Struck by the demand shock incurred by the coronavirus, the airline industry bent the knee to beg for a $50 billion government bailout, and like any good bloated government, the Trump administration has agreed to give it to them. As a part of the White House’s planned $850 billion bailout package, President Trump plans on giving some $50 billion to the airline industry.
Given our crippling $22 trillion national debt, this is an outrage. But even without small businesses on the verge of collapse and low-income earners forced into self-quarantine, bailing out the airline isn’t just theoretically antithetical to any semblance of free market principles. It’s just entirely unnecessary, especially in a time of mass pandemic.
With or without a bailout, airlines will lay off plenty of their employees based on a pure lack of consumer demand. No one wants to fly during a global pandemic without a vaccine, so the consumers won’t care if the airline industry crumbles over the next few months. After all, it’s unclear that the airline industry itself even did. The nation’s largest airline companies spent 96% of free cash flow in the past decade on stock buybacks. If they don’t have the cash to get through the summer, that’s on them.
A bank bailout presumably prevents the trickle-down effects of credit crises and defaults, and a pharmaceutical bailout often has a positive return on investment, an airline bailout primarily benefits the airline bosses. Even with arguably oligopolistic mergers and airlines routinely posting multibillion-dollar profits, if airlines cannot save themselves, they don’t deserve anyone else to save them.
The country has more than 7,000 commercial aircraft that will still be there after the coronavirus crisis abates. We have over 5,000 airports open to the public that will still be there, and we have a legal and regulatory infrastructure governing airports that will still be there. It will certainly take time for airline companies to arise or be revived, but it wouldn’t cause any of the losses of a halt of pharmaceutical development, or the impossibility of recreating industries with razor-thin profit margins like restaurants and department stores.
There’s a high chance that Trump refusing to bail out the airlines could disrupt global tourism and travel beyond the demand shock of the coronavirus. But given the wide profit margins of airlines and already extant infrastructure, it would likely prove a disruption, not a devastation. As demand returns, the profits will come. The same just isn’t true of small businesses, which should be the beneficiaries of bailout cash.
There’s no practical argument for bailing out the airline industry, and there certainly is not one conservative one.
