Shortchanged: How Airlines Can Repay Taxpayers for Billions in Subsidies by Improving Jobs, Security and Services


Developed and nurtured with taxpayer dollars, the airline industry holds a special status in the United States. From the early days of flight up through the early 1970s, the U.S. government provided more than $155 billion in direct support for the aviation industry. Even after the industry was deregulated in the 1970s, federal and local governments have continued to play a crucial role in supporting the industry by providing infrastructure support, tax exemptions, and low-cost financing. The justification given for the government’s investment in the industry has been the crucial role the airlines play in facilitating commerce, providing jobs, and bringing the inhabitants of a vast continent closer together.

More recently, the terrorist attacks of 9/11 brought financial devastation to the industry and provided a compelling rationale for increased government subsidies. After 9/11, the federal government not only provided the airlines with billions in cash grants, but also increasingly took on some of the economic risks associated with the industry’s operations, by acting as the airlines’ insurer, providing loan guarantees, and taking responsibility for airline employee pensions. Even after the industry returned to profitability in 2006 and 2007, it continued to benefit from some of these federal subsidies.