U.S. Airlines Upset About Paying Back Some Stimulus Money
Yesterday, CNN posted an article about the U.S. Government informing airlines they will have to pay back some of the stimulus money the government gives them that allocated as part of the CARES Act. The CARES Act included help to the airline industry, as well as many other aid packages that included a personal stimulus, student loan relief, and small business loans.
According to the article, the airlines thought the money would be a grant. However, term sheets sent out by the government require a 70-30% split, where 30% of the money will be a loan, and the rest will be a grant. The first $100 million will be a grant, and the 70-30 split only applies to money above that amount. Passenger airlines were allotted $25 billion in the bill, and cargo airlines were allotted $3 billion.
Let me start by saying that I know times are tough with the COVID-19 outbreak for companies, large and small. I also know that times are tough for employees at companies around the country and world. This crisis has impacted people in many ways. People have lost loved ones, kids have lost social activities and schools, parents lost daycare, people have been left jobless. The impacts of the crisis are substantial, and they are unlikely to improve in the near future.
As a society, we should take measures to help stem the bleed caused by this crisis. There are currently reasonable steps we are taking to do just that.
However, it’s the hypocrisy from U.S. airlines on this that is astounding (yet not shocking). Remember, U.S. airlines have hounded foreign airlines that receive money from foreign governments. Mainly, United, American, and Delta went after Qatar, Emirates, and Etihad — three major Gulf carriers — because of the money they receive from their own governments.
They have asked the government to step in and take away the ability of foreign subsidized airlines to fly to the U.S. They did this — they said — because it wasn’t fair to American workers and American companies who had to compete with airlines funded through taxpayer money. Meanwhile they gladly accept subsidies and taxpayer money when it’s convenient to them. Just take a look at the argument over taxes on fuel in Georgia or the tax cuts from Arizona to realize U.S. airlines make out well with taxpayer money (aka subsidies).
It takes a lot of audacity to carry on the way that U.S. airlines have in combatting Gulf carriers and their products and then be upset about paying back some of the stimulus money. Of course, a substantial reason I believe they took that position was based on losing out to a superior product they found it easier to attack rather than compete against.
While it should be noted that some money for the airlines must be allocated for payroll and benefits, that hasn’t prevented airlines from asking tens of thousands of airline employees from taking unpaid leave. This at the same time Delta is spending substantial sums of money.
Now, if the reports are accurate, the airlines are actually made they have to pay back the money. Meanwhile, people across all industries are suffering. Waiters and waitresses, Uber and Lyft drivers, construction workers, hotel workers, and more all all suffering under the impacts of the economy and how this crisis has impacted that. Yet, the airlines are complaining when they are getting $100 million as a grant and only paying back 30% of what they get above that $100 million.
Airlines have powerful lobbyists, and they have a history of using their connections to try to get what they want. There’s no doubt that other companies do the same. Airlines do it with the audacity of being firmly against government money in the airline industry. Of course, that only applies if you aren’t a U.S. airline.
I have a lot of sympathy for a lot of different people as the world goes through this crisis. I have a lot of tolerance for people taking action to improve people’s lives during this trying time. That being said, I don’t have much tolerance to listen to airlines complain about being required to pay back 30% of a loan when they are granted $100 million + 70% in grants above that amount. It’s insufferable and intolerable, particularly as some in the industry have sought to degrade their product over the last few years (basic economy, anyone?).
Editor’s Note: New reports suggest the airlines and the U.S. Government have made an agreement in principle over this issue. The details of that agreement have not yet been made public.