Unlike Thanksgiving flyers–who wait in endless lines for cancelled flights or are stuffed into overcrowded planes–airlines and their top executives have every reason to be thankful this holiday season. The nation’s five biggest airlines have collectively paid just a 7.5% federal income tax rate on $6.4 billion of profits made the first seven years after the corporate-friendly 2017 Trump-GOP tax law was enacted, according to a new study from Americans for Tax Fairness (ATF). Meanwhile, thanks to that same law, the airlines’ top executives have together saved up to $18.6 million on their personal returns.
“The big airlines and their top bosses are abusing their customers this holiday weekend while presumably giving thanks for the millions in tax giveaways offered to them by Trump and his fellow Republicans at our expense,” said David Kass, ATF’s executive director. “Long lines, flight delays, stingy legroom, lost luggage—these are the treats provided for the nation’s flyers this Thanksgiving, all so airlines can make bigger profits and further enrich their wealthy CEOs and shareholders. The Trump administration even made it easier for airlines to inconvenience their passengers by rolling back important consumer protections for fliers. Our tax code should be reformed so that large corporations—and the rich executives that run them—pay their fair share. Then we could all be thankful.”
Source: Americans for Tax Fairness
Customer complaints against the nation’s airlines hit a record last year. Top headaches reported by flyers include flight delays, being bumped from flights, long waits on the tarmac and lost or damaged luggage.
The collective 7.5% tax rate paid over seven years by the airlines in the study–American, Delta, JetBlue, Southwest and United–is little more than half the 14.5% paid by the average American household in 2022 (the latest year with available data). Counting only the three companies that were cumulatively profitable over that span–Delta, Southwest and United–the collective tax rate actually declines to 4%. (Excluding losses made the collective net income rise and by a higher percentage than the taxes paid).
The collective compensation of the top five executives at each airline totaled more than $690 million over the period 2018-24. And their potential tax savings of $18.6 million would have come from just one component of the 2017 law, the cut in individual tax rates. The biggest potential savings from that cut would have been enjoyed by Edward Bastian, Delta’s CEO, who could have avoided $2.5 million on his nearly $94 million in compensation. (See Methodology for an explanation of how potential personal tax savings were calculated.)
Source: Americans for Tax Fairness
Airline employees are not sharing in these corporate benefits. Over the first seven years following the Trump law enactment, the five highest-paid executives at the five airlines received 260 times more in compensation than the companies’ median-paid workers.
Airline shareholders, on the other hand, are making out as well as the firms’ top executives. Dividend payouts over the seven-year span of the study totaled almost $4.8 billion. Stock buybacks–which raise the price of shares remaining in investors’ hands–totaled over $15 billion.
Shareholders are almost exclusively wealthy: the highest-income 10% own 87% of all corporate stock; the richest 1% own about half. Foreign investors own about 40% of U.S. equities.
If the airlines in the study had used the money they spent on stock buybacks over that seven-year period to instead increase the wages of their employees, the average airline worker would have received over $47,000 more in pay.
METHODOLOGY: Public corporations regularly report the compensation of their top executives, but individual tax-return data is private. Actual tax savings from the lowered rates would depend on the filing status and taxable income of each taxpayer in each year. Taxable income in turn depends on deductions, credits and other adjustments to gross income. Tax savings shown here are the maximum possible.