June 5, 2020

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Transportation Department allows Alaska, Hawaiian airlines to cut some routes

The department’s announcement contrasts with decisions issued last week, when it largely denied requests from...

The department’s announcement contrasts with decisions issued last week, when it largely denied requests from JetBlue and Spirit airlines to suspend service at three dozen airports to save money.

As a condition of accepting billions in federal aid under the $2 trillion economic stimulus package known as the Cares Act, airlines had to agree to a number of conditions, including continuing to fly to communities they were servicing as of March 1. Carriers, however, were permitted to seek exemptions to those requirements.

More than a half dozen airlines did appeal, with many arguing that at a time when demand for air travel has largely dried up, it did not make sense for them to continue flying to all the cities they previously served.

At least two other carriers, American and United, are awaiting decisions on their appeals.

“Spirit, like other airlines, is in survival mode which has necessitated temporarily discontinuing service to the cities,” the airline wrote in its application for a waiver.

According to data provided by Airlines for America, carriers have idled more than 2,200 planes, more than one-third of their fleets, with more groundings planned. The International Air Transport Association said that worldwide revenue is down 55 percent from the previous year, which translates to roughly $314 billion dollars.

Transportation Department officials largely approved Delta’s request to delay the start of seasonal service to cities in Alaska, Massachusetts and Wyoming. However, officials denied Delta’s request to suspend service to Cedar City, Utah, and delay the start of service to West Yellowstone in Montana since both communities are part of the Essential Air Service program, which subsidizes air service to underserved communities. The department made no determination on Delta’s request to suspend service to two airports in the U.S. Virgin Islands.

Hawaiian Airlines will be allowed to stop serving many mainland cities, including Boston, New York, Las Vegas and Seattle. It will also suspend flights to American Samoa, where the governor asked that the carrier suspend service until June 1.

Hawaiian Airlines argued that the 14-day quarantine period imposed by the state’s governor for all travelers coming to or traveling within the islands has sharply curtailed demand for air travel, largely because most visitors from the mainland come for shorter stays.

The Transportation Department also said it would not require the airline to serve both Kahului and Kapalua airports on the island of Maui. Since Kahului is better equipped to handle large aircraft and cargo operations, the airline could fulfill its service obligation by flying to Kahului six times a week, the department concluded.

The airline’s request was backed by the state’s congressional delegation.

The department will allow Alaska Airlines to suspend service to three cities in Hawaii — Kona, Lihue and Kahului — citing the 14-day quarantine, but noted that the carrier continues to serve Honolulu.

Alaska also had sought permission to suspend service to Sun Valley, Idaho, for April and May because it had not previously served the city during those months. The department granted the request but said the carrier would have to resume the service in June, unless certain conditions were met.

Alaska noted that its service to Sun Valley has been supported financially by Fly Sun Valley, and that it was working with the organization about the possibility of continued funding for the 2020 summer season. The department said until the airline submits a letter indicating that the organization’s financial support has ceased, Alaska will be required to serve Sun Valley beginning June 1.

The Cares Act includes $50 billion in support for the airline industry in the form and grants and loans. In addition to continuing air service, carriers accepting the money must agree to not furlough workers before Sept. 30, place limits on executive compensation, and not issue dividends or buy back their stock until late 2021.

At least 10 carriers have agreed in principle to accept $25 billion in grant money, a portion of which will have to be repaid to the government. Carriers also will be required to issue warrants to the government as part of the program. Airlines may also apply for low-interest loans as part of the $50 billion program.

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