Monday was supposed to be the day the federal floodgates opened to pour grant money into cash-starved airlines. Instead, there was nary a drip of news or funds released. While many airlines applied for funds via grants and loans under H.R. 748, the CARES Act, the carriers voiced significant concerns with proposed requirements for carriers receiving aid. The government’s quest to ensure that communities maintained air service was at odds with some carriers as they shift into a new normal in the wake of the COVID-19 pandemic.
Those considerations were apparently being incorporated into the final rules, which were published today.
The DOT noted input from numerous air carriers pertaining to how the proposed two-tier approach to maintaining service to markets wasn’t appropriate: From the proposal writers’ perspective, markets that got one flight a day, seven days a week, were viewed no differently than routes that saw hourly service for business travelers. The ability to make service exception requests will allow for seasonal reductions and cessation of service to certain markets in the off season, a common practice of many Low-Cost Carriers that tailor their schedules to leisure travelers.
Meanwhile, legacy carriers American, Delta, Southwest and United find themselves ranked as “large carriers” based on their market share and will be held to maintain more of the flights they previously operated.
The incorporation of these considerations may help ease the minds of execs and employees alike, who were on edge over concerns that the CARES Act could prove an untenable burden for airlines seeking aid. In fact, over the weekend, the New York Times reported on a letter to a letter to Treasury Secretary Steven Mnuchin, by Chuck Schumer and Nancy Pelosi, that some airlines, if hamstrung by slow deployment of funds and onerous restrictions, might find bankruptcy a better option than using the CARES Act. RAVN Alaska, an air operator that served rural Alaskan communities, couldn’t wait this long. They ceased operations and filed for bankruptcy protection over the weekend before any CARES funds could be disbursed.
For airline employees, bankruptcies could void employment contracts, allowing the company freedom to reduce pay rates, hours of work, furlough or lay off. The CARES Act is written so that job protection—at least for the next few months—is a primary concern. As the act is implemented and airlines opt for one method of aid or another, workers will be holding their collective breaths to see how the industry will emerge from this nearly overnight downturn.