Closing airline tax loopholes offers states a way to shape up budgets

July 17, 2018

Twenty-seven states faced a budget shortfall in fiscal year 2018, with a cumulative deficit of more than $30 billion.[i] The National Conference of State Legislators (NCSL) expects that continued federal tax and spending cuts will present significant long-term challenges for state budgets.[ii]

While legislatures struggle to find resources to fund our communities’ basic needs, airlines are taking billions in tax subsidies to pad their bottom line. States can do right by taxpayers by ending fuel tax giveaways and other corporate welfare to airlines.

Public money comes with public accountability

Big, profitable corporations and the very wealthy are the biggest beneficiaries of the Trump Administration’s new tax policy.[iii]  The U.S. airline industry, which made $13.2 billion last year, is no exception. The six largest U.S. airlines project a combined tax savings of $4 billion a year from the 2017 Tax Cuts and Jobs Act in addition to the $13 billion in annual public subsidies airlines already receive.

Massive subsidies to the commercial aviation industry have been justified based on its importance to the country’s economic competitiveness – supporting interstate and global commerce, creating strong local and regional economic engines and providing jobs. But what are taxpayers truly getting in return?

Airport jobs used to be good, union jobs. But over the last few decades, airlines set up a system of low road contracting that drove down wages and working conditions. Meanwhile, contracted airport workers—the majority of whom are immigrants and people of color—provide soaring profits to airlines.

At a minimum, we should not be handing over billions of taxpayer dollars to an industry that rewards this generosity by outsourcing jobs to the lowest bidder. People working at our airports should not be paid so little that they have to work three or four jobs or rely on public assistance programs to get by.

States can save millions by closing jet fuel tax loopholes and supporting good jobs

Making sure airlines pay their fair share in taxes is a smart way to prepare for what’s ahead.

  • States that exempt airlines from paying fuel taxes can eliminate those tax breaks to reclaim an estimated $1 billion a year in much-needed revenue
  • can find ways to make sure those funds still benefit communities.
  • If all airport workers made at least $15 an hour, it would free up $433 million a year in safety net spending

Airlines can and should pay taxes on polluting carbon emissions, like any other industry or taxpayer. And elected officials can continue to support the thousands of airport workers nationwide who are organizing for good, safe, union jobs.

[i] https://www.kff.org/other/state-indicator/state-budget-shortfalls/?currentTimeframe=0&sortModel=%7B%22colId%22:%22SFY%202018%20Projected%20Budget%20Shortfall%20(in%20millions)%22,%22sort%22:%22desc%22%7D

[ii] http://www.ncsl.org/research/fiscal-policy/federal-tax-reform-and-the-states.aspx

[iii] https://itep.org/finalgop-trumpbill/

Airlines Grab More Tax Dollars out of Communities, but Workers, Community Groups and Other Stakeholders Can Fight Back

June 18, 2018

US airlines do not like to pay taxes, and have a long history of claiming they are over-taxed. In reality, passengers shoulder a substantial share of aviation taxes and commercial airlines receive billions of dollars a year in public financial support – including tax exemptions on fuel.[i]  In 2012, Delta Airlines asked the Federal Aviation Administration to examine whether some local taxes that were being used for schools or other community needs should be going to the airport (and thus benefitting Delta) instead.[ii] During a public comment period, airlines and industry groups submitted comments in favor of the rule, including lobby group Airlines for America. [iii] In 2014, the FAA released new regulatory guidance stating that all state and local government taxes, including sales taxes, must be used for aviation purposes if they come from sales of jet fuel even if the state or local government does not own or operate the airport and does not receive federal assistance for the airport.[iv] Previously, taxing jurisdictions that did not own or operate an airport were not being required to comply with the FAA’s revenue use rule. Under the new guidance, states and local governments must find a way to track what portion of their tax revenues came from sales of aviation fuel, and then divert that amount to the airport or state aviation system.[v]

Nationwide, this re-interpretation could cost cities, counties, school districts and public transit agencies an estimated $200 million every year[vi] – not including the costs of complying with the new requirements, which in some cases will be substantial. In Georgia, the state is providing $28 million in direct grants to address this revenue crisis, most of which will go to Clayton County, where Delta’s Atlanta hub is located.[vii] Clayton County’s school district, which will also lose revenue under the new rules, is not receiving any of the state money. Delta has said that they will voluntarily reimburse the school district for the lost revenue until 2019, which begs the question of what will happen after Delta no longer chooses to make these payments.[viii] (Delta, of course, will keep its tax savings in perpetuity as things stand.)

The legal and regulatory landscape around the use of fuel taxes continues to evolve – Clayton County previously filed a lawsuit challenging the new interpretation, which was dismissed because the FAA has not yet taken any enforcement action on these new rules[ix], and the FAA has allowed extensions past the December 2017 compliance deadline for some jurisdictions.[x] But assuming that these tax dollars earmarked for community needs are instead going to be sent to relatively cash-rich airports, it seems worth asking – shouldn’t these funds be used to benefit the whole community, not just to pad airline profit margins?

The FAA’s Policy and Procedure Concerning the Use of Airport Revenue states that proceeds from taxes on aviation fuel “may be used for any purpose for which other airport revenues may be used.[xi]” The FAA requires that airport revenue be used for operating or capital costs at the airport, the local airport system, or other facilities operated by the airport and directly related to air transportation. [xii] Airports, state, and local governments should understand that there are many ways to spend the funds that provide critical community-serving benefits, while fully complying with the FAA guidance.

Some possibilities might include:

  • Emergency Preparedness Training: When disaster strikes at an airport, the whole community feels the impact. A number of recent incidents have shown that our airports are ill prepared for emergencies. Frontline airport and airline staff, including contracted workers, are often left out of the planning and training process altogether, even though they are often first on the scene and first to help. Los Angeles International Airport has recently implemented an emergency response training program for all airline and airport workers, making the entire community safer.[xiii] Airports can and should use airport revenue to catalyze and then require airport-wide emergency response programs.

 

  • Responsible Contracting Enforcement: In recent decades US airlines have outsourced tens of thousands of jobs to often low-wage, irresponsible contractors. Studies have repeatedly shown the connection between low-wages, high turnover and increased safety and security risk.[xiv] In addition, many of these airline contractors have spotty records of legal compliance when it comes to wage and hour or health and safety laws.[xv] Airports should look to implement comprehensive responsible contractor policies. Enforcement of such programs can and should be considered an operating cost.

 

  • On-Airport Environmental Health Remediation: , Lawmakers should consider whether programs to protect airport workers from the environmental health dangers of working at the airport could be funded through airport revenues.   A 2014 paper that examined the impact of Ultrafine Particulates (UFP) on airport workers in Copenhagen found that, “at airports combustion of jet fuel and diesel from aircraft and handling equipment emits large numbers of UFP and employees working at an airport may be exposed to high levels, especially ground personnel working on the apron near the aircraft.”[xvi]   The UK-based union, Unite, has launched a campaign to address the environmental health risks for airport workers and has called for a series of steps by airports, including additional investment in electric vehicles, changing rules on idling vehicles, and regular monitoring of air quality.[xvii]

 

  • Public Transit to the Airport: The FAA has regularly deemed the partial funding of Airport Access Projects a permissible use of airport revenue.[xviii] Although the specific legal tests are case-by-case, airports received FAA approval to pay for some capital costs on projects such as San Francisco International Airport’s extension of the BART line to the airport, the extension of the light rail system to the Minneapolis St. Paul International Airport, and an extension of mass transit to serve the Portland International Airport. These kinds of public transportation improvements make it easier, cheaper, and less polluting for travelers and workers to get to the airport, while also relieving traffic congestion in neighborhoods near the airport.

Our national aviation infrastructure was built largely with public dollars, to benefit the public.  But increasingly, the consolidated mega-airlines are working to exercise maximum control over the system, in order to maximize airline profits. Although the legal landscape governing jet fuel tax revenue continues to evolve, state and local governments should actively consider ways to spend these critical tax dollars in ways that maximize community benefits.

[i] Economic Roundtable, Flying Right: Giving US Airport Workers A Lift. See overview at https://economicrt.org/publication/flying-right/

[ii] https://www.myajc.com/business/clayton-fights-loss-hartsfield-jackson-jet-fuel-sales-tax-revenue/pxNFgM27s0k7cfYuLIF4FL/

[iii] http://airlineinfo.com/faapdf2/440.pdf

[iv] https://www.federalregister.gov/documents/2014/11/07/2014-26408/policy-and-procedures-concerning-the-use-of-airport-revenue-proceeds-from-taxes-on-aviation-fuel

[v] See, for example, The State of California’s Action Plan in Response to FAA Policy Change

[vi] https://www.npr.org/2015/01/08/375799632/faa-clarifies-fuel-tax-rule-municipalities-to-lose-needed-funds

[vii] https://politics.myajc.com/news/state–regional-govt–politics/clayton-will-get-most-state-funds-from-georgia-jet-fuel-tax-cut/EEI4rxZSclkPeLc7s8v1xJ/

[viii] https://www.11alive.com/article/news/clayton-co-superintendent-delta-will-make-up-for-loss-from-jet-fuel-sales-tax-through-2019/85-561259569

[ix] https://www.myajc.com/news/local-govt–politics/appeals-court-dismisses-clayton-lawsuit-hartsfield-fuel-tax-battle/YDjiRlPXUR5WIg8bUuRvaM/

[x] https://www.faa.gov/airports/airport_compliance/aviation_fuel_tax/

[xi] Policy and Procedure Concerning the Use of Airport Revenue, 64 FR 7696, Section IV, D.1

[xiii] https://www.lawa.org/-/media/lawa-web/lawa-airport-operations/files/approved-lawa-er-training-syallbus.ashx?la=en&hash=37BBD01209A67A9E163495134A11CBE28C85193A

[xiv] The Impact of Wages and Turnover on Security and Safety in Airports: A Review of the Literature, Amanda Gallear, UC Berkeley Labor Center, Oct 18, 2017, p1. See Airports Campaign – Key Facts LEGAL pg 5

[xv] See Airports Campaign – Key Facts LEGAL pg 7

[xvi] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4159265/

[xvii] http://www.unitetheunion.org/uploaded/documents/UFP%20let11-12119.pdf

[xviii] See FAA Airport Compliance Manual

Our nation’s Mayors are improving the lives of airport workers

June 6, 2018

If you work hard in this country, you should be able to provide for your family no matter the color of your skin or where you come from. But today, too many people whether white, Black, or brown are working longer hours for lower wages because greedy corporations and certain politicians have rigged the economy against those of us who work for a living.

In response, Mayors are taking action by supporting contracted airport workers—the majority of whom are immigrants and people of color—as they band together to win the right to form a union and the pay they need to take care of their families. Just last year in Philadelphia, Mayor Jim Kenney stood with airport workers, demanding that contractors pay a “21st Century Living Wage,” and helped bring the contractors to the table to bargain the first-ever union contract. Then in Chicago and Los Angeles—two critical hubs for United Airlines—City Council voted unanimously to raise wages for airport workers. And already this year, the Port Authority of New York and New Jersey voted unanimously to raise wages to $19 an hour.

Mayors and elected officials are showing that they have the power to improve the lives of working people and make our cities a place where a hard day’s work is rewarded with fair pay and a voice on the job.

Elected officials can hold airlines accountable through airport-airline lease agreements

Leases between airlines and airports are arguably the most fundamental document in shaping the rules of our nation’s airports, but shockingly most fail to represent the public interest or hold airlines accountable to basic federal, state, and local laws that protect human rights, worker rights, and the rights of people with disabilities. Even worse, when airlines or their contractors violate state or federal laws, there are few, if any, enforcement options for airports.

Because airlines benefit from massive and ongoing public investment, airlines and their contractors must do more to comply with our laws, support good jobs, and ensure the safety of all workers and passengers.

Find out how to make sure your airport’s leases protect taxpayers, working people, and passengers.

 

Carbon taxes to address greenhouse gas emissions should include emissions from air travel

April 30, 2018

Carbon Taxes are an important way that we can begin to address climate change caused by greenhouse gas emissions.   In the absence of meaningful federal action on climate change, proposals are advancing in several states to create state-level taxes on CO2 emissions.  But, to make these policy tools as effective as they can be, states should not exempt the highly polluting commercial aviation sector.   

Globally, aviation is the fastest-growing source of greenhouse emissions in the transportation sector.[i]   Currently, the aviation industry contributes about 2.5% of total global carbon dioxide emissions.[ii]   If the aviation industry were a country, it would be one of the world’s top 10 emitters of CO2.[iii]  And, without policy interventions, emissions from the aviation industry are projected to continue to grow between two and four times by 2050.[iv]

The costs of climate change to the public and to the economy as a whole, even in the short-term, are staggering.  A 2017 report estimated that climate change, along with the health impacts of burning fossil fuels, has cost the U.S. economy at least $240 billion a year over the past ten years.[v]   The report estimated annual costs of $188 billion alone in health costs due to air pollution caused by fossil fuel energy production.[vi]

The San Francisco-based International Council on Clean Transportation insists, “No serious attempt to face the problem of climate change can fail to address commercial aviation.[vii]    Incredibly, despite mounting environmental and economic evidence to the contrary, airline industry lobbyists Airlines for America said recently that the industry “doesn’t need a carbon tax to build on our exceptional environmental record.”[viii]  But, despite the PR, a January 2018 report from Seattle-area public radio station KUOW concluded that, although airline fleets are getting more fuel efficient, “air travel is growing three times faster. On climate, aviation is still moving backwards.”[ix]

What Are Carbon Taxes?

The U.S.-based organization, Carbon Tax Center, explains that “a carbon tax is a fee imposed on the burning of carbon-based fuels.” [x]  The organization argues that the tax is the most effective way to make users of carbon fuels pay for the climate damage caused and that, “[i]f the price is set high enough, it becomes a powerful monetary disincentive that motivates switches to clean energy across the economy.”[xi] As this piece from Brookings notes, the basic idea of a carbon tax is supported by most economists.[xii]

Movement on Carbon at the State Level

Despite political gridlock at the federal level, a 2017 report from the Carbon Tax Center concluded that 7 states, plus Washington DC were “promising” arenas for enacting state carbon taxes.    The report found promising initiatives in Massachusetts, New York, Connecticut, Maryland, Hawaii, Illinois, Washington State and Washington DC.[xiii]

But State-Level Proposals Have Sometimes Chosen to Exclude Commercial Aviation

Although state-level action is encouraging, some proposals at the state level have excluded jet fuel burned through commercial air travel from being taxed.

Below is a brief run-down of some of the recent or pending proposals at the state-level.

California

State’s existing “cap and trade” system excludes aviation fuel.

Since 2012, California has had a “cap and trade” system that covers greenhouse gas emissions, as part of the state’s commitment to reduce emissions to 80% below 1990 levels by 2050.[xiv]    Although the current system covers approximately 85% of California’s current greenhouse gas emissions,[xv] the law currently excludes jet fuel.[xvi]   The International Council on Clean Transportation estimated, in 2015, that 7% of the state’s total greenhouse gas emissions come from aviation and insisted that “if national and international policymakers continue to pass the buck on aviation emissions, it may be time for California to step forward again.”[xvii]

Connecticut

2018 bill appears to include emissions from jet fuel.

In Connecticut, there have been multiple efforts over the years to pass a state-level carbon tax.   In the 2018 session, HB 5363 is currently being considered.  The bill establishes a fee of $15/ton of carbon dioxide, with regular increases.   The bill specifically states that the proposed tax would include kerosene-based jet fuel.[xviii]   Most jet fuel is kerosene-based.[xix]

Hawaii

Bill introduced in 2018 appears to include jet fuel emissions. 

In the 2018 legislative session, House Bill 1991, proposes an escalating tax per ton of CO2 emitted, starting at $10 per ton in 2019 and increasing $5/ton/year until reaching the rate of $40/ton/year in 2025.[xx]   The law clearly covers any fossil fuel including those “used for fuel, petroleum, and any petroleum product.”[xxi]   The bill has been referred to committee.[xxii]

Massachusetts

2017 proposal would have created a study to determine how to address “lifecycle emissions” which would include emissions from jet fuel. 

In Massachusetts, House Bill 1726, introduced in 2017, puts a price of $20 per ton of CO2 released and increases to $40/ton over four years.[xxiii]    Importantly, the bill leaves open the question of whether and how to cover what it calls “lifecycle emissions,” defined as “greenhouse gas emissions that are released during phases of a fuel or other produce’s life, including those emissions released during extraction, processing, transportation, and disposal.”    Under the language proposed in the bill, the state’s commissioner of energy resources is required to issue a report and recommendations “as to whether such “lifecycle” emissions should have the greenhouse gas pollution charge applied to them.”[xxiv]

Maryland

“Lifecycle emissions” like those from jet fuel are initially included, but the proposal creates a bill to study possible future adjustments.

In Maryland, House Bill 939, introduced in February, 2018, would create the Regional Carbon Cost Collection Initiative to create a tax on “natural gas, petroleum, coal, and any solid, liquid, or gaseous fuel derived from” natural gas, petroleum, or coal.   The bill does appear to cover emissions related to aviation emissions at present.   However, like the proposal in Massachusetts, the bill proposes the creation of a report to examine “whether any increases or decreases in greenhouse gas pollution charges are recommended to” (among other things), “address life cycle emissions and leakage issues.”   Like the Massachusetts bill, the Maryland bill defines “life cycle emissions” as “greenhouse gas emissions that are released during phases of a fuel or other product’s life.”[xxv]

New York

Bills appear to include emissions from jet fuel.

On March 7, 2018, more than 150 local New York officials released an open letter to Gov. Andrew Cuomo and state lawmakers, urging them to impose a tax on carbon and methane emissions.    There are parallel bills currently moving through the New York legislature.   The bills do not appear to include an explicit exemption for commercial aviation.[xxvi] [xxvii]

Oregon

2018 Proposal exempted aviation fuel.  Details of 2019 proposal remain to be seen.

Similarly, a proposal to establish a cap and trade system for greenhouse gas emissions in Oregon in 2018 failed to advance through the state’s legislative process.   But the bill also stated that the law would “exclude from regulated emissions the greenhouse gas emissions from the combustion of fuel that is demonstrated to have been used as watercraft or aviation fuel.”[xxviii]    Supporters vowed to return with a renewed proposal in 2019.    We hope the backers will consider including emissions from commercial aviation.[xxix]

Washington State

Proposal exempted commercial aviation

Washington Governor Jay Inslee started 2018 with a push for a state carbon tax.  Under the proposed plan, industrial carbon emissions would be taxed at $20 per ton, beginning in 2019.[xxx]   Money raised by the plan would go to support clean energy projects, as well as improving floodwater and wildfire risk management.[xxxi]    The bill proposed to exempt jet fuel from the tax – a move KUOW attributed to Boeing’s role as the largest private employer and political powerhouse in the state.[xxxii]   The bill failed to advance out of the Washington State Senate.[xxxiii]  Governor Inslee claimed that the bill was just “one or two votes shy.”

Just days after the bill failed to advance in Washington, the Alliance for Jobs and Clean Energy in Washington State filed a ballot initiative for a new carbon tax.   Based on the language on the group’s website, it appears that the initiative will also exempt aviation fuel.[xxxiv]

The Bottom Line

States’ approaches to taxing carbon continue to evolve, as do their strategies for addressing jet fuel emissions and other “life cycle emissions.”   Some states have chosen simply to include these emissions directly, while others have adopted a more cautious approach to study the issue and recommend strategies.

Given the large and growing impact of greenhouse gas emissions from aviation, policy makers should think carefully about how not to ignore this source of pollution in our communities.

 

[i] https://theconversation.com/airline-emissions-and-the-case-for-a-carbon-tax-on-flight-tickets-56598

[ii] http://www.cate.mmu.ac.uk/projects/bridging-the-aviation-co2-emissions-gap-why-emissions-trading-is-needed/

[iii] http://blogs.edf.org/climatetalks/files/2012/07/Aviation-CO2-Ranking.jpg

[iv] http://www.icao.int/environmental-protection/Documents/EnvironmentReport-2010/ICAO_EnvReport10-Ch1_en.pdf

[v] https://news.nationalgeographic.com/2017/09/climate-change-costs-us-economy-billions-report/

[vi] https://feu-us.org/case-for-climate-action-us3/

[vii] https://www.theicct.org/aviation

[viii] https://www.thecompanydime.com/carbon-tax

[ix] http://kuow.org/post/sea-tac-wants-curb-carbon-without-limiting-your-travel-thats-steep-climb

[x] https://www.carbontax.org/whats-a-carbon-tax/

[xi] https://www.carbontax.org/whats-a-carbon-tax/

[xii] https://www.brookings.edu/opinions/the-tax-favored-by-most-economists/

[xiii] https://www.carbontax.org/Opportunities_for_Carbon_Taxes_at_the_State_Level.pdf

[xiv] https://www.carbonbrief.org/explainer-californias-new-cap-and-trade-scheme-to-cut-emissions

[xv] https://www.c2es.org/content/california-cap-and-trade/

[xvi] https://www.theicct.org/blogs/staff/radar-aviation-california%E2%80%99s-climate-policy

[xvii] https://www.theicct.org/blogs/staff/radar-aviation-california%E2%80%99s-climate-policy

[xviii] https://www.cga.ct.gov/2018/TOB/h/2018HB-05363-R00-HB.htm

[xix] https://www.hunker.com/12003828/the-differences-between-kerosene-jet-fuel

[xx] https://legiscan.com/HI/text/HB1991/id/1703647

[xxi] https://www.capitol.hawaii.gov/session2018/bills/HB1991_.HTM

[xxii] https://www.capitol.hawaii.gov/measure_indiv.aspx?billtype=HB&billnumber=1991&year=2018

[xxiii] http://www.thedrive.com/sheetmetal/17652/carbon-taxing-may-be-coming-to-energy-conscious-states

[xxiv] https://malegislature.gov/Bills/190/H1726

[xxv] http://mgaleg.maryland.gov/2018RS/bills/hb/hb0939f.pdf

[xxvi] http://nyassembly.gov/leg/?default_fld=&leg_video=&bn=A00107&term=2017&Summary=Y&Actions=Y&Memo=Y&Text=Y

[xxvii] https://www.nysenate.gov/legislation/bills/2017/S2846#

[xxviii] https://olis.leg.state.or.us/liz/2018R1/Downloads/MeasureDocument/SB1507/A-Engrossed

[xxix] https://www.bizjournals.com/portland/news/2018/03/03/oregon-cap-and-trade-backers-eye-2019-after-failed.html

[xxx] http://kuow.org/post/inslee-proposes-new-version-carbon-tax

[xxxi] https://www.seattletimes.com/seattle-news/politics/gov-inslee-to-release-carbon-tax-proposal-tuesday/

[xxxii] http://kuow.org/post/sea-tac-wants-curb-carbon-without-limiting-your-travel-thats-steep-climb

[xxxiii] https://www.seattletimes.com/seattle-news/politics/washington-states-carbon-tax-bill-dies-in-legislature/

[xxxiv] https://jobscleanenergywa.com/ballot-filing-statement/

Airlines Don’t Need Jet Fuel Tax Breaks, our Communities Need Good Jobs

March 15, 2018

The relationship between Delta Airlines and its hub home state of Georgia has been in the news recently after conservative lawmakers removed a proposed state tax exemption on jet fuel after Delta stopped giving a discount to NRA members.  The jet fuel exemption was set to give Delta an extra $40 million a year in the form of tax money that currently helps fund one of the poorest school districts in the country.  The news coverage on the controversy has tended to overlook some fundamental points – Delta, United and the other major US airlines are incredibly profitable, already take billions of dollars in public subsidies, and instead of giving back to the taxpayers and workers that make their success possible, they outsource jobs and cut corners on safety.

Thanks in part to government-facilitated mergers and industry consolidation, US airlines are now near-monopolies and hugely profitable. In 2017, the top six US airlines made over $13 billion in profits.  US airlines are also heavily subsidized, with over $13 billion annually in national public support for commercial aviation.  This includes roughly $1 billion a year in jet fuel tax exemptions.  On top of that, airlines just received a huge windfall thanks to President Trump’s recent corporate tax giveaway. Delta expects to save $800 million on its tax bill.  That is, once Delta starts paying taxes – the airline has paid exactly $0 in cash federal income taxes since 2011, thanks to its ability to deduct past losses.

There’s yet another way in which the public indirectly subsidizes Delta, United, and other major US airlines – the public assistance benefits that so many outsourced airport workers rely on to make up the gap between the low wages airline contractors pay and what they need to live. Based on estimates by the Economic Roundtable, if all airport workers at ATL were paid a living wage of $15 an hour, state assistance programs would save almost $15 million.  At Detroit, another Delta hub, a $15 living wage would save the state almost $2 million.  

Airport jobs used to be good, union jobs. Then, to drive profits higher, airlines like Delta and United destroyed these good jobs and set up a system of low road contracting that drove down wages and working condition. It’s time airlines stopped asking taxpayers to subsidize their profits. Airport workers are calling on airlines to pay their fair share in taxes and hire responsible union contractors that pay a livable wage so airport workers can provide for their families, get the training they need to keep the public safe, and provide the best service possible.

 

Top 6 US Airlines to Pocket $4 billion from Tax Cuts 

February 15, 2018

Just before Christmas, Congress passed the tax cuts promoted by President Donald Trump. The tax plan is widely expected to increase the deficit by more than 2 trillion dollars in the first decade, while delivering benefits disproportionately to the wealthy and to corporations.

The new law reduces the overall corporate tax rate from 35% to 21%. The precise impact on particular companies can be difficult to calculate, because corporations used, and will likely continue to use, a variety of strategies to reduce their effective income tax rate. However, in the last several weeks, many companies, including America’s 6 largest airlines, have released fourth-quarter earnings statements. As part of these disclosures, airlines have disclosed information that has provided a window on the impact of tax reform on their bottomline.

And, although the numbers provided by the companies differ (some refer to FY2017 savings, some project savings for FY2018), we tallied up the numbers and found that the 6 largest airlines in the United States are projecting a combined tax savings of roughly $4 billion annually.

Airline Estimated Tax Savings
United Airlines $192 million
American Airlines $830 million
Delta Airlines $800 million
Southwest Airlines $1.4 billion
JetBlue $502 million
Alaska Airlines $274 million
6 Airline Total: $3.99 billion

 

And airline investors were already doing well. In FY2017, these six airlines reported a combined profit of $13.2 billion. Meanwhile, as the Economic Roundtable reported in their 2017 report, the commercial aviation industry in the United States receives an estimated $13 billion in annual subsidies, while tens of thousands of US airport workers live below the poverty threshold. The report estimated that nearly 200,000 airport workers make so little that they are forced to reply on public assistance programs, with a price-tag of $1.2 billion.

And, while some airlines did announce modest bonuses for employees, following passage of tax reform, to our knowledge, none of the major airline contractors, who the airline rely on to provide many of their critical frontline services, have announced bonuses.

Across the country, airlines rely on publicly funded infrastructure and other forms of public support. President Trump’s tax cuts allows billions more to flow into the pockets of airline CEOs and investors. It is time for communities, airports, passengers, and workers to hold airlines accountable.