The New York Times reported on January 5th that Mesa Airlines had filed for bankruptcy protection in a Manhattan court. Another article published in Travel Agent Central quotes some interesting facts about airline bankruptcies and airlines’ financial performance. United Airlines CEO Glen Tilton is quoted in this article saying that in the last 30 years the airline industry has experienced 185 bankruptcies. Are you kidding me? 185? Well, actually, based on Mesa’ s filing on Tuesday that would make 186 now. Now that’s not to say that there have been 186 different airlines that have declared bankruptcy – some of them have done it more than once! Just as black holes pull in matter which they ultimately crush, so airlines in the United States pull in money they have nothing to show for.
Mr. Tilton, who is also Chairman of the Air Transport Association, presented some other numbers that are staggering when you think about them:
- Since the beginning of 2008 airlines have lost $27 billion (that’s with a B)
- Since 2001 that number is 60 billion (that’s slightly more than the Gross National Product of Kuwait)
- Roughly one out of every three jobs in the airline industry have been lost since 2001 (that’s 160,000 jobs, a little more than the population of Santa Rosa, CA)
Mr. Tilton is quoted as saying: “Taxes by airports, the Federal Aviation Administration and the Department of Homeland Security represent as much as $60, or 20 percent, of a $300 domestic round trip airline ticket,” Tilton said in wide ranging remarks. “America’s aviation sector and our customers shoulder a federal tax burden that is typically higher than the amount the alcohol and tobacco industries pay. The extreme and unfair tax burden on commercial aviation and our customers should be reduced.”
The article goes on to say: “The government must accelerate and fund the FAA’s next-generation air traffic control system. “We have the technology that will transition America from a ground-based system to a satellite-based system that will result in fewer flight delays, together with fuel and environmental benefits â€“ by enabling airplanes to travel more safely and efficiently through the nation’s airspace,” Tilton said. ”Maintaining the advances in capacity discipline, made across the industry in times of difficulty, will be critical to our collective profitability and our sustainability as the economy improves. This challenge is set against a backdrop of an industry has an appalling record of self-destructive actions that compound the problems of a quasi deregulated and an overtaxed industry that I spoke to previously. This must change,” Tilton concluded. “Commercial aviation should not be taken for granted.”
ATA representatives don’t usually say much that I would agree with since they have consistently targeted General Aviation as a cause to their problems. However, I can agree with everything Mr. Tilton says in the quotes lifted from this article.
All businesses are overtaxed in this country including general aviation businesses, not just the airlines. We do need the Next Gen air traffic control system sooner rather than later to gain efficiency in the system and save on fuel costs and wasted time. The airlines need to control their capacity so that they can raise prices and make a profit.
Last but not least the airline industry has an “appalling record of self-destructive actions that compound the problems of a quasi deregulated and an overtaxed industry”.
Finally someone in the airline industry taking a little responsibility for their problems and not blaming it all on the rest of us!