Become a Supporter
Become a Supporter
Federal Relief Aid To Airlines Comes With Strings Attached
The government explains what airlines must do to get a share of $50 billion in aid. It includes maintaining minimal service to where they flow now, and no consolidating flights between carriers.
STEVE INSKEEP, HOST:
The federal rescue law for American businesses comes with conditions. Employers, for example, get federal grants to keep people on the payroll. Airlines get $50 billion - so long as they keep flying. The airline aid is contingent on flying to every U.S. city the company served before the outbreak. NPR's David Schaper reports.
DAVID SCHAPER, BYLINE: When arriving at Reagan National Airport in Washington Tuesday for a flight to Newark, Greg Weinman (ph) didn't expect this.
GREG WEINMAN: It's empty. It was eerily quiet. There was nobody in the security line.
SCHAPER: As a volunteer medical courier, Weinman's travel is essential. And he says it was surreal walking through the airport with everything closed. He saw only about a dozen other travelers waiting in a gate area. At his gate, he was alone.
WEINMAN: I thought I was going to be the only passenger on the plane. At the very last moments, another woman wearing a face mask walked onto the plane as well. But the crew still outnumbered us 5-to-2.
SCHAPER: When airlines are paying more employees on the plane than there are passengers paying the airline, the economics of commercial aviation are upside down. That's why taxpayers are throwing the drowning airlines a $50 billion life preserver. But to get the money, the airlines must maintain their current workforce and keep flying to every city they served at the beginning of March.
The airlines have pitched the idea of consolidating flights. So instead of each airline flying a nearly empty plane from, say, Chicago to LA, everyone buying a ticket for that route on American, Delta and other carriers might all fly together on one United plane. But the Department of Transportation won't let them do that. Instead, the government will allow each airline to consolidate all their own flights to a certain city from several different airports into just one trip from one hub.
Robert Mann is a former airline executive and now an industry consultant.
ROBERT MANN: You could literally go from that 25 or 30 flights a day in Albuquerque down to one. How much more flexibility do you want than that?
SCHAPER: Another condition is that the government can take an ownership stake in exchange for grants and loans.
HELANE BECKER: It's kind of a form of nationalizing the industry.
SCHAPER: Airline financial analyst Helane Becker says this happened with AIG and automakers in the last financial crisis.
BECKER: Should the government and taxpayers be compensated? Well, if I lend you money, I expect to get a return on my investment.
SCHAPER: She says the airline industry that emerges will likely be different and much smaller. And a full recovery could take years.
David Schaper, NPR News, Chicago. Transcript provided by NPR, Copyright NPR.View this story on npr.org
CapRadio provides a trusted source of news because of you. As a nonprofit organization, donations from people like you sustain the journalism that allows us to discover stories that are important to our audience. If you believe in what we do and support our mission, please donate today.