US airlines will need to fly far more than demand dictates if they want to receive CARES Act funding for employees. But the obligations are reduced in the Department of Transportation’s (DOT) final order compared to the initial proposal. The DOT took feedback from all stakeholders into account in trying to strike an appropriate balance of service versus demand, slightly revising the rules.
Splitting big and small
The most significant change to the DOT’s requirements is a separation of large carriers and small carriers in setting the frequency of services. The DOT set the line at 10% of domestic capacity, putting American Airlines, Delta Air Lines, Southwest Airlines and United Airlines in the big carrier category. All other airlines are in the small set. The DOT also acknowledges there is a difference between destinations served just 1x daily and multiple daily flights. To that end the large carriers now have a designation of points served 25x or more weekly, not just the prior 5x threshold.
While the smaller airlines benefit significantly in the overall reduction of service required there are a number of larger airlines that also have destinations served in the 5-24x weekly range that will see their service obligation reduced as a result of the policy change.
Satisfying Seasonal Shifts
The Department recognizes the significant operational and financial challenges that would be imposed on carriers operating seasonal services should they be required to operate them year-round.
While the DOT is willing to acknowledge the seasonality of schedules, something pressed for by the smaller carriers, the relief offered is limited. The Department is focused on peak seasonal schedules, not the far more dynamic operations that the ULCC model of Spirit Airlines, Frontier, Sun Country, and Allegiant operate today.
Indeed, a review of the DOT’s seasonal analysis suggests that the previously mandated obligations would be beneficial for all carriers except United Airlines. This will likely lead to a significant number of exception requests, particularly from the LCCs. That Allegiant’s obligation is larger than that of Alaska Airlines shows there are still some weaknesses in the formula.
The DOT expects these exception requests to come in, but prefers to adjudicate them individually rather than issue blanket exemptions. Indeed, the DOT declined to issue blanket exemptions for April/May that a couple airlines requested or for destinations, such as the current NYC and Seattle-area hot zones. Similarly, the DOT did not address Hawaiian Airlines‘ request for blanket exemptions for its mainland service on routes that have neither demand not economic justification.
The bits that didn’t change
Commenters on the proposal sought two other changes to the DOT’s guidelines. Some customer industry groups proposed that international routes be included. The DOT declined to accommodate that request but noted that it could do so in the future if critical supply chains break down.
Separately, smaller airports and some congressional representatives requests that the service requirements be assigned to airports rather than metro areas. The DOT declined, “The Department believes the ability of carriers to consolidate operations at a single airport serving a point is an important flexibility that furthers the objectives of the CARES Act. Requiring carriers to continue service to multiple airports serving a single point would impose undue costs on covered carriers.”
Moreover, the DOT chose to continue using its internal designation of airport groupings, not the designations used by travel agencies or other parties. While some concerns were raised about the confusion this might cause the DOT defaulted to its rules because it can control them, even if they are out of date.
Ultimately the ruling is better than it was in the initial proposal but also not relaxed enough to dramatically change the number of empty planes that are likely to fly. Alaska Airlines plans some routing adjustments with flights making two stops out from Seattle rather than just one. Other airlines might adjust similarly.
Route networks are going to look a lot different this summer and passengers should not expect much in the way of normal for some time to come.
For a (generally) up-to-date listing of airlines and their operational levels check out this spreadsheet maintained by PaxEx.Aero and other industry experts.
More on COVID-19 and the airlines affected
- Alaska Airlines offers elite bonus earning in face of COVID-19 booking weakness
- Massive cuts, uncertain recovery timelines for aviation in the face of COVID-19
- Qantas cuts international 25% through September facing coronavirus-induced demand drop
- Spirit Airlines plans 5% growth reduction for April as COVID-19 hurts demand
- American Airlines slashes schedule, increases flexibility for customer rebookings
- US to block some European visitors
- Two key takeaways from American’s latest schedule cuts
- Regulators suspend slot rules, opening door to deeper airline cuts
- Beyond route cuts, airlines initiate extended suspension of operations
- Gogo looks to ride out coronavirus-related dip in demand
- Trans States Airlines: The first US airline victim of COVID-19
- JetBlue removes 40% of capacity, delays new deliveries as demand drops
- Airlines get a break on coronavirus EC261 comp, looking for more
- Airport lounges shutter as airlines slash capacity
- Will COVID-19 delay the opening of Berlin Brandenburg Airport?
- Qatar Airways plans 75% capacity cut in response to COVID-19
- Emirates, Turkish Airlines slash route networks, ground aircraft
- JetBlue plans additional draw down in service
- Is it time for US airports to start closing terminals??
- Converting to cargo: Putting passenger planes to use in the COVID-19 era
- IATA anticipates recession, slower recovery, as COVID-19 impact drag on
- US carriers cut frequencies, not destinations as they seek federal funding
- JetBlue plans 70%+ cut in April operations
- Cancelled flights, vouchers and the airline cash flow crunch
- Spirit Airlines reportedly cutting 90% of flights
- US airlines cut deep, but not deep enough
- An eerie quiet over New York City: The flights are gone
- Who wants what? How the US airlines are responding with CARES Act funding on the line
- Delta, United extend elite status by a year, adjust other benefits
- DOT adjusts, finalizes airline route requirements for CARES Act funding.
- Lufthansa announces major, permanent fleet restructuring
- Air Canada, Alaska Airlines extend elite status
- Deeper cuts, reprotect options coming for JetBlue
- Air Canada replaces seats with cargo in 777-300ER cabin
- American Airlines extends status, eases qualification
- A new take on amenity kits in the COVID-19 era
- COVID crushing inflight connectivity: Part 1
- Stuck in the past, DOT botches its CARES Act implementation
- DOT grants exemptions to Delta, Alaska Airlines, Hawaiian Airlines under CARES Act obligations
- Introducing yin-yang seating for economy class
- Inflight social distancing will kill short-haul LCC travel: IATA
- Gogo furloughs 60% of workforce, applies for CARES Act support
- COVID crushing inflight connectivity: Part 2
- De Havilland, Air Canada Cargo partner on Dash 8-400 cargo conversion
- JetBlue plans new route network for CARES Act compliance
- Spirit Airlines running triangle routes to meet CARES Act requirements
- Sun Country wins big as United, Frontier lose in latest CARES Act ruling
- Frontier Airlines pushes new route plan for CARES Act compliance
- Argentina plans to restart flights in September 2020
- Spirit Airlines asks DOT again to drop destinations
- Delta Flight Products, TechOps develop isolation pod for COVID-19 military transport
- JetBlue aims to drop 16 "major hub" destinations from its network
- Allegiant scores leniency from DOT in CARES Act obligations
- Panasonic Avionics implements furloughs to address slowing business
- American, Delta confirm accelerated fleet retirements
- Airbus aims to ease "COVID Combi" temporary freighter conversions
- The Weekly Wrap: FlightPlan, personal screening and more!
- United’s long-haul operations focus on a new "workhorse"
- United plans touchless bag tag kiosks
- Temperature scans in, 767s out for Air Canada, Rouge
- JetBlue, Spirit score exemptions to drop service at major US airports
- IATA recommends against blocked middle seats, favors "layered" protections
- United plans to resume (cargo for now) Hong Kong-Singapore service
- JetBlue suspends six cities through June
- Project Wingman USA Opens Lounges for Frontline Healthcare Heroes at Two Major New York City Hospitals
- Cape Air’s ugly April stats (and some possible good news for May)
- Fighting for the middle: A pandemic seating shift
- Avianca declares bankruptcy, seeks protection in restructuring
- United raises ire in cutting hours for salaried employees
- DOT further relaxes airline CARES Act obligations
- Allegiant sees quick recovery on the horizon
- Delta drops 777 fleet as coronavirus cuts continue
- JetBlue offers free TrueBlue Mosaic status, plus a year extension
- United faces lawsuit over M&A employees pay cut
- Optimism on the horizon: The Weekly Wrap 15 May 2020
- Beached Whale: A380’s future turns more bleak
- TSA implementing lower-touch screening protocols
- Volotea plans for growth into a COVID-affected Summer
- Health passports in our future: The Weekly Wrap
- LATAM seeks US bankruptcy protection, plans to continue operations
- JetBlue plans return of international markets in June