Press Release

For Immediate Release                                                                

 

Contact:      Jack Saporito, 630-415-3370                              

Date:   January 18, 2007

 

More of the Same: Big Airlines Refuse to Cover Costs for O’Hare Expansion, Once Again Shifting the Burden Onto Taxpayers

 

The Chicago Chapter of the American Working Group for National Policy (AWGNP)  today) today reacted to the commercial airlines’ opposition to the city of Chicago’s request to cover the escalating costs of expanding O'Hare International Airport with general airport revenue bonds.   As a result of the airlines’ denial, the city is now forced to seek federal approval to use $270 million in passenger ticket taxes to help cover the costs, thus shifting the burden of their costs directly onto passengers.  This is in spite of the fact that big airlines’ operations have pushed O’Hare to expand at audited costs estimated to be over $70 billion, including needed offsite infrastructure and interest.

 

This is becoming an all-too-common pattern with the big, subsidized airlines.  The  generallyThe generally multinational airlines created the need for this O'Hare expansion  because of their aged and congested ‘hub and spoke’ system, yet they don’t want to pay their fair share – they want to tax everyone else except for themselves.  Unfortunately, the huge burden ultimately falls onto taxpayers and small businesses,” said Jack Saporito of AWGNP.

 

Studies have shown that the peak operations of the airline hub-and-spoke system are  primaryare primary cost drivers of the system, yet the commercial airlines  refuseairlines refuse to modernize to more efficient modes, in order to continue to block their competition.   In Washington, lobbyists for the big airlines are currently trying to ram through yet even another  $2 billion dollar tax cut for the airline industry – even though the taxes they want to avoid are needed for modernization of the air traffic control system.

 

In addition, this proposed tax break comes even though the airlines are facing record profits this year, and in spite of the fact that over the past five years, the commercial airlines have received a $5 billion government bailout, a $10 billion government loan guarantee program, and the shift of some the government’s pension obligations to the government’s Pension Benefit Guaranty Corporation – which ultimately gets paid for by American taxpayers. 

 

“The big, commercial airlines should come clean as to what this is really about – the airlines don’t want to pay out of their own pockets to modernize and expand O’Hare airport, because that means that there would be room for more competitors to come in and force them to, at the same time, lower their prices for consumers,” said Saporito.  And they don't want to change their monopolized and antiquated hub-and-spoke system by building new, more efficient and environmentally buffered airports, as that would also allow new competition and protect the health a large percentage of the population.

 

Big, airline companies have stifled consumer-benefiting competition by monopolizing scarce resources around the country.  For example, commercial airlines recently opposed a recent proposal by the Federal Aviation Administration (FAA) to open LaGuardia Airport to additional carriers.  The situation prompted industry veteran and Air Tran spokesman Ed Faberman to note: "This is the first opportunity we've seen for increased competition at LaGuardia.  Obviously the larger carriers are trying to do everything they can to try and put this on the shelf." 

 

If this scenario is what our government and taxpayers had in mind when the big airlines were "de-regulated", and since the big airlines all seem to want to consolidate and shift ownership to foreign interests, we question that earlier and apparently misplaced confidence and wonder if it isn't time to re-regulate the legacy airlines.  If the taxpayers are forced to support them, let the taxpayers own them.

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