U.S. airlines on Monday asked the federal government for nearly $60 billion in aid as passengers stay home to avoid the COVID-19 pandemic.
Airlines for America, an industry group, said in a memo that the carriers need $25 billion in immediate grant assistance to compensate for reduced liquidity. The association has requested $4 billion for immediate grant assistance to cargo carriers.
It’s seeking an additional $25 billion in zero-interest loans and loan guarantees for passenger airlines, with an additional $4 billion in equivalent loans and loan guarantees for cargo airlines. And it seeks tax relief from 2020 excise taxes and for taxes on tickets, cargo and fuel through December 2021.
The industry’s plea comes as the Senate prepares to pass a stimulus bill aimed at pulling the U.S. economy out of a pandemic-induced free fall, and the Trump administration is preparing the public for a second stimulus bill that would include support for the flailing travel industry. President Donald Trump signed an initial bill, providing supplemental spending to prepare the nation for the pandemic on March 6.
“It’s absolutely a key topic of discussion here,” National Economic Council Director Larry Kudlow said of preparations for helping airlines in a second stimulus measure on Fox Business on Monday morning. “It’ll be up to Congress as well.”
And in appearances Sunday on ABC’s “This Week With George Stephanopoulos” and “Fox News Sunday,” Treasury Secretary Steven Mnuchin said the administration is “very focused on airlines, hotels, cruise ships, workers for these industries.” He said on ABC that he had spoken with Speaker Nancy Pelosi “about airlines, which [are] critical to us, hotels, cruise ships, more [Small Business Administration 7(a)] lending, more liquidity, some type of stimulus.”
Losses
The request was preceded by gut-punch announcements from individual airlines in the wake of administration-imposed of travel restrictions that now include the United Kingdom and Ireland. United Airlines said it would cut its flights by 50 percent in April and May and projected its revenue in March would be $1.5 less than billion less than it was for March 2019.
American Airlines is cutting its international flights by 75 percent through May 6.
In comments to Congress last week, Mnuchin signaled that the administration was eyeing loan guarantees similar to what was offered after 9/11. “I want to be clear, this is not a bailout,” he said.
Whether that had changed over the course of the weekend, however, was not yet clear.
Mnuchin has signaled as well his willingness to back aid for the cruise industry, which announced March 13 that it was temporarily suspending cruise ship operations related to U.S. ports for 30 days in the wake of the outbreak. But Democrats have been particularly wary about the latter, arguing that many cruise companies avoid paying U.S. taxes by registering their individual ships under foreign flags of countries with lower taxes and, often, more lax laws and regulations.
‘Freeloading’
On Monday, labor weighed in as well, with Don Marcus, president of the International Organization of Masters, Mates & Pilots, rejecting the idea of a cruise line bailout.
“We should not give one dime in stimulus money to ‘flag-of-convenience’ party boats; they should be the last on the list for a federal bailout,” he said in a news release, noting also the companies’ use flags-of-convenience laws to avoid hiring American crews and adhering to American labor laws and standards.
“American taxpayers should not be sending their hard-earned dollars to an industry that freeloads off of our government and is notorious for exploiting low-cost foreign crews,” Marcus said.
Republicans on the House Transportation and Infrastructure Committee, meanwhile, are eyeing a number of proposals, according to panel staff.
For airports, they’re discussing new airport improvement program grants that can be used for operational costs, such as janitorial expenses, debt servicing or staffing.
For airlines, they’re discussing federal loans to help purchase jet fuel and to meet other operational costs.
Were such loans to be used, airlines wouldn’t have to pay jet fuel tax — they could either pay back the loans or commit to purchase an equal amount of sustainable aviation fuel over the next 10 years.
Airlines opting to do the latter would not have to pay back the loan, thus boosting the sustainable fuels market.
House Republicans are also discussing both tax relief for air carriers as well as supplementing existing formula programs — an easier route to get money to airlines without sweeping policy changes.
While the administration has singled out airlines, cruise lines and hotels specifically in comments to the press, other travel-related industries have made it clear they’re struggling.
Amtrak has repeatedly slashed service, and the American Bus Association, which represents the motorcoach industry, sent out a missive Sunday warning that “the situation is deteriorating by the hour.” It estimated a 40 percent drop in bookings since the outbreak began.
“Our message is pretty clear,” association CEO Peter Pantuso said in an interview. “As Congress is considering helping out other modes of transportation, we are an essential piece of the transportation network and we think we should be included in whatever is passed.”
He noted that spring school trips to Washington, D.C., have been virtually eliminated. “It’s completely shut down,” he said. “And there’s no telling when that will come back.” The industry employs about 100,000 and moves close to 600 million passengers a year, he said.
Pantuso said the association is hoping for zero interest loans over a 20- or 30-year period as well as direct grants.
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