US airline lobby group Airlines for America has provided details about the US airline industry’s request for more than $58 billion in government aid and billions more in tax breaks.
The group, as previously reported, has asked for $50 billion in support of passenger airlines. But it also requests $8 billion for cargo carriers, and tax breaks from a fund that generated almost $16 billion in fiscal year 2018 revenue.
The $58 billion is about three times the $18.6 billion in support the US government offered airlines after the 11 September 2001 attacks. (Adjusted for inflation, the package comes to about $27 billion in today’s dollars, according to the US Bureau of Labor Statistics Consumer Price Index.)
The 11 September support package included $5 billion in compensation for losses stemming from the airline grounding, and $10 billion in available loans and other financial support. Airlines took only $1.6 billion in credit assistance, according to think tank American Action Forum.
The industry’s latest request has already generated criticism from some observers who fault airlines for making significant stock buybacks recently. It comes in response to a coronavirus-driven falloff in travel demand that Airlines for America describes as a fundamental industry crisis.
US President Donald Trump has already expressed support for providing some form of “help” to airlines, though details remain unknown.
The group’s aid request specifically calls for government grants totalling $29 billion, including $25 billion to passenger airlines and $4 billion to cargo carriers.
The grants, requested of the US Department of the Treasury, would “compensate for reduced liquidity… attributable to the novel coronavirus”, says the group.
Airlines for America also requests the US Federal Reserve provide zero-interest loans worth $29 billion to the industry, including $25 billion in loans to passenger airlines and $4 billion in loans to cargo carriers.
Additionally, the trade group requests the government to rebate federal excise taxes by airlines into the Airport and Airway Trust Fund in the first three months of 2020.
Likewise, the group requests the government temporarily repeal taxes they must pay on passenger tickets, cargo and fuel through the end of 2021.
“The process should be simple, straightforward and streamlined,” Airlines for America says. “Participation should be open to all carriers, no carrier shall be required to collateralise any instrument and the particular instruments purchased or guaranteed should be structured so as to expedite the participant’s ability to re-access the private capital markets” as quickly and practically as possible.
Federal excise taxes paid by airlines in 2019 included a 7.5% tax on passenger ticket sales, domestic flight segment taxes of $4.30 per passenger and international air transport taxes of $18.60 per passenger, according to FAA documents.
Airlines also paid 4.3 cents per gallon in fuel taxes, and cargo airlines paid a 6.25% tax on prices paid for cargo or mail transportation. General aviation users also pay fuel taxes.
In fiscal year 2018, the Airport and Airway Trust Fund collected $15.8 billion in aviation excise taxes from all users, according to the FAA. That includes $10.5 billion in passenger air travel taxes and $4 billion for the use of international facilities, FAA documents show.
Some critics are already faulting the industry for requesting government assistance after spending billions of dollars on stock buybacks in recent years, and after implementing practices and policies some view as consumer-unfriendly. One Bloomberg report says airlines spent 96% of free cash flow in the last decade on stock repurchases.
Airlines for America did not immediately respond to a request for comment about such criticism.
Airlines for America says the coronavirus crisis “hit a previously robust, healthy industry at lightning speed and we remain concerned that the impacts of this crisis will continue to worsen”.
“US carriers are in need of immediate assistance as the current economic environment is simply not sustainable,” the group adds, noting US airlines employ 750,000 people and supports 10 million jobs.
