JSPES, Vol. 27, No. 1 (Spring 2002 )
p. 45-64

The WTC Emergency Airline Subsidies

Edward M. Miller

Following the September 11 crashing of two airplanes into the World Trade Center (WTC) by terrorists, the US government adopted a large airline subsidy with the apparent goal of preserving essential airline services. However, economic analysis shows that it is unlikely to achieve this goal because it leaves marginal cost and marginal revenue unchanged. Thus, it is unlikely to affect the level of airline service and unlikely to maintain airline employment. In essence there was a large transfer of money to the industry for very little, if any, public benefit. A very generous victim assistance program was also adopted. No rational reason can be found for a program that assists these victims more than those killed or injured in other disasters.