A Tale of Two Cities - Airline Industry Bailout and Barber Shop Blues

Since September 11, 2001 the airline industry has received upwards of $18 billion in government handouts to assist them with their dwindling share of the travel market. 

The first installment of $15 billion came shortly after the terrorist attacks of September 11^th.  There is no question that the industry was in trouble prior to the terrorist attacks and it is certain that the events of that fateful day sent chills down the backs of airline passengers so assistance from the government may have been valid.  The most recent installment of airline bailout money, $3 billion included in the President’s almost $80 billion wartime authorization passed by Congress last week, should not go to the airlines at all, but to small business truly impacted by the war in Iraq.

The airline industry in America has been at the receiving end of government hand outs for far too long.  Many of the major airlines in the nation have either filed for or are on the verge of seeking bankruptcy protection.  They blame terrorism and the war in Iraq for their losses rather than bad business plans, but more importantly they treat the tax dollars of the American public like fall back capital as their executives continue to make multi-million salaries while seeking protection from creditors.  Their industry is tangentially affected by terrorist attacks of two years ago and perhaps fewer people are flying than were flying a few years ago, but is it the responsibility of the taxpayer to keep every airline afloat?

Rather than sending another $3 billion to airlines that point to the war in Iraq as a reason for massive losses, perhaps government should look at businesses that are uniquely situated to say that their losses are actually because of the war with Iraq rather than simply perhaps caused by the conflict.  Airlines may be losing money because of the war, but one thing is certain – small businesses in military towns are losing money because of the war and they should receive assistance from the federal government to offset their losses.

Take two military installations and the small towns that exist primarily because of the enormity of the military bases that surround them.  Fort Bragg, North Carolina and Camp Pendleton, California are two of the largest military installations in the United States.  They also support the economies of two medium sized towns that are almost entirely dependent on the base military personnel, dependents, and civilian employees.  Fayetteville, North Carolina has an economic impact by its proximity of Fort Bragg of approximately $4 billion and Oceanside, California $6 billion.  These figures come about when the military men and women who are stationed there are spending money on base and in town – rent, haircuts, dry cleaning, and restaurants are dependent on their being there for income to continue.  Deploying the vast majority of the military men and women to war affects the economy in a manner that airlines could never prove.

Consider just two industries in these two cities.  Dry cleaners, whose income derives from the crisp clean necessity of military uniforms, and barber shops – an industry that benefits from the weekly visits of our warriors.  In Oceanside there are over 40 barber shops and 25 dry cleaners; Fayetteville boasts more than 70 barber shops and 50 dry cleaners.  After speaking with four barber shops and four dry cleaners in both of these cities, it is obvious that they have had their business drop by a dramatic amount – far in excess of the losses that the airline industry can only guess comes as a direct result of the war.

Patronage in the barber shops in Oceanside have fallen off by an average of about 60% in Fayetteville, perhaps because there are so many of them, that number is a shocking 70%.  In both towns there are no longer lines to get haircuts and some have laid off the people who normally had a barber chair full of young Marines and soldiers waiting for up to 45 minutes on a Sunday afternoon to get a haircut.  The majority of both Camp Pendleton and Fort Bragg have deployed and the number of reservists brought in to continue where the active duty Marines and soldiers left off are minimal.  In both cities – one of the four barber shops I spoke to were considering closing down during the conflict, but were concerned for their employees.  None of the eight were sure how long they could continue remaining open, but the longer the conflict lasts the worse their books appear.

Loss of business at such a high level is not unique to barber shops.  Dry cleaners in both cities have had business fall off in some stores as much as 80%.  Marines and soldiers account for the vast majority of business to these industries in military towns – there is no call for dry cleaning, name tape embroidering, or tailoring when the people are sitting in the desert and their replacements utilize on base businesses for their needs.  Family members are seldom patrons in dry cleaners in military towns, except for military balls and official functions – all of which fall off when the Marines and soldiers deploy.  All told, half of the eight dry cleaners I spoke to in both cities said they were on the verge of bankruptcy.

Some will argue that people who open stores that cater to military personnel around a military base take the risk that the men and women who are stationed there may some day be called upon to do their duty.  There is no argument with that.  There is, however, a certain amount of hypocrisy to say that the airline industry should be bailed out to the tune of an additional $3 billion because of the war in Iraq might be affecting their bottom line while not offering any assistance to small businesses whose income are clearly and obviously affected by the war.

The $3 billion being offered to the airline industry would be far more than enough to supplement the incomes of businesses affected directly by the deployment of men and women in uniform being asked to fight for our nation.  Consider the tangential nature of the connection between massive airline losses, which have occurred annually for a decade, and the direct losses of men and women who work for far less than the annual salary of the president of any one of the major airlines and it is only fair that they be offered a bail out as well.

It is time to let some of these airlines finally go out of business and to stop taking money from the American taxpayer.  If the government wants to be benevolent to business, they should start with barber shops and dry cleaners in Fayetteville and Oceanside and let the airlines fend for themselves.