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The CARES Act already provides funding for airlines
The CARES Act has provided US airlines with around $50 billion of support. Aspects of this only run through September 30 — for example, payroll protection requires airlines to not involuntarily lay off any employees before October.
It’s pretty clear that airlines are going to be asking for more government help, and we’ve seen a lot of concepts thrown around regarding what that could look like.
It’s not just airline executives that want government help, but this is also something that unions are campaigning for, since it’s clear that most US airlines will otherwise be laying off employees in a few months.
Well, American Airlines’ pilots union has just made an interesting suggestion…
A proposal from American Airlines pilots
The Allied Pilots Association, which represents, roughly 15,000 pilots at American Airlines, has proposed a concept they are calling “SEATS” (Safe Essential Air Transportation Seating).
As it’s described, this program is designed to enable a gradual return to pre-pandemic passenger travel while maintaining critical transportation infrastructure employment. The union has started discussions with lawmakers about the concept, hoping it can be integrated into any future stimulus bills, similar to the CARES Act.
As APA President, Captain Eric Ferguson, describes this program:
“Under SEATS, the government would purchase enough seats on each flight to eliminate the need for any passenger to sit next to a stranger. Thanks to uniform social distancing, passengers would be encouraged to fly more, airlines would be encouraged to operate more flights, and the government would ensure the preservation of critical transportation infrastructure and associated jobs.
The return of air travel is a major catalyst for economic recovery, stimulating ancillary spending well beyond the cost of an airline ticket. But in order for air travel to return, passengers must feel comfortable that it is safe. They must gain confidence that their government is acting to ensure that all safety standards and protocols are being upheld and enforced.”
How would the amount that each airline receives be determined?
- The price of empty seats would be based on industry average costs for 2019, leaving the pre-pandemic business models unchanged
- No carrier would gain an unfair advantage as a result of the disbursements
- As immunity for COVID-19 rises, the number of empty seats bought by the government would fall
Does this plan make any sense?
The first question is whether airlines should get any more taxpayer support come October 1:
- If the answer is no, then obviously this shouldn’t be a thing
- If the answer is yes, then the question becomes what the government should be looking for from airlines in exchange for more funding
For the initial $50 billion in support through the CARES Act, airlines had to agree not to involuntarily lay off employees, and also had to agree to maintain service to most existing airports.
On the surface this concept from the APA doesn’t make much sense to me:
- Some airlines — like Delta, JetBlue, and Southwest — are already blocking middle seats to make customers feel more at ease
- Across the board airlines are claiming that blocking middle seats isn’t needed in order to fly safely
- Many would argue that it’s bad for the environment to intentionally fly planes empty
At the same time, if the government is going to give billions of dollars to airlines, maybe consumers having guaranteed blocked seats isn’t the worst thing we could see?
My concern with a proposal like this is that I do think it could lead to higher airfares. How will airlines be encouraged to add significant capacity rather than operate a limited network in order to raise fares? I’m not sure to what extent consumers would really benefit here.
American Airlines’ pilots union is proposing that the government purchase empty seats on flights so that no one is sitting next to a stranger. While I’m not sure I’m in favor of this, I have to give them credit for at least getting creative.
If the government is going to give the airline industry another bailout worth billions and billions of dollars, then there might as well be something in it for taxpayers… and I guess this could be viewed as that?
What do you make of this proposal from the APA?