- Airlines continue to fly across the US despite only having a few passengers on each flight, due to the coronavirus pandemic .
- In the COVID-19 bailout package, the CARES Act , airlines receiving aid are required to continue flying to every domestic destination they already serve, even with low passenger numbers.
- Industry experts explained to Business Insider that the requirement is designed to keep supply chains stable and transport essential personnel, like government and healthcare workers, as well as to maintain connectivity to smaller areas.
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Airlines in the US are still flying around the country amid quarantines, lockdowns, and social distancing guidelines, with each flight carrying passenger loads of just 5-15% in some cases, even just a single passenger .
Airlines have dramatically decreased their planned international flying, with as much as 80-90% of capacity cut for April and May, but the domestic cuts have been slightly less. United, for instance, is still flying about a third of its domestic capacity.
However, as the federal stimulus package (known as the CARES Act) is implemented, it's unlikely that flights will be cut much further, even as passenger numbers dwindle.
That's because both provisions of the bailout package for airlines payroll grants to keep employee paychecks stable, and loans to help offset negative cash flow contain provisions requiring airlines to continue service while receiving the aid.
Specifically, the Act requires airlines receiving loans or grants to "maintain scheduled air transportation service as the Secretary of Transportation deems necessary to ensure services to any point served by that carrier before March 1, 2020. When considering whether to exercise the authority granted by this section, the Secretary of Transportation shall take into consideration the air transportation needs of small and remote communities and the need to maintain well-functioning health care and pharmaceutical supply chains, including for medical devices and supplies."
Business and leisure travel are at a near-standstill, but there's still a need for air connectivity to continue, according to Robert Mann, a consultant and former airline executive.
"Scheduled airline services are a strategic, nationwide logistics lifeline for public health and related personnel and material," he said. Without it, "federal and state government agencies would need to charter as many as thousands of flights daily, at far greater cost than CARES Act grants."
Flights continue carrying government and public health personnel, as well as clinicians and support staff bringing resources to the most hard-hit areas. There's also cargo.
"Regular airline service moves both people and goods, including US mail," Henry Harteveldt, an industry consultant and analyst, told Business Insider. "That makes it essential during this crisis."
An important provision in the Act is the discretion given to the Secretary of Transportation, Elaine Chao. While it requires service to cities to be continued, it's left that open for interpretation based on perceived needs.
"DOT has mandated continuing service, but allowed each marketing carrier to consolidate its services to as little as a single daily flight to every point on its network as of the end of February 2020," Mann said.
"In the case of a city with more than one airport, like Chicago, New York, Washington DC, or regions, like on the West Coast, DOT has clarified that they'll allow airlines that serve multiple of those airports to consolidate to just one," Harteveldt said. "It's about maintaining services to the cities, not the specific airports."
"Airlines can run one flight per week and still meet the requirements."
While midsized and larger cities would never have to worry about losing service, Hartveldt said, the provision is designed to make sure that service is maintained to smaller destinations that could otherwise be cut off during the pandemic separate from the existing Essential Air Service program, in which the government subsidizes flights to rural and remote destinations.
"The primary concern behind the requirement is to ensure airlines don't drop service to the smallest cities in their route networks," Harteveldt said. "Those are often the first cities to be cut when demand falls, and the last to be added back in when things pick up again."
While competing airlines had considered whether it would be possible to consolidate flights between them , reducing flights and cutting costs even more, the US Transportation Department ruled that idea out.
"DOT prohibited that on anti-trust grounds, as they did post-September 11," Mann said. "They substituted the ability for each individual carrier to consolidate its own services."
It was not immediately clear which airlines intended to apply for aid under the CARES Act. Although American Airlines and Southwest Airlines have said they would, other carriers have been reluctant due to a provision which allows the US to take an equity stake in the airlines receiving aid.
The deadline to receive priority consideration for payroll grants is Friday at 5 p.m. ET, while airlines still have the option to apply through April 27. The procedure for applying for grants has not yet been released.
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