Bigger airlines with bigger route systems are getting big government aid with money both for operating expenses and payroll. Smaller airlines, especially the ultra-low-cost carriers are eligible, too, but some may not be able to afford the assistance.
There’s been a lot of publicity in the past few days about large restaurant companies and other chains getting the bulk of the paycheck protection money that was supposedly for small businesses because they were able to jump in faster and had cozy relationships with lenders, the issue is different for airlines.
The funding for airlines, $50 billion, is split half and half between general assistance and money to meet payrolls. With the money comes a requirement that airlines keep all or nearly all of their cities served, providing essential links between cities and regions, despite 90% or more dropoff in demand.
That’s relatively easy for the large legacy carriers, which operate on a hub system; the smaller carriers tend to operate point-to-point nonstops, and have asked to be allowed to drop significant numbers of cities to avoid flying empty planes.
Travel industry trend site Skift cites some examples of why the big carriers have it easier. United flies to Salt Lake City from six other cities, with several flights a day on most of those routes. It can meet the requirements for the loan by keeping one of its about 30 daily flights going, allowing an overall drop of more than 90%.
Spirit, Frontier, Allegiant and Sun Country, on the other hand, have many routes that are served once a day or less, and must retain all but a small portion of their flights to be eligible for the money, with many flights going out empty. Spirit asked for exemptions to allow dropping 26 cities; only one, a city in Puerto Rico whose airport is shut down, was approved. Others have requests pending.
Because they have so few flights at most airports, these airlines usually use ground service providers such as Swissport and GAT to take care of their check-in, luggage and boarding stations. They will still need to pay for those services, but cannot use the payroll aid money for that; it can only be used to cover their own employees. The larger airlines generally hire their own airport staff except at the smallest airports.
While it’s hard to weep for companies that have grown and prospered on a myriad of fees, ups and squeezes, it seems clear that they are now in greater danger than their larger competitors. For flyers, even those who don’t fly the ultra-discounters, their disappearance could mean less competition and higher fares down the road.
