How the 2024 U.S. Election Could Impact Aviation

‍DALLAS — The 2024 U.S. presidential election could significantly impact commercial aviation, from policy implications, mergers and acquisitions, to sustainable aviation and ATC privatization.

Before we get into the nitty-gritty, we can briefly talk about how presidential campaign activities are already affecting air traffic operations through extensive Temporary Flight Restrictions (TFRs) that restrict airspace with inner cores of up to 12 nautical miles radius and outer rings of 28 nautical miles.

A report by aviationweek.com cited a TFR implemented over Wilmington, Delaware, on August 2, 2024, at 2208 UTC. Due to VIP movement, the TFR was scheduled to expire on August 5, 2024, at 1730 UTC. The FAA’s Graphic TFR webpage indicated that the inner core of the TFR had a 12-nautical mile (14-mile) radius and extended from the surface up to 17,999 feet.

All aircraft operations within this inner core were strictly prohibited, except for approved law enforcement, military aircraft directly supporting the Secret Service and the Office of the President, approved air ambulance flights, and regularly scheduled commercial passenger and all-cargo carriers operating under Transportation Security Administration (TSA)-approved security programs.

TRFs affect operations at major airports, requiring special procedures and "cut-outs" for continued operations and enhanced security screening at gateway airports.

Moving forward from the campaign trail and considering both sides, let's explore the most likely long-term impacts of this election result on the U.S. aviation industry.

Policy Implications, Sustainable Aviation

The 2024 election outcome will affect trade, supply chain operations, and infrastructure investment for the next four years, with policy decisions varying across both parties.

Trade. According to an asstra.com report, a Democratic victory might lead to reduced trade barriers and more stable international relationships. Conversely, a Republican win could increase tariffs and trade barriers, potentially complicating aviation supply chains and increasing operational costs.

Airports. The current administration has made progress regarding national infrastructure investments in transportation networks and sustainable projects. We can recall the provision of US$1 billion annually for five years for Airport Terminal Program grants, which is one of three aviation programs created by the Bipartisan Infrastructure Law.

In total, the Bipartisan Infrastructure Law provides a historic US$25 billion "to modernize" airport infrastructure in the United States. Republicans may continue supporting this and other traditional infrastructure projects albeit with less emphasis on sustainability initiatives.

Sustainable aviation. According to sustainableaviationfutures.com, a Democratic administration would likely continue supporting Sustainable Aviation Fuel (SAF) development through tax credits and incentives. Under a Republican administration, while broad IRA repeals are possible, SAF programs might survive due to their alignment with domestic manufacturing and agricultural interests.

Environmental regulations. A Democratic win would likely mean stricter sustainable aviation policies and continued support for "green" aviation initiatives. On the other hand, a Republican administration might roll back environmental regulations, potentially reducing compliance costs but affecting sustainability efforts.

The election's outcome will inevitably influence aviation policy direction, affecting everything from trade, aviation infrastructure and operations, to long-term industry sustainability goals.

Airlines Mergers, Acquisitions

Democratic administrations have generally taken a more stringent approach to airline mergers and acquisitions:

• ‍Stricter antitrust enforcement: The Obama administration initially filed a lawsuit to block the merger between American Airlines (AA) and US Airways in 2013, citing concerns about reduced competition and higher fares for consumers.‍
• Focus on consumer protection: Democratic administrations have emphasized the potential negative impacts of consolidation on passengers, including fare increases and reduced service.‍
• Recent merger blocks: Under the Biden administration, the Department of Justice (DOJ) successfully sued to block JetBlue's (B6) attempted acquisition of Spirit Airlines (NK).‍
• Scrutiny of partnerships: The DOJ also moved to dissolve the Northeast Alliance partnership between B6 and AA.‍
• Selective approvals: Despite the overall strict stance, some mergers have been approved under Democratic administrations, such as Alaska Airlines' (AS) acquisition of Hawaiian Airlines (HA).

Republican administrations have typically been more lenient towards airline mergers and acquisitions:

• ‍Business-friendly approach: Republican administrations are generally seen as more willing to allow industry consolidation and pricing power.‍
• Less intervention: There's an expectation of reduced scrutiny on mergers and acquisitions in the aviation sector under Republican leadership.‍
• Potential for larger mergers: Some analysts believe that under a Republican administration, larger mergers (e.g., between AS and B6) might be more feasible.‍
• Focus on economic benefits: Republican administrations often emphasize the potential economic benefits of mergers, such as improved efficiency and competitiveness.‍
• Streamlined investigations: The Trump administration pursued policy reforms to streamline merger investigations and reduce regulatory burdens on companies.

While it's still to early to tell how U.S. airlines will fare under a new administration, shares of legacy carriers could go up if the Republican ticket wins the election.

Air Traffic Control (ATC) Privatization

Different administrations have taken varying positions on ATC privatization, and a change in administration could significantly influence the prospects for ATC privatization in the U.S.

The first Trump administration advocated shifting air traffic control to a private corporation, an idea discussed for decades. Previous administrations, including those of Bill Clinton and Barack Obama, also explored ATC reform and corporatization to varying degrees.

A new Trump administration could make ATC privatization a key policy goal and push for legislation to create an independent, non-governmental organization to oversee air traffic control.

The other side of the political coin would involve deprioritizing privatization efforts and maintaining the current FAA-operated system, given that the current administration has allocated US$21.8 billion for the FAA, including funding to continue the air traffic controller hiring and training surge.

The question then shifts to the next administration's funding and modernization approach, precisely how the next generation Air Transportation System modernization efforts are pursued, and what potential changes to funding mechanisms for the ATC system need to take place, possibly shifting from tax-based to user fee-based models.

Different administrations may be more or less receptive to various stakeholder groups. Major U.S. airlines generally support privatization, while private jet owners and operators often oppose it. Additionally, the National Air Traffic Controllers Association (NATCA) has previously supported some privatization proposals.

Therefore, an administration favoring privatization might point to successful ATC privatization in countries like Canada, the UK, and Germany as models to follow and argue that privatization could improve efficiency and technological adoption.

Any administration must address how safety oversight would be maintained if ATC operations were moved out of the FAA and quell concerns about potential conflicts of interest in the current system where the FAA operates and regulates ATC.

A change in administration could alter the political momentum and policy priorities surrounding ATC privatization, potentially leading to issuing reforms or maintaining the status quo.

There also the issue of US relations with China going forward, as there have been reports of global airlines quite quitting flights to the Asian nation. Despite potential tensions, the commercial aviation market in China is projected to grow significantly.

As cited by foreignpolicy.com, Boeing's 2024 Commercial Market Outlook for China predicts that China's commercial airplane fleet will more than double by 2043, growing from 4,345 to 9,740 aircraft. This growth presents substantial opportunities for U.S. aircraft manufacturers, but access to this market may be complicated by political factors.

Regardless of who wins, the pulse of the U.S. commercial aviation industry for what's left of the decade will depend on the new administration's stance on these complex and long-debated issues.