By Captain John S. Blonsick
Ironic that in the
summer of 2001, the Bush Administration declared that the airlines
were too vital to the national economy to allow even one major
airline to engage in a strike under the Railway Labor Act. But now
two major carriers are in bankruptcy facing possible Chapter 7
liquidation, two others are hovering on the brink of Chapter 11 and
there is almost no governmental action to troubleshoot this vital
national economic engine. Ticket prices are being set by start-up
carriers with little or no investment or overhead in the aviation
infrastructure while the majors with 70 years of investment and
overhead of mature companies are being left to the cut themselves
to the bone. Meanwhile, Federal taxes and skyrocketing fuel prices
are destroying any economic lift generated by passenger-filled
airplanes.
"What about the tax
policy imposed on airlines? We pay more taxes than the so called
"sin" industries; liquor and tobacco. In the 3rd quarter we paid
between $800 million and $900 million in taxes and lost $646
million. A 4.6% tax is imposed on the fuel we buy. This tax
originated to pay for building the national highway system.
Railways and steamship companies are exempt from this tax, but not
airlines." - Gerald Grinstein, CEO Delta Air Lines.
"Were it not for Exxon getting most of our money this year, we
would have been able to make some progress," – American
Airlines chief executive Gerard Arpey.
As ticket prices have dropped, taxes have increased over 100%
from 1997 through 2004 to almost half the cost of an airline
ticket. That's understandable in a sense, as revenues had been
increasing during the first half of that time period. But with
billions upon billions of dollars in losses after 9/11 has Congress
cut taxes on airline tickets? No. As the airlines hemorrhage
billions of dollars, the Republican Congress and White House
continue to suck the marrow out of their revenue stream with taxes
and fees. Burdens on the financial weight and balance sheet that
airlines cannot pass along to their customers at a profit because
of the limited pricing control in the industry. That 45-percent
drag results in an industrial stall. Combined with $50-a-barrel
fuel prices there is no extra thrust left to fly out of it and
avoid ground impact.
Has Congress or the President declared a tax holiday for the
airlines? No. Have they imposed a $20/ticket fuel surcharge since
the airline cannot do it themselves? $10? $5? No. Or a break on the
4.6% fuel tax? No. Has the ATSB been made fully available to
failing airlines? No. The first victims on the morning of Sept. 11,
2001 were the pilots and flight attendants - now the rest of flight
crews are being victimized by the US government in support of cheap
airfares, unsustainable fuel costs and continued taxation to fund
pork barrel projects and tax cuts. I am certainly willing to
contribute to my company's well-being but not to subsidize
artificially cheap airfares, pork-barrel politics and a trillion
dollar tax break deficit.
Congress just passed a $388 billion government-wide spending
bill laden with what Sen. John McCain touted as "one big fat
turkey." Local pork-barrel projects abound:
- $3.5 million for bus acquisition in Atlanta, GA
- $2 million for kitchen relocation in Fairbanks North Star
Borough in Fairbanks, AK
- $2 million to buy a former presidential yacht for a Navy
museum
- $1.5 million for a demonstration project to transport naturally
chilled water from Lake Ontario to Lake Onondaga
- $500,000 for the Kincaid Park Soccer and Nordic Ski Center in
Anchorage, AK
- $250,000 for the Country Music Hall of Fame in Nashville,
TN
- $200,000 for Fenton Street Village pedestrian linkages in
Montgomery Co., MD
- $100,000 for a municipal swimming pool in Ottawa, KS
- $100,000 for the Punxsutawney Weather Museum in
Pennsylvania
- $80,000 for the San Diego Gay, Lesbian, Bisexual, and
Transgender Community Center
- $75,000 for the Paper Industry International Hall of Fame in
Appleton, WI
- $35,000 for the Alabama Sports Hall of Fame
- $25,000 for fitness equipment for the YMCA in Bradford County,
PA
Whatever happened to
local funding for local initiatives? Citizens voting for bond
initiatives and civic funding efforts for such localized specific
projects? Quoted in the Arizona Republic, "I feel like Bill Murray
in Groundhog Day," [Rep. Jeff Flake, R-AZ] said of his opposition
[to the bill]. "Every year, it's the same thing -- Congress passing
spending bills loaded with pork projects. In fact, this year, and
I'm not joking here, Congress spent $100,000 for the Punxsutawney
Weather Museum in Pennsylvania."
Is that what airline employees’ pay cuts are indirectly
subsidizing through the 45% tax on airline tickets? The
Punxsutawney Weather Museum in Pennsylvania or one of the other
pork barrel projects stuffed into the budgetary turkey?
As the $800 billion deficit mounts in the face of Republican
bread and butter issues like tax cuts, the Republican-controlled
House passed the budgetary measure on a 344-51 vote; the
Republican-controlled Senate 65 to 30. "The cost of making the cuts
permanent is more than $1 trillion, a daunting figure in an age of
record budget deficits. But Bush is likely to get much of what he
wants with larger Republican majorities in both the House and the
Senate," according to an AP wire service story. If Congressional
Republicans can find the time to fund their own local pork-barrel
projects, why can’t they find time to prevent the collapse of
the nation’s airline industry?
Does the blame lie
solely with Republicans? No. But they are the majority party in
Congress and the White House so they also must shoulder the
majority of the responsibility for governmental inaction. As
airline employees watch their pay cuts spent on the Punxsutawney
Weather Museum in Pennsylvania and numerous other pork barrel
projects, Congress and the White House allow the 45% airline ticket
tax burden and $50-a-barrel fuel prices to destroy the airline
industry without lifting a finger to help. If indeed Bush is likely
to get much of what he wants with larger majorities in both the
House and Senate, then why couldn't he and they alleviate the red
ink within the airline industry with some simple tax and fuel
surcharge relief to the airlines? Maybe because it would make that
trillion dollar national debt even larger? Better to hammer down
union airline employees contracts instead.
Captain John S. Blonsick, former naval aviator, currently an
international-category pilot with a major airline, also served
three years as an elected representative with the Air Line Pilots'
Association.