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Airlines Say They Will Fail Without More Federal Aid

March 3, 2021 by Tom Ramstack
Airlines Say They Will Fail Without More Federal Aid

WASHINGTON — Airline industry officials made a plea Tuesday for additional federal assistance to help their deeply wounded businesses recover from the COVID-19 pandemic.

They asked a congressional committee for another round of Payroll Support Program funds, not only to keep their workers employed, but in some cases to help air carriers survive.

“The challenges facing the aviation sector are unprecedented,” said Heather Krause, director of physical infrastructure for the U.S. Government Accountability Office.

The Payroll Support Program is a portion of last year’s federal bailout called the CARES Act. It provided subsidies to passenger air carriers, cargo air carriers and their contractors to continue payment of employee wages, salaries and benefits.

CARES refers to the Coronavirus Aid, Relief, and Economic Security Act that Congress approved in March 2020 to provide $2.2 trillion in economic stimulus funds to private American citizens and businesses. $28.2 billion went to the airline industry under the Payroll Support Program, according to the Government Accountability Office.

Krause said the pandemic might be passing, but the airline industry is likely to be transformed forever by it.

While small airlines went out of business, large carriers downsized, which included retiring or selling aircraft that normally would continue in service for years. They’re also developing ultraviolet cleaners to kill germs and touchless technology that allows passengers to board without touching airline workers or common surfaces.

They sought to shore up their finances through partnerships with financial institutions in deals that could become permanent parts of the airline industry, Krause said.

Even with the adaptations and the ebbing rate of COVID-19 deaths and infections, the industry estimates a full recovery could take at least two more years.

“The American aviation outlook remains uncertain,” Krause told the House Transportation and Infrastructure Committee.

At its lowest point a year ago, the number of U.S. airline passengers dropped off by 95%. Even now, airlines are flying only half as many routes and passenger traffic is 60% of its pre-pandemic 2019 levels, according to industry estimates.

They need 80 % of pre-pandemic passenger loads just to break even on their expenses.

Rep. Garret Graves, R-La., agreed that some kind of additional support is needed for the airline industry.

“What is important is that we actually maintain the capacity of our airline industry and the ability to have business, recreational and tourism travel available for when the economy picks back up again,” Graves said.

Ensuring the industry remains healthy “is absolutely integral to our economic recovery,” he said.

Rep. Peter DeFazio, D-Ore., suggested that any additional subsidies include requirements for better sanitation and masking of passengers to protect them from disease.

“We do not have comprehensive long-term plans in place,” DeFazio said.

A danger passengers face if rules are not adequately enforced requiring masks comes from, “The jerks who get on and suck on a lollipop or sip on a bottle of water for several hours,” DeFazio said.

Despite the grim news, some economic indicators show the airline industry’s fortunes are returning.

AirDNA, a short-term rental analytics firm, reports that vacation bookings are only 2% below pre-pandemic levels for the end of this month. Oxford Economics is forecasting 7% growth for the U.S. economy this year.

Some airline industry executives said they could not wait much longer.

“A year ago, we were in the golden age of flying,” said Nicholas E. Calio, president of the trade group Airlines for America. “The bottom fell out very, very quickly.”

He credited previous rounds of the Payroll Support Program with preventing a disaster.

“It kept the industry online,” he said. “We are still struggling however.”

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