Some of the nation’s smallest airlines are facing some of the biggest headaches in coping with the travel meltdown.
Three regional airlines have already stopped flying as passengers shun air travel out of fear of the coronavirus. And industry officials worry that other small carriers could fail, leaving smaller cities and towns even more isolated.
“There is an extremely high risk to small community air service right now,” Faye Malarkey Black, CEO of the Regional Airline Association, told USA TODAY in an interview.
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Flying under names like United Express and Delta Connection, regional carriers are usually independently owned businesses that affiliate with major airlines to feed passengers into hubs from cities that don’t have enough passengers to merit mainline service.
But because they serve small markets that are less profitable than bigger ones, they are more vulnerable to downturns than the large airlines with which they partner, Black said.
That financial fragility is already playing out.
Trans States Airlines, a United Express carrier, suspended operations in April. It was followed by Compass Airlines, which flew as American Eagle and Delta Connection. Both are owned by Trans States Holdings.
The Bridgeton, Missouri, company had planned to wind down Trans States Airlines’ operations and funnel its employees into another of its commuter airlines, GoJet Airlines. But when the pandemic struck and passenger volume dried up, it pulled the plug. It also grounded Compass after an effort to find a new partnership fell through in light of the COVID-19 crisis.
“It’s a huge blow,” said Richard Leach, president of Trans States Holdings, in an interview. For nearly 40 years, he said the company was always able to find new opportunities and survive the tumult in the airline industry. But this time, there was no beating the pandemic, which claimed more than 2,000 jobs combined between the two shuttered airlines.
“An airline is made up of people’s lives,” he said, employees for whom he cares a lot. For now, the company is pinning its hopes on GoJet and the new Bombardier CRJ-550 regional jets that are arriving. But he said there is no getting around the headwinds that are rocking the entire airline industry.
“We’ve all got to survive this,” he said. “Everybody is impacted. Everyone is challenged.”
The third airline ceasing operations is RavnAir Group, based in Anchorage, Alaska, which filed for Chapter 11 bankruptcy reorganization last month after 90% of its passenger revenue dried up. Between its three separate brands, RavnAir Alaska, PenAir, and RavnAir Connect, the company provided passenger, mail and freight service to more than 100 Alaskan communities, including remote villages.
The company, which bills itself as Alaska’s largest regional carrier and employs more than 1,300 people, said the state-wide travel shutdown forced it to park all of its 72 of its aircraft.
On its website, RavnAir Group CEO Dave Pflieger pleads for public support to lobby the Trump administration to try to save the carrier. He says RavnAir could only receive $5.2 million of the $75 million from the federal stimulus package for which it had applied due to a formula that favors large, well-capitalized airlines, not small regional carriers.
“Ensure small airlines can get critical federal aid,” Pflieger implores.
Although the regional airlines were able to participate in the federal stimulus package that delivered much-needed cash to the airline industry, they faced limitations. They were able to compete for grants, but are limited in their ability to participate in the Treasury’s Air Carrier Loan Program, which is structured in a way that works against the regionals because their operations are usually wholly tied to major airlines, Black said in prepared remarks to the Senate Commerce Committee, which held a hearing last week on airline issues resulting from COVID-19.
Regional airlines are also limited because their arrangement with the major airlines prevents them from controlling their own ticket prices or being able to make real-time rate adjustments, Black said.
It didn’t help matters that on Tuesday, the U.S. Department of Transportation issued a revised order that will let the airline industry further reduce flights.
The government has been requiring carriers to operate a minimum level of service to cities as a condition of receiving aid, but compliance has meant planes have been flying with few passengers due to flagging consumer demand. One aspect of the new order is to let carriers reduce service in a way that will mean airports that had two airlines serving them could now have only one.
In small communities, that could mean new reductions in airline service on top of the ones they have already seen. It also renews worries about whether service can eventually be restored.
“Connectivity to the aviation system is vital for small communities..” said Todd Hauptli, CEO of the American Association of Airport Executives in a statement to USA TODAY. “Communities may be inconvenienced in the short-term by a reduction in service options while demand is low, but longer-term, continued access to connecting airports is critical.”
Flagstaff, Arizona, about 140 driving miles from Phoenix and more than 250 miles from Las Vegas, Nevada, is one of those more isolated cities. While it is the gateway to Grand Canyon National Park and a destination for other outdoor recreation, the coronavirus pandemic has cut service to Flagstaff from eight daily flights to just three, said Barney Helmick, the airport director.
It hurts, he said, given that Flagstaff was on pace to see about 300,000 passengers taking off and arriving this year, up from 260,000 last year. Helmick said he understands the drop in service given weak passenger demand at present but is concerned about what happens when flights need to be restored in the future.
“I am less worried about whether they make a cutback than whether they decide to do them long term,” he said.
In the Senate Commerce Committee hearing last week, Sen. Jon Tester raised the same issue about airline service to rural states, especially given the need for social distancing. If flights aren’t eventually restored, “it’s going to be an economic killer,” the Montana Democrat said.
In response, Nicholas Calio, the CEO of Airlines for America, the top organization representing major airlines, said that if the passenger demand returns, airlines are sure to restore flights.
“If that demand comes back, I guarantee you you’ll have the flights,” Calio said.
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