Top 5 Reactions to Trump's Big Meeting with Airline Industry Leaders
Originally published in The Street on February 10, 2017
After President Trump's meeting Thursday with airline industry leaders, many in the industry seemed pleased.
After all, one concept that unites the industry is that the nation's air traffic control system needs to be modernized. And a conclusion that emerged from Thursday's meeting is that Trump also supports ATC modernization.
"I hear we're spending billions and billions of dollars, and it's a system that's totally out of whack," were Trump's words on the subject.
The president sat directly across from Southwest (LUV) CEO Gary Kelly, who "steered the conversation from the get-go to the country's aging air traffic control system," according to The Dallas Morning News.
Trump also suggested that the Federal Aviation Administration, which oversees ATC, runway modernization funding, and, critically, aviation safety, should be run by a pilot. The president's observation was, "I just think a non-pilot wouldn't know the sophistication of the system."
Pilots are characterized by an ability to take command of an aircraft. The FAA is a different sort of operation, widely diffused, extremely successful in its oversight of aviation safety, somewhat successful in seeking to modernize ATC even as the system continues to operate, and always troubled because each of the 535 members of Congress and the Senate wants to take command.
That might make for a difficult flight operation.
In any case, here are the top five reactions to Thursday's meeting.
American's Doug Parker: Sorry I Couldn't Make It
In a message to employees on Thursday night, American (AAL) CEO Doug Parker explained, for the second time in 24 hours, why he could not attend the session.
"Unfortunately, in our divided political climate, some assume my not being there was a political statement," Parker said. "Nothing could be further from the truth. I would have happily attended the meeting and would like to have been able to do so."
But it was scheduled for the same time as Parker was speaking to 1,600 American managers at the airline's annual leadership conference.
Parker said he was told the meeting went well and that Trump was receptive to the industry's desire for "ATC reform, lower taxes and less regulation."
Dan Carey, president of the Allied Pilots Association, said Parker should have gone.
"Yesterday, the most important meeting to our pilots and the employees of American Airlines was in Washington D.C. with the president of the United States," Carey said in a prepared statement. "But no matter the meeting choice of our CEO, we remain confident and hopeful that President Trump will continue to deliver on his promise to put U.S. jobs first again."
Delta's Ed Bastian: I Too Am Happy
While everyone in the airline industry backs ATC modernization, the method is disputed. Many airlines, led by the trade association Airlines for America, support privatization. Others, led by Delta (DAL) , oppose privatization. This is one reason why Delta left A4A. Nevertheless, Delta CEO Ed Bastian said he was pleased with the meeting.
The most intriguing sentence in Bastian's prepared statement was the last one: "At Delta, we plan to hire 25,000 people over the next five years with the support of a level playing field globally." It seemed to refer to Delta's leadership of an effort to have the State Department restrict rapid U.S. expansion by the three large, subsidized Middle East carriers.
Trump seemed to refer to the Middle East three, saying of "foreign carriers" that "many times, they come with big investments. In many cases, those investments are made by their governments. But they are still big investments."
FAA: We Are Already Working Hard to Modernize ATC
The FAA posted a comment following Thursday's meeting, saying it already has spent $7.5 billion, approved by Congress, "on the air traffic modernization program known as NextGen over the past seven years. That investment has resulted in $2.7 billion in benefits to passengers and the airlines to date, and is expected to yield more than $160 billion in benefits through 2030.
SMALL INVESTMENT, BIG POTENTIAL. TheStreet's Stocks Under $10 has identified a handful of stocks with serious upside potential. See them FREE for 14-days.
"NextGen is one of the most ambitious infrastructure and modernization projects in U.S. history," FAA said. "Its successful, ongoing rollout is the result of rigorous acquisition, program and portfolio management, and stakeholder engagement with the airline industry and other members of the aviation community."
Flight Attendants: "Trump Can't Afford to Get This Wrong"
Given that the U.S. already has "the safest aviation system in the world," Sara Nelson, president of the Association of Flight Attendants, doesn't want to see it diminished.
"The flying public enjoys aviation regulations we fought to achieve," Nelson said in an interview. Among them: rest requirements, no smoking or knives on planes, and crew training. "Each regulation includes careful review and input from all stakeholders," she said.
Also, Nelson said, Trump's statements "show a complete disregard for enforcing trade agreements or protecting and promoting U.S. jobs" that are endangered by the Middle East three and Norwegian Air International.
"President Trump can't afford to get this wrong," Nelson said.
Wall Street: Did You Say "Deregulation" and "Lower Taxes?"
After the Trump meeting, all airline stocks rose, with 3% gains at JetBlue (JBLU) , Alaska (ALK) , Delta and Southwest. Afterwards, Deutsche Bank analyst Mike Linenberg wrote in a report that the U.S. airline industry is one of the most heavily taxed industries, paying $23.1 billion in excise taxes in 2016, up from $3.7 billion in 1990.
During the meeting, Trump said he would roll back regulations and lower taxes on business. Also, Linenberg said he believes the administration could be close to unveiling a transportation infrastructure program.
