February 02, 2003
Just put it on our tab

Here's a potential cost of invading Iraq that you probably hadn't given any thought to: Airlines are lobbying for another handout to help them recoup losses that they expect to face as a result of a war.

As the threat of war looms, the industry is seeking tax relief, the relaxing of some antitrust laws and relief on fuel taxes. They also want the federal government to reduce oil prices by releasing crude from the Strategic Petroleum Reserve.

There's a whole lot of worms in this can. The anti-trust laws they want relaxed are ones that prohibit them from sharing flight schedules with each other. The airlines want to be able to coordinate routes in the event of reduced demand. Even with a guarantee that this would be sunsetted after any invasion, I say this is way too collusional to be allowed.

The airlines also want the government to temporarily suspend a $2.50 security tax implemented by the federal government after the Sept. 11 terrorist attacks to pay for increased security measures.

Bethune has long called for the elimination of that tax, saying it unfairly burdens the airlines and airline passengers.

"We are asking passengers to underwrite the national security," the Continental CEO said in an interview recently. "It is just unprecedented."

Strangely enough, I agree with him. This is precisely the reason I favored federalizing airport security after 9/11. It's nothing but a cost center to airlines and airports, and they have always treated it as any business treats such a thing - as cheaply as possible. We all know what happened. This should be run and funded by an agency that doesn't have stockholders to answer to. Unfortunately, we picked a halfassed way to go about federalizing airport security. It'll take more than just placating Gordon Bethune to fix that.

Companies that service the major airlines already are preparing for war. Texas Pneumatic Systems of Arlington recently developed a contingency plan, company President Bernie Rookey said.

The businessman worked for a similar company during the Gulf War in 1991 and said the airlines saw about a 20 percent decrease in business.

"It was pretty poor that year," he said. "I think generally you are going to see the American public is going to be reluctant to fly on airlines. Basic travel is going to cease or be reduced for a period of time."

Yes, an invasion will definitely be a big blow to many companies' bottom lines. Keep that in mind the next time Mitch Daniels starts blowing smoke about the costs of this little excursion.

Posted by Charles Kuffner on February 02, 2003 to Bidness | TrackBack