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Airline bailout shouldn’t be cleared for takeoff

Everyone is struggling with the economic impact of the coronavirus outbreak. Do airlines, cruise ships, and hotels deserve special treatment?

Cruise ship companies and airlines shouldn't get special bailouts, and any taxpayer assistance must be conditioned on corporate reforms to serve the greater public good.
Cruise ship companies and airlines shouldn't get special bailouts, and any taxpayer assistance must be conditioned on corporate reforms to serve the greater public good.Aylssa Newton/Associated Press

What makes airlines and hotels think they’re so special?

Yes, flight bookings and room reservations are down because of the coronavirus outbreak. But almost every American business, from coffee shops to casinos, has also suffered as Americans heed public health warnings to stay at home and practice social distancing.

Still, the airline industry is panhandling for its very own $50 billion bailout — and the Trump administration has made clear that it wants to give it to them as part of a larger emergency economic stimulus package, along with possible targeted aid to the cruise ship industry. Meanwhile, hoteliers have asked for $150 billion.


As Congress rushes to write the third phase of stimulus legislation, lawmakers should approach industry-by-industry pleas with extreme caution. The lesson of the 2008 financial crisis, when the government bailed out banks and the auto industry even as small businesses were going belly up and Americans were losing their homes to foreclosure, ought to be clear. Using taxpayer money to favor certain businesses in a time of crisis is a practice that merits scrutiny, especially when it comes to companies whose long-term commitment to the greater public good is questionable. It’s also offensive to many Americans and risks undermining the spirit of shared sacrifice the country needs to get through this crisis.

Whatever stimulus emerges from Congress needs to provide broad-based help, so that the rescue is fair to everyone who is struggling — and, just as important, that Americans perceive it that way.

The case for a special bailout for the airlines rests on their economic clout — they employ 700,000 Americans — and their extreme vulnerability to the coronavirus downturn. Ditto for hotels: Coronavirus “already has had a more severe impact on the hotel industry than 9/11 and the 2008 recession combined,” according to the hotel industry’s trade group. Cruise ships, meanwhile, were one of the first places the government advised Americans to avoid. (Although now that restaurants and other businesses are closing too, it’s harder to argue that cruise ships have been singled out.)


Airlines, hotels, and cruise companies should be eligible for whatever general economic assistance programs the government develops. Their size, and the extent of their losses, should put them in line for sizable aid — at least in the form of low-cost loans.

But if Congress is to set aside money just for airlines or hotels or cruise ships, it needs to attach some awfully stringent conditions to justify exceptional treatment on the taxpayer’s dime. The criteria should be aimed at ensuring such businesses contribute more to society in their practices with respect to employees, customers, and the environment.

Some Senate Democrats, including Senator Ed Markey of Massachusetts, have said they won’t support a “blank check” for the airlines. He suggested that any bailout also include consumer protections, like a ban on unfair change or cancellation fees; labor protections for airline workers; and a commitment by airlines to reduce their greenhouse gas emissions.

Meanwhile, the cruise industry registers its ships in places like Bermuda or Panama to skirt US taxes and labor laws. (There is one, count them, one, US-flagged cruise ship out of about 300 total.) If they’re in need of government help, those would be the governments to turn to. Changing their registration to the United States and committing to improve their own environmental and labor practices, should be a prerequisite for any special US taxpayer assistance.


Other conditions to attach might include giving the federal government an ownership stake in the companies, so that the taxpayer benefits from any eventual rebound, or requiring that the companies maintain their payrolls and refrain for a period of time from share buybacks. (Companies like American Airlines that have used profits routinely for share buybacks to boost their short-run stock price could have put such resources into shoring up their ability to withstand a crisis.)

There’s no doubt that coronavirus poses an exceptional challenge to American businesses, and it’s entirely appropriate for the government to backstop employers of all sizes and sectors as it also backstops American families and workers. But if taxpayers are asked to go above and beyond for any particular industry, those industries will need to go above and beyond for the public interest.

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