Part 1

Since 1945, the United States has led in the total number of passengers carried by air as well as total fatalities by plane crash globally. In the last few years particularly, a string of crashes and mid-air malfunctions of Boeing produced aircraft has driven public confidence in air travel downward, decreasing from 71% of Americans who say it’s “very or somewhat safe” down to 64% (The Associated Press-NORC Center for Public Affairs Research). In addition to this, American Airlines, despite boasting “record revenue” in its second quarter, saw an 18.5% loss in pre-tax profits compared to the second quarter of 2024, United Airlines saw a 28% decline, and Delta at a 10% loss. These economic cracks, mixed with the loss in consumer safety confidence, have been even further pushed to the limit with the ongoing shortage of air traffic controllers- currently, the industry is about 3,000 air traffic controllers short of what the Federal Aviation Administration recommends as safe and efficient.

These various problems in the air transport industry seemingly speak to the ongoing general overproduction crisis in capital and the bourgeoisie’s inability to overcome the inevitable. Transportation systems have historically evolved in direct correlation to the needs of production, lowering the necessary time for the metamorphosis of commodities in the circuit of capital. Filling a special role in the circulation of commodities, this industry also requires the employment of productive capital to build the infrastructure (railways, ships, planes, etc.) and the exploitation of labor-power to operate and maintain them, and therefore also to extract surplus value, which is transferred to the commodities they carry and is integral to the expansion of capital. Thus, the capitalist means of transportation cannot be separated from the capitalist mode of production and the crises thereof.

From Novelty to Monopoly: History of the Airlines

Among the first commodities to be moved by aircraft, were bombs used to strategically attack soldiers from the skies in the Italo-Turkish War of 1911, thus beginning the enduring alliance of the bourgeoisie invested in the air industry with those in warmongering. A new dimension of bourgeois terror from above had arrived, that would continue advancing from the simple dropping of grenades to the eventual delivery of the atomic bombs onto the Japanese. By 1924, what had taken the previous revolutionary form of transportation, the steam engine locomotive, 72 hours to accomplish, the aircraft could now transport in under 30 hours, less than half of the time. Although it could not yet be widely utilized for commercial use without government subsidies, air travel had plainly reduced the socially necessary time for the circulation of goods by an astounding amount. It would take a few more decades of refinement from a scientific novelty into a sophisticated, complex modern machine, enabling the bourgeoisie to utilize aircraft to accelerate the circulation of commodities – by bringing distant markets to the consumer, or bringing consumers to distant markets.

In the years prior to the 1930s, the American air industry, outside of military conflict, was largely limited to government-subsidized mail delivery. Technological limitations and a lack of infrastructure made commercial passenger travel unprofitable and unreliable. Facing the crisis of the Great Depression in the late 20s, in what later became known as the “Air Mail Scandal,” Hoover’s government orchestrated a series of secretive meetings with large airlines, effectively excluding smaller, independent carriers from federal contracts. The goal was to force the smaller companies to merge and concentrate and paved the way for the formation of a few powerful companies: United Airlines, American Airlines, and Trans World Airlines. These early monopolies would eventually go on to dominate American aviation.

Eventually in 1934, Roosevelt attempted to mobilize the Army Air Corps to take over the delivery of mail, before soon reverting back to privatization after a string of pilot deaths from haphazard planning and ensuing public outcry. In the end, consolidation had served its purpose, and now breaking up major trusts like United Aircraft and Transport Corporation (which included major companies such as Boeing, Northrop Aircraft Corporation, Pratt & Whitney) into smaller companies to encourage competition was on the bourgeoisie’s agenda, as well as altering the nature of the industry to embrace passenger travel over mail, which had become less profitable. It would take the offloading of thousands of surplus Douglas DC-3s left over from the second great imperialist war into the markets, that were converted back into commercial passenger planes, that the bourgeoisie would have their first profitable commercial airline independent of government subsidy.

The post-war period for the airlines were heavily regulated through the Civil Aeronautics Board (CAB) in conjunction with the International Air Transport Association (IATA), which acted as a government controlled cartel, fixing fare prices relatively high and obstructing the cut-throat competition of the free market. CAB regularly granted waivers from US antitrust laws, allowing capital to consolidate where it found it necessary, and while there was a tidy profit to be made with this relationship, the capitalists ached to loosen the regulatory collar and expand the markets and their profits and soon they were compelled by crisis to reorganize themselves yet again.

The oil crisis of 1970 and the ensuing financial chaos led to the then largest bankruptcy in US history with the collapse of the Penn Central Transportation Company, which had borrowed extensively in unsecured corporate debt to offset its plunging profits, only to find itself unable to borrow anymore from the spooked banks. This unprecedented financial crisis in the rail transportation industry, and the fear that the airlines would follow suit, pushed the bourgeoisie under Carter to release the shackles of regulation on the airline fares and routes and promote competition among them, passing the Airline Deregulation Act in 1978, which lowered the prices of fares and led to a small emergence of competitive airlines. Of course, as monopoly and competition dialectically condition one another, competition naturally concentrated back into monopoly and these smaller airlines would eventually fade away or be absorbed into the larger airliners in due time.

Thus as of 2015, we see major mergers between airlines through the various crises of the 2000s, resulted in 80% of the domestic market controlled by just four companies: American, Southwest, United, and Delta, which naturally have the four largest investment companies – BlackRock, Vanguard, PRIMECAP, and State Street – as their largest shareholders.

Boeing, Airbus, and Rising Chinese Competition

When colossal monopolistic forces of capital collide, the violent competitive struggle for domination presents to the bourgeois the maxim: “adapt or die”, even if this means risking the future of society for the short term profits for today. In the “duopolistic” struggle between Boeing and Airbus, this maxim has already materialized numerous tragedies, but with the growing imperialist pressure from emerging Chinese aircraft production market, we will likely see American finance capital force its sub-imperialist periphery into subordination and further consolidate against the Chinese bourgeoisie.

Boeing’s domination of the global aerospace industry was cemented in 1997 when it acquired McDonnell Douglas, forming the largest aerospace manufacturer in the world. Boeing has long operated as a monopolistic force in the global aircraft production market, with only one serious international competitor, Airbus, founded by the governments of Germany, France, and the UK in 1970. For decades, Boeing had exclusive deals with the largest airlines in the US, which were the largest in the world, until Airbus began cutting into the US market with sweetened deals to Northwest Airlines in the 80s.

The two companies, while sharing in mutual control over the market, are nonetheless subject to the bitter struggle embedded in competition and the need to continuously offset the costs of their personal enterprise in order to prevail over the other. When Airbus announced the upgrades to its A320 aircraft with New Engine Options, which effectively lowered the necessary average amount of fuel required for a trip, while increasing the amount of passengers able to be transported, therefore increasing profits. Boeing was forced to respond, poorly retrofitting a similar system into their 373-800 to create the 373-800 MAX in an effort to match the economic gains of the A320neo.

In order to compensate for the altered aerodynamics caused by the placement of larger engines, Boeing implemented the Maneuvering Characteristics Augmentation System (MCAS). This software was designed to automatically push the nose of the aircraft down under certain conditions to avoid stalls. Pilots were not trained on this feature, nor were redundant safeguards in the case of malfunction seriously considered; it was only a matter of time before the world witnessed two tragic disasters. On October 29, Lion Air Flight 610 crashed into the Java Sea, killing 189 passengers and on March 10, Ethiopian Airlines Flight 302 crashed, killing 157 people. Both incidents were linked directly to MCAS malfunctions.

In July of this year, a 787 Dreamliner plane operated by Air India, crashed in Ahmedabad killing 242 people. The cause of the crash is still under investigation, but while the 787 Dreamliner has a clean history of safety, Boeing certainly does not. Confidence in the company, and of air travel under capital’s control, is declining.

To Boeing, a company that holds essentially a monopoly on global plane production and is so interwoven into the US government (approximately 32% of their revenue is from government contracts), which in turn profits from the death of proletarians abroad from imperialist wars; a few crashed planes are only a smudge on the balance sheet, and more importantly are merely future orders for planes that need to be replaced. Much like the other transportation modes such as the railways and ships, the bourgeoisie use insurances to cover the costs of the inevitable disasters from their desperate turnover of capital in the quickest manner. We certainly must remember that the railroad capitalist finds it cheaper to pay the bill of a disaster yet to come rather than properly staff their train lines or replace the crumbling fixed capital and infrastructure of the railways (like the Norfolk Southern train that derailed in East Palestine, Ohio in 2023), or much less, increase pay for the few workers who are now doing the job that used to be performed by many. In a system where profit reigns, such risks are deemed acceptable so long as capital turnover remains uninterrupted.

But Boeing cannot avoid the woes of overproduction. The US airlines are struggling with consistent domestic consumer demand, showing a 0.1% decline despite a 2.2% increase in capacity as of August 1st, causing the airlines to revise and reduce their planned orders. China, which currently makes up 10% of Boeing’s current backlog, amid the ongoing trade war with the US, has lifted their temporary ban on Boeing purchases, potentially improving the company’s overall delivery projections in the coming years, but the rapidly expanding airline industry in China will prove to be a future problem for Boeing.

Already being the second largest aviation industry in the world, China is set to overtake the US market by 2043 according to Airbus’s own 2024 forecasts. In an effort to challenge Boeing and Airbus on the battlefield of the global market, China has begun pushing its spheres of imperialist influence into purchasing its domestically produced aircrafts by the Commercial Aircraft Corporation of China (COMAC) and investing in airports in South Asia and Africa through its Belt and Road Initiative; simultaneously building up its domestic production, imperialist ties with the bourgeoisie in underdeveloped countries, and improving the trade networks for its e-commerce markets(such as Alibaba).

While China has yet to position themselves ahead of Boeing and Airbus, as they are still largely reliant on foreign tech (like electricity systems and landing gear from Honeywell, engines from CFM Leap, flight control and fuel systems from Parker Aerospace, etc.) for production of their rival C919 jet, their emerging influence on the world market and the competing interests of the imperialist blocs are certain to continue bringing the knives of the warring bourgeoisies closer to each other’s throats.

The Crisis Within

Despite the numerous convenient alibis of the bourgeoisie, the overproduction crisis and the tendential fall in the rate of profit has plainly revealed itself in the airline industry. Recent reports say that the airline industry will break a record $1 Trillion in revenue, but the actual profit is predicted to be approximately only 3% of that, at about 36.6 Billion. In fact, without “loyalty revenues” from speculatively valued frequent flyer miles and banking partnerships, all major airlines operate at a considerable profit loss. Even the bourgeois economists must admit that the industry is unstable for social capital, blaming ‘thin margins’ and the ‘high wages’ demanded from the unions for why it has been teetering on the edge of collapse for decades, requiring the bourgeoisie to resuscitate it multiple times via government bailouts.

The first of the major US bailouts happened in 2001 under the smoke screen and panic of the September 11 attacks. The airline capitalists pointed to a 30% decline in air travel afterwards as the primary cause for their pitiful state of affairs, lobbying to the bourgeois parties to help reverse this ‘misfortune’ that had been thrust upon them from the outside; the bourgeoisie under Bush expeditiously relieved them with $15 Billion within two weeks of September 11. In reality, as the American bourgeoisie geared up to wield its imperialist might against Iraq in an effort to redivide the oil markets under the guise of “the war on terror”, the airline crisis was inevitable and would have happened if Manhattan had not suffered an attack that September morning. Before 2001, American Airlines was already reporting “considerable” losses in their third quarter and, due to what has been dubbed the Dot-Com recession, which at its peak resulted in an 80% loss in value for the Nasdaq Composite Index, financial analysts were already predicting a loss of $2.5 Billion for the US airline industry. Many of the developed ‘old-line’ monopolies were also experiencing competitive pressure from the emerging ‘low-cost’ airlines in the 90s that were undercutting the ‘big players’, largely by paying lower wages, and sucking up a larger share of the market.

The oil industry, being one of the largest industries globally, is obviously a major component of all modern manufacture, production, and transportation; but in industries like transportation, that are entirely conditioned on access to large amounts of ready-made fuel on the market, the price of oil has a profound impact. Fuel costs, in fact, constitute approximately 30% of the constant capital employed in the airline industry. The volatile price of crude oil throughout the 2000s exposed the sector to constant uncertainty. The American State’s imperialist ventures in the Middle East were thus not merely ideological campaigns but responses to an economic crisis already underway – crises that manifested in the transportation sector among others. The interdependence of military production, global oil control, and civil aviation cannot be overstated.

Starting in the 2000s, the airlines began seeing consolidation again, beginning with Trans World Airlines being acquired by American months before September 11, 2001. America West Airlines, after filing for bankruptcy for the second time in the decade, merged with US Airways in 2005, combining two of the largest airlines in the country at the time (US Airways would later be swallowed by American in 2013). In 2008, ATA Airlines was forced into bankruptcy from the financial crisis and was subsequently bought by Southwest, while Northwest and Delta Airlines, emerging from their own bankruptcies, would merge into the largest airline of the time. United, feeling the competitive pressure from the now dominant Delta, sought its own expansion and merged with Continental in 2010, ousting Delta from the throne. Southwest responded by buying out Air Tran the same year, securing its position as the fourth largest airline in the US.

So we find the original monopolies, United and American (who devoured Trans World), that were formed by the bourgeoisie in response to the crisis in the 30s, reconsolidating yet again in response to the financial crisis of 2008; with Delta and Southwest becoming worthy competitors by culling the weaker airlines.The bourgeois virtue of competition disappears in the real historical course of capitalism and concentration of industry prevails.

In 2019, the economy in general was already showing signs of a slowdown and even the bourgeois economists were already seeing the writing on the wall. For the airline industry, economists were pointing out the effects of overproduction and how they were out-pacing the national economic growth (2%) by increasing capacity. Airlines like American were reported to have the highest debt to EBITDA ratio among the total debt ratio in the industry, rising from 3.8 to 4.1. They had joined the bloated collective surplus of US debt that by this time had reached heights 50% higher than that of the 2008 crisis and had begun its dramatic Euphorion-like crash. The convenient alibi of global pandemic acted as a surrogate for the overproduction crisis that subsequently threw the world capitalisms into a nosedive.

Under the ruse of ‘external’ disasters, the airline companies then in turn forced wage concessions from the workers who are told they must share in company poverty, or are simply expelled into the surplus labor army while the industries ‘rebuild themselves’ at no real loss to the capitalists. In 2001, air transport workers were met with 30,000 layoffs and wage cuts; in 2020, after allocating $11.9 Billion of bailout money towards buybacks of their stock, companies like American Airlines subsequently laid-off 20% of its workforce, all while the CEOs raked in tens of millions individually.

False Solution of Nationalization

Reformist opportunists make the same old cry for the “nationalization of the airlines”, reminiscent of the calls from Railroad Workers United (RWU) to nationalize the railways; suggesting that the State, what is just the organizing body of the bourgeoisie, is somehow untouched by the economic laws of production in private enterprise and will be able (if it even wants to, for that matter) protect the people from the disasters inherent to capitalist production and its systems of transportation. In previous articles on railroad nationalization we referred to this text from Prometeo, which equally applies here:

“…Nationalization does not suppress the market or the exploitation of labor. It merely regulates the economy according to market forces. Nationalized industries are guaranteed a monopoly within their own borders, but this does not affect the market as a whole. Nationalization also does not prevent the realization and appropriation of surplus value. In fact, it often helps to rescue deficit economic units. Nationalization guarantees capitalist profit in all cases. On the level of inter-imperialist relations, nationalizations are the most bare and obvious expressions of the tension of all national economic forces…. Finally, in the game of class struggles, nationalizations represent the most refined method of immobilizing the active energies of the proletariat and regimenting its fellow poputčiks” (Prometeo, n. 4 of December 1946).

The U.S. airline industry is already deeply integrated into the State apparatus. From direct bailouts to routine antitrust exemptions, the government has long acted as its financial backstop. Further integration would not liberate the working class from exploitation; it would only rationalize that exploitation more efficiently, aligning it more directly with national economic and military objectives.

Already, the US bourgeoisie are working to create Artificial Intelligence powered networks of commercial factories that can quickly shift from commercial to wartime production, quickening their control and requisition of war machines when imperialisms collide, building off of currently existing models like the Air Force’s Civil Reserve Air Fleet and the Navy’s National Defense Reserve Fleet contracts with commercial transportation companies to increase military transportation capacity when needed for war. The recent $131 Million House proposal for the 2026 military fiscal budget sets to create this “Commercial Reserve Manufacturing Network”, able to answer the bourgeoisies call for blood at a moment’s notice.

Similar sentiments were expressed in a report by Michael Bloomberg in January titled: Strategic Edge: A Blueprint for Breakthroughs in Defense Innovation. The Chief Financial Officer of Divergent Industries and former director of the Air Force’s innovation arm, AFWERX, and one of the report’s authors sums it up: “Right now, we literally are printing hyper car frames in the morning and cruise missiles in the afternoon.”

A sober confession of the bourgeoisie and a perfect summary of the ultimate logic of commodity production in the age of imperialism.

(To Be Continued in the Next Issue)