LONDON – We are now four months into the new and fresh administration of President Joe Biden. He aims to bring the United States into a more recoverable position, especially with the COVID-19 pandemic still wreaking havoc on the world.
One big issue that still needs to be addressed is the U.S aviation industry, something that has been heavily funded by the U.S Government, predominantly under the Trump administration.
But obviously, keeping airlines and jobs afloat is only one method of keeping the industry on its feet but the Biden Administration has to consider a few things, which is what this article will explore.
Restoration of Air Travel
Restoration of air travel is something of a big priority for the Biden Administration, not just on the domestic front, but on the international front as well.
On the domestic front, United Airlines had appealed to advisors of the President back in December 2020 “to set up a task force that would re-establish air travel as the global coronavirus pandemic” left “carriers to flounder amid continued depressed demand” (Wolfsteller, 2020).
Biden will have to continue on the work and efforts produced by President Trump, especially with the first doses of the Pfizer vaccine being “flown to the U.S from Belgium”, which will mean the expansion of the private sector will have to continue as it already established, with examples such as the “United Airlines COVID Vaccine Readiness Task Team” well in effect (Deese, 2020).
On the continued theme of the previously outgoing Commander-in-Chief, Biden will have to reverse the attitudes taken by Trump during his Presidency to make America more attractive to fly into as explained by Buckinghamshire New University’s Senior Lecturer, Francesco Ragni.
“Trump’s administration hasn’t done a great job in encouraging international travel with its anti-immigration policy and controversial decisions such as the Muslim ban in 2017 and more recently a very restrictive Covid-19 travel ban,” he says. “Under Biden, I think we can expect fewer restrictions, more consistent policies and in general a more open and welcoming US, and that will help aviation” (Airport Industry Review, 2020).
And such policies include a $400bn fund that will be invested over the next ten years “for the development of clean energy innovation, as well as improve US airports by increasing funding to the Federal Aviation Administration Airport Improvement Programme, which provides a grant to agencies for the development of airports” (ibid).
With the last relief deal being signed in December, consisting of a “$900 billion COVID-19 relief package”, of which $15 billion went to the airlines, more work was still “needed to restore the 4.5 million travel jobs lost in the travel and tourism industry” (Oliver, 2020). And this will be something Biden looks to tackle.
The Boeing 737 MAX
With the Boeing 737 MAX returning to commercial service back in December as well with “American’s first flight between Miami and New York’s LaGuardia”, the manufacturing side will be something Biden is keen to get back on track (Shepardson & Rucinski, 2020).
American Airlines were at the centerpiece of encouraging further consumer confidence about the aircraft, with Chief Operating Officer David Seymour stating that the mood about the aircraft in the business was positive.
“We would have never brought this back if the pilots and flight attendants didn’t feel comfortable” (ibid).
Another focus on this will of course is “Boeing’s financial liability” when it comes to such a return to service, especially as airlines had to cancel services due to a lack of equipment, which subsequently resulted in compensation proceedings taking place. (ibid)
But, with the aircraft slowly returning to the skies, it is of the hope that as the COVID-19 pandemic passes, there will be rapid growth in the number of airframes both in the air but also delivered so then the backlog can be cleared accordingly. From there, Boeing can then begin to place greater focus on its next project being the 777X.
For this to happen, however, Biden will need to place as much support behind Boeing as possible, as well as the Federal Aviation Administration (FAA), so then the big figure of “57%” from a Reuters and Ipsos figure in terms of people not being likely to fly the MAX can come down and offer more confidence. The two fatal incidents would not have helped “aviophobia”, which is a big anxiety over in the U.S (Mitib, 2021).
The Subsidy Battle
A relatively big issue that will no doubt continue to surround the US-EU relationship is the condition of state subsidies over aircraft manufacturers, with the “European Union” wanting to “seek a swift resolution of a 16-year battle” due to “new U.S tariffs” damaging “talks with the Trump Administration” (Blenkinsop, 2020).
The European Commission will of course be looking for no more disruption that has been “unilaterally” caused by Trump’s isolationist policies when it comes to trade and goods (ibid).
Bringing this issue to a solution will be in the interests of both sides, especially so then it can “agree to cooperate in opposing any future “hurtful” subsidies used by China to build up its commercial aircraft industry”, of which the U.S has been aggressively adding companies to the ban list because of this (Business Today, 2020).
“The EU will engage with the new U.S. administration at the earliest possible moment to continue these negotiations and find a lasting solution to the dispute,” the EU said in an emailed statement to Reuters last year.
And such subsidies even relate to the ongoing BREXIT scenario in the United Kingdom, with “the British decision to suspend tariffs on US goods from January 1, once Britain fully [left] the EU, upset European planemaker Airbus and exposed a growing rift between the UK and Europe over aerospace investment” (Wilcock, 2020).
But with a trade deal set to be agreed by 2022 (ibid), this could repair relationships with the likes of Airbus, who will be keen to keep its presence strong in the UK and also in the US too.
Condition of the US Industry
There are both positives and negatives to take from the condition of the U.S aviation industry thus far.
One positive is that the initial rumours of American Airlines going into bankruptcy stayed as rumours, due to the airline securing “more than $14 billion in liquidity at year-end”, even with it having “higher debt because it invested in new airplanes” (Reed, 2020).
Those on Wall Street, however, believe that the industry will be heading on the up very quickly, with Frank Holmes (2020) stating that he believes “the airline industry is in a good position to rebound much faster than many people initially thought”.
That being said, whilst recovery to 2019 levels may not take that long, recovering over 20 years of passenger traffic growth will be more of a challenge, with “more than 40 airlines completely ceasing or suspending operations” in 2020, with more expected to fail in 2021 (Ng, 2021).
It does remain clear that US aviation officials are doing all it can to restore the industry as fast as possible, with them pushing “to resume normal air traffic operations while Coronavirus spreads”, as reported by WSWS in 2020.
Whilst it may not be perceived as a good thing, it is something that may be needed in order to keep the industry on its feet and in a position where it can be kick-started back into life like an old car.
What is being suggested therefore, is however dire the virus may be at this present time, aviation must continue to operate due to its continued value to not just American connectivity but also to global connectivity. And Biden knows this.
It remains clear that whilst we are early into the Biden Administration, the response time taken out by the likes of President Obama will be needed in order to bring this sector back to some level of normality once again.
A better approach to trade and diplomacy will need to be undertaken in order to make the industry benefit again, as the international market will become more important than ever.
Once it can get the subsidy battle, the 737 MAX and the condition of the industry into better situations, then the economy can fundamentally grow once again to its original point and soar further. But only if Biden plays his cards right.
- Wolfsteller, P. (2020), United Calls on US Presidential Transition Team to Restore Air Travel, FlightGlobal, https://www.flightglobal.com/strategy/united-calls-on-us-presidential-transition-team-to-restore-air-travel/141781.article [Last Accessed 5th January 2021]
- Deese, K. (2020), First Doses of Pfizer Coronavirus Vaccine Have Flown to US From Belgium: report, The Hill, https://thehill.com/policy/transportation/aviation/527835-first-doses-of-pfizer-vaccine-being-flown-to-us-from-belgium [Last Accessed 5th January 2021]
- Airport Industry Review (2020), Biden 2020: Reaction from Around the Aviation Industry, https://airport.nridigital.com/air_dec20/biden_2020_reaction_aviation [Last Accessed 5th January 2021]
- Oliver, D. (2020), ‘Desperately Needed’: Travel Industry Praises COVID-19 Stimulus Package; $15 billion for airlines, USA Today, https://eu.usatoday.com/story/travel/airline-news/2020/12/21/coronavirus-stimulus-deal-reached-travel-industry-praises-congress/5934288002/ [Last Accessed 5th January 2021]
- Shepardson, D. & Rucinski, T. (2020), American Airlines To Restart U.S Commercial Boeing 737 MAX Flights, Financial Post, https://financialpost.com/pmn/business-pmn/american-airlines-to-restart-u-s-commercial-boeing-737-max-flights [Last Accessed 5th January 2021]
- Mitib, A. (2021), ‘Dark Cloud Hangs over Return of 737 MAX’, The Times, https://www.thetimes.co.uk/article/dark-cloud-hangs-over-return-of-737-max-53zxxj77g [Last Accessed 5th January 2021]
- Blenkinsop, P. (2020), EU bets on Biden to resolve aircraft subsidy row, Reuters, https://uk.reuters.com/article/usa-trade-eu/update-1-eu-bets-on-biden-to-resolve-aircraft-subsidy-row-idINL1N2JB0HC [5th January 2021]
- Business Today (2020), US, EU must cooperate to oppose China subsidies for aircraft industry: USTR, https://www.businesstoday.in/sectors/aviation/us-eu-must-cooperate-to-oppose-china-subsidies-for-aircraft-industry-ustr/story/425183.html [Last Accessed 5th January 2021]
- Wilcock, D. (2020), Brexit Britain Is Warned It Will Not Get a US Trade Deal Until ‘at least 2022’ because Democrat President-Elect Joe Biden Plans to Rebuild Ties with the EU, The Daily Mail, https://www.dailymail.co.uk/news/article-9101749/Brexit-Britain-warned-not-trade-deal-2022.html [Last Accessed 5th January 2021]
- Reed, T. (2020), Airline Shares Ended 2020 Down, But The Sky Did Not Fall And American Bankruptcy Chatter Turned Out to Be Nonsense, Forbes, https://www.forbes.com/sites/tedreed/2021/12/30/airline-shares-will-end-2020-down-but-the-sky-did-not-fall-and-americans-bankruptcy-never-happened/?sh=452ee62f6e04 [Last Accessed 5th January 2021]
- Holmes, F. (2020), Things Are Looking up for Commercial Airlines, Forbes, https://www.forbes.com/sites/greatspeculations/2020/12/17/things-are-looking-up-for-commercial-airlines/?sh=603346399b21 [Last Accessed 5th January 2021]
- Ng, A. (2021), More than 20 years of airline passenger traffic growth got erased in 2020, report finds, CNBC, https://www.cnbc.com/2021/01/04/21-years-of-airline-passenger-traffic-growth-erased-in-2020-travel-report.html [Last Accessed 5th January 2021]
- Delphian, C. & Cordon, H. (2020), US Aviation Officials Push to Resume Normal Air Traffic Operations While Coronavirus Spreads, WSWS, https://www.wsws.org/en/articles/2020/12/12/airc-d12.html [Last Accessed 5th January 2021]