As the aviation industry copes with a historically steep drop in demand and revenue due to the COVID-19 pandemic, Congress passed a $2 trillion stimulus package last week to help keep the economy afloat.
The CARES Act legislation, designed to help both businesses and millions of consumers who were furloughed or laid off as a result of the economic slowdown, is one of the largest stimulus bills in U.S. history.
About $25 billion of the funding is designated for grants to passenger air carriers, with another $4 billion going to air cargo carriers and $3 billion to industry contractors like ground handlers, wheelchair attendants and others.
“While this assistance is welcome, it’s important to remember that the relief package is not a cure for the unprecedented challenges we face,” CEO Ed Bastian told Delta Air Lines employees in a memo.
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That money is required to be used to maintain payrolls. Recipients cannot cut jobs, pay or benefits through Sept. 30, per the terms of the legislation. They also cannot buy back stock or pay dividends until Oct. 1, 2021. In addition, airlines must maintain service to all of their existing destinations through March 1, 2022.
Another $29 billion is earmarked for loans to passenger and cargo carriers. Those loans come with a similar list of conditions, including allowing the U.S. government to take stakes in the airlines as collateral.
About $10 billion in grants will be directed to airports. As part of the stimulus terms, airports accepting money must maintain 90 percent of their staffing levels through Dec. 21.
“We are thankful for the working relationship with our partners and elected leaders, but also mindful that the CARES Act funding is a first step and will not change anticipated revenue losses,” said Vince Gastgeb, Vice President of Government and Corporate Affairs at Pittsburgh International Airport. “At this point, we are working on the details of what the legislation would mean for PIT.”
Most airports have seen passenger levels drop precipitously, although they must remain operational in their roles as critical national infrastructure. The Transportation Security Administration, which handles security at U.S. airports, reported that it screened only 203,858 travelers on Thursday—a 91 percent drop from the same day in 2019.
Officials at Pittsburgh International Airport say they’ve seen a similar drop there, dramatically impacting the budget.
“Airports, since no tax dollars go into operations, are dependent on revenue from airlines and passengers, both which have been greatly reduced as a result of the current state of affairs,” Gastgeb said.
Workers at PIT have been offered voluntary furloughs, and a select number of staff have been offered early retirement packages — actions other airports and some airlines have taken as well.
With the pandemic growing to more than 140,000 cases and 2,400 deaths in the U.S. as of Monday, and unlikely to slow down for weeks if not longer, the aviation industry is preparing to deal with depressed passenger demand for a period that could last months.
Airlines continue to pare their schedules almost weekly. For example, American Airlines now expects domestic capacity to decline between 60 and 70 percent in April, and between 70 and 80 percent in May. As recently as March 10, the airline had announced only a 7.5 percent cut in domestic capacity for April.
Two byproducts of those cuts are idle planes and quiet airports. Those two dilemmas have a symbiotic solution: parking unused aircraft on underutilized runways.
PIT is currently hosting more than 90 planes, with more on the way, and Hartsfield-Jackson International and Orlando International airports are among others turning tarmacs into parking lots.