5 key elements of the $50 billion airline aid package

Mar 27, 2020

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

The House of Representatives passed a $2 trillion aid package Friday to help the American economy stay afloat through the coronavirus pandemic.

The Senate passed the legislation earlier this week and it’s expected to be signed into law by President Trump imminently.

Sign up for the free daily TPG newsletter for more airline news.

Included in the $2 trillion pot is $50 billion in aid earmarked for airlines. Here are five things to know about how that aid is structured, and how it can be used:

1. It’s meant to help airline workers

$25 billion — half of the total aid to airlines — is set to help cover airline employees’ salaries through September. That money is structured as a grant, which means the airlines won’t have to repay it even after the pandemic passes. In addition, the funds can’t be used to pay executive salaries.

Read more: An in-depth analysis of the $50 billion aid package to airlines.

2. The government will give airlines loans if they have to

The other $25 billion in the aid package will be structured as loans. Airlines will eventually have to pay that money back if they choose to take it, and it comes with some other restrictions as well. The government could take an ownership stake in airlines that receive government-backed loans.

Analysts think most airlines will treat these loans as a last resort because of the conditions. They’re seen more as a way for the government to express confidence in the industry, and encourage private banks to give struggling airlines funds if needed.

3. Cities will keep their service

The legislation requires airlines to maintain flights in every U.S. airport they currently serve for a fixed period as a condition of receiving some of the aid. That doesn’t necessarily mean airports will have the same level of service, but it should help keep the transportation network relatively stable in the near-term.

Related: What the airline aid package means for travelers.

4. No major changes for travelers

Many passenger advocates had hoped that the bill would include new regulations on inflight service, fees, amenities, or even minimum seat dimensions. The aid package includes no such restrictions though, so travelers are unlikely to see any major changes to their travel experience, but it’s likely that the airlines will emerge from this crisis with changed business models once the dust settles.

5. No favors for Wall Street

Previous government aid packages for airlines have been under strong criticism in recent days for allowing companies to use the funds for stock buybacks and other payments to investors. This package explicitly prohibits taxpayer funds from being used for those purposes.

Related: Coronavirus-related waivers and schedule changes in effect at U.S. airlines.

Featured photo by Patrick T. Fallon/Bloomberg/Getty Images.

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points

TPG'S BONUS VALUATION*: $1,600

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®.
  • 2X points on travel and dining at restaurants worldwide, eligible delivery services, takeout and dining out & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 80,000 points are worth $1,000 toward travel.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.
Intro APR on Purchases
N/A
Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.