Why a second airline bailout would be a mistake

In the early days of the COVID-19 crisis, airlines could see a drop in demand for travel coming. First it appeared that the affected areas would be isolated to Asia. Even Dr. Anthony Fauci stated in mid-February that the risk of the virus coming to America was “minuscule.”

No one saw the storm coming until it was too late, and the industry that was hammered the most was the global travel industry, which includes the world’s more than 800 commercial airlines. As of 2018, the travel industry accounted for $8.3 trillion of the world’s GDP and a staggering 313 million jobs — representing one in ten workers on the planet at the time.

The travel industry is an important component of the domestic and global economy. When the industry saw an unprecedented drop of more than 90 percent, the adverse economic impact was the driving force for preparing a stimulus package to assist U.S. airlines as never before.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided $25 billion in payroll support. But it came with the stipulation that airlines that accept the money refrain from laying off their employees until after the September 30, 2020 deadline. Initially, many airline executives were hesitant about accepting the money because of the strings attached. With an outward appearance of hesitation, the airlines took the needed cash.

Now they want more.

As we approach the October 1 deadline, airline executives are predicting an unprecedented wave of employee furloughs, and the collective number of airline employees affected could exceed 100,000. Unions representing airline employees are calling for a second round of aid to help delay these layoffs for another three to six months. But doing so would be a waste of taxpayer money.

By even the most optimistic calculation, demand for air travel could take as much as two or three years to rebound, so what would a payroll extension package of a few months really accomplish? Upon close examination, nothing more than keeping airlines overstaffed for another few months. It is for this reason that a second round of payroll money to airlines should not be granted.

There are compelling arguments for why we need to protect airlines, such as the previously mentioned economic impact figures. I agree that U.S. airlines must be assisted. But paying for airlines to maintain an overstaffed workforce makes no sense.

I understand the training needs for pilots, flight attendants, mechanics and others who cannot simply take an extended leave of absence and then immediately return to the flight line. There is (thankfully) a set of specific steps that must first be taken before these highly trained professionals can return to work. But to use this as justification for billions of dollars in payroll support begins to sound more like it’s being done in the interests of unions trying to protect their workers than out of concern for airlines during this operational challenge. 

Having spent nearly 40 years connected to the airline and travel industry, I sympathize with many of my former colleagues, as these are incredibly trying times. Fortunately, many have been given a six-month advantage to get their affairs in order, which was not provided to millions of other professionals in other fields.

Sadly, the idea of a second round of federal aid to the airlines would necessitate further rounds of aid. There are better ways we can spend taxpayer money during these challenging times. Here’s hoping common sense will prevail by telling the airlines “no” to a second round of stimulus cash.

Jay Ratliff spent over 20 years in management with Northwest/Republic Airlines, including as aviation general manager. He is an IHeart aviation analyst.