In exchange for $79 billion in direct subsidies from the federal government, airlines agreed not to drop any of the routes they flew before the pandemic without permission from the Department of Transportation.
As this requirement from the first of three rounds of subsidy packages was about to lift last fall, American Airlines threatened to pull service from 15 cities right away unless they were given an additional $5 billion.
- These cities appeared strategically chosen based on the districts of influential members of Congress
- Pulling service from two of the cities wasn’t even legal but someone at American forgot to check that (they were eventually able to leave several months later)
- They even directly traded the continuation of small city air service for political support for subsidies
The government kept shoveling more money at the airlines, and American and other carriers kept flying to small cities. This wasn’t actually necessary, because the Department of Transportation had the authority already to tell the airlines to keep flying their existing routes as part of their accepting subsidized loans. The government didn’t exercise that authority, and taxpayers were fleeced twice for the same flights.
The final obligation of the third round of subsidies lifted on September 30, 2021. And American Airlines has ended service to three cities as a result:
- New Haven, Connecticut (HVN)
- New York – Stewart (SWF)
- Williamsport, Pennsylvania (IPT)
All 3 cities were on the original threat list to see an end to service a year ago.
Outside of these three, and the two Essential Air Service cities that were reassigned (Joplin and Sioux City), American continues to fly to the other 10 cities on its threat list even though it’s no longer required to do so.
Wasn’t it that they had to continue service to cities, not keep all routes as you say in the first paragraph.
this simply goes to show that you either must have a fully nationalized air transportation system or one that is totally free market. The Feds confused the idea over the past year and one half. Airlines have to be free to make market-based decisions – but that doesn’t mean that some of the money that was given to airlines hasn’t been wasted. In fact, government help to airlines could have been much more efficient in preserving the industry which was supposed to have been the goal.
Post 9/11 there wasn’t enough aid to airlines and nearly all legacy carriers filed for bankruptcy; post covid, there has been too much aid. Hopefully it will be a long time before the country faces another major crisis but there needs to be more refined help to industry in the future.
Pretty much the same way that Aeroflot decided whether or not to fly to cities in the USSR. . . government bureaucrats told them to. The Soviets used the unromantic name Gosplan, but savvy American marketers for Communism and Central Planning came up with the much more exciting and public minded name, “Federal Aviation Administration.”
Wow, and these guys complain about middleeast airlines subsidies. At least their service is excellent, not 3rd class like AA