Smaller airports may see schedule cuts after Sept. 30
Pandemic relief law that required airlines to continue service for smaller markets expires on Sept. 30, along with airlines' payroll support
At least two major U.S. airlines are considering scaling back or stopping scheduled service to small and medium-sized cities when a provision in the roughly $2 trillion coronavirus law expires Sept. 30.
That law, which included $25 billion in federal dollars to keep commercial passenger airline employees on payroll through the same date, also included a provision requiring airlines accepting those dollars to maintain a minimum level of service in the communities where they flew before the pandemic.
In some cases, that provision resulted in airlines running virtually empty aircraft to communities around the country.
Now, with air travel rebounding but still significantly lower than last year, labor unions and airlines alike are fighting for Congress to extend that aid through March 31, 2021.
But as the deadline approaches with no deal, airlines have begun issuing furlough notices to some 100,000 employees and on Thursday, American Airlines confirmed that it is determining which routes it will fly after Sept. 30.
An American Airlines official said the carrier is evaluating between 25 and 30 markets where there is lower demand — smaller city markets such as Williamsport, Pa., and Dubuque, Iowa. The airline has not yet finalized the cuts but could do so as early as next week.
United Airlines, meanwhile, expects to be “a much smaller airline come Oct. 1,” in part because of reductions to service, according to a person familiar with the airline’s thinking. The person said while the situation was "highly dynamic" and could change at any time, the airline plans to be "nimble" in its strategy as demand fluctuates.
Such reductions in service would be challenging for mid-size cities like Dubuque, which is only served by American Airlines and, on occasion, Sun Country for charter flights to Biloxi.
Todd Dalsing, Dubuque Regional Airport Director, said the pandemic has already spurred American Airlines to reduce their flight load from three flights a day to one or two a day.
A 2009 economic impact statement found that the airport contributed about $34 million, including $13.3 million in payroll, to the Dubuque metropolitan area’s $4.3 billion economy.
“A lot of companies have a checklist of five things” they look for when looking to locate a company, he said. “Typically one of the five things is, does that city have commercial air service? If they don’t have commercial air service, they take that city off the list of potential places to start a business.”
American Airlines received $5.8 billion in support from the $2 trillion law. But it lost about $55 million a day during the second quarter.
The Department of Transportation had until Aug. 1 to notify the public if the minimum service obligations were to be extended. A DOT spokesman said the department “has not proposed to extend the obligations at this time but will use the authority in the CARES Act to monitor ongoing access by the traveling public to the national air transportation system.”
“The Department is also prepared to implement any new provisions of law in this area if enacted by Congress,” the spokesman added.
Lawmakers have signalled support for extending the airline provisions in any future coronavirus stimulus bill.
Sixteen Republican senators — many from states with airports that could be affected — signed an Aug. 5 letter urging Senate leadership to extend the program. A spokeswoman for Senate Commerce, Science and Transportation Chairman Roger Wicker, R-Miss., said he backs an extension of the airline assistance, including continuity of air service requirements.
A July 27 letter led by House Transportation and Infrastructure Chairman Peter A. DeFazio, D-Ore., and Aviation Subcommittee Chairman Rick Larsen, D-Wash., called for expansion of payroll support program. The letter drew 223 lawmaker signatures, including 195 Democrats and 28 Republicans.
But Congress remains at an impasse in negotiations over the next pandemic relief bill — a fact which troubles labor unions, airlines and airports that say a new tranche of federal funds is needed.
Sara Nelson, president of the Association of Flight Attendants International-CWA, said just as the loss of airline jobs after Sept. 30 could be calamitous, so too could the loss of flight service to communities be economically devastating.
'Need to travel'
“You can’t just turn off airlines and turn it on,” she said. “People still have a need to travel.”
Katherine Estep, a spokeswoman for Airlines for America, a trade group representing major U.S. airlines, said her organization also backs a six-month extension of the program.
“Without additional federal aid, U.S. airlines will be forced to make very difficult business decisions, which could include announced furloughs and reductions in service,” she said.
The minimum service requirement drew notice after the bill’s passage when photos of virtually empty airliners taking off went viral.
But Bob Mann, a former airline executive turned industry consultant with RW Mann & Co., said those empty flights may ultimately be key to the post-pandemic economic recovery.
He cites the Northwest Arkansas Regional Airport, which serves the corporate headquarters of Walmart Inc., as an example of an airport that could see a decline in flights.
In good times, “it’s a bustling place with a lot of corporate travel,” he said. But now, “you could probably bowl there, and you wouldn’t have a difficult time doing that.”
He said even though traffic is down now, that airport will help in the country’s economic recovery.
“Do you want this industry around when the economy is trying to recover on the other side?” he said. “That’s what this is all about.”
The airline industry, he said, “has such a strong multiplier effect on economic growth, economic development, such leverage on the U.S. economy that you could hardly afford to walk away.”