Airlines get break from service requirements
Grants and loans from the recovery measure came with mandates to continue serving all airports on their schedules
Airlines that signed up for $61 billion in federal grants and loans in the roughly $2 trillion coronavirus spending bill passed last month had to promise to continue serving the same airports they served before the pandemic.
But 17 airlines, ranging from major players to small commuter lines, have asked for exemptions from that requirement. And the Department of Transportation has granted some of those requests, depending on the case made by the airline.
On Saturday, the DOT weighed in on requests by United Airlines, Frontier Airlines and Sun Country Airlines.
It allowed United to temporarily suspend or delay flights to Hawaii, Puerto Rico, the Northern Mariana Islands and Alaska, where some travelers are required to undergo a 14-day quarantine upon arrival or where incoming flights are routed through larger airports so travelers can undergo health screenings.
But the department denied the airline’s request to delay the launch of planned seasonal flights to Hilton Head and Myrtle Beach, S.C.; Nantucket, Mass.; Key West, Fla., and other seasonal vacation destinations, arguing that the law requires minimal coverage to connect the destinations with the national air transportation system.
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Sun Country asked to halt, suspend or reduce flights to 28 airports and Frontier asked to temporarily suspend flights at 35 locations.
The department largely rejected Frontier’s request, allowing it only to suspend services to Boston, Charlotte and Detroit through June 10. But it was more amenable to Sun Country’s request, arguing the smaller airline would face “undue economic and operational burden” by maintaining the services.
The federal government has a long history of requiring service to smaller airports. The 1978 Airline Deregulation Act included a provision guaranteeing that small communities served by air carriers before deregulation continued to receive some level of service.
But that was long before a global pandemic ground air traffic to a virtual halt. Now, suddenly struggling airlines are grappling with how to justify sending nearly empty planes from city to city.
The DOT’s willingness to grant the requests has varied.
It rejected requests by JetBlue to cut services to 11 cities and from Spirit Airlines to cut services to 26 airports. But the department agreed to allow Delta Air Lines to cut some seasonal routes that the carrier has not yet flown this year. It has also been amenable to requests by Hawaiian Airlines and Alaska Airlines.
Budget carrier Spirit on April 8 asked to cut services to 26 airports, including Columbus, Ohio; Austin, Texas; and San Francisco.
Before the crisis, Spirit flew to more than 60 destinations in the U.S., according to its website. In its request for an exemption, Spirit argued that it is in “survival mode” and that it was not reasonable nor practical to continue serving destinations such as Hartford, Conn.; Kansas City, Mo.; or even the New York City metropolitan area because of the dearth of passengers.
Doing so, it argued, would “rapidly exhaust Spirit’s financial resources and manpower, while adding virtually nothing to those cities’ access to air transportation at this time.”
The DOT largely denied the request, allowing Spirit only to cut services at Rafael Hernández Airport in Aguadilla, Puerto Rico, and deferring decisions on Christiansted and Charlotte Amalie in the Virgin Islands.
JetBlue, meanwhile, argued that it and the entire airline industry was facing an “existential, unprecedented crisis” in its request to stop service to 11 airports, including midsize cities such as Albuquerque, N.M.; Portland, Ore.; and Bozeman, Mont.
The DOT denied all but cuts on Aguadilla and Ponce in Puerto Rico. All air traffic to the island territory is going through San Juan because the governor has requested health screening there.
The DOT largely granted requests by Delta to delay plans to begin seasonal flights to seven vacation destinations, including Juneau, Alaska; Martha’s Vineyard, Mass.; and West Yellowstone, Mont.
“It is not reasonable or practicable for Delta to commence its seasonal summer 2019 baseline schedule immediately,” the DOT wrote in its response. But it rejected a request to limit service to West Yellowstone, arguing that the airport was covered by an essential air service contract and that the airline was compelled to begin service there May 7.
Hawaiian Airlines also received a reprieve, with the DOT citing the 14-day mandatory quarantine as a reason to approve requests to cut service to eight cities, including New York and Boston. The airline’s request for exemption also came with supportive letters from Hawaii public officials who said they want to limit the amount of nonessential travel to the islands during the pandemic.
Under the law, an airline that served a city less than five times a week would have to provide at least one weekly flight. Carriers with more than 25 weekly flights to a city could reduce that to five per week, which the DOT deemed a “minimum level of service” that would ensure that cities still receive air service.
Even as the DOT considers remaining requests, the Treasury Department is beginning to send out grants from the coronavirus spending bill.
The federal government has yet to issue the loans, but Delta has announced it will receive $5.4 billion in aid.
JetBlue so far has been designated to receive $935.8 million, and Alaska Airlines will receive at least $992 million.
Hawaiian Airlines will receive $290 million under the program, and Spirit expects to receive $330 million, according to its most recent SEC filings.
United announced that it will take some $5 billion from the federal grant program, with $3.5 billion in direct grants and $1.5 billion in the form of a low-interest loan. Frontier will receive a grant, but has not announced the details.