Air Travel Cronyism Falls Short in Senate



The airlines. Boeing. What is it about aviation that brings out such widespread crony capitalism?

(From Reason)

Bilateral Open Skies agreements allow airlines from partnered countries to operate routes between their countries and restrict government interference. They opened international markets to U.S. carriers and greater competition. But Delta, American and United, along with their unions, have argued that the governments of Qatar and the United Arab Emirates are providing unfair subsidies and that their state-run carriers should have their U.S. routes frozen.

This is ridiculous. As my colleague Gary Leff, the author of the famous blog “View from the Wing,” tells me, “U.S. airline employment is at a long term peak. And Delta has no problem taking advantage of subsidies—fuel tax breaks in Georgia, subsidies for its oil refinery in Pennsylvania, and having moved pension obligations onto the federal Pension Benefit Guaranty Corporation in bankruptcy. Delta even shares revenue on routes across the Atlantic with Alitalia which had been subsidized by Etihad. Delta owns a stake in the most subsidized Chinese airline, China Eastern.”

“The issue,” he adds, “isn’t free markets versus subsidies but ‘subsidies for me but not for thee’ while lobbying the federal government to pick the pockets of American consumers despite U.S. airlines earning nearly half the world’s commercial aviation profits.”…

…Recently, Sen. Johnny Isakson—a Republican from Delta’s home state of Georgia—attached a provision to the tax reform bill that would impose a corporate tax rate on foreign carriers whose home country doesn’t have a tax treaty with the United States and isn’t served by an American carrier at least twice per week. That would have broken an international agreement that carriers pay no taxes on gross income they earn when flying into the United States in exchange for the U.S. airlines benefiting from the same treatment abroad.

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