Airlines Seek $50 Billion Bailout Over Coronavirus Grounding
Joe Cortez March 16, 2020
As carriers slash routes and ground aircraft, they are seeking help from federal officials. Airlines for America and the major domestic carriers are asking lawmakers for a $50 billion grant to ensure their businesses can survive the lack of customers.
Airline consortiums and domestically-based carriers are looking to the federal government for help, after the President of the United States asked flyers to cancel discretionary travel and airlines are trimming executive payrolls. The group asks for over $50 billion in bailout funds for the aviation industry, as companies look for a path through the COVID-19 outbreak.
Airlines seek “grant, loans and tax relief”
The plan put forward is asking for three specific areas of relief for the aviation industry, costing over $50 billion of taxpayer funds. The majority of those funds would be available to passenger air carriers first, with a smaller amount earmarked for cargo-only carriers.
“Each U.S. carrier is having direct and continuous conversations with their employees, and everyone understands the severity of the situation,” the Airlines for America proposal reads. “Airlines for America recommends the following combination of programs to provide immediate and medium to long-term assistance to the U.S. airline industry and their employees: 1) grants; 2) loans; and 3) tax relief.”
Specifically, the consortium wants $25 billion of grants made available “to compensate for reduced liquidity (net of financing)” for losses directly attributed to the novel Coronavirus outbreak. The other $25 billion would come in the form of unsecured loans or loan guarantees: “zero interest unsecured loans or zero interest unsecured loan guarantees to U.S. Part 121 passenger air carriers.” Cargo carriers would receive $4 billion in grants, and $4 billion in loans and guarantees.
The airlines are also asking for a tax holiday due to a lack of passenger traffic. The group is asking for an excise tax refund through Mar. 30, 2020, followed by a temporary repeal of excise taxes through 2021.
White House asks flyers to cut discretionary travel
The relief package request comes as the White House and federal health officials want flyers to cancel unnecessary travel. During a Monday afternoon press conference flanked by doctors and admirals from the U.S. Public Health Service, President Donald Trump asked flyers to cancel discretionary flights. When asked if his administration will support air carriers, the president noted they would find a way to help them stay solvent.
“We’re going to back the airlines 100 percent,” Trump said during the press conference. “It’s nobody’s fault, unless you go to the original source. We’re going to be in a position to help them very much.”
The comments come as airlines find new ways to cut costs. After Delta Air Lines chief executive Ed Bastian announced he would not take a salary for six months, United Airlines CEO Oscar Munoz announced he would also forego his own salary, defer a salary increase into the future and will cut corporate officer salary by 50 percent.
I'd be ok if the government gave the airlines direct loans at the Federal Reserve interest rate (~.25%). I might be ok with a temporary tax cut too, depending on how the tax cuts were structured. However, a $25 Billion "grant" would be about 15% of the combined annual revenue of all US-flagged mainline passenger carriers. That type of "grant" better come with the federal government taking shares in those companies, much like how the Treasury Department got shares of GM during the auto bailout. Preferably these would be voting shares, but that would probably be too socialistic for our politicians to countenance.
I expect you will be asked to authorize financial help to the US airline carriers. I am asking you to require the airlines provide the the following in the future to qualify for financial aid from the US taxpayer. This should be in the form of federal law with penalties for non adherence. The airlines must provide all seats have a minimum of 34" pitch. The airlines must provide a minimum of 2 checked bags (50 pounds each) per passenger at no charge. The airline will automatically pay the passenger $1000 for any checked bag delayed or lost, in addition to 100% of the stated value of the bag and its contents. The airlines must refund all tickets 100% with no fees if the passenger requests it at any time. This includes tickets paid for with "miles". The airline will automatically refund the ticket price and $1000. for any airline cancelled flight. The airlines must provide at no cost one hotel room per passenger for any flight delayed for any reason in any city not at the passengers final destination if the delay is after 10 PM local time. The hotel must not be more than 1 mile from the entrance to the airport where the delay is at. The airline must pay for transportation to that hotel and the passenger must arrive not more than 1 hour after the arrival at the gate in the delay city. The airline must Pay each passenger automatically (that is without the passenger having to request it) $1500. if the arrival time at the passengers final destination is more than 4 hours delayed for any reason. All passengers must be given a pillow and blanket. No extra fees required for any form of boarding pass. The airline must accept as payment for any posted fare the amount of its frequent flier miles as cash equivalent at the rate of $.02 per mile.
No bailouts for corporations,bailouts should go to the average worker.
Before we do this, the government that is, shouldn't we ask the airlines for complete elimination of the extra charges and the billions they have been reaping on change fees, baggage fees etc.?
Grants? What. Corporate socialism at it's finest. If they hadn't wasted the money they made buying back their own stock, maybe they'd be able to weather this period. But, of course, never let a disaster go to waste.If they want any taxpayer money, they better be ready to reduce their salaries, especially that Parker character, and be prepared to pay thru the nose for the privilege.