Airlines made the case that they’re important to the economy, that everything would be fine in the fall and we’d want flights to resume in full quickly. To do that we needed to keep employees connected to their jobs. And we needed to keep travel going in the meantime, too, even though that meant bringing people with the virus from one city to another and widening the spread.
This culminated in the CARES Act, which provided $58 billion in subsidies for commercial aviation including $25 billion in payroll support for airlines. Those taking the money had to agree not to furlough anyone or reduce their rate of pay through September 30. By October 1 everything would be back to normal!
In the meantime airlines figured out they could furlough workers before taking the money, require workers to take unpaid vacation, and reduce their hours – all without running afoul of the law, and still taking the money (and in some cases double dipping with forgivable Small Business Administration Payroll Protection Loans).
Now airlines like United and American are notifying workers of potential furloughs effective October 1, as soon as CARES Act restrictions run out. Florida Senator Rick Scott thinks it is wrong wrong wrong that airlines took payroll support money and are going to turn around and furlough workers – and he wants to meet with airline CEOs to give them a piece of his mind!
This is very frustrating news. I didn’t believe big corporations should have gotten bailouts. But for them to turn around & furlough employees after receiving billions in taxpayer $$ is wrong.
— Rick Scott (@SenRickScott) July 16, 2020
I’m not sure why he is frustrated, except that maybe he was hoodwinked into believing if we just spent $58 billion on airline subsidies (plus tax abatements) everything would be fine?
The CARES Act said airlines taking payroll support funds couldn’t furlough through September 30. And they’re following the law. There’s going to be less demand for travel for awhile, while will in turn mean fewer flights, and therefore fewer airline employees.
If that’s the new normal, having folks move on from one role to the next in another industry is better for the economy and delaying that transition will cause the economy to stagnate.
Scott can do something about it, he can sign on to the union request for more subsidies to carry employees through the end of March, when they will again be… furloughed, because there are more employees than airlines need to fly planes to meet consumer demand.
There, I saved the airlines a meeting with the Senator, so their CEOs can focus on saving their airlines. Oh, who am I kidding, U.S. airline CEOs are always happy to plead their case for government favors and protection.