Travel and omicron: Who deserves a bailout now?
The industry is starting to line up at the trough again. But what do we get for the money?
Is it too soon to start talking about more travel industry bailouts? Nah.
This week, the U.S. Travel Association sent a letter to Congress, urging it to approve more financial aid for the travel industry. The U.S. airline industry's profits are down in the latest quarter, and everyone is blaming omicron. It's just a matter of time before the industry lines up at the trough again — airlines first, as always.
And what does all of this have to do with you? Plenty.
The airline industry has already taken more than $80 billion in taxpayer money. The transportation industry bailout record, held by the auto industry in the wake of the Great Recession of 2008, is $85 billion.
If airlines get more money — and, of course, they will if they ask — then that would almost certainly give the U.S. aviation industry the distinction of having one of the biggest bailouts in American history.
Your thoughts on a bailout, please
Before we continue, I’d love to get your feedback. Who should get bailed out this time, and what should they offer taxpayers in return? Join the debate now.
This is the time to ask some hard questions. Does the airline industry deserve another bailout? Is the travel industry entitled to more government money? What, if anything, should we get in exchange, besides companies that charge us more, serve us less, and would be happy to sell us more worthless frequent flier miles?
Do airlines deserve another bailout?
Should airlines get more federal aid, especially if omicron gets worse? On this subject, there was near unanimity from readers of this newsletter: No.
We had a fascinating discussion on Friday about airline bailouts. As of now, not a single commenter said the airlines should get another dime of taxpayer money.
The overwhelming sentiment was that airlines had their chance. Instead of spending the money prudently, they laid off workers and cut flights, in direct violation of the spirit of the bailout agreements (but alas, still following the letter of the law). The result: massive flight disruptions during the holidays and dramatically worse service. Staff cutbacks almost certainly played a major part in the disruptions, even if they weren't the sole cause.
The frustration goes back to March 2020, when Congress reflexively pumped billions of dollars into the failing airlines to keep them flying. But it attached no meaningful conditions for improving customer service that many consumer advocates wanted. The airline industry, with one or two notable exceptions, saw that as a green light to slash service levels and flights, which is exactly what it did after getting the government money.
Now in fairness, the airline industry has repaid some of the loans it received at the beginning of the pandemic.
Still, the airline industry may get more federal money, whether you like it or not. And if it does, there should be some strings attached.
Airlines could end their outrageous fees, such as charging extra for baggage, seat reservations, and flight changes and cancellations. They could provide refunds instead of vouchers for flights canceled during the initial outbreak. And they could finally agree to a minimum seat size, instead of squeezing passengers into smaller and smaller spaces.
But airlines aren't the only ones lining up at the trough for federal dollars.
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What about the rest of the travel industry?
Of course, airlines aren’t the entire travel industry (even though they like to think of themselves that way). There are cruise lines, hotels, restaurants and event venues.
In its letter to Congress, the U.S. Travel Association outlined the government aid on its wish list. It includes:
A temporary tax credit for venues, event organizers and small businesses to help cover the cost of running or participating in in-person business meetings, as proposed in the Hospitality and Commerce Job Recovery Act.
Allowing the tax-deductibility of entertainment business expenses under Section 274 of the tax code. Temporarily allowing businesses to deduct entertainment expenses would help increase business spending on live entertainment and sporting events and offset weaker consumer demand.
Enacting government-sponsored event cancellation insurance coverage for pandemic-related losses, such as proposed in the Pandemic Risk Insurance Act of 2021. Businesses need pandemic risk insurance to gain the certainty they need to re-engage in hosting and registering for in-person meetings and events.
This is a me-too for the rest of the travel industry. Airlines got a lot of money, and now restaurants, venues and hotels want some, too.
People seem to be divided on bailing out other travel-sector companies, which have already received some relief under the CARES Act. Large companies with the resources to continue operating shouldn't get any money, but readers told me small businesses running on fumes might need a helping hand.
But some restrictions should apply.
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What we want for our money
If omicron takes a turn for the worse or another variant emerges, and bailouts seem likely, then people have a right to ask for concessions.
Airlines: let's agree on a standard product
Airlines must agree to offer a minimum, standard product — a seat assignment, at least one checked bag, and on longer flights, a meal. Ticket change fees must be banned, regardless of the fare type. They're free to offer true ancillary products like in-flight entertainment or duty-free shopping, but they have to agree never to monetize the basics.
Hotels: no more mandatory fees
Hotels accepting federal money should agree to always tell the truth with their pricing by displaying "all-in" rates. No more extras tacked on at the end of the booking for parking or resort fees. They can earn money the way they used to, by selling restaurant meals, spa services and souvenirs in the gift shop.
Restaurants: don't lie about your prices
Restaurants who take even a dime of bailout money have to play it straight with their customers, too. They have to agree to drop mandatory tips and supply chain surcharges. They can't take your taxpayer money and misrepresent their menu prices. And while we're at it, they should use some of that money to pay their servers a living wage so their employees no longer have to rely on gratuities to survive. Then tips could become optional like they are in the rest of the world.
Omicron is a tragedy, but it's also an opportunity. If the travel industry wants more bailout money, maybe we should give it to them — with a few important conditions.
Who should get the money?
I'd love to get your thoughts on this issue. As the uncertainties of the omicron variant continue to drag the travel industry into uncertainty, who should get help from the federal government? And if our elected officials say "yes" to their lobbyists, what should we get in return? The comments are open.
About the art
"This work reminded me of the three little piggies, who definitely went to the market," says artist Dustin Elliott. "And by market, I mean the federal government's wallet — and your hard-earned taxpayer dollars."