Posts Tagged ‘airline service’

Most Airlines Agree to Emergency Aid Terms

April 15, 2020

The federal government has reached an agreement in principle with 10 airlines over terms of the federal emergency aid that they will receive.

A report by Aviation Daily said he carriers will receive a combination of grants and loans as part of the $25 billion allocated to them by the Coronavirus Aid, Recovery, and Economic Security Act.

The airlines had wanted all of the funding to come in the form of grants that they would use to pay employees through spring and summer.

However, 30 percent of the aid will be low-interest loans with 70 percent of the funds being grants.

The agreement also said the U.S. Department of Treasury will receive warrants equal to 10 percent of the amount of the loan, which the agency can later convert into shares at a pre-determined price should it desires.

Airlines agreeing to participate in the program include Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, SkyWest Airlines, Southwest Airlines and United Airlines.

Spirit Airlines said it continues to negotiate with the government over terms of its application for emergency aid but expects to reach an agreement soon.

Treasury Secretary Steven Mnuchin said talks with other airlines are still ongoing, particularly smaller carriers.

The CARES Act requires that airlines accepting financial assistance cannot cut positions through layoffs or furloughs, but can reduce staff through voluntary incentives such as early-retirement or paid leave packages.

Airlines also are prohibited from repurchasing stock or issuing dividends through September 30. They must agree to certain limits on executive pay until March 24, 2022.

The carriers are required to provide minimum levels of service to all points in their pre-pandemic networks to the extent “reasonable or practicable.”

However, some airlines, including Alaska, Allegiant and United have sought waiver requests for exemptions to cease flying to certain points, citing weak demand due to the COVID-19 pandemic.

Flying Like its 1954

April 14, 2020

Air travel numbers have dropped to the levels of the early 1950s.

On April 8 the Transportation Security Administration said it screened 94,931 people at U.S. airports, the second consecutive day that the number of those screened fell below 100,000.

Air travel statistics show that the last time the U.S. averaged fewer than 100,000 air passengers per day was in 1954.

Airline industry observers say the number of passengers flying may be smaller than TSA numbers indicate because those figures include airline crew members and some employees of airport shops and restaurants located beyond the checkpoints.

The decline in TSA screenings was 96 percent less than it was on April 8, 2019.

TSA said that on March 1 this year it screened nearly 2.3 million passengers at U.S. airport.

The plunge in passengers began in the second week of March and has only shown signs of slowing in recent days, perhaps because it has just about hit its floor.

Back in 1954 the only commercial jetliner was the British-built de Havilland Comet and it had only been flying commercially for two years.

The Boeing 707 was still in development and would not make its first flight until 1957 and enter commercial service on Oct. 26, 1958.

Industry trade group Airlines for America said airline capacity has been slashed by 71 percent although some reports have placed the figure at 90 percent.

Anecdotal reports have surfaced in the news media that some flights have operated with just one passenger aboard.

The trade group said on average only one in every 10 seats on domestic flights is occupied.

Flight cancellations have been widespread in the past four weeks.

U.S. Airlines have reported taking out of service 1,800 planes or about 30 percent of the airline fleet.

Amid the COVID-19 pandemic, TSA workers are now wearing masks and in some instances face shields.

TSA said 327 of its employees have tested positive for the virus. The union representing flight attendants at American Airlines said 100 of its members have tested positive.

Industry observers expect demand for air travel to grow slowly once the pandemic subsides.

Airline traffic took a major hit following the Sept. 11, 2001, terrorist attacks on New York and Washington and air travel once restored didn’t begin to grow until 2003.

Some believe air travel will grow even slower following the COVID-19 pandemic.

The Associated Press reported that Polling firm Public Opinion Strategies found fewer than half the Americans it surveyed about 10 days ago say they will get on a plane within six months of the spread of the virus flattening.

The firm Stifel Nicolaus projects that in a best case scenario air travel demand won’t return to pre-pandemic numbers until the middle of 2021.

Those traveling tend to be health care professionals on their way to pandemic hot spots and a few traveling to be with family.

United Airlines reported it is losing $100 million a day while Delta Air Lines put its losses at $60 million a day.

U.S. carriers are expected to accept federal emergency grants to cover their payrolls through September.

The industry expects carriers to be smaller in the post pandemic era.

How quickly air travel recovers will hinge upon a number of factors including social distancing rules and how quickly those thrown out of work during the pandemic are able to resume their jobs or find new employment.

Trump Budget Also Targets Air Service, Fees

February 15, 2018

Amtrak is not the only form of transportation with a target on its back in the Trump administration’s budget proposal for fiscal year 2019.

In the same way that the budget seeks to slash funding for Amtrak, particularly its long-distance trains, the administration wants to cut funding for essential air service to small airports.

The budget proposed cutting expenditures for the EAS program from $150 million to $93 million.

The budget would also raise fees related to transportation security, and customs and immigration fees paid by airline and cruise passengers. The federal air traffic control system would be privatized.

Amtrak funding would fall from $1.5 billion to $738 million. The budget proposal said Amtrak’s long-distance trains suffer from poor on-time performance and carry just 4.7 million of Amtrak’s nearly 32 million annual passengers. It also said the long-distance trains lose more than $500 million annually.

These proposals are not new. Most of them were in the FY 2018 budget, but Congress did not heed them.

The Trump administration budget proposal calls for appropriating $15.6 billion for the Department of Transportation, a cut of 19 percent from what Congress gave it in FY 2017.

The most recent data available from the U.S. Department of Transportation, dated October 2016, shows that the federal government funded commercial airline flights to 120 communities in the continental U.S and Hawaii.

The program, which began in 1978, also makes 237 Alaskan communities eligible for funding.

The rational for the EAS program was to enable remote towns to remain in the national air traffic network following airline deregulation, which resulted in scores of airports losing commercial service.

“However, today many EAS flights are not full and have high per-passenger subsidy costs. Several EAS eligible communities are relatively close to major airports,” the budget proposal says.

The recommendations were part of the $4.4 trillion budget proposal the administration sent to Congress on Monday.

Among the travel security-related fees that the administration wants to increase are the 9/11-passenger security fee that is assessed on airfare from the current $5.60 per one-way trip to $6.60 in 2019 and then to $8.25 beginning in 2020.

Although the 9/11 fee is supposed to fund Transportation Security Administration airport operations, Congress has sent about a third of it to items unrelated to security.

The administration said raising the fee would result in the traveling public paying for the full cost of aviation security.

The custom inspection fee would increase from $5.65 to $7.75. This fee is assessed on air and cruise ticket prices for people arriving in the United States.

The immigration fee, which is also assessed on tickets held by air and cruise passengers entering the U.S., would go from $7 to $9.

The proposal includes ending an exemption on that fee for passengers arriving via sea from Canada and Mexico.

The budget proposal said that the customs fee and immigration fee were last increased in 2007 and 2001, respectively.

Air traffic control is now overseen by the Federal Aviation Administration, but the Trump administration wants to shift it to an independent private organization.

Doing this, the administration believes, would speed implementation of a satellite-based NextGen system while removing air traffic control from contentious appropriation debates in Congress.

Critics have said doing this would reduce public accountability and harm the interests of private aviation.

An ATC privatization bill has twice made it out of the House Transportation Committee, but has failed to pass either the full House or the Senate due to bi-partisan opposition.