The US Congress has just handed US airlines $15 billion in so-called “payroll support” as part of a new $900 billion stimulus bill. The math is alarming, especially considering that many Americans actually suffering will receive a pittance.
US Airlines Benefit Greatly In New Stimulus Bill
With Congress unable to reach a deal ahead prior to November 1st on extending payroll support, airlines began a series of schedule reductions and furloughs. American and United led layoffs while Delta and Southwest laid off no workers at all. In total, about 32,000 airlines employees faced furlough.
The $900 billion stimulus package, approved on a bipartisan basis and expected to be signed by President Trump, provides a $600 check to each American while providing $15 billion to U.S. airlines.
While we are still waiting for the final text of the bill to emerge, the conditions are reportedly similar to the earlier CARES Act funding, which will require airlines to maintain pre-pandemic service to each city and bring back all employees from furlough through April 1, 2021.
Airlines had prepared to proceed without additional payroll support and acted accordingly. While the $15 billion is intended to defray payroll support for all airline employees, the only employees who will see a difference are the 32,000 who will now be offered a chance to return to work (many, by the way, have already moved on to new positions or even been re-hired by other airlines).
Divide $15 billion by 32,000 and you get $468,750 per furloughed employee for four months of pay. That works out to $1,406,250 per year! Obviously workers will not be seeing that money. Instead, the junior employees who were laid off can expect to see their normal wages and the residual be used to pad the overall bottom line.
Meanwhile, other Americans in more dire need can expect a $600 check while some who need no aid at all will also be receiving $600. Government efficiency in action…
The widespread distribution of the vaccine will help improve the prospects of the airline industry. Thus, I wonder if the focus was just wrong. Instead of providing airlines more money to maintain service and employees who are not needed, why not re-direct that money toward creating more production capacity and distribution of the vaccine, so that more Americans actually feel like flying? I see a lot of suffering in the small businesses around me. While I am very happy for airline workers who will receive a steady paycheck through April 1, 2021, this stimulus deal does nothing to solve the the underlying demand problem that is at the heart of airline woes.
Furloughed workers will be recalled, but it creates more uncertainty for them as they again anxiously await the spring to see if their life will be turned upside down again. Instead of investing this time into looking for a new and more rewarding career, they are left waiting.
Don’t buy the spin from airlines. $15 billion is not needed to save jobs that would be lost absent more stimulus funding. Delivering vaccines is profitable and not something that requires subsidies. Billions of dollars are not needed to maintain service to smaller cities. Think millions.
So congratulations airline lobbyists. You fleeced us again. At least change fees are gone…for now. Viva la corporate socialism…