American Airlines has been saying that if Congress doesn’t pass another $25 billion in payroll support, which forbids airlines from laying off workers and requires them to keep flying to all the cities they used to serve, that they’re going to drop service to a number of small towns.
But is that even true? American pledged to terminate service to 15 cities on October 7, but they’ve already backed off of four of those:
- They have to keep serving Joplin, Missouri and Sioux City, Iowa through the end of the year (unless someone else picks up minimum service first) because they had entered into Essential Air Service agreements for those cities.
- They will keep serving Roswell, New Mexico – where they have planes stored and send mechanics flying in and out.
- And they’ll keep serving Stillwater, Oklahoma because the state’s politicians there pledged to support their effort to obtain more subsidies.
Now though American has taken out a $5.5 billion subsidized CARES Act loan. One of the provisions of the CARES Act airline loan program is that, in accepting the funds, they agree that the Secretary of Transportation can order them to continue air service to cities they served prior to March.
SEC. 4005. CONTINUATION OF CERTAIN AIR SERVICE.
The Secretary of Transportation is authorized to require, to the extent reasonable and practicable, an air carrier receiving loans and loan guarantees under section 4003 to maintain scheduled air transportation service as the Secretary of Transportation deems necessary to ensure services to any point served by that carrier before March 1, 2020. When considering whether to exercise the authority granted by this section, the Secretary of Transportation shall take into consideration the air transportation needs of small and remote communities and the need to maintain well-functioning health care and pharmaceutical supply chains, including for medical devices and supplies. The authority under this section, including any requirement issued by the Secretary under this section, shall terminate on March 1, 2022.
American has already been ordered to continue flying to Joplin and Sioux City through the end of the year but that can be extended, under section 4005 of the CARES Act, until March 1, 2022.
Whether American Airlines stops serving any city, leaving them without air service, is now entirely at the discretion of the federal government. No further legislation or subsidy is necessary to require American to continue service. Any city losing American Airlines air service, then, only does so because the federal government is making that choice.