Former Spirit Airlines CEO Ben Baldanza has penned a piece for Forbes defending airline
bailouts by U.S. taxpayers and strongly dismissing the emotional “myths” people use to oppose government support. I’m still not convinced, though. CEO Discounts Airline Bailout “Myths”
I’ll give Baldanza credit for doing a better job than anyone else in defending the idea of government aid to airlines. He tries to make his point by arguing against five myths commonly levied against airlines. Let’s go through each one.
Aid Now Just Delays The Inevitable
Baldanza doesn’t even dispute that recovery is “years” away and business travel may never recover. Nevertheless, he argues that “we don’t know how demand will recover, and the sooner airlines can start flying the better it is for the whole economy.”
I think most Americans would be willing to accept another short-term fix if we knew demand was returning next spring. But every indication says otherwise. Every indication says people are too sacred or unwilling to come back and business travel polices will not easily be altered.
Baldanza adds:
“Further, failing to provide this kind of aid doesn’t save much money, since these employees would be eligible for unemployment insurance and yet would not be staying current as their roles require.”
I think everyone agrees (sadly, I must add), that there is no way the airline industry will be able to offer employment at 2019 level for many years to come. Why wait in limbo? As one flight attendant noted:
Is this the life more junior airline workers want for themselves? Hoping for the best every few months while life quickly passes by? That is such horrifying thought to me.
It is true that airline cutbacks now make airlines less equipped to add more capacity and respond to any economic upswing, particularly if pilots are laid off. But the cost of retaining the status quo seems unacceptably high.
Aid Only Helps Investors Who Knew The Risks
Baldanza dismisses the notion that government aid rewards investors, not taxpayers.
“Providing aid to keep employees current has not resulted in airline equity values increasing. In other words, the market is smart enough to know that temporary aid is just that, and so to raise the value of an airline due to that makes no sense.”
But look at how airline stocks have surged on news that a second round of bailouts is coming. Baldanza says that aid “does nothing to recover to the losses for investors who held airline stocks going into this crisis,” but he fails to account for all the speculators who have recently entered the foray and are betting on another infusion from Uncle Sam.
American Airlines #Aviation
#Airlines#SpiritAirlines
#CEO#Former#Bailouts
#Businessnews#Aidonly#Investors
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Author : AviateTv |
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