My eyes nearly bulged out of my head reading the Business Insider headline,
United Airlines CEO says a lack of support from the government to the aviation industry is partly to blame for travel chaos, report says
Lack of government support, is he insane?
- It started with $25 billion in direct cash to airlines and $25 billion in subsidies loans from the CARES Act
- And there were two more rounds of direct cash injections totaling $29 billion
- Not to mention tax relief and cash to airports and airline contractors
It turns out what he’s really saying isn’t that government didn’t give airlines cash – it did, duh! – but that government hasn’t poured enough cash into the infrastructure that supports the industry.
“Frankly, the bigger challenges are not the airlines themselves, they’re all the support infrastructure around aviation that hasn’t caught up as quickly.”
“When the FAA says you can’t land airplanes at the airport, you’re going to have delays and cancellations,”
Unlike in much of the rest of the world, airports are usually owned by governments. Security isn’t just regulated by government but usually performed by government. And air traffic control is directly provided by the government.
Of course unlike at the airlines, governments generally didn’t do furloughs during the pandemic (airlines used government cash to keep people employed to fund early retirement offers that reduced employment).
There have been staffing issues at TSA and in air traffic control, and these have made travel less pleasant. Airlines themselves code the reasons for delays and cancellations and air traffic control hasn’t been a primary driver. In fact, Scott Kirby found himself apologizing to Transportation Secretary Pete Buttigieg because his claims were baseless (and because it’s import to grovel before the Secretary of Transportation when you run a heavily regulated and subsidized airline).
While Buttigieg has blasted airlines for poor performance in media, he also hasn’t done anything about it, and has only complained about their lack of operational statistics compared to pre-pandemic – accepting the level of service airlines were providing them as somehow good enough.
Airlines let too many people go during the pandemic (over 30% at Delta!) while taking billions in taxpyeyr cash explicitly not to do so. They didn’t have the people to scale up their service when demand returned, even though the point of the subsidies was so that they would. And they lost a lot of context, culture, and knowledge of how to run an airline in the process.
But Kirby wants more taxpayer money for aviation infrastructure because that’s a subsidy to United. So much for the days just a few years ago when United Airlines, along with Delta and American, pretended to be against subsidies – when in truth they were just looking for the subsidy of protection from competition from Emirates, Etihad and Qatar – higher prices and less choice for customers.
When Scott Kirby criticizes the government what he wants is more government. And specifically, more government that benefits him and his airline. He doesn’t ask, is NavCanada a more efficient model for U.S. air traffic control?
- The independent non-profit doesn’t just handle Canadian domestic flights, but traffic across the North Atlantic
- It does so more efficiently and at generally lower cost
- And more importantly isn’t subject to the annual appropriations cycle of the government for financing technology upgrades… they can borrow and make capital investments, in contrast to the U.S. which is finally ridding itself of paper flight strips.
It’s absolutely time to improve airports (my home airport in Austin shouldn’t be governed by the City Council if it has any hope to serve the growing community); air traffic control (spin off the function to better invest in technology); and airport security (we’re safer when the entity performing the security function isn’t its own regulator). But the answer to all of this isn’t more taxpayer subsidies, and the blame for airline poor performance falls on the airlines themselves.
Correct on all counts. Congress is indeed broken. Handing out taxpayer billions like candy and demanding nothing in return.
Companies have gotten fat and lazy. They put out a terrible product, cut employees, whine they can’t hire employees (often with poor benefits and at low pay), pay themselves large bonuses, and then want more free money from the government.
Kind of like investors in the stock market, they think the market should always give them 10%+ returns.
A lot of people are going to have a rough decade or so as standard of living drops, salaries level off, mortgage rates go back to high levels that haven’t been seen in ~20 years, etc.
@rich – 100% agree!!
Indeed…the only question now is whether these companies that tied themselves to the government did so unwittingly or if this was all by design. Airlines are not the only ones…healthcare is a big one. The free market has taken many hits over the years…but it has always rebounded because despite pressure from some factions often including government and some government aligned trade organizations, the free market has always been stronger than these forces alone. However, it cannot withstand a relentless pounding from all sides for much longer. The people and the companies that are made up of freedom loving people need to start taking responsibility, recognize it was wrong to ask the government for help (think things like mask mandates as well)…and let the market heal. If not, I’m afraid that in the not so distant future we will all lament the death of a true free market from a million cuts and bruises.
Crony capitalism – where business and bureaucrats get together and decide the real enemy is consumers.
Kirby learned how to feed from the Government trough early, starting with getting his college paid for by us taxpayers. Just saying. Blame someone else instead of taking on the problem yourself…
I wonder how well America would work if we stopped giving Corporate America Bailouts, Subsidies, and tax breaks? Everyone is against the student loan bailout, but no talks about Corporate Welfare.
Our government is absolutely spineless when it matters. If you’re going to dole out billions in public money, demand something in return (the airlines threw a fit when this was initially a condition of CARES, hmmmmmm). These companies are out of control, only because they know how to extract what they want in a manner that only benefits their bottom line.
first, Gary, there is simply no correlation between the number of early retirements during the pandemic and the ability to staff operations. People are not going to sit around for 2 plus years chained to a company during a pandemic when the government is handing out thousands of dollars per household. Airline pilots and ATC controllers have age limits and many did retire and would have any way; their employers did not rehire them because they had no idea when the pandemic would end. The only way to know how to determine if early out packages was excessive is to count the number of people that left during the pandemic that would not have left if the industry continued to operate normally. That number cannot be known but it most certainly includes air traffic controllers and other airline employees.
Second, there is no correlation between the level of service airlines are operating now and the level of retirements. Airlines had the right numbers of staff months ago but didn’t have people in the right places and the right places for those employees could only be known when demand returned. DOT data shows that every US carrier massively struggled with operational challenges during the first half of 2022 but that occurred at different times for different types of carriers; legacy carriers were the last to get it all figured out but all carriers cut capacity in order to restore operational integrity. Part of the reason why Pete B quit rambling is because airlines are largely back to their pre-pandemic rankings of operational reliability and rates of cancellations and delays.
And finally you have to read what Scott Kirby says heavily within a bias about EWR. CO built EWR into a massive hub, it became slot-controlled, UA took over CO and the hub and underutilized the slots at EWR, the FAA removed full slot controls at EWR but not at LGA and JFK, and UA is now at a competitive disadvantage in NYC because low cost carriers have been able to add flights at EWR while UA has had to cut flights just to keep its operation running remotely reliably. DL is now operating more than 20% more flights from LGA and JFK than UA at EWR which is physically not capable of growing to the levels that UA needs to maintain the #1 position in NYC that CO and later UA once had. Kirby wants to blame everyone else for limitations that UA failed to see and address.
Mr. Dunn has spoken.
Awesome history lesson as usual!
All is right with the world…..
A huge problem is clogging up the system with RJs. Get rid of RJs, reduce frequency, and presto 90% of the issues magically go away. From lack of pilots to gates to slots.
It’s literally a self-fixing problem yet the air carriers keep doubling down on them. They served a purpose post-9/11 but no longer.
SWA has been the most profitable carrier and yet no RJs. Hmmm.
I agree with some of what you are saying Gary, but you have to be careful about privatization. Quite a few government functions have already gone that way–military contractors are one big example. It’s not clear that these companies are necessarily any more efficient either economically or in quality of services. Look up health care in private prisons. But people who have their fingers in them (Cheney at Haliburton is also a good example) can make a lot of money from taxpayers. It’s a bit like a friend of mine who was given early retirement from a statewide law enforcement computer system when higher ups figured they could run it more cheaply with less people. Then he was hired back as a needed consultant…at triple his old salary.
I can see a totally private national airline system dropping money losing small airports that the local people rely. Or how a private national postal system would jack up prices and severely reduce services. (Like turning Social Security over to private investors this has been a dream of certain Congresspeople for a long time.) A quick look at Nav Canada’s website shows a real bureaucratic system with lots and lots of fees, including significant ones for small general aviation aircraft. That would quickly destroy the industry. Is this really where we want to go?
There is absolutely a direct correlation between the number of employees the airlines let go (while being paid to maintain employment levels) and the inability to staff operations adequately today. Airlines encouraged huge numbers of employees to leave. Gary says that Delta reduced its workforce by more than 30%. These reductions were achieved primarily through severance programs as opposed to early retirement programs. Most of the employees who left were not retirees. These massive and excessive losses are far beyond what any airline would have otherwise incurred in that timeframe.
To encourage junior employees to quit and accept severance benefits, airlines threatened massive layoffs. That threat was also used to strongarm Congress into offering CARES Act cash initially and to renew it twice. Of course the airlines had their cake and ate it too by slashing their workforces anyway.
John,
your statement is categorically false on so many levels.
1. Airlines did not threaten massive layoffs because federal aid to airlines specifically included job protections. Federal aid was offered early and renewed frequently. Even after Oct 31, 2022 when federal job protections ended but demand had not recovered, airlines simply did not engage in mass layoffs.
2. Delta did not involuntarily sever any employees and neither did any other airline.
3. You, like Gary, have yet to be able to demonstrate that airlines did not have the right number of people; in fact, every single airline has said in their investor updates that they had employees that were not fully trained so they were not as useful. Every airline reduced capacity during the summer of 2022 to match their workforce which is why operations are at historic levels.
4. Pilots must use their skills continually or be retrained. It was neither practical or realistic for airlines to keep flying every pilot sufficiently to maintain their skills while demand was not present.
5. Airlines that did attempt to maintain its pilot workforce – including United – have not achieved any better operational integrity than airlines like Delta which aggressively offered early retirements.
Data and facts, not personal opinions, support my positions.
btw, DOT data on delays and cancellations for the year through June 2022 is out and it shows that DL maintained its historic position of #2 in ontime, behind Hawaiian and the third in cancellations, behind HA and AS. AS was just slightly ahead of DL and WN was just slightly below WN. All 3 airlines took different strategies to managing through covid and yet they all came out with virtually the same results in terms of operational reliability.
The ultra low cost carriers as well as JetBlue which tried to aggressively expand during the pandemic had higher rates of cancellation and much worse on-time than the rest of the industry.
The data simply does not agree w/ your position.
@Tim Dunn,
My statements were correct. You’re getting it wrong because it appears that you don’t understand early retirement and severance programs, the terms of the government bailouts, and the requirements of the WARN Act..
First, early retirement applies only to those who are eligible to retire, i.e. those who meet age and years of service and other requirements that allow them to leave and begin to receive benefits immediately under the terms of the applicable retirement plan. Employees who don’t meet those requirements can leave employment voluntarily or involuntarily, but it is not a retirement.
Severance programs generally provide benefits to employees who voluntarily leave employment at the employers request and are not eligible to retire. Severance programs don’t mean an employee was terminated, just the opposite. Severance and early retirement programs are terms of art that you are unfamiliar with.
Second, airlines most definitely threatened massive layoffs before CARES and each subsequent renewal of Payroll Protection Plan benefits. The bailouts only required that airlines not involuntarily trim their payrolls during the period in which they received PPP. CARES and the other PPP programs were short-term programs that had to be renewed every six months or so because Congress didn’t know how long the pandemic would last.
Under the WARN Act, employers are required to give employees 60 days notice of mass layoffs and certain other events. This worked out great for the airlines in this case because 60 days before each PPP was set to expire (and before Congress renewed the programs) they issued WARN layoff notices to huge groups of employees .
To go along with the WARN notices, airlines offered early retirement and severance benefits to employees and encouraged them to take the money and run voluntarily to avoid the mass layoffs the airlines were saying were imminent. Airlines didn’t have to layoff anyone. The threats were sufficient to get many, actually too many, to leave on their own. The WARN notices were cancelled.
Many, but certainly not all, employees who left were junior employees who would have been subject to layoff under the WARN notices. Airlines didn’t have layoffs after October 2021 because they’d already cut staff to the bone.
Even airline executives have admitted that they didn’t have enough employees to operate their expanded schedules. A prior post on this blog cited a statement from Kirby that listed employee shortages as one of three issues leading to operational meltdowns post Covid. I can’t locate the post unfortunately but the other two scapegoats were weather and ATC problems as I recall
I don’t understand the apparent incompetence in publishing an operational schedule that the airlines should have known they lacked enough employees to staff. If you care to take issue with Kirby and others, you may offer your theories on the cause of the massive operational problems we’ve all experienced this year.
The blog reference in the penultimate paragraph of the previous comment is to a different blog than this one and the statement was in a June 30, 2022 email to Delta customers from Ed Bastian.
John,
of course the airlines said they would lay off employees if they didn’t get help. If you were running a business and demand fell by 95%, you would be saying the same thing. That is not threat; that is reality. If you somehow think that a business should be expected to retain employees and just suck it up in the face of such demand destruction caused by the government, not the private sector, you simply have no concept of business.
Airlines offered very generous leaves of absence even for employees that did not qualify for retirement packages. You stated above that airlines laid off employees and that is patently false – other than American and United which touted how many non-union management employees they laid off – because they weren’t protected by government laws.
And then United laid off hundreds of employees because they wouldnt’ get vaxxed – and yet UA not only has rescinded that rule but there is growing evidence that the vaccines harmed many people more than they helped prevent disease. UA cowed down to the government, not common sense.
You clearly have no concept of not just how airlines run but also how many businesses run. I just watched a national news story about shortages throughout the US economy – but you somehow can’t grasp that throwing a bunch of money at airlines did no better job of solving the problems the government itself created than if the free market had been left to fix it.
Read the transcipts from Delta and other airlines’ 2nd quarter 2022 and they specificallly said they had enough staff but not enough fully trained staff.
And you and Gary still have yet to address the fact – not opinion – that other airlines performed far worse in DOT measured operational metrics than Delta. The argument that Delta’s pandemic retirements left it worse off are patently false.
There was a trillion dollars worth of covid relief that was given to US businesses and consumers and the tab keeps growing – and yet lines are longer, supplies are shorter, and there are still staff shortages.
Instead of narrowly focusing on airlines, why don’t you step back and look at the entire problem first and THEN and only THEN get your facts straight about what happened with the airline industry.
One final thought, John.
If you have read this blog for any length of time, I have REPEATEDLY said that the federal bailouts to the airline industry beyond the first were a waste of money, were nothing but a bold-faced attempt to buy union votes and were targeted at Texas and Florida, the former home to 2 of the 4 largest US airlines and the latter home to an army of airline employees.
The first round of aid was needed to reopen credit markets and keep airlines from filing for bankruptcy. After the first round, everyone figured out how to either unlock credit lines or mortage their loyalty programs. There was no need for any further aid to the airline industry.
The difference I have with you is how you characterize what took place during the period when the airlines received aid and the impact of that aid on service levels.
Service levels fell but that happened throughout the US economy. It was a bold-faced lie by the federal government that aid would ensure that airlines would be ready to return to normal when Fauci could no longer convince people to keep masks on, stay indoors or get any more vaxes. When the country had enough of Fauci, they all moved as one. No service industry kept up. None.
Other industries received massive amounts of aid. To somehow act as if airlines received a unique benefit is patently incorrect.
The US government followed the Chinese in their guidance as to how to manage covid and to no one’s surprise, they got it all wrong. Their economy is far worse off that ours but the shakeout from covid is far from over.
Add in the energy crisis that is going on because of the mismanagement of the Ukraine crisis which has been developing for years and major parts of the world are due for a shakeout that will make service levels at US airlines this summer look like child’s play.
Mr. Tim Dunn: vaccines DIDN’T harm more people than they saved. That is A LIE! I suggest you stop watching fox news for your daily propaganda especially when it comes to proving if 10 year old rape victims exist.
Stick to Delta Airlines facts, that is where you shine since you own the company. You disappoint me in this matter sir but even Babe Ruth ate too many hot dogs…..
Tim,
Please show me where I said airlines laid off any of their employees or that Delta’s performance was worse than others. That will be tough because I never said any such things.
This is your statement: “Airlines did not threaten massive layoffs because federal aid to airlines specifically included job protections.” Your statement is patently false. Airlines threatened mass layoffs repeatedly when they issued WARN notices before PPP protections were initially offered and extended. The threat of layoffs is why Congress felt it had to offer and extend PPP!!! The WARN layoff notices were rescinded when Congress offered and reoffered PPP and the airlines chose to accept the payments.
You also say: “And then United laid off hundreds of employees because they wouldnt’ get vaxxed…” Also incorrect. United didn’t layoff people because they didn’t get vaccinated, it terminated their employment for cause because they did not comply with the conditions required to remain employed. Big difference.
Airlines offered severance programs to employees who were ineligible for retirement programs.
You do not have experience with or understand the definition of a layoff, leave of absence, severance, termination of employment, and retirement.
Does anybody honestly give 2 sh*ts about any of this, john, Tim, whoever else?
Are you all senile, erectily dysfunctional loners with no life?
Liberals need to realize anything the govt regulates and subsidizes is just another failed socialist construct. Prove me wrong.
John,
you specifically said that Delta achieved its headcount reductions through severance programs. That is categorically false. Everything you write from there is tainted.
UA most certainly did lay off employees that would not get vaxxed. Inability to work because of a company mandate is not a voluntary program.
You simply are projecting what you think happened onto a program.
And you STILL have yet to connect the number of layoffs/terminations/leaves of absence with operational performance NOW. I and most people could care less how they reduced their workforce during the pandemic.
George,
Nearly every country in Europe is still reporting excess deaths and Germany noted that 1 in 5000 people that were vaxed have vax related follow-on problems. The long-term impact of the vaccines was suspect and there is growing evidence that the vaxes have a much higher rate of not just inability to stop infection but also harm to immune systems. You owe it to do the research and set your bias aside.
Steve is right. The government injected itself into the free market on multiple levels during covid and it is almost entirely backfiring. Their solution is to double down which only makes those problems worse. Airlines didn’t need all the aid they got but they did it use according to the rules Congess set
Tim Dunn, you’re missing the point because you don’t understand the meaning of the terms we are using. In the words of HAL 9000: Tim, This conversation can serve no purpose anymore. Goodbye.
John,
I certainly do understand the difference between all of the variants of no longer working with a company either on a temporary or permanent basis.
It is you that lost the plot when you and Gary tried to extrapolate United’s CEO’s comments into a biased treatise on airline industry handouts.
Re-read the title of the article and the article down through the shaded blocks. It is all about UAL’s belief that the federal government has slighted United because EWR has not grown to accommodate United’s desire for an even larger hub.
EWR handled 2.4% less traffic in June 2022 than in June 2019, a smaller decrease in flights than the nation as a whole.
But UA’s share of the market as measured by percentage of flights fell by 1%. And that is undoubtedly because other airlines have been free to add flights to EWR, something that happens when slot controls are removed.
UA still operates the highest percentage of flights at any large northeast US airport.
EWR is not physically capable of handling much more traffic because of runway capacity which will not change.
UA’s complaints are that it can’t dominate an airport that is not capable of growth but other carriers can grow in that market. UA should have thought about that likelihood when it underutilized its slots which led to the FAA’s decision to remove slot controls.
The notion that the country as a whole is receiving worse quality air service is patently false according to the DOT’s own data.
The on-time percentage for June 2022 vs. June 2019 differences by one tenth of one percentage.
The cancellation rate for June 2022 was ONE PERCENT higher in 2022 than 2019.
There is no meaningful difference in the DOT’s OWN measurable metrics of air service quality this summer vs. pre-pandemic.
Instead of berating the government for telling falsehoods about air service quality which the media has happily repeated over and over and over again, UAL’s CEO as well as those of every other US airline need to tell the DOT to read their own data.
The reason for publishing data to the public is for the public to know the issues at stake.
There simply are many other sectors of the US economy that are far, far worse than 1%.
On a perfectly clear VFR weather night we were told to expect holding upon arrival to Newark…fortunately we were not one of the aircraft forced to divert. When we queried why the answer was due to staffing. Happens more than you think Jeff.
From the FAA:
Due to the availability of staff tonight, the
FAA must reduce the flow of aircraft in
certain airspace serving New York City to
maintain safety. Departure and arrival delays
this evening could approach two hours at
John F. Kennedy International Airport – JFK,
LaGuardia Airport and Newark Liberty
International Airport – WR airports.
Passengers should prepare for delays, and
monitor https://www.fly.faa.gov for updates.
Please check with your airline for information
about specific flights.
1. NYC: 3 airports, 2 planes, 1 cloud and it all stops. Is NYC ATC understaffed, yes. So is JAX Center, the pathway to FL.
2. Do airlines have tons of extra crews lying about to take over when delays occur, no.
3. Are the major airlines hiring, yes.
4. Are the regional airlines having staffing issues, yes, because the majors are poaching from the regionals. See the rash of contract maneuvers with way higher pay to stop the bleeding of talent.
5. Are airlines over their own operating capacity, yes. When a weather event happens at a hub, say ATL or DFW, when airspace opens back up, the airlines push their planes into the hubs, but the gates are still full and the support system to push a plane out and park another plane in is very understaffed. Its not that there’s no job openings, its that the airlines can’t hire and retain fast enough, plus they have to pass a drug test (a problem with our pot smoking culture) and stay drug free. So the retention rate is poor. Plus, who want to move to a high cost area like NYC to work as a ground ops guy or refueler, etc?
6. Today’s issues aren’t really linked to CARES act. Is Mr Kirby right in that if DOT restricted other airlines in EWR that traffic would get better, yes, but only to a point, and its not too far away. Same for central Florida. A few more controllers might allow a few more departures, etc, but when most of the state has storms on any given day, there’s only so much space to flow through.
THESE CEO’S ARE ALL CROOKS. WE GAVE 3 BILLION TO THE AIRLINES AND FOR WHAT? THEMSELVES. THEY ALL NEED TO GO TO JAIL. SICK OF ALL THIS CORPORATION CRAP. ITS GOING TO GET WORSE.
Kirby makes some valid points. Covid hit. The US govt mandated travel nearly cease. So how is a company expected to survive when basically ordered by law to cease operations for approximately a year or more? Many international markets are still closed, China being the most significant.
You can’t just flip a switch and return hundreds of jets to flying. Aviation is possibly the most regulated industry in the U.S. and rightly so. There are only so many runways to land on within a reasonable proximity of major metropolitan areas. You need security, TSA, etc. ATC, advanced lighting on taxiways and runways, terminal jetway infrastructure, sophisticated approach systems, the list goes on and on. Many of these are paid for and run by the federal, state and local governments.
To insinuate the government doesn’t play a huge role in the airline industry is naive or just creating click bait.
I often think it’s a small miracle that it operates as smoothly as it does. You have no idea the amount of pieces that must work in order for an airplane to takeoff legally let alone safely.
Funny how everyone focuses on the flight crew problems, which to be honest are also not minor, but no one really looks under the wing. The vast majority of operations at large hubs are being performed by, and you all should already know this, contractors and subcontractors. The ATC and security are Federal; everyone from ticket agents, gate agents, loaders, fuelers, handlers, et. al – mostly anyone that does not actually work on the plane – are individuals that work for someone like Swissport, AGI, Menzies, DNATA, etc. Or they work for a subcontractor. The labor issues there have been coming since before the pandemic, for much the same reason – lower pay, abysmal schedules, overwork, safety issues, and more, to squeeze every last cent out of the airline while keeping the airline just happy enough to not change handlers. Look over to the cargo warehouses, some of the people work for two different handlers, and are willing to drop any one of them for a nickel more an hour. Of course, this saves the air carrier money – no flight benefits, no insurance and no ground employee overhead costs. The airline industry has itself been seeking profits through the use of contracting to get necessary services “better, cheaper, faster”. Guess which two out of three they’re getting?
Also, Tim, let me only tell you one thing – Vaccines work. You know how I know? Not only did I pass 4th grade science, but I also didn’t get polio, measles, mumps, rubella, smallpox, I’ve never had pneumonia while I’ve taken that shot, and I’m terrified of chickenpox. Why? Because I never had chickenpox as a child; the vaccine wasn’t widely available until I was already an adult, and at my age it can be deadly. Oh, but it doesn’t worry me as much, mostly because a vaccine HAS been available for over 20 years. Proven, factual data doesn’t stop being proven, factual data just because it’s inconvenient to some while deadly to, let’s say, 1% of the population.