The US Department of Transportation’s (DOT) final order on requirements air carriers must meet if they take advantage of government aid during the coronavirus pandemic gives carriers additional scheduling flexibility and relieves secondary airports which subsidised unprofitable routes.
The DOT says it received 45 comments to the show cause order, published on 31 March, from cities, airports, members of the public and industry and business associations.
While mainline legacy carriers are generally able to accept the terms and were satisfied with the flexibility it offered, vacation specialists and ultra low-cost carriers (ULCCs) like Allegiant Air, Spirit Airlines, Sun Country Airlines and Frontier Airlines complained the proposed rules would force them to operate networks that were unsustainable and not in the spirit of the CARES act, which makes almost $60 billion in government aid available to the aviation industry.
ULCCs had said the order was “disproportionate and unfair to air carriers that provide point-to-point operations and lack the frequency, scale and scope of legacy air carriers and their hub-and-spoke business model”, the DOT writes. In addition, it would have required them to continue flying, during the northern hemisphere summer, routes they otherwise would operate only in winter.
“The department recognises the significant operational and financial challenges that would be imposed on carriers operating seasonal services should they be required to operate them year-round,” the DOT says in its final order on 7 April. “Given that the service obligation will be in place for at least the upcoming summer, the department will allow covered carriers to choose whether to continue to provide seasonal services to the points it served in the winter schedule 2020 or the summer schedule 2019.”
That means airlines which have significantly different summer and winter schedules have flexibility to base their “minimum service” determination on the schedules they flew the week before 1 March 2020, or the week before 4 August 2019, which the DOT said was “peak week” for summer schedules last year
Allegiant Air welcomed the new rules, saying, “We’re pleased the revision accounts for the fact that seasonality and flexibility are hallmarks of Allegiant’s business model, which will continue to be important to our customers as travel returns”.
The frequency requirements the DOT suggested on 31 March remain, but an additional category has been added to the agency’s spectrum.
“For covered carriers with less than a 10% share of total industry domestic capacity in calendar year 2019 that served a point five or more times per week, it would only need to provide three weekly flights and for points served less than five times per week, it would only need to provide one weekly flight,” the DOT says.
For carriers that have a greater than 10% share, the requirements as per the 31 March show order have also been slightly modified. If a carrier served a point more than 25 times every week, it must continue serving that point at least five times per week. For points served five to 25 times per week, the carrier would need to provide at least three weekly flights. For points served less than five times per week, it would only need to provide one weekly flight, the DOT says.
The order says the DOT will examine requests for exemptions from airlines when it comes to individual routes. However, it includes one blanket exemotion permitting regional airlines to drop routes served under “financial support arrangements” with cities. Such deals, which can help relatively rural communities maintain regular air service, are now unviable due to lack of demand during the nationwide public health emergency, some airports had said.
One such secondary airport is the Southwest Wyoming Sweetwater Regional airport in Rock Springs, Wyoming, which had entered a capacity purchase agreement with SkyWest so that passengers can connect to Denver International airport, a major United Airlines hub, without having to travel several hours on the ground. The airport commented on the show cause order because its request for exemption had initially been denied.
“As noted by the Southwest Wyoming Regional airport, in such instances it would not be equitable for the department to impose a service obligation,” the DOT writes.“The Department’s exemption for this circumstance is effective when the covered carrier has a letter or agreement from the funding parties to the arrangement indicating that the direct financial support has ceased.”
Airlines must file monthly reports with the DOT to prove compliance with the order’s minimum service requirements. The regulations will be in effect until at least 30 September, and the DOT says it will review the rules at that time depending on travel restrictions and passenger demand.
