AP Photo/Pablo Martinez Monsivais
On Tuesday, May 2, America's airline executives were hauled before the House Transportation Committee to justify their businesses' conduct to the assembled representatives of the American people and the flying public. At least, that's what the Democratic members of the committee wanted to hear. The majority Republicans, however, were happy to cut the airlines some mega-slack.
As Dana Milbank noted in The Washington Post, Republican members, led by Committee Chair Bill Shuster of Pennsylvania, happily parroted airline management's talking points. The problem at the root of the airline passenger experience, they said, is that the airlines are overregulated. "I don't believe in overburdening our businesses," Shuster said, while adding the codicil that Congress might seek to add a few more regulations "next time" some assault on a passenger goes viral.
Or not. "I don't like regulation if I can get away with it," said Texas Republican Brian Babin-a viewpoint echoed by his GOP colleagues. Arkansas Republican Rick Crawford added that he sure didn't wish to "apply re-regulation," and bring back more "interference from Congress."
Shuster even said that one thing the Republicans could do would be to enact tort reform so that airlines could reduce the scourge of those "damn lawsuits" filed on behalf of mistreated customers.
Egged on by the committee Republicans (not that they really needed much egging), the airline honchos actually asked for the lifting of some regulations. "Y'all place a lot of stuff on us," said United CEO Oscar Munoz, of break-your-face-and-call-it-re-accommodation fame.
If the airlines wanted to make a more credible case that external pressure is what keeps them from straightening up and flying right, however, they shouldn't complain about government regulations. A more plausible target is Wall Street.
Last week, as Michael Hiltzik reported in the Los Angeles Times, American Airlines stock tanked-losing 8 percent of its value in just two days. The reason wasn't more bad publicity about treatment of passengers, as, for instance, the airline's suspension of a flight attendant for allegedly slugging a mother fumbling with a baby stroller. That's the kind of news, if it doesn't go completely viral, that the markets can take in stride.
What set off the stock's slide, rather, was the airline's decision to give its pilots an 8 percent raise, and its flight attendants a 5 percent hike, over the next two years.
That American decided to hike workers' pay little, rather than funneling more money to shareholders, induced a panic.
Morgan Stanley downgraded the company's shares, writing that the wage hikes created "a worrying precedent … for both American and the industry."
Keven Chrissy, a Citigroup analyst, complained that, "Labor is being paid first again. Shareholders get leftovers."
As Hiltzik pointed out:
From 2014 to 2016, American Airlines authorized $9 billion in share buybacks, money that went directly into shareholders' pockets. The company also paid out 40 cents per share in shareholder dividends in both years. By contrast, the pay raises will cost American $1 billion over three years.
Indeed, as I've documented in previous columns, the increasing ownership stake that private equity has taken in airlines, and the doctrine of shareholder-value-uber-alles, have played a major role in compelling the airlines to reduce competition, shrink the seats in coach, and spare every expense that might otherwise go to elevating the passenger experience to something better than airborne incarceration.
Not that that's any concern of the Republican majority on the House Transportation Committee. For their stellar performance in defending the passenger-abuse business model of the nation's airlines, they are our Trickle Downers of the Week.
Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives' age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren't made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.
