There Should Be Three Key Conditions Attached To Any US Airline Bailout


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Ever since airlines around the world started begging their respective governments to give them ridiculous sums of taxpayer money to help them stay afloat, we’ve seen various suggestions of what the airlines should have to offer up in return for government subsidies. Some suggestions have been great while others have been poorly thought through so I thought I’d join in and list the three key things that I’d like to see the US government insist upon before US airlines are given a cent of our money.

Condition 1 – Proper Customer Protections

EU261 is a European law that requires airlines operating to/from the European Union to offer passengers set amounts of compensation when:

  • Their flights are delayed (by specific lengths of time)
  • Their flights are canceled
  • They are downgraded
  • They are denied boarding

Any US carrier requesting taxpayer money should have to agree to back the introduction of very similar (if not identical) legislation to protect flyers in the US.

Condition 2 – Cash For Equity

As is typical of a lot of the US airlines, the big 3 always want everything their way so despite being on their hands and knees begging the US government for money I haven’t heard or read about any of them saying what they’re prepared to offer the taxpayer in return for the billions they’re asking for.

As far as I can tell, they want a truck-load of cash without offering anything in return and that’s not good enough. The only reason the US government should be considering an airline bailout is to protect the thousands of regular workers whose livelihoods are at stake if the airlines go to the wall – the US government’s job is not to protect an airline’s shareholders.

Just as some countries did with their banks in 2008/2009, the US government should take a massive equity stake in any of the airlines who receive taxpayer dollars and the stockholders should be wiped out – if the stockholders don’t like it they can direct their board to refuse the cash (and get wiped out anyway) or take it up with the directors they trusted to protect them from disastrous times.

Shareholders do not get to enjoy the spoils when times are good and then enjoy government protection when things go wrong – that’s not how capitalism works.

Just as governments around the world have now mostly sold their equity stakes in the banks they saved over a decade ago, the US government could gradually divest itself of its airline holdings when things return to normal – taxpayers would get their money back (mostly).

Condition 3 – All Directors Are Removed…With Conditions

Most US airlines have been through bankruptcy at least once and while workers have lost their jobs or taken pay cuts and while shareholders have been wiped out, there’s a select group of people that have either walked away with riches beyond most people’s dreams or are still in the industry reaping ridiculous rewards – these are the people running the airlines.

As a condition for receiving taxpayer money to bail out their airline, the entire board of directors of that airline should be forced to resign and accept certain conditions alongside their dismissal.

All directors should have their golden parachute deals voided, should be forced to waive their rights to dismissal compensation, and should have their stock options canceled as well. Moreover, they should be banned from working in the airline industry ever again.

Sure, that last condition is going to seem harsh and no doubt I’ll get a ton of comments telling me so…but I genuinely don’t care. There needs to be a very real price for failure and a lot of the people at the top of the US airline industry today haven’t really paid for any of their failures down the years – they’ve just continued to rake in the money while others have suffered.

Bottom Line

I genuinely detest a lot of the people running the major airlines in the US and if it wasn’t for the huge number of ordinary people who would suffer, I’d happily watch them all go to the wall without a penny of taxpayer money…but that’s simply not practical.

The airlines have to be bailed out or the consequences for thousands will be disastrous but the government needs to attach very strong conditions to any bailout money to ensure that passengers get some genuine protections, that taxpayers get their money back and that those at the very top are taught a lesson that they and their successors never forget.

We cannot allow a situation to arise where airlines are essentially given the green light to do what they want in good times (stock buybacks, huge salaries/bonuses/stock options for the board, etc…) knowing that the government will bail them out when things go badly wrong.

Yes, these are highly unusual times that we’re living through and no doubt some will try to argue that the airlines couldn’t have foreseen a crisis like this…but so what? The Mom and Pop shops in your local neighborhood that are highly likely to go out of business couldn’t see this coming either, who’s bailing them out? How is it right that they go bankrupt while the geniuses atop the airline industry who didn’t save for a stormy day don’t really suffer at all?

The US government should give the airlines all the taxpayer cash they need to stay afloat so that we protect the ordinary workers but the conditions for such a bailout must be severe.

4 COMMENTS

  1. A great set of requirements. Not a single one will ever be enacted in the current administration but great nonetheless.

  2. The taxpayers will bail out the airlines if they get bailed out (I think they will get bailed out because this is not a free market and both political parties are thieves in their own ways.)

    But the taxpayers will bail out the airlines not the travelers. Nobody gives a crap what travelers want. The primary concern should be getting the money back and getting a lot of money on top of the money back. If the airlines change to take travelers upside down on meat hooks so be it. Nobody cares. You take up your concern with the DOT.

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