Ron Paul's Texas Straight Talk - A weekly Column

September 24, 2001

What Should Government Do for the Airlines?

In the aftermath of the September 11th terrorist attacks, our nation's economic outlook has deteriorated. Although many industries are suffering, perhaps the greatest damage has been done to America's airlines. Almost all of the major carriers have announced layoffs of tens of thousands of workers, and many are losing millions of dollars every day.
The airline business was not doing well even prior to the attacks. The slowing economy caused a big drop in business travel compared to recent years, while labor disputes and rising fuel costs have further reduced profits. The industry perhaps had too much capacity; takeovers and bankruptcies were likely among some carriers regardless of the recent disasters. As a strong advocate of free-market capitalism, I would never support government subsidies or bailouts for any industry simply because its companies could not survive in the marketplace.
However, the airlines do have a valid claim for compensation for lost profits from the government-imposed shutdown in the days following the attacks. First, remember that the government has made airline security almost purely a federal matter. The FAA and federal law enforcement agencies are charged with preventing terrorism, and the airlines in effect are not expected nor allowed to provide security. Second, the federal government utterly failed to provide that security on September 11th. Third, the federal government shut down the airlines for several days, limited flights for several more days, and undoubtedly made millions of Americans reluctant to fly because of its massive security lapse. So the airlines have been actively harmed by the government, and deserve compensation limited to their lost profits resulting from the recent disasters.
Accordingly, I voted for the administration's requested $40 billion emergency relief bill largely because I believed some of the money should go to the airlines as economic victims of the government's security failure. However, any relief must not be in the form of a bailout that makes the airlines better off than they were before September 11th or solves their pre-existing financial problems. I cannot vote to support future legislation that simply gives taxpayer dollars to the airlines without reference to their actual losses caused by the terrorist attacks.
I also cannot support proposed legislation that simply provides corporate welfare for the airlines at the behest of industry lobbyists. The federal government has no business insuring that massive CEO salaries remain in effect while rank-and-file employees face layoffs and loss of medical benefits. It would be outrageous for the government to give taxpayer dollars to the airlines without insisting that the money be used for basic operations and safety issues. This is no time for the government to be protecting executives at your expense.
There are steps the government can take immediately to enhance airline security. It should undo regulations that have in effect disarmed pilots, and create a clear policy that permits airlines to establish their own rules regarding the arming of flight crews. Many commercial pilots once carried firearms, but federal rules now require that airlines go through a process of FAA-administered training classes that literally have never been conducted. It is ludicrous to leave pilots defenseless in the cockpit. A federal air-marshall program may be needed in the short run, but ultimately we should insist that pilots and flight crews be allowed to defend themselves and their passengers so that any future hijacking attempts can be thwarted.
Congress also should consider privatizing more aspects of airline and airport security. Many security-intensive private industries do an excellent job of maintaining safety without depending on federal agencies. Nuclear power plants, chemical plants, oil refineries, and armored money transport companies all employ private security forces that operate very effectively. No government agency will ever care about the bottom-line security and profitability of the airlines more than the airlines themselves.
Even after the huge failure by the FBI, FAA, CIA, and many other federal agencies to provide security and prevent the recent tragedy, some in Congress simply are calling for more money for these same failed agencies. Why should we increase funding for a system that is not working? Now is the time to change our approach and look for new solutions to make the flying public safe. We must reject the easy impulse to pour more federal dollars into the same failed policies.