BIG IDEAS: The Case For a State-Owned Airline

So many of us in DSA long for what I call “a Star Trek future,”  where democratic socialism is assumed and resources allocated accordingly. Now, DL begins a series where comrades explain how that might come to be. This piece is intentionally controversial. What’s your dream scenario? — Ed.

If theres one thing the country can agree on, it’s that flying is miserable. After paying for an expensive ticket, passengers are crammed into tight seats; charged unexpected fees; and, in worse-case scenarios, booted off their flight due to overbooking. And that was before the pandemic.

To improve this situation, the United States should nationalize the private airlines into a state-owned United States Flight Corporation. Although a state-owned airline may sound idealistic to us in the United States, there are many such entities already operating around the world. States either own airlines outright or are majority stakeholders.. 

Nationalizing the airlines will not fundamentally alter U.S. society, but it would be a shift away from the neoliberal doctrine of rampant privatization and prioritization of corporate interests that has dominated the country for the last half-century. Not only would state consolidation make traveland therefore lifeeasier, but it would greatly normalize the much-maligned concept of central planning and collective ownership, laying the groundwork for future endeavors, such as free public colleges or a national health service. With the legacy of Cold War propaganda still scaring Americans away from any sort of collective ownership, a state-owned airline would prove the effectiveness of state enterprise, wedging open the door to other social programs.

An Airline for the Public Good

In its current form, private air travel is expensive, uncomfortable, and environmentally disastrous. All these negatives stem from the same source: the profit model. Overcrowded planes, upcharged snacks, and ghost flights(empty flights conducted to maintain airport gates  make capitalist owners more money. (Although it’s true that airlines lost money due to COVID-19 travel decreases, they are projecting profitable futures.). In theory, capitalist competition should reward companies that improve the quality of their service. But because airlines effectively operate as a cartel with little to no competition for similar routes and departure times, there is no motivation for them to improve the passenger experience. 

A state-owned airline operated for the public good would be dedicated to the following:

  • Quality: Americans should be able to traverse their country as easily, frugally, and comfortably as possible. 
  • Sustainability: Air travel is disastrous for the environment, contributing 2.5% of CO2 emissions. In order to mitigate climate catastrophe without hindering travel, flights will need to be conducted at a maximum efficiency the market is unable to achieve. This would mean an end to ghost flights, as well as optimization of routes to avoid short flights that could be traveled by rail, bus, or car.
  • Reliability: Currently, private airlines are experiencing rampant flight cancellations and delays due to staffing shortages, a downstream effect of poor pay and unsafe conditions for pilots, attendants, and other workers. As its goal is to provide adequate travel conditions and not maximize profit for shareholders, a state-owned airline would avoid such disruptions by including fair worker treatment in its mission statement, making unionization guaranteed and severely curtailing the labor disputes currently plaguing for-profit airlines.

Building the Fleet

To build the U.S. Flight Corporation (USFC), Congress would need to charter a state-owned enterprise (SOE) to create and oversee the operations of this national airline. This isnt a novel process. The United States already owns numerous SOEs in industries from agriculture (Federal Crop Insurance Corporation), to wildlife preservation (National Fish & Wildlife Foundation), to space exploration (NASA).The overarching rationale for incorporating an SOE is that it serves the public interest. For example, NASA was chartered in 1958 for the explicit purpose of ensuring peaceful applications of space science and exploration. The same public interest would be the basis for the USFC. 

Following incorporation, there are two approaches that could be used to build the national fleet. These approaches are not mutually exclusive and can be done in conjunction with each other:

The first approach would be to build an airline from scratch. This is not as daunting as it sounds. The USFC would purchase airplanes from manufacturers, hire pilots and crews, and operate the airline just as private companies do. Passengers would be able to purchase tickets online, go to the airport, and fly to their destination. Additionally, because creating an airline from scratch wouldnt eliminate private airlines, this would give the USFC the chance to prove the superiority of its model over the capitalist companies to bolster public support.

There is, of course, another option: nationalization. To nationalize existing airlines, USFC would purchase stock in publicly traded private airlines to acquire a controlling share. While they won’t be able to directly stop purchases of publicly traded companies, stockholders will fight back politically, so this attack will have to be countered with a strong political campaign that highlights the advantages of nationalization. And while equity could be actively purchased through the stock market, its likely the industry will need another bailout in the near future (as has already happened twice this century). Such a situation would be the best opportunity for USFC to acquire airline stock. 

For example, the air travel industry was bailed out with $18.6 billion after the September 11, 2001 attacks. Twenty years later, it  received another $54 billion as part of the COVID-19 Payroll Support Program (with only 26.2% of the PSP needing to be repaid).

But rather than waiting for the next financial disaster, USFC could purchase publicly traded airline stock now. Once the government owns the majority of shares in multiple airlines, they could be merged together to form the USFC. While purchasing airline stock may sound impossibly expensive, it is actually quite fiscally reasonable. Below are the market caps (the total value of issued stocks) of the four leading airlines operating in the United States. To have the most impact possible, the USFC should prioritize acquiring these four with designs to acquire smaller airlines, such as JetBlue and Frontier.

Delta: $25.31B

American Airlines: $11.27B

Southwest: $26.44B

United Airlines: $14.48B

Altogether these market caps total $77.5 billion, just $5 billion less than the $72.6 billion given to the airlines from the two bailouts this century.

So, instead of twice bailing out the capitalist owners, the government could have taken that money, (plus $5 billion from the Pentagons inflated budget), purchased all four of these airlines, and merged them into a democratically accountable airline that operated for the good of the people and the environment. 

Such a purchase may sound far-fetched, but there have been similar government buyouts in recent memory. For example, the government received a 60.8% share of General Motors in exchange for the 2008 and 2009 bailouts. This transfer made the U.S. taxpayers the legal owners of GM from 2008 until 2013, when the Obama administration sold the shares for a loss.

The Big Picture

Ideally, the USFC will become one facet of a state-owned transportation system that optimizes travel by train, plane, and bus to maximize quality of life while preserving the planet. At its onset, the USFC would operate primarily in the domestic United States with plans to expand internationally. Meanwhile, private companies (or, one day, the state-owned airlines of other nations) could facilitate international travel as the USFC builds its capacity for cross-border flights.  With access to U.S. research and development into sustainable sources of fuel, a state-run airline would be positioned to become 100% green much faster than a private company. By starting with the USFC and proving the benefits of the public sector over militant marketization, U.S. society would be on course for a future where every form of travel is pleasant, eco-friendly, and democratically accountable.

Although markets may work for distributing wants based on personal desire (items such as 25 varieties of coffee, music, and video games), they fail to provide the necessities of life: food, shelter, water, education, and transportation. Consumers dont have a choice about whether to enter said market. When citizens see that collective ownership of one facet of life such as airlines can improve their lives, they will be open to democratizing other industries for the good of the people.