Response to Article on U.S. Airline Industry
My position is yes. The decision to relax the rule restraining foreign ownership in U.S. airlines is long overdue. The restriction has limited benefits for airline employees and consumers by enforcing a protectionist policy, despite the U.S. claim to be an international leader in democratic and market freedom. In other industries such as banking, I.T., oil, and car manufacturing, vast quantities of capital enter and exit the U.S. market, serving as important distinguishing factors for the country’s free commercial culture. Such freedom is the foundation of immense commercial advantages for the U.S. against other countries across the world. In the case of the airline industry, the Federal Aviation statute restricting foreign ownership of U.S. airlines has prevented these advantages, and the outcomes have included regular bankruptcies, operational inefficiencies, stiff competition from other airlines such as Emirates, Lufthansa, and British Airways, and redundancies.
Airline clients in the U.S. are commonly dissatisfied with the quality and efficiency of services that their enterprises offer and rate other airlines’ services higher, in terms of timeliness, comfort, and satisfactory service. By opening up the industry to foreign investment, the airlines would benefit from more capital and stronger balance sheets, enabling higher investments in technology that would influence improved services for clients, including less expensive and more comfortable services and less harm to the environment. Such action would also eliminate the problem of operational inefficiencies and redundancies in the industry. This is because foreign carriers and investors would finance expansion within the U.S. market and influence U.S. airlines’ achievement of greater scales of operation at a global level, more effective branding, and enhanced international competitiveness.
Protectionism represents a strong obstacle for the U.S. airline industry. The argument for protectionism on the basis of national security concerns is unsound and paranoid. It reflects misplaced and self-destructive hostility towards foreigners because thousands of planes under foreign ownership and control already land within the U.S. daily. While it may be sensible to argue in theory that airlines under foreign ownership may be more likely to allow terrorists’ access to their operation systems thanthose with U.S. ownership, it is judicious to remember that all planes used in the 9/11 attacks were under the ownership and control of U.S. airlines. Rather than depending on airlines’ operations for security in the post-9/11 world, the U.S. relies on the services of intelligence agencies and the T.S.A. (Transport Security Administration). In the case of passenger safety, standard incentives for the maintenance of airplanes, employment of competent staff, and safe operations of airlines and planes are in force equally for all competitors, irrespective of ownership. Rather than shielding the national airline industry from competition, the protectionist policy has failed to prevent regular bankruptcy claims among U.S.-owned airlines due to the effects of competition among themselves. Airlines such as United and Delta have suffered bankruptcy since the early 2000s even without foreign competition within the U.S. airline market.
Foreign firms in non-airline industries such as steel manufacturing and financial services have operated successfully within the U.S. and contributed immensely to the U.S. national economy, implying that foreign investment in U.S. airlines would also be practical and successful. It is also relatively easy for U.S. citizens to invest in foreign airlines, portraying the unfairness of protectionism in the U.S. airline industry. These assessments mean that the U.S. airline industry has no justification to enforce a protectionist policy against foreign ownership.