Senate Hearing Brings Airlines, Payroll Support Program, Workforce into Focus
Every few years Congress brings together all the major airline CEOs to press them on major concerns and pet issues. The most recent iteration of this event was a hearing of the Senate Committee on Commerce, Science, and Transportation on Wednesday, December 15, 2021. Entitled Oversight of the U.S. Airline Industry, the full committee hearing featured the following witnesses:
- Mike Tretheway, Chief Economist and Executive Vice President, InterVISTAS Consulting Inc.
- Doug Parker, CEO, American Airlines
- Gary Kelly, CEO, Southwest Airlines
- Scott Kirby, CEO, United Airlines
- John Laughter, Executive Vice President and Chief of Operations, Delta Air Lines
- Sara Nelson, International President, Association of Flight Attendants-CWA
(Testimonies can be downloaded here). The following topics were the primary discussion points.
Payroll Support Program
The hearing began with a laudatory exchange about the Payroll Support Program (PSP), Congress’s $54 billion in aid over three relief bills to airlines and their staff to halt layoffs during the worst parts of the pandemic. Committee members patted themselves on the back and witnesses profusely thanked them for the program. While such thanks might seem self serving, the PSP was undoubtedly successful in preventing massive layoffs during peak COVID.
Treheway, the only non-airline or union representative on the panel, pointed out that PSP yielded the best results of any airline-based government support program globally, and had several features that had an outsized effect on the economy. The program was targeted to workers, which helped keep them on the payroll and eliminated mass layoffs and costly re-hiring as the industry recovered. Indeed, committee chairman Maria Cantwell (D-WA) showed graphics of how the U.S. aviation sector has recovered much earlier and much faster than counterparts in Europe and elsewhere around the world. Treheway and others highlighted the transparency of the program, that it did not favor a particular airline, and that it had spillover effects on the broader aviation and travel economy.
However, the hearing was a reminder that PSP is not entirely free to the airlines. It came with new rules for airlines to be more flexible on change fees, cancelations, and refunds. Members pressed the airline executives on their policies for refunds, citing complaints from constituents. Parker said that American Airlines issued $3.2 billion in refunds to passengers in 2020 alone, almost as much as their 2020 revenue. While all airlines are complying by issuing refunds for incidents where the airline is responsible for disruptions, they are giving out vouchers when a passenger cancels an un-refundable ticket. This irked several members, including Senator Richard Blumenthal (D-CT), who unsuccessfully attempted to get the airline executives to agree for a need for a passenger bill of rights.
Recent Flight Disruptions
Members also requested the airline executives explain the recent, widespread disruptions that affected national networks. Over the past several months, bad weather and other events cascaded into mass cancellations of flights for Southwest, Spirit, and American. United paused flights in September due to a computer outage. The incidents resulted in thousands of flights being canceled.
Parker replied that while the initial cause might be weather-related or some other factor, the widespread nature is stemming from the workforce. He said the airlines have enough people, but not enough workers are willing to volunteer for overtime when major disruptions occur. Kelly similarly suggested that airline scheduling needs to adjust to the new workforce culture and reticence to take on extra work. While they were happy to be able to keep their staff due to the PSP help, they remarked that it is a difficult hiring environment. People returning to work are less interested in extra hours, and attrition has been higher. They expect to adjust to these issues over time with more experience and with a continued recovery in the economy.
Senators Marsha Blackburn (R-TN) and Ted Cruz (R-TX) posited that vaccine mandates might be hampering the supply of workers, but the airline executives responded saying that has been a minor factor given the very high compliance rates among public-facing employees.
Service to Small Communities
Several Senators also brought up concerns of losing service to smaller communities in their states. John Hickenlooper (D-CO) lamented the loss of Delta Air Lines service between Grand Junction and Salt Lake City. Deb Fischer (R-NE) bemoaned the loss of service, also Delta, between Lincoln and Minneapolis. Tammy Baldwin (D-WI) and John Thune (R-SD) noted that all airlines have been cutting many smaller communities, particularly those using smaller jets with 50 or fewer seats.
Members questioned whether this decision was economic, and the airline executives countered by saying that the decision to cut this service was directly tied to a shortage of pilots. For years, the industry (and Eno in a 2019 workforce report) has warned of a looming shortage of pilots and that is now directly affecting their ability to find pilots for regional routes. Kirby was particularly pessimistic on the outlook to fill the need. He said that there is a current need of thousands of pilots, but requirements of 1,500 hours of flight time and approximately $150,000 in training expenses are too steep of a barrier to entice large numbers to get trained.
Some members offered the possibility of additional Essential Air Service resources to make such service more financial viable, but the executives countered by saying that it is not a matter of economics but pure need for more pilots. They suggested more resources to support the training of pilots will help in the long run, but to expect continued cuts in the short term.
During the hearing members brought up several other issues that will likely be part of the continued discussion on aviation:
- Committee ranking member Roger Wicker (R-MS) asked if people will ever be able to fly without masks. Mask mandates on planes will continue, although airline executives reiterated the high quality of filtered air on aircraft, often better than in hospitals and other indoor spaces. All panelists were hopeful that one day passengers can fly without masks but will wait on medical community advice to suggest when that might be.
- Nelson discussed ongoing concerns with unruly passengers, requesting better information about the rules, more resources for enforcement, and cutting alcohol sales.
- Senator Baldwin asked about improvements to wheelchair and disabled persons’ access to aircraft and aircraft bathrooms, to which the airline representatives mentioned the challenges and progress on making air travel easier.
- Senators Brian Schatz (D-HI) and Hickenlooper both brought up efforts to decarbonize the airline industry. The airline executives agreed that supporting efforts to develop and scale sustainable aviation fuel was the most positive role that Congress could play. Approaches such as carbon offsets, according to Kirby, will be less effective.
- International travel will also be a crucial part of the aviation industry’s recovery, and panelists suggested that open borders and consistent policies will be necessary to facilitate a safe and healthy return.
- Committee members also question the possibility of major flight disruptions related to the roll-out of 5G that is planned for early January. The airlines are particularly concerned with FAA rules, and ask Congress to help clarify the risks and the rules prior to implementation.
The hearing made it apparent that there are several major issues facing the industry, and perhaps the most challenging will be addressing the workforce as demand continues to increase. Regardless, Congress and the panel concurred that the $54 billion in PSP relief aid was well spent, and have a mutual interest in the long term health of the nation’s airline industry.