Before We Bail Out Airlines, Let's Change the Rules

'NYT' columnist isn't shedding tears for the industry amid the coronavirus outbreak
By Newser Editors,  Newser Staff
Posted Mar 16, 2020 9:30 AM CDT
Before We Bail Out Airlines, Let's Talk About Their Fees
File photo of an American Airlines jet.   (AP Photo/Matt Rourke, File)

Nobody is using the word "bailout" yet, but it's just a matter of time before the government acts to shore up the US airline industry in the midst of the coronavirus outbreak, writes Tim Wu in the New York Times. Not so fast, he adds. "As the government considers what we, the public, should do for the airlines, we should ask, Just what have they done for us?" He takes particular exception with American Airlines, which made money hand over fist in the mid- to late 2010s, including a staggering $7.6 billion profit in 2015 alone. Did it use the money to buttress cash reserves for a crisis like this one? Did it invest in ways to improve its woeful reputation on customer service? Did it use the money to resolve contract issues with pilots and other workers? No, no, and no, writes Wu. Instead, "American blew most of its cash on a stock buyback spree."

Wu details that decision, but his main point is that things must change as a condition for any industry bailout. "Before providing any loan relief, tax breaks, or cash transfers, we must demand that the airlines change how they treat their customers and employees and make basic changes in industry ownership structure," he writes. For example, how about capping change fees, which aren't just annoying but actually hurt the economy, at $50? And it's time to stop allowing large shareholders to own big stakes in multiple airlines, which leads to collusion. "During the last economic crisis, we largely let individuals suffer while helping out the big guys, leaving behind deep resentments that still fester," writes Wu. "This time around we should start from the bottom instead of the top." Read the full column. (Read more coronavirus stories.)

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