Leveling the Playing Field
Delta Airlines (DAL) earnings report was filled with intrigue and excitement beyond the actual numbers. Delta’s CEO Ed Bastian was exceedingly pumped about the impact on his business from the groundswell of post-election excitement.
According to Bastian, “There was no question post the election that we saw an improvement," he said. "You see in the marketplace. You see it in some optimism with respect to starting to get things done in Washington. We saw it in our results."
Moreover, Mr. Bastian seemed thrilled at a chance to level the playing field in his long struggle to stop the United States from actually funding his foreign competitors and to stop foreign governments from enormous subsidies of their rivals.
Our new president-elect ran on a campaign of protecting U.S. jobs and enforcing U.S. trade treaties, we don't think there's a more important industry that has been violated with respect to trade treaties, and the potential loss of jobs. - Ed Bastian
Created in 1934 by an Executive Order to facilitate trade between the United States and the Soviet Union, the Export-Import Bank has become another agency behemoth that many say is the poster child for big government and crony capitalism. The company has backed loans to foreign airlines to buy Boeing aircraft and in turn, compete with American carriers. In 2015, there was a Delta case in Federal court against the EXIM Bank loan guarantee to Air India that was tossed.
Back then, the company said this issue ultimately would have to be resolved by Congress.
Note: through 2012, Delta has spent $10 million in efforts to highlight, and to stop the efforts of the Export-Import Bank; Boeing has spent $60 million in the same time frame.
Note: Conservatives are divided on this issue as a few of my friends at the Club for Growth are in favor of Export-Import Bank, but my other friends at Heritage are staunchly opposed.
In 2014, Emirates Airline was granted permission to fly into U.S. cities with direct flights from the Middle East; since then, the number of destinations has grown. I have flown on this airline, and I can attest that’s it’s the best experience in the air (the old Swissair came close, and they trained Emirates). Normally, competition is good; however, in the airline industry, it has been devastating in the past.
What makes this more of an issue than usual are the governmental subsidies that Emirates and other Middle East airlines are receiving. Since 2004, the governments of Qatar Airways and the National Airline of the UAE have subsidized their nation’s airlines with $42 billion. Meanwhile, all U.S. airlines got more rules and regulations from their government.
Free Market Solutions
Donald Trump ran on a platform of fewer government regulations and leveling the global playing field for American businesses. Comments from Delta set up a great and long overdue showdown – we will see just how serious Republicans are to ditching corporate welfare.
The excitement in Ed Bastian’s voice isn’t about the manifestation of swelling Main Street’s optimism into reality, but it’s also something just as important; someone is finally making things fair for American businesses.
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