The airline industry's Trump-endorsed case for privatizing air traffic control may be getting a boost, experts say
- Airlines said that they lost millions during the 35-day-long government shutdown.
- JetBlue CEO Robin Hayes said the government shutdown was likely to cause or did cause "extended security lines, flight delays, and even cancellations."
- That may drive airlines to renew their calls for privatizing certain parts of the aviation industry.
The longest-ever government shutdown ended Friday, totaling 35 days.
And for airlines, the effects of the shutdown can be quantified in tens of millions. Southwest Airlines said the government shutdown cost it more than $10 million. Delta said it lost $25 million in revenue during the month of January thanks to the shutdown.Federal airport workers were hit particularly hard by the shutdown, as they were forced to work without pay and missed two paychecks during the shutdown. Transportation Security Administration (TSA) workers, in particular, are experiencing "extreme financial hardships." Some were forced to live in cars and sign up for food stamps. Some were also unable to pay for necessary medications and some received eviction notices.
"It's a crazy way to run our country, absolutely absurd," Southwest Airlines CEO Gary Kelly told CNBC on Thursday.
These statements may bolster the need for a cause that much of the airline industry stands behind - privatizing the air-traffic-control system.
Cowen analysts wrote in a note to investors on Friday that the myriad issues that the government shutdown foisted upon the airline industry would strengthen arguments in favor of privatizing."(I)n our view, this is another major factor in airlines' support of setting up a private company to manage the country's air space," Cowen analysts Helane Becker, Conor Cunningham, and Tyler Seidman wrote.
Big airlines want privatization
Trade organization Airlines For America (A4A) is a major champion for the privatization cause. A4A's members include UPS, FedEx, United, Southwest, and other six major airlines.
In June 2017, President Donald Trump outlined a plan to "modernize" America's skies. One of the more controversial components of that plan was to privatize the air traffic control system, which he said would help quickly update outdated technology and cut costs for consumers.
A4A agreed with Trump's plan. "Flight delays cost the economy $25 billion last year, and our antiquated ATC system is responsible for almost half of those delays," the organization wrote.
"If you look at service between the Eastern US and the West Coast, flight times today are much longer than they were 20 or 30 years ago, and it's not because the airplanes are moving slower," Hawaiian Airlines Chief Commercial Officer Peter Ingram told Business Insider's Benjamin Zhang in 2017.
"(I)t's because we confine ourselves to a fraction of the available airspace because we simply don't have the ATC infrastructure to be able to support taking full advantage of that," Ingram said.
But not everyone else agrees
Delta, the second-largest airline globally, doesn't agree with its fellow big league airliners. It left A4A in 2015 largely because its stance is so different on air-traffic privatization.
"The current FAA system helps support equal service at both large urban airports and smaller rural ones, but privatization could cause smaller airports to limit service or shut down," a 2016 Delta report said. "As a result, rural residents could be forced to drive to urban areas to access the same airline service they currently enjoy close to home."
The report also noted that privatizing air traffic control boosted fees in Canada and the UK by 59% and 30%, respectively.
Regardless, the government shutdown could prove a boon for pro-privatization folksNo part of Trump's modernization bill has gone through yet, but Cowen analysts said that the shutdown could certainly bolster the need for the privatization component.
"To date, bills in Congress to set up a separate corporation to manage air traffic control have gone nowhere," they added. "This issue could be a turning point for change."