American Airlines CEO Doug Parker pressed the case for another bailout today, saying without more government aid they’ll eliminate service to some small cities. And that’s true, but misleading.
The airline has said they would to end service to 15 small cities effective October 7. They pushed that back. For two cities – Joplin and Sioux city – that would have violated agreements they’d made with the federal government (and so are looking at 2021 discontinuation of service). For Roswell, New Mexico they actually needed the flights because of all the planes they have parked in the desert there. And for Stillwater, Oklahoma they traded continued service for political support for more bailouts.
What Parker doesn’t tell the public – or lawmakers who may have forgotten – is that in exchange for the $5.5 billion subsidized CARES Act loan his airline just closed he agreed that the Department of Transportation could order them to continue air service to all of the cities they serve.
In other words, American Airlines can only drop service to cities they currently fly to if the federal government allows them to and doesn’t enforce provisions of the CARES Act that American just signed onto in late September.
Now, since the Trump administration supports a further bailout of airlines, they might choose not to enforce continued service in order to give the airline more leverage to pressure Congress to act on airline aid as a standalone or just because they’ve generally taken a fairly light touch with airlines. But that’s proverbially holding the gun here to their own head, not a real need for funds to continue service to small communities – which wouldn’t cost $25 billion to fund in any case.
United Airlines, Alaska Airlines, JetBlue and others have also taken the same subsidized loans and can be ordered to similarly continue service in exchange. We already given them the money to continue flying to small towns. Why do they get to double dip on this argument?
Am I the only American who doesn’t give two F-s about airline service to small cities? Residents of small cities already have a car culture. They drive everywhere. Why not let them drive the distance necessary to reach a big city airport?
Capitalism in the good times, socialism in the bad. Companies are people too
I am grateful that Gary does not look the other way, or equivocate in any way, when the airlines or hotel chains get greedy, which is pretty much all the time. He could be a sycophant, like many of the other travel bloggers, but he calls out BS when they are selling it.
Even though I will never understand why he continues to give American occasional good press, or even fly them, I do get the impression that his posts are at least not driven by concealed financial arrangements (except for the credit card ones).
Oh, and no more special treatment for airlines with taxpayer dollars! Lots of other sectors, like restaurants and small retail, are suffering just as much and not getting the huge bailouts or attention of the airlines.
“Trump administration supports a further bailout of airlines,”
Is this because it’s a vote winner?
I just don’t get why the airlines should get special treatment. They should be sized to meet demand, not subsidized to keep people employed. Not only do these employees have premium paychecks, they will likely be doing next to nothing while getting that paycheck. I know a pilot who sat for 2 months while getting his minimum pay because he wasn’t needed. I don’t like to see someone struggling, but by the same token I don’t like to see certain people getting special treatment either.
This idea of subsidizing air travel to small cities makes no sense. Certain things are cheaper in small cities (real estate, rent, etc.) and certain things are more expensive (air service.) I’m OK with the government subsidizing air fare from small cities when it starts giving me a rent subsidy for living in a large city.
I’m all for business but frankly have zero sympathy for any business that shuts down due to the COVID recession or if airlines have to eliminate certain routes and/or markets. It is supply and demand people and an efficient economy should let it work. I do feel very sorry for all the people that lost their jobs but that doesn’t warrant supporting economical illogical decisions.
On a tangent, I hate all the PR about how many restaurants will go out of business. GOOD – it will shake things up a little. Restaurants (and bars) fail more than any other business. Also, even the good ones get stale. Then you have the copycat syndrome where you end up with way too many similar establishments in a given area. Restaurant employees are some of the most flexible out there. Yes many are out of work now but they will quickly find jobs as the economy improves. Also, if customer demand supports more restaurants they will quickly open (and probably will be better and more creative than what was there before). This is one area where Darwinism really works! Let it happen people – we will ALL be better off in 5 years by letting many of the current restaurants die.