The Day of Reckoning has Arrived: CARES Act Expires and Furloughs Begin
1 October 1 is a date that has loomed over the industry for six months, as everyone braced for the expiration of the CARES Act and the job losses that would follow. While many groups have made 11th hour agreements to avoid furloughs and layoffs over the last two weeks, over 30,000 people are expected to lose their jobs beginning today.
American will furlough 19,000 employees, Envoy 1,000, and United 13,432 for a total of 33,432 lost jobs. United and its pilots came to an agreement earlier this week to hold off on any furloughs until June 2021 while Delta and its pilots kicked the can down the road only one month, delaying any decision until November 1 on the off chance the government provides more funding.
In addition to the lost jobs, the CARES Act protection of cities maintaining service will go away as well. Several airlines, led by American have announced service cuts in the coming weeks and more are expected. Small and medium-sized airports within a couple hours drive of a larger airport are especially in danger of losing service with the expiration of the CARES Act rules.
A bill has been introduced in the Senate to extend an additional $25 billion to the air travel industry to protect jobs for another six months while the White House has proposed $20 billion. It was always unlikely that it would be signed into law prior to today… but many hope that the stalled legislation can save many of the jobs currently on the chopping block.
FAA Chief Flies on Max, Doesn’t Crash
2 FAA Administrator Steve Dickson piloted the Boeing 737 Max in a test flight over Seattle yesterday, and it did not crash.
The aircraft has been banned from flying since March of 2019 when an Ethiopian Airlines 737 Max crashed, killing all 157 on board. The crash was the second for the plane in less than five month. Both incidents were caused by a flawed automated flight system leading to the grounding.
Despite the test flight, the FAA will continue its review before the plane is brought back into service, saying there is more work to be done. The current timeline has the aircraft returning to service late in 2020 or early 2021.
South African Airways Suspends All Operations
3 South African Airways has suspended all operations as the airline has effectively run out of cash. This comes after a rumored plan by some guy who served briefly as CEO this year to enter the illegal elephant ivory trade was deemed impractical.
The airline has been put under “care and maintenance” until the ongoing discussions between its Business Rescue Practitioners and the government result in a deal for a new funding plan. This move comes right after SAA’s LCC subsidiary, Mango, was forced to shut down its operation due to unpaid maintenance bills.
The South African government has not yet provided the $590 million the airline needed to stay afloat. SAA has been desperate for operating cash since before the pandemic, with the downturn in demand only making its financial predicament worse. SAA has been in bankruptcy since December of last year.
American Airlines Eliminates Partner Seating Benefit
4 American Airlines is removing access to its Main Cabin Extra seating for most oneworld elite members traveling on the airline. Previously, Sapphire and Emerald members (the two top tiers in oneworld) could reserve complimentary MCE seats when traveling on American at booking while Ruby members could assign MCE 24 hours prior to departure. Now they can’t.
While oneworld elites will still have access to so-called “preferred” seating in economy class — which is just closer to the front but not physically different — they will be required to purchase Main Cabin Extra at the going rate. Oneworld Aquamarine and Tanzanite tiers will continue to receive free upgrades at the time of booking, mostly because those tiers don’t exist.
The change won’t effect American’s own elites as they will still receive access to MCE at no charge. Along with MCE, AA elites will still be eligible to upgrade to first using AA’s traditional pyramid scheme 500-mile upgrade certs.
United States and Bangladesh Agree to Open Skies Agreement
5 The United States and Bangladesh have agreed to an open skies agreement, including unrestricted capacity and frequency of services, open route rights, and open codesharing.
The FAA is now expected to conduct an inspection before carriers can begin direct air services. They’ll take a look at major airports in the country as well as airlines that would like to operate to the United States. Specifically, the FAA will want to make sure there are no Pakistan-type shenanigans and that everyone who says they are a pilot actually is a pilot.
Biman Bangladesh Airlines flew to New York/JFK from Dhaka (DAC) between 1993 and 2006, operating via Europe. The loss-making route, however, was suspended in July 2006. The airline considered re-starting a fifth-freedom route to JFK prior to the pandemic, so it still has an interest, but not many — if any — other airlines are expected to care.
Airline Potpourri
- British Airways is launching a daily flight from Heathrow to Bermuda beginning March 28.
- FlyPelican is launching new, 2x-weekly service between Canberra (CBR) and Port Macquarie (PQQ).
- Hawaiian resumed service today to both Las Vegas and Tokyo/Narita.
- HK Express is the latest to launch a “flight to nowhere,” offering a 1.5 hour aerial tour of Hong Kong.
- JetBlue launched two new destinations from Tampa today: Providence and Washington/National.
- SWISS has finally caught up and refunded all customers who requested refunds for flights through July.
- TAP has negotiated payment deferrals on 60% of its leased Airbus aircraft.
Andrew’s Moment of Levity
I got offered a new job last night teaching poetry in the county jail. I’ve spent all day today weighing the prose and cons.
