American Airlines warns it will drop service to 15 small cities if it does receive more payroll subsidies from U.S. taxpayers. But the nature of the list strongly suggests this is far more a political move than a financial one.
Which 15 Markets Does American Airlines Plan To Cut?
The planned cuts take effect on October 7, 2020. Here’s the full list:
- Del Rio, Texas (DRT)
- Dubuque, Iowa (DBQ)
- Florence, South Carolina (FLO)
- Greenville, North Carolina (PGV)
- Huntington, West Virginia (HTS)
- Joplin, Missouri (JLN)
- Kalamazoo/Battle Creek, Michigan (AZO)
- Lake Charles, Louisiana (LCH)
- New Haven, Connecticut (HVN)
- New Windsor, New York (SWF)
- Roswell, New Mexico (ROW)
- Sioux City, Iowa (SUX)
- Springfield, Illinois (SPI)
- Stillwater, Oklahoma (SWO)
- Williamsport, Pennsylvania (IPT)
American Airlines adds:
“For now, these changes are only in place for the October schedule period, which runs through Nov. 3. The airline will continue to re-assess plans for these and other markets as an extension of the Payroll Support Program remains under deliberation.”
A few things immediately jumped out at me.
First, the changes are spread out among 14 states, with only Iowa facing more than one reduction. The move therefore impacts 28 U.S. Senators who would have to defend the loss of air service, not to mention vulnerable members of the House.
Second, look at the list. Iowa, North Carolina, Michigan, Pennsylvania? American Airlines is targeting battleground states in an election year. That may catch the President’s attention.
Furthermore, View from the Wing notes that the legality of American’s plan to drop service to Joplin and Sioux City are legally questionable at best and likely illegal.
This is blatantly a political move. Ok, so what?
Now we see who blinks first. Will it be Congress that caves and passes an extension of payroll support or will be American that ultimately “reconsiders” its choice to suspend service to these markets, including nine of which it has a monopoly on?
Congress Should Call On AA’s Bluff
Speaking of subsidies, the U.S. has a program called Essential Air Service (EAS). I’ve written about it here. Since there are persuasive economic and equity arguments for a wide net of air service to smaller cities in the USA, other airlines will fill the void in these cities if AA cuts service via the EAS.
Thus, the issue would become who gets the subsidy going forward. Frankly, I’d rather award it to the airline that does not engage in brazenly political tactics to try to pressure Congress into opening the purse. Then again, while American Airlines may do it more openly, it is hardly unique in pressuring key decision makers.
American Airlines is entitled to cut service on routes that it deems unprofitable if it stops accepting government funding. Indeed, there are probably routes that no longer justify service due to tepid demand. But let’s see this announcement for what it is: politics first. That American Airlines would issue a press release about DROPPING service to 15 cities and then mention the CARES Act three times (in a 151-word release) speaks volumes about its true intentions.
image: American Airlines