- The Washington Times
Tuesday, December 14, 2021

The top executives of three airlines will tell Congress on Wednesday how the carriers spent $54 billion in COVID-19 government aid, and why they are still grappling with thousands of canceled flights, staffing shortages and frustrated customers who can’t get refunds.

American Airlines CEO Doug Parker will tell the Senate Commerce, Science and Transportation Committee that the taxpayer aid “saved the airline industry” at the start of the pandemic, according to a copy of his advanced testimony seen by Reuters.

He’ll say that if Congress had structured the aid as government loans, the airlines “would have survived by shutting down flying in April 2020, furloughing almost all of our teams, and waiting for demand to return to levels strong enough to justify restoring flying.”

“As it turns out, that would have been some time in 2021,” Mr. Parker will tell lawmakers.

Southwest Airlines CEO Gary Kelly and United Airlines CEO Scott Kirby also are scheduled to testify.

Of the $54 billion in taxpayer-funded payroll grants to 10 airlines in three rounds in 2020 and this year, the Treasury Department required larger carriers to repay 30% and to award the government stock agreements. Those stock options are reportedly now worth a tiny fraction of what taxpayers provided in aid.

The airlines also agreed to promissory notes to eventually pay back a total of $14 billion.

Despite all that aid, airlines “repeatedly have canceled and delayed flights, denied refunds and failed at customer service,” according to a report this month by the Arizona PIRG Education fund that analyzed 200,000 complaints filed with the Department of Transportation.

“Taxpayer money was given to the airline industry to stabilize its finances; however, the airlines’ profits are instead flying high at the expense of too many travelers not even getting off the ground,” said Diane Brown, the group’s executive director.

The report found that passengers “are clamoring for refunds for flights canceled during the pandemic and are upset about several other issues, notably understaffing.”

“Fewer workers and fewer flights mean each changed, delayed, or canceled route affects a higher percentage of flights and flyers,” the report said. “While these problems are a direct result of the airlines’ actions, the companies generally refuse to issue refunds to many of their customers.”

Instead of giving full refunds, airlines frequently opted for vouchers and credits for future flights, the group said.

Southwest and Allegiant have been the airlines with the fewest complaints per 100,000 flyers since May 2020, while Frontier, United, and Hawaiian have had the most.

Delta, Hawaiian, and Alaska Airlines have been the most punctual since June 2020, while Allegiant and JetBlue have been the least punctual, the group said.

The report found that on-time performance “dropped significantly in the summer of 2021 among seven of the 10 largest airlines.”

As part of the bailout terms, the airlines agreed not to force employees out of work or cut wages. But airlines collectively have reduced their work forces by tens of thousands of employees in the past two years.

Airlines are still experiencing major problems, from flight disruptions to increasingly belligerent behavior by passengers. In August, Spirit Airlines canceled more than 3,000 flights in less than two weeks. In October, American Airlines canceled more than 1,400 flights over one weekend, citing staffing shortages and bad weather.

Last month, American canceled more than 2,000 flights.

Complaints about airlines have more than doubled during the pandemic.

U.S. airlines lost nearly $35 billion in 2020, and passenger bookings were down about 60% from 2019. But the four largest airlines — American, Delta, United and Southwest — had a combined $31.5 billion in cash on their balance sheets by Dec. 31, 2020, up from $13 billion at the end of 2019.

Mr. Parker will testify that American Airlines has “developed incentive pay programs for peak travel periods to fortify our efforts to operate every flight on our schedule,” according to Reuters.

He will also say that the airline has “set a target of hiring an additional 18,000 team members in 2022.”

The hearing also comes as a federal appeals court rejected this week an emergency appeal by United workers who are challenging the company’s vaccine mandate.

Last summer, Sen. Maria Cantwell, Washington Democrat and the commerce committee chairwoman, called on the heads of six airlines in a letter to explain workforce shortages, flight cancellations, and delays, in light of the billions they received in payroll aid.

“I am deeply concerned by recent reports highlighting…workforce shortages that have caused flight cancellations and generated delays for passengers,” Ms. Cantwell wrote at the time. “These shortages come in the wake of unprecedented federal funding that Congress appropriated, at the airlines’ request, to support the airline industry during the COVID-19 pandemic.”

She said as passenger travel picked up during the summer, airlines were “unprepared to meet the increased demand that they scheduled for, and have resorted to delaying or canceling flights.”

“This reported workforce shortage runs counter to the objective and spirit of the [payroll support program], which was to enable airlines to endure the pandemic and keep employees on payroll so that the industry was positioned to capture a rebound in demand,” she wrote.

The mood of lawmakers also is reflected in a renewed proposal by Democrats that could scale back airline fees for extra bags.

Airlines worldwide took in about $110 billion in fees in 2019, up 400% from the $22 billion in 2010 fee revenue, according to Sen. Edward Markey, Massachusetts Democrat.

“If a traveler needs to check a bag, that’s a fee. If a traveler wants real legroom, that’s a fee. If a parent wants to change their seats just to sit near their children, that’s a fee. If a traveler’s plan changes, as they often do, that’s a fee,” Mr. Markey said in a statement.

He added, “we can no longer allow these fees to remain as high as the planes passengers are traveling on.”

The Forbidding Airlines from Imposing Ridiculous (FAIR) Fees Act would give the Transportation Department the authority to regulate airline fees and “prohibit air carriers from imposing fees that are not reasonable and proportional to the costs incurred by the air carriers.”

Passenger airlines received $25 billion in the CARES Act of 2020, $15 billion for payroll support in December 2020, and $14 billion in the American Rescue Plan Act last March.

• Dave Boyer can be reached at dboyer@washingtontimes.com.

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