It may seem like déjà vu. Just one year ago, the U.S. government passed its first massive COVID-19 relief bill by signing the CARES Act into law in March of 2020. Nearly one year later, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law. This $1.9 trillion dollar stimulus bill includes $14 billion for airlines and is the third such stimulus airlines have received since the start of the pandemic.
$1.9 Trillion Dollar Stimulus Bill Includes Money for Airlines
The latest round of stimulus is exclusively for extending the paycheck protection of airline employees. Along with the $14 billion set aside for air carriers, eligible contractors will also receive $1 billion for the continuation of employee wages, salaries, and benefits. The extended payroll support is available to airlines that received assistance under the previous Consolidated Appropriations Act, which was passed in December. Airlines that accept the new aid will not be able to furlough or layoff employees through September 30, 2021.
Furloughs, Recalls, and WARN Notices
This mirrors the last stimulus bill signed by former President Trump in December 2020, which provided $15 billion for airlines to extend payroll support through the end of March 2021. At that time, the CARES Act stimulus had already expired, as of October 1, 2020, and American and United had already furloughed more than 32,000 employees.
To receive aid from the December bill, airlines were required to call back all furloughed workers, but executives at the time made it clear that it may be temporary since it wasn’t expected that travel demand would pick up by the end of March.
In a December letter to employees, United CEO Scott Kirby stated, “The truth is, we just don’t see anything in the data that shows a huge difference in bookings over the next few months. That is why we expect the recall will be temporary.”
Sure enough, by early February 2021, WARN notices were sent out to 14,000 United employees and 13,000 American Airlines employees. These notices are legally required 60 days in advance of any mass layoffs as part of the Worker Adjustment and Retraining Notification Act (WARN).
“Obviously, issuing these required WARN notices isn’t a step we want to take.” American Airlines CEO Doug Parker wrote in a February letter to employees.
American Rescue Plan Act Stimulus Saves Airline Jobs
After the American Rescue Plan Act was signed on March 11, 2021, Parker posted an Instagram video where he excitedly told employees, “If you have one of those WARN Act notices we sent out in February, tear it up. There aren’t going to be any furloughs at American Airlines in April and, with vaccinations on the rise, hopefully never again.”
United also cancelled furloughs planned for April thanks to the new aid and hope is on the horizon for travel to pick up by the end of summer — at least domestically.
The TSA screened a record number of travelers since the beginning of the pandemic over Easter weekend. Over 1.5 million travelers were screened on multiple days and the number has been over 1 million every day since March 11. Cooped up travelers have clearly been feeling more comfortable flying and took to the skies for spring break.
This is in stark contrast to a year ago, when the pandemic had just begun to take its toll on travel in the U.S. and passenger numbers were mostly in the 100,000s toward the end of March and early April 2020. However, the TSA checkpoint numbers are still well below normal, as there were over 2 million passengers screened on a daily basis in 2019.
The uptick in passenger numbers is a good indication for airlines that the pent-up demand for travel is there. Just last week, the CDC even adjusted its guidance to say that fully vaccinated people can travel safely within the U.S. The extended stimulus to keep trained employees active will help the airlines keep flying through the summer, at which time, hopefully, the majority of Americans will be vaccinated.
Will There Be More Stimulus?
Of course, the next question is “What happens at the end of September?”
Airline jobs are safe, for now, but come October , 2021, I’m guessing that we will see layoffs once again unless there is yet another round of stimulus. Several experts have predicted that travel won’t recover to pre-pandemic levels until 2023 or 2024. While we will probably see domestic travel recover earlier, the airlines will still be overstaffed for a limited worldwide network.
As for another stimulus package, it definitely could happen, but at some point, I think reality will set in and the airlines will simply have to adjust to the new travel landscape. People will always want to travel and leisure travel will be booked as long as the human desire to explore the world continues. But business travel will likely never be the same and that is where the airlines were most profitable. Nothing can truly replace a face-to-face meeting, but the pandemic has probably made companies realize that some things can be done remotely.
Once stimulus money runs out, it’s likely that airlines will have to consolidate in one way or another in order to keep flying profitably. For now, we’ll probably see most U.S. airlines survive the summer. When September ends, be on the lookout for some changes such as airlines forming alliances and possibly discussing mergers once we know a little more about how travel evolves in a post-pandemic world.