The heads of 6 major airline unions wrote to Congressional leadership asking for another 6 months of airline payroll – $32 billion for passenger and cargo airlines and airline contractors – to prevent employee layoffs through March 31.
NEW: Major airline unions says Congress should extend payroll assistance through March or the US will see hundreds of thousands of layoffs pic.twitter.com/hXHQJpWZMv
— davidshepardson (@davidshepardson) June 25, 2020
The specific ask in the letter,
We are calling on Congress to pass a clean extension of the [Payroll Support Program] through March 31, 2021, allowing the program to continue as intended under the current statute without requiring additional applications or agreements between Treasury and recipients.
The first set of bailouts was a bad idea. As President Obama’s Chief Economic Advisor (who served as President Clinton’s Treasury Secretary) put it about the original CARES Act payroll support grants to airlines,
Some of the time it’s dumb to maintain employment… What conceivable logic is there [in the airline baul out] in telling Delta Air Lines they have to retain every flight attendant until October 1st? Delta Air Lines is years away from needing the number of flight attendants it has now. And it is zero percent probability to want to have those flight attendants back on October 1st.
So what conceivable purpose is achieved by the government mandating that the illusion that those flight attendants have jobs to come back to is perpetuated as a condition for giving money? The right answer for those flight attendants is more generous unemployment insurance, and for them to get unemployment insurance and figure out what’s coming next.
…Ultimately for these industries to be viable they probably have to shrink.
He explained that by trying to keep all of the airlines alive, you assure that they all have excess capacity and that they’re all unprofitable. That has long-term consequences for the whole economy, “the failure to allow the appropriate economic adjustment is kind of the mistake that Japan made in the 1990s. We need as we realize how long this is going to play to be aware of those risks.”
He argues that we should have provided money to people suffering and “grants to the airline industry seem to be a classic example of something that won’t work.”
By the way two thirds of the airline contractor money from the original CARES Act hasn’t even been spent yet. And airline payroll grants went to 287 airlines including helicopter tour operators and private jet firms. Under the union plan those would be extended too.
Of course currently workers are set to be laid off one month before the Presidential election. I’ve told you that airlines and unions have been angling for a second bailout while the ink was still wet on the first one. Is anyone surprised to see this?