Even though a second airline bailout is a bad idea it’s appeared to have political support.
- It was endorsed by a significant number of both Republicans and Democrats in both the House and the Senate
- It has the public backing of the President
- Without it there will be layoffs a month before the election (though far fewer than originally projected, perhaps 40,000 rather than 75,000 or 100,000)
It’s seemed that politically the only thing stopping another payroll support grant program to U.S. airlines – even to U.S. airlines that aren’t going to furlough anyone without it – is the broader gridlock in Congress that has prevented any legislation from passing both the House and the Senate.
However there’s now word that legislation Senate Republicans are unveiling doesn’t include another round of payroll support and also doesn’t include a second $10 billion for airports after the first one made bizarre payments to tiny airports, as much as 50 times their annual operating expenses.
Republicans expect to vote in the Senate on their scaled-down plan this week. Even if this is what passes the Senate, airline money could be added in later as part of reconciliation between the Senate and House bills.
When calculating the cost of ‘jobs saved’ for six months via a ‘clean extension’ of CARES Act payroll support, we were looking at a cost of $333,333 per job since most of the money goes to fund payroll that airlines will have whether a bill passes or not. In other words it funds $200,000+ a year pilots and it funds the salaries of executive management, having taxpayers pick up the tab rather than shareholders and creditors.
Now though against actual announced furloughs we’re looking at a cost of about $625,000 per job saved – and many of those will just mean job losses six months down the road. Ultimately airlines say they are going to be smaller because there’s less demand for air travel, and so they will operate fewer flights. That means they need fewer employees. Paying them to keep those employees on payroll while not actually working does nothing for the economy.