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U.S. presidential policies ignore aviation infrastructure

Analysis

The long-anticipated U.S. Presidential election will take place on 03-Nov-2020 against a background of a polarised nation, seething hatred and continuing riots in many cities. It is quite possibly the most important election ever fought in that country, with repercussions for all nations.

One subject that has been barely touched on by the candidates, even while they have been vocal on the matter of infrastructure generally, is the air transport business.

In a recent publication the Federal Bar Association has, as it does every four years, printed formal statements by both camps concerning their position on key transport matters.

While it does not reveal much – they are either playing their hands close to their chest or they do not have much to say anyway – it is at least evident that a Republican win would see a prolongation of private sector, profit-focused activity in the sector, whereas a Democrat one would see a greater accent placed on the environment and surface transport as an alternative to air.

No big surprise, really. This report is rounded off by a CAPA perspective on what the priorities should be, whoever wins.

Summary

  • U.S. Presidential candidates set out their positions on infrastructure but overlook air transport.
  • 10% of U.S. jobs are transport-related.
  • So much rhetoric; so little reasoned debate.
  • President Trump focuses on surface transport failings and on preventing the Democrats’ green deal.
  • President also looks back to ‘achievements’, rather than forwards.
  • Candidate (and ex-VP) Biden has a little more to say on aviation but it is mainly wrapped up in environmental proposals; his rail ambitions could undermine domestic air travel.
  • The airport privatisation process needs another shot in the arm, quickly.
  • A Biden administration would take a more hands-on approach to managing the virus, versus the hands-off approach and philosophy adopted by the Trump Administration.

The most critical U.S. election in history? Certainly for the air transport business

With the U.S. Presidential election – possibly the most critical in the history of America – looming on 3-Nov-2020, the U.S. Federal Bar Association (FBA) has published a paper analysing the position of the presidential candidates on 'key transportation matters'.

Every four years TransLaw, an FBA publication, asks the presidential candidates for their positions on key transportation matters, which, it says, possibly with unintended irony, are “not always fully covered in the main stream media.” The Trump and Biden campaigns have provided statements summarised below.

The Biden-Harris (Kamala Harris, the prospective Vice President) 'Transportation Policy' content was provided by the Biden-Harris campaign. President Trump’s ‘Providing the Leadership to Rebuild, Restore, and Renew our Nation’s Transportation and Infrastructure Sectors’ was provided by the Trump-Pence campaign.

Transport-related jobs make up 10% of US jobs

The FBA states quite correctly that Federal actions and policies on transportation matters affect everyone. Their importance cannot be overstated.

Almost 10% of U.S. jobs are either in transportation or are transportation-related. Transportation accounts for 15% of the spending by the average household (second only to housing) and contributes towards almost 9% of the Nation’s gross domestic product. The FBA thus “presents these positions of the presidential candidates for your information and decision-making on these critical subjects.”

What it does not say is that transportation is currently buried beneath the aggressive rhetoric that is flowing out of both camps; President Trump is being painted by the Democrats as an inveterate liar with a history of dodgy dealings, who is unfit for office, and Mr Biden is being posited by Republicans as a senile geriatric with a son accused of dodgy dealings, equally unsuited to such a position. There is simply no middle ground, and reasoned debate seems long to have gone out of the porthole.

Indeed, there are more objective statements made in the two submissions that are examined here than would occur in 100 Presidential Debates.

But without a cohesive transportation policy, especially for airports – one that has admittedly come under the microscope on several occasions during the Trump presidency – economic recovery from the impact of the virus is going to be much, much slower for the U.S., and hence for the world.

Shockingly little content on air transport in either candidate's position

What may come as a surprise, but not to anyone who has read previous CAPA reports on this subject, is the lack of comment on the air transport sector. Believe it or not the word ‘airline’ does not appear in the document at all, from either side.

Similarly, there are no occasions at all where the word ‘airport’ is used. ‘Aviation’ does make an appearance on four occasions; one of them in the name of the International Civil Aviation Organisation (ICAO) in respect of sharing technologies with other nations (Biden) while the same candidate uses the word on another three occasions (including twice in the same paragraph) to comment on plans to develop ‘low carbon aviation’.

That’s it. As for the Trump camp – there is no proposal whatever, aside from some oblique CARES mentions.

The Trump document

Historical achievements rather than looking to the future

The focus of the Trump campaign contribution is a historical overview of achievements rather than a look to the future, and it majors on surface transport, especially trucking.

It does, however, refer to the USD85 billion in transportation funding authorised as part of the Coronavirus, Aid, Relief and Economic Security (CARES) Act, the majority of which went towards payroll support, which “literally kept trucks on the road and airplanes in the sky”…enabling “essential healthcare workers to travel by air and loved ones to get to their relatives in need, sometimes with only one or two passengers on a flight”.

There were “quick agreements on things like mask requirements for air travel”. What is not mentioned, but might have been, is the halt placed on travel from China, followed by travel from other countries – a ban which persists until today, with some exceptions.

The submission makes a bold statement that “President Trump’s leadership saved our American transportation jobs and in turn saved the American economy. And, President Trump‘s approach to the coronavirus – keeping essential transportation services going safely through lagging demand – allowed the quick, robust economic recovery we are now seeing take hold.”

The Democrats’ 'Green New Deal’ is rebuffed

The President insists that his approach stands in stark contrast to “the radical, Green New Deal philosophy that Vice President Biden proposes for this country.”

The Green New Deal (which Mr Biden said he did not actually support early in Oct-2020) puts ‘climate change’ at the forefront of U.S. policy making for the next four years.

His campaign bills it as ‘THE BIDEN PLAN FOR A CLEAN ENERGY REVOLUTION AND ENVIRONMENTAL JUSTICE’ and insists that “there is no greater challenge facing our country and our world”. The Biden Plan will “ensure the U.S. achieves a 100% clean energy economy and reaches net-zero emissions no later than 2050”, but will also “lead an effort to get every major country to ramp up the ambition of their domestic climate targets.” That clearly has potential implications for air travel.

The Trump campaign dismisses the plan as the basis for destruction of traditional U.S. industries, for example fracking, which has become a single-issue vote winner or loser in some key states, and dismisses it on the basis of cost, which it says would amount to USD100 trillion.

The document goes on to say that “Under this President’s watch, billions in transportation funding has been approved. This includes vital investments in our nation’s roads, ports, power grids, broadband, and other projects. But, transportation and infrastructure leadership is not just a willingness to spend. It requires cutting red tape and empowering communities to get funding working to provide jobs and make a meaningful difference to our nation.”

Surprisingly, aviation is not mentioned in the text here because this administration has indeed made some baby steps towards reducing red tape on airport privatisation, for example (a forthcoming CAPA report highlights a small Florida airport that will join the Airport Privatisation Programme), while public-private projects have been encouraged and are actually taking place at airports of varying sizes across the country, to realise infrastructure that might not otherwise have been built.

Suggestion that environmental review processes will be dramatically reduced in length

The next paragraph deals with the alleged tardiness in infrastructure projects during the eight-year Obama-Biden terms, referencing a bridge project in North Carolina that took more than 19 years just for completion of its environmental review process, before a lawsuit delayed the project approximately five more years.

It can only be perceived from this comment that such reviews will be dramatically reduced in length in any second Trump term, and in all sectors, including aviation. Otherwise, there is no apparent reason for the mention.

The statement says: “Under President Trump, it is now the policy of the federal government to complete all Federal environmental reviews and authorisation decisions for major infrastructure projects within two years. While protecting the environment, we will build gleaming new roads, bridges, railways, waterways, tunnels, and highways.” (Again, no mention of gleaming airports).

But it does say that the administration has updated rules relating to the National Environmental Policy Act (NEPA) for the first time in over 40 years, thereby establishing time limits for completion of environmental impact statements and other assessments.

‘Big city’ investment to be shifted to rural America – but would that include the airports that service them?

In a section on ‘rural America’ President Trump says that he is working to ensure it receives the investment it needs, giving it “a seat at the table” and avoiding what he describes as “the Democratic tactic of  investing in big blue cities, while the American heartland is neglected.”

He claims that the government is “harnessing the power of the private sector in infrastructure development in distressed communities...having designated nearly 9,000 Opportunity Zones across the United States, encompassing almost 35 million Americans…attracting USD75 billion in funds and USD52 billion of new investment and 500,000 new jobs”.

But once again, an opportunity appears to have been missed to relate these activities to the small commercial airports around the U.S. that lost out initially to post-deregulation hub and spoke activities and more recently to the pandemic, and to explain how these policies will help those airports regain services, their status, and play a part in economic revitalisation of communities.

The next section is in typical Twitter-like caps:

‘THE NEXT FOUR YEARS WILL DETERMINE THE FUTURE PATH OF AMERICAN TRANSPORTATION AND INFRASTRUCTURE AND THE CHOICE IS CLEAR.’

But it uniquely concerns surface transport (highways, bridges), with the only meaningful generic statement that would also concern air transport being that under a Biden administration “Regulation would explode, rather than continue to be streamlined and cut”.

The statement concludes by stating:

“President Trump is meeting the transportation and infrastructure needs of America, which is vital to our country’s continued economic success. His track record of getting the job done provides a clear contrast to the failed Obama-Biden years. The choice is clear. American jobs and prosperity under President Trump or a socialistic Green New Deal agenda under Vice President Biden.”

Rectifying surface transport failings and avoiding an ‘environmental cost’ is the mainstay of the Trump position

That pretty much sums it up.

President Trump’s transportation position is hinged on rectifying surface transport failings and on preventing the green deal the Democrats posit on the basis that it would cost too much and hinder economic progress.

The Biden statement

‘The Trump campaign in reverse’, a little more air transport content, but still thin

In many ways the Biden statement is that of the Trump camp in reverse, putting emphasis on public sector solutions and on community development initiatives.

Where there is commonality is that little is said directly about the aviation sector. However the Biden camp does talk at length about aviation and the environment, as suggested in the Trump camp review above, and also devotes lengthy paragraphs to the development of high-speed rail, which could be interpreted as a threat to domestic aviation, short haul at least.

The opening statement is that Mr Biden is running for President “to rebuild the middle class and make sure that everyone can come along.” This would require “a transformational investment in our country’s infrastructure and future to equip the American middle class to compete and win in the global economy.”

Well down the world rankings for quality of infrastructure, but nothing about how airports can be improved

Mr Biden also uses the same phrase as President Trump when he refers to a grading by the World Economic Forum, which places the world’s richest nation as 10th in the overall quality of infrastructure.

But that would mean that its airports would have to remain, or be brought up to, scratch, allowing the nation’s airlines to provide domestic and international services cost effectively, and there is nothing about how that might be done.

Mr Biden says that President Trump, during his 2016 presidential campaign, said that he would change that, and that he has been promising an infrastructure plan since his earliest days in office; that he keeps holding “Infrastructure Weeks” but has actually failed to deliver results. Instead, President Trump “has focused on privatising construction projects to benefit his wealthy friends”.

Whether or not that is the case, under the Trump presidency there have been several attempts to invest both publicly and via private resources in the airport sector, but they were denied by political manoeuvring in Congress.

Mr Biden can call on experience gained from the 'American Recovery and Reinvestment Act'

One thing in Mr Biden’s favour is that as Vice President he oversaw the implementation of the American Recovery and Reinvestment Act, which put more than USD800 billion into infrastructure and stimulus spending, including into airport projects. But that makes it all the harder to understand why such infrastructure investment is not being identified and promoted now.

Moving the U.S. to net zero greenhouse gas emissions is a major plank of the Biden camp statement, along with an obscure line about “creating good, union jobs that expand the middle class. It is Joe’s firm belief that American workers should build American infrastructure and manufacture all the materials that go into it, and that all of these workers must have the option to join a union and collectively bargain.”

This appears to conflict the worthy ambition of creating ‘union jobs’ with that of finding the best possible resources and skills to manage infrastructure. For example, there are few experts in the U.S. who know how to operate airport concessions, P3s and other such deals. They are mainly to be found in Europe, followed by Asia.

Much emphasis on clean fuels

But to return to the environment. A Biden Administration “will work to launch a new generation of low-carbon trucking, shipping, and aviation technologies. Long haul trucking, oceanic shipping, and global aviation contribute heavily to transit emissions.”

As part of Mr Biden’s plan to invest USD400 billion over 10 years in clean energy research and innovation, his administration “will develop a federal research programme focused on further reducing the cost of bio fuels; increasing their energy density; and developing more efficient engines that can power long-haul trucks, planes, and ships, to keep global commerce moving while reaching net-zero emissions by 2050".

In addition, a Biden Administration “will work with the International Civil Aviation Organisation and the International Maritime Organisation to share cutting edge technologies with other nations.”

Return of the railroads? Mr Biden thinks so: a "second great railroad revolution”

Mr Biden will also push to build a national high-speed rail network, seemingly largely as a global prestige measure, which is also consistent with his environmental goals. In what is probably the largest section in the entire document he says that he will “recognise the importance of America’s chronically neglected rail network”, and “spark the second great railroad revolution”, pointing out that the U.S. is lagging behind Europe and China in rail safety and speed.

The document says, “A 21st-century passenger rail system that connects people across our nation is essential to our competitiveness, to reducing greenhouse gas emissions, and to giving more Americans the freedom and flexibility to travel.”

Mr Biden says he will make sure that America has “the cleanest, safest, and fastest rail system in the world, for both passengers and freight, and as President, he will “invest in high-speed rail.”

However, in merely saying he will “make progress toward the completion of the California High Speed Rail project” (one which has been dogged by difficulties, including the outright denial of land for it to run on), he recognises how hard it can be to turn intention into reality where America’s rail networks are concerned.

Europe’s preference for rail over air may be catching on in the U.S.

Even so, by promising the construction of an end-to-end high-speed rail system that will connect the coasts, “unlocking new, affordable access for every American”, there is more than a suggestion that the European propensity towards rail over air for environmental reasons has finally caught up with America.

Indeed, part of Mr Biden’s “second great railroad revolution” could be to expand national rail operator Amtrak to provide new services in corridors up to 400 miles in length, to replace airline service with a fast train. This sounds very similar to the European green policy for journeys up to 600km. Naturally, that would be bad news for LCCs and ULCCs, along with the airports they serve.

To speed that work, Mr Biden will tap existing federal grant and loan programmes at the U.S. Department of Transportation, and improve and streamline the loan process. There is no similar provision for airports.

He says, “We will make sure that our highway, road, transit, and air systems never again divide us”, although it sounds very much like the rail and air systems will be divided, rather than be encouraged to work in unison.

Revitalising communities will be at the surface level rather than in the air

There is another commonality with the Trump position in that the Biden strategy is to “revitalise communities in every corner of the country so that no one is left behind” by decaying infrastructure.

But again, this section zeroes in on surface transport – highway improvements (a promised USD50 billion over the first year of his administration), electric cars and buses and improved battery storage technology, cycle schemes, ‘smart pavements’, anything that minimises carbon emissions rather than even the simplest plan to rescue small airports from the doldrums.

And that is even despite the claim that as President, Mr Biden would aim to provide all Americans in municipalities of more than 100,000 people with “quality” (it’s a noun, not an adjective) public transportation by 2030.

To that end, he would increase flexible federal investments, helping cities and towns to install light rail networks and improve existing transit and bus lines. He will also help them to invest in infrastructure for pedestrians, cyclists, and riders of e-scooters and other micro-mobility vehicles.

Again, absolutely nothing about travel by air and how that could be made better.

More to say on air transport but only where the environment is concerned

So in summary, where President Trump’s transportation position is hinged on rectifying surface transport failings and on preventing the Democrats’ green deal, the Democrats themselves have more to say on air transport, but insofar as it relates to the green deal.

Meanwhile, Mr Biden envisages an improved rail network that won’t so much work in conjunction with air travel as challenge it.

What can the airport industry reasonably expect from politicians right now?

Where airports are concerned, they did start to shift in the direction of more private financing activities as soon as the first months of 2017, very early in the Trump administration.

In 2018 infrastructure proposals were delivered, including an incentive programme to spur additional dedicated funds from states, localities, and the private sector, on a matching funds basis. The Airport Privatisation Pilot Programme (APPP) was extended beyond its original format, permitting participation by any U.S. commercial airport, and becoming the Airport Investment Partnership Program (AIPP), a broader title for a new era.

Proposals were made for the power of airlines to veto a lease or P3 deal to be reduced or eliminated, while the future of tax-exempt and private activity bond funding of airport infrastructure was placed under review, with the possibility of a positive change. But little – apart from the APPP – actually changed.

Then in 2019, in the early stages of the pandemic, a ‘Moving Forward Act’ (H.R.2) was introduced, inter alia to inject USD1.5 trillion into infrastructure generally. Within it was an Invest in America Act, with nearly USD500 billion promised to rebuild and reimagine the nation’s transportation infrastructure. It appeared that members of both Houses were beginning to understand the critical role of airports – even if that appreciation was forced on some of them by circumstances, as they were unable to move around easily by air.

Specific provisions included authorisation for the Secretary of Transportation to permit up to 30 non-large hub airports each fiscal year to use Airport Improvement Programme (AIP) grant funds for innovative financing techniques related to an airport development projects. Also 'Supplemental Funding for Airports' to protect smaller regional airports that have already taken a hit from successive waves of consolidation.

At the time, CAPA queried whether there would be bipartisan support for H.R.2, but it was passed in Jul-2020, and many of its environmental aspects turned up in Mr Biden’s statement for this election.

But overall, few of the initial Trump-era proposals have come to pass, even though they were fleshed out quite boldly later, and included the boosting of public and private sector co-operation on airport development.

That was at least partly because they became hung up on the U.S.’s internecine political structure. The die is now cast, and that will probably continue to be the case whichever President, and party, is in power.

The airport privatisation process needs another shot in the arm, quickly

Regarding the future prospects for private investment into a still hugely majority publicly owned airport system, one that will continue to creak while the pandemic lasts, Bob Poole, director of transportation policy at Reason Foundation in the U.S., provided these observations.

“As for airport privatisation via long-term P3 leases, Congress opened this up to all passenger airports in the 2018 FAA reauthorisation legislation, but so far the only serious effort has been at St. Louis, which got terminated in Dec-2020 by metro-area politics, despite very strong private-sector interest and a preliminary agreement with the airlines there. No other large or medium hub is currently in prospect, but the Punta Gorda Airport on the west coast of Florida is seriously considering a long-term P3 lease, and has been talking with people involved with the San Juan P3 (Aerostar consortium) and with the St Louis efforts (Partners Group).”

One might reasonably conclude from Mr Poole’s remarks that while the privatisation process was enhanced during the Trump administration, there is still a long way to go to make it more attractive to both domestic and international organisations, and in the case of the latter, even more so in the light of Mr Biden’s remarks that American infrastructure should be built by Americans. Presumably that means financed as well.

There is a danger that unless it gets a quick shot in the arm again, whoever is in power, it is in danger of reverting to the parochial position it occupied a decade ago, when even firms from ‘friendly’ states were being dissuaded from bidding for airport lease opportunities.

What can the airline industry reasonably expect from politicians right now?

The following overview comes from CAPA’s Senior Analyst for the Americas.

It is difficult to look beyond the short term with respect to what’s needed by the US aviation industry from the country’s presidential candidates. America is facing a third wave of COVID-19 infections, and airlines continue to burn through millions in cash on a daily basis. Those operators have pushed out their target dates to achieve a breakeven cash performance well into 2021.

Mr Trump’s presidency has been generally benign for the country’s aviation sector, with no real onerous new rules or regulations introduced during the last three years. His administration worked with Congress to push through the Coronavirus, Aid, Relief and Economic Security (CARES) Act that allotted USD50 billion to airlines, including USD25 billion in payroll support.

But thousands of furloughs ensued when the payroll funding expired on 30-Sep-2020, and hopes of a second relief package are fading even as President Trump has previously stated he would support a stand-alone bill for airlines, but it is highly unlikely any additional broad stimulus relief will emerge before the election.

Former Vice President Biden has stated that he would issue a mandate requiring the use of face coverings in all interstate transportation, including airline flights, according to Reuters. It is not clear if a Biden Administration would heed calls by the airline industry for widespread testing and other measures to jump-start demand, but this would be broadly consistent with other noises made about handling the pandemic. Mr Biden has pledged to bolster the overall COVID-19 testing capacity in the US, and pledged to invest USD25 billion in vaccine manufacture and distribution to guarantee cost-free vaccines for Americans.

Also, it is likely that the Department of Transportation (DoT) in a Biden Administration would take a more hands-on approach to managing the virus, versus the hands-off approach and philosophy adopted by the Trump Administration.

Beyond COVID-19, Mr Biden appears to be ready to work with the industry to reach carbon neutrality goals, while Mr Trump would leave aviation to its own devices in reaching its environmental aspirations.

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