Kempner: Big Delta squeezes Georgia and metro Atlanta’s poorest county


Here’s what we should never forget about Delta: it is fabulously good for Georgia’s economy, and it never tires of squeezing fellow Georgians for more profits.

Picture more than 500 local high school students showing up at the headquarters of mighty Delta Air Lines to protest. They were there — at the urging of Clayton County school officials — to fight the company’s attempts to be excused from paying certain taxes that, among other things, fund local school projects and local government.

Kids as theatrical props in politics? Pure gold.

But Delta sometimes has a knack PR razzle-dazzle, too. The airline graciously ordered the students Chick-fil-A lunches, provided tours of the company museum and asked who wanted to be a pilot someday.

It’s hard to out maneuver one of the world’s biggest airlines.

What might seem surprising is that Clayton County would need to, especially considering that Delta is its biggest property tax payer. The airline is a profit behemoth ($3.6 billion last year alone) with a big presence in what is easily metro Atlanta’s lowest income county.

Give and take

But, as always, Delta giveth, and Delta taketh away.

Giveth? The company just paid out more than $1.1 billion in profit-sharing bonuses to employees, including tens of thousands in metro Atlanta. It’s just the latest of big bonuses that should help keep workers happy and their interests aligned with the airline’s.

Bigger still, in the process of making itself a giant airline, Delta made Hartsfield-Jackson Atlanta International the world’s busiest airport and a giant hook for economic development in Georgia.

Taketh away?

The carrier has been working awfully hard to get out of continuing to pay $40 million a year in local and state of Georgia taxes on jet fuel.

A bill backed by Gov. Nathan Deal is pending before state legislators to give Delta its tax-avoidance wish. (Anyone who pays for jet fuel could benefit, but Delta ostensibly would get the biggest slice.)

This has put Delta in a battle with its neighbors.

Nearly $20 million of Delta’s jet fuel tax payment goes to schools and local government in Clayton County, which hosts both company property and much of the airport.

For Clayton schools alone, the cut would eliminate 17 percent of the money used for construction projects. For Delta the total savings would be equal to just over one percent of its global profits last year.

Of all the ways Delta could cut costs, why take a swipe at the finances of such a county where 5,000 of its own employees live?

Well, who among us isn’t interested in paying less in taxes? That’s part of the issue, here.

A question of fairness

You and I pay taxes every time we buy a gallon of gas. Homebuilders pay tax on lumber they use, and for-profit bus companies pay tax on the fuel they put in their vehicles.

Delta and other air carriers want to be an exception, at least when it comes to what is their biggest operating cost beyond people.

In fairness, Delta suggests this is just a matter of fairness. Because some of its competitors pay little or no taxes on jet fuel at most air hubs, including in Texas and North Carolina.

But, also in fairness, competitors with hubs in California or Chicago pay even more in jet fuel taxes than Delta does here.

See how this works? Leverage states against each other to drop taxes for a favored industry.

It’s a game we shouldn’t play without clear and convincing evidence that there will be significant benefits for the community, because other taxpayers will have to make up the difference in tax revenues or see community projects and services cut.

“Laughable”

So far, “clear and convincing evidence” is a problem.

Yes, supporters of the tax break — including our governor — predict that eliminating the jet fuel levy might convince carriers to add more direct flights locally. Delta CEO Ed Bastian told my colleague Kelly Yamanouchi: “Forty million means additional flights that we’ll be able to invest here in Atlanta.”

Some Georgia legislators even suggested the tax gimme might prompt Delta to cut ticket prices. 

I asked Robert Mann about those possibilities.

“Laughable,” he said.

He’s an airline industry analyst who specializes in airline economics and planning.

Demand, not cost, is the primary driver for where airlines launch new flights, Mann said. And he told me he doesn’t expect the legislative action to change air fares.

No specifics

I asked Delta if they anticipate cutting Atlanta ticket prices as a result of the tax change and, if so, by how much.

“We can never comment on future pricing decisions,” a spokesman wrote in an email.

I asked how many local flights Delta would add as a result of the tax going away.

“We don’t have any specifics right now …,” they wrote.

(By the way, Clayton may lose money even if the tax remains in place. The county is suing to stop federal regulators from requiring that jet fuel tax revenues be spent only on airport projects.)

To Delta’s credit, it has said that if the state eliminates the jet fuel tax, the company has “committed to ensuring that no school project that depends on this local option sales tax for education will go without funding.”

What Delta hasn’t said, to my knowledge, is whether it also will make up for jet fuel taxes that go to other local government functions in Clayton or that would have been included in anticipated renewals of the school sales tax program beyond next year.

“Support that community”

Clayton schools superintendent Morcease Beasley cited those potential gaps.

He also told me the county can’t collect property taxes on the airport, which takes up a big chunk of Clayton. Locals contend with noise and pollution from air traffic, he said.

“This community has given a lot, so it is not too much to ask for reciprocating of giving,” Beasley said.

“It’s important for all corporations and companies that need the support of a community to invest in that community, support that community.”

That reminds me of a past Delta slogan: “Good goes around.”



Reader Comments ...


Next Up in Business

All-new Chevy SUV, the Blazer, debuts in Atlanta
All-new Chevy SUV, the Blazer, debuts in Atlanta

Chevrolet unveiled the newest vehicle in its lineup, the Blazer, in Atlanta Thursday night, reviving the defunct SUV with a smaller version. Alan Batey, General Motors’ North American president, made the announcement at an event at The Fairmont in Atlanta, showing off a model of the mid-size SUV, which features a slimmer, more athletic front...
UPS, Teamsters reach tentative labor agreement
UPS, Teamsters reach tentative labor agreement

UPS and the Teamsters union have reached a tentative agreement on a new five-year labor deal, which if approved could alleviate the risk of a strike. The settlement in principle of the national master UPS agreement is subject to approval by UPS local unions. Yet to be resolved are supplemental agreements, according to the Teamsters. The final deal...
Wes Moss: How to head into retirement with no mortgage
Wes Moss: How to head into retirement with no mortgage

“Should we pay off our mortgage before we retire?” This is among the most common questions I get from clients and “Money Matters” listeners (tune in from 9-11 a.m. Sundays on WSB radio (News 95.5 and AM 750 WSB). I most recently heard it from a couple who are on their final approach for retirement. Let’s call them Rose...
Chevrolet announces all-new Chevy Blazer in Atlanta
Chevrolet announces all-new Chevy Blazer in Atlanta

Chevrolet unveiled the newest vehicle in its lineup, the Chevy Blazer, in Atlanta Thursday night, reviving the discontinued Trailblazer with a smaller version of the utility vehicle. Alan Batey, General Motors’ North American president, made the announcement at an event at The Fairmont in Atlanta, showing off a model of the mid-sized SUV, which...
Mayor Kasim Reed aides got late term promotions to Hartsfield-Jackson
Mayor Kasim Reed aides got late term promotions to Hartsfield-Jackson

Former Atlanta Mayor Kasim Reed’s administration transferred two employees from City Hall to high-paying positions at Hartsfield-Jackson International Airport in the final days of Reed’s term. Both worked closely with Reed, one as an executive assistant to the mayor and the other as a scheduling coordinator, and both were promoted to the...
More Stories