Airlines to Trump: Block Rivals and Privatize Air Traffic Control
Donald Trump, a hotelier and former airline executive, has said plenty about immigrants, borders, and free trade. But he hasn’t said much about the multibillion-dollar aviation industry. This huge segment of the American economy has some priorities and complaints that have gone essentially nowhere during the Obama administration, due in part to political gridlock.
With Republicans running both houses of Congress and the White House next year, airlines are now ready to push their case on several issues they hold dear. Most aviation experts say it’s hard to gauge how Trump’s administration might respond, given that it doesn’t owe the industry any favors.
“This is probably not the kind of pro-business Republican administration you might expect,” said Seth Kaplan, managing partner at Airline Weekly, an industry journal, as Trump isn’t tied firmly to a particular ideology and “doesn’t really have any core beliefs. He’s said certain things in the campaign that he had to, to bring himself in line with the Republican Party a little bit, but it’s not like there’s a history with anything.”
It’s also not clear that the Trump administration would see regulating aviation as a priority, said Bob Rivkin, a Chicago attorney who formerly worked for Delta Air Lines Inc. and at the U.S. Department of Transportation. “It becomes a question of priorities and capacity to push through Congress laws invalidating regulations when you’ve got a whole lot of other things going on,” Rivkin said. “In transportation, there are number of things that could be affected, but I think they’re going to be down the list of priorities.”
Also, there’s the populist sentiment that may not mix well with favors to industry. “The people who voted for him seem to feel that they’ve gotten the raw end of the deal with big business,” Kaplan said.
Nevertheless, here are some of the legislative issues facing airlines:
Air Traffic Control
U.S. carriers, with the notable exception of Delta, are pressing for Congress to transfer air traffic control from the Federal Aviation Administration to a new not-for-profit entity similar to the model used in Canada to control airspace.
Large carriers such as American Airlines Group Inc. and Southwest Airlines Co. argue that the FAA’s structure and funding are unable to complete a long-delayed airspace modernization program and that the new organization would be more efficient and financially stable. Congress has declined to pursue the issue. But there could be a new movement from the House, especially since the airlines’ leading champion in Congress, Representative Bill Shuster (R-Pa.), won reelection. Shuster is chairman of the House Transportation and Infrastructure Committee and has close personal ties to Airlines for America, the industry’s trade group.
The industry—including its labor unions—is seeking to curb further expansion in North America by a trio of Middle Eastern carriers, Emirates, Etihad Airways, and Qatar Airways Ltd. The U.S. industry has been pressing the current administration for two years to open talks with those airlines’ governments over what they allege are tens of billions of dollars in unfair subsidies to the three airlines.
Trump, 70, has vehemently attacked U.S. trade deals he says disadvantage Americans, and airlines are saying the same regarding these competitors.
“We look forward to briefing President-elect Donald Trump and his new administration on the massive, unfair subsidies that the UAE and Qatar give to their state-owned Gulf carriers,” said Jill Zuckman, chief spokesperson for the airline lobby group, Partnership for Open & Fair Skies, in a statement Wednesday. “Trump would be inclined to not allow subsidized state-owned foreign airlines to compete unfairly against market-driven public companies from the U.S.,” Rivkin said. For now, the Obama administration has been at a “sort of impasse” over the Middle East controversy, said Brian Havel, director of the International Aviation Law Institute at DePaul University in Chicago.
The same coalition of airlines and unions is also battling efforts by Norwegian Air Shuttle AS to expand internationally with more U.S. service. The airline has been seeking a permit for its Irish subsidiary to serve U.S. destinations. Norwegian’s request to the Department of Transportation has been pending for almost three years.
Airlines have begun flying there, but it’s a tiny business and not one likely to be profitable in the near future. And while Trump may not reverse the Obama policy on more open relations with the Castro government, he could slow any further diplomatic relations, said Charlie Leocha, president of Travelers United, which lobbies on consumer travel issues. Efforts in Congress to quash the 54-year-old U.S. embargo of the island—and tourism ban—may falter.
“We remain hopeful that Mr. Trump, who has previously supported engagement with Cuba as a businessman and a politician, will continue to normalize relations that will benefit both the American and Cuban people,” Engage Cuba, a group of U.S. companies working to end the embargo, said in a statement. But the issue is also complicated because Trump has potential business interests in the island nation, with executives from his company traveling there in 2012 or 2013 to scout golf opportunities, Bloomberg Businessweek reported in July.
Lighter regulation from a billionaire businessman in the White House could mean a Transportation Department that is friendlier to airlines, with fewer rules and fees the carriers had criticized under Obama. Trump is also a former airline executive, having operated the Trump Shuttle (Eastern’s former shuttle service) with flights from New York to Boston and Washington, D.C., for about two years before it shut down in 1992. One reason: Trump opted for a relatively lavish service on short flights, at a time of high fuel prices, and couldn’t recover his costs. Whether his experience then will affect how carriers do business in the next four years is unclear.
“I don't think aviation policy is going to soar to the top of his inbox,” Havel said. “I think we’ll see a sort of default continuity into what we’ve had with the Obama administration.”