Nothing for something
Airlines are helping themselves to another $15 billion of federal aid — and this time, we're getting even less for it
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Anyone notice that airlines received another $15 billion in the latest economic stimulus bill?
And what are passengers getting in return?
This time, it's not nothing. It's less than nothing.
Scroll down to Title IV ("Airline Worker Support Extension") if you don't believe me. It's on page 285. Go on, I'll wait here.
Do you see anything that air travelers get in return for $15 billion?
Neither do I.
Passengers also got nothing in the first CARES Act, when they received $19 billion in federal grants and loans. But this time it's different. We're probably going to suffer a huge loss despite offering a helping hand.
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What passengers wanted
I should probably define what I mean by "nothing." Yes, the government bailout saved a lot of airline jobs. And, although it wasn't required under the terms of the aid, travelers now have more flexible change policies, cleaner planes and a little more space on some flights.
But consumer advocates had a long list of demands that they wanted to include in both bills:
Enough with the fees! If airlines want more government help, they should agree to stop charging ancillary fees — such as for baggage, seat reservations, and flight changes and cancellations — that are unreasonable or disproportional to the costs incurred by the air carrier in providing such services.
Faster refunds. Airlines and third-party ticket sellers must offer full cash refunds for all canceled tickets during the coronavirus pandemic. Airlines currently offer refunds only if they cancel the flight. If you cancel, you only get a ticket credit.
Loosen the vise grip. Consumer advocates wanted to stop airlines from further reducing seat width and pitch until such time as the Department of Transportation concludes its Congressionally mandated evaluation of emergency evacuation standards. That's particularly important at a time when passengers are trying to maintain social distance on a plane.
Create a sick passenger rule. Airlines should establish rules to allow sick passengers with a note from a doctor to change or cancel flights without additional fees or costs. After all, the CARES Act was supposed to stop the spread of the virus.
No more bailouts. New aid should be contingent on all air carriers maintaining cash reserves sufficient to keep operating without government intervention for up to six months in the event of a pandemic or other long-term crisis.
What will happen instead
Here's the kicker: Our reward for the latest helping of tax-funded aid just became apparent to the industry’s soothsayers. They believe we are about to lose a major airline.
"In 2021, the big carriers will shrink from four to three," Reuters predicted today.
It says consolidation would probably leave taxpayers — if not consumers — "better off."
Reuters (disclosure: I used to work there) is both right and wrong. Right, there will probably be another big airline merger. Wrong — terribly wrong — that consumers would be better off.
Can you think of a single airline merger that left passengers in a better place? I can't. Every single merger reduces competition and leads to higher prices.
It's a lose-lose proposition
I'm disappointed by what has happened — and what is about to happen. First, the airline industry pockets $34 billion in federal aid. And then two airlines merge, leaving passengers with fewer choices and higher prices. Even the airline employees will get burned in that deal.
Talk about a lose-lose proposition.
We could take bets on which two airlines will merge. My money's on American Airlines and United Airlines, although it could be any of them. The question is, should it be? Maybe one of the prerequisites to receiving federal aid should have been an agreement to continue operating as an independent company. But it's too late for that.
Over to you. Did taxpayers and airline passengers get burned by the latest economic stimulus bill? Or was the federal bailout appropriate? And which domestic airlines do you think will merge?
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What do customers get in return? The ability to continue to fly in airplanes operated by airlines that would have gone bankrupt otherwise. Many of the airlines have eliminated change fees too. I don't expect them to eliminate other fees, since eliminating change fees will result in less revenue per flight as people opt for the cheaper fares knowing they can change them at will.
Once again thanking you for being our outspoken advocate. I was scratching my head while wondering what we, as travelers, were getting in return for the big bailout.