The Implications of a Biden Administration on Airlines and Aviation

With the November elections quickly approaching, speculation is growing about what a Biden administration could mean for the airline and aviation industry once the administration addresses the larger issues of the pandemic and stabilizing the economy. We expect any forthcoming COVID-19 relief bill would likely include additional funding to airlines. Closer scrutiny of who is receiving funds and how they are being used is even more likely by the COVID-19 oversight committees that are in place for both the House and Senate. This would build on the host of letters and calls for investigations of how certain airlines and air cargo companies have used funding. It is also still unclear who Biden might choose for oversight positions such as Attorney General, should he get elected but they would be important as well in setting the administration’s oversight agenda.

We also expect that, once things begin to stabilize, there will be a push for airlines to commit to reduce emissions in the coming years. In his policy proposals, Biden openly acknowledges that solutions are not readily available today and that more investment dollars are needed. However, we do believe longer term commitments by the aviation industry are a likely outcome.

Other key areas that we expect to see a different approach include labor disputes, revisiting the passenger bill of rights, an increased focus on oversight and investigations, environmental policies for the industry, and increased funding for critical airport infrastructure.

A Different Stance on Labor Disputes

While the Trump administration has been somewhat indifferent to labor disputes, a potential Biden administration would bring with it much stronger union support. The “Biden Plan for Encouraging Unions and Empowering Workers” focuses on what Biden considers a “war on organized, collective bargaining, unions, and workers”. Some of the Biden campaign’s more relevant proposals include:

• Putting back in place Obama’s Fair Pay and Safe Workplace executive order that requires employee compliance with labor and employment laws as well as put back in place Obama’s “Persuader Rule” that requires companies to become more transparent with information that they communicate to employees, including the use of any outside help; and
• Updating the National Labor Relations Act to make it easier for workers to join unions (most airline workers are unionized at this point anyway), including more labor-friendly appointees to the National Labor Relations Board.

Passenger Bill of Rights

Post 9/11 when air travel became much more cumbersome, there have been numerous attempts to put in place a passenger bill of rights for the aviation industry. Calls for reform accelerated after a series of well publicized passenger mishaps over the last several years.

Major areas of focus include:

• Reimbursing passengers who are denied boarding $1,350 due to an oversold flight;
• Limiting the airlines from further shrinking their seats until a minimum standard is set by the U.S. Department of Transportation (DOT); and
• Airlines would be required to immediately refund bag fees for damaged or lost bags.

While an all-encompassing passenger bill of rights has not moved forward, the airlines themselves have taken it upon themselves to improve the passenger experience even prior to COVID-19. Involuntary denied boarding’s have already dropped markedly and overall customer satisfaction has improved as well. Post COVID-19, many of the airlines have taken Southwest’s lead (which has been in place for years) on eliminating passenger change fees in order to get passengers more comfortable booking a flight. We continue to think that a consistent COVID-19 flight testing protocol is needed for both domestic and international passengers to help contribute to the recovery of demand for the industry.

Environmental Policies

The Biden campaign has made it clear that it intends on making companies accountable on an international scale for reducing emissions in both global shipping and aviation. This is an area that Europe has been widely regarded as a first mover, establishing regulations that are often adopted by other nations. Notably, Biden’s proposed approach seems to be incentive-based as opposed to a punitive. The “Biden Plan for Climate Change” includes:

• Pursuing measures to incentivize the creation of new, sustainable fuels for aircraft;
• Requiring public companies to disclose climate risks and greenhouse gas emissions in their operations and supply chains;
• Leading the world to lock in enforceable international agreements to reduce emissions in global shipping and aviation; and
• Investing $400 billion over 10 years in clean energy, climate research, and innovation.

Oversight and Investigations

Both in the wake of the Boeing 737-MAX crashes and the formation of the Select Subcommittee on the Coronavirus Crisis, government oversight of the aviation committee has never been stronger. The Biden campaign has released several policy proposals that would strengthen oversight and investigation capabilities including:

• Strengthening enforcement of the Sherman and Clayton Antitrust Acts;
• Providing oversight agencies with the resources needed to increase the number of labor investigations;
• Directing the EPA and DOJ to pursue criminal cases against polluters to the fullest extent possible and, when needed, seeking additional legislation; and
• Increasing the number of OSHA investigators and safety enforcement efforts.

Funding for Critical Airport Infrastructure

America’s overall airport Infrastructure continues to be woefully lacking in contrast to the rest of the world. The Biden campaign has made critical infrastructure improvements a key part of its platform, with some commitment specific to airports. While exact funding sources for many improvements are not specific, the proposals include:

• Doubling funding for airports through the FAA’s Airport Improvement Program;
• Launching a new competitive grant program for major airport renovation projects;
• Working with FAA to fully implement its NextGen technology system; and
• Establishing a manufacturing communities tax credit of $6 billion over three years to invest in communities that experienced mass layoffs.

Key Considerations for the Industry

We would expect a potential Biden Administration and Democrat-controlled Senate to consider input from a much broader group of stakeholders who will participate in what is likely to be a more robust public comment period leading up to changes in the four areas mentioned above. Understanding how the process works and who will be providing input to the process will allow companies to better prepare and dedicate the necessary resources to navigating reviews or complying with new legislation.

Another layer to consider is the public perception of how companies have behaved in the past and what new disclosures may be needed. Putting proactive positions in place quickly and effectively could help mitigate and manage new threats to businesses, whether that be increases in consumer or labor activism, environmental scrutiny, new investigations, or the negative headlines that could come from all of these.

As companies prepare for a potential shake up in Washington, understanding what changes are likely to occur first is critically important. The stakes are high, and industry’s freedom to operate may be curtailed if companies are not well-prepared for potential changes from a new Administration.