The US presidential election on 5 November could determine much about the next four years for US airlines and aerospace manufacturers, leaving firms possibly facing major new policy shifts – or continuation of the status quo.
The outcome of the race remains very much up for bets, with Republican former president Donald Trump and Democratic vice-president Kamala Harris running neck and neck in major polls. What is clear is that the candidates would bring vastly divergent economic and regulatory priorities to the White House.
Harris is widely expected to continue along the path taken by the administration of president Joe Biden, who has staunchly backed Ukraine, taken a hard stance against industry consolidation and sought to move the USA away from fossil fuel, including by incentivising sustainable aviation fuel (SAF) and “clean” hydrogen – fuels airlines and aerospace manufacturers say are key to reaching carbon-reduction goals.
Trump has criticised the USA’s massive aid packages to Ukraine and threatened to roll back Biden’s envisioned clean-energy revolution, while calling for increased fossil-fuel production. He is expected to be more open to mergers and acquisitions, and has proposed a sweeping set of tariffs on imported goods.
Differences aside, observers say the airline and aerospace sectors can broadly expect political support from whoever wins, reflecting the industries’ importance to the US economy, physical presence in both Democrat- and Republican-controlled states and contributions to national security.
Both candidates have also already governed, meaning the aerospace industry has a decent idea about what to expect.
“I think people generally understand a Trump economy, and generally understand what a Harris economy could look like,” says aerospace analyst Alex Krutz with Patriot Industrial Partners. “It’s the first time in history that you can put them side by side to see what the priorities would be.”
ACROSS-THE-BOARD TARIFFS?
But the candidates’ policy priorities could have vastly different implications, perhaps none more than Trump’s proposal to slap 60% tariffs on imported Chinese goods and 20% tariffs on all other imports. The 45th president embraced tariffs during his first term, insisting the measures strengthen US industry and protect US workers. Whether Trump, if elected again, would actually impose sweeping new import taxes remains unclear, as are details about how such tariffs might be structured.
Such taxes would seemingly hit raw materials imported by aerospace and defence companies, driving up costs and possibly pressuring “US-based companies to source more materials domestically”, says Krutz. Affected imports might include titanium, nickel, steel and aluminium.
But Krutz doubts tariffs would otherwise significantly impact prime manufacturers like Boeing, Northrop Grumman, Lockheed Martin and RTX, because those companies produce most of their products in the USA. “Tariffs typically target lower-cost goods that are totally assembled overseas and imported” – products that generate “little to no US manufacturing value”, he says.
Analysts suspect other countries, including European allies and adversaries like China, would strike back with retaliatory tariffs of their own, possibly hurting demand abroad for US products, including Boeing jets.
“It would be very bad if implemented as advertised,” says aerospace analyst Richard Aboulafia with AeroDynamic Advisory. “Incredibly expensive. Very disruptive. And probably the end of the China civilian aircraft market for the US.”
New tariffs could inflame an existing US-China trade dispute, perhaps leading Chinese carriers to again stop receiving Boeing jets. Those airlines had halted 737 Max deliveries in 2019 due to the type’s grounding. But the pause lasted nearly five years, ending only in January – reflecting, analysts say, US-China trade relations having soured after Trump imposed tariffs on Chinese imports during his first term. Biden left most of Trump’s China tariffs in place and even slapped new tariffs on some Chinese products.
Aboulafia can envision new US tariffs encouraging a “de facto alliance between the EU and China”, saying, “these things have a way of spiralling out of control.”
How Trump’s proposed tariffs might affect Airbus is unclear. The taxes could theoretically apply to Airbus jets delivered to US carriers, or to imported components used by Airbus to assemble A220s and A320neo-family aircraft at its US manufacturing site in Mobile.
But analysts suspect Airbus, with help from US lawmakers, could secure exemptions freeing its products from new import duties. That is because the European company has a large US manufacturing footprint, including the Mobile site in Republican-leaning Alabama.
“Airbus did something smart when they built their presence in the southern and Republican part of the US,” says Aboulafia.
Also, Krutz notes that tariffs typically target products produced cheaper overseas to the disadvantage of US industry. That is not the case for Airbus jets, which tend to be priced competitively with Boeing products, says Krutz.
Airbus chief executive Guillaume Faury addressed Trump’s tariffs during the company’s third-quarter earnings call on 30 October, warning that US airlines would end up footing the bill.
“Tariffs – they go on our customers. It would put them in a difficult place of having an additional cost,” he says.
Faury adds that Airbus has experience navigating prior US-European trade wars, including years-long disputes over alleged aircraft-production subsidies adjudicated by the World Trade Organization.
“We are looking into the mirror because we have been in that situation before,” he says. “That is something that we would be able to manage.”
DEFENSIVE SHIFT?
US military procurement is primarily controlled by elected legislators. The president submits budget requests (which are typically heavily influenced by generals at the Pentagon) to both houses of the US Congress, which has the final say on spending matters.
Budgetary battles therefore typically play out between Pentagon top brass (including the president’s chosen secretary of defense) and lawmakers – with the president largely watching from the sidelines.
Regardless, Harris and Trump both appear supportive of a muscular American presence on the world stage, with the US military as the primary tool for achieving that outcome. As such, Pentagon spending is likely to increase regardless of who prevails on 5 November.
All 435 US House of Representatives seats, and 34 Senate seats, are also up for election on 5 November – and the results could shift spending priorities. Forecasting by Congress-focused media outlet The Hill gives Republicans strong odds of capturing control of the Senate from Democrats, while control of the House is almost a coin toss, with Republicans slightly favoured.
Should Republicans gain control of Congress, further aid to beleaguered Ukraine could be in serious doubt, with many party members – including Trump – expressing scepticism about Kyiv’s ability to prevail.
A Republican-controlled Congress also seems likely to throw more support to Middle East ally Israel, both militarily and politically. Democrats have become increasingly critical of Israel’s conduct in the bloody year-long war, which has expanded from Gaza into Yemen, southern Lebanon and Iran. That dichotomy could allow for a bipartisan compromise that sees additional support to both Israel and Ukraine.
During his time in office, then-president Trump pressured spendthrift NATO members, threatening only to honour treaty obligations if those countries brought military spending to the alliance’s target of at least 2% of gross domestic product.
That bluster, and the outbreak of Europe’s largest land war in nearly a century, produced a significant uptick in defence spending on the continent, with a record 23 of 32 NATO members now meeting commitments. The spending spree has been a boon for European and American defence manufacturers, with particularly high demand for long-range missiles, air defence systems and the US-made Lockheed F-35 stealth fighter.
A president Harris would likely continue the Biden administration’s support for developing advanced autonomous systems, and its strategy of using arms sales to pull potential overseas partners closer into the American orbit.
Trump might be less inclined to pursue such efforts, having previously shown scepticism about certain high-tech modernisation efforts. In 2019, then-president Trump criticised the US Navy’s use of a General Atomics-made electromagnetic catapult system on the service’s new Ford-class aircraft carriers – expressing a preference for the steam-driven launch system of older Nimitz-class ships.
Trump was also known to personally intervene on specific defence programmes during his first stint in the White House, and famously negotiated directly with Boeing over contract terms for the in-development VC-25B “Air Force One” replacement presidential jet. That programme has become a financial pit for Boeing, which will likely never see a profit from the two heavily-modified 747s, executives say.
The airframer tells FlightGlobal it is still working with the Pentagon to set a service entry date for the new presidential jets.
A second Trump term could see similar intervention into costly defence projects, including, perhaps, the enormously expensive F-35 stealth fighter programme. In recent months, Trump-aligned Republicans in Congress became increasingly vocal in criticising the Lockheed programme, including the company’s F-35 profits.
Republican congressman Matt Gaetz on 22 October announced a legislative resolution to declare Lockheed in breach of contract over the “numerous failures within the F-35 aircraft programme”. The bill, which carries no penalty and is unlikely to pass, cites issues related to certifying the F-35’s Technical Refresh 3 standard, below-target F-35 availability rates and $209 billion in cost overruns.
With the Pentagon set to make key decisions in the coming months – including those related to Northrop B-21 stealth bomber procurement targets, development of next-generation fighter aircraft and fielding of autonomous combat jets – the outcome of congressional races could be significant.
Although the USA began its “Pacific Pivot” under president Barrack Obama, Trump is credited with accelerating the shift. The USA could lean more heavily into countering China if Trump returns to 1600 Pennsylvania Avenue.
While having constrained budgetary influence, the president has wide authority over military operations, including authority to order troops into combat or to aid allies. Nowhere will the implications of that power be more evident than Ukraine, which has remained afloat with military and financial aid from the USA and Europe.
Harris, if victorious, is expected to continue Biden’s strategy of backing Ukraine with rhetoric and materiel. “We will be with you for as long as it takes,” vice-president Harris told Ukrainian President Volodymyr Zelensky on 17 February.
By contrast, Trump hedged when asked in September if he wants Ukraine to prevail, saying,
“I want the war to stop… I think it’s in the US’s best interest to get this war finished and just get it done.”
The USA has provided 49% of military assistance and 27% of financial contributions received by Ukraine during the nearly three-year war, according to the Brookings Institution. For that reason, Kyiv’s success may hinge substantially on choices made by American voters.
AIRLINE CONSOLIDATION
Who wins the White House also stands to significantly shape the US airline industry, possibly determining the success of further consolidation.
The implications could be particularly significant for budget-conscious consumers, as Frontier Airlines is reportedly considering reviving a plan to acquire rival ultra-low-cost carrier Spirit Airlines.
The Biden administration has taken a hawkish stance against airline tie-ups, while its Department of Transportation (DOT) has imposed measures intended to protect consumers.
Under Biden, the DOT has required airlines to automatically issue refunds after cancelling flights, and has fined carriers for operational breakdowns. Federal agencies also recently launched a sweeping inquiry into the competitive landscape of the US airline industry, focusing on consolidation, anti-competitive practices and labour issues.
Also during Biden’s term, the Department of Justice (DOJ) successfully sued to block JetBlue Airways’ attempted acquisition of Spirit and to dissolve JetBlue and American Airlines’ Northeast Alliance partnership. In both cases, a federal judge agreed with the DOJ that the deals reduced competition, violating antitrust laws.
Biden’s administration has not universally shot down consolidation. Both the DOJ and DOT declined to oppose Alaska Airlines’ acquisition of Hawaiian Airlines, a deal that closed in October.
Bloomberg analyst George Ferguson believes Harris, if elected, would continue Biden’s close scrutiny of airlines, saying, “I haven’t heard anything from the Harris camp that would dissuade me from thinking it would be pretty similar to the Biden administration.”
Ferguson thinks a Trump administration would “be a little more willing to allow consolidation of pricing power” and “a little more business friendly”.
Robert Poole, director of transportation policy at libertarian research group Reason Foundation, agrees Harris would likely continue with strict airline oversight, including a “very aggressive” antitrust stance.
“I would love to see easing off some of that, but I don’t see it as being likely,” Poole says. “[Harris] has basically explained that what she wants is a continuation… I don’t see any signs yet of breaking with that.”
However, troubles now roiling US low-cost carriers could persuade a Harris administration to take a more lenient approach to future mergers, such as a Frontier acquisition of Spirit. That is because Spirit has struggled to stay afloat since the DOJ scuttled its JetBlue deal, having recently laid off staff and slashed capacity amid rumours of a possible bankruptcy filling.
“It’s hard to say whether [regulators] would be more receptive now, if Frontier wanted to try again,” says Poole.
Ferguson thinks consolidation in the “lower end of the US airline industry” is likely under either administration. “You could maybe put an Alaska and a JetBlue together under a Trump administration, but probably not under a Harris administration,” he adds.
Poole is alarmed by the Biden administration targeting what it calls “junk fees”, otherwise known as ancillary fees, which airlines charge for once-included services like seat upgrades, checked baggage and in-flight meals. The DOT has issued rules specifying how such fees must be disclosed.
“Every US airline I know charges various fees that go beyond the ticket price, and they have played a very significant role in the overall viability of airlines, including ultra-low-cost carriers,” Poole says. “If that kind of thing continues, we may see constraints that, in my view, would not be consistent with the Airline Deregulation Act, which has democratised air travel in the United States.”
A second Trump administration’s airline-oversight stance is hard to read, says Poole. And predicting actual policies and regulations is tougher. “Candidates for president and vice-president can say a lot of things, but anything that requires legislation requires Congress – and that’s one safeguard,” he says.
Poole notes that Trump’s first administration formed “very good congressional committees”, with bipartisan support for a strong, minimally regulated US airline industry – to the benefit of consumers. “If regulations impose new costs on [airlines], they will certainly try to recover that in airfare increases,” he says. “Higher ticket prices will deter some trips from getting made.”
STILL GOING GREEN?
In recent years, the global airline industry committed to achieving net-zero carbon output by 2050. While no clear technological pathways exist to hit that target, airlines intend to get part of the way there by using more SAF and by adopting new technologies, possibly including hydrogen-powered aircraft. Over and over again, industry leaders have called on governments to help fund the transition.
The Biden administration responded with its SAF Grand Challenge, a plan to increase SAF production and usage to 3 billion gallons annually by 2030 and to 35 billion gallons annually by 2050.
Nikita Pavlenko, fuel programme lead at the International Council on Clean Transportation, calls the Grand Challenge toothless, saying the goals are widely considered unfeasible unless the US government starts requiring airlines actually use the fuel. Biden has not done so, and whether Harris would support SAF mandates remains unclear. A mandate under pro-fossil-fuel Trump seems less likely.
But Biden has taken steps to encourage SAF production. His so-called Inflation Reduction Act created a programme providing tax credits to SAF producers of up to $1.75 per gallon. (To qualify, the fuel must be deemed to emit at least 50% less life-cycle greenhouse gas emissions than petroleum-based jet fuel).
The current tax credit – known as “40B” – expires at year-end. A second similar credit – “45Z” – starts in 2025 but expires at end-2027. Those expirations have kept the credits from significantly incentivising SAF production, says Pavlenko.
Lawmakers have introduced a bill to extend the credit through 2037, but its likelihood of passing remains unclear.
While Trump has reportedly promised to roll back Biden’s climate initiatives, whether he would nix SAF credits is also uncertain, especially considering the measures enjoy support from powerful lobby groups.
Trump and Harris could also differ over the already thorny issue over what exactly qualifies as SAF for the purposes of the tax credit, says Pavlenko. Fuel made from used cooking oil does qualify, but biofuel produced from crops like corn and soy does not necessarily make the cut.
Airlines badly want crop-based SAF to qualify because they need far more SAF than used cooking oil can supply. The biofuel and agricultural industries are aligned with airlines.
The problem is, environmental groups say some crop-based fuels should be excluded because they provide no or little reduction in greenhouse gas emissions compared to fossil-based fuels.
In 2024, the US government took the middle ground, saying the current credit (which expires this year) can apply to crop-based fuels produced using certain carbon-reduction methods like carbon-capture technologies.
Regulators have not yet decided if crop-based fuels will quality for the 2025-2027 credit period.
Pavlenko imagines a Trump administration might be inclined to “relax some [SAF] eligibility constraints” – perhaps letting more crop-based fuels qualify – and that Harris might be a “little more strict”.
A tax credit for “clean hydrogen” production, also created by the Biden administration, is even more politically contentious. Several aviation manufacturers, including Airbus, are studying hydrogen-powered aircraft. But the carbon-reducing benefits of hydrogen heavily depends on how the fuel is produced.
“This one is potentially at risk [of] Trump… diluting the definition of what counts as green hydrogen,” says Pavlenko, noting that the fossil-fuel industry supports a “looser interpretation”.
