The United States Department of Transportation is to allow domestic airlines to reduce or even drop services to certain airports. Airlines have been required to maintain skeleton services across most of their routes under the CARES Act provisions. But this was becoming impractical in light of the dramatic downturn in travel demand. Today, the Department of Transportation has moved to allow airlines to wind back or drop some services.
When the CARES Act was signed in late March, an airline receiving financial assistance was required to “maintain scheduled air transportation service as the Secretary deems necessary to ensure services to any point served by that air carrier before March 1, 2020.”
Walking a fine line between service expectations and economic realities
On the face of it, that seems fair enough. Airlines are receiving approximately $25 billion in funding under the CARES Act. That includes Delta Airlines receiving $5.4 billion, American Airlines receiving $5.8 billion, United Airlines receiving $6 billion, Alaska Airlines receiving $1.2 billion, and Southwest Airlines receiving $3.2 billion.
For that kind of money, you might think it’s reasonable that airlines maintain services to an airport near you.
But as airlines feel the bite from the drop in travel demand, they’ve inundated the Department of Transportation with exemption requests. Airlines have said demand on some routes is near zero. They’ve also argued maintaining services on some routes is “unreasonable, impracticable, costly, and challenging.”
The Secretary of the Department of Transportation is allowed to granted exemptions and has frequently done so. But the Secretary has also knocked back exemption requests.
Changes were announced today
Today, the Department of Transportation has announced some changes to service obligations that deals with the vexed issue of maintaining services on uneconomic routes. The aim is to allow carriers to reduce services without breaching the spirit and aim of the CARES Act.
The Department of Transportation is not going to allow a free-for-all withdrawal from marginal routes. All airports with an air service before March 1 will retain an air service and a link to the national air transportation system. But if a particular airport is serviced by two or three airlines, the Secretary may now allow just one airline to fly in.
Under the new provisions, airlines can apply for exemptions for up to five airports, or five percent of the airports they fly to, whichever is greater. To put this into some context, American Airlines flies to about 95 destinations in the United States, Southwest Airlines flies to about 100 domestic destinations, and United Airlines flies to about 78 domestic destinations.
The Department of Transportation says these changes should provide airlines with more flexibility to manage operations and reduce financial imposts while still ensuring airports across the United States maintain some air links.
Delta Air Lines is dropping services to ten airports tomorrow
This appears to be on top of existing exemptions. One of the biggest US carriers, Delta Air Lines, has cut 80% of its usual domestic capacity this quarter. As of tomorrow, the airline is quitting its routes from 10 airports in the USA. These include Chicago Midway, Oakland International, Hollywood Burbank, Long Beach, Manchester-Boston Regional, T.F. Green International, Westchester County, Stewart International, Akron-Canton, and Newport News/Williamsburg International.
Delta has no plans to return to these airports until the start of October. The airline notes that all of these airports have nearby alternative airports. It’s not the end of the service cuts either. Delta Air Lines has applied to the Department of Transport for service exemptions to a further nine airports.
That’s just one airline. With US carriers bleeding cash, they are keen to cut costs where they can. The Department of Transport needs to walk a fine line between keeping air links open and accommodating economic realities for the airlines. Today’s adjustments out of the Department are a small step in that direction. Airlines have until May 18 to submit lists of airports they want to cut flights to.