by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Analysts agree that the government is likely to step in and help U.S. airlines as they slash schedules and lay off employees. Douglas Holtz-Eakin, a former director of the Congressional Budget Office, told Politico that the case for action on the airlines is urgent because they have “a spillover value to the rest of the economy.” …
… But now is also a good time to consider other long-term steps to strengthen the U.S. domestic airline industry, including those that have nothing to do with loans or bailouts.
U.S. carriers have long believed that foreign competitors — especially from Middle Eastern carriers — have violated the letter and spirit of the Open Skies agreement, which regulates which airlines get to fly to another country’s airports. The goal of Open Skies is to benefit consumers by providing open entry, with barriers raised only if a government-subsidized carrier is using an artificial advantage to compete unfairly with privately owned carriers.
U.S. senators across the political spectrum, from Democratic senator Bob Menendez of New Jersey to Republican senator Ted Cruz of Texas, have said that the subsidies for Middle Eastern carriers are costing U.S. jobs. They point to studies showing that more than 1,500 jobs are lost for every daily international aviation route lost to unfair subsidies. …
… A similar approach is now called for to rebalance business in the struggling airline industry. This is not about threatening to add new tariffs as part of a trade negotiation, a process that the Trump administration has sometimes handled well and sometimes poorly. Instead, we should convince trading partners to level the playing field and make sure that we enforce existing agreements.