Here’s What We Know A Trump Administration Will Mean For Travel – View from the Wing

Donald Trump was a hotelier in addition to being a real estate developer, and has strong opinions on air travel, owing to his time owning the Eastern Airlines shuttle. The rebranded Trump Shuttle was a money-loser, hampered by the first Gulf War and skyrocketing fuel prices, and he couldn’t service the debt.

Ultimately Trump lost money on the deal and it was taken back by Citibank, who entered into a joint venture with US Airways to run it. That product became the American Airlines shuttle, which no longer operates as a separate product.

Trump also sought to take over American Airlines just a year into his foray as an airline operator. He likely never had financing for the offer, and may have been looking to simply make a trading profit on the American shares he did buy as a greenmailer (an amount below the SEC reporting threshold). He ultimately lost money on that, too, caught up in the 1989 Friday the 13th stock market mini-crash. Trump also had a failed online travel agency website, GoTrump.com.

Despite significant experience in the airline industry, and a first term experience on which to draw, I’m not sure we can confidently say how a Trump administration will play out in all areas of travel. That’s because Trump largely staffed his first administration with mainstream Republicans. He nominated former Labor Secretary Elaine Chao as Transportation Secretary.

This time may be different. The standard Republican line is less broadly pro-business now than it was eight years ago.

Tourism

Given the once and future President’s stances on immigration, we might see greater border control efforts not just focused on land borders but scrutiny of airport arrivals (perhaps targeted at arrivals from specific countries, which we saw during the first Trump administration). Efforts at reducing Visa backlogs may be de-prioritized. None of that is good for inbound tourism.

Tensions with China over trade won’t be supportive of greater recovery in U.S.-China travel, and flight levels that used exist prior to the pandemic. But we’re not headed down that path today! Flights between the U.S. and China remain significantly below 2019 levels, and that’s had an effect on transpacific airfares and seat availability generally. Of course these predictions are, again, much more speculative than similar suggestions in fall 2016.

More ‘tough talk’ in foreign policy may not be conducive to visa free travel and reduced tensions overall, which may not be supportive of greater travel.

It would be rather amazing if global tensions, visa restrictions, and border enforcement – combined with greater support for space travel given his relationship with Elon Musk – it was eventually easier to go to Mars than El Salvador?

Anti-Trust

There’s a lot of commentary expecting less anti-trust enforcement generally by a second Trump administration, but I’m not sure those commentators have been paying attention. That could be what happens, but the Republican Party has a newfound love for anti-trust and attacking business (especially social media companies). Vice President-elect JD Vance has praised Lina Khan’s efforts against business on multiple occasions.

Still, the Biden administration sued successfully to break up the American Airlines-JetBlue partnership and block JetBlue’s acquisition of Spirit. No doubt many potential combinations have been off the table, expecting to run into a buzzsaw of federal regulators. Although the administration went along with Alaska buying Hawaiian, given local support for the deal among Democrats in Hawaii and the troubled finances of that carrier as a standalone.

A new administration opens the possibility for another bite at the apple in airline partnerships like American-JetBlue and both airlines say they’re interested in reviving this partnership. We don’t know how receptive a Trump DOT and Justice Department will be even though they were last go-around (with DOT signing off in 2020).

We’ve also seen new developments in the industry since the Biden DOJ was last in court. Spirit Airlines is in a very different and more precarious position than it was when DOJ blocked JetBlue’s acquisition of the ultra-low cost carrier. Frontier might have had an easier time doing a deal for Spirit, if they go down that route, than JetBlue had anyway.

New York LaGuardia

And a return to American-JetBlue could have been in the cards with the new JetBlue management team in place. Recall that it was under the previous CEO that the airline walked away from challenging the district court ruling against the partnership, in favor of focusing on their acquisition of Spirit, even though that deal mostly made sense in the context of their partnership with American which created the need for planes and pilots to expand their presence in both New York and Boston.

The judge in the American-JetBlue case said that a partnership like what American has with Alaska would have been legal. We could see a revised partnership proposed, that doesn’t include the same schedule coordination as the original one, and new leadership at DOT and DOJ could be more amenable to it.

Air Traffic Control

The last time Trump was President he said he wanted to sell off the D.C. airports (a good idea!) and he proposed to reform air traffic control spinning it off out of the FAA into a non-profit with stakeholder board.

Air traffic control in the U.S. is hopelessly antiquated. While NavCanada went all electronic 20 years ago, the FAA won’t eliminate paper flight strips from a majority of its largest facilities until the 2030s. They’re bad at staffing, they’re bad at technology upgrades, and the current arrangement where the same agency is both the service provider and regulator (they regulate themselves) has serious safety implications.

Even splitting air traffic control service provision and regulation into separate agencies would be a start. Making it a non-profit function, as in much of the world including Canada (which performs better – and at scale, since they handle traffic over the North Atlantic), would allow the agency to issue bonds for technology upgrades rather than relying on the vagaries of annual congressional budgeting cycles.

The policy didn’t go anywhere during Trump’s first term. We do not know if he’ll have an appetite for taking another bite from that apple.

Boeing v. Airbus

There’s one thing that’s clear in the President-elect’s rhetoric, and that’s a favorability towards tariffs. That doesn’t mean we’ll see the extreme version of them discussed on the campaign trail. He can fall back on saying that was a negotiating position to get the victories he was after, but it’s not unreasonable to expect higher tariffs overall.

That’s not great for supply chain and costs for Boeing, even though Boeing may benefit from the administration acting on its behalf (pressuring allies to buy from them) and from tariffs on European aircraft.

On the other hand, the President may not be favorably inclined to associate himself with the Boeing brand until it first cleans up its quality assurance and delivery problems. Boeing, for its part, certainly learned a costly lesson negotiating over a new Air Force One contract on which they’ve already lost $2 billion on a $3.9 billion contract.

The new official paint design for the ‘Next Air Force One’ VC-25B aircraft has been selected. The modern design will closely resemble the livery of the current Air Force One, VC-25A.

Release: https://t.co/n5pLqAefR5 pic.twitter.com/SVISguGYs8

— Boeing Defense (@BoeingDefense) March 10, 2023

Nonetheless, to the extent they can get out of the President’s mental model as a ‘loser’ they’re likely to find favorable treatment from an administration that views mercantilist policies favorably. The intellectual backers of Trumpism see Airbus as a model for industrial policy.

Union Power

While union workers in legacy industries may broadly benefit from the imposition of tariffs on foreign goods (in the short-term), aviation union power is likely a big loser in the election. They’ll lose majority control of the National Mediation Board as the President appoints members of the 3-member mediation board, with no more than two members from the same party, so it will eventually flip to majority Republican.

Additionally, unions didn’t deliver the election for Democrats so may not be as important four years from now either.

Pilot unions are a different story – pilots skew Republican, and ALPA has already put out a positive statement about working with the Trump administration.

.@ALPAPilots statement on Trump victory: pic.twitter.com/Z08MKqcUcz

— Ryan Ewing (@FlyingHighRyan) November 6, 2024