Thursday November 01 07:20 PM EST

THE SLEAZY SKIES: The Airlines' Great Plane Robbery

by Ted Rall

NEW YORK

Don't look down, but you've just been robbed. While the rubble smoldered and the tears fell, America's big airlines lined their pockets with 15 billion taxpayer dollars. And there'll be more-much more-to come. Remarkably, the airlines didn't bother to say thanks.

Carol Hallett, president of the Air Transport Association, announced recently that the airlines lost $4.8 billion between September 11th and the end of that month due to business they lost as the result of the two-day grounding declared by the FAA (news - web sites). More than half that amount has already been collected by more than100 carriers; they'll get the rest in the form of cash and federal loan guarantees.

So what did you, the hard-working (or more likely, until-recently-working) American taxpayer get in return for this bailout? The short answer: significantly less than nothing.

Airlines, along with HMOs and cable TV companies, run one of the most hated, customer-unfriendly businesses in the United States. They routinely commit sins against free-market decency that would never fly in any other line of work: They sell more tickets than they have seats. They're late more often than they're on time, and they never offer refunds or discounts when they fail to do what they promise-deliver passengers from point A to point B at advertised times. If they lose your luggage, you might collect a few hundred bucks for your trouble. And if you're taller than 5'8", coach seating is criminally torturous. And yet, despite these longstanding grievances, none of our elected representatives in Congress even considered the idea of tying the issuance of the $4.8 billion to the long-languishing Passengers' Bill of Rights.

The CEOs of American, Delta and Continental have all agreed to forego their salaries through the end of 2001, mostly to assuage criticism of their decision to fire more than 100,000 employees. American's Donald J. Carty, for example, will "lose" about $193,000 of his $772,500 annual paycheck. But CEOs make most of their money through stock bonuses. Last year alone, Carty collected $1.4 million.

But even if you see economic Darwinism where more soft-hearted folk discern rapacious hypocrisy, the jettisoning of those 100,000-plus workers onto the unemployment rolls is costing you. Airport check-in and security lines, already absurdly slow due to understaffing before September 11th, have now slowed to a dead crawl. If the Bush Administration had possessed an ounce of sense, they would have predicated a bailout on a pledge not to lay anyone off. Instead, the airlines collect taxpayer money for a bailout, inconvenience those same taxpayers by firing service personnel, while also letting taxpayers pick up the tab for unemployment compensation to the victims of those layoffs-layoffs made primarily to increase the value of CEO stock bonuses in 2002. Bow your heads, y'all; this is the work of maestros!

If the boardroom alarmists are to be believed, the airlines were in grave danger of going belly-up without immediate infusion of public funds. Even prior to September 11th, they had been suffering from recession-related reductions in business travel. Only two airlines, Continental and Southwest, had been profitable. In the weeks after the attacks, some flights were going out 80 and 90 percent empty. To which a true free-market aficionado might shrug: So what?

Businesses, thousands and thousands of them, go bankrupt every year, and the government doesn't give a damn. There's a case to be made that the margins are simply too slim to make air travel a profitable business-aircraft and jet fuel are too expensive and ticket prices too low to generate profits while paying a living wage to employees. If enough airlines go out of business, reduced competition would presumably increase fares to the point that the survivors could make it. But then flying would become a luxury for many people.

The U.S. should probably follow the model of numerous other countries and nationalize the aviation industry. Air transportation is too vital to the nation's economy to trust to the vagaries of the marketplace; profitability should take a back seat to reliability, as it does with the military and the postal system, and other essential components of our infrastructure. Flying on such national carriers as Air France and Turkish Airways, neither terribly concerned about profits, is infinitely more safe and pleasant than on our lean, viciously mean American companies.

This reasonable, widely proven approach to air travel isn't likely to catch on with a president who's so addicted to privatization that he remains unwilling to nationalize the broken-down airline security business. On October 25, in fact, Bush announced a plan to cut more checks to private industry. "[The bailout] would essentially treat all companies, who may be sued as a result of the terrorist attacks, similarly," an administration official said. "This would help them be treated fairly and help ensure that plaintiffs will also be able to recover." This would include plane manufacturers like Boeing, insurance companies facing September 11th-related payouts and even additional money for the two carriers (American and Delta) whose planes were hijacked.

If American and Delta's security hadn't sucked, of course, they wouldn't be facing lawsuits. As for the insurance companies, isn't paying out claims supposed to be a routine part of their business? In this new golden age of corporate welfare, however, there are no negative consequences for poor business decisions...unless, of course, you pay taxes.

-- $15,000,000,000 (ain't@chump.change), November 02, 2001

Answers

As for the insurance companies, isn't paying out claims supposed to be a routine part of their business?

I was wondering about that, isn't that what they have taken money in for all these decades? How can they claim the act of paying off the claims which were paid for is a business loss? That is their problem, the chance they take by being in the business, that is what insurance is for!

Now they are modifying insurance policies so they will not cover anything that has to do with terrorism. All they have to do is claim a death during a robbery qualifies as an act of terrorism and deny any claims against it. They already go out of their way to remove almost every thing that can kill you as reasons not to pay in a death, lowering the "payout" as you become more vulnerable to dying, such as living longer. Or are they just there to take money for their stockholders without providing any services in return. What a scam.

-- Cherri (jessam5@home.com), November 10, 2001.