What role — if any — can the federal government play to help the airline industry pull out of its tailspin? Three years after the post-9/11 multibillion dollar bailout of the airline industry, Congress is in no mood for a repeat performance.
“I don't think any bailout is going to come or financial assistance in the short term from Congress,” said Rep. John Mica (R- Fla.), Chairman of the House Aviation subcommittee “The money isn't there. There's not support for it. I know they're hit by high fuel costs, but so are all the other industries. So, they're going to have to do some additional cutting.”
Some lawmakers are even more adamant, saying this is not the time to turn back the clock on the 1978 decision to deregulate the airlines. Despite skyrocketing fuel costs, some airlines are making money.
“We have five legacy major carriers who have lost $2 billion in the last year and five start-ups, five low-cost carriers who have made $1 billion,” said Mica. “So, you can make money.”
Airline consultants say like it or not, bankruptcies will force the long overdue overhaul of industry cost structure.
“We have very high costs still and very, very low revenue,” said Darryl Jenkins, director of the George Washington University Aviation Institute. “This is not long-term sustainable. And over the next five years, we will always have at least one or more of the major airlines in Chapter 11. “
But the government cannot stay on the sidelines. A second Chapter 11 bankruptcy for US Airways puts at risk $900 million worth of federal loan guarantees — granted in the 2002 bankruptcy.
United Airlines, now operating under bankruptcy protection, wants to default on future pension obligations, which would put pressure on the government pension insurance system. The Pension Benefit Guarantee Corporation is already about $11 billion dollars in the red and has asked the court to block the move.
“At the end of the day, is it going to bankrupt the government? No,” said Bradley Belt, executive director of the PBGC. “But there is some risk that if we don't address this, that the American taxpayer is going to be called upon to bail out the pension insurance system, and that would be most unfortunate.”
Meanwhile the FAA does have a five-year flight plan for helping the airline industry — mostly through encouragement of infrastructure improvements to terminals and runways and the like. But that’s for the long-term. For the current financial turmoil hitting in the airlines industry, it is very much survival of the fittest.