Delta: Subsidies for Me But Not For Thee

One Mile at a Time points out that Delta’s astroturf lobbying group which it shares with United and American (the ‘Partnership for Fair and Open Skies’ that — like so many of these sorts of groups in Washington stands for the opposite of what it says, they oppose Open Skies) has Delta talking out of both sides of its mouth.

We agree with Boeing – foreign government subsidies are antithetical to free and fair trade. They kill American jobs; they don’t create them.

The Partnership for Fair and Open Skies is putting out a statement against Emirates, Etihad, and Qatar in response to Emirates pointing out just how many Boeing aircraft they buy — a direct contrast with Delta.

However Delta at the very same time is directly at odds with Boeing over subsidies, with Boeing arguing that Canada shouldn’t be able to subsidize aircraft manufacturer Bombardier, and Delta arguing that they should be able to benefit from these subsidies.

But there is absolutely no inconsistency on Delta’s part at all.

Delta Sometimes Opposes What They Argue are Subsidies

Delta opposed re-authorization of the Export-Import Bank, which subsidizes foreign purchases of US manufacturing goods (Boeing is the biggest beneficiary, with two-thirds of the total loan guarantees). Delta buys new Airbus and Bombardier aircraft.


Credit: Veronique de Rugy

Delta opposes government subsidies to Etihad, Emirates, and Qatar. (Their video on the subject is one big ‘pants on fire’.)

Sometimes They Choose Not to Argue Against Subsidies

But they don’t seem to mind government subsidies to their partners Saudia (which is bigger than Etihad) or Alitalia even when it was controlled by Etihad (they share revenue across the Atlantic with Alitalia in an anti-trust immunized joint venture). Delta owns a stake in the most subsidized Chinese airline, China Eastern.

And they don’t mind Canadian subsidies from Bombardier, Delta is getting a great deal on new C-series jets. (Boeing filed a trade dispute, the Commerce Department backed big tariffs, but Delta claims they’ll be able to receive the jets and not pay.)


Copyright: idealphotographer

And Sometimes Delta Gets Subsidies Themselves

Delta benefits from having moved billions in pensions off their books and onto the federal Pension Benefit Guaranty Corporation. And using net operating losses which survived bankruptcy to avoid paying taxes on billions of dollars in profits (American Airlines recently described themselves, a beneficiary of this maneuver, as “a non-cash taxpayer”).

They benefit from tax subsidies for their oil refinery in Pennsylvania, fuel tax subsidies in Georgia, and payments from Indianapolis for their new Paris flight.

They operate in government-funded airports with government subsidized public transit. And until recently opposed any changes to federally subsidized air traffic control.

Delta Consistently Makes Whatever Argument Benefits Delta

Delta is right on the Export-Import Bank. They’re right that consumers are harmed by driving up the price of aircraft through tariffs (and that Boeing doesn’t actually have a plane which competes with the Bombardier C-series).

Some people call out Delta’s hypocrisy but those people don’t understand Delta at all. Cronyism that benefits Delta is good. Cronyism that benefits competitors is bad. Delta lobbies for what’s good for Delta, and says anything they have to say furthering that agenda.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Comments

  1. They’re not entirely in favor of government subsidized airports.

    They’ve used a lot of muscle over the years to make sure that 2nd subsidized airport in Atlanta never happens

  2. “Some people call out Delta’s hypocrisy but those people don’t understand Delta at all. Cronyism that benefits Delta is good. Cronyism that benefits competitors is bad. Delta lobbies for what’s good for Delta, and says anything they have to say furthering that agenda.”
    That is literally the definition of hypocrisy… I get you’re a fanboy but come on.

  3. To say Delta “opposes Open Skies” is ridiculous. The USA has such agreements with 115 countries. Delta opposes 2 of them — because those two agreements are being massively abused by the UAE and Qatar. Saying Delta opposes Open Skies would be like arguing somebody opposes free speech when that person sues an individual who has willfully slandered them.

    Your definition of “hypocrisy” is also silly. Delta is obviously a business, and does things in its interest. The Bombardier situation is obviously complicated. There’s no doubt that Bombardier IS heavily subsidized by the Canadian gov’t and Quebec. Does that mean that Delta should never buy their airplanes because you’d accuse them of hypocrisy? Or should Delta buy their planes if they think they’re good and can get a good price? I think everyone (except perhaps you) would suggest the latter.

    Boeing, of course, has every right to complain about Bombardier. I think their claim is a bit weak because they don’t actually make the aircraft type that Bombardier is making, but that’s for the gov’t to decide. It’s certainly not for Delta to decide.

    The bottomline here is that Delta opposes the mind-boggling subsidies provided by autocratic Middle Eastern countries to their wholly owned airlines because such subsidies are bad for Delta. Of course, that’s not why others should support them. We should support Delta because Delta is correct that these subsidies violate the Open Skies treaties and because the subsidies are bad for America. The Bombardier dispute has nothing to do with this. While you accuse Delta of hypocrisy, it seems like the real offence is demagoguery by a certain points blogger a little too fond of his subsidized luxury flights.

  4. @iahphx – Airlines For America (don’t you just love euphemisms), and specifically Delta are vehemently against Open Skies. When the Open Skies principle worked for them, US airlines adored the idea. Now that there are some realistic drawbacks, they suddenly want to abrogate the treaty wherever inconvenient. The inconvenient spots coincidentally happen to be identical to places with unwanted competition. The problem isn’t so much looking out for personal interest, which is rational. The problem is that if a person or business chooses whether to have a firm, guiding principle based on what the Magic 8 Ball says today, rather than consistent beliefs, it makes them utterly untrustworthy. Would you personally choose to have a serious business relationship with a company whose guiding ideologies and principles were wildly variable, depending on a variety of factors well beyond your control? How do you trust such an entity? How much cheaper or better would they have to be to obtain or retain your business, since there would obviously be zero trust?
    Specifically regarding subsidies, it’s not complicated: If you cry foul against subsidies while simultaneously accepting a variety of subsidies, you look hypocritical. At best, Delta has not only ceded any moral high ground, they’ve given up any pretense of having a consistent argument. In short, they’ve failed. If they’re really against subsidies, let them divest from any subsidized airline and strongly push to remove any Skyteam partner that is subsidized from the alliance.

  5. @Christian — Again, it’s two agreements out of 115! And the only reason they oppose the two is because these three airlines have received more subsidies than (my words, not theirs) all the other airlines in the world combined. It’s breathtaking: tens of billions of dollars. It’s why they fly planes that almost nobody else flies on routes that nobody flies and offer services (things like suites) that nobody else offers. Nobody could do these things without tens of billions in subsidies. They make no economic sense for a for-profit company to do.

    So what should Delta do? What would you do that if you were running Delta and three foreign competitors were receiving tens of billions of dollars and hurting your business? Would you do nothing? Or would you go to YOUR government and hope YOUR elected officials might intervene to stop this unfair competition. Why should the United States government be in the business of helping foreign governments unfairly compete against US companies? So Gary Leff can fly to exotic destinations in over-the-top first class for free? There’s one reason he can’t do this on other carriers: they can’t afford to give him these things, because they’re not massively subsidized!

Leave a Reply

Your email address will not be published. Required fields are marked *