- Airlines get flexibility on mandated service
- FCC decision threatens GPS
- Which federal entity could mandate masks on planes?
- The airport grants debacle
- Contract towers still far more cost-effective
- Marc Scribner joins the Reason team
- News notes
- Quotable quotes
Airlines Get DOT Reprieve on “Maintenance of Service”
My recent Reason Foundation commentary, “Central Planning of Airline Service is a Bad Idea—Even if Airlines Took Bailouts”, criticized the U.S. Department of Transportation’s (DOT’s) hard-line interpretation of the flexibility provided by Congress in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. That stimulus bill authorized grants and loans to airlines, so long as they continue serving all markets on their schedules through September 30, to the extent “reasonable and practicable.” That language did not seem to be reflected in the widespread DOT denials of initial waiver requests from legacy and low-cost carriers alike. On April 15, Aviation Daily reported that “U.S. DOT Denies First Batch of Service Exemption Requests.” This decision led to numerous planes flying essentially empty to places hardly anyone wanted to go.
I was mystified by this ham-handed response until I got an email from a former senior DOT official who told me that “the White House ordered DOT to establish a program for maintaining the service across the board. They might well have done it differently if left alone.” He added that the end result was both “ludicrous and predictable.”
In Senate testimony, Airlines for America CEO Nick Calio noted, “The cost associated with operating nearly empty flights to communities with little or no demand significantly exacerbates air carrier liquidity” (as well as filling the air needlessly with more CO2). The groundswell of negative commentary seems to have led to a rethink. Politico reported that on May 12, DOT issued a notice to carriers that it will use a “systematic process” to allow airlines to reduce the number of points they must serve as recipients of CARES funding. Airlines were given until May 18 to submit prioritized lists of airports they wished to stop serving.
One of the first to act was Delta, which announced that it would consolidate service at its metro area hubs, meaning it is suspending service from 10 secondary airports within an hour’s driving distance from one of its hubs. In Delta’s case, that means Boston will handle people who can drive from airports at Manchester (NH) and Providence (RI). In Los Angeles, with service concentrated at Delta’s hub at Los Angeles International Airport (LAX) it is suspending service at Long Beach and Burbank. And Delta has requested permission to drop another nine secondary airports from its near-term schedule. JetBlue is likewise consolidating service at Boston, Los Angeles, New York (JFK), San Francisco, and Washington Reagan.
Forbes aviation commentator Dan Reed speculates that major carriers like Delta may not return to some of those secondary airports as commercial aviation recovers during the next few years. If that happens, there will be predictable political pressures to force financially-recovering airlines to resume such service. That would be a huge mistake, especially if one or more of the major airlines is unable to survive the COVID-19 recession. What the country will need more than ever in the economic recovery is revived competition and “secondary” airports were what gave the original upstart competitor, Southwest, its start. In more recent years, as Southwest has become a major carrier, the new generation of ultra-low-cost carriers (Allegiant, Frontier, and Spirit, in particular) have moved heavily into secondary and tertiary airports, usually bringing them point-to-point service that bypasses congested hubs. These airlines will be more motivated than the majors to restore service to smaller airports as the industry recovers and this market process should not be second-guessed by legislative micromanagement.
FCC Decision Threatens All Users of GPS
On April 15, by a unanimous vote, the Federal Communications Commission approved a long-debated proposal from Ligado Networks to operate what it terms a 5G telecommunications service but which poses a serious interference threat to the vast array of public and private-sector users of GPS.
The military uses GPS everywhere, and so do other federal, state, and local service providers, including public safety services like paramedics, police, and fire departments. Railroads depend on GPS for their new Positive Train Control system. The Federal Aviation Administration’s (FAA’s) NextGen air traffic control modernization program is heavily reliant on GPS. We all have GPS receivers in our smartphones. It is ubiquitous in our 21st-century economy.
Here is the fundamental problem. GPS (like related services in Europe, Russia, Asia, and elsewhere) operates from a network of satellites in orbits 12,500 miles up. Its signals are very weak, and to get accurate locational information on the ground you must be able to receive signals from at least three satellites at once. Because the incoming signals are so weak, they are vulnerable to interference from users operating in adjacent portions of the radio spectrum. Terrestrial signals are hugely more powerful than the weak GPS signals, and that is unlikely to change for a very long time. Ligado’s system will operate in spectrum very close to that of GPS.
The widely-accepted international approach to preventing such interference (which has been likened to someone blasting out rock music next to a library) is the Interference Protection Criterion, requiring a one-decibel difference between the GPS signal and surrounding interference. Inside GNSS, like other sources, reported, “That margin will largely disappear under the FCC’s decision.” One writer for that publication wrote that FCC’s new standard appears to be “broadcast until you break it.”
Ligado, formerly known as LightSquared, has been trying to obtain spectrum close to the GPS bands for more than a decade. Its current plan calls for it to interact with the Defense Department and other federal agencies over potential interference with their GPS uses, and potentially to pay for replacing equipment that is affected by Ligado interference. But state and local government users have no such “protection,” nor do millions of business and personal users, including airlines and all other aircraft operators using GPS.
With numerous federal agencies, including the Department of Defense, Department of Homeland Security, NASA, and the Weather Service strongly on record opposing Ligado’s plan, how did it achieve the clout to gain a unanimous FCC decision?
It appears that the White House, Justice Department, State Department, and the Commerce Department are all on board for the federal government to promote 5G telecommunications, partly out of fear of China becoming the dominant 5G player.
The Senate has held a hearing at which senior DoD officials spoke against the FCC decision. And Rep. Peter DeFazio (D, OR), chair of the House Transportation & Infrastructure Committee, and Rep. John Garamendi (D, CA), chair of the Armed Services Committee, have expressed strong opposition to the decision. Both have been leaders in seeking federal action on a full-fledged GPS backup system, which is long overdue. And on May 15, a bipartisan group of 32 U.S. Senators sent a letter to the FCC urging it to reconsider its decision.
This was a terrible decision, and it should be reversed.
Which Federal Policymakers Can Require Airline Passengers to Wear Masks?
By Marc Scribner
In recent weeks, airline employee unions and their allies in Congress have stepped up calls for a federal requirement that airline passengers wear masks in an effort to slow the spread of COVID-19. They have suggested that this action be undertaken by the Federal Aviation Administration (FAA) or Transportation Security Administration (TSA). Universal passenger masking may be smart policy, with most U.S. carriers already requiring that their passengers wear masks on their aircraft. However, neither the FAA nor the TSA has been authorized by Congress to issue and enforce a passenger mask rule.
In the case of the FAA, mask-mandate supporters have cited a 2006 notice in the Federal Register in which the FAA declares itself to be a “public health authority.” This is not the slam dunk proponents claim it to be since the 2006 notice from the FAA was about steps taken by the agency to comply with federal health privacy rules to ensure the FAA’s medical research personnel could maintain access to health data necessary for research purposes. It had nothing to do with any exercise of public health police powers.
With respect to the TSA, its authorities revolve around protecting transportation networks from violent threats from persons carrying weapons, explosives, and other destructive substances. Making matters more complicated is that federal courts in the past have required TSA to publish regulations that clearly identify screening practices in advance to passengers who must then comply, and that those screening rules comport with the agency’s statutory anti-terrorism mandate. Universal passenger masking simply doesn’t fit the bill.
Similarly, calls from the White House and Airlines for America for the TSA to check passenger temperatures during screening run into the same problem. Airports, however, could likely enforce mandatory masking and temperature screening policies in their passenger terminals without violating federal grant assurances, according to FAA guidance from late March—and especially if airports merely mirror policies imposed by state and local public health authorities.
In a telling omission, federal masking mandate advocates have pointed to precisely zero federal statutes, regulations, or court decisions supporting their claim that the FAA and/or TSA should issue and enforce a mandatory passenger mask-wearing rule. In contrast, the Department of Transportation’s Office of the Secretary of Transportation (OST) likely does possess this power under its broad “safe and adequate” interstate air transportation authority, which it so far has not exercised.
The OST’s lack of action to date may reflect a belief that a rule on passenger masking is redundant given that carriers are already taking these actions on their own. The OST may also be concerned that locking in a hard rule today may make it more difficult for carriers and the Department of Transportation to react quickly to new information on COVID-19.
This second rationale has been raised by the International Air Transport Association (IATA) and Airports Council International (ACI), who worry that overly prescriptive coronavirus countermeasures from governments will prevent rapid and effective future responses as public health experts learn more about the disease. It should be said that the OST, like the FAA and TSA, possesses no general public health expertise. But strangely, none of the increasingly vocal federal masking mandate supporters have pointed to OST’s obvious authority while instead pointing the finger at agencies that lack this clear power.
Most troubling is that this call has come from some senior members of Congress who sit on transportation and homeland security committee leadership. They ought to know, more than most, which authorities they have granted to executive branch agencies. As members of Congress, they are also in a unique position to pass legislation requiring airline passenger masking. Indeed, Section 190505 of the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act passed by House Democrats would, among other things, “require each passenger and cabin crew member to wear a mask or protective face covering while onboard an aircraft of the air carrier” for the duration of the presidential national emergency declaration on COVID-19.
Locking in a hard mask rule through legislation that may persist beyond its usefulness—if it is even useful to begin with—may be unwise, but it would at least be lawful. If Congress wishes to proceed down this path, that would be its prerogative as the branch of government that writes laws. What members of Congress absolutely shouldn’t be doing is demanding executive branch agencies to unlawfully rewrite the laws of Congress.
How Did CARES Act Airport Grants Get So Bollixed Up?
“Marry in haste; repent at leisure” has its counterpart in Congress: Legislate in haste, repent maybe someday?
Responding to lobbying by airport trade associations, and members of Congress with airports in their states and districts, Congress included $10 billion worth of airport grants in the bipartisan $2.3 trillion CARES Act signed by President Trump. But since airports come in all shapes and sizes, somebody had to figure out how do divvy up the $10 billion. Both houses had proposed formulas, but in the haste to get the measure enacted, the poorly thought-out formula from the Senate Appropriations Committee was used.
The result has been many headlines such as “Some U.S. Airports Hit CARES Act Jackpot, Others Cry Foul” and “Tiny Airports Rake in Big Cash After Botched Stimulus Formula.” The two best explanations I’ve seen were Sam Mintz’s Politico piece “FAA Scrambling to Fix Congress’ Faulty Airport Stimulus Grant Math” and Jeff Davis’s Eno Transportation Weekly assessment, “FAA Distributes $9.1B in Airport Grants; Formula Disproportionately Benefits Airports with Heavy Debt or Reserves.”
Why Senate appropriators would reward airports with high debt is a mystery, but that seems to be part of what happened. Instead of just making the grants proportional to annual passenger enplanements (except for general aviation airports, which were handled separately), the bill created two large subsets of the $10 billion: $3.7 billion would be allocated based on annual enplanements and another $3.7 billion based on the ratio of an airport’s unrestricted cash reserves to its debt service. Due to the second category, Davis shows that Atlanta (52 million enplanements) got 3.75 percent of the total grant amount, while Washington Dulles (with only 11.6 million enplanements) got 1.59 percent of the grants. So the ratio of grants to enplanements was 1.23 for Dulles but only 0.65 for Atlanta. The average large hub had a grant/enplanement ratio of 0.76.
Things got even weirder when it came to small hubs and non-hubs. Small hubs Sioux Falls (SD) and Wilmington (NC) ended up with a grant/enplanement ratio of 4.22, compared with the average small hub at 1.50. In the case of Sioux Falls (and some 55 other small and non-hubs) the funding formula called for dividing cash reserves by a debt amount of zero. Tilt! FAA decided in those cases to simply give each no-debt airport a flat amount of $17.56 million. That ended up with such situations as Devils Lake Regional Airport in North Dakota is getting enough money to cover 50 years of operating expenses. West Yellowstone Airport in Montana is getting money to cover 28 years of expenses and general aviation airport Merrill Field in Alaska is getting 9.4 years’ worth of operating expenses. Meanwhile, most large and medium hubs got enough to cover 3 to 6 months of operating expenses.
FAA points out that it has not immediately handed out the money called for by the Senate formula; airport sponsors must first file applications to request it. With the formula embedded in legislation, and Congress unlikely to pass any bills in the near term, FAA appears stuck with having to make up whatever wiggle room it can. Things would have been a lot simpler had Congress gone with the House formula, based almost entirely on annual enplanements.
Contract Towers Still More Cost-Effective Than FAA-Run Air Traffic Control Towers
On April 28, 2020, the DOT Office of Inspector General (OIG) released its latest assessment of the 38-year old FAA Contract Tower Program, under which non-radar towers of various activity levels are operated by FAA-certified tower operating companies. The “results in brief,” as OIG always begins its reports, are that contract towers cost significantly less to operate than FAA-run towers with similar traffic levels and runway configurations and are at least equivalent in safety. (Report No. A202028) This is comparable to the findings of at least six previous Inspector General reviews of this program.
Contract towers began in 1982, as part of the Reagan-era DOT effort to restore and rebuild air traffic control services in the wake of the illegal strike by controllers (which resulted in the majority of them being fired when they refused to return to work). It began with only five “level 1” towers and had grown to just 27 by 1993. With support from the Clinton administration, Congress expanded the program significantly. Today there are 248 contract towers in operation in 46 states, operating at large general aviation airports and small air-carrier airports.
Contract towers cost significantly less for several reasons. First, their average staffing is lower than in comparable-activity FAA towers. Second, the companies pay controllers somewhat less than FAA controllers, but there seems to be no problem of finding licensed controllers who prefer to work in the private sector—including former military controllers and others who are above FAA’s mandatory retirement age but don’t want to stop working traffic.
The naïve expectation is that lower staffing and pay would compromise air safety at contract towers. But the study finds that safety levels at contract towers are, if anything, better than those at comparable FAA towers, as figures in this OIG report make clear. For example, the FAA towers in their sample averaged 8.24 controller-involved risk analysis events per million aircraft handled, compared with 1.08 per million for the contract towers. Still, in its summary OIG puts the difference this way: “We do not believe the difference between these numbers and those of FAA’s towers is meaningful because, among other reasons, the numbers of safety-related events across the [National Airspace System] were very low relative to the total number of flights.” Yet this safety advantage for contract towers has remained the finding of every OIG audit dating back to 1998.
Another way the report soft-pedals the extent of contract towers’ superior cost-effectiveness is its presentation of the cost savings. There are several ways one can report cost comparisons. Previous OIG reports tended to list the difference in cost between a typical FAA tower and a typical contract tower, with a focus on the dollar amount, not the percentage savings. For this article, I only went back to the 2012 report, which reported a typical $1.5 million per year saving for each contract tower, but did not directly answer the question: How much more-costly is a given tower if run by FAA instead of a contractor? The answer in 2012 was 3.77 times as costly.
For the current report, OIG has analyzed all 248 contract towers and their 103 FAA counterparts, organized into four groups based on traffic levels and runway configurations (Table 2 in the report). Later on, in Table 5, it lists the average cost per aircraft handled for FAA and contract towers in each of the four groups. For example, in Group 1 (the towers with the highest flight operations per hour) the average FAA cost (including overhead) is $29.74 per aircraft, while the contract towers average $10.50. That means the average FAA tower now costs 2.8 times what the average contract tower costs, but that number does not appear. Instead, the table reports that the contract tower uses “64.7 percent less resources” than the FAA tower. That sounds far less dramatic than the FAA tower costing nearly three times as much. The ratio for Group 2 is 3.1 times the cost for the FAA tower, while Group 3’s result is 1.95 and Group 4 is 1.91. Since there is a different number of towers in each of the four groups, I calculated the weighted average, which worked out to the average FAA tower across the groups costing 2.24 times as much as the average contract tower.
By the way, for many years the controllers’ union, the National Air Traffic Controllers Association (NATCA), under previous leadership, waged both a propaganda campaign and a legal battle against contract towers. After they eventually lost the legal battle—and elected much better leadership—NATCA came to terms with the program and has succeeded in unionizing some of the contract towers. I’m sure the program’s proven record of providing more bang for the buck has meant that more small airports have control towers today than would be the case had the program not been implemented.
Marc Scribner Joins Reason Transportation Team
I am pleased to announce that Marc Scribner, who authored the pieces on airlines and masks in this newsletter, has joined Reason Foundation as a senior transportation policy analyst. A graduate of George Washington University in economics and philosophy, Marc spent more than a decade at the Competitive Enterprise Institute in Washington, DC. His work there included infrastructure investment, transportation safety and security, regulatory policy, private finance, and emerging technology such as autonomous vehicles. Marc will be writing policy studies and contributing articles to this newsletter and the Surface Transportation Innovations newsletter. Marc’s aviation policy work at CEI included air traffic control policy reform and Passenger Facility Charges.
New Report Documents Aviation Privatization and Public-Private Partnerships
Reason Foundation has released the first three chapters of its Annual Privatization Report, which examines trends in privatization and public-private partnerships (P3s). My report on aviation documents the ongoing global trend toward airport privatization, which these days consists primarily of long-term P3 leases. The U.S section discusses the failure of a several-years effort to lease Lambert Field St. Louis, and the growing use of P3s for terminals, consolidated rental car facilities, and other components of airports. Also included is an update on corporatization of air navigation service providers (ANSPs).
Corrections to April Issue
Two errors crept into last month’s issue. In the article on federal aid to airports in the wake of COVID-19 lockdowns, an incorrect figure was given for the amount the federal government netted on the post-9/11 warrants it exercised after the airlines recovered. The correct number is $330 million, not the $130 million stated in the article. And in the quotable quote from Andrew Charlton, I failed to spot a typo, specifically the word “un-unify.” His correct sentence was, “That would unify en-route and terrestrial slots.” I apologize for these errors.
Aerion and CANSO Providing New Data on Flight Activity During Pandemic
CANSO, the global association of ANSPs, and Aireon have teamed up to provide global data on air traffic volume changes due to the coronavirus pandemic and the initial results are dramatic. While passenger aircraft traffic has plummeted (from mid-January to mid-April), cargo air traffic decreased by only 4 percent. Overall, there was a 74 percent decrease in average daily flights, and a 72 percent drop in-flight hours. Regionally, flights were down 91 percent in South America, 89 percent in Europe, 88 percent in Africa, 87 percent in the Middle East, and 64 percent in North America.
Added London Runway: Heathrow Maybe No, Gatwick Maybe Yes
The potential for increased runway capacity to serve the greater London area has changed in recent months. First, the plan that parliament had approved for Heathrow to add a long-planned third runway was turned down by the country’s Court of Appeal (though Heathrow Airport is appealing the decision). But in early May, Gatwick Airport won airspace approval from the Civil Aviation Authority to use its northern runway for landings and takeoffs, rather than only as a backup facility. The decision means that owners Vinci Airports and Global Infrastructure Partners can move forward with the planning process.
Free London Heathrow Slots Produce a Scramble
On the rare occasions when a slot at Heathrow becomes available for sale, the price can be eye-watering. Last year, Will Horton reports for Forbes.com, Air New Zealand sold one slot pair (landing and takeoff) for $27 million, and Oman Air bought another one for $75 million. But occasionally UK competition policy forces an airline to give up a few slots—and those are made available at no charge. Would-be acquirers will make their case to the government’s Competition and Markets Authority, which will somehow decide whose case best increases competition. JetBlue, seeking its first-ever trans-Atlantic service will be facing off against Delta which has only 1 percent of Heathrow slots today.
Airways New Zealand and Nav Canada Reduce Service at Small Towers
To cope with greatly reduced flight activity and revenue, two leading ANSPs have made similar decisions: to reduce or eliminate control tower services at some small airports. In Nav Canada’s case, the decision suspends overnight service at 18 small towers and flight service stations, while retaining 24-hour weather information and communications with pilots during all phases of flight. In New Zealand, the ANSP’s decision to stop tower services altogether at seven regional airports has led to a discussion of legislation to permit a competitive market in control tower services.
ADS-B Deadline in Europe Postponed Again
The twice-previously-extended deadline for most aircraft based in Europe to be equipped with ADS-B/Out has been postponed for the third time. The European Commission has released an amended regulation, extending the deadline from June 7 to December 7. This applies only to new-built aircraft. Those with airworthiness certificates issued prior to Dec. 7, 2020, actually have until June 7, 2023, to equip with ADS-B, but must file a retrofit plan by Dec. 7 of this year. So obviously, ADS-B will be far from universal in European airspace for several more years.
Eight Companies to Develop Drone ID Requirements
FAA has selected eight companies to devise technology requirements for the agency’s remote-ID mandate for small drones, to be managed by UAS Service Suppliers (USSs). The winning companies are Airbus, AirMap, Alphabet Wing, Amazon, Intel, OneSky, T-Mobile, and Verizon Skyward. Once implemented, the regulations will call for small drones to report their identity and location to the ground, via either directly broadcasting to ground-based receivers or via the cellular network. When the final regulation is published, FAA will accept applications from companies to become Remote ID USSs.
Hiroshima Airport P3 Lease Delayed
The COVID-19 pandemic has led to delays in information requested from the two semi-finalist teams to take over the operation and management of the Hiroshima Airport. The companies’ next submission has been delayed from April 2020 to July, setting back the entire schedule. Under a 30-year P3 lease, the winner will acquire the existing terminal building company, and control of the runway from the government of Japan. Completion of the process is now scheduled for July 2021.
Eurocontrol and Aireon Sign 10-Year Agreement
Space-based ADS-B provider Aireon has signed an agreement with Eurocontrol to provide expanded data, not only from the 4.4 million square miles territory of the agency’s 41 member states but also from air routes extending six flight hours and 3,000 nm beyond those borders. The information will be fed into Eurocontrol’s enhanced tactical flow management system (ETFMS) to make it more accurate. Especially useful will be real-time information on incoming flight hours before they reach Eurocontrol borders.
GMR Wins New Airport Concession in India
GMR Airports has won a 40-year P3 concession to transform an Indian naval airfield into a new commercial airport in Bhogapuram. The new airport will have a capacity of 6 million annual passengers, compared with the 2.75 million handled by the civilian portion of the navy base last year. Since February 2020, GMR has been 49 percent owned by Aeroports de Paris, the world’s largest airport company, by annual revenue.
French ANSP Implementing Curved RNP Approaches
DSNA, the ANSP of France, is introducing curved approaches at selected airports where straight-in precision landings are not possible. It is using Required Navigation Performance-Authorization Required (RNP-AR), which permits curved precision approaches to such runways for planes equipped with the required technology and whose crews have been trained for this kind of approach. Due to various limitations, DSNA currently estimates the technique will be applicable to only six or seven of the 160 French runways it controls.
New Berlin Airport to Open October 31st—Really
After decades of delays in its development, the Berlin-Brandenburg International Airport is now scheduled to open on Oct. 31, 2020. The apparently final hurdle was approval by the local building authority, which was recently granted. The airport’s new terminal has been developed on the site of the former East German airport at Schonefeld, outside the city. It will replace the existing Tegel Airport in the city. The new airport will also be known as the Willy Brandt Airport.
TAV Buying Kazakhstan’s #2 Airport
TAV Airports, based in Turkey, has signed an agreement with the government of Kazakhstan to buy 100 percent of the Almaty International Airport for $415 million. Its investment partner is VPE Capital. Almaty is the largest city in fast-growing Kazakhstan, responsible for 20 percent of the country’s GDP. The airport handled 6.4 million passengers in 2019, up 13 percent from the previous year. TAV Airports is a member of Groupe ADP, which owns and operated the three Paris airports and many others worldwide.
“There is reason for significant concern that the FCC’s approval of the Ligado application could lead to widespread interruption in essential GPS-dependent services. GPS is used daily by Americans for all forms of transportation, both passenger and freight, in cars, trucks, buses, planes, rail, and ships, as well as modern emergency response systems. GPS is the invisible utility we all take for granted, and the Federal government has a duty to public safety to ensure that GPS remains accurate and available.”
—Diana Furchtgott-Roth (Deputy Assistant Secretary for Research & Technology, U.S. DOT) in Bill Carey, “Drive to 5G Threatens GPS After FCC Ruling,” Aviation Week, May 4-17, 2020
“Improvements in high-definition digital surveillance technology, sensors, data transmission links, data-processing systems, situation displays, and cyber-resilience will undoubtedly see the industry increasingly moving towards Remote Digital Towers (RDTs). In fact, it will not be a surprise if today’s on-site control towers will one day become viewing attractions for passengers and tourists alike. . . . ICAO’s Global Air Navigation Plan encourages states to implement RDTs where there is a positive business case with operational benefits. Indeed, there are many benefits to RDTs. They occupy a smaller footprint, cost less, are technically highly effective, and could be more resilient and secure in comparison to a conventional control tower.”
—R. C. Raman (ACI World), “Remote ATC Towers and the Changing Airport Landscape,” International Airport Review, May 12, 2020
“As airlines ask for bailouts, government influence will grow. Lufthansa is expecting to reach a €10 billion rescue deal with the German government in coming days and has tried to keep state power at a minimum, with no success. Berlin will get two seats on the board of directors and a large minority stake. But the stronger role government will play in running airlines is only part of the problem. As airlines agree to rescue deals now, they are adding massive debt, sometimes at high interest rates as governments seek to justify the use of taxpayer money. Ultimately, the help governments proffer today could be a good financial deal for them tomorrow. By contrast, airlines will suffer from the burden of limiting their ability to invest in new aircraft—the opposite of the environmental targets governments are setting.”
—Helen Massy-Beresford and Jens Flottau, “The Downsides of European Government Bailouts,” Aviation Daily, May 8, 2020
“There is, of course, a sensible option, but it will take foresight, courage, and leadership. Turn your back on 1944; turn your back on rent seeking. Stare down the job loss threats; it is not as if treasuries are not going to pay for the damage anyway. Let the airlines go through the pain of reshaping and reinventing themselves, or if that is too difficult—ciao Alitalia—let others come into the market. The barriers to entry will never be lower. There are aircraft, there are crew, there are slots, and there are gates available. For the existing carriers, a long period of little or no demand is an ideal time to reshape and redesign. Refined, reformed, and reimagined aviation—yes, this must include the airports and the ANSPs—demanding new, greener outcomes. It is a far, far better thing . . .”
—Andrew Charlton, “A Tale of Three Cities: State Aid in a Time of Revolution,” Aviation Intelligence Reporter, May 2020