Trump 2.0: Anticipated Impact on Aviation and Aerospace

In the coming months, we will be watching the following key areas.

President Elect Trump’s Pick for Department of Transportation (DOT) Secretary
Former Rep. Sean Duffy (R-Wis.) is Trump’s pick for DOT Secretary. In announcing Duffy’s nomination, Trump stated that Duffy will “make our skies safe again” by eliminating DEI for pilots and air traffic controllers, both of which face staffing shortages. While Duffy’s background in aviation is not extensive, he has stated he is eager to help “usher in a new golden age of transportation.” We expect him to follow “MAGA” principles and potentially to adopt some of the aviation proposals set forth in Project 2025.

Reduction of Aviation Consumer Protection Regulations and Enforcement Actions
DOT has broad authority to prohibit “unfair and deceptive practices,” which it has relied on to issue many consumer protection regulations. In the first Trump Administration there was an effort to roll back some of these regulations and to impose limits on DOT’s use of this authority. We expect to see something similar in the next Trump Administration.

Items at risk would include a regulation adopted this year by DOT requiring new disclosures of fees for airline ancillary services, such as premium seating, WIFI and lounge access. This rule was stayed by the Fifth Circuit Court of Appeals and, if it survives judicial review, will face an uncertain future under the new Administration. The same is true of a proposed rule that would require airlines to seat families together on flights without incurring extra fees (the “Family Seating Rule”).

We would also anticipate fewer and less aggressive enforcement actions by DOT’s Office of Aviation Consumer Protection, as was true during the first Trump Administration.

Streamlining Regulatory Obstacles for Emerging Technologies

Advanced Air Mobility
The Trump Administration is likely to accelerate the development of advanced air mobility (e.g., electric vertical takeoff and landing vehicles, “eVTOL”). In a 2023 Agenda 47 speech, Trump stated:

“Dozens of companies in the USA and China are paving the way to develop electric take-off and landing vehicles for families and individuals … Just as the United States led the automobile revolution in the last century, I want to ensure that America, not China, leads the revolution in air mobility.”

In the same speech, Trump revealed a plan to create up to 10 new, futuristic “Freedom Cities,” built on undeveloped federal land, which would include an investment in eVTOLs. Accordingly, the Trump Administration may introduce policies to speed the introduction of the advanced air mobility industry in the United States, especially if viewed as taking on China in a race to dominate this new industry.

Drones
In Trump’s first term, his Administration recognized drones as an asset to the economy by establishing the Drone Integration Pilot Program (DIPP), which provides cooperation between private companies and community governments. It is likely Trump’s next Administration will be similarly focused on accelerating opportunities to integrate drones into the national airspace. This issue is complicated, however, by U. S. reliance on Chinese-manufactured drones. The Trump Administration may support policies aimed at reducing dependence on Chinese-made drones, mainly DJI products. Along these lines, Trump may encourage U.S.-based companies to increase production of drones, and perhaps offer incentives or grants.

In addition, the Federal Aviation Administration (FAA) is expected to soon publish a proposed rule that would allow for expanded operations of drones in U.S. airspace beyond the visual line of slight of the pilot. Advocates for this proposed rule, including House T&I Committee Chairman Sam Graves (R-MO), have continuously urged the need for an expeditious rulemaking, arguing the current process (which requires waiver and exemptions) stifles innovation and is unnecessarily complex. We expect the Trump Administration will be supportive of this rulemaking.

Removal of FAA Regulatory Obstacles for Commercial Space
Given Elon Musk’s potential role in Trump’s next Administration including his appointment to lead the new Department of Government Efficiency (DOGE), we expect to see reduction in FAA restrictions with respect to commercial space launches and an approach to accelerate development in commercial space. Musk has long been at odds with the FAA over, in his view, the FAA’s slow approach to SpaceX’s launch approvals. There will now be powerful impetus for a more flexible approach.

Reduced Regulation of Competition
We anticipate seeing support from the Trump Administration for joint-ventures, mergers and/or acquisition efforts by smaller airlines to compete more effectively with the larger U.S. airlines. In addition, in October, the Biden Administration issued a request for information (RFI) seeking comments on the state of competition in the airline industry, including the effects of mergers and grants of anti-trust immunity. We expect the Trump Administration will withdraw or give little weight to the results of the RFI.

Possible Restructuring of Air Traffic Control (ATC)
The FAA’s ATC system has been widely criticized (for years) as being outdated. The FAA has taken steps to upgrade and modernize its system, but a number of observers would like to see a faster pace. Trump’s first Administration announced a plan to privatize ATC, an idea which has been discussed in other administrations. We believe privatization or a concept to make ATC a not-for-profit and/or to separate it from the FAA, could be raised in Trump’s next Administration. Of note, Project 2025 supports the separation of ATC from the FAA.

Uncertain Future of Sustainable Aviation Fuel (SAF)
SAF is the cornerstone of airline industry efforts to achieve carbon net neutrality. The future of SAF is unclear in Trump’s next Administration. First, President-elect Trump has promised to significantly scale back federal efforts to mitigate climate change. He has been vocal in his dislike of the Inflation Reduction Act (IRA), the Biden Administration’s signature legislation dealing with climate change, calling it a “Green New Scam.” The Biden Administration intended through the IRA to introduce a Clean Fuel Production Credit in January 2025 (to replace the $1/gallon Blenders Tax Credit) for biofuels that achieve at least a 50% reduction in emissions compared to traditional petroleum-based fuels. SAF producers, as beneficiaries of tax credits under the IRA, would be adversely affected by a repeal or weakening of the IRA. Moreover, the SAF industry relies heavily on imported non-petroleum feedstocks, such as used cooking oil from China, to produce SAF. The likely increased tariffs on imported goods from China could easily affect the availability of feedstock needed for SAF. While the international community may continue to press for progress in the SAF industry, the role of the United States could be in doubt.

Trade Implications on Cargo Traffic
Further on the issue of tariffs, the expected increased tariffs on goods imported from China, as well as Mexico and Canada, and the probable retaliatory tariffs imposed on goods exported from the United States, will impact international cargo traffic to and from these markets. The cargo airline industry will need to remain agile, as there could be volatile and unpredictable days ahead.

Support for “Open Skies” Agreements Between the United States and Other Countries
On the international front, we expect the Trump Administration will be supportive of existing bilateral Open Skies agreements, which allow airlines to operate freely between participating countries with minimal government interference. We also expect the Administration to support other international aviation agreements in emerging markets (non-Open Skies agreements) while at the same time ensuring U.S. airlines compete on a level playing field and taking a hard stance if it views foreign government actions as placing U.S. airlines at an unfair competitive advantage.

Potential Review of Foreign Ownership and Control Limitations on U.S. Airlines
As a final point, a long-standing issue that may be revived in Trump’s Administration, and as advocated for in Project 2025, is the revision of the strict statutory U.S. citizenship requirements for U.S. airlines. One argument supporting relaxation is that worldwide investors are providing access to capital for foreign airlines for innovations and new equipment purchases that U.S. airlines cannot match because of the statutory citizenship limitations. Project 2025 suggests that the U.S. should use the CFIUS process to exclude nefarious foreign actors while allowing investment from investors in designated like-minded countries so long as U.S.-based investors maintain plurality ownership.

Looking Ahead
As the Trump Administration develops its aviation and aerospace agenda, Pillsbury’s aviation team will continue monitoring developments to provide actionable guidance.