On Monday, I talked about the $50 billion airline stimulus that the government rolled out. One of the provisions in both the grant and the loan pieces of the pie said that the Department of Transportation (DOT) could require airlines to continue to serve all points until March 1, 2022. It appears that the DOT is going ahead with this mandate, and I can’t understand it. The right thing to do is to shut down most of the system, leaving only a skeleton operation behind.
DOT issued guidance earlier this week on just what is required from a service-level perspective to be able to qualify for grants and loans/loan guarantees.. Here is the summary.
- Only US airports counts; no international point must be maintained
- If an airline serves multiple airports in a city, it can consolidate to a single one
- To get the list, DOT will first look at the schedules filed with OAG for the week ending February 29, 2020. It will also look at year-end 2019 schedules to fill in the blanks.
- If an airline served a city at least 5 days per week, then it will be required to serve that city at least once a day for 5 days per week.
- If an airline served a city less than 5 days per week, then it will be required to serve that city at least once a day for one day per week.
- The requirement is to maintain service to a city, not to maintain service on a route. Each airline can serve each point as required in the two bullet points above from any one or multiple cities in the network.
- The marketing airline is what matters here. Any mainline airline can move regional carriers around as needed to serve each city. The regional carrier doesn’t have the obligation.
- This will only apply through September 30, 2020 to start. If DOT extends the obligation, it will do so before August 1, 2020.
This seems like a fair way to go about determining which routes were previously served, but that misses the point entirely. Just because an airline has flown it doesn’t mean it should continue to do so.
There are the obvious exceptions like seasonal routes that shouldn’t be operating now anyway. United just dropped its service to Mammoth Lakes in California. Is DOT really going to require that they go back in?
The answer is… probably not, I think. Here’s how this is worded in the docket.
…the Department tentatively determines to allow covered carriers, at any time for the duration of their Service Obligation, to request that points be exempted from their Service Obligation. Covered carriers should submit a list of points that they believe are not reasonable or practicable to serve and explain why service is not reasonable or practicable. The Department will inform covered carriers of its decision in a timely manner.
In other words, airlines can object, but it’s up to DOT to decide. That’s particularly problematic for an airline that’s debating whether to take this money or not. Without actually knowing which cities will have to be served, it’s tough to evaluate. Hopefully airlines are getting more guidance behind the scenes.
But ultimately, the question about Mammoth is minor and unimportant in the scheme of things. We are at a point now where almost nobody is flying on even the most popular routes. If an airline has a load factor above 15 percent, it’s doing well. And this is on an already vastly reduced schedule.
Just take a look at this screenshot from Flightradar24. It’s not as busy as it usually would be, but that is still a whole lot of airplanes flying around with nobody onboard.
European airlines have all but shut down. KLM is operating fewer than 30 intra-Europe flights per day from Amsterdam. Ryanair and easyJet have almost entirely parked their fleets. Yet here we are in the US with the government telling airlines they have to continue to serve every point on the map even when there’s no demand for the best of routes.
Every day we have airline employees, contractors, TSA officers, and more leaving their homes to do their duties. Many have gotten sick, and that will keep happening as long as airlines are flying. When a doctor risks everything to help the ill, it is for the greater good. But when a flight attendant risks everything to help one person get to Idaho Falls, then there is no good justification.
The system shouldn’t shut down entirely. There is no question that a skeleton air service network is needed. There are valid reasons to get on an airplane right now whether it be for healthcare, food supply, etc, and I would optimistically hope that most of the people flying today are doing so for good reason. We do need to have a transportation network. I still think the right way to handle this is for the government to pick the routes that are needed, assign them out, and set fares. Then fund that operation and let everyone else go home.
You’re going to tell me that an airline should continue to serve Chattanooga when it’s less than 2 hours to drive from Atlanta? What about Denver and Colorado Springs? I can do this all day. This is all, at best, horribly unnecessary at this point in time. At worst it’s helping this virus do more damage. When demand returns and the pandemic subsides, it’s a different story. But right now, DOT is just getting this wrong.
It is time to shut this down.
