American, United say flights to small cities are at risk unless Congress extends payroll program
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.
Small cities like Dubuque, Iowa, and New Haven, Connecticut, could be without air service — maybe for good — in eight days if the U.S. Congress does not extend airline payroll assistance.
American Airlines will suspend flights to both cities that it serves exclusively on Oct. 7 after requirements under the federal government’s coronavirus aid package, or CARES Act, expire. And that may just be the beginning, with the leaders of both American and United Airlines saying their respective carriers may have to end these flights — “critical infrastructure” in the words of United CEO Scott Kirby — and others to small cities amid the historic hit to air travel from the pandemic.
“We’re trying to maintain those critical links to communities but, much like our employees, at some point you can’t keep everything going,” Kirby told reporters in front of the U.S. Capitol on Tuesday. He declined to name cities as American has, but he implied that cuts were likely to stem the airline’s losses that amount to an average of $25 million a day.
The CEOs of American, JetBlue Airways and United were out knocking on doors on Capitol Hill to drum up support for an extension of CARES Act protections for employees. They were flanked by leaders of major labor unions, including the Air Line Pilots Association (ALPA) and the Association of Flight Attendants-CWA (AFA), as well as the Airlines for America (A4A) trade group.
But the event — the first major in-person press conference for the airline leaders and A4A since March — signaled just how precarious the fate of a possible extension is. There is a little over a week until the first CARES Act protections expire on Sept. 30. After that, tens of thousands of airline staff are expected to be furloughed across the U.S.
“If Congress can’t come together on a mechanism to extend the [payroll support program] by Oct. 1 — eight days from today — small communities will lose air service and 19,000 American Airlines aviation professionals will be furloughed,” said American CEO Doug Parker in front of the Capitol.
“If Congress cannot come together to support an extension of the PSP on Oct. 1st – eight days from today – small communities will lose air service and some 19,000 American team members” could lose their jobs, says American CEO Doug Parker. $AAL pic.twitter.com/T9aPXThyO3
— Edward Russell (@byerussell) September 22, 2020
While House Democrats passed a broad $3 trillion coronavirus relief bill in May, a smaller Republican-led measure failed in the Senate earlier in September. On Sept. 21, Sens. Roger Wicker (R-Miss.) and Susan Collins (R-Maine) introduced a $28 billion package for airlines alone that could be the airline industry’s best chance at extending payroll support through the end of March.
Additional aid for just airlines faces criticism. While there is bipartisan support for assistance, many feel that it should come as part of a broad package that also extends unemployment benefits to the millions of Americans out of work due to COVID-19 and offers support for small businesses.
However, many on Wall Street think additional relief is misguided. Those critics argue that the funds would only put off inevitable cuts in staff and air service at airlines that will be needed without a quick rebound — something that most agree will not happen.
The number of travelers on U.S. domestic flights was down 66% year-over-year during the week ending Sept. 20, the latest data from A4A shows. Few expect the number of flyers to climb significantly before the end-of-year holidays.
Airlines see it differently. If payroll assistance is extended through March, both Kirby and Parker said that they believe their carriers will have a better view of future travel trends that would allow them to avoid — or at least minimize — possible furloughs.
“This is a jobs program,” added AFA president Sara Nelson at the Capitol. She emphasized that all funds in the proposed payroll assistance extension would go directly to employee salaries and not to airlines’ other expenses.
The impact of furloughs is not limited to just lost jobs. Once staff leave an airline they lose necessary federal certifications; requiring re-training and re-certification when they return to work. Airlines argue that this could slow their ability to add flights back when travel resumes in earnest.
Not every airline faces significant furloughs on Oct. 1. Southwest Airlines will not furlough staff before 2021 and Delta Air Lines has avoided flight attendant and ground staff furloughs through voluntary actions. In addition, on Tuesday the ALPA chapter at Delta said the airline has agree to put off up to 1,900 pilot furloughs until at least Nov. 1.
Delta Air Lines has agreed to put off any decision on pilot furloughs until Nov. 1, says @Delta_Pilots. The move anticipates an extension of CARES Act employment protections. $DAL pic.twitter.com/IPxvVGgwUq
— Edward Russell (@byerussell) September 22, 2020
On Sept. 15, Delta CEO Ed Bastian told staff that the outlook the payroll assistance extension was “uncertain.”
Like American, Delta has begun trimming its network once the CARES Act expires. It has quietly pulled Worcester, Massachusetts (ORH) from its schedule beginning Oct. 1 with more small cities expected to follow. The airline previously suspended flights to 12 airports and ended service to Ottawa (YOW) in Canada.
Small airports may need to look locally to keep air service if CARES Act protections end. The communities of Roswell, New Mexico, and Stillwater, Oklahoma, have stepped up to keep American flying beyond Oct. 7. More communities may have to do the same if they are to ensure commercial service continues.
But, to be clear, small communities and staff stand to hurt the most without additional aid. The airlines themselves are not at risk — even with the prognosis of a slow recovery in air travel that could stretch into 2024.
“American Airlines is going to be fine… no one in our industry is at risk of true financial duress,” said Parker. “What this is about, again, is doing what’s right for our team.”
Featured image by by Edward Russell/TPG.
Welcome to The Points Guy!
WELCOME OFFER: 60,000 Points
TPG'S BONUS VALUATION*: $1,200
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.
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- 2X points on dining at restaurants including eligible delivery services, takeout and dining out and travel & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for travel through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.