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Bipartisan Committee Leaders Request Clarity from Airlines on Management of Payroll Support Program Funds

December 02, 2021

WASHINGTON, D.C. — Chair of the House Committee on Transportation and Infrastructure Peter DeFazio (D-OR) and Ranking Member Sam Graves (R-MO) requested yesterday that Airlines for America President and CEO Nicholas Calio provide clarity on how airlines managed funds provided to them under the Payroll Support Program (PSP) and what effect these funds have had on airlines’ recent operational capabilities.  

Under the PSP program—which was created by the 2020 CARES Act and funded in subsequent COVID relief packages, including the American Rescue Plan—funds must be used exclusively to pay employee wages, salaries, and benefits. 

In their letter, DeFazio and Graves write, “We are aware that, without visibility into the timing of a recovery of passenger demand and taking historical experience into account, a substantial number of workers across the airline industry accepted voluntary separation packages as airlines dramatically reduced capacity and their flight schedules last year to remain solvent…We suspect that the voluntary separations coupled with a faster than anticipated growth in travel volumes may have rendered airlines less resilient when recovering from cascading disruptions and delays due to weather and other variables, like those we saw earlier this fall.”

The Members continued: “…we expect airlines to take whatever measures are available to ameliorate any short-staffing issues and begin to address longer-term workforce shortages. As you know, travelers don’t care why their flight is delayed. They care just that it’s delayed.”

DeFazio and Graves concluded by requesting answers to several questions regarding how airlines have been managing PSP funds, especially as the next phase of the holiday travel season approaches.

The full letter text can be found below and here.

December 1, 2021

Mr. Nicholas Calio

President and CEO

Airlines for America

1275 Pennsylvania Ave. N.W.

Suite 1300

Washington, D.C. 20004

Dear Mr. Calio:

At least two major air carriers encountered systemwide operational disruptions over the last two months, each as the result of an unfortunate confluence of factors. Some have raised the concern that one of the causes for these disruptions was a shortage of workers in key operational areas, despite the approximately $50 billion in aid that Congress provided through the Payroll Support Program (PSP) to prevent involuntary furloughs of airline workers as a result of the COVID-19 pandemic. Indeed, the PSP has been characterized by airlines, labor unions, and others as a very successful worker aid program that prevented air carrier insolvency and mass worker layoffs.

No one knew at the time when PSP aid was provided when the industry would reach rock-bottom following the collapse in air travel at the beginning of the COVID-19 pandemic. In the airline crisis that followed the September 11th terrorist attacks, the U.S. airline industry as a whole did not return to profitability until 2006, according to the U.S. Bureau of Transportation Statistics, and even then multiple large carriers were operating under bankruptcy protection. We are aware that, without visibility into the timing of a recovery of passenger demand and taking historical experience into account, a substantial number of workers across the airline industry accepted voluntary separation packages as airlines dramatically reduced capacity and their flight schedules last year to remain solvent. As you know, domestic passenger volumes have recovered to approximately 80-90 percent of their pre-pandemic levels. We suspect that the voluntary separations coupled with a faster than anticipated growth in travel volumes may have rendered airlines less resilient when recovering from cascading disruptions and delays due to weather and other variables, like those we saw earlier this fall.

However, we expect airlines to take whatever measures are available to ameliorate any short-staffing issues and begin to address longer-term workforce shortages. As you know, travelers don’t care why their flight is delayed. They care just that it’s delayed.

            To gain some clarity and insight regarding the airlines’ management of PSP funds and its effect on their operational capabilities as we approach the next phase of the holiday travel season, we would appreciate answers to the following questions no later than close of business Monday, December 6, 2021:

1.         How many U.S. airline employees were saved as a result of PSP grants?

2.         Approximately how many flights and how many points of service did PSP enable airlines to continue offering?

3.         Has any A4A member been informed, or there is a basis to believe, that such member has not complied with any statutory requirement attached to PSP grants?

4.         What approximate average percentage of payroll costs did PSP grants and loans cover?

5.         To what extent did carriers rely on early retirements and voluntary leaves of absence to weather the pandemic? Were voluntary separations necessary to enable airlines to remain solvent?

6.         What were the primary causes of the operational disruptions experienced by some carriers this summer? Were they a result of mismanaging PSP funds? What steps are airlines taking to avoid future operational disruptions like those we saw this fall?

7.         Are carriers experiencing workforce shortages? If so, why? Did these shortages play any role in operational disruptions this year? What steps are being taken to address these shortages?

8.         Please provide details regarding the amount of time and resources required to hire, train, and qualify flight and cabin crewmembers, mechanics, and other workers whom airlines may be hiring to address any shortages referenced in question 7.

9.         What steps are airlines taking to improve the passenger travel experience in the wake of the COVID-19 pandemic? To what extent did PSP grants enable airlines to take these steps?

            Additionally, please feel free to provide any additional information regarding the issues addressed in the foregoing if you believe such information would be helpful to us as we continue to conduct oversight on this important issue.

Sincerely,

PETER A. DeFAZIO

Chair

SAM GRAVES

Ranking Member

  

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