Last updated: 02:48 PM ET, Tue April 14 2015

Forbes: U.S. Airlines Have Paid More to Government Than Received

Airlines & Airports | Rich Thomaselli | April 14, 2015

Forbes: U.S. Airlines Have Paid More to Government Than Received

As the debate between the three major U.S. airlines and the three big Middle East Gulf airlines rages on, every week brings a new twist and turn.

This week? In a Forbes column written by Ted Reed, an airline industry analyst since 1989, the magazine points out that U.S. airlines have paid more back into the U.S. government than it has received.

Reed’s arguments came in reaction to last week’s release from the Business Travel Coalition – and backed by the U.S. Travel Association – in which a never-published, 16-year old Congressional Research Service report was unearthed that showed U.S. airlines received $155 billion in government subsidies between 1918 and 1998.

This, the two travel advocacy groups said, refuted the argument by American, Delta and United airlines that Emirates, Etihad and Qatar airlines have received $42 billion of their own in subsidies from their respective governments over a 10-year period.

The three U.S. carriers, backed by several industry unions, got their wish on Friday when the Obama administration said it would review the claims and perhaps revisit the Open Skies Agreement – an agreement that, the U.S. airlines say, has been taken advantage of by the Gulf carriers who have skewered the market on international routes.

Reed balances his argument by noting that the domestic airlines have a valid argument against their Middle East counterparts. Nonetheless, he pointed out where a majority of that $155 billion received in subsidies over 80 years went.

Back to the government.

“Of the $155 billion in spending through 1988 outlined in the report, the vast majority, $140 billion, was spent by the aviation trust fund that supports Federal Aviation Administration spending," Reed said.

The (Congressional Research Service) report does not mention that since 1971, U.S. airlines and their passengers have contributed about $247 billion to the fund, according to Federal Aviation Administration historical data.

The airlines and their passengers today contribute about $10 billion annually to the fund, which currently holds a surplus of about $13 billion. The rest has been spent.

In other words, the U.S. airline industry generally pays for what it gets from the government.”

Reed also notes that the U.S. airline industry began with subsidies from the government who contracted these airlines to begin more rapid mail service. But rather than emulate the same model, he wrote, Gulf countries have simply pumped billions into start-up airlines with no regard for the money involved.

“Please don’t try to tell me that’s the same thing as helping to fund a risky start-up venture that used tiny aircraft to pick up mailbags suspended from cables at isolated sites in the Allegheny Mountains,” he wrote.


You may use your Facebook account to add a comment, subject to Facebook's Terms of Service and Privacy Policy. Your Facebook information, including your name, photo & any other personal data you make public on Facebook will appear with your comment, and may be used on Click here to learn more.

Discover Club Med All-Inclusive Vacations

Hotels & Resorts