Railroad History Suggests Federal Bailouts Could Spell Doom for Airlines

The ultimate lesson of James J. Hill and his Great Northern Railroad is that the “winners” government picks today are the “losers” of tomorrow.

by Dane Stuhlsatz
April 12, 2020

A famous saying, especially prescient in times like this, is “those who do not learn from history are doomed to repeat it."

Last week, Congress mortgaged the nation’s future in a matter of days by rushing through a historic $2 trillion stimulus bill in response to the coronavirus. The problems with the bill seem as numerous as the dollars handed out as a result of it.

One such problem involves massive bailouts for major industries. In particular, the CARES Act promises $58 billion to airline carriers for, among other things, direct payment for wages to keep some workers on payrolls, loans with very beneficial terms, and other funds to cushion the blow and prevent looming bankruptcy brought on by the sudden and immediate drop in consumer demand in response to the coronavirus.

Gifts With Strings Attached

The gifts, however, are not without strings. In exchange for the financial assistance, the airlines will not be allowed to lay off or furlough workers, they c…