The US Department of Transportation (DOT) will offer airlines increased flexibility under their CARES Act obligations. The move comes as multiple airlines have requested exemptions from serving smaller airports that have minimal demand or nearby airports where flights can consolidate. But rather than choosing individual airports that will be exempt the DOT is now going to let the airlines select which stations will see service suspended.
Numerous carriers have requested exemptions – in some cases, making multiple requests – to reduce or eliminate their service obligations at certain points where demand is essentially zero. Carriers contend that services to certain points in their networks are unreasonable, impracticable, costly, and challenging to complete in light of public health and safety concerns.
Each airline will be permitted to select up to 5% of the total destinations obligated under the DOT’s initial CARES Act guidance, with a minimum of 5 airports eligible for each airline. For the main commercial carriers this translates to 11 exemptions each for United Airlines, Delta Air Lines and American Airlines. Allegiant will be permitted six exemptions while the remaining carriers each get five. Essential Air Service obligations are not reduced and cannot be waived through this process.
The DOT also previously indicated that smaller airlines would not be required to serve large hub or predominantly connecting traffic airports. Several airlines took advantage of those exemptions. Those will remain in place, in addition to the newly granted options to airlines.
Airlines win, airports may lose
For some airlines the increased exemptions are easy to place and will leave all parties satisfied. JetBlue, for example, wants to suspend service at five of its smallest Western US destinations.
It scored letters of support from the airports, elected officials and other business interests to help its cause in front of the DOT. Those exemptions should now see no troubles being granted as the five allocations the carrier gets under the new rules.
Spirit Airlines recently requested to drop additional small markets and many should be accommodated through this process. But perhaps the most compelling case – dropping Latrobe, PA – would not be approved as Spirit is the only carrier service that airport. Other marginal demand airports such as Niagara or Plattsburgh, New York also have service from other airlines so could potentially be dropped, so long as all the airlines don’t request the same exemptions.
Delta similarly wants to reduce service at smaller airports but locals, both government and industry, were much less supportive of the plan.
With the new rules in place Delta can select any 11 airports it wants to trim and be approved, so long as at least one other carrier continues to provide flights. Under typical DOT processes the objections raised would carry weight in the decision process. The new guidance suggests these objections will have no bearing.
A demand rebound??
Are all these cuts still necessary in light of what appears to be some positive signs for the industry? Many observers are now suggesting that airlines saw what the bottom looks like for demand and things should improve going forward. Even some full flights have recently made news. But the industry still has a long way to go to justify the full network operations. These cuts will allow carriers to trim a few more flights and save the DOT from making too many difficult decisions.
More on CARES Act routes and and the airlines affected
- DOT grants exemptions to Delta, Alaska Airlines, Hawaiian Airlines under CARES Act obligations
- 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
- Spirit Airlines asks DOT again to drop destinations
- JetBlue aims to drop 16 "major hub" destinations from its network
- Allegiant scores leniency from DOT in CARES Act obligations
- JetBlue, Spirit score exemptions to drop service at major US airports
- Cape Air’s ugly April stats (and some possible good news for May)
- United raises ire in cutting hours for salaried employees
- DOT further relaxes airline CARES Act obligations
- United faces lawsuit over M&A employees pay cut
- JetBlue plans return of international markets in June
- American Airlines seeks buyouts of thousands of workers
- Frontier, Mobile bicker over flights to Orlando
- United plans $5 billion loan against MileagePlus
- JetBlue plans to outsource airport operations at (more) smaller destinations
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