The Brancatelli File

NO TAXATION
WITHOUT REREGULATION

BY JOE BRANCATELLI

September 20, 2001 -- We should be mourning our dead. We should be debating our new security regimens. We should be discussing how we pick ourselves up, dust ourselves off, and get back on the road.

This is what we should be talking about this week. But we can't because the nation's airline executives have decided that now is the time to try to pick our pockets and demand a mind-boggling $24 billion taxpayer-funded bailout of their shabbily run private businesses.

Almost from the moment this horrific tragedy began on September 11, the major airline executives have been wrapping themselves in the flag and claiming that we owe them taxpayer dollars to prop up a system that was fiscally and morally unsupportable just 10 days ago. These shameless millionaires, who had driven commercial aviation to the brink of collapse long before September 11, have threatened us all with aviation Armageddon if we do not divert tax money to their private coffers.

This is my response: No taxation without reregulation.

If we, as taxpayers, need to step in to save a group of private companies to keep commercial aviation running, then we, as taxpayers, need to regain control of the system. If we open the nation's treasury to keep airlines flying, then the shameless men who lead many of the nation's carriers must go. If we're going to give tax money to the airlines--they want about $12 billion in immediate, direct tax subsidies and an equal amount of loan guarantees--then the industry will have to submit to reregulation, so that the nation can create a safe, fair, intelligently managed aviation mass-transit system.

Make no mistake about it, fellow travelers. The nation's airlines are in crisis. We should not and cannot deny the obvious. The losses in fiscal 2001 are going to be gigantic. Tens of thousands of jobs will be lost and more than one carrier may disappear forever. And some of the bleak financial winter that confronts the airlines is directly and inextricably linked to the events of September 11.

But most of the blame for the precarious state of commercial aviation lies directly at the feet of the gluttonous men who now come hat in hand begging alms from the American taxpayers. Over the years, they have upstreamed tens of millions out of the system and into their own pockets. They have designed a fare structure that penalizes its best customers, gives away the store to the occasional traveler, and confuses everyone. Operationally, they have choked the nation's airports with fleets of smaller and smaller aircraft. They have tried to drive travel agents and smaller airline competitors out of business. They have steadfastly opposed a raft of reasonable safety and security measures.

Now these same self-serving plutocrats come to us and say "Save us from ourselves."

Our answer should be this: No taxation without reregulation. If the nation's taxpayers must step in to save commercial aviation--and we may have to do it--then many of these men must go. If the system must be saved with tax dollars, then taxpayers have the right to demand commercial aviation is run for our benefit, not theirs.

The bail-out brigade began privately, within hours of the hijackings, but Continental chief executive Gordon Bethune started the public drum-beating on Saturday. After announcing capacity cuts and employee layoffs, he promptly began to demand taxpayer funds. Yet he didn't volunteer one thin dime of his $3 million annual compensation to save his airline. On Sunday, Delta chief executive Leo Mullin, who has earned upwards of eight figures annually, wailed on television that the "airline industry cannot be the first casualty of this war." This while thousands of genuine first casualties are still buried in the rubble in New York and Washington and Pennsylvania.

USAirways chairman Steve Wolf and chief executive Rakesh Gangwal have earned as much as $100 million in the last five years. On Monday, they laid off 11,000 employees without offering a single penny of management givebacks or contributions. United Airlines was on track to lose $1 billion this year even before the events of September 11. It is run by men who have demonstrated their inability to lead or to manage even in the best of times. Northwest has been plundered by Al Cheechi, Gary Wilson and the acolytes of Frank Lorenzo, the man who taught airline executives how to denigrate passengers and employees, saddle carriers with debt and send profits out of the company.

Do you really want to give tax dollars to these men? Do you really want the national coffers within reach of these charlatans and buccaneers? With these guys running the show, do you really think a buck or a billion of any tax subsidy would really go to saving jobs, saving service or improving security?

From the moment we deregulated the airlines two decades ago, the industry's top executives have zealously guarded their privatized, unfettered status. They have built a system that maximizes traveler pain, minimizes customer rights, and belittles the value of employees. They have stoutly resisted any call for public input or corporate responsibility. They have dismissed any criticism of their methods and ethics. For years, they have pompously insisted they were better prepared, better managed and more nimble than outsiders understood. They fancied themselves Skygods, beyond the ken and comprehension of us merely mortal business people.

Fair enough. They wanted to live by and profit from the free market, so now they must work within or die by the free market. If the tycoons who've been begging for a taxpayer bailout these past few days really want to save their airlines, then they should use the tools available in the free market.

They should fly their carriers right into Chapter 11 bankruptcy protection. Do it now. Today, tomorrow, next week at the latest. Reorganize, regroup, and renegotiate with lenders, suppliers and employees the way all private businesses do. And, please, have the common sense and common decency to cut your own damned salaries while you send tens of thousands of rank and filers to the unemployment lines.

But if you're waving the flag and looking for taxpayer subsidies, be warned: We want our aviation system back, and we want to reform it and reshape it to serve the nation's best interests.

This column originally appeared at JoeSentMe.com

Copyright © 1993-2004 by Joe Brancatelli. All rights reserved.