mpi34/MediaPunch /IPX
United told its workforce last week that it expects to furlough some 36,000 jobs by the fall.
Many of the major components of the CARES Act, Congress’s coronavirus response package, are nearing expiration. Most of the one-time stimulus checks have already been delivered; enhanced federal unemployment expires after July 25; the Paycheck Protection Program, the small-business payroll guarantee, closes for applications after August 8 after a five-week extension was passed. Many of those small businesses have exhausted their PPP loans already.
The exhaustion of those signature programs has coincided with an increasingly impassioned public hand-wringing over CARES’s greatest failures. First it was conservatives claiming enhanced unemployment had dealt a scandalous blow to the economy, with its overcompensation of low-wage workers disincentivizing people from returning to work and sabotaging President Trump’s booming economy. This is dubious, as seven million people returned to the workforce in the last two months despite this alleged disincentive. Then, it was the $1,200 stimulus checks, which, according to the Government Accountability Office, had been sent to roughly a million dead people, good for $1.4 billion in misallocated funds. Never mind that the figure represented a shockingly low error rate for a program of that size, and nearly as many live children didn’t get checks to which they were entitled, and that roused next to nobody.
Most recently, it was decided that the PPP was responsible for the greatest turpitude of all, as The Washington Post, CNN, and others reported breathlessly on the Trump-allied firms, the rich businessmen and presidential hopefuls, and the clearinghouses of conservative agitprop that all received loans. (That the data from the Small Business Administration that media outlets were working off was fatally corrupted hasn’t drawn much comment.)
But the greatest quickly expiring debacle of the CARES package is none of those programs, which were, if anything, surprisingly successful, if temporary. The most egregious CARES Act programs by far are situated in the corporate bailout, of which the most scandalous component, despite evading any real public scrutiny, is assuredly the airline bailout.
March may seem like eons ago, but when Treasury Secretary Steve Mnuchin met with Congress to hammer out the contours of CARES, it was the airlines, above and beyond all the other large business interests he advocated for, that got particularly special treatment. In some ways, this made sense: Commercial aviation seemed uniquely primed to see its business imperiled by the virus and forthcoming lockdowns.
The result was an industry-specific bailout package of significant proportions. The industry got
$25 billion in payroll support, largely in the form of grants, and another $25 billion in loans, not to mention a subsequent $10 billion in both grants and loans for cargo airlines and industry contractors. The money came with strings attached, but not many. In exchange for large loans, the government would acquire stock in the amount of 10 percent of the loan value above $100 million. In practice, this meant that, for $5.4 billion in grant and loan assistance to Delta, the government would be entitled to acquire 1 percent of the company’s stock over five years. Despite the high price tag, it was assured that this arrangement would steady the ship, and save the companies’ workforces from mass layoffs.
The arrangement Mnuchin negotiated may not seem outrageous on its face, until you compare it to what other countries accomplished. Instead of forking over tens of billions for a 1 percent stock position, the Italian government assumed outright ownership of its largest airline, Alitalia, nationalizing the company to save it from faltering. Returning American Airlines to public-utility status, as both a financial necessity and an opportunity to improve its reviled customary service, was a course of action I suggested in mid-March. That was always going to be a long shot for our privatization-crazed government, but it merited consideration.
That’s not all the airline bailout failed to accomplish. The U.S. aviation industry is responsible for more greenhouse gas emissions than any other nation: Flights from domestic airports are responsible for 25 percent of global passenger flight–related carbon emissions, a sector that’s expected to gobble up 25 percent of the world’s carbon budget by 2050. But Mnuchin and his friends in Congress failed to stipulate even one single environmental standard for access to the bailout funds. Meanwhile, airlines all over the world agreed to environmental commitments for their bailout money: Air France agreed to shift passenger traffic to railways on short-haul flights, and Austrian Airlines agreed to cut its CO2 emissions in Austria by 50 percent by 2030.
While it may come as no surprise that a Republican administration was actively disinclined to pursue public ownership or ecological standards, the airline bailout soon failed in its hallowed pursuit of job protection. Grants received by the major American carriers were conditioned on employee retention, but even in March, companies like United telegraphed that they would be firing their workers the moment they were no longer contractually obligated to keep them. To drive that message home, United told its workforce last week that it expects to furlough some 36,000 jobs by the fall; on Wednesday American gave the same warning to 25,000 employees. Payroll grants expire on September 30, which means United and others can get to their firing spree the second the calendar flips to October.
We’re now paying the airlines to actively spread the virus coast to coast, as overbooked planes shuttle potentially sick or asymptomatic passengers around the country.
Meanwhile, other airline-adjacent contractors didn’t even bother to wait that long. Gate Gourmet, the airline catering company, seized on a loophole that allowed them to fire their employees first, and then ask for and receive hundreds of millions of dollars in bailout money meant to forestall layoffs.
But the biggest scandal comes down to the virus itself. The bailout money also came without binding commitments to safety and social distancing during the pandemic, which meant that, predictably, those same airlines ditched their perfunctory safety measures as fast as they could. By late June, American announced it would begin booking flights at full capacity, no longer leaving the middle seat open for precautionary reasons, virus be damned. It even began overbooking flights. The CDC sharply condemned that decision, which changed American’s course of action … no, of course it didn’t. Soon, the other major carriers followed American’s lead.
So instead of using the federal government’s largesse to pay the airlines not to fly in the name of public health, we’re now paying them to actively spread the virus coast to coast, as overbooked planes shuttle potentially sick or asymptomatic passengers around the country (they don’t test, so we don’t know). Not only did the airline bailout fail to stave off mass layoffs beyond a couple of months, and fail to bring about urgently necessary environmental standards, and fail to secure meaningful public ownership, it’s now actively facilitating one of the single-largest liabilities in the spread of a virus that is running out of control. This can only be described as shooting oneself in the foot at point-blank range, over and over and over. If a picture gets the point across more clearly than an idiom, though, this one of Ted Cruz flying on an American Airlines flight on Sunday without a mask gets close. Our legislators and our legislation are aligned in their complete willingness to fan the flames.
The role of air travel in sustaining this pandemic should not be undersold. Look at this animation of how the virus spread from city to city: It wasn’t train travel or buses that carried the pathogen from New York to New Orleans to Seattle and back, it was publicly underwritten air travel. Of course, it would be an oversimplification to say that we’ve spent exorbitantly to make the pandemic worse. That $50 billion did succeed in steadying the airlines’ respective stock prices.
If we were at all serious about meaningfully stanching the wildfire spread that we’re seeing in the South and Southwest, air travel would be grounded, especially in those areas, indefinitely. Of course, grounding flights would subject these companies to even greater financial strain, which would in turn likely necessitate an even greater outlay of public money. But that is already happening. In early July, Barron’s reported that American et al. were already lining up for even more bailout money. TSA data shows that air travel is back in decline amid the renewed surge of cases, which may well expedite their lobbyists’ return to Congress.
Though there’s been little indication that airlines are a priority group for the newest batch of stimulus measures currently being bandied about Congress, some sort of action on their behalf will likely be necessary by the fall. But the industry already stands as a symbol of the profound failure of our political class in its initial crisis response, and the abiding devotion to the bottom line still coming from the business sector. If the airlines make it back to the halls of Congress hat in hand, the terms simply must be different.
This article is a part of our ongoing series on sustainable mobility, transportation, and climate.
