstance but for a different reason. ATL dominates travel plans out of Georgia. Likewise, Delta dominates ATL. Why should Georgia give Delta tax breaks on fuel there? That long standing practice puts competing airlines at a disadvantage and raises airfare prices for all consumers. Government needs to stay out of business and businesses need to stay out of politics!

    1. You could argue that Delta no longer giving discounts to NRA members is a great example of businesses staying out of politics.

      1. But is it staying out of politics though? From the sounds of it it was just standard group rate pricing to get to their convention. This wasn’t Delta endorsing the NRA or giving it any special treatment it wouldn’t give to a similar sized group. (Heck Delta even did a deal with Dragoncon a few years ago!) My question is what about other orginizations like AARP, PETA, NAACP, AAA, ACLU, etc.. Do they have similar agreements with those orginizations and did they toss those as well? Then you can make a case of staying out of politics.

        1. AARP, PETA, NAACP, AAA, ACLU, etc. are all non-controversial organizations. No one is going to disagree with what AARP does, and there is no organization called The Association Against the Rights of Retired Persons. While the organizations you listed might have political activities, they are generally non-political groups and most Americans support (or do not actively oppose) their aims.

          1. You’re kidding right? PETA is hugely controversial, so is the NAACP and ACLU. AARP has it’s own set of controversial stands and is the 8th largest lobbying group in DC, with over a quarter billion in spending, over the last 20 or so years. It dwarfs the NRA and has it hands in just about every piece of legislation. It just has better PR people. https://www.opensecrets.org/lobby/top.php?indexType=sindexType=s

    2. Competing airlines would get the tax break as well. If anything it makes it easier for ALL carriers to justify expanding services at ATL by reducing their costs.

      1. But the gallons required to achieve the subsidy are beyond the capability of all carriers but DL; AirTran used to benefit but as SWA reduced service that wouldn’t apply.

        1. Perhaps I missed something; did the proposed law require a minimum fuel purchase required to waive the tax?

    1. As does California, San Francisco, and pretty much every other state and local government in the US.

      1. I can’t think of a case where the California government has done anything this petty. Please cite an example.

  4. The Delta fuel subsidy is no doubt politics but I wouldn’t say overly hostile to the business climate of Georgia. They pulled a tax subsidy which Delta only received due to the weight they carry in that sate. There are much worse things state legislatures can do to their local business climate – looking at you California.

    I’m sure the NRA discounts amounted to hardly anything in the Delta bottom line. Delta surely wanted to win public opinion points by punishing an easy scapegoat. I say shame on Delta for trying to exploit a tragedy. I take a contrarian view that maybe this will be a lesson to all businesses to not be so reactionary.

    1. “Exploit a tragedy”. Oh, you’re going there again. We can’t pressure the government to take action to stop these massacres, because that would be “exploiting” a tragedy. But the gun lobby using the tragedy to sell more guns is perfectly fine, huh?

  5. Haha, a guy from CA is disparaging how another State runs it’s government…that’s rich! By the way, how many thousands of businesses have moved from CA to GA in the past decade?

    1. CF is neither a politician nor a spokesperson for the state of California and shouldn’t be considered as such. His opinion of Georgia’s actions are no less noteworthy because of where he happens to live.

    2. California’s economy has grown faster than Georgia’s over the past decade. Get your facts straight before you talk.

  6. Dang…the year is barely into its third month and already most of my predictions for 2017 are on the ash heap…IF the Brazil report is true and not just wishful thinking.

  7. Delta is really in a bad position here. What are they going to do? Pull up stakes from Hartsfield-Jackson? HA! Delta is tied to that super hub like United is tied to Houston and American to New York (Delta too). It can’t cut back. It can’t shift flights to other hubs. It’s bound to Georgia. It can’t afford to get political…even if it’s trying to position this as being apolitical (which nobody believes). It is interesting however that the Texas legislature has not retaliated against United the way the Georgia legislature retaliated against Delta.

    1. Of course Delta can cut back. They have plenty of other hubs. They could move a chunk of the international flying to JFK, and route some of the domestic traffic over CVG, DTW, MSP, and SLC instead.

    1. flyplane – What would be the government’s reply? Or my reply? Personally I don’t care what Delta does with discounts. If I’m a state legislator, I’m not basing any decisions on how Delta decides to dole out deals.

      1. CF;

        Of course Delta is perfectly within their rights [ I guess ] to dole out discounts to whomever they please. Just be aware that for every action there is REACTION.

        1. Flyplane – Delta should be prepared for a consumer reaction to any of the moves it makes. But a political retaliation? That’s not how government is supposed to work.

          1. Evidently a SLOW news day, as I understand on 14 members of the NRA used the Delta discount to attend their annual convention. If you don’t like the government in power, vote them out. By the way, I grew up near the intersection of Lakewood Blvd & Del Amo, if you know where that is?

  8. I was born in Atlanta to a corporate family who moved allot and returned to ATL for undergrad and my 20s. This spat is political theater and rooted in the Tale of Two Georgias; economically there is the ATL area and everywhere else. Many political people ‘out in the state’ love sticking it to the A and don’t consider the metro as ‘real Georgia’. My theory is that this is Lt.Gov. Cagle pandering to his small city & rural constituents.

    1. Eric A – The thing is, it’s no longer political theater when the consequences are real. That’s why I say I wasn’t surprised to see Cagle playing to his base and yelling at big bad Delta for hating guns (or whatever). But when that actually turns into action that has a direct financial impact, that’s when it becomes very real. It crosses a line.

      1. I’m not disagreeing that this is scorched-earth politics at its worst. Another example of political chicken that disregards real-world consequences….which, sadly, is a new normal.
        Kind of segues into my next idea for a topic: what kind of ramifications will a trade war have on Boeing and Airbus’ Mobile AL production?

  9. Maybe this is a wake up call to ALL companies to stop giving donations or discounts to *any* group with political affiliations or leanings, and I am including those on the left AND right.

    This is one example why many of the core airlines I work with donate to the American Cancer Society as our main charity because they tend to be very ‘apolitcal’.

  10. Free PR ended up cost more. DL was busy today defensing its position (DL was just to be neutral; respects 2nd amendment; only 13 discounts ever). The bill was already passed house before the free PR, leaving only senate vote. Not only republicans, many democratic GA house & senate were also in favor for removing the credit. Guess there was a good level of agreement. Might not be even related to this dispute.

    1. Delta has said they will pull discounts for all groups that engage in politically divisive activities, demonstrating that Delta doesn’t want to be in the middle of these political battles. The sad reality is that many people will lose discounts because of the Delta-NRA-Georgia dustup but many companies don’t want to be caught in the middle of all of this.

      There are also marketing analytic surveys taken in the last week that show that Delta as well as other brands that cut discounts from the NRA actually are scoring higher on brand reputation.

      Finally, the Georgia governor, who is in his last term, will push for a fuel sales tax exemption for Georgia because it benefits Georgia’s economy far more than the cost to Georgia in revenue. ATL contributes hundreds of billions of dollars in economic impact to Georgia; $40 million in reduced taxes to attract additional billions is a small price to pay- even as DL has committed to billions more in new terminals, runways, and improved facilities while other airlines will pay about the same amount as DL for the projects.

      Whether Cagle is playing to the rural base or not, when a major economic engine to a state doesn’t provide as much tax revenue as it is now, someone else has to pay more or services have to be cut. The Governor and the Atlanta mayor who also was critical of the Republican leaders of the legislature strongly support doing what is necessary to keep Delta growing in Atlanta.

      Just as in other states, tax abatement decisions should be based on economics – which the Governor, Mayor and Delta can easily show help each other – and not politics.

      Georgia now has to spend a lot of effort to fix its damaged reputation in the global business community.

    1. Delta flies 100 million passengers a year. NRA has maybe 5 million members. This dust up won’t hurt Delta

  11. Everyone in the news media acts as if this blew up out of nowhere (and Delta management is pushing the same line): Poor, naïve Delta — trying to be ‘neutral’ after the Florida school shootings — ‘ended its relationship’ (such as it was) with the NRA and the Republicans in the state legislature ‘punished’ them, without provocation.

    A little memory paints a somewhat different picture: It is not two years since Delta and a number of other large, national corporations (Especially movie production companies. Georgia grants movie productions generous tax credits.) threatened the state with economic retaliation if it passed a weak-sauce ‘Religious Freedom Restoration Act’ bill that religious conservatives were pushing. The governor (the same Nathan Deal who was humiliated as an impotent lame duck this last weekend) folded, the threatened economic apocalypse was averted and the ‘woke’ CEOs exchanged high-fives all around.

    Side- effect: The atmosphere between the state government and Delta management — already ‘complicated’ — was poisoned.

    Delta management’s slap at the NRA was more corporate virtue-signaling, and they expected it to be as risk-free and halo-enhancing as the RFRA affair. Instead, it turned out be very expensive because:

    * There were no other big corporations (with less ‘skin’ in the state) to spread the risk this time.
    * This time around, the state had something Delta really, really wanted (the fuel tax break).
    * It’s an election year with a lame-duck governor and a crowded field of Republicans angling for an advantage and public recognition before the primaries begin. Lt.-Gov. Casey Cagle was smart enough to spot an opportunity.

    Delta will eventually get their tax break. (Probably next year. Gov. Cagle may be the one signing it.) Delta HQ will stay in ATL.

    The people coming off worst should be Delta’s management. Playing with firecrackers is fun until someone loses an eye. (Or $40 million off the year’s bottom line.)

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