So Now What?

Nov. 9, 2020
Brace for turbulence before we reach the new altitude in transportation funding.

The election is over and it’s apparent that we’ve got a new presidential administration on the way.

While we still don’t know the full outcome of the election, there are a few things we can surmise from the results and what it means for the aviation industry.

The administrative branch will be run by the Democrats. President-Elect Joe Biden is forming a transitional government. However, major legislative wins for the party didn’t happen in the House or Senate. Depending on how the Senate runoff elections in Georgia go in January it could give the party slim control of both chambers.

With either a split government or a narrowly controlled government, I think it’s a safe bet we will see approval of some version of the HEROES Act, but don’t count on a robust action. Biden has campaigned on major infrastructure investment along with many democratic leaders. Republican leadership has also signaled support for a bill within the past year, but gridlock looms. Best case scenario is a bill that looks near identical to the CARES Act.

I’d also caution dreams of a massive transportation investment bill. Studies on the American Recovery and Reinvestment Act of 2009 show such investments can be effective in at least the short term to address a recession. But comprehensive change or even a shadow of Biden’s $2 trillion investment proposal in national infrastructure is going to be a tough sell. Getting the industry rolling again via rapid testing deployment, hygienic improvements, mask mandates and a national vaccine program is going to be the focus for restarting all modes of the transportation industry.

I do see potential for a boost in AIP funding and congressional action addressing the roughly $120 billion in outstanding municipal debt our nation’s airports have sold. Boosting AIP funding would allow quick investment in equipment to boost the private sector to jolt the economy while awaiting a vaccine to allow for normal operations. Taking actions on debt could also provide more protections to the private sector.

I anticipate more appetite for general aviation infrastructure investment. The industry is soaring during the pandemic and is now more essential than ever for small communities. Airlines were kneecapped by the loss of federal funds in October and small communities have lost most if not all air service. Many companies have turned to business and general aviation as the solution to their loss of connection. They’ve gotten a taste for the convenience commercial flights don’t offer and the price points are often bearable. Given the seismic shift in the industry from the pandemic, it’s easy to see a bipartisan appetite to boost support for this facet of the industry.

The gorilla in the room remains airline consolidation. A lot of murmurs have begun in recent weeks that we could see another blockbuster merger in 2021. I’d be shocked if that didn’t happen. Too much red ink is dripping off the balance sheets of U.S. airlines and federal inaction has opened the door. Five U.S. airlines have already hit the skids since March. The most recent data from Airlines for America (A4A) puts weekly average domestic load factors at 58% with 1,400 less active aircraft in the sky since Jan. 1.  

Limping the big four to the (estimated) return to pre-pandemic levels would be a herculean effort with very little political support. Shedding aircraft and chopping positions can only go so far. And with fears of a heavily progressive leadership in the House and Senate vanished, approval of a mega merger isn’t impossible.

Elections are easily viewed through partisan lenses and talking points, but the reality is they mean changes in how things work. Knowing what we know about who is leading the nation and how they'll govern is really the important part. Plan accordingly. 

About the Author

Joe Petrie | Editor & Chief

Joe Petrie is the Editorial Director for the Endeavor Aviation Group.

Joe has spent the past 15 years writing about the most cutting-edge topics related to transportation and policy in a variety of sectors with an emphasis on transportation issues for the past 10 years.

Contact: Joe Petrie

Editor & Chief | Airport Business

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Alejandro A. Alvarez/The Philadelphia Inquirer/TNS