Many airlines have been forced to reduce their routes amid collapsing demand and reduced routes. Photo / Getty Images
Many airlines have been forced to reduce their routes amid collapsing demand and reduced routes. Photo / Getty Images
US airlines are asking for more than US$50 billion (NZ$83 billion) in federal assistance amid the economic uncertainty caused by the dramatic decrease in passenger traffic due to the coronavirus outbreak.
The aid would come in the form of grants, loans and tax relief.
Among the asks is nearly US$30 billion in grants for passenger airlines and cargo carriers, according to a document from Airlines for America, the industry's leading trade group.
In addition, the industry is asking for US$25 billion in loans and temporary tax relief in the form of a repeal of all federal excise taxes on tickets fuel and cargo through the end of 2021 and a rebate of all federal excise taxes paid between January and March of 2020.
"This is a today problem, not a tomorrow problem, said Nicholas E. Calio, president and chief executive of Airlines for America. "It requires urgent action."
The recommendation is more than triple what the airline industry received in the days after the September 11, 2001 terrorist attacks. That package included US$5 billion in direct aid and US$10 billion in loan guarantees. The measure that ultimately passed also included limits on executive compensation, specifying that any airline executive who made more than US$300,000 in 2000 could not receive a raise for the following two years.
"You have to remember the A4A's job is to shoot for the universe in hopes of getting the moon," said aviation analyst Henry Harteveldt, president of Atmosphere Research Group. "And so it's an aggressive request and it's probably the starting point for a series of negotiations with the administration and potentially Congress for relief."
The request comes as airlines face an unprecedented slowdown in passenger demand and newly imposed flight restrictions that affect 28 countries in Europe. In some cases, airlines said that the number of cancellations is outpacing the number of bookings.
"We are currently reviewing A4A's proposal, as well as many other proposals from our affected stakeholders," said Justin Harclerode, Republican spokesman for the Committee on Transportation and Infrastructure. "Airlines may be the most visible part of our aviation system, but we have to ensure that a stabilization package addresses the needs of airports, regional and charter airlines, cargo airlines, manufacturers, and general aviation business.
" This crisis is bigger than any one proposal, and all options are on the table as we work to ensure the continued stability of our national air transportation system," Harclerode said.
On Sunday, in a message to United employees, Chief Executive Oscar Munoz and President J. Scott Kirby said that more than one million fewer customers travelled during the first two weeks of March than the previous year and the airline was predicting a drop in revenue of $1.5 billion for March. The airline will cut capacity by 50 per cent for March and April, they said.
Airports too, may request help. People close to the discussions, who were not authorised to speak on the record, said they will ask for roughly $10 billion in aid from the federal government.
According to an analysis released Monday by Airlines Council International - North America, passenger traffic is forecast to drop by 49 per cent or 222 million enplanements in the first half of 2020. Financial losses could top $87 billion for the calendar year 2020.
Kevin M. Burke, president and chief executive of ACI-NA, said that while airports are making cuts, "there are limits to that belt-tightening."
