COVID-19

What it means when airlines get special aid

Sabri Ben-Achour Oct 7, 2020
Heard on: Marketplace
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Airline industry workers call for more federal aid in Federal Plaza in Chicago on Sept. 9. Kamil Krzaczynski/AFP via Getty Images
COVID-19

What it means when airlines get special aid

Sabri Ben-Achour Oct 7, 2020
Airline industry workers call for more federal aid in Federal Plaza in Chicago on Sept. 9. Kamil Krzaczynski/AFP via Getty Images
HTML EMBED:
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After abruptly shutting down negotiations Tuesday over the next COVID-19 relief package, President Donald Trump backtracked saying maybe some direct aid to households will happen. 

He also singled out airlines for some additional aid. 

He said he wants Congress to pass a $25 billion aid package for the airlines, and that’s on top of the $25 billion that’s already expired.   

Airlines are suffering in this pandemic, no question. But a lot of industries are struggling. So why are airlines special? 

For one, airlines are a big industry. They generate almost $2 trillion in economic activity; they employ around 450,000 people, which is indirectly tied to 10 million more jobs.  

“If we are going to jumpstart the economy, the country needs to be able to move people and goods,” said William Swelbar, a research engineer at the Massachusetts Institute of Technology’s International Center for Air Transportation. It’s a case that’s convinced lawmakers at least once this pandemic. But among critical industries, airlines also have unique clout.

“They provide service to just about every congressman’s jurisdiction,” said Richard Squire, professor of law at Fordham University. “They are able to threaten to deny service or terminate service to smaller airports.”

In fact, one of the conditions of the first airline relief package was that service not be interrupted to a long list of airports. Squire said it meant some flights flew empty, or nearly so. Airlines also spend heavily in Washington, D.C., with the hope of preserving a special status.

“Last year, the U.S. airlines spent over $100 million on lobbying,” said Samuel Engel, senior vice president with consulting firm ICF. He said that was ramped up this year

Airline employees wield influence, too, according to Tom Kochan, professor of management at MIT’s Sloan School of Management. That’s because they are heavily unionized.

“The unions join the companies in promoting and lobbying for support as well,” he said.

It’s worth pointing out, too, the government has a long history of supporting airlines. The government set prices and routes before 1978, and it was part of the Federal Aviation Administration’s mandate to promote airlines up until the 1990s. 

COVID-19 Economy FAQs

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

Are people still waiting for unemployment payments?

Yes. There is no way to know exactly how many people have been waiting for months and are still not getting unemployment, because states do not have a good system in place for tracking that kind of data, according to Andrew Stettner of The Century Foundation. But by his own calculations, only about 60% of people who have applied for benefits are currently receiving them. That means there are millions still waiting. Read more here on what they are doing about it.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out Tuesday from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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