[Senate Hearing 117-724]
[From the U.S. Government Publishing Office]
S. Hrg. 117-724
OVERSIGHT OF THE U.S. AIRLINE INDUSTRY
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HEARING
BEFORE THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
DECEMBER 15, 2021
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available online: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
53-137 PDF WASHINGTON : 2023
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
MARIA CANTWELL, Washington, Chair
AMY KLOBUCHAR, Minnesota ROGER WICKER, Mississippi, Ranking
RICHARD BLUMENTHAL, Connecticut JOHN THUNE, South Dakota
BRIAN SCHATZ, Hawaii ROY BLUNT, Missouri
EDWARD MARKEY, Massachusetts TED CRUZ, Texas
GARY PETERS, Michigan DEB FISCHER, Nebraska
TAMMY BALDWIN, Wisconsin JERRY MORAN, Kansas
TAMMY DUCKWORTH, Illinois DAN SULLIVAN, Alaska
JON TESTER, Montana MARSHA BLACKBURN, Tennessee
KYRSTEN SINEMA, Arizona TODD YOUNG, Indiana
JACKY ROSEN, Nevada MIKE LEE, Utah
BEN RAY LUJAN, New Mexico RON JOHNSON, Wisconsin
JOHN HICKENLOOPER, Colorado SHELLEY MOORE CAPITO, West
RAPHAEL WARNOCK, Georgia Virginia
RICK SCOTT, Florida
CYNTHIA LUMMIS, Wyoming
Melissa Porter, Deputy Staff Director
George Greenwell, Policy Coordinator and Security Manager
John Keast, Republican Staff Director
Crystal Tully, Republican Deputy Staff Director
Steven Wall, General Counsel
C O N T E N T S
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Page
Hearing held on December 15, 2021................................ 1
Statement of Senator Cantwell.................................... 1
Statement of Senator Wicker...................................... 4
Statement of Senator Schatz...................................... 50
Statement of Senator Blunt....................................... 52
Statement of Senator Klobuchar................................... 54
Statement of Senator Fischer..................................... 56
Statement of Senator Hickenlooper................................ 58
Statement of Senator Thune....................................... 59
Statement of Senator Baldwin..................................... 61
Statement of Senator Moran....................................... 64
Statement of Senator Markey...................................... 66
Statement of Senator Blackburn................................... 69
Statement of Senator Blumenthal.................................. 70
Statement of Senator Cruz........................................ 73
Statement of Senator Peters...................................... 75
Statement of Senator Young....................................... 77
Statement of Senator Scott....................................... 79
Statement of Senator Rosen....................................... 81
Statement of Senator Sinema...................................... 83
Statement of Senator Lujan....................................... 85
Witnesses
Dr. Mike Tretheway, Chief Economist and Executive Vice President,
InterVISTAS Consulting Inc..................................... 5
Prepared statement........................................... 7
Doug Parker, Chairman and Chief Executive Officer, American
Airlines Group, Inc............................................ 15
Prepared statement........................................... 16
Gary C. Kelly, Chairman of the Board and Chief Executive Officer,
Southwest Airlines Co.......................................... 25
Prepared statement........................................... 27
Scott Kirby, Chief Executive Officer, United Airlines Holdings,
Inc............................................................ 28
Prepared statement........................................... 30
John Laughter, Executive Vice President and Chief of Operations,
Delta Air Lines................................................ 33
Prepared statement........................................... 35
Sara Nelson, International President, Association of Flight
Attendants-CWA, AFL-CIO........................................ 39
Prepared statement........................................... 41
Appendix
Letter dated December 10, 2021 to Senator Maria Cantwell and
Senator Roger Wicker from Captain Todd Insler, Chairman, United
Airlines Master Executive Council, Air Lines Pilots
Association, International..................................... 93
Ted Christie, President and CEO, Spirit Airlines, prepared
statement...................................................... 96
Robin Hayes, CEO, JetBlue, prepared statement.................... 99
Ben Minicucci, CEO, Alaska Air Group, prepared statement......... 104
Response to written questions submitted to Dr. Mike Tretheway by:
Hon. Maria Cantwell.......................................... 139
Response to written questions submitted to Doug Parker by:
Hon. Maria Cantwell.......................................... 141
Hon. Richard Blumenthal...................................... 149
Hon. Brian Schatz............................................ 151
Hon. Jacky Rosen............................................. 152
Hon. Raphael Warnock......................................... 153
Response to written questions submitted to Gary C. Kelly by:
Hon. Maria Cantwell.......................................... 154
Hon. Richard Blumenthal...................................... 161
Hon. Brian Schatz............................................ 163
Hon. Raphael Warnock......................................... 164
Hon. Roger Wicker............................................ 166
Hon. Shelley Moore Capito.................................... 166
Hon. Jerry Moran............................................. 167
Hon. Rick Scott.............................................. 168
Hon. Ron Johnson............................................. 168
Hon. Roy Blunt............................................... 169
Response to written questions submitted to Scott Kirby by:
Hon. Maria Cantwell.......................................... 170
Hon. Richard Blumenthal...................................... 174
Hon. Brian Schatz............................................ 176
Hon. Jacky Rosen............................................. 177
Hon. Raphael Warnock......................................... 178
Hon. Roger Wicker............................................ 180
Hon. Shelley Moore Capito.................................... 180
Hon. Rick Scott.............................................. 182
Hon. Ron Johnson............................................. 183
Hon. Roy Blunt............................................... 184
Hon. Mike Lee................................................ 186
Hon. Marsha Blackburn........................................ 188
Hon. Ted Cruz................................................ 189
Response to written questions submitted to John Laughter by:
Hon. Maria Cantwell.......................................... 198
Hon. Richard Blumenthal...................................... 205
Hon. Brian Schatz............................................ 207
Hon. Jacky Rosen............................................. 207
Hon. Raphael Warnock......................................... 208
Hon. Roger Wicker............................................ 210
Hon. Shelley Moore Capito.................................... 210
Hon. Jerry Moran............................................. 212
Hon. Rick Scott.............................................. 212
Hon. Ron Johnson............................................. 212
Hon. Roy Blunt............................................... 213
Hon. Deb Fischer............................................. 214
Response to written question submitted to Sara Nelson by:
Hon. Richard Blumenthal...................................... 214
Hon. Kyrsten Sinema.......................................... 215
Hon. Raphael Warnock......................................... 217
Response to written questions submitted to Ted Christie by:......
Hon. Richard Blumenthal...................................... 218
Response to written questions submitted to Robin Hayes by:
Hon. Maria Cantwell.......................................... 219
Hon. Richard Blumenthal...................................... 223
Response to written questions submitted to Ben Minicucci by:
Hon. Richard Blumenthal...................................... 225
OVERSIGHT OF THE U.S. AIRLINE INDUSTRY
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WEDNESDAY, DECEMBER 15, 2021
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 2:35 p.m., in
room SR-253, Russell Senate Office Building, Hon. Maria
Cantwell, Chairwoman of the Committee, presiding.
Present: Senators Cantwell [presiding], Klobuchar,
Blumenthal, Schatz, Markey, Peters, Baldwin, Sinema, Rosen,
Lujan, Hickenlooper, Wicker, Thune, Blunt, Cruz, Fischer,
Moran, Blackburn, Young, and Scott.
OPENING STATEMENT OF HON. MARIA CANTWELL,
U.S. SENATOR FROM WASHINGTON
The Chairwoman. The U.S. Senate Committee on Commerce,
Science, and Transportation will come to order. Today we are
having an oversight hearing on the U.S. airline industry and
the PSP program. We have a distinguished panel of witnesses.
Oh, I think some are joining us remotely.
So thank you all very much for being here today. I know
that some of our colleagues, we just had a vote called and are
running to do that and we will be back. But again, I want to
thank American Airlines CEO, Mr. Parker, for being here;
Southwest Airlines, Mr. Kelly, for being here; Scott Kirby, the
CEO of United Airlines, Mr. Laughter--is that how you pronounce
it right? Laughter----
Mr. Laughter. Laughter.
The Chairwoman. Mr. Laughter, thank you--representing Delta
Airlines, and Ms. Nelson, representing the flight attendants,
and I believe remotely, we have someone from my part of the
world anyway, British Columbia, the Pacific Northwest, Mister--
sorry, sir. Mr. Trethe? Let's see----
Mr. Tretheway. Tretheway.
The Chairwoman. Tretheway. Mr. Tretheway, thank you so
much. You are going to be leading us off after I make a few
comments and Senator Wicker gives his statement, but certainly
appreciate you and your company in analyzing transportation.
The immediate question before the Committee today is whether
the Payroll Support Program for the airlines worked.
As we will hear from our panelists today, economists, union
presidents, and airline executives, the answer to that question
is yes. The Payroll Support Program was a historic investment
to sustain a critical sector of the U.S. economy. Aviation
amounts to more than 5 percent of U.S. GDP and contributes $1.8
trillion in total economic activity. By ensuring airlines had
funding to continue to pay their employees' wages and salaries
and benefits, the Payroll Support Program saved the jobs and
livelihoods of hundreds of thousands of workers.
And I am sure that that is the story we are going to hear.
Specifically, though, the relief saved 386,200 direct full-time
U.S. passenger airline jobs, approximately 85 percent of the
pre-pandemic workforce, according to data reported by the major
airlines. In addition, the workforce aid indirectly supported
over 340,000 jobs, including over 74,000 jobs in the supply
chain. This is one of the great things about this program is
that it helped the entire ecosystem of aviation.
Today, the U.S. domestic capacity is 87 percent of the pre-
pandemic levels, which is above our peer markets in Europe and
Asia. I think these two charts probably show it best and the
gap, the United States being the blue line and in this case,
Europe, being in the red. The fact that the United States acted
quickly and continually built on that showed the difference in
what we were able to restore for aviation travel.
To look specifically over that same time period, in the
various months, again, where we are today, you can see more
people have started to catch up where the United States is. But
during this time period, the United States was able to move
faster. That meant a lot to our economy. It meant a lot to
those families and to the workers, and the fact that as of
September 2021, the airline industry was operating with only
about 5 percent fewer employees than under pre-pandemic levels
in early 2020. So we know that this means good news for the
future.
We will hear testimony, as I said from an economist who is
going to tell us why the United States proposal and program
worked so well and how it helped us retain experienced and
trained workforce individuals, and why that is so important as
we move forward. In Mr. Tretheway's words, correctly focusing
on the key objectives of retaining airline industry workforce
and ensuring continuity of economic and social connectivity was
an important goal.
Indeed, the Payroll Support Program provided relief to
other parts of the aviation system, including contractors,
repair stations, service providers, and I want to thank my
colleagues, specifically Senator Duckworth and Senator Peters,
who focused on that. Airlines were also required to service 662
U.S. destinations, including some small communities that might
otherwise have lost service in the pandemic, and as a result,
U.S. airlines continue to operate 5,936 weekly frequencies to
these destinations, amounting to over 300,000 frequencies per
year.
This service guarantee ensured that the nation's air
transportation network remained open for business. It was
critical for supplies, including vaccines and the health care
system that everyone was counting on. But let's be clear, this
success was not a foregone conclusion. This required Congress
to act immediately. And I want to thank my colleague, Senator
Wicker and the team of people on this committee on both sides
of the aisle who worked day and night for weeks and worked with
the various counterparts in the House and in the private sector
and the White House to try to come up with this proposal.
With the market demand collapsing at record speed bottoming
out at nearly 5 percent of pre-pandemic levels within weeks,
the Payroll Support Program provided a degree of confidence and
certainty in the marketplace. We know the PSP program worked
because U.S. airlines kept frontline workers employed and were
able to capture the air travel rebound that I just showed in
those charts. In January 2021, the U.S. domestic passenger
volumes were at 42 percent of pre-pandemic levels, and by last
week they were at 87 percent.
This is a 107 percent increase in domestic airline capacity
in 2021 and indicates domestic travel could be fully back by
2022. In contrast, as the chart showed, other nations weren't
at that same capacity. In fact, I think the Asian Pacific
region is lingering around 53 percent airline capacity in
comparison to 2019 levels. Again, we have a different market,
different complexities. So as designed, the PSP helped us
preserve skills and high paying jobs critical to our economy,
and I can't wait to hear from the witnesses in more detail.
According to the Treasury Department, out of the $54
billion in PSP funds, the airlines must repay $14 billion,
which is 26 percent of PSP funds. The Treasury holds warrants
that are currently worth over $200 million, and the Committee
is asking for an assessment of what we would have spent if the
U.S. Government would have taken care of that same population
on unemployment benefits.
So we know that in the end, it would have been still a lot
of cost to the Federal Government. The Committee will be
working on a full report in the New Year about this program,
and today's hearing informs us about some of those details the
Committee would like to know. Obviously, during this time
period, there were challenges, outages, weather events,
workforce challenges. I am sure that we will hear from our
witnesses about those and questions from my colleagues on those
disruptions and what we should do.
I am sure we will hear about consumer delays and
cancellations of flights and refunds; consumer refunds and
complaints against U.S. airlines did skyrocket in 2020. The
Department of Transportation reports a 4,634 percent increase
in filed complaints over 2019 levels. While 2021 is better,
there are still more than 5,500 refund complaints so far, and
we here know that the law requires airlines to provide refunds
to consumers for airline driven cancellations, and we expect
airlines to comply with that law.
Tomorrow, we will hear from the general counsel nominee for
DOT who will be in charge of this issue, and we look forward to
hearing their comments. So again, I want to note that while we
have witnesses here before us today, just in the interest of
time and committee participation and dialog, we have asked
other airlines, including Alaska, JetBlue, and Spirit, to
provide written testimony that will be part of the record.
My colleagues should feel free to ask questions for the
record of those airlines as well. I know that we are in a
better place than where we would have been if we hadn't done
the PSP program.
I hope that we can also share the thanks to Gerry Petrella
in Senator Schumer's office and Scott Raab in Senator
McConnell's office for their hard work on this program as well
and would like to now turn it over to my colleague, Senator
Wicker, for his comments.
STATEMENT OF HON. ROGER WICKER,
U.S. SENATOR FROM MISSISSIPPI
Senator Wicker. Madam Chair, I am sitting here wondering if
I should simply yield back my time and say that I subscribe
wholly to everything you said in your statement. But I think I
will go ahead. She had hope for a moment. Beginning in March of
last year, COVID-19 began to devastate air travel.
In the ensuing weeks, passenger air traffic was reduced to
a trickle and the commercial aviation sector faced the
possibility of bankruptcies and layoffs for hundreds of
thousands of workers. The National Air Transportation Network,
which Americans rely upon, was at risk of collapsing.
By establishing the Payroll Support Program, PSP, as part
of the CARES Act, Congress acted boldly to help the industry
weather the storm and to preserve National Air Service for big
cities and small towns alike. I am proud to have been part of
the bipartisan effort to create PSP.
A spokesman for the Allied Pilots Association Union was
exactly right when he said recently that, ``PSP was an over-
the-top success. Without it, the airline industry would have
collapsed.'' It is worth noting two important aspects of PSP.
First, it required airlines to continue serving all the markets
they served before the pandemic, even as demand vanished.
Second, the assistance provided covered pay and benefits
for frontline workers, pilots, flight attendants, gate agents,
and service contractors, but not senior management.
Furthermore, the passenger airline PSP, covered only 77 percent
of the total payroll cost for the largest 11 airlines. In other
words, PSP was a necessary lifeline, not a windfall. And that
lifeline worked.
In fact, one recent analysis found that nearly 400,000
direct passenger airline jobs were saved. This figure does not
include the jobs saved by PSP funds that were directed to cargo
airlines and aviation service contractors. Unfortunately, the
pandemic and its catastrophic impact on passenger demand lasted
far longer than any of us had hoped or anticipated.
In the fall of 2020, Senator Collins and I introduced
legislation to extend PSP past its original expiration date of
September 30, 2020. Even though the bill had 24 bipartisan co-
sponsors, I regret that somehow Congress was unable to act in
time to prevent a lapse of the PSP program.
In December of last year, Congress extended PSP in the
Consolidated Appropriations Act of 2021, but the nearly three-
month lapse in the program, along with lower demand, created a
period of uncertainty, forcing the aviation industry to adjust
staffing levels through voluntary furloughs and buyouts.
Fortunately, the second round of PSP paved the way for airlines
to rehire employees who had left voluntarily. If that gap in
PSP and the uncertainty it caused could have been avoided, the
airlines would have been better positioned to handle the
resurgence in air travel demand and operational challenges.
As a COVID-19 vaccine rollout began, the demand for
passenger air travel returned faster than anticipated. Over the
summer of 2021, we saw many instances in which some airlines
were overly ambitious, and passengers paid the price. No one
likes flight delays or cancellations. Having thousands of
customers stranded and unable to get to their destinations is
frustrating and unacceptable, but those disruptions should not
lead us to question whether PSP was the right decision.
PSP kept the airlines from collapsing entirely. PSP is the
reason flight cancellations were limited to mere days and not
months and years, and PSP is the reason ticket prices did not
skyrocket. I call that a success, and I join the Chair of this
committee in saying that boldly. Now, there have been delays
and cancellations. It appears that airlines have heard the
traveling public's frustration with that, but this
Thanksgiving's travel weekend went off with minimal disruption.
More than 20 million passengers flew safely and got to
their destinations. PSP was meant to save the air
transportation system, not to be a guarantee of smooth flying
for everyone everywhere. I look forward to hearing from our
witnesses about how they are taking steps to prevent any
further mass delays and cancellations while maintaining
flexibility during the ongoing pandemic.
And once again, I join the Chair of this committee in
saying that PSP was a resounding bipartisan success, and I am
glad to have been a part of it. I yield back to you, Senator
Cantwell.
The Chairwoman. Thank you, Senator Wicker. And again, thank
you for your leadership on the issue. And again, I don't think
anybody really has a concept of how fast the United States
worked to make this happen, but it was very fast and really
almost a two and a half weeks sprint of just working every day
till we figured this out. So, we will now turn to our
witnesses. We are going to start with you, Mr. Tretheway, for a
more global view, so it is very appropriate that you have a big
map of the world behind you, and welcome to the Committee.
STATEMENT OF DR. MIKE TRETHEWAY,
CHIEF ECONOMIST AND EXECUTIVE VICE PRESIDENT,
INTERVISTAS CONSULTING INC.
Mr. Tretheway. Well, thank you very much for the
opportunity to share my thoughts about the PSP. I am Dr. Mike
Tretheway, Ph.D. University of Wisconsin in Economics, and
Chief Economist of InterVISTAS Consulting. We are a global
transportation and tourism consulting practice, and I work out
of both our Washington, D.C. and Vancouver offices and have a
home in Wisconsin.
I understand that industry representatives have been
invited to provide evidence on specific impacts on the
industry's workforce and recent operational issues. But I am
not going to address those issues. What I would like to do is
focus on international comparisons of what other nations did
and how the U.S. compares to that. I have worked
internationally for over 40 years and find that international
comparisons can be very insightful.
In brief, it is my opinion based on my 40 years of
experience that the PSP and the overall policy response of
Congress with unprecedented, severe, and sudden impact of the
COVID-19 crisis was exemplary, and I would suggest it was best
in class in the world. While every major policy dealing with a
complex industry might not be perfect, the U.S. response met
standards in eight key policy categories.
The consequence has been that the U.S. is emerging more
quickly, as you have seen on the chart, more quickly from the
crisis and better poised to maintain market forces and not
Government regulation and directions to drive the industry in
the recovery period in the coming decade. So I am going to
briefly comment on each of the policy categories I identified.
First, the response was immediate. A comment just a moment
ago from Senator Cantwell was that people don't have any
concept of how fast the U.S. responded. I do. There are many
nations right now that still haven't figured out their policy
in the COVID market. So the response the U.S. provided, it was
immediately. It did not take months and months.
Second, that response provided certainty and therefore was
confidence building for both the industry and the traveling
public. Third, it is my view that the response was there in the
sense that unlike many other nations such as Germany, Congress
did not choose a single champion airline to support through the
pandemic and provide it and only it or largely it with generous
support.
Congress stood ready to provide support to any and all
qualifying airlines, airports, and other aviation supply chain
businesses. Fourth, this policy was transparent. Congress'
policy, the amount of support to be provided, the rules for
access to that support were public and clear for all to see. In
many other countries the amount of support, who would get it,
and the rules are it still opaque. Fifth, the policy was
focused on supporting economic and social connectivity and
workforce retention.
In my view, this is one of the most important aspects of
Congress' policy. The policy objectives were clear, to ensure
the continuing economic and social connectivity of the Nation,
and second to ensure the continuity of the aviation work force.
This workforce takes years to train and over decades took to
develop a strong safety culture. There was risk that a slow
response, an impartial and imperfect response, would compromise
retention of the work force.
This is in contrast to other nations where the focus was
not on the key elements of connectivity and continuity of the
work force. For example, Canada initially had no aviation
specific program, only a general program available to any
sector of the economy. A consequence of that is because it
didn't focus on maintaining connectivity. Many Canadian
communities lost all of their commercial air service.
Wage support was followed in a number of nations but is not
the same as maintaining continuity of connectivity. Six, the
support program was comprehensive in coverage of the entire
aviation supply chain. Most other nations focused on their
airlines, a few might have added in airports but ignored the
rest of the supply chain. Congress's program covered
everything, including air cargo, manufacturing of aircraft, the
whole supply chain. Seven, and this is very important to me as
a market economists, the policy was grounded in retaining
competition and market forces as the primary drivers of sector
activities.
The evidence is not only strong, but extremely strong that
the benefits to the traveling public and aviation dependent
businesses derive from market oriented policies in the U.S. I
and many of my colleagues around the world in aviation
economics are apprehensive that the post-pandemic era will find
a playing field no longer to be leveled, with Governments
having chosen specific champion carriers and provided
significant support, and in many cases, direct Government
intervention in decisions of these carriers.
Finally, the policy was designed to position the aviation
sector for a more rapid recovery and for competing globally in
the post-pandemic era. Many other nations, as I indicated,
champion airlines were chosen. Many of the airlines elsewhere
will survive, but with massive amounts of debt that will burden
these carriers, result in higher fares, and reduce travel.
The U.S. program found an appropriate balance between
direct support and debt so that the airlines and the whole
aviation ecosystem will come out of this in a financially
viable position for the long term. In sum, these criteria, in
my view, are appropriate for assessing the U.S. policy response
to the COVID-19 crisis. Several nations have done well on one
or more of these criteria, but the U.S. is unique in achieving
top marks in every category.
The PSP will enable the U.S. aviation sector to meet the
current and future economic and social connectivity needs of
Americans.
[The prepared statement of Mr. Tretheway follows:]
Prepared Statement of Dr. Mike Tretheway\1\, Chief Economist,
InterVISTAS Consulting Inc.\2\
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\1\ Dr. Tretheway has a PhD in Economics from the University of
Wisconsin. A former academic, he is co-founder of InterVISTAS
Consulting. His area of expertise is Transportation Economics with 40
years global experience in air transport, rail and port economics. A
biography is attached.
\2\ The views I express in this report are those of the author
alone, and do not necessarily represent opinions of InterVISTAS
Consulting Inc.
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The U.S. Payroll Support Program Successfully Met Critical Tests of
Policy Effectiveness
December 13, 2021
I thank the Committee for the opportunity to provide my thoughts on
the Federal pandemic Payroll Support Program (PSP) to protect the
airline industry workforce, support the continuity of safe and
essential travel, and ensure the industry's ability to remain viable to
meet future air travel demand.
I understand that industry representatives have been invited to
provide evidence on specific impacts on the industry's workforce and
recent operational issues, hence I do not address these issues. I would
like to provide comments on how the U.S. PSP compares to what other
nations did. International comparisons can be insightful as different
nations pursued different types of policies with different
consequences.
In brief, it is my opinion, based on 40 years' experience with
aviation economics (airline, airport, air navigation and
manufacturing), that the U.S. PSP and overall policy response to the
unprecedented severe impact of the COVID-19 crisis was exemplary, and I
would suggest ``best in class''. While any policy dealing with a
complex industry might not be perfect, the U.S. response met the
standards of being:
Immediate;
Certain, and therefore confidence building;
Fair;
Transparent;
Focused on supporting economic and social connectivity and
workforce retention;
Comprehensive in coverage of the aviation supply chain;
Grounded in retaining competition and market forces as the
primary driver of sector activities; and
Designed to position the U.S. aviation sector for recovery
and for competing globally
These criteria are appropriate for assessing the U.S. policy
response to the COVID-19 crisis. Several nations have done well on one
or more of the criteria, but the U.S. is unique in achieving top marks
in every category. Especially compared to many other nations, the PSP
will enable the aviation sector to meet the current and future economic
and social connectivity needs of Americans. The industry will also be
positioned to compete globally and weather future challenges.
I briefly look at each criterion--but first, I wish to discuss the
importance of aviation for economic, social, medical, disaster response
and other connectivity. This is why a transition support program\3\ for
aviation was warranted.
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\3\ It is important to distinguish different categories of support
for businesses. Bailouts are payments to business whose business model
and/or management has failed. That is not the case with U.S. airlines,
airports and other aviation supply chain members who began to incur
massive losses from the pandemic and government imposed travel
restrictions. Compensation is payment to businesses to offset losses
incurred by the business due to government decisions. Transition
support are payments to businesses that are well managed and pursing
economically efficient business models, but were subjected to an
unanticipated event that threatens their ability to continue to serve
the market. More on these distinctions can be found in my report titled
``Observations Regarding the Economics of Enterprise Bailouts,''
available at https://www.intervistas.com/observations-regardingthe-
economics-of-enterprise-bailouts/
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Importance of Aviation
Developing an aviation specific support program like PSP can only
be justified if the industry is of broad importance to the Nation.
Aviation is a critical infrastructure sector, not merely for the
economy but for social purposes as well.
1.3 million direct on-airport jobs and above average wages.
Many organizations have put forward measures of the economic impact
of aviation, both in terms of the number of direct jobs in the
sector and its direct gross domestic product. I focus on job
impacts, since preserving jobs were the key focus of the PSP.
The U.S. Bureau of Labor Statistics reports that in December
2019 there were 750,000 direct jobs at U.S. airlines. Airports
Council International--North America reports that in 2017,
including airline, airport, ground support and other jobs,
there were more than 1.3 million U.S. direct jobs on commercial
airports. On average, aviation direct jobs pay above average
wages.
Jobs in other sectors depend on aviation connectivity.
The economic impact of aviation is larger than on-airport jobs.
Many U.S. economic sectors depend on aviation's connectivity.
The ACI study identified roughly 4.4 million direct U.S. jobs
dependent on visitors that use airports and spend $250 billion.
These visitor-based jobs include not only tourism jobs, but
jobs dependent on individuals travelling for business, visiting
friends and relatives, education, medical care, disaster
support, etc. The wholesale and retail distribution sectors
increasingly are dependent on rapid resupply as supply chains
are challenged and the emerging e-commerce sector makes heavy
use of air cargo.
Economists also identify indirect and induced jobs in other
economic sectors dependent on the spending of the airlines and
airports. These are the ``multiplier'' impacts. While direct
jobs are straightforward to measure (as these individuals are
employed directly by airlines, airports, etc.), multiplier
effects have to be ``modelled'' and the measures can vary, with
some economists being skeptical of any specific measure. I do
not put forward specific multiplier impacts but note that a) in
general they more than double the number of jobs linked to
aviation, b) two Nobel prizes have been awarded for development
of the data and methodology for multiplier impacts, and c) the
COVID-19 economic experience should make clear to everyone that
when times are bad, multiplier effects are genuine--as each
sector of the economy weakened, their suppliers suffered job
losses of their own--as recovery begins, jobs grow in support
sectors.
It's not just economics: Social, medical, disaster response,
education as well as business depend on aviation connectivity.
While the aviation industry has tended to focus on its economic
importance, there are other equally or more important impacts:
Remote and isolated communities.
Commercial and general/business aviation provide essential
connectivity to remote and isolated communities. These
communities depend on aviation for nutrition, medical care,
education, and social services, as well as selling products
and services to the national and global economy.\4\
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\4\ See the recent OECD International Transportation Forum Report
https://www.itf-oecd.org/connecting-remote-communities.
Medical connectivity.
Commercial and private aviation transport patients (and their
families), medical practitioners, essential maintenance
technicians and essential medicines, personal protective
equipment, and other supplies, etc.
Education connectivity:
Air transport supports the movement of students and instructors.
In person human interaction is increasingly being found to
be essential to knowledge exchange and expansion.\5\
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\5\ See for example: ``New Harvard Research Identifies Business
Travel as Driver of Economic Growth,'' August 2020, https://
growthlab.cid.harvard.edu/news/new-harvard-research-identifies-
business-travel-driver-economic-growth
Disaster response.
Both commercial and general aviation provide the immediate
connectivity of supplies, rescue and medical personnel and
medevac when disaster strikes.
The pick-up truck of remote locations.
Aviation is a critical element of many businesses in remote
regions. Helicopters play critical roles for electric power
and pipeline systems. Many sectors of agriculture--
including forestry management--depend on fixed wing,
helicopter and remote piloted aircraft. Business aviation
moves technicians and parts for urgently needed repairs and
installation,. . .
Social connectivity.
Saving the best for last, aviation is critical for social
connectivity. This includes visiting friends and relatives,
cultural experiences, the arts, and government
administration. 100 to 150 years ago, maritime and rail
transport were the Nation builders. Today, aviation is what
directly connects people.
Immediate
I now turn to my assessment of the policy. The COVID-19 crisis
emerged suddenly. The first cases were found overseas in November 2019,
and by the end of March 2020, the number of U.S. air passengers had
declined by 90 percent, with the collapse contained in roughly a one-
month period. (See Figure 1.) Unlike manufacturing sectors where unsold
product can be placed in inventory (and financed) for later sale,
aviation services are perishable and non-recoverable. In 2019, U.S.
airlines spent roughly $70 million every day on fuel, labor, aircraft,
fees, and finance. Without incoming revenue from ticket sales and
passenger activity, even those airlines (and airports) with strong cash
positions would rapidly exhaust their financial resources.
What was more pressing was that aviation is a complex industry
which has built an incredible safety knowledge base that is dependent
on a highly trained and experienced workforce. Without some sort of
financial support, in the face of a 90 percent collapse in demand,
airlines would be compelled to lay off a large portion of their trained
and experienced staff, and this indeed happened in many nations. Doing
so immediately reduces national connectivity for economic, social,
medical and other vital needs and undermines the ability to rapidly
restore capacity.
The U.S. Congress reacted quickly to maintain both connectivity and
to retain a vital workforce. There was no vacillation about the need to
support aviation connectivity and its workforce. Few other nations in
the world reacted as quickly. As a result, connectivity of their
domestic and international air services fell precipitously. In
contrast, the U.S. was able retain an effective degree of connectivity
and workforce continuity throughout the pandemic. No other nation
responded as quickly with a broad aviation program focused on the goals
of connectivity and workforce retention.
Certainty and Confidence
The U.S. Congress not only reacted immediately, but it also
provided sufficient support to the entire aviation sector to provide
certainty that national connectivity would be sustained. This provided
confidence that employees could retain their skill sets in aviation and
not need to migrate to other sectors. Some nations eventually provided
support to their aviation industries, but without the immediate
certainty and confidence that the U.S. achieved. For example, Canada
treated aviation like any other economic sector and did not develop and
aviation specific program. The focus was on wages, a worthy goal, but
without a policy to maintain connectivity. While eventually the
Canadian level of support to aviation rose to levels per capita not
dissimilar to the U.S., the lack of an immediate aviation specific
program early in 2020 resulted in uncertainty for communities,
carriers, and workers. The result was that some Canadian carriers
ceased operating (e.g., Porter Airlines), and a number of communities
lost all scheduled commercial air service, leaving them unconnected for
an extended period.\6\ There were also financial capital benefits of
the certainty and confidence created by the PSP. When there is
uncertainty that individual carriers (and airports and support
businesses) will be able to weather a crisis and return to service, it
is difficult to raise private equity and debt for survival and
resurrection.
---------------------------------------------------------------------------
\6\ To its credit, the Canadian government did recognize the
importance of connectivity to remote and isolated northern communities
and provided support for continuity of these services.
---------------------------------------------------------------------------
Fair
The U.S. PSP was fair in that it provided support for all eligible
firms. Unlike the case of many other nations, it was not a program that
chose a champion carrier and supported it with transitional funds,
leaving other carriers to fend for themselves. Sometimes the support of
the champion was subtle. E.g., some modest general support programs may
have been put in place, but the champion carrier received a different,
much larger financial support package, often involving government
equity investment in the champion carrier, but not in other carriers.
Germany is only one of several cases where the champion carrier
received substantial support, but other carriers received little or no
support. Singapore, several Middle East countries, France and the
Netherlands are other oft-cited cases. The champion carrier received
substantial support and other carriers, such as low cost or ultra low-
cost carriers that had provided substantial national connectivity did
not. This implication is that in the recovery and post-recovery period,
the playing field will not be level. I will comment further on this
momentarily. This is not to say that there have not been issues with
the U.S. PSP about how the support criterion apportioned grants and
debt access among industry participants, but the U.S. Congress was fair
in the sense that it did not choose winners and losers--this is left to
the market.
Transparent
Another key attribute of the PSP program is that it is transparent.
The legislation was clear in specifying how much funding was available,
which sub-sectors (airlines, airports, air cargo, business aviation)
were to receive which amounts, what the criteria was for applicants and
how much individual carriers, airports and other business actually
received.\7\ This is not to say that every element of the program is
without controversy, but the rules were clear and for all to see. This
was not the case in many other nations. In Canada, while meaningful
support was eventually made available to carriers and airports, in many
cases the amounts involved were matters of press releases from the
carriers and airports. Delays in financing resulted because of issues
such as whether carriers were going to refund non-refundable tickets
and whether such refunds were to be financed by grants or not.
---------------------------------------------------------------------------
\7\ The U.S. Government Accountability Office has provided a series
of reports to Congress during the pandemic documenting the U.S. COVID-
19 support policies and observations on their impacts. See for example,
https://www.gao.gov/products/gao-22104429
---------------------------------------------------------------------------
Focused
The PSP was not developed as a bailout of failing firms.\8\ It was
a policy focused on providing transitional support for two key short-to
long-term objectives. The first key objective was of continuity of air
service for almost every community previously served. Service
continuity was a requirement for the air carriers. This was to provide
economic and social connectivity at a critical point in the Nation's
economic, social, and medical experience. The second key objective was
workforce retention of a highly skilled workforce, critical for safety,
and which requires years of training and experience. Again, workforce
continuity was a requirement. The experienced, safety-oriented aviation
workforce is needed to support the recovery of air travel, and with the
long lead times to develop necessary skills and experience, the
continuity of the aviation labor force will pay great dividends to the
Nation. It is my observation that few, if any, other nations
articulated focused objectives for the aviation support programs. For
them, the objective of continuity of airlines was stated, but the
programs did not tie support to the more fundamental objectives of
maintaining service and connectivity during the crisis. The consequence
was that a) some employees sought employment elsewhere and either will
not return to the aviation industry as recovery unfolds or will require
time and expense to become qualified and refresh skills; and b) many
communities lost their air connectivity.
---------------------------------------------------------------------------
\8\ It is important to recognize three terms regarding support for
businesses. See footnote 3.
---------------------------------------------------------------------------
Comprehensive
The U.S. PSP program was comprehensive in that it recognized that
aviation is an eco-system involving not only the air carriers, but also
airports, general and business aviation, independent maintenance
providers, ground handlers and manufacturers. The entire supply chain
needs to survive the crisis and be ready for the recovery. Post
pandemic aviation economic and social connectivity and service to the
Nation will only be as strong as the weakest link. I know of no other
nation that articulated its aviation pandemic transitional support with
a comprehensive understanding of the entire aviation eco-system.
Retaining competition and market forces as the primary driver
As a market economist I place great importance on economic
decisions being made by the market and competition. The evidence is not
only strong, but very strong of the benefits to the travelling public
and to aviation-dependent businesses from market-oriented policies for
aviation such as deregulation, privatization and liberalization. The
1978 U.S. deregulation policy was passed near unanimously by Congress
and its rapid success became the model for the entire world. The U.S.
reliance on private enterprise for airlines led many nations to
privatize their carriers. The U.S. pursuit of liberalized air service
agreements to allow market forces to prevail over government edicts on
fares, service levels and even sandwich sizes have created
unprecedented access to air connectivity for economic and social
pursuits. I, and many of my colleagues around the world, are
apprehensive about the post-pandemic aviation playing field being
unlevel. In too many nations, massive government grants and equity
investments in champion carriers but not others raise a question as to
whether the post-pandemic industry will provide the same consumer and
social benefits. The PSP was intentionally designed to maintain the
market and all of its pre-pandemic carriers and airports. It did not
use the crisis to impose government judgement of which carriers should
survive. While it is now too late for other nations to pursue level
playing field responses during the crisis, hopefully they will observe
and heed U.S. 2020-21 leadership on the design of aviation policy.
Positioning the aviation eco system for a more rapid recovery
My last key point is that the PSP policy of Congress was well
designed in positioning the aviation sector for a more rapid recovery.
In many other nations, airlines and airports have survived
but with massive new debt that will have to be serviced and
retired. The PSP found a balance between direct support (linked
to continuity of community connectivity and the trained
aviation workforce) and debt.
Outside the U.S., those airlines and airports with
substantial increases in debt will suffer higher costs.
The higher costs may result in higher fares, especially in
those nations where the playing field was unleveled in favor of
champion carriers.
The more balanced U.S. transitional support of its carriers
may better position them competitively during the recovery and
post-pandemic periods.
Alternatively, carriers elsewhere will be more vulnerable to
failure with their greater financial burden.
Foreign carriers whose labor forces were dispersed during
the pandemic will incur higher expenses to re-attract, train
and requalify workers to an industry which in their cases will
be viewed as now having greater uncertainty. The U.S. aviation
sector has greater continuity and thus lower costs. This is not
to say that there will not be case-by-case challenges in the
U.S. industry during the recovery, but the U.S. industry is
better positioned than almost all others that rely on market
forces.
Market recovery progress. Comparing the current degree of market
recovery of the U.S. versus other nations is complex. Nations differ in
terms of current travel restrictions and processes. The relative shares
of domestic versus international travel is also a factor as domestic
markets are recovering more quickly while international travel faces
continued and changing restrictions. Nevertheless, a few figures of the
current state of affairs may be useful.
Figures 1 and 2 compare the recovery of traffic to 2019 levels for
the U.S. versus Canada. U.S. passenger traffic U.S. is 77 percent that
of 2019 as of the first week of December. Canada, which has a higher
international portion of travel, is only at 58 percent recovery, and
only a few months ago was at 10 percent recovery while the U.S. was
well ahead.
The table below provides a comparison for a few other nations of
domestic seat capacity in November 2021 versus the same month in 2019
of nations with large domestic markets.\9\
---------------------------------------------------------------------------
\9\ Capacity recovery is higher than recovery of passenger numbers
as load factors (percent of seats filled with paying customers) is
down, but increasing in the U.S.
Forecasts. There are a number of forecasts available of commercial
airline traffic and when recovery will take place.\10\ While they
differ somewhat, there are common findings.\11\
---------------------------------------------------------------------------
\10\ Forecasts are available from, among others, Airports Council
International--World, the International Air Transport Association,
Boeing and InterVISTAS Consulting.
\11\ All are dependent to a large extent on no new outbreak of
COVID-19 variants that evade current vaccines and the continuation of
social distancing measures on aircraft.
Domestic markets will recovery more quickly, likely
achieving full recovery to 2019 levels by 2024, possibly late
---------------------------------------------------------------------------
2023 for the U.S.
International markets will recover more slowly, possibly
delayed by one to two years, longer for regions with lower
vaccine rates.
While traffic is expected to recover to 2019 levels within
the next 1-3 years, it will be longer before traffic returns to
its previous long-term trend. But all the forecasts expect that
air connectivity and traffic will continue to grow. Thus,
infrastructure challenges that were present in 2019 will still
need to be addressed.
There will be differences in recovery rates of market
segments.
``Visiting Friends and Relatives'' travel is expected
to recover strongly and quickly, as is leisure travel.
Social connectivity is a priority for many families.
Business travel will take longer to recover, and some
parts of business travel may recover weakly. Conferences
and other knowledge and networking travel are expected to
recover almost fully, while intra-corporate travel may
recover only partially.\12\
---------------------------------------------------------------------------
\12\ A good discussion of the potential scenario for business
travel recovery can be found in the report by IdeaWorks, ``The Journey
Ahead: How the Pandemic and Technology Will Change Airline Business
Travel.'' IdeaWorks forecasts that in the medium term, business travel
is likely to only recover between 19 percent and 38 percent. https://
ideaworkscompany.com/the-journey-ahead-how-thepandemic-and-technology-
will-change-airline-business-travel-report/
---------------------------------------------------------------------------
A recent study by Airport Council International--World
identified that recovery rates will be slower for those
individuals who did not travel at all during the pandemic. This
identifies a challenge for the industry and for governments in
providing clarity and consistency in border and health policy
for air travel.\13\
---------------------------------------------------------------------------
\13\ https://aci.aero/events/asq-2021-global-traveller-survey-
evolution-of-sentiment-and-behaviours-part-1/
The U.S. will be one of the fastest markets to recover.
Closing Comment
I close with the question I was asked to address: my thoughts on
the issue of ``the Federal pandemic Payroll Support Program (PSP) to
protect the airline industry workforce, support the continuity of safe
and essential travel, and ensure the industry's ability to remain
viable to meet future air travel demand,'' I observe:
The PSP was not focused merely on proving financial support
for carriers. It was correctly focused on the key objectives of
retaining the airline industry workforce and ensuring the
continuity of economic and social connectivity. Other nations
largely conceptualized their support programs as one of
supporting carriers and worker incomes, rather than supporting
connectivity and employment continuity.
Congress provided an immediate (relative to other nations)
response to the COVID-19 crisis for aviation, creating
certainty and confidence. This enabled the market to continue
to function.
The PSP was designed to be a fair program for the entire
aviation eco-system and all carriers and airports. Unlike
several other nations the U.S. did not select and favor a
champion carrier.
The PSP is a transparent program with clear rules, amounts,
decision making processes and disclosure. This is not the case
at many other nations.
The PSP maintained the aviation level playing field. It
relied on and did not distort the market and competitive
forces.
The PSP has positioned the U.S. aviation industry for a more
rapid recovery, and a faster ability to restore financial
resilience to support growth and future challenges the industry
will face.
______
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairwoman. Thank you, Mr. Tretheway. Thank you so
much. And I will remind our witnesses that if you can stick to
5 minutes, it would be so appreciated. We appreciate your
comments, Mr. Tretheway, and we will now go to Mr. Parker.
STATEMENT OF DOUG PARKER, CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
AMERICAN AIRLINES GROUP, INC.
Mr. Parker. Thank you. And I, like Ranking Member Wicker, I
am tempted to cede my time because the Chair's comments were so
consistent with mine. But like Ranking Member Wicker, I also
would like to give my remarks, mainly because I want to thank
the two of you and the rest of this committee.
We, at American Airlines, are deeply grateful for the
pandemic assistance we received through the CARES Act and the
Payroll Support Program. We are extremely appreciative of
everyone who made it possible, including the members of this
committee. You showed leadership at a time that it was needed
most. And you demonstrated a commitment to our industry and our
team members that made a lasting impact. So I would like to
take a moment to say thank you and to assure you that the
support of the U.S. Government extended to us was well worth
it.
I want to state it succinctly and unequivocally, the
Payroll Support Program has been an overwhelming success.
American Airlines fought hard for the CARES Act and the
subsequent extensions of PSP, and we did so in close
partnership with lawmakers from both parties and in lockstep
with our labor union partners. PSP shows what can be
accomplished through bipartisanship and compromise. And all
those who were involved in crafting the program deserve a great
deal of credit.
When the CARES Act passed, we understood that receiving
financial support from the Federal Government comes with an
obligation to serve. It was an obligation we were ready,
willing, and humbled to accept. And we are very proud of how
our team has delivered. Thanks to PSP, we have the team in
place that we need to run our airlines successfully. In fact,
at American Airlines, we have as many or more pilots and flight
attendants per scheduled crew block hour this year as we have
had in years preceding the pandemic.
So with our team at the ready, we have been able to run a
safe and reliable airline, and continue providing critical air
service, including the small and rural communities. As I have
outlined in my written testimony, American Airlines and all
U.S. carriers are delivering on our commitments with an overall
operational performance this year that is as good or better
than before the pandemic.
Not only has American performed well, we have done so while
growing back at an unprecedented pace. We grew an industry
leading 82 percent from the first quarter to the second quarter
of this year, and we are providing significantly more service
to the flying public than any of our competitors. We took that
aggressive approach because the central purpose of PSP was to
ensure we were able to provide air service when travelers
decided they were ready to get back to flying.
In addition to the strong year to date operational
performance I mentioned, I am also pleased to say that American
delivered a stellar performance with the Thanksgiving travel
period, and we are off to a great start in December as we look
toward the upcoming holidays. I am extremely proud of how our
team has stepped up as demand has rebounded. They have shown
tremendous professionalism and dedication to the customers we
have had the privilege to care for.
Now, like other airlines and numerous other businesses, we
have experience about operational challenges in recent months,
which we have worked to manage as deftly as possible and with
the utmost care for our customers and our team. While various
pandemic related factors have caused our operation to run tight
when extraordinary disruptions occur, these events have been
the distinct exception, not the rule.
A strong U.S. airline industry has been and will continue
to be critical to the overall economic recovery from COVID-19.
Because of your leadership, U.S. airlines are competing
vigorously. Fares have remained low. And we are doing our part
as an industry to support the ongoing economic recovery.
Indeed, according to the DOT, the average domestic itinerary
fare in 2019 was the lowest inflation adjusted annual fair on
record. And fares have declined further yet in 2020 and 2021.
So in summary, I am incredibly proud of how the American
Airlines team has managed through the pandemic.
Early on, we agreed that this one day would pass, and what
would matter most is how we treated each other, our customers,
and those in our care. Looking back, I am extremely proud of
the decisions we made and the values we used to guide us. And
on a personal note, I have been humbled by the thousands of
American Airlines team members who have thanked me for fighting
for their jobs, so it gives me tremendous pleasure today to
pass those thanks along to you.
So thank you for your support of our team, for all you have
done to protect the vitality of our industry. I look forward to
taking your questions.
[The prepared statement of Mr. Parker follows:]
Prepared Statement of Doug Parker, Chairman and Chief Executive
Officer, American Airlines Group, Inc.
Introduction
Good afternoon. I'm Doug Parker, Chairman and CEO of American
Airlines.
I would like to begin by thanking Chair Cantwell, Ranking Member
Wicker, and the members of this committee for the opportunity to appear
before you today.
The charge for today's hearing is to examine the impact of the
Federal funding provided to U.S. airlines through the Coronavirus Aid,
Relief, and Economic Security (CARES) Act and the subsequent extensions
of the Payroll Support Program (PSP).
American Airlines is deeply grateful for the pandemic assistance we
received, and we are extraordinarily appreciative of the efforts of
policymakers in Congress and two administrations who made it possible,
including many members of this committee. You showed tremendous
leadership at a time when it was needed most, and you demonstrated a
commitment to our team members that made a lasting impact.
On behalf of more than 100,000 American Airlines team members--85
percent of whom are members of a labor union and 25,000 of whom faced
the stark reality of a furlough notice during the pandemic--I'd like to
take this moment to say thank you, and to assure you that the support
the U.S. government extended to us was well worth it.
Allow me to explain why.
The impact of COVID-19 on U.S. airlines
The devastation inflicted by the COVID-19 pandemic has been
profound and universal, and the gut punch we took as airlines has been
well-documented. However, nearly two years removed from the start of
the pandemic, it is worthwhile to recall just how severe a crisis our
industry faced.
Nothing in history has ever come even remotely close to negatively
impacting demand for air travel like COVID-19. In fact, from the onset
of the pandemic through November of this year, the impact of COVID-19
on U.S. airline demand has exceeded the combined effect of Sept. 11,
the Great Recession, SARS, H1N1, and the 1991 Gulf War by a factor of
more than three.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
For American, in the final week of March 2020, our passenger
revenues were 96 percent lower than the same period in 2019, and our
load factor was 14 percent compared to 85 percent in the same week of
March 2019, even though we had reduced our capacity by nearly two-
thirds.
In response to the unprecedented evaporation of demand, we took
aggressive self-help measures like grounding aircraft, canceling
flying, and implementing a major cost-reduction program. While these
actions were necessary, they were not sustainable, and unfortunately,
they were not enough to eliminate the potential for a massive number of
furloughs across the industry.
It was in the midst of this unparalleled crisis that the Payroll
Support Program, which would go on to save the jobs and protect the
livelihoods of many thousands of workers at American Airlines and
across the industry, was devised.
The Payroll Support Program saved the airline industry by providing a
lifeline for its workers
To state it succinctly and unequivocally: The PSP has been an
overwhelming success.
I'm proud to say that American Airlines fought hard for the CARES
Act and the subsequent extensions of the PSP. I'm even prouder to say
we did all of it hand-in-hand with the leadership and members of this
committee, in partnership with a wide swath of lawmakers from both
parties, and in lockstep with our labor union partners. The PSP stands
as a shining example of what can be accomplished through bipartisanship
and compromise, and all those who were involved in the policymaking
process deserve a great deal of credit for that.
It's not an exaggeration to say the program saved the airline
industry, which Congress and the administration recognized as critical
infrastructure that is as essential to the economy as it is unique.
While there was relatively little debate at the time about whether the
industry should be supported, there was significant debate about the
form that support should take. Some suggested it should be provided
entirely in loans, which we would have thankfully accepted to stay
solvent, but most all of us would have survived by shutting down flying
in April 2020, furloughing almost all of our teams, and waiting for
demand to return to levels strong enough to justify restoring flying.
As it turns out, that would have been sometime in 2021.
Fortunately, the support was ultimately structured as a combination
of loans and grants, with the PSP as the critical component. It kept us
flying by paying us to pay our team. In exchange, we agreed not to
involuntarily separate anyone or reduce pay rates, and we agreed to
maintain air service to the communities we served prior to the
pandemic. The program also set limits on executive compensation, added
restrictions on stock buybacks and dividends, and gave the American
taxpayers a stake in the industry so they would see the benefits of our
recovery.
Because of the support U.S. airlines received, our team and our
industry have been able to help prevent a hyper-stressed economy,
shocked by the spread of a novel virus, from grinding to a halt.
Throughout the worst stages of the pandemic, American Airlines
continued leading the industry in number of U.S. communities served. We
carried essential workers, including medical professionals, to the
locations where they were most needed. We transported critical
supplies, including PPE and vaccines, on flights around the country and
across the globe. In fact, in March 2020, we launched our first cargo-
only flights since 1984, and by the end of the year, American had
carried 167 million pounds of goods on close to 5,300 cargo-only
flights.
It's because of the assistance extended to us through the CARES Act
and the PSP that we've been able to support a nation and a world in
crisis. It's brilliant policy, written during a time of extraordinary
uncertainty, and our entire industry remains incredibly grateful for
it.
Fulfilling our obligation to serve as demand returns
As we made the case for the PSP, we understood that receiving
financial support from the Federal government would come with an
obligation to serve. It was an obligation we were ready, willing, and
humbled to accept.
Demand for air travel came back swiftly in the spring of 2021 as
COVID-19 vaccines became available and more widely distributed. Thanks
to the PSP and just as intended, U.S. airlines were ready, and we
sprang into action to serve the massive influx of customers returning
to the skies.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
At American, we grew our airline by a whopping 82 percent from the
first quarter to the second quarter of 2021, providing significantly
more service to the flying public than any of our competitors. We flew
over 24 million customers in quarter one and 44 million customers in
quarter two, which is about one-third more than our next-closest
competitor in both cases.
This was an unprecedented ramp-up of our operation--the largest in
our history, in fact. No airline has ever attempted to expand at the
pace we did after a demand shock of the magnitude we experienced during
the pandemic. We took this aggressive approach because the central
purpose of the PSP was to ensure we were able to provide air service
when travelers decided they were ready to get back to flying.
We knew we had an obligation to fulfill, and we are proud of how we
have delivered.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
It's important to note that all of this was done with operational
performance that was as good or better than before the pandemic. In
fact, American closed the month of September with the best operational
performance in our airline's history, 2020 notwithstanding. While
flying the largest airline in the world, carrying more than 14 million
customers, we recorded our most reliable September since the merger in
2013, based on completion factor, on-time departures, and on-time
arrivals. More recently, over the Thanksgiving holiday period, American
operated 95.7 percent of the domestic capacity we operated during
Thanksgiving 2019, and we did so with stellar performance.
The story is the same across the industry. While there have been
some high-profile challenges, the data shows that overall, U.S.
airlines have been delivering operational reliability that is on par
with or better than the years preceding the pandemic.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
This year, the combined completion factor of the six major U.S.
carriers is consistent with pre-pandemic years, and we've delivered an
on-time arrival performance that actually exceeds pre-pandemic years.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
U.S. airlines are meeting and exceeding operational expectations,
just as we pledged.
I'm extremely proud of how the American Airlines team has stepped
up as demand has rebounded. They've shown tremendous professionalism
and dedication to the customers we've had the privilege to care for,
and I know they've made millions of travelers' return to the skies the
experience they've been waiting for.
Managing operational challenges to deliver on our commitments
As has been the case across industries and throughout the global
economy--with the ongoing supply chain crunch as a stark example--the
return of demand for air travel has been intense. Like other airlines,
we have experienced some operational challenges in recent months, which
we have worked to manage as deftly as possible and with the utmost care
for our customers and team members.
Thanks to the PSP, we have the team we need to operate the schedule
we've planned. We've continued to welcome team members back to the
company, and we are aggressively onboarding new hires.
To be more specific, American has as many or more pilots and flight
attendants per scheduled crew block hour this year as we had in the
years preceding the pandemic. This is the best measure of the adequacy
of our crew staffing because it reflects the number of active pilots
and flight attendants who are eligible to fly, the number of aircraft
we have available and scheduled for deployment, and the number of
crewmembers we need for each flight based on the equipment and the
destination.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
As the charts above illustrate, when it comes to having the team we
need, we are in as good of a position now as in recent years, if not
better. Nonetheless, there are pandemic-related factors at play that
have caused our operation to run tight when extraordinary disruptions
arise.
For our team members on the frontline, a significant share of their
work as customer service professionals is now devoted to enforcing mask
mandates and other pandemic-related policies. Not only is this a
departure from the job they signed up for, but it's also not as
rewarding. Airlines have required masks since early in the pandemic as
an additive health and safety measure, and our industry strongly
supported the introduction of the Federal mask mandate, but there's no
denying that it has altered the day-to-day duties of many of our team
members.
It's tough work because we're seeing customer emotions run high,
and the industry has experienced an unsettling raft of passenger
disturbances and assaults onboard aircraft and in airports. These
incidents are not all related to masks, and the overwhelming majority
of our flights take place without issue, but the general level of
disrespect, anger, and impatience our team has had to manage in recent
months is simply inexcusable. It should not be part of their jobs.
Our industry has worked closely with the Federal Aviation
Administration, the Transportation Security Administration (TSA), and
others, to address and deter this type of unacceptable behavior, and
we're grateful for the agency's vigorous efforts to ensure that
passengers who act out while traveling by air are met with the serious
consequences laid out in Federal law. We also support the recent
announcement by the U.S. Department of Justice on prioritizing the
prosecution of those passengers who commit Federal crimes on our
aircraft.
Our team is resilient, but with that workplace environment as the
backdrop, we have found a higher-than-usual reticence among our
crewmembers to pick up additional trips or fly above their minimum-
required hours during the pandemic. Unfortunately, this severely
impairs our ability to recover quickly in instances of extraordinary
disruptions to service, because recovery is so dependent on team
members choosing to pick up flying above their minimum-required levels.
We have adjusted our staffing models accordingly, but it's something we
continue to grapple with as a company and an industry, and it
contributed to the operational challenges we dealt with at the end of
October.
In that case, we experienced an extraordinary disruption when we
were hit with two days of unforecasted severe winds at Dallas-Fort
Worth International Airport (DFW), our largest hub, leading to the
closure of three of the five runways on which our operation typically
relies. The resulting cancellations put many of our team members out of
their regular flight sequences, a consequence exacerbated by the fact
that the end of the month is also the end of the bid period, limiting
the availability of crewmembers who have already reached their maximum
flying time. While the cancellations were driven almost entirely by the
situation at DFW, they were extended because we had difficulty getting
crewmembers to pick up additional flights. It's likely not a
coincidence that those difficulties came in the wake of one of our
flight attendants being violently attacked by a customer who punched
her and broke her nose.
We made the difficult decision that weekend to proactively adjust
our schedule. We never want to disappoint those who choose to fly with
us, so that decision was not made lightly. Our team got to work
rebooking our customers who were impacted by the changes, and we were
able to recover and resume normal operations by Tuesday.
I provide these details to underscore that these events have been
the distinct exception, not the rule. In our view, the reduction in
desire to pick up trips is largely caused by events related to the
pandemic and should gradually dissipate. In the meantime, while
recovering from extraordinary disruptions has been more difficult,
we've still delivered an overall operational performance this year that
has met or exceeded our pre-pandemic norm.
As we began to focus on running an outstanding operation for the
holidays, we developed incentive pay programs for peak travel periods
to fortify our efforts to operate every flight on our schedule and to
encourage flight crews to pick up additional work in the event of
another extraordinary disruption. We provided extra pay for the vast
majority of our frontline team members to pick up shifts during the
Thanksgiving holiday, and we are providing 300 percent pay to flight
attendants with no absences between Nov. 15 and Jan. 2, with similar
programs in place for other work groups. The incentive pay contributed
to our smooth operation over Thanksgiving, and we're confident that
these programs will help us deliver a similarly smooth travel
experience over Christmas and the New Year, as well.
Speaking of Thanksgiving, it's worth spending a moment on the
details of the industry's excellent performance. On the Sunday after
the holiday, 2.5 million passengers passed through TSA checkpoints--a
pandemic record. And over the 10-day holiday travel window, 20.9
million total passengers were screened. From the Friday before
Thanksgiving to the Sunday afterward, the big six U.S. carriers
delivered the best completion factor since the same time period in
2017, with an on-time performance exceeding the Thanksgiving weekends
of 2018 and 2019.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Today, American Airlines is serving an average of more than 500,000
customers on over 5,600 daily flights to more than 300 destinations
across the country and around the globe. This is all a testament to the
dedication, resilience, and skill of our frontline team, and proof
positive of the success of the PSP.
The PSP has enabled the industry's ongoing recovery
By now, we know that the recovery from the pandemic will be
prolonged. It's certainly true for our business. But no matter how far
removed we are from the depths of the crisis, American will continue to
be guided by the obligation to serve that we accepted when we accepted
PSP funds.
For one, we're flying close to the same capacity this month as we
were in December 2019, not to mention more than our competitors. We are
ready and eager to fly our customers where they need and want to go as
they celebrate this holiday season.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
As for our team, not only have we excitedly welcomed back team
members who were furloughed when the PSP lapsed, I am pleased to say
that American hired more than 16,000 new team members across all our
workgroups this year. This included more than 1,350 pilots, over 1,600
flight attendants, an additional 1,000 tech ops and maintenance
professionals, and more than 2,000 reservations agents. We believe this
positive momentum will continue into next year, as we've set a target
of hiring an additional 18,000 team members in 2022. Each time we add
to our ranks, it's like a dividend payment on the investment made in
our team through the PSP; instead of building back from collapse, we're
growing to provide more promising careers in good-paying jobs to hard-
working individuals who are the lifeblood of our Nation's economy.
A strong U.S. airline industry has been--and will continue to be--
elemental to the overall economic recovery from COVID-19. We've
remained strong because of the support we've received, but also because
of robust competition in the marketplace and fares that remain low
despite historic inflation.
Even before the pandemic, fares were low. In fact, according to the
U.S. Department of Transportation's Bureau of Labor Statistics, the
average domestic itinerary fare in 2019 was the lowest inflation-
adjusted annual fare since the bureau began collecting such data--and
fares declined further still in 2020 and 2021. While prices are rising
on all manner of consumer goods, airfares have declined to the lowest
level since the late-1990s. Just a few weeks ago, the New York Times
reported that while fuel oil--one of our main costs--increased 59
percent from October 2020 to October 2021, airfares went down by 5
percent during the same period. And November's inflation report showed
the same pattern: Overall inflation reached a 39-year high, but
airfares fell 3.7 percent. And to put the value of air travel in
perspective, consider this: From 1979 to 2019, the price of a day at
Disney's Magic Kingdom rose 10 times as fast as the price of air
travel. Traveling by air on a U.S. airline remains a great value, and
American consumers are proving as much by taking to the skies in
growing numbers.
To those who may wonder whether this story would be the same
without the CARES Act and the PSP, let me tell you my view: It most
definitely would not. Fortunately, because of the foresight and
commitment of our Nation's leaders, American is in a position to
continue competing vigorously with our peers while we, as an industry,
buttress the ongoing pandemic recovery.
Conclusion
I am so proud of how our team has managed through the pandemic.
Early on, we agreed that this would one day pass, and what would matter
most is how we treated each other, our customers, our partners, and
those in our care. As I look back now, I feel confident in the
decisions we made during COVID-19 and the values we used to guide us.
Earlier in my testimony, I mentioned that I was appearing before
you on behalf of American's more than 100,000 team members. As CEO,
that is a responsibility I treasure. My message to you today is
actually theirs, so I'd like to take a moment to tell you about a
couple of them.
Kimberley Dorman is one of our amazing flight attendants, based at
DFW. She had her first child right before COVID-19 took hold. Her
husband, a veteran, is a self-employed real estate developer, so
Kimberley carries the family on her health insurance plan. When faced
with the possibility of furlough, Kimberley began to consider other
options for insurance, but all were far more expensive and provided
less coverage than her plan with American. It would have tipped her
family into financial struggle. But instead, because of the PSP,
Kimberley kept her job and her insurance, she was able to continue to
provide for her family, and she returned to work from a leave of
absence this spring.
I met Brookelle Stockton on one of my flights to D.C. in the fall
of 2020. (In fact, it's possible some of you may have met her during
your travels, too.) Of the four flight attendants working that
particular flight, three had received furlough notices, including
Brookelle. While she did end up being furloughed when the PSP lapsed--a
period of time she describes as heartbreaking--fortunately, we know
that's not the end of the story. She held off on applying for
unemployment as she held onto hope for an extension of the PSP, and I
actually ran into Brookelle at our training center this spring as she
prepared to come back to the line. It was special for both of us to
experience that full-circle moment.
These are just a couple of the American Airlines team members who
have thanked me for fighting to save their jobs. On their behalf, I
have the great honor of thanking you.
So, thank you for your support of our team members and for all
you've done to protect the vitality of the U.S. airline industry,
especially during the pandemic.
I look forward to taking your questions.
The Chairwoman. Thank you. Thank you, Mr. Parker. Mr.
Kelly, welcome. Thank you for being here.
STATEMENT OF GARY C. KELLY, CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER, SOUTHWEST AIRLINES CO.
Mr. Kelly. Thank you. Chair Cantwell, Ranking Member
Wicker, and members of the Committee, good afternoon. My name
is Gary Kelly, and I am very privileged to serve as the
Chairman and CEO at Southwest Airlines, so thank you for
inviting me to testify here on behalf of the more than 54,000
Southwest employees who directly benefited from the Payroll
Support Program. And I can sum up the PSP in two words, it
worked.
Our employees have endured unprecedented challenges over
the last 2 years, from new Federal requirements to unruly
passengers, but I couldn't be more proud of them for their
resilience and their resolve. They are nothing short of heroic.
And PSP secured their jobs and their pay and their benefits. So
I want to start by expressing my heartfelt appreciation to you
all and to Members of Congress, and certainly this committee.
In a bipartisan fashion, Congress recognized the severity
of the COVID-19 threat and heeded the call for swift, decisive
action, passing the PSP within weeks. Despite this incredible
achievement, no one could have predicted what happened in the
months that followed. Multiple waves of COVID cases, new COVID-
19 variants, changes in Government policies, volatile demand
for air travel, and record financial losses for every single
airline.
Even with the turbulence that was brought on by the global
pandemic, your commitment to protecting the livelihoods of
hundreds of thousands of airline workers never wavered. And
most importantly, you saw the PSP as a successful program
worthy of not one, but two extensions. And for that, on behalf
of all Southwest Airlines, I am eternally grateful. At
Southwest, we take pride in being a maverick, including being
about as well prepared for this crisis as any company, let
alone any airline, can be.
And looking back at early 2020, we entered the pandemic in
a strong financial position. We had over $5 billion in
liquidity. We had very modest debt. We had record low financial
leverage and a low cost structure. As the pandemic unfolded, we
took aggressive and appropriate self-help measures to remain
solvent, eliminating discretionary spending, right sizing our
flight schedule, and cutting executive compensation.
At the same time, Southwest has never achieved our low cost
on the backs of our employees. We are 83 percent unionized. We
offer industry leading retirement and health benefits. We are
consistently ranked on Fortune's list of the world's most
admired companies and Glassdoor's list of best places to work.
And until 2020, our employees received profit sharing
contributions each and every year since 1972, which is an
unprecedented streak of profits of 47 years.
So for Southwest, the source of our strength and success is
our people, and they have always been my top priority, and my
number one concern is our employees' health and job security.
And funds received through the PSP were only used for
qualifying employees' salaries, wages, and benefits. We did not
cut pay rates. We did not cut hours. We did not cut benefits.
We did not lay off. And we did not furlough.
We actually have raised our employees pay. And my biggest
source of pride is that Southwest has never had an involuntary
layoff or furlough in our 50 year history. Southwest is also
the only major airline to maintain service at every domestic
airport that we serve before the pandemic. And moreover, in the
last 22 months, we launched service to 18 new airports.
It is also a testament to our people that we have been the
best year to date DOT customer satisfaction ranking among
marketing carriers and the highest net promoter score in the
industry. By every measure, we lived up to the letter and the
spirit of the PSP as Congress intended. Our operational
performance during the week of Thanksgiving underscores our
focus on reliability, and we knew the challenges of a busy
holiday season and week might bring and implemented several
enhancements to support our customers and our employees.
And in a week where we served over two million customers,
we operated nearly 24,000 flights with a 99.9 percent
completion rate and only 12 cancellations. Our DOT on time
performance for the week was 88.3 percent, and on November 28,
2021's busiest travel day based on the TSA numbers, Southwest
had the highest on-time performance in the industry.
So in closing, I am extremely proud of our company's record
of taking care of our employees and our customers and the
communities that we serve. As I have said to many in the past
year, it was messy going into this pandemic, it is going to be
messy coming out. But for as long as the pandemic persists, we
will continue to be cautious and focused on reliability.
And I assure you that no matter what challenges presented
to us next, taking care of our employees and our customers
remain Southwest's primary goal. So thank you all again for
your tremendous support during our darkest hours as a company
and as an industry, and I look forward to answering your
questions.
[The prepared statement of Mr. Kelly follows:]
Prepared Statement of Gary C. Kelly, Chairman of the Board and Chief
Executive Officer, Southwest Airlines Co.
Chair Cantwell, Ranking Member Wicker, and members of the
Committee, good afternoon:
My name is Gary Kelly, and I'm privileged to serve as Chairman and
CEO at Southwest Airlines. Thank you for inviting me to testify on
behalf of the 54,000 active Southwest Employees who directly benefitted
from the Payroll Support Program (PSP). I can sum up the PSP in two
words: IT WORKED. Our Employees have endured unprecedented challenges
over the last two years--from new Federal requirements to unruly
passengers--and I couldn't be more proud of them. Their resilience and
resolve are nothing short of heroic. PSP secured their jobs, their pay,
and their benefits.
Gratitude
Let me begin by expressing my heartfelt appreciation to Congress
and the leaders of this Committee. In March 2020, I joined my industry
colleagues, as well as the Nation's airline union representatives, in
urging Congress to act quickly by providing immediate liquidity to the
airline industry. In a bipartisan fashion, Congress recognized the
severity of the COVID19 threat and heeded the call for swift, decisive
action, passing the PSP within weeks. Despite this incredible
achievement, no one could have predicted what happened in the months
that followed: multiple waves of rising cases, new COVID-19 variants,
changes in government policies, volatile demand for air travel, and
record financial losses for every airline. Even with the turbulence
brought on by the global pandemic, your commitment to protecting the
livelihoods of hundreds of thousands of airline workers never wavered.
You understood the critical importance of our industry to the economy
and the Nation's recovery. Most importantly, you saw the PSP as a
successful program worthy of not one, but two extensions. For that, I'm
eternally grateful.
Being Prepared
At Southwest, we take pride in being a maverick, including being
about as well-prepared for this crisis as any company, let alone any
airline. Looking back at early 2020, we entered the pandemic in a very
strong financial position--with $5 billion in liquidity, modest debt,
low financial leverage, and a low-cost structure. By being financially
conservative, we've always strived to be well-prepared for the
unforeseen. Southwest is the only 1980s major carrier that has never
filed for bankruptcy, even after 9/11 and the Great Recession. We
responded to the pandemic with aggressive, appropriate self-help
measures to keep the Company solvent: eliminating discretionary
spending, right-sizing our flight schedule, and cutting executive
compensation--including reducing my base salary. As the only airline
with an all-investment-grade credit rating, Southwest could also access
capital from the private markets. If the current demand environment
holds, we should be able to pay off most of the debt we incurred during
the pandemic within the next five years.
At the same time, Southwest has never achieved low costs on the
backs of our Employees. We're 83 percent unionized. We offer industry-
leading wages and great retirement and health care benefits. We're
consistently ranked on Glassdoor's list of Best Places to Work and
FORTUNE's list of the World's Most Admired Companies. And, until 2020,
our Employees received profit-sharing contributions each and every year
since 1972, an unprecedented profit streak of 47 years.
Putting People First
For Southwest, the source of our strength and success is our
People. As CEO, they've always been my top priority, and my number one
concern is our Employees' health and job security. Funds received
through each round of the PSP were only used for qualifying Employee
salaries, wages, and benefits. We did not cut pay rates. We did not cut
hours. We did not cut benefits. We did not layoff. We did not furlough.
We actually raised our minimum pay to $15/hour effective August 1,
2021. This represents a wage increase of 711 percent for about 7,000
Employees. In fact, my biggest source of pride is that, as of today,
Southwest has never had involuntary layoffs or furloughs in our 50-year
history.
Southwest is also the only major airline to maintain service at
every domestic airport we served before the pandemic. Our commitment to
bringing Customer-friendly policies and low fares to consumers does not
end there. In the last 22 months, we launched service to 18 new
airports. Consumers in these markets benefited from the ``Southwest
Effect,'' a phenomenon observed by the U.S. Department of
Transportation (DOT) in which our entry into a market drives
competition up and fares down. We continue to provide outstanding
hospitality. It's a testament to our People that we have the best year
to date DOT Customer Satisfaction Ranking among Marketing Carriers and
the highest Net Promoter Score in the industry. By every measure, we
lived up to the letter and the spirit of the PSP as Congress intended.
Focus on Reliability & Resiliency
Our operational performance during the week of Thanksgiving
underscores our focus on reliability. We knew the challenges a busy
holiday travel week might bring and implemented several enhancements to
support our Customers and Employees. Southwest Employees executed those
planning efforts with coordination and precision. In a week where we
served over 2 million Customers, we operated nearly 24,000 flights with
a 99.9 percent completion rate and only 12 cancellations. Our DOT on-
time performance for the week was 88.3 percent and on November 28--
2021's busiest travel day based on TSA throughput--Southwest had the
highest on-time performance in the industry.
In closing, our purpose at Southwest is to connect People to what
is important in their lives through friendly, reliable, and low-cost
air travel. After two difficult years, I'm so proud of our Company's
record of taking care of our Employees, Customers, and the communities
we serve. As I've said to many in the past year, it was messy going
into this pandemic and it'll be messy coming out. And it has been, at
times, when flight and passenger activities got ahead of our effective
staffing. Yet we've made progress toward stabilizing our operations.
Since the pandemic persists, we'll continue to be cautious and focused
on reliability. I assure you that, no matter what challenge is
presented to us next, taking good care of our Employees and Customers
remains Southwest's primary goal.
Thank you again for your tremendous support during our darkest hour
as a Company and an industry, especially through the enactment of the
Payroll Support Program. I look forward to answering your questions.
The Chairwoman. Thank you, Mr. Kelly. Thank you so much for
that testimony. We will now turn to Mr. Kirby. Thank you so
much.
STATEMENT OF SCOTT KIRBY, CHIEF EXECUTIVE OFFICER, UNITED
AIRLINES HOLDINGS, INC.
Mr. Kirby. Good afternoon, Chair Cantwell, Ranking Member
Wicker, and members of the Committee. I am pleased to be here
today to discuss United Airlines' response to the COVID-19
pandemic and the Payroll Support Programs' assistance to
companies like United. On behalf of all the United employees
and our industry, I would like to thank Chair Cantwell, Ranking
Member Wicker, and all the members of this committee, and the
Federal Government for your support during the most challenging
time in our shared history.
As I begin, I also want to publicly thank our 80,000 United
employees who performed so admirably and worked so tirelessly
throughout this pandemic to take care of our customers and each
other. Our United team and the airports on board aircraft and
all throughout our global network have been on the front lines
of this crisis from day one and helped ensure anyone or
anything, including medical equipment and vaccines, who needed
to travel throughout the pandemic could do so safely.
The COVID-19 pandemic is the most disruptive crisis in the
history of commercial aviation, with both the devastating human
and economic toll. The quick response by the Federal Government
with the rapid implementation of the PSP prevented what would
have been an unprecedented shutdown of air service that would
have impacted the U.S. and world economy for years to come.
The PSP allowed us to maintain operational consistency,
avoiding the challenges that shutdowns, mass, involuntary
layoffs, and furloughs would have created. United supplemented
the Federal support with our own unprecedented cost cutting and
fundraising efforts. PSP also gave us the time and the bridge
to the private capital markets, where we raised an additional
$23 billion in debt. At the same time, we were shoring up our
finances, we were also taking early and aggressive action to
mitigate the impact of the virus on our employees and our
customers.
We led on safety throughout the crisis. We were the first
airline, among the first companies to require masks last April
and this August, we implemented our vaccine requirement while
ahead of any Government directive for the sole and simple
reason that we believed it was the right thing to do for
safety. Today, we remain the first and only airline to
successfully complete a vaccination requirement for employees.
We also leaned into our responsibility to keep the country
and the world connected. We operated more than 130 repatriation
flights, brought home more than 18,000 stranded Americans,
booked close to 3,000 free flights for medical volunteers, and
transported hundreds of millions of pounds of medical kits,
PPE, and medical equipment. And United continues to fly
vaccines around the world. We have already flown over 400
million vaccines since they were first ready for distribution.
Throughout the pandemic, United and many Members of
Congress worked closely with our unions, and I want to
recognize and thank the Air Line Pilots Association, the
International Brotherhood of Teamsters, the International
Association of Machinists and Aerospace Workers, the
Association of Flight Attendants, and the Professional Airline
Flight Control Association.
The PSP not only kept the airline running, but it also kept
the economy moving during a time of great uncertainty. As
customers began to fly again, we took a gradual approach to
building back our schedule. We knew it would be challenging to
try to bring flights back all at once and too quickly, so we
made a conscious decision to gradually add capacity over time.
While this choice sacrifice short term profits, it allowed
us to ensure a reliable service and to largely avoid any
widespread operational impacts to our customers. But even in
the depth of the crisis, we always kept an eye on the future
for customers. We invested in technologies and enacted new
policies to make travel easier and more enjoyable. We got rid
of change fees forever for travel within the U.S.
We are investing in features like large overhead bins,
seatback entertainment, and fast Wi-Fi, and our mobile app was
the first to let customers check their destinations travel
requirements, schedule COVID-19 tests, and upload and validate
vaccine records using artificial intelligence. From an
employment perspective, we have already hired more than 5,000
people this year into careers with high pay and benefits and
expect to hire approximately 10,000 more next year.
And for our communities, United is the leading global
airline in the fight against climate change. We are leading in
sustainable aviation fuels, electric aircraft, and hydrogen
aircraft, just to name a few. While the COVID-19 pandemic has
been the most disruptive global crisis in the history of
aviation, United is emerging as a leader and is a better
airline for our customers and employees.
The Payroll Support Program was a vital aid when our
industry and our employees needed it most. I appreciate the
opportunity to appear before this committee and look forward to
answering any questions you may have.
[The prepared statement of Mr. Kirby follows:]
Prepared Statement of Scott Kirby, Chief Executive Officer,
United Airlines Holdings, Inc.
Good afternoon, Chair Cantwell, Ranking Member Wicker, and members
of the Committee. I am pleased to be here today to discuss United
Airlines' response to the global COVID-19 pandemic and the Payroll
Support Program's assistance to companies like United. I would like to
thank the members of this Committee, Congress, and the Federal
government for helping our industry during one of the most challenging
times in our shared history.
I also must take a minute to acknowledge the 80,000 United
employees around the world who have worked tirelessly throughout this
crisis to take care of our customers and each other. Our employees in
the airports and in the air have ensured our customers who had to
travel throughout the pandemic could do so safely.
The pandemic has been a once-in-a-generation crisis, and the scale
of the human cost is staggering. More than 5 million people have lost
their lives to the virus, and countless others have been affected in
shared and deeply personal ways. It has been a trying time for all of
us, and sadly United Airlines employees haven't been immune to the
human toll of COVID-19. We mourn for all those we have lost and their
families.
The COVID-19 pandemic is the most disruptive global crisis in the
history of commercial aviation. In addition to the devastating human
toll, at the beginning of April 2020, we saw the sharpest, deepest drop
in market demand on record. We cut our domestic and international
schedules by 90 percent and were burning as much as $100 million per
day.
The only comparison to the COVID crisis is the attacks of September
11--which resulted in the aviation industry's loss of a decade of job
creation, productivity, investments, and technological advancements--
and it was clear early on that this pandemic would have a much deeper,
longer-lasting impact on our industry without support.
The quick response by the Federal government with the rapid
implementation of the Payroll Support Program (PSP) prevented the type
of losses the industry suffered in past major events. The PSP allowed
us to maintain operational consistency, avoiding the challenges that
mass involuntary layoffs and furloughs would have created. In addition,
the PSP enabled us to maintain our workforce and protect the
livelihoods of tens of thousands of United employees--keeping pilots
and others current and at-the-ready to respond to a rebound in demand.
The PSP also gave us the time and the bridge to capital markets where
we raised $23 billion in debt and equity that were crucial to our
survival and ability to support the great careers at United, contribute
to the COVID response around the world, and be prepared to support the
economic recovery now underway. Quite simply, the PSP saved the
industry while giving us the flexibility to not only think about how
best to chart our recovery, but also to make meaningful, fundamental
changes within our company so we could emerge on the other side of the
crisis as a better, stronger airline. And that is exactly what we are
doing today.
Importantly, we supplemented this Federal support with our own,
unprecedented cost-cutting and fundraising efforts. We froze new
hiring, suspended salary increases, cut costs across our operation,
introduced new voluntary leave and separation programs, cut Officer
salaries by 50 percent, cut CEO and President's base salaries by 100
percent and used various assets, including our MileagePlus loyalty
program and aircraft, as collateral to finance more than $23 billion in
commercial debt. This is in addition to the $3.2 billion of PSP notes
that were provided by the U.S. government. In addition, we raised $2.6
billion in equity, issuing 76 million shares.
Our recovery efforts started by taking early and aggressive action
to mitigate the impact of the virus on our employees and our customers
and as our industry always does, we put safety at the forefront. We
were the first airline--and one of the first companies--to mandate
masks for employees and the first to introduce customer COVID-19
testing and contact tracing.
We partnered with DARPA to study how effectively the unique airflow
configuration on board an aircraft can prevent the spread of
aerosolized particles among passengers and crew. And based on those
results, we were the first and only airline to run our HEPA filtration
systems during the entire boarding and deplaning process.
We launched a program called United CleanPlusSM that
delivered an industry-leading standard of cleanliness, including
partnerships with Clorox and experts from the Cleveland Clinic. And we
were the first major U.S. airline to ask all passengers to complete a
health self-assessment during their check-in process based on
recommendations from the Cleveland Clinic.
Within our company, we have continually prioritized the safety of
our employees and customers, including taking decisive action on mask
and vaccine requirements. Some of the decisions were hard, but
necessary. I personally sent letters to the families of every United
employee who died from COVID-19. We must continue to do all we can to
keep another United family from receiving that letter.
We did all we could to keep our business running safely and
consistently, and still, we would not be in the position we are today
without the support of the United States government.
One important step in maintaining our operational performance was
close coordination with our unions, who stepped up to work on creative
agreements to get us through the crisis, reduce the number of affected
employees where possible, and set up the airline for a strong rebound.
I want to recognize and thank our union partners, the Air Line Pilots
Association (ALPA), International Brotherhood of Teamsters (IBT),
International Association of Machinists and Aerospace Workers (IAM),
Association of Flight Attendants (AFA) and Professional Airline Flight
Control Association (PAFCA) for understanding the enormity of the
challenge we collectively faced, for keeping our employees engaged, and
for working with us to prevent furlough.
Doing Our Part to Help Fight COVID-19
United acted quickly not just to support our customers and
employees, but also to do our part for the world. We are incredibly
proud of the role that we played, which has brought us even closer to
our mission of connecting and uniting people across the globe. We have
been maintaining these vital air bridges and links between countries--
Australia, India and Brazil to name a few--throughout the crisis,
because the pandemic really brought home how those connections are
vital to develop shared understanding, which is necessary to solve
problems and address conflict.
To support the pandemic response, we activated our people and
capabilities to operate more than 130 repatriation flights bringing
home more than 18,000 Americans who were stranded abroad. We also
booked nearly 3,000 free flights for medical professionals to support
the COVID-19 response in New Jersey/New York and California. In the
early days of the pandemic, it is safe to say, people who were flying
were doing so because there was a critical need.
Our work did not stop there. Through a combination of cargo-only
and passenger flights, United transported more than 401 million pounds
of freight, including 154 million pounds of vital shipments, such as
medical kits, PPE, pharmaceuticals, and medical equipment, and more
than 3 million pounds of military mail and packages. And once the
vaccines were ready for distribution, we sprang into action. United has
flown approximately 400 million vaccines around the world, reaching
many countries that were in desperate need of vaccines, including
shipments to Guatemala and Ghana in just the last few weeks.
Throughout the pandemic, United has been committed to providing our
unique resources and relationships to assist in those areas hardest hit
by COVID-19. In India specifically, we operated dozens of flights with
the majority of cargo being humanitarian supplies, including PPE,
medical devices, medications and oxygen.
Bouncing Back with Innovation at the Forefront
While weathering the crisis and contributing to the humanitarian
effort, United has also been focused on innovation and emerging from
the pandemic as the world's best airline. PSP's support allowed us to
keep thousands employed and help prevent a catastrophic impact to our
company. This allowed us to take steps to change the airline for the
better and to take a unique approach to rebuilding.
After dramatically cutting our flight schedule at the start of the
pandemic, we knew it would be challenging to bring flights all back at
once, so we made the decision to gradually add flights over time. While
this choice sacrificed short-term profits, it allowed us to ensure a
reliable service and to largely avoid the widespread operational
challenges experienced by other carriers. By being open, honest, and
transparent with our workforce about our decision-making process,
United was able to retain most of our workforce with thanks to our
union partners.
Even in the depths of the crisis, we continued to prepare for the
recovery by investing in technologies and enacting new policies that
help make travel easier and more enjoyable for customers. The United
App and United.com have everything most travelers need to get ready,
including verifying testing and vaccine records. Our Connection Saver
Tool helps thousands of people make tight connections every day. And we
have eliminated change fees forever for flights within the U.S., a
policy that historically got in the way of delivering great service.
As an airline, safety has always been our top priority, and we
successfully implemented our vaccine requirements for our employees
early and before there was a government directive. This issue is now
largely behind us and we are able to focus on taking care of our
customers, which is particularly important going into the winter season
when weather complications and holiday travel can cause disruptions.
By keeping our future in view since the start of the crisis, we've
been able to bounce back better than we could have anticipated.
Envisioning a More Resilient Future
It is important to remember the shocking scale of this pandemic on
the globe and its deep effect on our industry. We are not completely
out of the woods, and the emergence of the Omicron variant in recent
weeks is a stark reminder of that. Nevertheless, we are moving forward
toward a more resilient future, ensuring we continue to do right by our
customers, employees, and investors. Despite sizeable financial
obligations coming out of the pandemic, we are continuing to invest in
advancing environmental sustainability; diversity, equity, improving
the customer experience; and creating lasting and rewarding careers for
our growing and diverse workforce; and job creation.
This summer, we announced a major purchase agreement that will have
long-term positive economic impacts. United will order 270 brand new
aircraft--the largest purchase agreement in our history and the largest
by a single carrier in a decade. With this order, combined with our
current orders, we will be adding 500 new airplanes to our fleet in the
next few years. Aircraft orders, especially at this scale, directly
fuel job creation, consumer spending, taxes, and many other drivers of
economic growth.
Replacing smaller, older aircraft also allows us to make an
expected 11 percent improvement in fuel efficiency and reduce carbon
emissions per seat by 17-20 percent, compared to older planes.
Our efforts will yield impressive job creation. Through 2026, we
expect to create 25,000 new careers, totaling thousands of openings at
each of our seven domestic hubs. These union jobs have compensation
above the Federal minimum wage and come with company-sponsored medical
coverage, company-funded retirement programs, paid sick leave and
vacation, and flight benefits. We are not interested in offering just a
job. We want to provide a rewarding, long-term career--69 percent of
the senior leaders I work with every day came up through the ranks in
jobs like these.
In addition to these economic contributions, we are proud of our
actions and transparency on diversity, equity, and inclusion. United
firmly believes that DEI is key to a strong company culture and
critical competitive advantage. Over the past decade, our focus has
evolved from excellence in employee engagement and talent programs to a
strategic approach that embeds DEI throughout our business and impacts
the communities where we work, live and fly.
One development we are really excited about is the creation of our
United Aviate Academy, a state-of-the-art flight-training program at
Phoenix Goodyear Airport. We are seeking to train 5,000 pilots by the
end of the decade, with the goal that half of the students will be
women and people of color, all while maintaining our incredibly high
training standards. The inaugural class, which began just last week, is
80 percent women and people of color.
I can also say, proudly, that United has achieved, and is committed
to maintaining, near-perfect pay equity for employees of all genders
and races performing comparable work across our U.S. operations.
Finally, we're taking bold action to help combat climate change by
embracing a new goal to be 100 percent green by 2050, reducing our
greenhouse gas emissions by 100 percent. We are making significant
investments to reach this goal and, importantly, to reach our goal
without the use of traditional carbon offsets.
Our industry collaborations are cutting-edge and part of the reason
we were named 2021 Eco-Airline of the Year by Air Transport World
magazine. In September, we agreed to invest in and purchase 1.5 billion
gallons of sustainable aviation fuel (SAF) from Alder Fuels,
representing the largest publicly announced SAF agreement in aviation
history. United is the world leader in the usage and support for the
development of SAF, already having agreements or commitments to
purchase nearly twice as much SAF as the known agreements of all other
global airlines combined. Just two weeks ago, we operated the first
ever airline flight with passengers to fly on 100 percent SAF.
We've also launched the first-of-its-kind Eco-Skies Alliance, a
group of global corporations--including DHL Global Forwarding, HP, Inc.
and Nike--contributing funds to purchase SAF to reduce their aviation-
related impact on the environment.
All of these efforts are part of our ambition to do the right thing
for the environment, our customers and our people.
Conclusion
The COVID-19 pandemic has been the most disruptive global crisis in
the history of aviation. Thanks to the support of the U.S. government,
the resilience of our teams, and the loyalty of our customers, United
will emerge a stronger, better company. The Payroll Support Program was
a vital aid when our industry most needed it, and enabled us to make
the ground-breaking, innovative investments and commitments that I've
described to you today.
I appreciate the opportunity to appear before this Committee and
look forward to answering any questions you may have.
The Chairwoman. Thank you, Mr. Kirby. Thank you very much
for being here. Mr. Laughter.
STATEMENT OF JOHN LAUGHTER, EXECUTIVE VICE PRESIDENT AND CHIEF
OF OPERATIONS, DELTA AIR LINES
Mr. Laughter. Good afternoon, Chair Cantwell, Ranking
Member Wicker, and distinguished members of the Committee.
Thank you for the opportunity to appear before you today and
discuss the status of the U.S. airline industry during the
COVID-19 pandemic. My name is John Laughter and I have the
privilege of serving as Delta's Executive Vice President and
Chief of Operations.
I have been with Delta for over 28 years, serving in
several leadership positions. I look forward to sharing the
measures Delta has taken to address the crisis by protecting
the health of our customers and the safety and jobs of our
people who have done an outstanding job throughout the
pandemic. I also look forward to discussing our compliance with
the Payroll Support Programs.
Currently, I am responsible for ensuring that we provide
safe, reliable industry leading operations across the globe. I
directly oversee Delta's global flying operations, maintenance
services, and safety and security groups, over 22,000 Delta
professionals. Delta and all of its employees are extremely
grateful to this committee and the rest of the U.S. Congress
for your support throughout the pandemic. The pandemic has
reminded us all of the importance of cooperation and taking
care of one another in our community.
I am so proud of how the Delta team pulled together for
each other and for our customers during this time. In the early
days of the pandemic, demand for air travel evaporated by
nearly 95 percent, forcing Delta to take decisive action to
preserve jobs without compromising on employee and customer
safety. We parked or retired more than 650 aircraft and
consolidated facilities at airports nationwide.
We cut executive compensation and more than 40,000
employees volunteered for unpaid leaves of absences. The Delta
community truly came together during an extraordinarily
stressful and difficult time. Delta people led the way in
demonstrating our commitment to health and safety. We moved
quickly at the onset of the pandemic to transform the industry
standard of cleanliness to ensure a safe and comfortable travel
experience for our customers and employees.
In the span of a few months, we implemented a rigorous
cleaning regimen onboard our aircraft and in all of our
facilities, abroad employee COVID testing program, the
industry's first mask requirement, contact tracing on
international flights, and other pandemic protocols that have
protected the safety of our customers and employees. In the
past year, we spent over $25 million to administer more than
151,000 vaccines, not only to Delta people, but to friends,
families, and members of the Georgia community and across the
country.
As we continue to face challenges presented by COVID, we
are committed to maintaining our tradition of excellent
customer service. Delta has long run the most reliable
operation in the world, and we have maintained that standard in
the recovery. And I would like to be clear on this point, this
year we are exceeding our operational performance compared to
2019 and lead the industry in on time performance and
completion factor. We are in the process of hiring thousands of
new Delta people and regrowing our network in a disciplined way
that allows us to deliver on our commitments to our people and
our customers.
The unmatched level of service culminated in the best
customer feedback scores we have ever received, earning us the
number one spot on the 2021 J.D. Power North American Airlines
satisfaction study. I would like to once again thank Congress
for the invaluable support the Payroll Support Program was to
us.
To ensure that we are in full compliance with the terms of
the PSP agreements, Delta established the PSP in CARES Act
Compliant Steering Committee and CARES Act Working Group. These
groups made up of our law compliance, H.R., and finance teams
focused on adhering the PSP requirements to ensure these
critical funds were used only for eligible employee's wages,
salaries, and benefits could be properly accounted for and
continue to ensure strict compliance with ongoing program
restrictions.
Together with the extraordinary efforts of our employees,
these PSP funds helped us save jobs. As we recover from the
pandemic, we will continue to keep the health and safety of our
customers and employees our top priority.
Thank you again for your support of the airline industry.
And more importantly, thank you for your support of our people.
I look forward to answering your questions.
[The prepared statement of Mr. Laughter follows:]
Prepared Statement of John Laughter, Executive Vice President
and Chief of Operations, Delta Air Lines
The Status of Delta Air Lines in 2021
Introduction
Good afternoon, Chair Cantwell, Ranking Member Wicker, and
distinguished Members of the Committee:
Thank you for the opportunity to appear before you today regarding
the status of Delta's workforce, operations, and management of Federal
funding as we continue to work through the COVID-19 (COVID) pandemic.
My name is John Laughter, and I have the privilege of serving as
Delta's Executive Vice President & Chief of Operations. I am
responsible for ensuring that Delta provides industry-leading, safe,
and reliable operations across the globe. I directly oversee Delta's
global flying operations, maintenance services, safety, and security
groups--over 22,000 Delta employees that include pilots, mechanics,
dispatchers, and aviation professionals who manage pilot staffing,
training and standards, technical support, and regulatory compliance.
In my 28+ years with Delta I have served as the Senior Vice President
(SVP) of Flight Operations; SVP of Corporate Safety, Security and
Compliance; and held various leadership positions in Technical
Operations.
Delta and all its employees are extremely grateful to this
committee and the rest of the U.S. Congress for your support throughout
the pandemic. The CARES Act and subsequent relief packages included
vital support for Delta's employees through the Payroll Support Program
(PSP). COVID has caused an unprecedented public health and economic
crisis. As the recently discovered Omicron variant has demonstrated, we
continue to reckon with challenges caused by the pandemic, and we
appreciate the opportunity to engage with you on these issues.
Today, as always, we remain focused on protecting the health and
safety of our employees and customers, providing the best possible
service, and safeguarding Delta jobs. At the onset of the COVID
pandemic Delta moved quickly to transform the industry standard of
cleanliness to ensure a safe and comfortable travel experience for our
customers and employees--all while maintaining our industry-leading
reliability and customer experience--and we continue to do so.
How COVID-19 Has Impacted Delta Air Lines
The pandemic continues to present an extraordinary challenge to
Delta and other airlines. At the beginning of the crisis, travel
restrictions and stay-at-home orders were effective at slowing the
spread of the virus, but severely impacted demand for travel. In 2020,
passenger volumes dropped by as much as 95 percent by the end of March,
resulting in a pre-tax loss of $12.4 billion for Delta over the entire
year, the largest loss in our history \1\. While we have seen travel
stabilize across the U.S., the Omicron variant of COVID has
demonstrated the ongoing volatility of the pandemic. Countries that
have recently lifted travel bans are reevaluating policies, impacting
the recent increased demand for international travel.
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\1\ DAL 12.31.2020 10K (q4cdn.com)
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Delta Air Lines Responds to COVID-19
Delta Culture and Servant Leadership Rise to the Challenge
In the early days of the pandemic, revenue and demand quickly
evaporated, forcing Delta to take decisive action to preserve jobs by
reducing our cost base without compromising employee and customer
safety. We parked or retired more than 650 aircraft and consolidated
facilities at airports nationwide. In March of 2020, our CEO announced
he would forgo his salary and the salaries of Delta officers were
reduced by 50 percent. To avoid involuntary layoffs, we offered
voluntary early retirement and departure packages and voluntary unpaid
leaves of absence. I am proud of the way the Delta community came
together during an extraordinarily stressful and difficult time:
More than 40,000 employees volunteered for short-and long-
term unpaid leaves of absence at some point in 2020, and more
than 17,000 Delta people volunteered to take early retirement
or departure packages--all of which enabled us to avoid U.S.
furloughs and save countless Delta jobs.
As the operation slowed, most of our merit and ground-based
frontline employees worked under reduced schedules for much of
the year, providing vital savings that reduced our daily cash
burn rate and positioning us for recovery.
Our flight attendants, pilots, reservations agents, and
other front-line teams provided an unmatched level of service
that resulted in the best customer feedback scores Delta has
ever received--earning Delta the No. 1 spot on the 2021 J.D.
Power 2021 North America Airline Satisfaction Study.\2\
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\2\ 2021 North America Airline Satisfaction Study | J.D. Power
(jdpower.com)
These measures, taken together, were vital to protecting Delta's
future during the early months of the pandemic as we operated a minimal
schedule to provide essential services for those who traveled.
This comprehensive approach is part of Delta's longstanding
commitment to protect our people, customers, and the communities in
which we live, work, and serve. It is also reflective of our culture of
sharing sacrifices during difficult times, as well as sharing the
benefits of success during good times. As a result of our employees'
efforts and the PSP, we are proud that no U.S. Delta employee was
involuntarily furloughed due to the financial and operational impacts
of the pandemic.
Measures to Prevent COVID-19 Exposure
Delta has made the health and safety of our people and customers
our No. 1 priority since the start of the pandemic--leading the
industry with policies including: establishing rigorous cleaning and
safety protocols on the ground and in the air; blocking of middle seats
through April 30, 2021; facilitating contact tracing for inbound
international passengers; and implementing mask requirements for all
passengers.
Early in the onset of the pandemic, we partnered with the world-
renowned Mayo Clinic, whose experts advised us on employee testing,
strategies for cleanliness, and operational tactics to reduce the
transmission of the virus. These efforts led to the establishment of
our Global Cleanliness Division, which sets a new standard of
cleanliness for our customers, known as the Delta
CareStandardSM. In a first for the U.S. airline industry, we
hired Mayo Clinic's Dr. Henry Ting as our Chief Health Officer to
oversee our efforts and ensure they are based on rigorous scientific
research. Dr. Ting is also responsible for leading our efforts to
reimagine Delta's efforts to ensure the physical and mental health and
well-being of our employees.
Operationally, we created a dedicated team of more than 100 Clean
Ambassadors to oversee our Global Cleanliness Division's goal of
increasing the number of cleaning crews and implementing the DeltaCare
Standard at more than fifty airports.\3\ We also partnered with the
makers of Lysol and Purell to ensure each flight complies with our
extensive preflight cleaning checklist and that all our planes include
hand sanitizer stations and provisional Purell disinfecting wipes for
each passenger. Additionally, we continue to electrostatically spray
our aircraft interiors with high-grade disinfectant and use HEPA air
filters to remove 99.99 percent of airborne particles on-board.
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\3\ Delta deploys dedicated cleanliness 'eyes and ears' at U.S.
airports | Delta News Hub
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Vaccines
As part of our broader efforts to protect our customers and our
employees, Delta partnered with Georgia to host the state's largest
COVID vaccination site to support the state's vaccination program. Over
117,000 vaccines were administered at the site, located at Delta's
headquarters. Overall, Delta has spent more than $25 million to promote
and administer a total of 151,000 vaccines to Delta employees and
members of the public. We continue to offer COVID testing and
vaccinations to our U.S.-based employees, free of charge. These efforts
allowed the company to fully reopen our headquarters in June and have
resulted in more than 90 percent of our employees being vaccinated.
Delta was also in a unique position to distribute the COVID vaccine
on a global scale thanks to our extensive network, unmatched
international airline partnerships, and proven ability to safely and
effectively transport vaccines. As the first U.S. passenger airline to
receive IATA's Center of Excellence for Independent Validators Pharma
Logistics Certification at its Atlanta hub and headquarters, our full-
service pharma capabilities included temperature-controlled warehouses,
and all COVID vaccine shipments were transported with the highest
priority and monitored throughout their journey by our unique Vaccine
Watch Tower. Shipments occurred daily throughout the U.S. with 100
percent reliability. Our shared values of honesty, perseverance, and
service to each other, our customers, and our communities have allowed
us to safeguard Delta's future in this unprecedented time while helping
others around the globe.
Delta's Collaboration with The Federal Government
Payroll Support Program
The PSP enabled the airline industry to preserve tens of thousands
of jobs that would otherwise have been lost. Delta's people, our
families, and I cannot thank Congress enough for this support.
Delta has implemented several measures to ensure we are in full
compliance with the terms of the PSP agreements. We established a PSP &
CARES Act Compliance Program Executive Steering Committee and CARES Act
Working Group led by the Ethics & Compliance team in the Law
Department. The Working Group and Steering Committee are both cross-
functional groups that bring together key stakeholders with
responsibility for ensuring Delta complies with the requirements of
this important Federal program. The Ethics & Compliance team structured
the compliance program framework around the PSP obligations and
restrictions applicable to Delta and our wholly owned subsidiaries. The
team worked with key stakeholders to ensure appropriate processes and
controls were put in place. The compliance program includes the
following workforce-focused measures: i) tracking how Delta uses the
PSP funds to ensure they go exclusively to payment of Wages, Salaries,
and Benefits of CARES-eligible employees; ii) review of any involuntary
terminations to ensure they constitute permitted terminations (such as
terminations for cause); iii) monitoring reductions of pay rates and
benefits for compliance with PSP requirements; and iv) review of highly
compensated employees subject to Total Compensation restrictions. Early
in the pandemic--and prior to the establishment of the Federal PSP
program--we announced a goal to avoid furloughs entirely, a key goal of
the PSP program. Thanks to the PSP support, our employees'
extraordinary efforts, and Delta's collaborative culture, we were able
to achieve this goal, despite the unprecedented economic impact of the
pandemic.
While the CARES Act emergency relief for airline employees was
welcome assistance, those funds alone were not nearly enough to sustain
our business through the pandemic. As noted previously, demand for
flights dropped by 95 percent over the course of a few weeks in March
of 2020. As a result, Delta had a cash burn rate of $90 million each
day, which resulted in our 2020 operating revenue dropping nearly $30
billion compared to 2019. Consequently, even with the significant
relief offered through the CARES Act and subsequent measures, it was
still necessary--and expected--for Delta to take additional measures to
reduce costs and shrink its footprint. The incredible efforts of the
Delta team and support through PSP resulted in an amazing $10.8 billion
reduction in operating expenses. PSP funding alone was simply not
sufficient for Delta to maintain the scale and tempo of its pre-
pandemic operations. Again, Delta is so proud that together with PSP
and Delta workforce efforts, we came together to be sure not a single
employee faced an involuntary furlough.
Delta Air Lines' Work with U.S. Agencies
Delta worked closely with Federal agencies on several pandemic
efforts. Developing face mask requirements was a key measure to limit
the early spread of COVID. Delta worked closely with DOT to ensure the
process worked for all passengers, including an exemption to facilitate
travel by persons with disabilities that prevent them from wearing a
mask. The process Delta developed was the basis of guidance the DOT
subsequently issued to ensure all airlines are appropriately
accommodating persons with disabilities.
Delta also worked with Federal agencies to implement contact
tracing for international travel. In December of 2020, Delta became the
first U.S. airline to partner with the Centers for Disease Control and
Prevention (CDC) and the U.S. Customs and Border Protection (CBP) to
establish a voluntary contact tracing program for customers traveling
to the U.S. from an international location, adding one more important
layer to our overarching efforts to ensure health and safety throughout
the travel experience.
Finally, Delta worked closely with regulators to meet governmental
requirements ensuring service continued to smaller communities while
adjusting to new demand. For example, the CARES Act, and subsequent
relief bills, included language to ensure that essential travel would
continue uninterrupted. Delta was able to work with DOT to maintain
scheduled air transportation deemed necessary by DOT.
New Challenges Created by The Return to Air Travel
Returning to Travel
Delta has been optimistic that travel would resume, but we still do
not know when it will return to pre-pandemic levels. As travel demand
begins to accelerate, and countries begin to reopen, we are taking the
necessary steps to restore our capacity in a disciplined, thoughtful
manner. We recently enjoyed a successful Thanksgiving, helping 3.6
million Delta customers travel from November 21 through 28, with more
than 534,000 passengers transported on November 28 alone. Of the more
than 32,000 flights Delta operated, only 16 were canceled.\4\
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\4\ Delta caps smooth holiday week with record-setting Sunday |
Delta News Hub
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However, we expect, and are prepared for, an uneven, choppy
recovery even as the virus is being contained. While domestic travel is
improving to encouraging levels, it is still significantly below 2019
levels. The Omicron variant has created further uncertainty, and there
is no clear consensus on when business and international travel will
return. As travel demand begins to accelerate and countries begin to
reopen, Delta is committed to restoring our capacity while ensuring the
safety of our employees and customers.
Working Towards the Future of Travel
Delta is working quickly to increase staffing in Reservations and
Customer Care, Airport Customer Service, Cargo, Flight Operations, and
Technical Operations in support of customers' return to travel. The
Reservations and Care team has hired 1,400 specialists who have been
trained to address long customer support wait times during the
pandemic. Along with this, we are hiring more than 6,100 Airport
Customer Service Agents and more than 600 pilots. In total, we have
hired more than 8,700 people across the business to support the return
to travel in 2021. Delta also continues to look for ways to simplify
the travel experience and help customers navigate travel. We are
improving the Fly Delta app and delta.com to make quick changes easier
without waiting in line at the airport or calling Delta directly. We
have also extended the time-frame customers traveling in Basic Economy
can make changes to their flights for travel occurring through December
31, 2021. (Basic Economy fares are typically nonchangeable and non-
refundable).
Delta Remains the Most Reliable Major Airline
A positive customer experience is critical to Delta's success--
customer loyalty is good for business, and that begins with ensuring we
do our best for each customer. During the pandemic, when so many
customers were changing their travel plans, Delta continued to honor
valid refund requests when we cancelled a flight or made a significant
schedule change. Delta approved over 7.3 million valid refund requests
and issued more than $3 billion in customer refunds between March 2020
and March 2021. We also provided travel credits to passengers with
Basic Economy fares, which is not typically permitted. Further, Delta's
travel credit extension allows for unmatched flexibility through
December 31, 2022, for all tickets purchased or expiring in 2020 and
2021.
While we continue to face challenges, we are committed to
addressing them and maintaining our tradition of high-quality service.
Delta has long delivered the most reliable airline service in the
world, and we have maintained that standard in the recovery. DOT data
demonstrates Delta continues to run an industry-leading operation--
Delta ranked No. 1 among our competitive set on key operating metrics,
including completion factor and on time performance from January-
September 2021 (see the addendum below). Our internal data indicates we
continue to lead our peers through November.
Thank you again for your support of the airline industry which is
vital to our Nation's economy and national security. I look forward to
answering your questions.
Addendum
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairwoman. Thank you so much for being here. And last
but certainly not least, Ms. Nelson, thank you for your voice
in all of this. It has been a very important one. Welcome.
STATEMENT OF SARA NELSON, INTERNATIONAL PRESIDENT, ASSOCIATION
OF FLIGHT ATTENDANTS-CWA, AFL-CIO
Ms. Nelson. Thank you so much, Chair Cantwell, Ranking
Member Wicker, members of the Committee. I am a twenty-five
year union flight attendant, and just five years into my
career, I witnessed personal and national tragedy with the
events of September 11, 2001.
As a Boston based flight attendant, I lost nine friends on
Flight 175, the day aviation in our country came to a total
stop. Within weeks, half of my flight attendant base was
furloughed. The Federal Government response was a $5 billion
compensation for direct losses incurred across the whole
industry as a result of the ground stop ordered by the
Government, and I am quoting from the Air Transportation
Stabilization Act of 2001.
It also included a loan guarantee program that the White
House denied for United Airlines, even after employees agreed
to significant concessions as a part of the condition of the
loan. The result of insufficient action from the Government was
a string of bankruptcies across the industry. We were the
bailout.
Our jobs were cut, our pensions were gutted. Those who
remained shouldered massive pay cuts and many more hours on the
job. Wall Street was ecstatic with the enormous cuts to labor
costs. Workers were devastated. Consumers eventually felt the
hit too as capacity was cut, seat size shrunk, and pricing
became segmented with all kinds of fees.
There was no hiring for a long time, but the diminished
jobs later made it hard to attract pilots, mechanics, and other
aviation careers. So when air travel demand dropped overnight
in March 2020, we refused to follow the old blank check for
corporations bailout playbook, especially for airlines. We
designed what we could later--what would later be called the
Payroll Support Program and took it to Chairman Peter DeFazio
in the House.
When the airlines asked him for help, he demanded that they
talk to labor first, and that is what they did. American CEO
Doug Parker called me on March 18, and I went to A4A
headquarters where all of the CEOs were camped out and
frustrated with the response from the days of meetings on the
Hill. I was honest with them. I said the public is mad at you
and feeling the sting of inequality on our planes. You are not
going to get anything on your own. But if you work with labor
and support our Workers First program, we can save the
industry.
We didn't agree on every provision that night, but the
basic terms of the program were set and the next day we started
working together to get it done. Senator Cantwell and Senator
Wicker, with your leadership, I cannot thank you enough. In
less than a week, the PSP program became a part of the CARES
Act, and our jobs were saved. I have to recognize the
outstanding leadership of Leader Schumer as well. We kept our
health care, our retirement, and kept paying taxes. We didn't
stress unemployment lines or need coverage for costly COVID
benefits.
The Workers First Relief Program saved millions of
ancillary jobs connected to the industry and made it possible
to restart our economy. Consumers haven't faced inflation in
the cost of airline tickets because we were positioned to meet
demand and companies were required to use the funds for
payroll. The program helped workers, helped airlines, and
helped consumers while capping executive pay, you are welcome,
guys, and banning stock buybacks and dividends.
For the first time in American history, a relief program
told companies exactly how they had to apply the relief, the
required service they must maintain for the country, and
ensured Federal dollars got directly to the people and to the
taxpayers.
Some have questioned the use of the relief dollars in the
wake of operational meltdowns in late summer and fall. This
wasn't related to PSP. It was the result of first the lapse in
PSP funding from October 1, 2020, to December 28, 2020, as we
warned would happen due to the backlog in retraining,
certification, and security credentials that are needed, and
airlines planned operation based on pre-pandemic overtime
hours, but workers were no longer willing to pick up voluntary
overtime at the same rate because of combative passengers and
COVID concerns.
But recognizing these issues, unions negotiated with
management before Thanksgiving to put in place and financial
incentives for crew to pick up time, and it worked. Airline
performance was off the charts over the Thanksgiving holiday
travel week.
PSP made it possible to meet demand. And we are not a
bailout. But lately we have been punching bags. Flight
attendants and aviation workers are saying, please make it
stop. My written testimony provides a series of recommendations
to address this, starting with clear communication and swift
consequences for violent offenders.
I would especially like to call your attention to the U.S.
Attorney General's memorandum calling for an interagency
coordination to address criminal conduct on commercial flights.
We urge the Department of Justice to ensure arrest and
prosecution of disruptive passengers on the plane and in the
airport. Failing to ensure consequences for passengers who
prevent passenger service agents from doing their jobs by
assaulting, intimidating, or threatening them on the ground
only increases the likelihood of problems in the air too.
This pandemic has been brutal, and we are not through it
yet, but no one should question the effectiveness of the
Aviation Payroll Support Program. It was the most transparent
program in all of COVID relief. It is being declared the best
relief program put in place anywhere around the world and
should be the model for future relief in all industries.
PSP not only addressed the crisis and made it possible for
us to ensure we lose no time in getting back to the urgent
issues we face prior to the pandemic, safety, security, worker
and consumer rights, improving aviation jobs, diversity and
inclusion, sustainability, implementing next gen technology,
and so much more.
We are so grateful for the bipartisan efforts of this
committee to enact PSP. It worked. Thank you for your continued
oversight.
[The prepared statement of Ms. Nelson follows:]
Prepared Statement of Sara Nelson, International President,
Association of Flight Attendants-CWA, AFL-CIO
Introduction
Thank you Chair Cantwell, Ranking Member Wicker and members of the
committee for convening this hearing on oversight of the airline
industry during the longest sustained and biggest crisis in the history
of our industry.
My name is Sara Nelson. I am a twenty-five year union Flight
Attendant and president of the Association of Flight Attendants-CWA,
AFL-CIO (AFA), representing Flight Attendants at 17 airlines across the
industry. We also coordinate closely with our partner union the
Communications Workers of America, the Association of Professional
Flight Attendants and all of the transportation union affiliates of the
Transportation Trades Department, AFL-CIO.
We are grateful for the opportunity to testify about the Payroll
Support Program (PSP), a program that was built by, and for workers--
with controls on airline management. It is important to hear from Labor
because this program was designed for workers and our communities.
Creating a #WorkersFirst relief program avoided putting more strain on
safety net programs, provided stability for millions of workers, saved
millions of ancillary jobs connected to the industry, and made it
possible to restart our economy. Consumers haven't faced inflation in
the cost of airline tickets because we were positioned to meet demand
and companies were required to use the funds for payroll. They didn't
have discretion to divert the funds to other illusory costs and then
gouge consumers while blaming inflation. The program helped workers,
helped the airlines, and helped consumers.
For the first time in American history a relief program told
companies exactly how they had to apply the relief, the required
service they must maintain for the country, and ensured Federal dollars
couldn't benefit executive compensation or rewards for Wall Street. We
do not expect executives to talk about the benefits of capping their
pay or banning stock buybacks and dividends. We do not expect
executives to cheer the fact that inflation hasn't touched airline
tickets and to the contrary ticket prices have dropped. Their investors
don't want to hear any of this news that benefits workers, consumers,
and our economy overall through a program that was built from the
ground up. We are here to tell that story and applaud the bipartisan
efforts to enact a relief plan with immediate and long-term returns to
the public.
Some have questioned the use of the relief dollars in the wake of
some operational meltdowns in late summer and fall. Staffing is above
pre-pandemic levels if compared to the number of flight hours airlines
are flying. But aviation workers are not as willing to pick up overtime
due to the combative passengers and concerns around COVID. American
worker productivity was higher than any developed country in the pre-
pandemic world. This is also true in aviation, but it is not
sustainable anywhere. Earlier airline operational meltdowns were the
result of:
1. The lapse in PSP funding from October 1, 2020-December 28, 2020,
as we warned would happen due to a backlog in retraining,
certification, and security credentials, and
2. Airlines planned operations based on pre-pandemic overtime hours,
but workers were no longer willing to pick up overtime at the
same rate because of the conditions at work.
Recognizing these issues, unions negotiated with management to put
in place financial incentives to pick up time. It worked. Airline
performance was off the charts over the Thanksgiving holiday travel
week. There was no operational meltdown. PSP made it possible to meet
demand.
Without PSP, many airlines would have liquidated in the midst of a
97 percent drop in demand that happened nearly overnight. It is
important to remember the conditions our Nation faced in March 2020 and
the sustained harm affecting aviation around the world throughout the
rest of 2020 and the first half of 2021. PSP made it possible to keep
air transport infrastructure intact, invest in safety protocols, adjust
company size to current realities through voluntary programs rather
than forced layoffs, and reunite family and friends as the people were
able to access the vaccine and spend on travel once again.
We Couldn't Allow a Repeat of the Fallout from 9/11
``Hold all other communications on pay cuts, base closures, and
previously announced furloughs. United just called me. They're
furloughing another 2,500 Flight Attendants. We need to deal with that
first.''
I'll never forget that call. It was 2003, and our union was six
months into a 38-month bankruptcy at United Airlines that followed
September 11th.
Nearly one in three United employees--30,000 all told--lost our
jobs during that bankruptcy. Our pension was gutted. And those who
remained took two massive pay cuts. When United came out of bankruptcy,
nearly 45 percent of the savings the corporation showed Wall Street
came off the backs of workers.
Wall Street was ecstatic. Workers were devastated.
That time was the formative experience in my career. And that's why
our union worked with urgency to craft a relief plan that ultimately
became the Payroll Support Program.
We refused to follow the old ``blank check for corporations''
bailout playbook, especially for airlines. Our union had spent recent
years protesting stock buybacks that pay out Wall Street and top
executives while our staffing levels were cut to minimums and we had to
work more just to make ends meet. Twenty years after the events of
September 11, 2001, we were still feeling the effects of austerity and
cost cutting while Wall Street had become more emboldened to take the
profits made from our hard work. Prior to the pandemic inequality was
felt in our paychecks, quality of life, and the configuration of the
seats and service on our planes. Consumers experienced these cuts too
along with all kinds of ancillary fees. Austerity also meant job loss
and years of no hiring. Initiatives to promote diversity and inclusion
suffered at the same rate that mature workers felt the sting of 25, 30,
and 35 years on Reserve status or little ability to control our
schedules.
I know from personal experience: the people who benefit if airlines
go under are corporate executives, bankruptcy lawyers, and corporate
management consultants who under corporate bankruptcy law get to walk
away with hundreds of millions in bonuses.
We knew it would be immediate devastation for two million aviation
workers if we couldn't get relief, but there was no way we were going
to agree to a bailout for airlines. That's why our program demanded the
requirements of no involuntary furloughs, no cuts to hourly rates of
pay, continued service to all of our communities and a ban on stock
buybacks and dividends along with caps on the executive compensation
even after the relief period was complete.
Lessons from this Crisis
While we believe PSP was the most successful program in all of
COVID relief, we also know where it could have been more clear to
protect workers. All workers lost pay during COVID because overtime
hours were not protected. However, the program was intended to keep
workers employed at a regular full time rate. While the law explicitly
protected hourly rate of pay, it did not spell out a definition of full
time work. In most cases, this rate is defined in the union contracts
that protect 80 percent of the airline workers. However, Delta Air
Lines unilaterally cut hours for non-union workers to stretch PSP
dollars further.\1\ We believe this to be a violation of the PSP, but
it is certainly an instruction for any future relief program intended
to protect jobs.
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\1\ https://www.afacwa.org/
letter_senatecommerce_involuntary_reduction_hours_intent_caresact
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We are not a bailout, but lately we have been punching bags. ``Make it
stop.''
We strongly oppose any suggestion that the Payroll Support Program
(PSP) was a bailout for airlines. The PSP, championed by the Commerce
Committee, was a lifeline for aviation workers and the most successful
and transparent program in all of COVID relief. Headlines that
mischaracterize the purpose and use of this workers-first relief
program, designed to continue the payroll for airline employees, make
an already very difficult and stressful job on the frontlines of
aviation even harder and more dangerous. We are the face of the airline
and the direct interface with the public.
The problem with aviation right now is the violence towards Flight
Attendants and other aviation workers that has remained constant at
record high levels during the biggest crisis our Nation has faced in
100 years. The last thing we need, especially before the December
holidays after dealing with all of the stresses on the frontlines of
this pandemic for two years, is a false narrative about the program.
Unfounded controversy breeds contempt for aviation workers simply doing
our jobs to keep everyone safe.
Throughout 2021, incidents of disruptive passengers and violent
events against crew and passengers has been exponentially higher than
any previous year in aviation. While the number of bad actors is
relatively small, the rate of disruptions have been so pervasive Flight
Attendants wonder every morning they put on their uniform whether it
will be a sign of leadership and authority in the cabin to keep
everyone safe, or a target for a violent attack.
Flight Attendants are aviation's first responders, charged with the
safety and health of passengers and crew. For the past twenty years,
since the tragic events of September 11, 2001, Flight Attendants have
served as the last line of defense in aviation security. We know there
are two fundamentals in aviation safety and security: 1) remove all
distractions from safety sensitive work, and 2) leave all threats to
safety and security on the ground.
The threat of a terrorist attack related to commercial aviation has
not abated, but our vigilance and coordinated actions across government
and aviation stakeholders has to date thwarted any planned attacks. If
we allow disruptions in the cabin or distractions due to defiance of
passengers to comply with crew instructions to become a regular
occurrence, we are in jeopardy of missing cues of a coordinated attack
or handing tools to those who wish to do us harm. We cannot be lulled
into a place of accepting these distractions as a new normal.
Flight Attendants have one message for everyone who touches
aviation and the lawmakers charged with oversight of our industry: Make
it stop.
There is no doubt the issue of disruptive passengers is of
paramount concern and requires all of us--federal and private sector
workers, airlines, airports, regulators, and lawmakers to act with
coordinated urgency across aviation to subdue this threat to aviation
safety and security. Our union is very much on the record with defining
this problem \2\ and our recommendations to mitigate violent and
disruptive events. In summary, we continue to call for:
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\2\ https://www.afacwa.org/unruly_passengers_survey
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Recommendations:
1. Clear communication on the rules from point of ticket sale and
throughout the travel experience (airport signage, airport
PSAs, and notifications from the airline) reinforcing the
`zero-tolerance' policy, the fines/jail time consequences, and
the rules associated with alcohol consumption.
2. The DOJ must act with urgency to conduct criminal prosecution.
Just ahead of the Thanksgiving holiday Attorney General Merrick
Garland directed Federal prosecutors to prioritize prosecution
of disruptive airline passengers. This was welcome news, but
our experience is that it takes publicly reported jail
sentences for this to serve as an effective deterrent.
3. Ban to-go alcohol and delivery of open container alcohol to the
gates. Limit customers to purchasing one alcoholic beverage at
a time. Airports and airlines should brief all airport
employees at the start of each shift of our shared
responsibility to keep intoxicated passengers from boarding
planes in violation of Federal regulations.
4. Enforce the mask mandate consistently, starting in the airport.
Model of compliance starting at the airport door. Make clear
who is responsible to enforce at TSA and encourage all airport
personnel to remind passengers of the rules and point to
signage and announcements placed more frequently throughout the
airport.
5. Consistent response and clear consequences. Increase
coordination with law enforcement, airports, and airlines to
act quickly in the airport to keep problems on the ground and
respond effectively in the event of incidents reported in the
air.
6. Government centralized list of offenders used to deny the
ability to fly across all airlines on the day of an incident.
Place travelers on central ``banned passenger list'' to deny
right to fly for a period of time commensurate with the
severity of the offense, recognizing all necessary due process
to protect individual rights. Direct FAA passenger fines into a
legal/medical fund for affected crewmembers, Passenger Service
Agents, and Transportation Security Officers.
7. Airlines should utilize FAA guidance to respond consistently to
disruptive and violent passenger incidents, including
communicating thoroughly the role of Flight Attendants, agents,
pilots, ground coordinators, and management in reporting the
incident to law enforcement and internal company review.
Workers must know both in advance and after any incident what
to expect from the airline in terms of legal support and
emotional assistance for any workers harmed in the course of a
disruptive passenger event.
8. Require that all airport bars, restaurants, and shops post
signage and issue verbal warnings to patrons who fail to comply
with masking requirements and regulations related to alcohol
consumption.
9. Relevant House and Senate Committees should work with urgency to
enact legislation that expands FBI concurrent jurisdiction to
include the jetbridge in order to ensure enforcement of Federal
crimes for violence that occurs when the airplane door is open.
10. Make crewmember self defense training mandatory. The voluntary
program currently run by U.S. Air Marshals working in the
Transportation Security Administration should be included in
required continuing qualifications training for crew and paid
by the airline as intended by Congress following the events of
September 11, 2001.
11. Increase staffing at the gate and on each flight. Almost every
passenger is an infrequent traveler today. We need more
frontline workers in the airports and on planes who are able to
answer questions, identify problems early in order to de-
escalate, or simply have backup from other workers when issues
get out of hand or require physical restraint and a law
enforcement response. Regional airlines are reporting a couple
of aggressive passenger incidents per week and often there is a
single Flight Attendant to face unhinged rages.
12. Current conditions increase the urgency for the FAA and DOT to
implement the Flight Attendant rest rules mandated by Congress
in 2018.
CWA Calls on Congress to Help Enforce Protections for Passenger Service
Agents Under Federal Law
Frontline ground service agents have worked throughout the COVID-19
pandemic to provide essential services across airports in the U.S.
Their work, helping passengers navigate systemwide flight cancellations
and delays, evolving testing requirements and enforcing Federal and
airline protocols at the gate, ensured passengers started and ended
their journeys safely and efficiently. During this busy and uncertain
holiday travel season however, ground service agents are finding their
duties interrupted by an unprecedented increase in assaults from
violent passengers. Since January 2021, the Federal Aviation
Administration (FAA) has recorded 5,553 incidents involving disruptive
passengers across airports in the U.S.\3\ These records however, only
account for incidents involving flight crews, which means assaults
against agents on the ground are going unreported and unaddressed. CWA
is encouraged by the FAA's efforts to record and address assaults
against flight crews but we are concerned that more can be done to
enforce Federal protections for agents who are assaulted at the gates.
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\3\ https://www.faa.gov/data_research/passengers_cargo/
unruly_passengers/
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The Communications Workers of America represents 20,000 passenger
service members working for American Airlines and wholly-owned regional
subsidiaries Envoy Air and Piedmont Airlines. Over the past few months,
our agents have experienced egregiously violent assaults that have had
long lasting impacts on their physical, mental and emotional wellbeing.
Our members have reported being repeatedly punched in the face, kicked,
slammed against doors and counters and have even been spit on by
passengers. The visible and invisible impacts these attacks have on our
members should concern everyone.
The cause of these attacks vary but one common thread exists
between these cases--the lack of enforcement by local, state and
Federal departments creates opportunity for attacks to continue and to
increase in severity. When incidents occur at the gates, local law
officers are slow to respond, fail to properly document the incident by
taking statements from witnesses and often do not detain the offending
passenger.
Further, even where arrests are made, local prosecutors rarely file
serious charges in these cases. For example, on June 28, 2021, a
passenger tried to board a flight from Charlotte International Airport
in a state of extreme intoxication. When an agent barred him from
boarding the plane, the passenger violently attacked our member and a
supervisor. Despite the clear evidence of the assault, the Charlotte
Police Department arrested and charged the passenger with less serious
offenses such as, resisting arrest, disorderly conduct and trespassing
in the gate area. To the best of our knowledge, not a single passenger
who has assaulted a ground service worker has been prosecuted under
Federal law. This inaction signals to our members that their physical
and emotional safety is not a priority.
Agents are exhausted by the little to no enforcement in cases that
result in personal injury and emotional stress. Union representatives
report the highest number of calls to employee assistance programs
searching for ways to cope with fatigue, stress and fear caused by
these incidents. Gate agents are a vital part of a multilayered airline
security and safety process at the airport and their importance can not
be understated. Our members are the last line of defense before a
disruptive passenger boards an airplane and causes disruptions in the
air. Stopping assaults at the gate should be the highest security
priority for members of Congress.
The U.S. Attorney General's office recently issued a memorandum
calling for an interagency coordination to address criminal conduct on
commercial flights. Our members were excluded from this guidance. As
oversight in these cases is within the purview of the Departments of
Justice, Transportation and Homeland Security, we believe that an
interagency working group that makes clear the responsibility of
Federal and local agencies in cases of assault at airport gates, ticket
and reservation areas, and other on-the-ground airport locations is
necessary. The interagency working group should clarify the specific
agency roles and should establish a clear pathway for the reporting,
processing, referral, and prosecution of assault cases. The interagency
working group should include labor representatives of ground service
workers. CWA has partnered with other unions representing passenger
service agents to urge DOJ, DHS and DOT to urgently address this issue.
Millions of passengers are expected to travel during the upcoming
Christmas and New Years holiday season. Right now, we have every
indication that the trend of violent assaults and the lack of
enforcement will continue without intervention. This Subcommittee can
support our efforts to protect our members under Federal law by urging
the Department of Justice to arrest and prosecute passengers who
assault, intimidate or threaten gate agents either verbally or
physically--preventing them from performing their duties to secure the
aircraft while loading and unloading. Our members should expect a safe
and just workplace--in fact, our entire aviation system depends on it.
Payroll Support Program (PSP) Benefits Extend Well Beyond Furlough
Protections
This pandemic has been brutal and we're not through it yet. But no
one should question the effectiveness of the relief provided to
airlines in order to keep workers in our jobs, connected to our
healthcare, and qualified to work. The economic impact of PSP helped
workers and companies beyond the direct grant recipients. We recently
received this message about a company in south Florida that was able to
survive, maintain 850 jobs, and be in a position to hire more employees
today simply because aviation worker payroll was maintained.
``I just wanted to thank you on behalf of all of the families,
including mine, that you impacted for the better across
Aviation over the past two years . . . I profoundly remember
sitting in our boardroom on March 10, 2020 talking about very
difficult choices that we needed to make just to survive until
the next month given the new and unforeseeable reality we
faced. We had been in business for 2 decades and literally
overnight we were confronted with what seemed to be an
insurmountable task to survive Covid 19 impacts on global
Aviation. As words such as shelter in place started to become
common lingo the prospects for our industry and the millions of
jobs tied to it seemed bleak to say the least. A long story
short, due to people like you fighting on behalf of all of us
and our families we have emerged stronger than ever and with
more jobs and better salaries for our entire team. Thank you on
behalf of all the ancillary businesses and the millions of
dependents that you fought for in the darkest hours.''
Maintaining jobs, certification and security credentials puts us in
a stronger position to address today's aviation security issues. I'm
proud to share this thank you note that could also be addressed to
every member of this Committee who worked to make this program law. Our
economy and our planet will benefit from this program for decades to
come.
The International Transport Workers Federation commissioned a study
that will release findings in the coming months. As an affiliate of the
federation, I have seen the draft report that shows U.S. airlines need
to spend $256 billion dollars between 2020-2025 for fleet renewal given
the age of their fleets. Saving the airlines by saving people first
also makes it possible now to support aerospace and manufacturing jobs,
transition to newer fuel efficient aircraft and sustainable fuels, and
remain in place to immediately support our military with initiatives
like Operation Allies Welcome.
PSP made it possible for us to get back to addressing many of the
issues we had prior to the pandemic: safety, security, worker and
consumer rights, diversity and inclusion, sustainability, implementing
NextGen technology, and so much more.
Conclusion
We thank Congress, and especially the bipartisan efforts of this
Committee, for enacting the Payroll Support Program. It worked. Now
let's focus on a safer workplace for the people on the frontlines of
aviation and a collaborative effort to end the pandemic.
Thank you for your continued oversight.
The Chairwoman. Thank you. Thank you, Ms. Nelson, and thank
you for raising two important issues for us. I have worked with
Senator Durbin on making sure the Department of Justice does
address those issues. It is intolerable and I hope the
Department of Justice will prosecute those cases.
Second, I think it is safe to say if there are 100 members
of the U.S. Senate, there were 100 different opinions exactly
how this program worked, but in the end, people made a
compromise and worked together to get something done. So thank
you for mentioning that. This hearing is part of an official
report that we are going to do so we won't get to every
question today.
There will be questions for the record, too. So if
something, you know, isn't asked today, we will be following
up. But there are a couple of things to cover now. We have
talked about all the positive aspects of PSP. There are a
couple of things people want to know about the hiccups along
the way.
Obviously, last July and August, we ran into some things. I
think that was on my chart, we were way above everybody else in
returning to service. But we sent out letters asking airlines
who had problems to tell us what those were about. If you are
one of those airlines and you want to comment, would you give
us a comment on that? And then also on refunds, if we can just
get a quick answer from people.
I am assuming that all airlines believe that if you were
someone who wanted to travel during that period and your flight
was canceled and then something happened where you didn't want
to travel, that you could get a refund. And so if you could
just also give me a comment on that. So do you want to start,
Mr. Parker?
[Technical problems.]
Mr. Parker.--and the end of October, we had, American had a
serious operational issue. It was driven by an extraordinary
event, winds at Dallas-Fort Worth of all places that shut down
three of the five runways, our largest hub. When that happens,
over two days, we end up with airplanes in the wrong place,
people in the wrong place.
So that was that was the driver of the vast majority of the
cancellations. But we--in this environment, even though we are
adequately staffed, it gets characterized--it gets
unfortunately characterized--I mean it is probably
characterized as we don't have enough people. As I have said in
my testimony, we have more pilots per block hours, flight
attendants per block hours than we have had in the past.
In this environment, unfortunately, though, it is difficult
to get people to pick up extra time is what we are finding.
So--which is what we needed at that time. And that was the
case. It is largely related to what Ms. Nelson said about some
of what is going on on the aircraft as related to COVID, but we
just didn't have--we don't have the ability to recover as
quickly.
Now, fortunately, those large events don't happen very
often. But when they do, at least for us, we have had it much,
much harder to recover than we had in the past, so it extended
longer than it would have otherwise. It was a seriously
disruptive event that would have resulted in hundreds of
cancellations on its own. The fact that it took 2 days longer,
we were troubled by, but that is the reason why we really do
have difficulty versus prior to the pandemic right now.
I think that will pass by the way. But this environment
we're in right now, it is a different job than people have been
working. We have called people back from leaves that were on
leave that didn't--that weren't ready to be called back from
leave. So people are doing a great job, phenomenal job showing
up, doing their jobs, doing it right.
But we need, you know, extra hours working by the minimum
hours, is hard to find. So that was our case. As to refunds, of
course, we agree exactly with what you said. And indeed, we at
American issued $3.2 billion of refunds in 2020, in three
quarters of 2020, and our revenues over the last three quarters
of 2020 was $7.5 billion.
We issued nearly as much in refunds as we had in revenue,
or half as much rather over the three quarters.
The Chairwoman. This is in refunds versus a, you know, a
voucher or something?
Mr. Parker. Yes, absolute--cash refunds, $3.2 billion. So
yes, we took the position that you stated, which is, if we
cancel a flight, of course, the customer's dollar is refunded,
we issued those in cash.
The Chairwoman. OK. Others?
Mr. Kelly. My report is very similar, and it is a matter of
getting adjusted to I think, you know, this pandemic reality
that we are all dealing with, and we just need to make sure
that we don't reschedule the airline relative to the people
resources that we have, and we have made a number of
adjustments in that regard. But much for the same reasons that
Doug was describing there.
Yes, refunds--the refunds are obviously required when we
cancel the flight. Refunds are required within 7 days of the
need for the refund, and we are totally in compliance with
that.
Our refund rate in 2020 was double what was normal, even
though the revenues were a fraction of what they were
historically. So I feel like, you know, we have taken very good
care of our customers in that regard.
The Chairwoman. OK, I am going to have to get the rest of
you for the record, because my time is up, but I do want
everybody to address that issue, including the airlines that
aren't here. And if they can, you know, give us answers in
writing for that would be great. Senator Wicker.
Senator Wicker. Thank you very much. Let me ask about air
quality. Mr. Laughter, in your testimony you say, ``we continue
to electrostatically spray our aircraft interiors and high
grade disinfectants and use HEPA air filters to remove 99.99
percent of airborne particles on board.'' Is this new or were
those HEPA filters there all along?
Mr. Laughter. Thank you, Senator, for that question. Those
are HEPA filters that are part of an aircraft circulation
system, and I would assume that all modern airliners have those
same systems.
Senator Wicker. OK, so they were there to start with?
Mr. Laughter. That is correct.
Senator Wicker. And you have partnered, I believe, with
Mayo Clinic?
Mr. Laughter. That is correct.
Senator Wicker. Perhaps other airlines did something
similar with the top experts in the world on health care. What
did they tell you about the quality of air with respect to the
virus as compared to, say, a theater, a church, a concert hall,
perhaps a hearing room? What did they tell you?
Mr. Laughter. Senator, you are right. We did partner with
some science experts such as the Mayo Clinic, and part of the
discussion on the HEPA filters onboard the aircraft was to
understand what that air turnover rate was and how the air
quality onboard the aircraft would compare to other facilities.
I can't speak to this room or any theater, but I think we
all generally agree now that the cycle of the way air turns
over in a pressurized air cabin and the filtration system is
superior to many indoor spaces that you can be.
Senator Wicker. OK. Who else from the airline industry
would like to speak to that? Mr. Kirby?
Mr. Kirby. Yes, thanks. Thanks for the question, Senator.
And you know, at United we partnered with the Cleveland Clinic
as our expert partner, but we also partnered with DARPA and the
Department of Defense back in May of last year.
That was a great story about why is United Airlines
airplanes flying circles out over the Atlantic Ocean. And it
was because the Department of Defense was testing the air flow
on airplanes. And the conclusion of that is that expectively
anywhere that you are going to be indoors, the airplane is the
safest place that you can be indoors. It is because of the air
filtration.
Senator Wicker. Safer than a theater? Safer than----
Mr. Kirby. Far safer than a theater. Safer actually than an
intensive care unit because we have HEPA-grade filters, but we
filter the air 20 to 30 times an hour in a typical ICU is 2 to
3 times an hour. Our aircraft are a remarkably safe
environment. The takeaway that I remember most is that being
next to someone on an airplane, sitting next to them is the
equivalent of being 15 feet away from them in a typical
building.
Senator Wicker. Now let me ask you this, Mr. Kirby. Do you
think your airlines better than Mr. Laughter's, Mr. Kelly's,
and Mr. Parkers?
Mr. Kirby. Well, of course, I do. But I think we have all
done the same thing for safety.
Senator Wicker. Let me ask, Mr. Kelly on the air quality,
and Mr. Parker, would both of you briefly comment on that and
would we ever, do you think, be able to get on an airplane
without masks?
Mr. Kelly. Well, I would echo my colleague's comments on
the quality of the air. The statistics I recall is 99.97
percent of airborne pathogens are captured by the HEPA
filtering system and is turned over every two or 3 minutes. We
use UT Southwestern and Stanford School of Medicine, so we just
add to this prestigious list. But yes, I think the case is very
strong that masks don't add much, if anything in the air cabin
environment. It is very safe and very high quality compared to
any other indoor setting.
Senator Wicker. Mr. Parker.
Mr. Parker. I concur. The aircraft is the safest place you
can be. It is true of all of our aircraft. They all have these
HEPA filters and the same airflow.
Senator Wicker. OK. Ms. Nelson, will we ever be able not to
wear masks in them?
Ms. Nelson. I think that that is probably for the medical
community to decide rather than me, but what I will add is that
the studies that were done that have been referenced were also
done with a mannequins who were sitting straightforward with
masks on, not removing them, not eating at any point in time.
So, it is important to recognize that the safe, controlled
environment on the plane is a layered safety protocol, which
includes the sanitation of the aircraft, includes the service
procedures, and includes the HEPA filtration that are not on
all aircraft, by the way, and it includes everyone wearing the
masks.
Senator Wicker. So, the filtration system is different from
airline to airline or----
Ms. Nelson. From aircraft to aircraft. So not all aircraft
have the HEPA filtration.
The Chairwoman. Older--older planes may not----
Ms. Nelson. The flights that you take to Mississippi, for
example.
Senator Wicker. They are the best.
Ms. Nelson. They are the best. They are the best.
Senator Wicker. Mr. Kelly that is what you told me.
Mr. Kelly. On your Southwest flight.
Ms. Nelson. OK, on your Southwest flight.
[Laughter.]
Ms. Nelson. I don't want to get in the middle of that. But
what I will tell you is we absolutely look forward to the day
that we no longer have the mask requirement, and we are simply
trying to get through this pandemic and have had to enforce
this to keep everyone safe. Not everyone on our planes have had
access to the vaccine yet, either.
Senator Wicker. Thank you, ma'am, and thank you, Madam
Chair.
The Chairwoman. Yes. Senator Schatz.
STATEMENT OF HON. BRIAN SCHATZ,
U.S. SENATOR FROM HAWAII
Senator Schatz. Thank you, Madam Chair. Thank you, ranking
member. Thank you to all of you for being here. Really
appreciate it. And we have all come through difficult times. We
are probably not quite done with all of that, but I do
appreciate every single one of your leadership.
Let's start with Ms. Nelson. I know you elucidated in your
testimony, but if you could for the Committee, just summarize
what are the key recommendations that you have for passenger
safety and for cruise safety going forward? And tell us what we
should tell Pete Buttigieg to get on top of?
Ms. Nelson. OK, so the biggest issue is making sure that we
are very clear about what the consequences are if someone is
acting out. So it is very--we are very heartened to know that
FAA and DOJ are working together now, sharing information, and
we are moving forward with criminal prosecution.
When we got the fines and penalties in place in early 2000
and then that was implemented and this was reported out through
the media, by 2008, 2009, events of air rage incidents on
planes was going down in the U.S. as it still going up around
the world. So we know that those consequences are a good
deterrent. We also need to be very clear from the time that
people get into the airport until they leave the airport again
on the other side of their trip about what the rules are, what
the consequences are, and what we will do if they don't--they
don't comply.
We do need more enforcement in the airports because we are
not seeing that happen, and it is unclear who is responsible
for that at TSA and how consistently that is happening. We need
to ban to go alcohol. This is a major issue. And alcohol is
being pushed on passengers now today more so as we are in the
pandemic than before. This started with to go alcohol because
of pandemic serving procedures, and they determined that this
was a moneymaker, and they are pushing it now in the airports.
And that is unacceptable because it is at the expense of
our safety. So we would hope that that would stop. And those
are the key items. We also just want to make sure that there is
attention on the issues at the gate as much as they are on the
plane, because 50 percent of the events our members tell us
they were able to identify there was a problem in the gate.
If we had clear attention on that and had law enforcement
response, we would cut down on half of the events on the plane
right there.
Senator Schatz. As someone who flies as much as a flight
attendant, all of those are my personal observations as well,
anecdotal as they may be. Mr. Kirby, I want to, first of all,
thank you for your leadership on the climate issue.
Mr. Kirby. Thank you.
Senator Schatz. You said on a panel this year, we have had
a couple of conversations about climate, and you have said some
tough stuff about offsets. And so earlier this year, you said
there are a fig leaf for a CEO who wants to write a check,
check the box, pretend they have done the right thing. I tend
to agree.
I know this is a little bit of a love fest, but I think it
is important for us to talk about offsets. I get aviation is
hard. You are in the business of using jet fuel to move people
around the planet. And so as we make our climate
transformation, you may be some of the laggards and not because
you don't desire to move, but because we don't really have an
alternative to jet fuel.
So could you talk about A, what you think about offsets,
and B, what is the future of transportation as it relates to
climate action?
Mr. Kirby. Well, thank you, Senator. They are related. And
as you know, as many of you know, this is a personal passion
for mine, and United is trying to make a real difference in the
world on climate change for aviation. We are hard to
decarbonize industry, but it is important that we keep flying
people.
You know, one of the casualties of COVID was the loss of
connectivity around the world. When we have thousands of people
flying to another country every day, back and forth, those
bridges help bring us together, and they got torn apart during
COVID. So we need to keep flying but do it responsibly.
Sustainable aviation fuel is the number one thing for this
industry, and we need your help, your support. In the Build
Back Better bill there is a portion of it.
Regardless of what happens with the overall bill, the
blenders tax credit that is the most important thing that can
happen to really build that industry. That is going to be big
for us. On your point about climate or about carbon offsets,
traditional carbon offsets, I have been passionate about this
for 30 years and I have hated it because the fact of the matter
is most of them aren't real.
They are planting trees that were going to be planted
anyway or not cutting down trees that are not going to be cut
down anyway. But even if that isn't the case, if we took, this
comes from Yale, if we took all the space on the planet where
you could plant trees and planted them all with trees, it is
less than 5 months of mankind's emissions and it is a one shot
solution.
And because of that, we will not make a dent in climate
change if every corporation--this isn't unique to aviation--if
every corporation is focused on the easy answer, let's plant
trees, in order to solve climate change. We need real things
like sustainable aviation, fuel carbon sequestration.
If we had more time, I would talk about that, as you know,
but we need real solutions like that. This is a solvable
problem. It is not easy. We can solve it, but we got to be real
about what the answers are.
Senator Schatz. I have two questions, for the record. The
first will be about minimum seat size, and the second will be
about an in-flight video that used to be in every seat back
coming into the State of Hawaii to basically educate people. I
know under the Commerce Clause of the United States
Constitution, we can't prevent people from coming to the State
of Hawaii, but we can tell people how to be a good guest.
And right now, that is a clickable option, which nobody
clicks, and particularly bad guests are not going to be the
ones that click. I have tried to work with FRA to get this to
be mandatory content. I will be reducing my request in writing
to you. Thank you.
The Chairwoman. Thank you. Senator Blunt. Senator Klobuchar
had been on the screen, so we are going to go to her afterwards
if she is available. But Senator Blunt.
STATEMENT OF HON. ROY BLUNT,
U.S. SENATOR FROM MISSOURI
Senator Blunt. Thank you. Thank you, Chair. Mr. Kirby,
when--we may see how far this question goes with others, but
when you were getting ready to get back to significant numbers
of passengers in the air and in the airport, what were the
things you were the most concerned about that you didn't
control?
Mr. Kirby. You know, one of the things we did that was
unique at United in April of last year, we thought the pandemic
might last a couple of years, and because of that, we put a
team together that really their goal was to identify land mines
of things that if this lasted for a few years, and mostly there
were small things like badging at airports, you know, the
badging office, make sure they were appropriately staffed.
The things that we worried about the most were really the
unanticipated because we had a list of hundreds of things we
could put through all of those. The challenges that we have had
have been--we have had challenges too. We have avoided big
operational disruptions. But the challenges have mostly been
around things that happen from vendors that support all of us.
So there were fuel shortages in the West this summer,
airports that--that wasn't even on our list, and we had a long
list, as an example. But those kinds of shortages with people
that we depend on, infrastructure that we depend on and kind of
took for granted that wasn't ready to come back at 100 percent
as soon as we were.
Senator Blunt. Mr. Laughter, do you have anything on that
question?
Mr. Laughter. I would only add that similarly, as we were
getting ready for the return, we formed a team of operational
readiness. And part of what we were looking at is, is what
other pieces of the aviation puzzle we should we just be having
the same conversation with, and that included several
Government entities such as the FAA, air traffic controllers,
CBP, and TSA.
And largely as we did that coordination, we found that they
were having similar conversations. So a lot of those were the
things that we went through, in addition to some of the supply
chain issues Mr. Kirby mentioned.
Senator Blunt. Well, Ms. Nelson, on that same topic, were
there things from a flight attendant perspective that you would
have expected to be ready when you got back to numbers of
passengers? And you mentioned already the concerns about
putting people on the plane that it is obvious in the airport
they shouldn't be on the plane. Any other things like that you
have seen?
Ms. Nelson. We--our biggest issue right now, actually, is
this pushing of alcohol in the airport and then the
inconsistency with the enforcement so that people are not
really sure what to believe. Part of the problem that we have
seen is that as people are boarding at different airports, some
of the patchwork of policies around the Nation about what
people should be doing has led people to believe that--they
don't know what to believe. And keeping people in a constant
state like that is really unsettling.
And so I would liken it to when we have a delay and we have
got all the passengers on the plane, in the times when we are
giving regular updates about what is going on and we are being
honest with people, they leave that plane smiling and happy.
When we don't do that, they are very angry, and that is what we
have seen during the pandemic with the different policies and
the different communications. And that has been--I think, added
to the issues at the airport.
Senator Blunt. Alright. Thank you. Mr. Parker, you
mentioned earlier that you thought you had the right number of
people, but you didn't have the right number of people at the
right time. Why would that be people--the right number of
people, if everybody's well and showing up?
Mr. Parker. Right number if we don't have any enormous
disruption, if we don't have a significant disruption. In those
events, you know, we need people to want to pick up additional
trips and to work more than just their minimums. That is the
situation. Very rare that it happens, but it happened to us in
late October. But that is really the situation.
And in normal weather events, this isn't about--it doesn't
have to be perfect weather. We have enough people to run the
airline, we have enough people run the airline, and in any sort
of, you know, hurricanes or anything like that we can handle.
But when we had this un-forecasted situation in Dallas, we
as--it is very difficult to get people to essentially not only
volunteer for work, but to be there to pick up additional trips
when needed.
Senator Blunt. Now this may be more of a societal question
than just an airline question, but did you have more people--do
you think people are more willing to take extra time before the
pandemic than after the pandemic?
Mr. Parker. Oh, absolutely. And again, but again, I am not
trying to make a statement about our people. I am saying it is
largely related to the pandemic, I believe. Again, some of the
things Ms. Nelson talked about makes it hard for flight
attendants to want to be--to go to work when they have to.
But also, yes, it is--there is a global pandemic going on.
So it is--anyway, our team is doing a great job. We just find
it harder in those circumstances than it has been in the past.
Senator Blunt. Mr. Kelly, I see Ms. Nelson shaking her
head, yes. Did you see the same--do you have the same situation
2 years ago? Would you have had people more eager to sign up
for overtime than you would----
Mr. Kelly. Yes, it is a very different environment. And I
don't talk to a CEO without having, you know, similar
experiences shared. So it is a difficult hiring environment. As
we all know, there is a lot of people out of the work force.
And then, I think even within, Doug mentioned earlier, just
having people returning from leaves.
Three weeks makes a habit. They are out for a long time.
They may not be interested in working as much, as an example.
Sarah mentioned the same thing. So yes, I think we are all
experiencing that. Absenteeism is higher. We have more people
on leave. Attrition is a little bit higher. So for most
categories, it is not that they are remarkably different.
But when you add them all together, yes, it is just a
different working environment. We are adjusting to it. And I
think one of the things that we are anxious to do is restore
flight activity within our network where it was before. And
obviously, one of the supply chain constraints we have is just
getting people on board to do that.
Senator Blunt. Thank you. Thank you, Chair.
The Chairwoman. Yes. Senator Klobuchar.
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Thank you very much, Senator Cantwell. I
am here chairing a hearing on antitrust and innovation, so I am
pleased to be on remotely. Why don't we start with you, Mr.
Kelly? You talked about in your testimony how Southwest
maintained service to all the domestic airports that you serve
before the pandemic. Could you talk about how the PSP helped
Southwest achieve this?
Mr. Kelly. Absolutely. Thank you, Senator, great to see
you. I think it was simply being able to keep all of our
airplanes, keep all of our people, and then be in a position
where we can respond to demand as it returns. So during the
pandemic, in the darkest days when revenues were down 95
percent, obviously we didn't need to be flying a lot of empty
airplanes around, so we reduced our flight activity there.
But we had opportunities to add--with available aircraft,
we had opportunities to add more new cities, and we are
delighted to see that we had a lot of good opportunities to do
that. They were more leisure oriented because business travel
still lags dramatically what it was pre-pandemic. But I think
PSP required--provided the funds to be able to sustain that.
Senator Klobuchar. OK, excellent, thank you. Mr. Parker,
you and I met yesterday. We talked about just overall the
workforce shortage issues. And talk about in a minute here,
including airplane mechanics, what do you think we need to do
in Washington to improve that?
Mr. Parker. Well, thanks, Senator. Yes, it is--we have a
number of jobs like these mechanic jobs, pilot jobs that are
great jobs that unfortunately are--we could do a much better
job of providing--as a country, making it easier for people to
get the training necessary to do those jobs.
And we certainly would like to work with you more on that.
I think all of us have ideas on things can be done. But this is
a workforce issue that is ripe to be addressed and one that I
know that if we work together, we can get addressed.
Senator Klobuchar. Excellent, thank you. Mr. Laughter,
Senator Blunt, he just spoke, he and I lead the bill on--led
the bill for a while on Brand USA, which is really important to
allow our country to advertise in other countries.
Obviously, the pandemic has--and allowed us to partner with
the private sector to do that and not at the expense of
taxpayers, but to great gain for tourism. Could you talk about,
despite the pandemic, how hard this has been, how important
international travel is to our country in terms of not just the
airlines, but really our entire tourism network?
Mr. Laughter. Well, Senator, thank you for that question. I
would say it is extremely important, and it is this segment of
our business recovery that is lagging the most. So we are
excited to see and very encouraged by the changes to our border
opening.
And I think that that going forward is one of the most
important things that we can do, is ensure that we keep the
border open, we keep the process for crossing the border
simple, and we work on making it consistent and easy within
whatever those requirements are, be it vaccinations or tests or
things like that. So I think, you know, that piece of our
international business recovery is key.
Senator Klobuchar. Alright, thank you. And now maybe you
can comment on Brand USA later on the record, if anyone else
wants to do that because it's pretty important to the tourism
industry. Everyone--anyone want to join in here? No one? OK.
Hi, Senator Grassley. I am on live in the commerce hearing. Do
you want to say hello?
[Laughter.]
Senator Klobuchar. Now I will turn to Ms. Nelson. Ms.
Nelson, you referred to the flight attendants as you sometimes
sadly can be punching bags when there are disruptive
passengers. Could you quickly give your ideas on how you can
get at that? And what are some of the policy changes you think
would help?
Ms. Nelson. Yes. Thank you, Senator Klobuchar. So we
definitely need clear consequences. So we are happy to see that
DOJ is taking this as a serious step and the instruction from
President Biden to do that. We also need to address any of the
issues that are contributing to this, such as alcohol, which
is--our members tell us is about 60 percent of the incidents.
So we are trying to cut the to go alcohol in the airports.
And we need clear communications throughout the entire process,
so--and coordinated response from law enforcement and FBI so
that we have consistent response at the gates and those
consequences can be levied. So these are the holes that we are
trying to plug, and I do want to recognize that we have been
working with the airlines on this and there have been absolute
advancements by working together.
We have announcements from the pilots, we have
announcements at the gates, and everyone is understanding that
the entire airline ecosystem has this problem, not just flight
attendants, not just gate agents, but we need to do more.
Senator Klobuchar. Alright. I really appreciate it. Thank
you, everybody, and we will respond--we will need--Blunt and I
will want answers on the Brand USA because it has been a huge
priority for the tourism industry. OK. Thank you.
The Chairwoman. Thank you, Senator Klobuchar. Senator
Fischer.
STATEMENT OF HON. DEB FISCHER,
U.S. SENATOR FROM NEBRASKA
Senator Fischer. Thank you, Madam Chair, and thank you to
our panel for being here today. Inflation is up 6.8 percent
year over year, accelerating at its fastest pace in almost 40
years. Americans across the country are feeling the pain of
increased costs of goods, with higher prices, from a carton of
milk to a gallon of gasoline. As airline executives, what
inflationary factors are most concerning to your companies as
we move into 2022, and will these factors impact airfare? Why
don't we start with you, Mr. Parker?
Mr. Parker. Thank you. The large one for us is fuel. It is
our second largest expense in American. Our wages actually
aren't done--don't have enormous inflationary pressure because
we have 85 percent union jobs, and our people are very well
paid. But we certainly are seeing fuel costs increases. It is a
commodity that is volatile, but certainly the last couple
months that increase is going to have a significant impact on
our cost structure, and at some point that will result in
higher fares.
Senator Fischer. Mr. Kelly.
Mr. Kelly. I would echo Doug's comments and just say that
as we are recovering and trying to get our schedule back to
maximum efficiency as we were close to it pre-pandemic, if you
will, there is a lot of opportunities to drive down--we are
fixed cost industry, so there is a lot of opportunities to
drive down our unit cost. But until that time, we will have
some inflationary cost pressures. You know, maybe just a little
bit different comment is, you know, we are seeing wage pressure
across the board with front line employees, and we are
competing with other sectors, especially for airport workers.
So inflation is real. It is a concern. At the same time, if
you look at airfares, the inflation adjusted airfares have been
trending down for decades and certainly been trending down
since 2014. So we are doing our best to hold the line in terms
of airfare inflation.
Senator Fischer. And we appreciate that they were trending
down, but I believe now they are going to be trending up. And
how long do you think that will last?
Mr. Kelly. Well, obviously we compete. So I am not speaking
for the industry, but we are low cost, we are low-fare, we
don't charge bag fees, we don't charge change fees, so we are
going to do our best to be America's leading low-fare carrier
going forward.
Senator Fischer. OK. Mr. Kirby.
Mr. Kirby. I would echo what both these gentlemen have
said. Fuel is our highest, our most volatile, and most
susceptible to inflation. Another one that I would add is
airports. You know, a lot of airports had lower revenues as
there were fewer flights around the country, and so some of the
airport and fees for air navigation are going up.
Those are probably the highest in a percentage increase,
and we would hope--we are working to and hopefully will get
ways to moderate those because it is the last thing, obviously,
we and our people need.
And then the third one is what Gary said which is, you
know, all of the support services around aviation are feeling
pressure, whether it is everything, whether it is people to
fuel airplanes, or security, airport workers in restaurants,
and all of that is, tends to flow through to us, whether they
have the contractual right or not.
People, our vendors will say we are either going to go out
of business or you are going to pay us more because we simply
can't hire people. So it is mostly about hiring people in those
kinds of jobs.
Senator Fischer. Mr. Laughter.
Mr. Laughter. I would first say thank you again to Congress
and the U.S. taxpayer for getting us in the position that we
are today. And I would just want to emphasize the point of
returning to our full scale is being the best thing that we can
do to combat these inflationary pressures. I think that as I
mentioned earlier, getting international open, keeping it open,
and continuing to restore our full network is going to be the
number one thing that we can do.
Senator Fischer. When you look at the energy costs that you
are facing here, fuel costs, and when you are looking at
pressure and trying to have enough employees as you are
building up your flights again, how is that going to affect
your economic outlook for 2022?
Mr. Laughter. Well, so for Delta, we continue to hire. We
have hired about over 8,000 people this year, and that is a key
part of getting back to that return that we are talking about.
We, at my company, see our recovery continuing through 2022
and into 2023, and that--I think the question there will be
when do the international markets fully reopen? But we see
continued up--you know, we do, we have a new variant out there
that we are keeping an eye on. And I think that long term,
though, we continue to regain that scale through the course of
2022.
Senator Fischer. Mr. Laughter, it was recently announced
that Delta is going to be ending a daily service between our
capital City of Lincoln and Minneapolis on January 10. I would
like to be able to have a conversation with you about that or
some written questions for the record, please.
Mr. Laughter. Absolutely. I welcome that.
Senator Fischer. Thank you.
The Chairwoman. Thank you. It is my understanding that
Senator Hickenlooper is going to be next. Senator Baldwin has
deferred to you very graciously.
STATEMENT OF HON. JOHN HICKENLOOPER,
U.S. SENATOR FROM COLORADO
Senator Hickenlooper. I am always in deeper debt.
[Laughter.]
Senator Hickenlooper. Appreciate that. Thank you all for
making time. I know how busy you all are, and I know what
challenging years you have had. Mr. Kirby, I thought I would
start with you just because you have had such a busy year,
partnership with Boom Supersonic, based in Colorado, which is--
will allow United to procure supersonic aircraft using
sustainable aviation fuel.
And then you were on that first flight from Chicago to D.C.
with 100 percent sustainable aviation fuel in one engine, which
somehow seems out of balance to me to this day. And then also
your investment in the middle of just a week ago or less than a
week ago in hydrogen electric engines for regional aircraft
flights. Hey, I commend you for the initiative that you are
showing.
But recognizing the damage done by COVID and the pandemic,
how will airlines like United be able to continue to pursue
climate ambitions amidst, you know, the economic recovery? Is
that something that should be of great concern?
Mr. Kirby. Well, thank you, Senator, for the kind words. We
are excited--we are excited to be part of that innovation on
the other side of the COVID and looking to the future. And my
answer to how can we do it is, we don't have a choice. We have
to do it, first and foremost because the right thing to do for
the planet. But at some point also either our customers, our
shareholders, our regulators, the legislative branch are going
to force us to do it because it is the right thing to do.
And this industry, because it is hard to decarbonize, needs
to start making the seed investments to build that foundation.
It is the reason that I think the bill--the blenders credit is
so important. To me, doing for aviation, what we want, what we
need to do is run the same playbook that we ran as a country,
as a globe for wind and solar 20 years ago.
Wind and solar were uneconomic 20 years ago, but here there
were credits, there was support, there was certainty for the
industry, drove massive investment, they came down the cost
curve, built economies of scale. It is now cheaper to produce
power with wind, and solar than it is with fossil fuels. We
need to run that same playbook.
We know the playbook that works and what is--the current
blenders tax credit, you know, really will drive the kind of
investment that we need because we need--we estimate $250
billion of investment to get the global aviation industry to a
10 percent start. This will be what kick starts and drives the
start of that private investment to make that happen.
Senator Hickenlooper. And I know from previous
conversations with Mr. Parker, Mr. Kelly, that they share your
sentiments in this regard. Mr. Laughter, I will start earlier
with the discussion of discontinued flights. Grand Junction is
about 300 miles west of Denver, 280 miles west of Denver, and
you have been flying there for decades, from Salt Lake City to
Grand Junction, Colorado. They remain 90 percent full. It is a
critical route for Grand Junction. It fits into their economic
package in a variety of ways.
Just what--I have always been told airlines want to become
an essential part of a local economy. It really is a key travel
hub to access to a number of Western cities that, you know, it
has been used 24 years, over millions of customers. And just in
the last--this year alone, we have had 80,000 customers flying
on that route.
And yet they heard there were recently announced, very
recently announced that that flight is going to be
discontinued. What economic conditions are you considering in
terms of making these decisions? And what should State
officials, how can we create an environment where this doesn't
happen?
Mr. Laughter. Well, Senator, thank you for the opportunity
to talk about that. The one area that we are seeing a labor
shortage, and I think it is short lived, is in our regional
pilots. And so as the major airlines are hiring pilots and
because of the fact that in 2020 there was a gap where there
was much lower flying, which sort of disrupted the training
pipeline and the captain upgrade in the regional world, that is
sort of impacting us at this point.
And so as we look out, we aren't able to serve every place
that we would like to. And so I do think that that is short
lived and we see recovery happening in 2022. And so as always,
these cities, we desire to serve them, and so I think it is
part of our continual analysis to see when we can get back in
there. And we have resumed service to some places that were
suspended during the pandemic.
Senator Hickenlooper. Great. Well, I will tell the people
of Grand Junction to exhibit a little patience. That doesn't
usually work very well with our local officials, but I will
give it my best, my best shot. I will yield back time to the
Chair. Thank you. Thank you all.
The Chairwoman. Senator Thune.
STATEMENT OF HON. JOHN THUNE,
U.S. SENATOR FROM SOUTH DAKOTA
Senator Thune. Madam Chair, Thank you. And thanks to all of
you for agreeing to testify today as the country continues to
grapple with supply chain challenges. I appreciate the
opportunity to discuss the recovery that U.S. airlines have had
from the major disruptions of travel last year, when the
pandemic emerged. And I think a lot of it was due to the
success of the Payroll Support Program, which has kept airlines
running and their employees working even travel numbers
plummeted. As Thanksgiving travel numbers indicate, the
industry starting to see a pretty strong recovery in domestic
air travel, and I am hoping that we will see that similar
recovery in the international air travel next year as
vaccination campaigns continue and the world becomes more
accustomed to handling these new coronavirus variants.
As the strong recovery progresses, I want to continue to
emphasize the importance of considering rural communities,
which have felt a disproportionate impact from pandemic related
service reductions as longer-term service decisions are made.
Mr. Kirby, could you describe how United is working with
codeshare partners to maximize service in smaller markets?
And then I will ask this of Mr. Parker when he concludes
his answer, if you could provide some examples of innovative
approaches your airline has taken to form partnerships with
other carriers or communities to ensure stability in service?
Mr. Kirby. Well, thank you, Senator Thune. And it follows
on, you know, to the previous, past question. There has been a
looming pilot shortage for the last decade in the United
States, and going through COVID, it became an actual pilot
shortage. So all of us, particularly our regional partners,
simply don't have enough airplanes to fly.
We have almost 100 airplanes effectively grounded right
now, regional aircraft, because there is not enough air--there
are not enough pilots to fly them. Which means, we just can't
at the moment fly to all the small communities that we would
like to. It is really about not having enough pilots. I am a
little less optimistic that that situation is going to reverse
itself in the near term unless we do something to increase the
supply of pilots.
At United, we have bought and have our first Khan Academy
called Aviate Academy with our first class start on Monday of
this week with 30 people, 79 percent of them diverse, also
another opportunity. These are 30 people that have no flight
experience that are going to get the opportunity to become
pilots.
And if they pass all the certification and all the tests,
can become commercial airline pilots at the end of the program.
We are going to need a lot more programs like that. The country
is going to need thousands of pilots.
Senator Thune. Is that a function primarily of just more
aggressive recruiting?
Mr. Kirby. No, it is really a function of--the problem to
become a pilot, particularly the 1,500 hour rule, is you need
to spend $150,000, and that is typically not eligible for
Government loans like other, you know, if you want to be a
doctor, a lawyer, you can get loans and go to school.
If you want to be a commercial airline pilot, you can't do
that, even though your career earnings are higher, and we need
those people. So creating ways that they can finance and fund
their ability to get the requisite training is really the
foundation, and I think it is the only way we are going to
solve this problem for small communities, because I expect it
is going to get worse before it gets better. We have to have a
higher supply of pilots and we just don't have enough today.
Senator Thune. Alright. Well, I know we would all be
interested in things that we could do to help and provide
incentives to fill that pipeline, refill that pipeline. Mr.
Kelly--or Mr. Parker, I am sorry.
Mr. Parker. Yes. And services to small communities is
incredibly important to American Airlines. We serve some 230
cities in the United States. Obviously, a number of those are
smaller communities, and places like Sioux City and Rapid--
Sioux Falls and Rapid City are important to that. So, and we
would like to serve more, frankly, over time. But again, at
this point in time I agree with, you know, where Scott is.
We at American have not yet--well, we have--we serve the
same number of cities we did prior to the pandemic. We have
terminated--we have lost some service to three cities, but we
have added three others. So, but it is an issue, it is going to
be an issue for our ability to serve if we can't recruit enough
pilots, you know, the regional airlines.
But again, I believe we can get that solved, but that is
certainly an issue that we are concerned about going forward.
It hasn't affected American yet. As to ways to make it even
better, as you asked, alliances that we have established that
American with other airlines like Alaska and JetBlue make it
more likely for us to be able to serve smaller markets because
we just connect people to more places.
So all of our business is about connecting people and
connecting dots, and the more ways we can do that through
either alliances or on our own mettle, we are looking to do all
the time.
Senator Thune. Good. And very quickly, and this has been
alluded to already, if you could touch on utilizing sustainable
aviation fuel to further reduce your emissions. I am concerned
about ICAO's carbon emissions modeling for SAF, which penalizes
American farmers because of its treatment of induced land use
changes versus the DOE's more favorable and I would argue,
accurate green model. What are your airlines doing to increase
the use of, and I know it has been talked a little bit--touched
on already, but I guess, can you commit to utilizing homegrown
biofuels?
Mr. Parker. Yes, sir. Again, that is the answer to getting
us to carbon neutral is safe aviation fuels, and we are all
dedicated to doing just that.
Senator Thune. OK.
Mr. Kelly. Yes, I would agree, and in fact, you know, the
targets that have been established are very ambitious and it is
going to take a sea change from where we are to achieve that,
and we need to cast a very broad net in terms of raw materials
to produce it. So we would be very supportive of that.
Senator Thune. Yes. Mr. Kirby.
Mr. Kirby. Well, Senator, I think it is important that we
get on a level playing field with road fuels, which we are not
today. A lot of incentives that exist for that, not for fuels.
But I also think it is a globe--at some point it is going to
have to come to grips with our sustainable fuels need to come
from sources other than just farm food. So, you know, municipal
solid waste, Woody biomass, whatever it is, you may be even
power to liquids. We are going to have to come to grips with
that too.
Senator Thune. Yes. OK. Good.
Mr. Laughter. And Senator, I would just echo these comments
that we have ambitions and goals to increase our use of
sustainable aviation fuels. We need it produced on the scale
that will support this industry and we look forward to
partnering with you and Congress on that.
Senator Thune. Good. Thank you. Thanks, Madam Chair.
The Chairwoman. Thank you. Senator Baldwin.
STATEMENT OF HON. TAMMY BALDWIN,
U.S. SENATOR FROM WISCONSIN
Senator Baldwin. Thank you, Madam Chair. I want to start
off where Senator Thune started off with regard to the need for
additional pilots. In my home State of Wisconsin, we have a lot
of small communities that are served by regional aircraft. And
Mr. Kirby, a United Express air carrier, Air Wisconsin is based
in our state. They fly the 50 seat aircraft. And statements
that you made last month at the Skift Aviation Forum about
markets that rely on these 50 seaters greatly concerned me, as
you can imagine.
Now, I am working on legislation that would make flight
education and training programs more accessible to a broader
range of students, precisely by increasing the amount of
student loan aid available for individuals who are enrolled in
an accredited program, all to ensure that we are going to have
a strong pipeline of pilots to fly to small communities and
everywhere that travelers want to go.
So I know there is a counterpart that's been introduced in
the House of Representatives. We are just trying to put the
final touches on it right now for Senate introduction. But
would you agree that such a proposal would encourage more
people to become pilots, and what more is United doing to
recruit and retain pilots?
Mr. Kirby. Yes, well, thank you, Senator. And for what it
is worth, some of those markets are going to get ungauged to
bigger airplanes. But small cities that are entirely relying on
a 50 seat service are at risk unless we create a bigger supply
of pilots. So I apologize, I am not familiar with the specifics
of your bill, but the idea of increasing the supply of pilots
is really important, and the Government has a huge role to play
in helping us do that.
At United, we have tried our self-help measure of using our
Aviate Academy as a way, and we intend to train 500 new pilots
a year. It is not just about creating the next generation of
pilots, it is a safer program. It is much more like you are up
to going to pilot training at the Air Force or, you know, the
Navy where you learn not just to fly, you fly aerobatics, you
fly in complicated airspace, it improves diversity, so there is
a lot of great things we can do.
But there is a real opportunity for this. And these are
great careers. I mean, a captain at United Airlines, and we
have over 200 widebody airplanes. The captains on those
airplanes make $400,000 with great benefits, I mean, there is
not many careers left like that in the United States.
So we just need to help people get onto the first rung of
the ladder, get through the rigorous training process so they
have enough certification to start at an airline and then they
can make their careers. But we are all on board with doing
anything we can to increase that supply and to help do that.
Senator Baldwin. Great. I want to switch focuses now to one
area where I think the industry has a great opportunity to
emerge from the pandemic much better than before, and that is
the topic of travel for individuals with disabilities.
I recognize that air travel has been anything but normal
since the early days of COVID-19. But in looking at disability
related complaints filed with the Department of Transportation,
there seems to have been a significant increase in complaints
filed in 2021 as compared to 2018. And so a question for each
of you to answer, what are--what is your airline doing to
address disability related complaints? And why don't we start
with you, Mr. Parker.
Mr. Parker. Thank you. It is certainly an issue that we are
working very hard to address. It is a difficult situation on
aircraft, of course, and it has been. We are all working very
hard to do everything we possibly can. Interested in working
and continue to work with you on other things that might be
done.
We at American, for example, while we know we are not doing
as well as we can, we are we are encouraged by the fact that
the number of--due to a lot of effort, the number of wheelchair
damages that we have had are down 40 percent over the last
year. So, again, by no means are we where we need to be, but we
are intensely focused on being the best we can in this regard.
Senator Baldwin. OK. Mr. Kelly.
Mr. Kelly. It think, you know, here in the short term our
primary focus is on wheelchairs training, in reducing the
damage, and also working with wheelchair manufacturers to see
what can be done to harden wheelchairs. They are just not built
to be loaded into their aircraft bins and transported.
So I think there is opportunities there. And like Doug
reported, we are definitely seeing our claims coming down,
which is obviously very welcomed. More futuristic, we are
working with manufacturers or intend to work with manufacturers
in terms of bathroom access on board the airplane, which is
obviously a big challenge and especially on narrow body
airplanes. But those are the two primary things that we are
working on.
Senator Baldwin. Mr. Kirby.
Mr. Kirby. We also have been very--it is a high priority
for us, and focused on wheelchairs, and have had a significant
reduction in wheelchair damages, wheelchair complaints. Like
Gary said it is tough because, you know, the wheelchairs just
aren't built--in spite of that, we are focused very hard on
that.
We are doing a lot of other things for people with
disabilities. We were the first airline, for example, to get
our website and our app for blind, for user blind--for the
visually impaired to be able to use it. There is a lot of
things like that--we have a whole team and I coincidentally met
with that team this past week on all the things we can do to
improve the world for disabled.
And a passionate group because for most of them it is
personal. They are either disabled themselves or have family
members that are disabled. And having a team like that to
advocate for, you know, it is probably one of the best things
that we can do internally to make sure we drive the kinds of
changes, identify what the issues are, and then drive change.
Senator Baldwin. Mr. Laughter.
Mr. Laughter. Senator, I would add that wheelchairs and
assistive devices are a focus for Delta, and we certainly are
working toward zero. That is our goal. We have also created an
advisory board on disability, which is made up of Delta
customers who volunteer their time from the disability
community and to help us throughout the travel where they make
travel more accessible.
Senator Baldwin. Great. Thank you for your indulgence. I
will submit one additional question for the record, just
relating to the fact that in airports, people with disabilities
often rely on folks that you have contracted with to help with
mobility in the airports, and I have some specific questions
about that.
The Chairwoman. Thank you. Senator Moran.
STATEMENT OF HON. JERRY MORAN,
U.S. SENATOR FROM KANSAS
Senator Moran. Chairwoman, thank you very much. Thanks to
our panelists for being here. Let me start where Senator Thune
led, which is with rural communities. Both American and United
are significant suppliers of air service across our state.
Essential air service is a significant component of the
ability to do that. I think it was you, Mr. Kirby, that talked
about the cost of training and educating a pilot. And I assume
that--are the revenues insufficient to cover the costs of
pilots in those smaller towns, is it harder to cover?
And then my question becomes, is essential air service a
method by which we could better compensate the airlines for
service that is less financially rewarding, if that is the
case?
Mr. Kirby. Yes, Senator, thanks for the question again. And
it is really important. Our bread and butter is flying to those
small cities and connecting the world. We really want to--we
don't want to take any of the cities off the map. And the
issue, though, is not really about economics.
If it is, it is about economics for individuals who are
deciding on their careers when they get out of college or when
they are wherever and deciding, do I go to law school or do I
go to another, you know, become a commercial airline pilot. And
historically, we have never been involved in training pilots
because a lot of them came out of the military or through other
sources. And now the demand that we have for pilots simply
exceeds the supply. So we are starting our Aviate Academy, we
have begun to start training pilots.
But I don't know that we are going to be--you know, it is
not what we have historically done. Our goal is to train 500
pilots a year. That is, you know, we are going to be hiring
2,000 to 3,000 a year. So it is even a small percentage of what
we are hiring at United. And so I think we probably need
something broader.
You know, I, you know, as much as we like getting EAS money
when we fly to markets, I would much rather take those funds
and put them into the infrastructure to create training for
pilots and to build a robust pipeline that makes it easy for
people with an aptitude and a desire to be a commercial airline
pilot to get the training, to get the skills that they need.
You know, I would like to focus on giving them better
training than they have gotten in the past so that they come
out more like a military trained pilot than somebody who, you
know, hasn't been through that path. And I think there is an
opportunity to make our system safer, better, create great
jobs, and fix the supply problem.
But the supply problem isn't going to get fixed in the
short term because it takes time to get through the process to
become a commercial airline pilot.
Senator Moran. So resources to support pilot education and
training is your request?
Mr. Kirby. Correct, yes.
Senator Moran. Mr. Parker, anything?
Mr. Parker. No, I agree. It is making more markets--EAS
markets would take a scarce resource and move it to different
markets. But the real point here is there is just not enough
resources.
Senator Moran. My question was, are there essential air
service resources that could be devoted to creating the revenue
necessary to educate pilots, not creating more essential
operations?
Mr. Parker. OK. Yes, I would agree that diverting to pilot
training would be a great idea.
Senator Moran. I got to run that by my communities, but it
is a huge component to Kansas. We, other than Alaska, probably
are the most essential air service state in the country and we
appreciate the service you provide. Let me ask--well first of
all, let me indicate to Ms. Nelson that I am a frequent flier
and I have lots of contact with gate agents and with flight
attendants.
My experience pre and post COVID has been almost without
exception nothing but tremendous care, compassion,
professionalism by those who serve in those capacities. And I
want to thank you and those you represent for the manner in
which they have conducted themselves, certainly to me, but more
importantly, to the flying public in very difficult and
challenging times.
Ms. Nelson. Thank you so much. Appreciate that so much,
Senator Moran. And we love that you fly with us. And also, I
would just note, I want to add to what was said here, the more
that we can show the public that these jobs are for everyone in
it, that they are for women, that they are for people of color,
and then that we can give them the means to be able to get that
training to get to it, we can actually increase the number of
people who are willing to do this work. So I just wanted to add
that as well. And thank you so much for your comments. We will
share that with our members.
Senator Moran. I am very complimentary. And I would again
offer as others have done so any way that we can assist. I
don't know anything about to go alcohol. I didn't know that was
an option, but nothing is going to change my behavior----
[Laugher.]
Senator Moran. Now that I know----
Ms. Nelson. Glad that you clarified that.
Senator Moran. Alright. I am happy to try to help assist to
reduce the friction that can occur as a result of that.
Ms. Nelson. Thank you so much.
Senator Moran. I appreciate, Mr. Laughter, the opportunity
I had to visit Delta Airlines in Atlanta a few weeks ago. And I
raised a couple of topics, although I mostly came there to
listen, learn, but I checked with my airports. I would
highlight for you the opportunity that Wichita, ICT, considers
to fly to Salt Lake City, and would welcome that--it seemed
like there was interest, but I would welcome any further
conversation. I also want to thank you for the passenger
lounge, the premium passenger lounge that you intend to build
within the new airport in Kansas City. And why are you
laughing? That is not for me.
[Laughter.]
Senator Moran. But I am glad that you have chosen to assist
in our new airport and its comforts and amenabilities. In
addition to that, Southwest, I saw in the business journal,
Kent City Business Journal, is going to pursue its
sustainability efforts in Kansas City.
And again, we welcome that further connection between
Kansas City and Southwest. One of the bills that the Chairman
of this committee was very helpful in seeing was passed is a
bill that I introduced to provide assistance, the Aviation
Manufacturing Jobs Protection Program designed to provide
assistance to the workforce within those industries, those
businesses that manufacture airplanes and its components. And I
again thank the Chairwoman for her help in that accomplishment.
But I want to make certain that it is known that the
ability to build new airplanes is not just a manufacturing
issue, it is an airline issue. And I would like to, if you
wouldn't mind confirming that, assuming that that is true, what
it means to you to be able to continue to access new aircraft,
often built in Kansas.
Mr. Parker. Right.
The Chairwoman. And if you could answer quickly because he
is over time--you can see that the subject of this hearing and
your being here, which I think actually is the first time that
we have had many of you here in almost a decade, that you can
see that this committee has a lot of aviation issues, and I
want to make sure all our colleagues get questions.
Senator Moran. I am sorry, Chairwoman. I didn't realize I
was over time.
The Chairwoman. I know, but that is because I know how much
you care about this issue, so----
Senator Moran. You were saying nice things about the Chair
too.
The Chairwoman. Right, exactly. How manufacturing----
Mr. Parker. I will try to do it real fast for all of us----
The Chairwoman. Yes, thank you.
Mr. Parker. Because I am sure we are all going to say the
same thing. It is critical to us. Of course, we have to have
airplanes. We appreciate your work in getting support into
those companies. They needed it like we did, and they are
crucial to what we do, so thank you.
Mr. Kelly. Ditto. And I would just add that it is also a
very significant part of our sustainability plan, which is to
continue to modernize our fleet. The MAX is 14 percent more
fuel efficient than the previous generation, so very important.
Senator Moran. For the record, I would ask your plans in
regard to the MAX, but I will take that for--in testimony.
The Chairwoman. Thank you, Senator Moran, and thanks for
working on the aviation manufacturing jobs bill with me, and I
appreciate your leadership on it. And I do think it got money
out to people in Kansas, particularly one of the big suppliers.
So, Senator Markey.
STATEMENT OF HON. EDWARD MARKEY,
U.S. SENATOR FROM MASSACHUSETTS
Senator Markey. Thank you, Madam Chair. According to CBS
News, the airline industry still owes fliers upwards of $20
billion in refunds, which is simply unjust and immoral. That is
why Senator Blumenthal, and I sent a letter to the Airline
Industry Trade Association yesterday demanding once again that
every airline provide immediate refunds for canceled flights
during the pandemic.
We have now made this appeal over and over again, yet the
airlines refused to do the right thing. Will each of you commit
to providing refunds for all tickets that were canceled due to
the pandemic, regardless of whether you canceled the flight, or
a passenger canceled in order to protect the health of a family
member? Will you commit to refunding this money, yes or no? Mr.
Parker.
Mr. Parker. Senator, we have refunded $3.2 billion of cash
refunds in 2020 alone. We did that for every flight that we
canceled. For flights----
Senator Markey. I am talking about the flights that
passengers canceled because of their justifiable concern about
the pandemic and the impact it was having on the air. Will you
refund that fund--will you refund that money to passengers?
Mr. Parker. You know, what you are asking about is a case
where someone has bought a nonrefundable ticket, condition one.
Condition two, the flight actually flew. So in which case, in
that case we did make the extraordinary--as conditions----
Senator Markey. Will you refund to passengers the money
that they spent on a ticket that they canceled because they
were afraid of the COVID risk to themselves or--will you refund
that money, yes or no?
Mr. Parker. In the case of a customer who bought a
nonrefundable ticket, and the flight went and still didn't want
to go, what we did is say, well, we are not going to force
you--we are not going to make you have it be nonrefundable and
keep your cash. We will give you a credit to use in the future
to fly when you are comfortable flying, and that is where we
are on those.
Senator Markey. And will you--have you removed an
expiration date on that ticket so that they can take it
whenever they want in the future?
Mr. Parker. In our case, we are up to March 31st, 2022,
right now on the expiration. We moved that as the pandemic----
Senator Markey. Will you commit to making it unlimited in
terms of the expiration date? Will you commit to doing that?
Mr. Parker. We want to make it--we want to--we want people
to fly. I would encourage people to fly. We have moved the date
as----
Senator Markey. Again, I am still not getting the answers
from the industry. The passengers want the money back and you
are not saying you are going to give it to them. And at a
minimum, they just want a voucher that they can use whenever
they want to. They shouldn't have to worry that in order to get
the cash that they have being used, that they have to jump on a
flight in the next 3 months when the pandemic is now rising.
And they shouldn't even have to worry about that.
You should be giving them the voucher now so that they know
they can use it for as--whenever they want, in whatever month
or year that they want, whenever they feel safe with their
family member. And you are still telling us today you will not
give those families that kind of a guarantee. And that is
unfortunately industry wide in terms of what the practice is.
And I am just telling you for passengers in our country,
they want fairness. They want to know that they are going to be
treated in a way which is respectful. And I will also add this
OK, the same thing is true with the fees, $30 for one bag, $40
for a second, $150 for a third. Does it really cost $150 to put
a bag on a plane? That is a rhetorical question, because
obviously the answer is no. So time is brief, and I just want
Ms. Nelson just to make this point.
I am shocked that some of the CEOs here today have
suggested that we no longer need mask mandates on planes. Ms.
Nelson in the face of omicron, children under five who still
cannot be vaccinated, thousands of flight attendants who
protect us every day and that we still allow unvaccinated
people on planes to fly in our country, do you believe that we
should be lifting the mask mandate for people who are on planes
in our country?
Ms. Nelson. I believe that the Government has taken a very
responsible approach to this and is moving the mask mandate as
we have more information about the pandemic. And we agree that
it should continue to stay in place. It is a workplace safety
issue. Although I will be very clear that we do look forward to
the day that we can vaccinate the entire world and get on with
this and not have to have the mask mandate.
We do need a consistent message, though, and it troubles me
to hear different messages. And I would hope that we would all
stay on the same message that we are going to follow the
medical experts and we are going to do what is necessary to
keep everyone safe.
Senator Markey. Yes. Well, right now there are tens of
thousands of people flying who are unvaccinated today on planes
in the United States, and it is unfair to people who are
vaccinated to have them sitting next to them with their masks
off. It would be wrong. It would be immoral to ever take that
position. People are petrified the airlines won't even
reimburse people who have canceled the flight because they are
afraid to fly because they could be endangering themselves or
their family members with coronavirus. And from my perspective,
it is absolutely unacceptable.
Ms. Nelson. Senator Markey, I would also just add that we
have heard from around the world that the confidence in air
travel, because of what has been communicated, the controlled
circumstances including everyone having to wear masks is why
people have confidence in buying their air tickets today.
Senator Markey. And we should continue to build that
confidence. And I just want, just to finish up with you, Ms.
Nelson, I just want to make it clear my support of the need to
do more to put an end to passengers who threaten and assault
flight attendants in our country. It is absolutely an epidemic
and we have to take the strongest possible action at the
Federal level in order to put it to an end. Thank you for your
leadership on that issue.
Ms. Nelson. Thank you so much.
The Chairwoman. Thank you, Senator Markey. Senator
Blackburn.
STATEMENT OF HON. MARSHA BLACKBURN,
U.S. SENATOR FROM TENNESSEE
Senator Blackburn. Thank you, Madam Chairman. And thank you
to each of you for being here today. As you can see, there is a
wide range of issues that people are concerned about. Mr.
Kirby, I want to come to you first. In November, Bloomberg
published a piece on how United Airlines is leading the charge
on implementing President Biden's unconstitutional vaccine
mandate.
U.S. District Judge Mark Pittman stated that you expressed,
and I am quoting, ``skepticism and apparent disdain for any
religiously motivated exemption request.'' So what we are
finding out, and I have got a Tennessean that is in this group,
I represent the State of Tennessee, that there are individuals
that were denied, that all of your religious exemptions were
denied.
So we are also finding out about their pay having been cut
at the time that that exemption was filed. So before they filed
the exemption, did you inform these workers that they were not
going to be paid even if they applied for a religious
exemption?
Mr. Kirby. Well, thank you, Senator. And first, we did
implement a vaccine requirement at United Airlines. We did it
in August before there were any Federal, State, before there
are any requirements from anyone, one direction or the other.
We did it purely as the right thing to do for safety, and I
am happy to explain why if you would like, but we did it purely
for safety and did it well before any Federal requirements. We,
I think you got some perhaps incorrect information. We accepted
about 80 percent of the religious requests. So 80 percent of
the religious requests were accepted.
Senator Blackburn. OK, but the other 20 percent that you
did not accept, were they made aware that they would not be
paid even though they were working while their request was
being considered, that they would not be paid when that was
denied?
Mr. Kirby. So we notified people--anyone whose request, the
20 percent who did not get a religious exemption, we gave them
notification and gave them approximately 35 days from that date
to get vaccinated if they wanted to, and they were fully paid
for that entire time. And to my knowledge, almost all of them
chose to get vaccinated----
Senator Blackburn. OK, so how many people are, how many
employees were fired because of this, and then how much money
did they lose? Do you want to clarify that for the record?
Mr. Kirby. So we got 99.7 percent of our employees
vaccinated, which for a workforce in the United States of just
under 70,000, means that about 200 people chose to leave the
company.
Senator Blackburn. About 200, OK. Alright. Well, it seems
like you are all talking about needing employees, so it seems
like you also would be able to find a workaround on this for
people who either have had COVID, don't want the vaccine, or
cannot take the vaccine. I have talked to so many people who
medically have been advised to not get vaccinated because they
have a complex medical issue.
So it seems like you all could find a workaround on this. I
want to talk to each of you about what is happening with 5G
implementation because we had six former Chairs of the FCC that
sent a letter to Chairman Rosenworcel and the NTIA's Acting
Administrator regarding their concerns with the FAA's decision
to delay 5G implementation.
And at the end of the letter, the Chairs, and I am quoting,
``encourage all stakeholders to work together toward a speedy
resolution of the issues in this band and to ensure these
surprises do not become a recurring feature of American
spectrum management in the future. The recent decision
undermines America's efforts to remain a leader in 5G.'' And of
course, we are looking at what is happening with China, with
their Belt and Road Initiative, with great power competition.
And so we are quite concerned about this. Mr. Laughter, I
want to come to you on this, because it is my understanding
that Delta has invested heavily in 5G for security. So we would
hope that you all are looking for a path forward to work not
only with us, but with regulators on the deployment of 5G and
making certain that it is not delayed.
Mr. Laughter. Well, Senator, thank you. And I can't speak
specifically to any investment in 5G. I do know that the safety
concerns with aircraft and aviation are very real. And I also
know that there is a solution here. We have seen it in other
countries as they have implemented 5G, and with a combination
of power adjustments and location, we could absolutely solve
this and live in a world where there is 5G available.
Senator Blackburn. There are 39 countries that have
implemented 5G and have had no issues that we are aware of.
Have any of you, any of you on the panel, experienced any
issues or problems with 5G?
Mr. Kelly. No, but I think if you were to ask us what our
number one concern is here in the near term, it is the
deployment of 5G because the FAA has issued an airworthiness
directive that would significantly impact our operations once
it is deployed on January 5.
So that is the essence of the concern. It is not an airline
concern, per se. The FAA is uncomfortable with the safety risk.
And as a consequence, the impact on our operations to mitigate
that would be a significant setback.
Senator Blackburn. Seems like we could find a workaround on
this. I am over time, but I appreciate that, and we will
continue the conversation on the issue. Thank you, Madam Chair.
The Chairwoman. Thank you for bringing that issue up.
Senator Blumenthal.
STATEMENT OF HON. RICHARD BLUMENTHAL,
U.S. SENATOR FROM CONNECTICUT
Senator Blumenthal. Thanks, Madam Chair. Welcome to all of
you. Thanks for being here. I think like all my colleagues
here, I am very happy to be flying again. And within the past
month or so I have flown, I think all of your airlines. And I
don't need to tell you that there are a lot of Americans who
are still unhappy.
And the reason they are unhappier is the continued fees and
charges for checked bags, carry-on bags, all kinds of other
things that they used to receive for free and are charged now
without any parent relation to the cost of what they do. So I
have led introduction of the Airline Passenger Bill of Rights,
and I would be happy to talk about the details.
It essentially speaks to problems related to overbook
planes, delayed flights, lost luggage, in effect protects
consumers against those charges and fees and cancellations and
delays that they feel violate their essential rights. I would
like your commitment that you will support a bill of rights. It
may not be exactly what I proposed. For example, my bill would
essentially crack down on airlines using weather as an excuse
for delays and cancellations that may be the airline's fault.
And not a moral fault, but if there is lack of planning,
the one who bears the burden ought to be the airline, not the
passenger. It would also provide--require airlines to provide
ticket refunds and alternative transportation for flights that
are delayed 4 hours or so.
Again, clear enforceable rights. Maybe not exactly those
provisions, but I hope that you are familiar with the basic
provisions of the bill. Will you support that measure? Let me
just ask you, beginning with you, Mr. Parker.
Mr. Parker. We obviously care deeply about our customers.
We want to make sure that--we, like you, want to make sure that
our customers are taken care of. We would like to not have to
even have it legislated. We think we do a nice job, but
certainly will--certainly we are certainly willing to work on--
certainly willing to work with you.
Senator Blumenthal. I apologize for interrupting but my
time is limited.
Mr. Parker. Alright. Certainly want to work with you, sir.
Senator Blumenthal. Mr. Kelly.
Mr. Kelly. I think what--you know, the industry was
deregulated. What we are in favor of is competition and we are
pro-consumer. We do not charge bag fees, we don't charge change
fees, we don't charge a fee to use your frequent flier, we
don't charge carry-on bag fees.
Senator Blumenthal. So I assume you would want a level
playing field, you will be supporting that bill of rights?
Mr. Kelly. We would simply like the opportunity to compete.
And that is the way we compete. If our competitors want to
charge those fees, they have the right to do that under
deregulation, and we would support that going forward.
Senator Blumenthal. Will you work with me on a bill of
rights?
Mr. Kelly. We are very pro-consumer. What I think would be
very helpful is full disclosure and transparency and that kind
of a requirement across the board, not just for airlines but
also for online travel agencies, I think would be very
welcomed.
Senator Blumenthal. Good idea. It is part of the bill of
rights. Mr. Kirby.
Mr. Kirby. Thank you, Senator. And we are really proud at
United of changes that we have made to improve the customer
experience. Thank you for flying again. I am doing a lot of
flying. It is great to be out seeing people again. But we are
really proud of everything--you know, permanently eliminating
change fees during the pandemic. We copied a good idea that our
friends in Southwest had had for a long time. Huge investments
in the product. Huge investments in customer service. Our net
promoter scores are at a level we never even thought possible
in the next decade.
And that is really important. And we are focused on trying
to win customers by quality and give them choices. And so I
don't think we will agree with everything you have in the bill.
We are certainly happy to work with you. I would tell you one
thing that is important is our complaint rates from online
travel agencies are about 10 times as high as they are
internally.
It is because when we--when we interact directly with the
customer, we try to tell that we are trying to be as
transparent as possible about what is happening. But that is
not true at third parties when they sell tickets on airlines.
And anything we can do to get the same level of
transparency through third parties as we have ourselves, we
would be very happy to help you with.
Senator Blumenthal. Thank you.
Mr. Laughter. Senator, I would add that we are also pro-
consumer and look forward to adding to things----
Senator Blumenthal. You are pro-consumer and pro-
competition----
Mr. Laughter. Pro-consumer and pro competition and look
forward to continuing things like eliminating change fees. We
have made very public our ambition to make Wi-Fi free for all
on Delta, and we are working toward that goal, and we would
certainly want to work with you and talk to you further about
this.
Senator Blumenthal. Ms. Nelson, I would ask you this
question, but I just want to preface by saying, first of all, I
really appreciate your strong support for the PSP. I am very
proud to have worked with you on it. I think the flight
attendants, in fact, are the unsung heroes of this pandemic,
literally.
Every time I get on a plane, I thank the flight attendants
and I thank the pilots because they have been on duty working
at the forefront, and I hope that they will be supported by a
bill of rights as well.
Ms. Nelson. They will, and we are very happy that we can
talk about these things because of the PSP. You made it
possible for us to continue to talk about how we can improve
the industry as opposed to going into a long, dire cost-cutting
scenario like we did after 9/11. So thank you very much.
Senator Blumenthal. Thank you. I will just close by saying
I am proud to have supported that $54 billion. I tried to help
lead the effort, but I think it creates a trust on your part
that you will be forthcoming, and I hope you will work on a
bill of rights.
And I hope, also I will just ask this question for the
record, would you tell me how much in your estimate you owe in
refunds for canceled flights during this period? Obviously, my
colleague, Senator Markey and I have written to you about this
question. He mentioned $20 billion in total. I would like to
know what amount, if any, you owe for those canceled flights
during that period.
The Chairwoman. Thank you. Thank you. Senator Cruz.
STATEMENT OF HON. TED CRUZ,
U.S. SENATOR FROM TEXAS
Senator Cruz. Thank you, Madam Chair. Welcome to each of
the witnesses. As a number of Senators have observed last year,
what Congress did with regard to the aviation industry was
critical, and it was unprecedented. We allocated over $54
billion to keep the American aviation industry strong and
healthy.
I was the Chairman of the Aviation Subcommittee at the
time. Each of the CEOs on this panel and Ms. Nelson, I have
spoken to all of you many times. Each of you went on a great
length making the case that maintaining our pilots, maintaining
our flight attendants, maintaining our personnel in aviation
was critically important.
We fast forward to where we are today, and we find
ourselves in a different circumstance. And the behavior of
airlines has not been uniform. I am proud to say the two
airlines based in Texas, Mr. Kelly's airline and Mr. Parker's
airline, I think have been exemplary, particularly concerning
vaccine mandates.
Both of you have made public commitments that you will not
be firing your employees because of failure to comply with the
vaccine mandates, and I thank you for that. Mr. Bastian has
likewise made that commitment at Delta. The outlier here is
United. And Mr. Kirby, United's behavior on this issue, I have
to say, has been deeply disturbing. I am a frequent customer of
United. I live in Houston. I have got over a million miles on
United.
There are over 14,000 United employees in the state of
Texas, and the way United has treated its employees is in
marked contrast to your competitors sitting here. Your
competitors have said they will stand with their employees.
United has not made that same commitment.
How many pilots has United fired because of failure to
comply with the vaccine mandate?
Mr. Kirby. Well, Senator, I am happy to talk to all about
the rationale for why we did it. We did it for safety.
Senator Cruz. I have a limited time, so my question is how
many pilots have you fired?
Mr. Kirby. I believe it is 6 out of 13,000.
Senator Cruz. And how many pilots have you placed on unpaid
leave?
Mr. Kirby. I think it is about 80.
Senator Cruz. OK. How many flight attendants have you
fired?
Mr. Kirby. I don't know the number. In total, it is about
200 employees.
Senator Cruz. Well, I will tell you, I spoke this morning
to the Airline Employees for Health Freedom that said they had
over 2,000 United employees who had been placed on unpaid leave
because they sought exemptions from the vaccine mandate.
They said that included 331 pilots.
I will also note that I have been literally inundated with
United employees complaining about United's callous disregard
for the rights of the pilots. One of the messages was for a
pilot who flew for United for more than two decades, who
applied for and received an exemption from your vaccine mandate
on religious grounds and was subsequently placed on leave with
no pay and no benefits, including no medical insurance.
Now his wife, who relies on her husband's insurance, has
had to postpone a necessary surgery with no idea when she will
be able to reschedule because she has no idea when her husband
would be able to fly again. And you are simultaneously
enforcing a non-compete so this pilot can't even go work for
your competitors.
Another message I received from another pilot, a
constituent self-described proud Texan, flew for the Air Force
for almost three decades, including missions in Asia, now finds
himself on indefinite unpaid leave with a denial of all
benefits to include medical, dental, vision insurance,
disability travel privileges, crew member access to jump seat,
denied access to his retirement savings.
This morning I spoke with a 10 year flight attendant for
United.
A woman name is Adriana Ubali, who is a single mom, a
Hispanic single mom from Texas who you fired. She received her
termination notice tied in a trash can to her front gate.
I have a letter here, Madam Chairman, from Ms. Ubali
describing the disgraceful treatment she received at the hands
of United. I ask unanimous consent this record to be entered--
this letter be entered into the record.
The Chairwoman. Without objection.
[The information referred to was unavailable at time of
printing.]
Senator Cruz. Just recently, you are being sued by your
employees for mistreating them, for violating their terms of
employment. Just recently, the Fifth Circuit Court of Appeals
Judge James Ho, someone I know very well, an exemplary jurist,
wrote an opinion in which she described the likelihood of your
employee succeeding on the merits as the claims against you
quote, ``appear compelling and convincing at this stage.''
And I want to read what Judge Ho wrote about United:
``Title VII forbids employers from retaliating against
employees who attempt to exercise their statutory rights.'' Yet
United CEO Scott Kirby told employees in a company town hall
meeting that quote, ``very few religious exemptions to the
vaccine mandate would be granted'' and that anyone who even
attempted to request one would be quote, ``putting their job on
the line.'' I saw that video and it is a disturbing video.
He went on to note, this is again Judge Ho writing, ``the
District Court thus concluded that United's mandate reflects an
apathy, if not antipathy, for many of its employees concerns
and a dearth of toleration for those expressing a diversity of
thought through both its policy and its official statements to
employees.'' United has demonstrated a ``callous approach to
and apparent disdain for people of faith.''
Why is United's conduct disregarding the rights of your
employees so different from the conduct of your competitor
airlines, which are protecting the rights of their pilots and
flight attendants and not firing them or putting them on unpaid
leave for exercising their religious liberty rights?
Mr. Kirby. Well, Senator Cruz, again, we did this for
safety. We believe it saved lives. I think that is my number
one obligation is safety, particularly running an airline.
Senator Cruz. You have an obligation to your customers?
Mr. Kirby. My number one obligation is safety, including to
our customers----
Senator Cruz. Are your competitors unsafe?
Mr. Kirby. I think that the world is safer for us. I made
the decision for United. I will let my competitor speak for
themselves. I made the decision for United that getting
everyone vaccinated would save lives and----
Senator Cruz. Mr. Kirby, I will tell you--my time has
expired, but I will tell you this. I fly United, I fly almost
every week. Almost without exception, when I am on one of your
flights, I get stopped by a pilot or a flight attendant, often
multiple pilots or multiple flight attendants who say thank you
for fighting for us. Your employees are being mistreated and it
is disappointing. Your company is better than this and what you
are doing is wrong.
The Chairwoman. Senator Peters.
STATEMENT OF HON. GARY PETERS,
U.S. SENATOR FROM MICHIGAN
Senator Peters. Thank you, Madam Chair. And thank you for
all of you for being here today. Before I ask my questions, I
just hope everybody in this country actually gets a vaccine. I
am absolutely tired of this pandemic. I am tired of what we are
dealing with. We have a tool that works. It is safe, it is
effective.
And if people take a vaccine, we can get through this. No
one has a right to spread a disease around and get other people
sick. Get a vaccine. Please, let's focus on that. But anyway,
let me get back to my questions here. Mr. Laughter, clearly, it
is essential that the economy can provide good paying jobs for
everybody who wants one.
The aviation industry offers an awful lot of really great
opportunities for folks to earn a good living, support their
families, and oftentimes they don't need a college degree in
order to get these great jobs. And we have to make sure that
future generations are able to take advantage of those
opportunities that are out there. I understand that Delta is
pursuing a skills first hiring approach that is based on
candidates not having or not based rather on folks having a 4-
year degree.
Could you tell this committee more about the Delta program
and how we can open up even more careers in the aviation
industry, perhaps providing skills training? And fact, in the
Build Back Better plan, there are significant investments in
skills training. I understand their jobs that are available for
people.
We need to fill those jobs, but some specific skills
training is absolutely critical. Clearly, you are leaning into
that. If you could tell the Committee how we could be of help
would be great?
Mr. Laughter. Well, Senator, thank you for that opportunity
to talk about jobs, opening the aperture, and creating more and
more opportunity at Delta across many different parts of the
company.
You know, the place that is easiest to talk about is what
we are doing with our own internal pilot program, it is called
Propel, and it is specifically driven to allow not only
internal candidates to express--internal non-pilot candidates
to express desire to learn to fly and to be part of our pilot
group. And along with that comes various guidance and mentoring
and direction into different programs, but it also partners
with colleges and universities across the country.
And its goal is again to open the aperture and to make
aviation, particularly technical careers, more available to
others. We have recently changed as many of our jobs as we
could from college degree required to preferred, and that in
and of itself removes a hurdle for many people. So lots of
different opportunities to do that across the system.
Senator Peters. Well, that is great. We would love to work
with you as we try to expand that throughout a variety of
industries as well to create opportunities for people. Mr.
Parker, in your written testimony, you noted that airfares have
declined to the lowest level since the late 1990s, which is
certainly an example of prices dropping and enhancing value for
your customers.
And as we think back what this, what we had to do in order
to keep the aviation industry going during the pandemic with
the Payroll Support Program. Clearly, I would think without
that program, it would have been devastating to the industry
and probably would have perhaps led to further consolidations
in industry, less competition, and perhaps even rising prices.
Could you talk a little bit about how important that
program was, and did it indeed help keep prices down for
consumers?
Mr. Parker. Absolutely. Thanks for asking. As I stated in
my written testimony, while there was a lot of support for the
airline business right at the start of the pandemic, there was
a suggestion that perhaps we should just get it in loans. And
as we wrote in our testimony, had that happened, we would--
obviously we would have taken it as companies. But the right
thing for us to do when given loans is to make sure we are
doing everything we can to be sure to repay those loans.
With no demand, I can't speak for everyone, but I am
certain most all of us would have shut down our airlines,
furloughed everyone, waited for demand to return. As it turns
out, that was probably going to be after the vaccines came out
in early 2021, before we started flying again. It would have
been cataclysmic to employment. It would have been cataclysmic
to our companies.
I don't know how long we could have survived just spending
nothing and producing no revenues. But there would have been
obviously a huge problem for the country as well. Because
instead PSP was used as the program instead of loans, because
we were paid to pay our people, because we made commitments to
continue service to every market, we made commitments to not
furlough, to not voluntarily separate anyone, we kept the
airlines flying, and as demand has returned, we are here.
So unlike other businesses where you see inflation, that
are not able to actually meet demand, so prices rise, we are
actually--we have more supply than there is demand still, and
as a result, certainly for, you know, without business
customers, et cetera, what you are seeing is prices falling and
it is--anyway, it has had that effect.
Prices are absolutely down. I don't know where they would
be if we were flying an airline industry still without PSP, but
with certainty, because we have it, fares are much lower than
they would have been otherwise.
Senator Peters. Well, that is great to hear, and our focus
has to be to continue to help American families keep costs
down, reduce their costs. And just one final question related
to Mr. Kirby. Earlier in the hearing, you mentioned that
airports' financial health has ramifications for air carriers
and the cost of airfares.
As all of you know, we passed a significant infrastructure
package that will make investments in our airports. Could you
comment as to how those investments will also impact hopefully
the cost to--lower costs to consumers going forward and why we
need to make those investments to lower costs?
Mr. Kirby. Well, thank you and thank you for the bipartisan
effort to pass the infrastructure bill. It is really important
to the whole country, not just aviation, to the whole country,
and our competitiveness around the world. But as you know, many
of our airports have not had significant investments. We
haven't built new airports.
I think Denver is the last big new airport that we built 20
something years ago in this country. We are not going to start
building new airports, but we need to update the infrastructure
at those airports. You fly, you know, here in Washington, you
go out to Dulles, there is a temporary terminal that was built
to be temporary 30 something years ago.
And that is not the right thing for our economic
competitiveness for our status as a nation. So we are excited
to have these investments in airports like Dallas or Chicago,
O'Hare, and lots of others as a way to modernize and improve
the system.
Senator Peters. Well, thank you. I appreciate that list of
airports. Include Detroit next time.
[Laughter.]
Senator Peters. Thank you very much. Thank you, Madam
Chair.
The Chairwoman. Senator Young. Hold on, Senator Young. I
don't know that we have your audio. Try again.
STATEMENT OF HON. TODD YOUNG,
U.S. SENATOR FROM INDIANA
Senator Young. Can you hear me?
The Chairwoman. Yes.
Senator Young. Can you see we can see me?
The Chairwoman. We can see you and hear you.
Senator Young. Fantastic. My apologies. So gentlemen, I
will begin with a 5G aviation issue. Indiana was an early
adopter of 5G, and new next generation wireless services will
result in significant benefits for my state. We need to make
sure that any event or claim that will slow the deployment of
5G is based in sound science and facts.
We have countries around the globe that are using the same
spectrum as the C-band for 5G, and we aren't seeing any issues
with aviation. We need to reconcile the aviation concerns
contained in a single study with what is actually happening on
the ground in the real world.
So I ask each of our four airline executives to kindly
answer me yes or no to this response. If you can't answer yes
or no, we will have to follow up later. But it is my hope you
will answer yes or no. Mr. Kelly, will you commit to work to
resolve the issue that I have just discussed as quickly as
possible, yes or no?
Mr. Kelly. Yes. And again, this is an issue that was raised
by the FAA----
Senator Young. Thank you, sir. Mr. Kirby, will you commit
to resolve this issue as quickly as possible? Yes or no, sir?
Mr. Kirby. Senator, this is the biggest and most damaging
potential issue facing us. We want nothing more than to work to
a solution.
Senator Young. Yes. Alright. I will take that as a yes.
Thank you. Mr. Parker, yes or no? You have heard the question?
Mr. Parker. Yes. With the emphasis on the fact that,
please, Senator, that it doesn't result in constraining air
travel.
Senator Young. We will discuss later. Mr. Laughter, yes or
no?
Mr. Laughter. Senator, yes. I would say, as Mr. Kirby said,
the biggest issue facing us right now. We need to work together
to resolve this.
Senator Young. Excellent. Thank you so much, gentlemen.
Turning to the Payroll Support Program. As many of us know, in
April 2020, passenger traffic for U.S. airlines plummeted over
95 percent compared to the prior year. That is quite the
spiral. At that time, we had no idea what the pandemic had in
store for us, and over the next year and a half, we took the
action we needed to in short order, in a bipartisan fashion to
help the U.S. airline industry employees keep their jobs.
Payroll Support Program, or PSP, was what we pulled
together to solve this unprecedented situation and ensure our
airline employees stayed on the payroll and to ensure the
airlines that are a central piece of our transportation system
were able to stay above water and make it through this
devastating situation.
We are sitting here in December 2021, coming off a period
of highly successful Thanksgiving air travel. And I think it is
safe to say the PSP was a very effective response to this
unprecedented crisis. The program helped the U.S. airline
employees get through the toughest months and years in the
industry's history. We are seeing those dividends pay off.
As Americans choose to return to normal life and travel for
business and personal reasons, they are going to find U.S.
airlines and airline employees there to help them get from A to
B.
Can each of you discuss, in summary fashion, PSP's impact
on your respective airline, and how the overall industry would
be different today if this program had not been established?
Mr. Parker. Sure. Senator, Doug Parker. First off, thank
you for your support, your bipartisan--your help in creating
bipartisan support was integral to getting it done. Without it,
I do--I don't know what would have happened to our industry.
It would have been cataclysmic. We wouldn't be flying
nearly what we are flying today. I think we wouldn't have been
flying hardly any--very much at all during 2020. And you saved
a business industry, and I think it made an enormous impact on
our ability to keep this economy moving, so thank you.
Senator Young. Thank you, sir.
Mr. Kelly. Senator, just to add my thanks as well. And yes,
the PSP did what it was designed to do. It preserved jobs, and
those jobs enabled us to continue serving our customers and our
communities. Demand is now back, and we are in a position where
we can take people where they want to go. So it has been a huge
success, and again, very, very grateful for your support.
Senator Young. Thank you.
Mr. Kirby. Senator, it was enormously successful and thank
you and thank you to everyone on a bipartisan basis that
supported it. The industry wouldn't, not only--we wouldn't
exist, anything like it does today, had this not happened. And
it is not just about the industry, it is about all the millions
of jobs that we support that are dependent on connectivity and
aviation and getting people from point A to B. And so this was
not only about saving the aviation industry, it was about
saving an industry that is a critical cog of the U.S. and the
global economy.
Mr. Laughter. And Senator, I will add my thanks to the
Congress in the U.S. taxpayer for making sure that we were able
to preserve tens of thousands of jobs and make sure that we are
in a position to recover in the airline industry and keep
things moving as the economy recovers.
Senator Young. Thank you, gentlemen. Chairman.
The Chairwoman. Thank you. Senator Sinema. Is Senator
Sinema available? Senator Scott.
STATEMENT OF HON. RICK SCOTT,
U.S. SENATOR FROM FLORIDA
Senator Scott. Thank you, Chair Cantwell, and thank you for
holding this hearing. I would like to start with Mr. Kirby. I
want to follow up with what Senator Cruz brought up. Do you
respect your employees' religious beliefs?
Mr. Kirby. Absolutely.
Senator Scott. You think it is, do--so here is what I am
hearing. I am hearing the same thing in Florida. You have got a
lot of people that work for your company many, many years, and
they have been placed on unpaid leave after being granted a
religious exemption to the vaccine mandate.
Title VII of the Civil Rights Act prohibits employment
discrimination based on religion, yet your companies place
employees who declined to receive the COVID vaccine based on
their sincerely held religious beliefs on unpaid leave. So,
number one, if you respect their religious beliefs, how can you
just put somebody out of work?
On top of that, do you believe you are currently in
compliance with Title VII of the Civil Rights Act?
Mr. Kirby. So first, Senator, I think it is important to
explain our policy, actually, which is we have offered everyone
an accommodation where they can still work in an area where
they are not interacting with customers and people frequently.
So for many--we have had about 2,000 employees that have either
a medical or religious exemption.
The majority of those are working in positions like agent
on demand, where they work virtually, on the ramp, where they
are outside and don't work with other customers. And we are
letting people do that. They have to test and there is a bunch
of strict requirements around testing. So we are doing that.
The exception to that is in places where they are with
other employees, and they are with customers. So customer
facing roles. Other biggest area are pilots and flight
attendants, and we will let them take one of the other jobs.
But if they want to be pilots or flight attendants, and the
flip side of this equation is safety is our number one
priority. We absolutely respect their religious rights, but
safety is our number one priority.
And if you are going to be sitting in a cockpit with
someone, and not just in the cockpit, if you are going to spend
4 days with that person traveling to and from the crew bus at
night and having breakfast with them and dinner with them, the
safety of the employees that they work with also comes to bear
and comes to mind.
And so that is the reason. And we look forward to the day
when the COVID pandemic is enough in the rearview mirror that
everyone can return to work vaccinated or unvaccinated. But
until they can do that safely and safely, for all the
employees, that is the accommodation that they have--they can't
work in those customer facing jobs like pilots or flight
attendants, and that we absolutely are compliant with all the
legal requirements.
Senator Scott. So why couldn't you just make them test
every day? I mean, other companies are doing this. I mean, you
are not the only company doing this. It is not just the airline
industry. I mean, you can buy, you know, tests pretty cheaply
now.
Mr. Kirby. Yes, Senator. It is not about expense. It really
is about safety. And you know, aviation has a history of being,
I would say, two standard deviations better on safety than any
other industry. And at United, that is core to our DNA, and we
just don't compromise on safety.
When we had an issue with our 777, 52 widebody airplanes
with an engine issue, we voluntarily grounded the entire fleet.
I mean, that is a massively expensive decision to make, but we
did it for safety because it is the right thing to do. And that
is our, not just our North Star, it is the only star that
guides us on our vaccine policies is about safety.
And there is--testing is good, but it is not as good as
someone being vaccinated because you have a point in time, even
if you even if you are testing every day, where you can infect
someone else before you show up positive. And these are people
that were with each other literally for days in a row.
And because we don't compromise on safety, those--we have
done everything we can to find opportunities for them, but
those kinds of places where they have to be around other
customers and each other for multiple days, we are not allowing
that because of safety.
Senator Scott. Have you ever lost your job?
Mr. Kirby. I have.
Senator Scott. And how did it feel?
Mr. Kirby. I was really angry.
Senator Scott. All of us up here, we are fiduciary to the
taxpayer. We gave your industry $54 billion, and we didn't do
it for every industry. There are a lot of small businesses that
didn't get a dime. And you guys did. You got a lot of money.
So, can each of you tell us, are we going to get a return?
Are the taxpayers of this country, when you think about you
guys all entered into an agreement with the U.S. Treasury. Are
we going to make money of this investment because we are a
fiduciary, that is our job?
Mr. Kirby. I guess I will start since I am on the mic. I
think the country is already getting the return. The return is
less a financial return of buying a stock and having it go up.
The return is about what we do for the U.S. economy, what we
did for humanitarian relief efforts carrying hundreds of
millions of vaccines, supporting relief efforts at the
beginning of the pandemic, bringing 13,000 refugees home from
Afghanistan, repatriating 18,000 Americans that got stranded
overseas. The return is what we do for the economy.
Senator Scott. Did you get paid for that, those flights?
Mr. Kirby. Some of those we did. But many of them--most of
those flew, especially the, you know, repatriation flights and
things flew at losses because there weren't enough passengers.
A lot of those were just commercial airline passengers, and
we have lost--it is hard to add up billions of dollars in the
last year and a half doing those kinds of things. But what you
did was allowed us to keep flying and keeping those airlines
alive. We weren't making money on them. But the support that we
got from Congress, and thank you for it, allowed us to keep
those bridges intact and we could do it because you were
helping fund it.
Senator Scott. Mr. Parker.
Mr. Parker. Yes, and I would just remind you that the $54
billion was 30 percent in loans, so that is being--that will be
repaid.
The reason is 30 percent of loans because it was an
analysis done by the Treasury Department at the time that said
70 percent of what was given to us could be directly saved in a
combination of reduction in unemployment, reduction in
Medicare, et cetera, and plus what the U.S. Government would
have to spend to actually move people around.
So I feel, I would welcome a post audit of this. I think
the U.S. Government has done extremely well. I am proud of
that. We owe that to the taxpayers. But I would encourage the
Committee to ask for a post audit of that. I think you will be
very pleased with the results.
The Chairwoman. Thank you--Senator Rosen. Senator Rosen.
STATEMENT OF HON. JACKY ROSEN,
U.S. SENATOR FROM NEVADA
Senator Rosen. Thank you, Chair Cantwell, Ranking Member
Wicker, if you are there. I can't see anyone on the camera
today, so thanking you both, but we really thank you for
holding this important oversight hearing of the U.S. airline
industry. I appreciate all the witnesses for being here today.
As Chair of this committee, Subcommittee for Tourism, Trade,
and Export Promotion, I have worked to find bipartisan pathways
and solutions to bring travel and the travel and tourism
industry back to its pre-pandemic prosperity.
I have been especially proud of the collaborative work this
committee has done to help workers in those industries. And
before I get to my questions and since we are on the topic of
air travel, I want to recognize yesterday's renaming of the Las
Vegas airport, which I am now so proud to be able to call the
Harry Reid International Airport.
It is one of the busiest airports in the world. It is a
gateway to Nevada's tourism economy. It is a wonderful way to
honor, mentor and friend, a former Senate Majority Leader,
Harry Reid. But I would like to really talk about how the
airlines are going to prepare to meet the increasing demand for
air travel, which I am glad to say is coming back. So in July
of this year, Reno Tahoe Airport, the second largest airport in
Nevada, faces a severe shortage of jet fuel available for
aircraft flying out of the airport.
This was potentially catastrophic. It is an issue that
could have adversely impacted tens of thousands of travelers
coming to and from Nevada, and we risk delays in vital cargo
coming to our state--since learning that jet fuel shipments are
based on travel trends from the previous year to decide how
much jet fuel and space they need to purchase in order to meet
the current demand.
The 2020 demand was artificially low as we dealt with the
unpredictability of a global pandemic, and we all know that air
travel was completely halted in some instances. As such, the
data and air travel trends for 2020 is not a reliable gauge for
predicting air travel in 2021 or the jet fuel that will
actually be necessary to meet these increasing demands.
Fortunately, my office, in partnership with the airport in the
impacted airlines, we did work together to manage the
situation.
However, I believe we have to be better prepared and to
face a similar situations going forward if we are trying to
base anything on those 2020 numbers. Normally, you can rely on
a past year's data, but in this case we might be better to rely
on 2019 data versus 2020. So to the airline representatives
today, could each of you please briefly discuss what your
airlines are doing to ensure you have sufficient jet supply
fuel to meet demand for travel in 2022, which may very well
significantly increase or exceed the travel in 2021?
And can you discuss a little bit about how you make
predictions for future air travel demand generally now, given
the 2020 was a statistical anomaly? So Mr. Kelly, we can start
with you and go on to Mr. Parker, Mr. Kirby, and then Mr.
Laughter, please.
Mr. Kelly. Thank you, Senator, and great to see you. And we
very much appreciate your help last summer. That was definitely
a very stressful situation. Well, I think, first of all, we
appreciate your help and working with the FERC to try to
address what is obviously a deficiency in the way the pipeline
and allocations are performed.
So that may require a legislative fix, quite frankly, so we
will need to continue to work on that. But all of us do
predictions of future traffic. We produce schedules. Our
schedule is published out through June the 4th, as an example,
in 2022, so we know by location how many flights we will have,
what kind of fuel requirements we have. We have a team of
people that goes out and procures the necessary quantities by
location.
Not all airports have pipeline access. And in that regard,
trucks are the primary means of bringing fuel in. And then we
also work on storage needs, as far as jet fuel goes, on an
airport by airport basis. We have talked this afternoon about
personnel shortages across the country in various sectors, and
we all read about truck driver shortages. So it is definitely
something that is a concern.
We factor those kinds of constraints into our planning and
try to make sure that we don't commit to fly more than what we
can supply. Over a long period of time, I am concerned about
the pipeline capacity for this country. It is not growing and
yet the country is growing, so we clearly will need jet fuel
supplies to meet our needs to grow in the future. We will need
distribution of capabilities to meet those needs as well.
Senator Rosen. Thank you. I appreciate it. Madam Chair, I
see my time is up, so for the remaining, Mr. Parker, Mr. Kirby,
Mr. Laughter, I will appreciate an answer to this in writing so
that we can be sure that we help you do whatever we can to meet
the needs, future travel needs for everybody across this
Nation. Thank you.
The Chairwoman. Thank you, Senator Rosen. Let's try Senator
Sinema. See if this works this time.
STATEMENT OF HON. KYRSTEN SINEMA,
U.S. SENATOR FROM ARIZONA
Senator Sinema. Hello--Chair and thank you to our witnesses
for joining us today. Can you hear me, Chairwoman?
The Chairwoman. Yes, we can.
Senator Sinema. Thank you. As the coronavirus pandemic
threatens aviation jobs across the country, Congress's
bipartisan effort to pass the PSP saved aviation jobs and
ensured that essential travel continued during the pandemic.
So the PSP, which was first created under the CARES Act in
March 2020, provided vital financial assistance to our domestic
airline industry and prevented massive layoffs throughout the
aviation sector. The PSP program was an example of Congress
working in a bipartisan way to ensure tens of thousands of
aviation employees would keep receiving their paychecks, and
that American travelers would have air service available when
they were ready to return to travel.
So I appreciate that you are holding this hearing to review
the PSP program and to ensure that the recipients of Federal
assistance met the program's requirements to maintain their
payrolls and use Federal funds efficiently and effectively. So
my first question is for Mr. Parker and Mr. Kelly, your
airlines, American and Southwest, are the two largest carriers
in Arizona's largest airport, Phoenix Sky Harbor?
So, Mr. Parker, you can go first. Please describe the
impact of the PSP program on American Airlines stopping in
Arizona and flight options for Arizona traveler.
Mr. Parker. Thank you, Senator, and thank you for your help
in getting us to this point. It is impossible to understate how
important PSP was to air travel and to what we would have ended
up having for the people of Arizona.
Our hub in Phoenix would have almost certainly, without
PSP, with a loan program as a PSP program, back in May, April,
May 2020, we would likely would have shut the hub down
completely, and Arizona wouldn't have air service, or at least
for American Airlines, as we did everything we could to save
money in a time of no demand. And I don't know when it would
have started back up.
They would have likely been, as things have played out, it
will likely been not until the vaccine a year later. So again,
it is impossible to overstate the impact it had. And thank you
again for all you did to help get us here.
Mr. Kelly. Senator, I am not sure I can improve upon what
Mr. Parker just said. So it definitely put us in a position of
strength. And I am very grateful for all your leadership and
support. And obviously, you know, taking care of our people is
a top priority. So again, thank you very much.
Senator Sinema. Well, thank you. You know, my next question
is for Mr. Kirby. Earlier this month, United opened the United
Aviate Academy, a State of the art pilot training center at
Phoenix with your airport. How will this training center bring
economic opportunity to Goodyear and provide flight training
opportunities for individuals from communities that have been
traditionally underrepresented in the cockpit?
Mr. Kirby. Well, thank you, Senator. And we have talked a
lot today in this hearing about the need to create a new
pipeline for training pilots. And so we are excited to have--to
be the first U.S. airline to have our own training academy for
pilots there in Arizona.
And what we are going to do--our first class started this
week of 30 students. None of them had flight experience before
today, and they will get training, and they will get the
opportunity to have training that is very similar to what
military training is, where they will fly aerobatics and they
will learn much, they will fly in crowded airspace. They will
have a very robust training program.
That group of people is 79 percent people of color. Today
at United Airlines--or women and people of color. Today, at
United Airlines, only 19 percent of our pilots are women or
people of color, and to the best of my knowledge, we have the
highest level of any airline in the country. That is because
there have been historical barriers to entry for women and
people of color. There just aren't pilots--as many pilots out
there.
So we are going to create and be able to start training the
next generation of pilots. We are going to be able to train
them better. But we are also going to be able to have a diverse
group of people and we expect to be putting 500 new pilots
through that facility every year. We are excited about it.
I hope it can become a template for other--for the rest of
aviation, but also for other jobs around the economy to create
training programs where people can get careers and have
careers, you know, which helps rebuild the middle class in this
country.
Senator Sinema. Thank you. You know, my last question will
be for Mr. Parker. In November, the CDC instituted new measures
to allow for more international travel, and the CDC measures
require airlines to keep passenger data for the purpose of
contact tracing, which can be shared with public health
officials if necessary.
What are your thoughts in the current process for data
collection and contact tracing and are there changes to those
requirements that we should consider?
Mr. Parker. Thanks, Senator. We are happy to comply. Again,
if it is helpful to the CDC, we are happy to collect the data
and we have been doing so. I don't know that we have any
recommendations for more. We collect what we are asked to
collect, and we will continue to do so.
The Chairwoman. Thank you, Senator Sinema. Is Senator
Lummis available? I don't know if she has joined us remotely.
If not, we will go to Senator Lujan.
STATEMENT OF HON. BEN RAY LUJAN,
U.S. SENATOR FROM NEW MEXICO
Senator Lujan. Thank you, Chair Cantwell and Ranking Member
Wicker for holding this hearing today and thank you to our
panel of witnesses for joining us. Like most places across
America, air travel is vital to New Mexico. It is a key
component of our transportation system, whether it is keeping
families connected, tourism that drives our economy--we have
seen an increase with film production in our state. Netflix,
NBC Universal recently opened up some studios, acquired the
largest soundstages.
New Mexico is seeing an upswing with a growing economy as
well. And as we have seen a return to better numbers since the
pandemic first really took a hit to the airline industry,
seeing these numbers grow back to 82 percent of what pre-
pandemic levels were for Thanksgiving and 87 percent now in
anticipation with growth going into the end of this year and
into next year is where my question begins.
I voted to fund the Payroll Support Program with the
understanding that supporting airline travel would help my
constituents stay connected to the world and bolster tourism
and economic opportunities back home.
So my question for each and each of you is just yes or no.
Compared to pre-pandemic levels, has your airline fully
restored service schedules for your flight routes to and from
New Mexico? Mr. Parker.
Mr. Parker. We have. We serve Santa Fe, Albuquerque, and
Roswell. We paired back some routes during the pandemic. We
have restored all of them. We have actually recently added a
route from Santa Fe to LAX.
Senator Lujan. And Mr. Kirby?
Mr. Kirby. We also serve three airports. We did and
continue to serve Albuquerque, Santa Fe, and Hobs.
Senator Lujan. And Mr. Laughter.
Mr. Laughter. Thank you, Senator. I believe that we have
restored all service, but I will verify that.
Senator Lujan. And Mr. Kelly.
Mr. Kelly. We are your number one airline in Albuquerque,
so I was afraid you were going to skip me. We have not restored
our flight activity across our system, so we are not back where
we were.
We have increasing flights coming in Albuquerque this month
and then again in May, and we hope to have our entire system
fully restored, hopefully by early 2023, which would include
Albuquerque as well. One route in particular----
Senator Lujan. Early 2023?
Mr. Kelly. It will take us that long. Absolutely.
Senator Lujan. Are there other states in the same situation
as New Mexico?
Mr. Kelly. It is across our system. Yes, there is no
airline that is back to pre-pandemic flight activity yet.
Senator Lujan. You are the only one on here that is not
back to pre-pandemic levels for New Mexico. And as you said,
you are one of the most important airlines that we have. You
are my preferred airline, by the way, Mr. Kelly, when I would
fly to and from our Nation's capital. I can't do that anymore
because those flights take you through Houston and through
other areas, and it is a longer journey.
The reason that I am asking this particular question, I
know what many of our colleagues have asked it, is when
entrepreneurs are looking to make investments or to move
around, they do it based on direct hops. The fewer direct hops
that we have, and especially with a flight that is as
affordable, with staff as great as you have on Southwest
Airlines, it stifles what is happening at home.
And so I am certainly going to advocate as a member of the
Commerce committee, as a newly elected United State Senator
with the power of the vote that I have, with how I can fight
for my constituents.
And so I look forward to following up on with that
conversation. The other line of questioning that I have, and I
don't know if it has come up today, but it has resulted from
members in the past, is about bag storage or just bag
transparency. I was surprised to see that there is no
consistency with the size of bags that you can carry on or
policies that the airlines follows.
Southwest and Spirit follow the recommendations of your
trade association, IATA, and have a carry-on bag limit of 50
total inches. Delta United and American 45 inches. So should
passengers be required to purchase different check on bags
depending on which airline they are going to fly?
I don't understand that. And then there are the fees. So
every airline charges a different amount to check your bag at
the gate. And whether or not you have to pay depends on the
gate agent often. It is still not consistent with flight to
flight on the same airline.
So the question that I have here, and I will get through
this quickly Chair Cantwell, Mr. Parker, yes or no, do you
believe customers deserve consistent and transparent luggage
policies during air travel?
Mr. Parker. Yes, certainly across any individual airline we
all have--we may have different policies, but across any
individual airline, yes, and we try to give our customers----
Senator Lujan. In individual airline, but not across
domestic flights as a whole?
Mr. Parker. We don't all have the same policies. Now, we
have different aircraft that can hold different--the ability to
hold different capacity inside. We are actually quite proud of
American of how we have transitioning all our airplanes to much
larger overheads that will allow all of our customers to bring
on a roller aboard the aircraft. So as things like that roll
out, we end up with different policies depending on what type
of aircraft we fly.
Senator Lujan. Mr. Kelly.
Mr. Kelly. Well, we don't charge for bags, so there is no
at the gate issue with us. Sounds like we have got the biggest
bag, so I think we are in good shape on this one.
Senator Lujan. So you think that there should be
consistency across the airlines?
Mr. Kelly. No, I agree with Doug. I think airplane sizes
are different and overhead bins are different. We actually have
the choice on our aircraft to have different bins ourselves.
So, I think that is an individual airline choice and a matter
of competitiveness.
Senator Lujan. Mr. Kirby.
Mr. Kirby. We are also investing in larger overhead bins,
so a full airplane, everyone can--every single customer can
bring a roller board on board. And I think we should be
internally consistent on how we behave and our message to
consumers. But I am not sure that we all--I don't think we
should all have to have the same policies.
Senator Lujan. Mr. Laughter.
Mr. Laughter. I would just echo what has been said and say
that, you know, we look forward to further conversation on that
subject.
Senator Lujan. And Chair Cantwell, I look forward to diving
into this more. It is just, Senator Menendez brought this back
up in 2015, and I think most recently, and other Senators have
raised this. It is inconvenient for constituents, for people
that are flying across the country.
Policies change depending on when you are at the gate, and
most backpacks that you might carry as a carry on, they don't
even fit in that little deal that you check your bags in, by
the way, and it is fun to watch who's asked to put their bag in
there and who is not.
Just consistency and transparency makes a difference as
people are flying so I look forward to following up. Thanks
again, Madam Chair.
The Chairwoman. Thank you. And Senator Lujan, is this a
deal we issue in Albuquerque?
Senator Lujan. No, we have gates--all of you are welcome to
take up more gates and get more direct flights there.
The Chairwoman. No, no, I meant. So in effects, DOE--
national lab travel to the United--to here. I mean, I am just
pointing out that you are saying that is hindered.
Senator Lujan. Oh, most certainly. So when you look at
Sandia National Labs, Los Alamos National Labs, Air Force
Research Labs, all connected national security apparatus as
well. And it does make a difference. And as I said that the
most direct flight is at the same time, just isn't available
any longer. And that is for all constituents----
The Chairwoman. Maybe, maybe----
Senator Lujan [continuing]. Not just one city.
The Chairwoman. Yes, maybe that is some information we
could, you know, make available. But I would imagine that DOE
traffic--and those two labs are the largest, one of the largest
employers of your State, right?
Senator Lujan. Most certainly.
The Chairwoman. And we want that--we want that fast access
back and forth, but we will get some data to the people and
ensure that. I don't know if Senator Duckworth is joining us
remotely. If there is anybody else who is joining us remotely.
Senator Blumenthal, did you have another round that you----
Senator Blumenthal. I have just a few more questions
following up on my colleague's question. Does it cost money,
Mr. Kelly, for you to allow passengers to come on your planes
without charge?
Mr. Kelly. I am sorry----
Senator Blumenthal. Does it cost money for passengers to
bring bags on your plane, and do you--in other words, is there
a cost to you of not charging?
Mr. Kelly. Is there a cost to us of not charging him?
Senator Blumenthal. I can't imagine what it would----
Mr. Kelly. Well, there is. There is effort involved,
obviously, for us to check a bag. There is weight involved when
a customer brings a bag into the cabin. But other than just the
added weight and their added fuel burn, no, there is no effort
on the airline's part. Like we have all said, we invest in
overhead bins and there is wear and tear on those. So there is
some--there is an----
Senator Blumenthal. Have you calculated the costs, what you
are sacrificing?
Mr. Kelly. No. No, I----
Senator Blumenthal. Mr. Parker, have you calculated the
costs of either checking or bringing bags on board, carrying
bags on board?
Mr. Parker. Let me--if I don't answer this properly, I am
sure you will let me know, but what I think you are asking is,
is there a cost to actually--for a customer to check a bag,
which we do charge a fee for.
Senator Blumenthal. What is the cost?
Mr. Parker. There is. Oh well, sir, the cost is everything
you see that is required to get that bag out of that customer's
hand and deliver it back to them on the carousel. Those are
lots of people. Those are bag belts. Those are infrastructure--
indeed in today's world----
Senator Blumenthal. But have you calculated--I can
understand in principle that there is someone at the check-in
counter, there is someone down next to the plane, there are
various people along the line, but what is the total cost?
Mr. Parker. And it is much more than that, real estate. In
today's world where customers don't need--we have airports that
were built for people to check in at the airport. Very few
people do that anymore. The only reason most people are
checking in outside of security, is because they have to check
a bag. We wouldn't need that space in airports, but for those
customers that check bags. So the cost of checking bags is, I
have not calculated the cost----
Senator Blumenthal. That really is my point.
Mr. Parker. But I know there is a significant cost, and the
customers that use that service cost American Airlines more
than those that don't.
Senator Blumenthal. I am just a country lawyer from
Connecticut. I never went to business school, so I apologize
for my sort of clumsiness in trying to put this question to
you. But the way I view it is that if there is any
justification for charging this fee, it must be that you are
saying to your customer, look, it costs us x amount either for
you to carry on a bag or to check a bag.
And what I just heard you say is that you haven't
calculated that either per bag or in total. In other words, you
don't say to your customer, you know, this is a service, and we
are going to have to charge you for it. It costs this much for
us to do it. You don't calculate that amount.
Mr. Parker. I haven't calculated it precisely, but indeed,
that is exactly what we are saying to the customer. If you want
to use that service that requires more expense, here is what we
charge.
Senator Blumenthal. Yes, I understand that because that is
why I don't check bags. That is why none of my children check
bags. That is why many of us carry bags on. And the point I am
making is that one of the provisions of the legislation that we
have offered is to say to the airlines, you have to justify
fees with what the costs are rather than in effect making
money.
And right now, it seems to me it is kind of a profit center
for you all, or in any event, you don't, at least according to
what you have said to me right now, you don't calculate. You
know the total per year cost per bag is x amount. The total for
a bag of 50 pounds or more is X, Y or Z.
So I think what I am asking all of you to do, those who do
charge those fees to check bags or to carry on bags, is to
provide us with the costs that you regard as your airline
having to pay wherever it goes and maybe specify how it does
go, whether it is labor, machinery, you know, obviously there
is machinery to get the bag onto the plane. So that is what I
am asking.
Mr. Kelly. Just to be clear, we don't charge. We don't
charge to carry on a bag or----
Senator Blumenthal. You have said that now a number of
times, Mr. Kelly.
[Laughter.]
Senator Blumenthal. We have that on the record. But I think
you are--you kind of prove my point, which is, and it goes to
the question I think that has been raised about consistency,
why do some airlines do it and some not?
Why do some charge x amount, and others not? And I think
that fee or charge if you are a consumer, I am not telling you
anything you don't know, looking at your airlines, you kind of
scratch your head and say, they must be using this fee to make
money off me.
The Chairwoman. Mr. Tretheway, do you have any comments
here? I feel like we should give you at least the last word
before we close out. You have sat here the entire time and paid
attention.
I didn't even see you looking at your electronic devices.
Do you have a comment on this about how airlines are choosing
the uniqueness of different services and how that is working
out in the marketplace, both for consumers and driving down
costs, and also on choice?
Mr. Tretheway. Yes, I do have some comments. First, can you
hear me? I want to make sure I am on.
The Chairwoman. Yes. Yes, we hear you.
Mr. Tretheway. So you could choose to re-regulate the
airlines. I think that would be a big mistake. The regulated
airline model serves wealthy passengers, some business
travelers, but it didn't serve 80 percent of Americans.
Deregulation has been phenomenal.
The airlines, I don't think, should be ashamed about making
some money. If you look at the profits of this industry, the
post-war era, and I always have to remind my students when I
say that I mean 1945 not 1991, have lost dramatic amounts of
money. They have to make money someplace.
If you want really low ticket prices, then you have to find
places where can some passengers pay a bit more. The airlines
have found things like there is no extra cost of the seat up at
the bulkhead versus the seat further back, yet some passengers
are willing to pay for that, and those passengers help offset
the fixed costs of flying the aircraft.
So I think that moving to a pure cost basis for setting
charges will reduce--will reverse what is now almost 45 years
of the benefits of a market solution.
Senator Blumenthal. If I may respond, Madam Chair.
The Chairwoman. Please go ahead. Although I really do want
to get out of here before 6 p.m.
Senator Blumenthal. 45 years is longer than I have been
flying. But no one here is proposing, Mr. Tretheway, that we
reregulate airlines. I would suggest, by the way, that we have
had a lot of consolidation, and we have the, essentially the
airline industry of America sitting before us because of
consolidation that has occurred because of lax enforcement of
our antitrust laws.
I don't know that anyone on the panel will agree with me on
that fact, but no one is suggesting that we regulate airlines.
Nor do we regulate a lot of other industries or companies when
we apply basic rules of consumer protection. Rules of the road.
I have suggested a bill of rights. So I don't want to be
misunderstood Mr. Tretheway, as that way as suggesting we need
another Civil Aeronautics Board, I think it was called--am I
right about that?
Mr. Tretheway. Yes.
Senator Blumenthal. I may not have been flying 45--well,
maybe I would. But we are done with the ICC. We are done with
the CAB. Deregulation was welcomed, but we are talking here
about basic rights that should be enforced. And I am all in
favor of competition, which many of you have urged, and I hope
that the Government will help to promote competition, not
impede it.
And I just want to finish by thanking you all. I think all
of you agreed that you would work with me on this idea of a
bill of rights. I am not interpreting you as committing to
anything specific, but your willingness to help in that
endeavor is very welcomed.
The Chairwoman. Well, I certainly will look forward to
working with you on it, and I think my question to Mr.
Trethewey was really just to spark this question. I do think,
you know, we have lots of opportunities for growth around the
globe, but we also want to make sure consumers are a big part
of the equation. So, you know, I appreciate your work on this.
Senator Blumenthal. And Madam Chair, I thank you for your
support. You have been a real consumer advocate. Thank you.
The Chairwoman. So, I want to make a point for the record
that we also have had testimony from the Air Line Pilots
Association. I didn't mention that at the beginning, as I
mentioned other airlines that we have also received testimony
for. As I mentioned, this hearing is part of our overall effort
to produce a report on the PSP program, which we estimate doing
next year, hopefully in the first quarter.
The hearing record will remain open until January 12, 2022.
So any Senators who would like to submit a question to you all
for the record, you need to do so by December 29, 2021. And we
would ask our witnesses to respond to that by January 12, 2022.
So with that, I want to thank all our witnesses for being
here. As I mentioned earlier, I think it has been a while since
the airline CEOs have been up here. I can't remember the last
time the flight attendants have been here.
But I think you can see from this attendance, we had more--
I think 20 members showed up. You could see the range of
questions, you could see the concern and the issues that were
raised.
And I think people have worked in a bipartisan effort and
want to continue to figure out how we can move forward
together. So thank you all very much. We are adjourned.
[Whereupon, at 5:25 p.m., the hearing was adjourned.]
A P P E N D I X
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
______
Prepared Statement of Ted Christie, President and CEO, Spirit Airlines
Chair Cantwell, Ranking Member Wicker and members of the Committee,
thank you for the opportunity to submit written testimony in connection
with the Committee's December 15, 2021 hearing entitled ``Oversight of
the U.S. Airline Industry.''
My name is Ted Christie, and I serve as President and CEO of Spirit
Airlines. I am pleased to offer some thoughts on Spirit's response to
the challenge of the global COVID-19 pandemic and the ways in which
Spirit's experience in managing through the crisis--as America's
leading ultra-low-cost carrier (ULCC)--may have differed in some
respects from that of the major U.S. airlines.
First, however, on behalf of more than 10,000 dedicated Spirit
employees, I express our great appreciation for all the effort and
professionalism of this Committee, the Congress and two administrations
in creating a balanced, thoughtful program that kept the U.S. economy
from spinning into the abyss, protected essential jobs and saved the
critical infrastructure of the U.S. airline industry from likely
permanent damage.
The arrival of the COVID pandemic in early Spring 2020 immediately
plunged U.S. airlines into crisis, the worst ever seen in the history
of our global industry. Travel demand dropped by almost 95 percent by
late March, forcing airlines to take drastic actions to mothball
aircraft, cut costs, negotiate with creditors and commence planning for
imminent restructuring, including via the bankruptcy process. Airline
employees and the employees of our constellation of critical suppliers
faced massive furloughs and layoffs, and government and business
leaders alike faced the reality of adverse spillover effects into the
general economy.\1\
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\1\ Changes in airline employment, up or down, have a high
multiplier effect on other jobs and the general economy, as airlines
are economic catalysts for many other economic sectors such as retail,
restaurants, tourism etc. that depend on consumer traffic.
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Working with the administration, and taking a practical, bipartisan
approach, this Committee and Congress developed the CARES Act and the
Payroll Support Program (PSP) thereunder. I have no doubt that CARES
and especially PSP not only saved the U.S. airline industry from near-
term failure but also forestalled many years of painful recovery as
airline companies and their supply chain tried to pick up the pieces
following a complete meltdown.
To those who decry the CARES Act and specifically the PSP as some
sort of undeserved ``bailout'' of our industry, let me offer the
following perspectives:
The PSP was clearly designed to support airline and aviation
workers, not the airlines themselves. Speaking for Spirit, not
one penny of PSP funds went for anything but employee salaries,
wages and benefits--in fact, in Spirit's case, we paid about 35
percent of the cost of retaining our workforce and maintaining
payroll out of our own funds.
The absence of PSP, or similar support, would probably have
resulted in immediate major layoffs and furloughs of about 70
percent+ of airline employees, as well as commensurate job
losses for employees in airports and the many businesses across
our country that indirectly benefit from air connectivity.\2\
Those workers would likely have turned to state unemployment
benefits, also taxpayer funded. In a sense, therefore, the PSP
simply transferred an already certain cost from one pocket to
another; it was certainly not wasted.
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\2\ This key point was well developed in Dr. Tretheway's testimony
before the Committee at the December 15 hearing. Beyond the 1.3 million
direct jobs in the airline industry and related infrastructure, the
indirect employment effects are material, if difficult to measure.
The speed at which PSP was rolled out protected other
important, if intangible, assets that benefit the airline
industry and our country--mainly continuity. Losing employees,
even temporarily, is not great for any business. It's even
worse for airlines, because we are complex organisms that
operate on long timelines: we sell tickets to our valued
customers often many months out; our collective bargaining
agreements run several years in duration, and we commit to buy
new aircraft and to serve key airports under contracts that can
run up to 25 years or even more. As past airline bankruptcies
(as well as single-event crises such as 9/11) have shown, these
long-term commitments are not quickly or easily repaired after
a sudden rupture. Managing a long-horizon business like an
airline requires an experienced and specialized staff that
works together as a team keep themselves and our customers safe
and the operation running. Even temporary loss of these
valuable people would impose an exceptional burden on recovery
of the airlines and the economy.\3\
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\3\ Some of the countries Spirit serves lacked the resources to
implement a PSP-type program, and also have a limited general safety
net for dislodged workers and their public health systems. Spirit has
witnessed the difficulty these countries have experienced, including
challenges added to our own operation, as they seek to recover from the
pandemic, specifically in the airline and related employment sectors.
Finally, the PSP needs to be understood as a transitional
support program for a safe, well-managed and largely efficient
industry that suffered a sudden and devastating external event.
It is not a bailout. PSP had nothing in common with past
taxpayer-funded programs to rescue critical industries whose
inefficiency, profligacy or downright irresponsibility gained
them taxpayer support, only because their continued failure was
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an even worse option.
For our hard-working, professional Team Members,\4\ many of them
classified as essential workers during the height of the pandemic who,
therefore, by the nature of their jobs, needed to show up in public
spaces every day and work, I have no words to describe my gratitude. On
their behalf I can only say, to this Committee, that you stepped up
fast when it was needed most.
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\4\ We use the term Team Members to refer to our over 10,000 direct
employees as well as about 18,000 contractors that are employed by
third-party staffing companies. This breakdown is typical for low-cost
carriers who have less dense networks than network carriers.
---------------------------------------------------------------------------
Spirit did not furlough a single employee during the pandemic. We
maintained all benefit programs intact (including all health benefits),
regardless of leave status. In Spring 2021, as demand recovered and
staffing problems emerged, we increased compensation for airport staff
and instigated pay raises at our third-party staffing partners (also
mainly at the airports). Some other points:
About 82 percent of Spirit direct employees are represented
by one of five unions. With access to PSP funds, Spirit
negotiated with our union leaderships several temporary and
voluntary leave programs we implemented during 2020 and parts
of 2021, before our employee recall and resumption of full
service. Spirit enjoys excellent relations with our represented
work groups, and we work hard to keep it that way. The
atmosphere of common objectives, shared sacrifice and
collaboration between our management and labor leadership
during this critical period, I believe, has further
strengthened that bond.
The PSP, including rounds 2 and 3, enabled Spirit and other
airlines not only to maintain payroll, but also to communicate
a credible message of stability to our workforce. It's hard to
underestimate the value of that, especially as the pandemic
wore on and employees remained naturally concerned about their
future and the airline's staying power. That messaging also
helped us through a well-organized recall of flight crews,
mechanics and others on paid temporary leaves in the early
Spring of 2021, as passenger demand picked up.
The mere existence of the CARES Act Loan Program maintained
essential access to private and public financial markets,
setting a firm floor that private capital sources competed
against. This was of great value to Spirit and the entire
industry. Spirit has a culture of self-help, and so in the end
we decided not to take funds under the Loan Program, even
though the terms were attractive. Rather, we considered it our
responsibility to prioritize financial markets over taxpayer
resources, to the maximum extent possible. In addition to
receiving, with gratitude, $754 million in PSP funds, since the
onset of the pandemic Spirit on its own has raised over $2
billion in private and public financial markets to shore up its
financial position.
Spirit Airlines is a disruptor in the airline industry, built to
provide a low-cost option to Americans who cannot easily afford air
travel. While our domestic market share is modest,\5\ we exert a
disproportionate effect on moderating airfares in the markets we serve,
saving U.S. consumer hundreds of millions each year whether they fly on
Spirit or not. As of the end of 2021, Spirit served 82 destinations,
including 24 of the top 25 U.S. metros and 16 countries in the
Caribbean and Central and South America. Over the past 15 years Spirit
has been the fastest-growing U.S. airline, roughly quintupling in size.
That says clearly that consumers want and need our prices and product
in the marketplace. All over our country, airports and local
municipalities are clamoring for Spirit to start or increase service;
they know very well what a competitive low-fare air option means to
their citizens and local economies.
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\5\ Spirit's domestic market share is below 5 percent, and the
collective share of the ULCC airlines (including Frontier, Allegiant
and Sun Country) is below 10 percent.
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Spirit is also a conservatively managed business. As of the end of
2019, before the onset of the pandemic, we had approximately $1.1
billion in cash and marketable securities, representing almost 30
percent of our revenues for that year--one of the highest such
liquidity ratios in the airline industry worldwide. We did that, and
continue to follow a conservative approach to liquidity, precisely
because we are a fast-growing airline that needs capital and access to
financial markets to support our growth. More importantly, in these
same past 15 years, our U.S. airline industry has consolidated into an
oligarchy of four carriers that share about 80 percent of the seats
flown each day in the US, and a gaggle of far smaller carriers,
including Spirit, that must fight for customers, airport positions,
government support and capital against carriers many times our size.
The CARES Act and PSP clearly warded off disaster for U.S. airlines
and our valuable workforce. However, the experience of the pandemic has
again shed light on some aspects and effects of government measures and
policies in the aviation sector. For the benefit of the traveling
public, it is worth taking stock of what we have seen during the
pandemic and considering some options and perhaps new ideas to support
competition, reliable service and the long-term health of our industry.
Despite the obvious value of CARES and PSP, in some ways
these programs have further exposed the advantages large
carriers have over smaller carriers. Larger carriers generally
covered a higher percentage of their payroll with PSP funds
than did smaller carriers like Spirit. That is because the
smaller carriers have been growing at faster rates, so the 2019
base payroll measurement period understated their 2020-21
payroll obligations. The Committee, Congress and administration
did think about this small-carrier disadvantage when devising
PSP, e.g., designing the first $100 million of PSP in pure
grant form, but the gap was wider than that.
Those who follow airline pricing closely have seen that
larger airlines have been pricing well below cost during most
of the pandemic. That practice may be explained in part by the
legitimate need to keep airplanes running and maintained, crews
trained, etc. However, route planning actions suggests a desire
to keep a boot on the neck of low-cost carriers, postponing the
day when ``return to normal'' conditions demand that all
airlines return to profitability--in order to ensure a stable
future for their employees, attract new capital, pay off
government loans and deliver reasonable returns to
shareholders.
The three-time renewal of the FAA's waiver of use-or-lose
slot restrictions has artificially propped up the holdings of
network carriers (public assets that network carriers obtained
mostly for zero cost). Smaller carriers like Spirit have taken
some advantage of the idle capacity to add flights in formerly
congested hours. However, non-legacy carriers cannot justify
the investment in potentially unused airport capacity if these
temporary authorizations are withdrawn in the future. In
Spirit's view the waiver should be withdrawn, and if the large
airlines are not willing to fly their valuable authorizations
(or, more likely, if they resume abusive ``squatting'' behavior
by e.g., the overuse of smaller aircraft at congested
airports), then FAA should promptly withdraw and re-allocate
these valuable public assets.
Network carriers maintain interline agreements among
themselves that provide re-accommodation options to aid
stranded passengers. Despite requests over the years, smaller
carriers have been denied these agreements, which is nothing
more than a competitive tactic by larger carriers to increase
costs for non-aligned carriers by forcing them to pay high
``walk-up'' fares when they seek to re-accommodate their
customers on other airlines. The operational disruptions of
Summer 2021 could have been mitigated by wider adoption of
interline agreements.
Let me comment briefly on the last point: recent operational
disruptions. As was widely reported, in early August, Spirit
experienced several days of network and crew disruption that resulted
in numerous unscheduled and pro-active flight cancellations. As a
carrier that has transformed itself in recent years from ranking at or
near bottom in reliability metrics to one of the best in the
industry,\6\ the August disruption was a painful and costly event. Our
passenger re-accommodation costs alone during this period exceeded $30
million.
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\6\ Spirit improved to 5th in on-time performance in 2018 and to
4th in 2019, better than any other low-cost carrier and most network
airlines. We are also very proud to have been named to 2021 Fortune 500
Global Most Admired Companies list; winning ATW Value Airline of the
Year (twice); APEX Most Improved Airline for 2019 and consistent 4-star
rating (top level for low-cost carriers); winner of SeaTac Airport's
prestigious ``Fly Quiet'' Award for the last three consecutive years,
among other awards and recognition. (WSJ rankings?) We are also one of
the most fuel-efficient airlines anywhere (expand? I know we've both
heard that is a key issue for this administration).
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Other airlines also saw difficult operating conditions during the
2021 summer high season and, after a smooth Thanksgiving holiday,
airlines again experienced challenging conditions over the Christmas/
New Year holiday period. I believe all airlines, including Spirit, have
implemented additional protective measures, and are continuing to do
so: reducing schedules, increasing crew reserves, re-timing flights in
congested airport hours, even mandatory overtime in peak periods for
crew schedulers and re-accommodation staff. But, it is clear we are all
in a pandemic era of new conditions. In addition to the usual forces
such as weather, ATC congestion and maintenance events, all airlines
are seeing persistent staffing pressures (even as airlines dramatically
increase compensation in affected areas), volatile demand as new
variants have come and gone and continued disruptive passenger behavior
on board that threatens and fatigues our dedicated flight crews.
I'll end on an optimistic note. Despite all the disruptions the
pandemic has caused, directly and indirectly, as I've travelled around
our network and visited our stations these past several months, I see
our Team Members happy to be back at work, our Guests excited to be
travelling again, and--finally--crowds again in our Nation's airports.
That's a great thing for our economy and our recovery. I again thank
members of this Committee for your support.
Ted Christie,
President and CEO,
Spirit Airlines, Inc.
Miramar, Florida
January 11, 2022
______
Prepared Statement of Robin Hayes, CEO, JetBlue
Chair Cantwell, Ranking Member Wicker, and Members of the
Committee, I am Robin Hayes, CEO of JetBlue. On behalf of more than
22,000 JetBlue crewmembers, thank you for the opportunity to provide
testimony for today's hearing.
In February 2020, just weeks before the United States began to feel
the devastating impact of the coronavirus pandemic, JetBlue celebrated
the 20th anniversary of our first flight. We were founded in 2000 with
a mission of Bringing Humanity Back to Air Travel, and since then have
delivered on that mission as we've grown to serve more than 100 cities
in the United States, Caribbean, Latin America and, as of this summer,
the United Kingdom.
I want to begin by thanking our amazing JetBlue crewmembers, who
every day deliver a simple but extraordinary value proposition--that no
one should have to choose between a low fare and a great experience.
Since that first flight almost 22 years ago, every JetBlue crewmember
has played a part in building a much-loved low-fare brand and a
reputation for shaking up the status quo, and challenging the
competition to raise their game.
JetBlue has always placed the highest priority on development and
support of our crewmembers. In our history, we have not involuntarily
furloughed a single crewmember, a claim very few--if any--carriers
around the world can make. Thanks to the Payroll Support Program (PSP),
JetBlue has maintained its commitment to a No Furlough policy
throughout the pandemic. Any JetBlue crewmember who wished to continue
employment with JetBlue through the pandemic was able to do so.
Our crewmembers and the entire aviation industry join me in
thanking the members of this Committee for your tremendous leadership
throughout this pandemic as COVID-19 created challenges unlike anything
we've ever faced. Without the PSP, the airline industry would have been
irrevocably damaged with devastating ramifications for our customers,
our crewmembers and the communities we serve.
We appreciate that the CARES Act and subsequent pandemic relief
packages included provisions intended to position U.S. airlines to keep
their employees on the company payroll, and to survive the crisis in
order to play a vital role in reviving the economy when travel demand
returned. While we took every action possible to survive the downturn,
there's no question that the PSP funds that flowed through JetBlue as a
payroll pass-through program to our crewmembers were critical to our
survival.
JetBlue used PSP funds to keep our crewmembers employed when there
was no demand for air travel and when the timing for that demand
returning was uncertain. In 2020 and 2021, following enactment of the
CARES Act, the Consolidated Appropriations Act, and the American Rescue
Plan Act, we entered into PSP Agreements under which the U.S.
Department of Treasury provided JetBlue with a total of $2.084 billion
($1.549 billion in grants and $535 million in unsecured term loans).
Under the CARES Act Loan Program, JetBlue was approved for a total loan
amount of $1.948 billion and drew $115 million in September 2020. In
September 2021, we repaid the loan in full, together with interest and
fees, totaling approximately $118 million. This is just one data point
to demonstrate the effectiveness of PSP--jobs were preserved, airlines
kept operating and the government earned a return on its investment.
As part of each of the three PSP Agreements as well as with the
CARES Act Secured Loan, JetBlue issued a total of 5,598,808 warrants to
U.S. Treasury to acquire JetBlue stock. Because the three PSP grants
and the CARES Act loan were issued at different times over the course
of the year, it's most helpful to assess value through the number of
warrants issued and the strike price for each:
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Every dollar JetBlue received under the PSP went directly to
crewmember wages and benefits and the entire $2.084 billion was
utilized as of September 30, 2021. The vast majority of those funds--84
percent--went to frontline crewmember wages and benefits.
While we are extremely grateful for the PSP program and the benefit
it provided to our crewmembers, PSP funds did not cover the full
payroll expense for JetBlue or any other airline. According to Airlines
for America, the $49.6 billion in PSP funds (both grants and loans)
received by the 11 largest U.S. passenger airlines from April 2020 to
September 2021 covered 77.4 percent of their overall payroll costs.
Factoring in the $14 billion in loans--even before adding interest that
must be repaid to Treasury along with the principal--PSP covered 55.5
percent of payroll costs. Of course, payroll expense for JetBlue and
other carriers would have been higher if we hadn't pursued voluntary
programs to further reduce our expenses.
Continuing JetBlue's longstanding No Furlough policy throughout the
pandemic, we were committed to ensuring every JetBlue crewmember who
wished to do so could remain on our team. We also provided Opt-Out
packages for those who wanted to retire early or were ready to make a
change in their professional life. Close to 2,100 crewmembers Opted
Out, most of whom left JetBlue in Q3 2020, and another 1,070
participated in our voluntary long-term time off program (LTO). In
addition, since March 2020, 3,100 JetBlue crewmembers left the airline
through normal attrition. This last group of crewmembers left JetBlue
for any number of voluntary reasons including wanting to be closer to
home, needing to provide dependent care, finding preferred employment
elsewhere, or the end of temporary employment.
In March 2020, JetBlue employed close to 22,750 crewmembers. Since
then, employment fell to roughly 19,900 before bouncing back to nearly
22,300 crewmembers today. We offered an Opt Out program to crewmembers
during summer 2020, with crewmembers leaving the company during August,
September, and October 2020.
We implemented a voluntary long-term time off program in the same
timeframe. Both the Opt-Out and LTO programs were introduced in early
June 2020 with a deadline to sign up by the end of the month.
Crewmembers had to start LTO on August 2, 2020 or September 6, 2020
depending on operational needs. While the vast majority of Opt-Outs
left the company in August and September 2020 there were a few
crewmembers that did not leave until the fall or winter.
As we rolled out these programs, we also guaranteed that all
frontline crewmembers who had not elected to take voluntary unpaid
leave would be paid at or above the guaranteed minimum hours in their
work agreements, even as reduced demand for travel would have otherwise
eliminated their work. This was the case whether a crewmember was part
of a group represented by a Collective Bargaining Agreement, an
individual work agreement or through the company work rules for their
group. At JetBlue, even when being paid the same rate of pay at
guaranteed minimum hours, crewmembers' health benefits that were in
place prior to the COVID-19 crisis remained constant throughout. We
made the commitments to pay at or above minimum hours and to maintain
health benefits as a result of funding from and in full compliance with
the provisions of the Payroll Support Program.
As critical as the PSP grants and loans were in covering a portion
of crewmember wages, salaries and benefits, weathering the dramatic
economic impact of the pandemic also required a company-wide focus on
preserving cash as booking levels plummeted. Even though JetBlue
entered this crisis from a position of strength with a strong balance
sheet and cash in the bank, we took immediate steps adjusting capacity
to reflect diminished demand, park aircraft in the desert, secure
additional cash reserves on the commercial market, cut capital and
operating spending, defer aircraft deliveries, and more.
From April 1, 2020 through September 30, 2021--the period covered
by the Payroll Support Program--JetBlue's total Salary, Wages and
Benefits spend was approximately $3 billion, 73 percent of which was
covered by the PSP grants and loans we received. Even after our
significant steps to preserve cash, JetBlue's non-payroll spend during
that same period totaled nearly $9 billon--including aircraft
deliveries and other capital expenditures, fuel expense, and debt
payments. While PSP funding mitigated one area of cost and a time when
revenue tumbled, our spend in other areas had to continue even before
travel demand returned.
When Congress first considered creation of the Payroll Support
Program in March 2020, none of us anticipated that there would be a
need for an extension of the program, let alone two. Again, thanks to
your leadership, the PSP funds worked as intended so that airlines
could keep their employees on their payrolls. As we moved into 2021 and
demand for air travel started to increase, our ramp up was more readily
achieved.
This year, we've been adding new crewmembers across the
organization at a record pace so we are positioned to meet the return
of travel demand. We're on track to hire 4,550 new crewmembers in
2021--38 percent more than we hired in 2019 and a 184 percent increase
over our initial 2021 plan at the peak of the pandemic. In 2020, we
hired only 724 new crewmembers, and all but 19 of them were hired
before March 31, 2000. Looking ahead to 2022, we expect to hire an
additional 5,400 JetBlue crewmembers.
Every new JetBlue crewmember attends orientation at JetBlue
University in Orlando, where they hear from senior leaders and learn
about our history, our industry, our network and business, and our
culture. We normally hold 22 orientation sessions in a calendar year,
but by year-end we'll have conducted 52 in 2021.
With additional crewmembers hired, JetBlue planned and prepared for
this summer's recovery eager to welcome more customers on board. Of
course, like every other airline, we experienced weather and other
operational obstacles that PSP funds and advanced planning could never
prevent.
In July, for example, the most significant driver behind long
flight delays and resulting cancellations was unusually impactful
weather, well beyond what we usually see, particularly in our Northeast
focus cities. JetBlue has its two largest focus cities in New York (New
York-JFK International Airport (JFK), LaGuardia Airport (LGA) & Newark
Liberty International Airport (EWR)) and Boston (Boston Logan
International Airport (BOS)) with significant operations at New York's
Westchester County Airport (HPN) as well. In fact, nearly 70 percent of
JetBlue's flights touch a Northeast airport on a typical day. In July,
the three major airports in the New York region--JFK, LGA and EWR--saw
record rainfall. Boston rainfall was more than triple normal and the
airport recorded rain in 21 of 27 days that month, making it the second
wettest July on record and the wettest July in 100 years. JFK and EWR
recorded more than double normal July rainfall, with measured rain 19
days at JFK and 21 days at EWR.
This record rainfall and the associated thunderstorms have impacted
our summer 2021 operation more than usual. In a typical July, FAA Air
Traffic Control imposes a Severe Weather Avoidance Program (SWAP) about
half the days in the month. This year, our Northeast focus cities--
where most of our aircraft fly--saw some of the wettest weather in
recent memory, with ATC SWAP Programs in place 75 percent of the days
in the first half of July. Convective activity significantly reduces
ATC throughput, constraining the en route environment, and results in
ramp closures as a result of lightning over an airport. These
thunderstorms often lead to flight diversions, out of position aircraft
and crews, and delays that impact the region and beyond. When
convective weather occurs day after day, the disruption to our fleet,
planned operations, crewmembers and customers is multiplied and the
challenge of recovery is compounded.
We recognize, of course, the impact irregular operations can have
on customers. That's why consistent with JetBlue's mission, in 2007 we
created the JetBlue Customer Bill of Rights--the first of its kind in
our industry. It reads:
JetBlue is dedicated to inspiring humanity. We strive to make
every part of your experience as simple and pleasant as
possible. But we know there can be times when things do not go
as planned. If you're inconvenienced as a result, we think it
is important that you know exactly what you can expect from us.
That's why we created our Customer Bill of Rights. These Rights
will always be subject to the highest level of safety and
security for our customers and crewmembers.
The full Customer Bill of Rights, which I've attached at the end of
my statement, details what customers can expect in cases of a
significant delay or canceled flight. Every day, the airline
professionals at JetBlue do everything possible to prevent delays or
cancellations that inconvenience customers--but in the rare cases when
they do happen, we do our best to make it right.
Looking back at the roller coaster of the past two years, I
couldn't be more proud or more appreciative of the dedication and
professionalism that JetBlue crewmembers have delivered to our
customers, to their fellow crewmembers, and to our communities. The
Payroll Support Program funds used to cover a portion of salaries,
wages and benefits was the foundation upon which we have successfully
built. Without it, I'm not sure JetBlue or any other major U.S. airline
would have persevered. As we move into 2022, I can confidently say that
JetBlue not only survived, but we have thrived.
This summer, we launched JetBlue's first ever transatlantic service
from New York JFK to London on our long-range Airbus A321 with
reimagine experiences in both the Mint and Core cabins. JetBlue's Core
experience--what other airlines call Coach or Economy class--to London
brings a whole new level of comfort and service across the pond. In
Mint, our business class, we made every seat a suite with a sliding
door for full privacy--and we've made that seat more affordable to more
travelers.
We first introduced Mint in 2014 on flights between New York and
Los Angeles as well as New York and San Francisco. We came up with a
revolutionary idea--a true lie flat seat, a great meal that didn't
taste like airline food, curated wines, and all delivered by JetBlue
crewmembers bringing hospitality to a whole new level--offered at an
affordable JetBlue fare.
At that time, there were few airlines that offered a true lie flat
seat in domestic markets, and certainly not one that was affordable to
anyone beyond those top tier corporate customers. As we've expanded
Mint to new markets other airlines have followed, and now a number of
transcon U.S. markets have lie flat products offered by multiple
carriers and in some cases, fares have dropped by more than 50 percent!
Now, as we bring the new Mint to the US-UK market, you can look forward
to that same model of disruption from JetBlue--lower fares and a better
product and experience, leading to more options and greater benefits
for consumers.
Just as with Mint, we believe our innovative new Northeast Alliance
(NEA) with American Airlines is the kind of disruption that enables
JetBlue to do what we do best--bring more low fare competition to
markets that are overpriced and under-served. This alliance, above all,
is about growth--JetBlue's growth that would not otherwise be possible
in the congested northeast where more competition is sorely needed.
By partnering with American, we are bringing a viable third large
network alternative to customers flying to and from New York (JFK, LGA
and EWR) and Boston (BOS). Together, we are bringing a deeper and more
relevant schedule to many Northeast markets, wider international
connectivity, frequent flier reciprocity, along with more low fares and
our great service. In partnership with American, we have already
launched 58 new routes out of the Northeast and have added frequencies
on more than 130 routes that will expand through next year.
Together, this winter we will operate 500 daily flights out of the
NYC area's three main airports, half of which will be flown by JetBlue.
Plus, JetBlue is well on its way to hiring more than 1,800 new
crewmembers to directly support growth from the NEA--jobs that would
not otherwise be created. The NEA is supercharging competition,
provoking competitive responses from entrenched legacy carriers, and
ultimately benefiting consumers with more flights at lower fares.
As we've hired so many new crewmembers in 2021 for every type of
role, we have also increased our focus on nurturing and developing the
aviation professionals our industry needs today and in the years to
come. JetBlue is demonstrating how airlines can meet that need through
programs that offer a range of pathways into the industry--for
crewmembers currently in other roles as well as external candidates--
while also opening the door to more candidates from underrepresented
communities, including women and people of color.
As part of our Diversity, Equity and Inclusion (DEI) strategy, we
are working to provide our crewmembers equitable access to affordable
education. The innovative JetBlue Scholars Program enables crewmembers
the ability to earn a college degree for around $5,000 on a flexible
timeline. By year end, nearly 300 crewmembers will have graduated from
the program.
The JetBlue Gateways program offers seven distinct education and
training paths to becoming a JetBlue pilot or maintenance technician.
JetBlue's program is the longest running U.S. airline program, which
produces a significant number of new hire pilots for an airline. Twelve
percent of JetBlue's new hire pilots in 2021 came to the airline
through one of these non-traditional programs and the pipeline for both
pilots and maintenance technicians continues to grow. These programs
are one way to address the significant socioeconomic barriers to higher
education and training programs, and to provide crewmembers and
external applicants from diverse communities exposure to certain
skilled roles in the airline industry.
JetBlue Gateways include:
University--Students at AABI-accredited partner colleges and
universities can fly nonstop to first officer via a prescribed
time and experience-building pathway. Open to external
applicants and JetBlue crewmembers.
Select--Crewmembers or external candidates with little or no
flying experience can land first officer status after this
rigorous training and time-building program. Open to external
applicants and JetBlue crewmembers. Training takes place with
JetBlue partner, CAE in Mesa, AZ.
Direct-Flight Ops--Current crewmembers can depart their
current position and pursue a prescribed college education
accompanied with primary flight training at Aviator College.
Upon graduation, crewmembers join Cape Air as a First Officer,
time build to ATP minimums, and gain valuable flight experience
as a Captain in a Part 135 operation. The combined experience
with Aviator College and Cape Air prepares pilots for a
successful transition to JetBlue. Open to JetBlue crewmembers
and Cape Air employees only.
Flex-Flight Ops--Current crewmembers can depart their
current position and pursue a flexible path to becoming a
pilot--as well as choose their own location for training and
time-building within a defined framework. Open to JetBlue
crewmembers only.
Family--Families of crewmembers can make a ``Blue-line'' to
a first officer position through a defined education, training
and time-building path. Open to family members of JetBlue
crewmembers only.
Direct-Tech Ops--Current crewmembers can depart their
current position and pursue a prescribed training pathway by
studying with JetBlue partners at Aviator College to become a
JetBlue aircraft maintenance technician. Open to JetBlue
crewmembers only.
Flex-Tech Ops--Current crewmembers can depart their current
position and pursue a flexible path to becoming an aircraft
maintenance technician--as well as choose their own location
for training within a defined framework. Open to JetBlue
crewmembers only.
We are also investing in future generations of aviation
professionals through the JetBlue Foundation's support of aviation-
related education and STEM initiatives. Inspiring the future of
aviation is a responsibility we take very seriously, and that's why
we're leading the industry with a focus on supporting aviation
education.
Over the past two years, JetBlue has also sharpened our focus
around Environmental, Social & Governance (ESG), building on a strong
track record that goes back years. We issued our first responsibility
report in 2007 and our 2008 report was done according to the Global
Reporting Initiative (GRI) standards. In 2016, JetBlue was the first
airline and one of the first companies to report based on
Sustainability Accounting Standards Board (SASB) and in 2017 based on
Task Force on Climate-Related Disclosures (TCFD). These have since
emerged as best practices in ESG reporting and we are pleased to see
others in the industry following our lead.
I'm particularly proud of our leadership in the Sustainability
space--the environmental pillar of ESG. In 2020, JetBlue became the
first U.S. airline to achieve domestic carbon neutrality, realized
today through the purchase of credible carbon offsets. We also began
flying regularly on sustainable aviation fuel (SAF), from San Francisco
International Airport--allowing us to reduce lifecycle emissions
roughly 75 percent per neat gallon of delivered jet fuel--and this year
expanded regular commercial usage to Los Angeles International Airport.
At the end of 2020, we further committed to achieve net zero carbon
emissions by 2040, 10 years ahead of the target set by the global air
transport industry, pledging to continuously innovate to directly
reduce air travel emissions and our usage of carbon offsets.
To reach this 2040 goal, we are aggressively pursuing each and
every decarbonization lever--including optimizing fuel efficiency with
new aircraft and efficient operations, seeking out large volumes of SAF
for use across our network, and minimizing emissions on the ground with
electric ground support vehicles and aircraft ground power and air
systems.
In September, JetBlue announced plans to speed our transition to
SAF at New York area airports, positioning us well ahead of pace on our
target to convert 10 percent of total fuel usage to SAF on a blended
basis by 2030. This new agreement marks a major milestone for SAF in
New York's airports, bringing the first large-scale volume of
domestically produced SAF for a commercial airline to the region.
JetBlue will convert 30 percent of its fuel buy across JFK, LGA and EWR
from traditional Jet-A fuel to SAF, which is expected to reduce
emissions by an estimated 80 percent per gallon of neat SAF, compared
to traditional petroleum-based fuels.
Chair Cantwell, Ranking Member Wicker, while the main focus of
today's hearing is on the benefits of PSP to airlines and their
employees, I think it's important for us to acknowledge the devastating
impact of this virus on so many in our industry, our Nation and the
world. Many of us have lost someone--a friend, a relative, a
colleague--to COVID-19. Since March 2020, sixteen JetBlue crewmembers
have died as a result of the coronavirus. We join their families and
friends in cherishing their memories. We will do our best to channel
their passion to deliver on JetBlue's mission of Inspiring Humanity
every day.
Thank you for the opportunity to share my views and to add
JetBlue's perspective to today's hearing.
______
Prepared Statement of Ben Minicucci, CEO, Alaska Air Group
Thank you, Chair Cantwell, Ranking Member Wicker, and distinguished
members of the committee for the opportunity to submit written
testimony for today's hearing. My name is Ben Minicucci and I am the
CEO of Alaska Air Group, the parent company of Alaska Airlines, Horizon
Air and McGee Air Services. I am proud to represent our company and our
22,000 employees across Alaska Air Group, nearly 14,000 of whom are
represented by the Senators on this Committee.
Alaska Airlines is a major carrier that also serves as a lifeline for
smaller communities.
Alaska Airlines is the 5th largest U.S. carrier. We are the only
major airline based on the West Coast, with our headquarters in Seattle
and additional hubs in Los Angeles, San Francisco, Portland, and
Anchorage. With more than 1,000 flights per day across North America--
spanning from Hawaii to Washington, D.C.--we operate and employ people
in urban centers and rural areas across the U.S., as well as in Canada,
Mexico, Belize and Costa Rica. As a member of the oneworld alliance,
our passengers, whom we call guests, can reach over 1,000 destinations
in more than 170 countries and territories.
Since our founding in 1932, we have had a strong connection with
our namesake State of Alaska. While we have experienced significant
growth and expansion, today the state still accounts for approximately
12 percent of our flying. We recognize the vital role we play as a
lifeline for 20 communities in Alaska--only three of which are
accessible by road. We are the only pre-deregulation passenger airline
still operating dedicated freighter aircraft in the U.S. Throughout the
pandemic, our cargo division has delivered essential goods, groceries
and home supplies to communities across the State of Alaska, as well as
vital health care supplies like masks, PPE, COVID-19 tests and
ultimately over 1,000 shipments of COVID vaccines. In fact, we added
new community air service in the State of Alaska to meet these needs
during the pandemic.
We are deeply committed to communities of all sizes and offer them
an extensive route network that connects cities, people, and businesses
across the U.S. and around the globe.
Across Alaska Air Group we are committed to safety as our number
one value, to exceptional caring service for our guests and
communities, and to offering low fares enabled by maintaining low costs
and running our business in a fiscally conservative way. We have held
to these commitments over 90 years of business, and we are proud to be
one of the few airlines that has never filed for bankruptcy.
We are grateful for PSP and our employees who are running a resilient
operation.
We brought those same historical commitments and values to
addressing the challenges brought on by the pandemic. The entire
aviation industry--labor, airports, airlines and government--
collaborated in an unprecedented way to meet this moment.
In 2020, at our lowest point at the outset of the pandemic, Alaska
Airlines was carrying only 5,000 passengers each day where we normally
carry 140,000 passengers per day. Financially at that point we were
bringing in only 5 percent of normal revenues and we had a cash burn
rate of $400 million per month. For 55 days straight, we had more
cancellations than new ticket sales. In such a highly capital-intensive
business such as aviation this was catastrophic, and we know that this
impact was not unique to Alaska Airlines but happening to the entire
industry.
It took everyone collaborating and pulling together to turn the
ship around. Today we are flying about 85 percent of our 2019 schedule
after scaling back up at a measured pace. Our on-time performance,
completion rates and guest satisfaction are all up compared to pre-
pandemic scores, and our operations rank among the top of the industry.
That is why my message today is one of gratitude: Thank you to this
committee, your staff and to all the officials who came together during
a critical time in our global history. I appreciate the consideration
and support you gave to airline employees and our industry through the
Payroll Support Programs (PSP) \1\ and Direct Loan Program.\2\ As we
said to many of you in March 2020, our goal was to use the assistance
as wisely as possible, and to come out of the crisis as strong as we
possibly could so we can continue our role as a critical part of
America's economic infrastructure.
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\1\ Alaska Air Group received a total of $2.27 billion in PSP
funds, a combination of grants and loans. All funds were expended to
cover payroll as of July 2021 and we have just under $600 million in
outstanding loans to repay under this program.
\2\ Alaska Air Group had access to $1.93 billion in loans under the
Direct Loan Program in case of need--the company drew down on $135
million in September 2020 and repaid that amount in full in June 2021.
All collateral assets were released unencumbered back to the airline.
---------------------------------------------------------------------------
More than 18 months later, I am proud to say this has been the
outcome at Alaska Airlines. By directly supporting our employees
through the PSP--a successful program built on collaboration with our
unions and which preserved a level playing field across the industry--
Congress wisely invested in the future of aviation, our people and the
economy.
The Payroll Support Program allowed Alaska Air Group to:
1. Keep employees on staff.
2. Reduce our cash burn.
3. Scale our operation in a safe and measured way.
4. Run a strong and reliable operation that's near the top of the
industry.
Airlines are not built to quickly ramp down and then ramp up again.
PSP allowed us to prioritize protecting our company's core--our people
and their families. It also enabled us to address the other intensive
cost structures in our company to ensure we would weather the storm as
one team.
PSP allowed us to protect employees and keep them in their jobs. By
keeping employees on staff, it reduced the time that would have been
required to train people coming back to work--an effort that takes
months and significant resources. PSP allowed us, with the short
exception of the gap between PSP1 and PSP2 funding, to not
involuntarily furlough any employees.\3\ We also worked with our labor
partners on programs for some employees to take voluntary leaves,
however, as of October 2021, every employee at Alaska Airlines who
signed up for voluntary leave has been recalled. Additionally, the
financial stability and flexibility provided by this government support
to airlines allowed us to keep supporting the entire economic ecosystem
and supply chain, including the aviation manufacturing industry and
jobs, as well as the industries that support our operation in
communities of all sizes. In short, PSP allowed us to scale back in a
safe, reliable and measured way and then to rebuild when the economy
and travelers were ready.
---------------------------------------------------------------------------
\3\ All involuntarily furloughed employees between PSP1 and PSP2
were recalled in compliance with the PSP2 requirements.
---------------------------------------------------------------------------
I am tremendously grateful for the people and labor unions who have
tirelessly contributed to Alaska Airlines' success in recovery. Folks
in our operation have been working incredibly hard and we recognize the
toll ramping down and ramping up again has taken on everyone.
Throughout it all, they are running a resilient operation and showing
remarkable care for our guests, even during an incredibly difficult
time of continual challenge and change.
The improved performance Alaska Air Group is operating today would
not be a reality without the hard work of the more than 22,000
employees who bring our airlines to life each day--rain or shine.
Our strong operational performance in 2021 is better than it was in
2019 and many categories rank among the top of the industry.
Even as we have navigated through a choppy recovery, with variants
and waves, our business today is strong and stable and we are confident
in our operational and financial outlook.
Alaska's approach from the beginning of the pandemic has been
deliberate. We prioritized people, by protecting the health and safety
of our employees and guests and bringing empathy and humanity to all
our decisions and actions. And we ran a resilient operation, no matter
the external circumstances.
To put that into context, below are some of our operational
performance metrics, which rank among the best in the airline industry:
Over the last several months, we have scaled capacity back
up in a measured way. Over the summer we flew about 85 percent
of our pre-COVID capacity. Our plan going forward is to move in
a deliberate way to 2019 levels in the second quarter of 2022
and get back to growth later in the new year. We plan to hire
more than 3,000 people to support our growth plans.
Year-to-date, we have completed 98.7 percent of our
scheduled flights, which is better reliability and a lower
percentage of canceled flights than at this time in 2019.
Our DOT on-time rate is 84.5 percent, which is 2.4 points
higher than our 82.1 percent on-time rate YTD in 2019.
And our guests have shown their appreciation for this
reliable service--our internal guest experience score of 80
percent is more than two points better than our YTD score in
2019 and we've exceeded internal targets every month this year.
------------------------------------------------------------------------
2019 YTD 2021 YTD
through through Difference
November November
------------------------------------------------------------------------
Passengers 47.5 million 33 million -31%
Schedule completion 98.6% 98.7% +0.1 pt
rate
DOT on-time 82.1% 84.5% +2.4 pts
performance
Guest Experience 78% 80% +2 pts
------------------------------------------------------------------------
Sustaining our high level of operational performance and guest
satisfaction is a remarkable achievement given how complex re-ramping
our operations has proven to be.
When our operation does well, our employees do well. We are unique
among most airlines in that we have performance-based rewards program
for employees. Basically, it is an annual bonus that increases or
decreases based on how we performed in the year. But unlike most
companies who share year-end bonuses based only on profits, our bonus
program is also driven by our operational metrics: safety,
productivity, generating cash flow, and reducing carbon emissions. This
company-wide program helps align us all around our goals that are
important to our long-term ability to create jobs and serve our guests.
Since this is not a purely profit-based plan, we are very excited that
Alaska Airlines employees will be rewarded at the end of this year even
as we are still recovering from our financial losses due to the
pandemic precisely because of our strong operational performance.
Looking forward, we are doubling down on the way we care.
Throughout the pandemic, we didn't lose track of what is important:
Leading with our values. As we return to growth, it is an opportunity
to rebuild responsibly and embed these values even deeper in our
culture.
In April 2021, the airline announced 2025 sustainability goals
across the most important areas of impact for the company, including
near-term goals to be the most fuel-efficient U.S. airline by 2025. The
company also set a five-part path to net zero carbon emissions by 2040
and established Alaska Star Ventures to identify and enable technology
that can accelerate our path to net zero. That strategy leverages
operational best practices and next-generation disruptive technology to
transform and reduce the long-term climate impact of aviation--another
area we will continue to need to partner with government on as we
modernize in this next age of aviation.
Now that we are hiring across the company again with an eye on
growth, we are also focused on investing in and caring for our diverse
workforce. We are monitoring and learning about how the workforce is
changing and how we can support them as they take care of guests and
operate a strong airline. We will see challenges and opportunities as
we look to meet demand, but I am confident that we can all collaborate
again and ensure we continue to have a world-class, highly qualified
and talented aviation workforce.
As the 5th largest U.S. airline, we believe in our ability to
compete when there is a level playing field, but it is also important
that aviation policy support competition and innovation in the
industry. As you consider the aviation policy issues of the day, we
would ask you to embrace policies that keep this federally regulated
industry vibrant, including enhancing the ability for smaller carriers
to gain access to facilities and markets, and refrain from policies and
regulations that would discourage new service offerings, cause prices
to needlessly increase, or disadvantage small communities.
To close, thanks to Congress' collaboration and support, we have
weathered the last nearly two years and at Alaska Air Group we believe
in our enduring competitive advantages will continue to serve us well
as we look to the recovery ahead--namely, owning safety, being fiscally
conservative (offering low fares enabled by low costs), and strong
guest loyalty based on our excellent operations, remarkable service and
a culture of genuine care.
______
In most American cities, the single largest worksite is the
airport. The jobs created by the air travel industry have a tremendous
impact on not only the national economy, but on communities--
particularly low-income communities of color--across the country. The
Service Employees International Union (SEIU) is committed to
transforming traditionally low-wage, non-union airport jobs into good
jobs that can sustain strong families and communities by:
1. Establishing a national wage standards floor for all airport
workers;
2. Establishing national standards for airport workers around issues
critical to both workers and the traveling public such as
access to affordable health care, sick days, measures to reduce
turnover, and training standards;
3. Securing a commitment from airlines that they will employ only
responsible contractors who adhere to these national standards
and respect the rights of workers; and
4. Ensuring that every airport worker in the country has the right
to form a union.
Airport workers are on the frontlines of our Nation's aviation
system, keeping passengers and communities safe from infectious
disease, climate disasters impacting travel, and threats of violence
and terrorism. Airport workers like wheelchair agents, cabin cleaners,
security officers, and baggage handlers are largely people of color,
immigrants, and women. Despite the critical role these workers play in
our aviation system and continue to play on the frontlines of the
COVID-19 pandemic, including making airports accessible as required by
the Americans with Disabilities Act and the Aircarrier Access Act, they
are often the lowest paid workers in airports. Airport workers like
skycaps report making a tipped wage of just $2.13 an hour,\1\ and many
of these essential workers do not have access to sick days, paid time
off, or truly affordable health care.
---------------------------------------------------------------------------
\1\ Nick Natario, ``IAH contract workers still waiting for higher
pay from United,'' ABC13 Eyewitness News, February 28, 2020. https://
abc13.com/iah-workers-pay-dispute-united-airlines/5975000/
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SEIU Footprint in Airports
Over the past ten years, SEIU has been successfully organizing and
engaging tens of thousands of airport workers at 31 major airports
across the country. Many of these workers are employed by contractors.
Since SEIU began organizing these airport workers, who are primarily
people of color, women, and immigrants, nearly 154,000 airport workers
have won raises and other improvements, including 146,000 who have won
a path to at least $15 an hour. Many workers are on a path to much
higher pay, including some with total compensation, including benefits,
as high as $23.60 (see airport living wage rates chart). In the coming
years we intend to advocate for improvements in pay, access to
affordable health insurance, improved working conditions, and to help
unionize 100,000 more airport workers.
What's Happening Now: Reports from the Field
Airlines and contractors received billions of dollars to keep our
Nation's aviation system ready for passengers to return to airports and
reconnect with loved ones as the country reopened. Yet an investigation
by the House Select Committee on the Coronavirus Crisis found that
nearly 58,000 employees of airline contractors--nearly 35 percent of
the workforce--were laid off or furloughed before federal aid was
delivered.\2\ Only 5 percent of these workers had been recalled as of
last summer,\3\ and significant problems remain, many of which are
likely caused or exacerbated by low staffing.
---------------------------------------------------------------------------
\2\ ``Unnecessary Costs: How the Trump Administration Allowed
Thousands of Aviation Workers to Lose Their Jobs,'' Select Subcommittee
on the Coronavirus Crisis, October 9, 2020, page 5. https://
coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/
PSP%20Report%20Fi
nal.pdf
\3\ Charles E. Schumer, Sherrod Brown, and Maria Cantwell, Letter
to Steven Mnuchin, July 17, 2020. https://www.goiam.org/wp-content/
uploads/2020/07/PSPTreasuryImplementa
tionJuly152020FINAL.pdf
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The following examples of the impact of staffing shortages on
airport workers were compiled from an August 2021 survey of SEIU
members who serve the traveling public in our Nation's airports:
Airport workers are working short-staffed. One worker
expressed concern about the workload caused by staffing
shortages, including not knowing when to ask for his break and
not having enough time to rest.
Workers at many airports report mandatory overtime, which
can create significant and expensive child care issues that
make the work unsustainable.
Transportation to airports is often poor or non-existent and
parking fees are significant, leading workers to choose jobs
that do not have the same transportation challenges.
Some airport workers report they are being kept as part-time
employees, but also given mandatory overtime resulting in
unclear schedules. They would like to work a full-time schedule
with clearly defined schedules.
Airport workers are being offered hiring bonuses or
attendance bonuses. At one Orlando Airport, workers report they
are being offered $500 if they are not late or do not miss a
shift, resulting in workers having to choose between coming to
work sick or not receiving the additional $500 bonus.
Some workers are being offered higher wages, but have been
told the wages might just be temporary through the busy travel
season.
Workers expressed concern with not having enough time to
take breaks or eat lunch because workers are expected to clock
out in a different terminal than where they take breaks. The
workload is so significant that workers also feel that it is
not possible to take breaks.
One pregnant worker expressed concern with the lack of paid
maternity leave and the fear of possibly not being able to
return to the same position upon her return to work.
Wages have stagnated and benefits remain limited or non-existent
(see airport living wage rates chart) while work loads have increased
at most airports. Airlines have the ability--and the responsibility--to
end inequity and make airports safer and more secure for passengers and
our communities. However, SEIU members who clean airplanes and
facilities, care for disabled passengers, and secure terminals believe
airlines will not exercise their power to improve working and traveling
conditions without strong oversight and Federal standards that mandate
it.
Eroding Worker Standards
As a result of industry deregulation in 1978, airlines have used
multiple strategies to reduce costs, in particular labor costs, which
has resulted in substantial losses in compensation to airline workers.
Airlines frequently use outsourcing as a means to ``both reduce wages
in lower skilled occupations and improve their ability to lay off
workers during slow times.'' \4\ By creating the subcontracting system,
airlines have been able to push down wages.\5\ Under the system,
contractors bid for work through an airline-run Request for Proposal
(RFP) process. In the labor-intensive airport services industry, labor
represents the majority of the cost of doing business. Therefore, the
contractor who pays the least to workers most often offers the lowest-
priced bid, subsequently winning the contract. Overall, airlines have
created a ``race-to-the-bottom'' whereby contractors cut wages in order
to compete with one another.\6\ But in truth, race-to-the-bottom
competition occurs in other areas as well. Contracting companies also
compete on the basis of cutting health care,\7\ sick leave,\8\ and
reducing investments in health and safety.\9\
---------------------------------------------------------------------------
\4\ ``Course Correction: Reversing Wage Erosion to Restore Good
Jobs at American Airports,'' UC Berkeley Labor Center, October 2013, p.
2.
\5\ Ibid.
\6\ ``Fix What is Broken,'' ITF & UNI Global Union, October 2018,
pages 7, 13, 15. http://www.airportworkersunited.org/wp-content/
uploads/2018/10/AviationReport-FINAL.pdf
\7\ ``Airport Workers--Majority Black and Immigrant--on Path to Win
Health Care as NY State Legislature Passes Historic Bill,'' SEIU 32BJ
Press Release, July 22, 2020. https://www.seiu32bj.org/press-release/
airport-workers-health-care-bill/
\8\ ``Airline Contractor Flouting NYC Sick Leave Protections To Pay
Workers Over $150,000 In Restitution,'' LaborPress.org, July 8, 2020.
http://laborpress.org/airline-contractor-flouting-nyc-sick-leave-
protections-to-pay-workers-over-150000-in-restitution/
\9\ ``Airport Safety Starts with Safer Working Conditions,'' New
York Committee for Occupational Health, March 2015. http://nycosh.org/
wp-content/uploads/2015/03/Airport-Safety-Starts-with-Safer-Working-
Conditions.pdf
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The airlines' system of subcontracting incentivizes poor treatment
of both workers and the public. And the system is widespread. Both
airlines and airport authorities have increasingly shifted passenger
services to third-party companies who compete vigorously to win lowest-
cost bid contracts.\10\ Both the absolute number and the share of
outsourced jobs have increased substantially since 1978. By 1991, 16
percent of jobs were outsourced; by 2001, 19 percent; by 2011, 26
percent; and as of 2019, 31.5 percent of jobs were outsourced.\11\ In
many major U.S. airports, there is no defined system specifically for
regulating the quality, capacity, or volume of contractors allowed to
operate on airport property.
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\10\ ``First-class Airport, Poverty-class Jobs,'' Puget Sound Sage,
OneAmerica, Faith Action Network, and Working Washington, May 2012,
pages 2 and 9-10. https://www.forworking
families.org/resources/publications/first-class-airport-poverty-class-
jobs
\11\ ``Air Transportation Employment,'' U.S. Bureau of Labor
Statistics, SEIU Analysis. https://www.bls.gov/ces/
For example, in 2002, 75 percent of porters and bellhops, also
known as skycaps, were directly employed by airlines and earned an
inflation-adjusted equivalent of $27.18 per hour.\12\ In 2019, 96
percent of those workers were employed by contractors and earned an
average of $12.23 an hour.\13\
---------------------------------------------------------------------------
\12\ U.S. Bureau of Labor Statistics, available at https://
www.bls.gov/oes/tables.htm.
\13\ Ibid.
---------------------------------------------------------------------------
Passenger attendants--such as those workers that care for
passengers requiring wheelchair assistance--are another case in point.
In 2002, 41 percent of passenger attendants were directly hired by
airlines and earned the inflation adjusted equivalent of $15.52 an
hour, whereas the remaining 59 percent of those workers were contracted
and earned the equivalent of $13.06.\14\ In 2019, 98 percent of
passenger attendants were contracted and earned an average of $12.44 an
hour.\15\
---------------------------------------------------------------------------
\14\ Ibid.
\15\ Ibid.
---------------------------------------------------------------------------
The dynamic is clear. Wages of outsourced workers decrease as
airlines do more outsourcing. But the effects of outsourcing don't stop
there: outsourcing also appears to drive down the wages of certain job
classes as a whole--specifically the professions the industry targets
for outsourcing most often--regardless of whether an individual airline
has outsourced the job yet or not. For example, the wages for directly
employed janitors--a profession that is typically heavily outsourced--
fell by nearly 30 percent during the 2002-2019 period.\16\ Meanwhile,
airlines actually increased compensation for direct airline employees
whose jobs are not typically outsourced by approximately 35 percent
overall.\17\
---------------------------------------------------------------------------
\16\ Ibid.
\17\ Ibid.
---------------------------------------------------------------------------
Recent data appears to show an acceleration of outsourcing. In
January 2018, the proportion of outsourced workers stood at 30.6
percent.\18\ In January 2020, prior to the COVID-19 pandemic, that
proportion stood at 32.06 percent.\19\ As of November 2020, the
proportion of outsourced workers stood at 34 percent.\20\ The
proportion of workers outsourced grew faster between April and May than
at any other time since at least 1991.\21\
---------------------------------------------------------------------------
\18\ Ibid.
\19\ Ibid.
\20\ Ibid.
\21\ Ibid.
---------------------------------------------------------------------------
Staffing Issues During the Pandemic
American Airlines
Although American Airlines has blamed labor shortages, in part, for
massive flight delays, the airline was the only major commercial
carrier to furlough pilots--1,600--during the pandemic.\22\ The airline
reported that a total of 19,000 team members were furloughed starting
October 1, 2020.\23\
---------------------------------------------------------------------------
\22\ Karl Evers-Hillstrom, ``Massive flight delays, cancellations
prompt finger-pointing,'' The Hill, July 14, 2021. https://thehill.com/
policy/transportation/562879-massive-flight-delays-cancellations-
prompt-finger-pointing
\23\ American Airlines Quarterly Report, third quarter ending
September 30, 2020. https://americanairlines.gcs-web.com/sec-filings/
sec-filing/10-q/0000006201-20-000101
---------------------------------------------------------------------------
In April 2020, The Dallas Morning News reported that 39,000
American Airlines employees opted to take early retirement, voluntary
leave, or reduced hours. Nearly 5,400 of those employees were pilots,
including 715 who took early retirement. Almost 9,500 flight attendants
took voluntary leave, among whom 823 took early retirement.\24\ In the
first quarter of 2021, American reported an additional 1,600 employees
had opted into a voluntary early retirement program.\25\ American also
stated that it decreased its management and support staff team,
including officers, by approximately 5,100 positions, or 30
percent.\26\
---------------------------------------------------------------------------
\24\ Kyle Arnold, ``39,000 American Airlines workers take early
retirement, leave or reduced hours in face of COVID-19 pandemic,'' The
Dallas Morning News, April 30, 2020. https://www.dallasnews.com/
business/airlines/2020/04/30/39000-american-airlines-workers-take-ear
ly-retirement-leave-or-reduced-hours-in-face-of-covid-19-pandemic/
\25\ American Airlines Quarterly Report, first quarter ending March
31, 2021. https://ameri
canairlines.gcs-web.com/sec-filings/sec-filing/10-q/0000006201-21-
000054
\26\ American Airlines Annual Report, year ending December 31,
2020. https://ameri
canairlines.gcs-web.com/sec-filings/sec-filing/10-k/0000006201-21-
000014
---------------------------------------------------------------------------
At the end of 2019, American reported that it employed 133,700
active full-time equivalent employees.\27\ By the end of 2020, that
number had fallen by more than 30,000, a reduction of more than 20
percent of full-time employees.\28\
---------------------------------------------------------------------------
\27\ American Airlines Annual Report, year ending December 31,
2019. https://ameri
canairlines.gcs-web.com/sec-filings/sec-filing/10-k/0000006201-20-
000023
\28\ American Airlines Annual Report, year ending December 31,
2020. https://ameri
canairlines.gcs-web.com/sec-filings/sec-filing/10-k/0000006201-21-
000014
---------------------------------------------------------------------------
But American does not appear intent on reversing that trend. The
airline told investors that getting to ``cash breakeven'' will require
``workforce flexibility following expiry of the [Paycheck Support
Program].'' \29\ American Airlines President Robert Isom acknowledged
in May at a Wolfe investor presentation that American intends to
continue with a substantially reduced workforce that includes, as one
example, single agents running boarding at gates. Isom declared, ``We
think the team is up for the challenge.'' \30\
---------------------------------------------------------------------------
\29\ American Airlines Current Report (8-K), March 8, 2021. https:/
/www.sec.gov/ix?doc=/Archives/edgar/data/0000006201/000000620121000022/
aal-20210308.htm
\30\ This is from an investor presentation which was posted on the
American Airlines Investor Relations page. Unfortunately, the
presentation is no longer publicly available.
---------------------------------------------------------------------------
United Airlines
United Airlines has also made major job cuts. In July 2020, Fox
Business reported that 6,000 United Airlines employees had taken
voluntary separation packages.\31\ Two months later, in September 2020,
United reported that since the beginning of the pandemic a total of
9,000 employees had opted into voluntary separation packages,
retirement packages, or extended leaves of absence.\32\ Additionally,
in the first quarter of 2021, approximately 4,500 employees elected to
voluntarily separate from the company.\33\
---------------------------------------------------------------------------
\31\ Lucas Manfredi, ``United Airlines says more than 6,000
employees take severance packages after $1.6B loss,'' Fox Business,
July 21, 2020. https://www.foxbusiness.com/markets/united-airlines-
says-more-than-6000-employees-take-severance-packages-aft er-1-6b-loss
\32\ United Airlines Current Report, October 14, 2020. https://
ir.united.com/static-files/e0a68774-99bb-4e8d-b1e3-444a85d129d1
\33\ United Quarterly Report, first quarter ending March 31, 2021.
https://americanairlines.gcs-web.com/sec-filings/sec-filing/10-q/
0000006201-21-000054
---------------------------------------------------------------------------
Despite receiving $7.7 billion in Payroll Support Program money--
funded by taxpayer dollars intended to retain employees during the
pandemic--United announced bonuses for top executives and planned job
cuts for thousands of unionized inflight catering workers based in
Honolulu, Cleveland, Denver, Houston, and Newark. In May 2021, seven
U.S. Senators--Hirono, Schatz, Brown, Blumenthal, Van Hollen, Menendez,
and Booker--wrote letters to United's CEO Scott Kirby and U.S. Treasury
Secretary Janet Yellen to prevent United from outsourcing 2,500
catering jobs.\34\ But at the end of July, United announced that it
planned to move forward with outsourcing the workers anyway.\35\
---------------------------------------------------------------------------
\34\ ``Hirono, Schatz, Brown, Blumenthal, Van Hollen, Menendez,
Booker Call for United Airlines to Stop Outsourcing 2,500 Catering
Jobs,'' Press Release, May 5, 2021. https://www.hirono.senate.gov/news/
press-releases/hirono-schatz-brown-blumenthal-van-hollen-menendez-
booker-call-for-united-airlines-to-stop-outsourcing-2500-catering-jobs
\35\ Tracy Rucinski and Sanjana Shivdas, ``United Airlines to
outsource catering operations from October,'' Reuters, July 29, 2021.
https://www.reuters.com/business/aerospace-defense/united-airlines-
outsource-catering-operations-october-2021-07-29/
---------------------------------------------------------------------------
TSA Infections
While there isn't any regular tracking of COVID-19 infections among
airline-contracted airport workers, it is clear that the public-facing
nature of many jobs puts these workers at significant risk. The
Transportation Security Administration (TSA) does provide data on COVID
infections and considering TSA agents also interact directly with the
public, they are likely to have a similar risk level to other airport
workers. As Forbes recently noted, ``The vast majority of TSA officers
who become infected with the virus are screeners who come into contact
with passengers and their belongings.'' \36\
---------------------------------------------------------------------------
\36\ Suzanne Rowan Kelleher, ``Here's Why You Need To Wear A Face
Mask At Airports And On Airplanes,'' Forbes, (August 4, 2021). https://
www.forbes.com/sites/suzannerowankelleher/2021/08/04/covid-airport-tsa-
flights-surge/?sh=1567a4bc473c
---------------------------------------------------------------------------
According to an analysis of data on infections of TSA officers at
the 30 largest airports in the US, the continued spread of the Delta
variant appears to be increasing the risk for airport workers:
In 2021, there has been an 80 percent increase in infections
(comparing January 1, 2021 to the current data). In the last
month alone, the number of infections increased by 10 percent.
The rate of change of infections is not evenly spread and,
for example, several airports saw a roughly 20 percent increase
in the last month, including FLL, ATL, LAS, DFW. MIA and IAH
were at about 18 percent.
In 2021 alone, several major airports have seen infections
rise by more than 100 percent (LGA, FLL, MCO, SFO, JFK). At
LAS, BWI, MIA, IAH, and EWR infections rose by rates well above
90 percent.\37\
---------------------------------------------------------------------------
\37\ Analysis of TSA COVID infections. https://docs.google.com/
spreadsheets/d/1aUhiYzp5E
esL6rpdUp5ld-b4cWnOpxdq/
edit?usp=sharing&ouid=101153717557407581469&rtpof=true&sd=
true
---------------------------------------------------------------------------
Airlines Failed to Protect Workers and Passengers During the Pandemic
A 2020 survey of nearly 900 frontline airport workers in 43
airports finds health and safety measures fall short:\38\
---------------------------------------------------------------------------
\38\ SEIU Survey of Airport Workers, July-September 2020.
One in five airport workers report receiving no PPE
whatsoever.\39\
---------------------------------------------------------------------------
\39\ Ibid.
Only half report that their employer, an airline, or the
airport provide them with masks to cover their mouth and
nose.\40\
---------------------------------------------------------------------------
\40\ Ibid.
69 percent report their employer failed to train them on how
to protect themselves and passengers from the virus.\41\
---------------------------------------------------------------------------
\41\ Ibid.
66 percent report their employer failed to train them to
properly don and doff gloves, masks, and other PPE in order to
limit exposure to infection.\42\
---------------------------------------------------------------------------
\42\ Ibid.
64 percent report their employer failed to train them how to
respond if they find a dangerous or contaminated item in the
cabin or the terminal.\43\
---------------------------------------------------------------------------
\43\ SEIU Survey of Airport Workers, July-September 2020.
64 percent report their employer failed to train them to
protect themselves from blood-borne pathogens and infectious
diseases as they perform their job duties.\44\
---------------------------------------------------------------------------
\44\ Ibid.
80 percent agree or strongly agree with the statement,
``Working at the airport puts me at increased risk for
contracting COVID-19.'' \45\
---------------------------------------------------------------------------
\45\ Ibid.
More than 50 percent report they are not given paid sick
days.\46\
---------------------------------------------------------------------------
\46\ Ibid.
67 percent report experiencing pressure to work too quickly
or do more work than they believe is safe because there are not
enough staff.\47\
---------------------------------------------------------------------------
\47\ Ibid.
Fewer than half agree with the statement, ``I can raise
concerns about workplace issues (i.e., safety and health,
cleaning, security, passenger service standards) without fear
of retaliation.'' \48\
---------------------------------------------------------------------------
\48\ Ibid.
---------------------------------------------------------------------------
The airline industry is squeezing not just workers but airports as well
Airlines are cutting costs in a number of ways that not only affect
the quality of workers' wages and working conditions, but also the
quality of U.S. airports. In March 2021, Lance Lyttle, the Managing
Director of the Seattle-Tacoma International Airport, urged lawmakers
to provide additional support for airports. In his testimony, he
specifically called for Congress to ``provide a path to sustainable
airport investment through a long-overdue adjustment to the Federal cap
on local PFCs.'' \49\ The federally authorized Passenger Facility
Charge (PFC) program allows airports to collect a fee from each
traveling passenger. These funds are then used to fund airport
development projects. For the last 20 years, PFCs have been capped at
$4.50 per passenger per flight segment,\50\ while construction costs
have risen significantly.\51\ Unfortunately, rather than support an
increase in PFCs, the airline industry has campaigned against any
increase, blocking airports' access to needed capital for
infrastructure projects.\52\
---------------------------------------------------------------------------
\49\ ``Lance Lyttle Opening Statement before the House Aviation
Subcommittee,'' American Association of Airport Executives (AAAE),
March 2, 2021, at 4 minutes, 20 seconds. https://www.facebook.com/
watch/?v=725176868187511
\50\ Jeff Davis, ``Study Commissioned by Congress Recommends
Increasing Airport PFC Cap by $3 per Passenger'' Eno Center for
Transportation, January 16, 2020. https://www.enotrans.org/article/
study-commissioned-by-congress-recommends-increasing-airport-pfc-cap-
by-3-per-passen
ger/
\51\ Benjamin M. Miller, et al., ``US Airport Infrastructure
Funding and Financing,'' Rand Corporation, January 2020, page xv.
https://www.rand.org/content/dam/rand/pubs/research
_reports/RR3100/RR3175/RAND_RR3175.pdf
\52\ ``Stop Air Tax Now,'' Airlines for America, accessed March 2,
2021. https://www.stop
airtaxnow.com/privacy-policy/
---------------------------------------------------------------------------
______
As the Largest U.S. Passenger Airline, American Airlines Is Critical to
the U.S. Economy's Ability to Rebound From the Economic Turmoil Caused
by The COVID-19 Pandemic
The CARES Act's Payroll Support of $7.6 Billion to American Airlines
Will Yield an Estimated $10.6-$12.3 Billion in Primary Benefits
to the U.S. Economy, and Facilitate an Additional $10.6 Billion
in Secondary GDP Benefits by Enhancing American's Ability to
Quickly Restore Capacity and Facilitate the Rebound in the U.S.
Economy
Eric Amel, Darin Lee, and Ethan Singer\1\
---------------------------------------------------------------------------
\1\ See last page for author biographies.
---------------------------------------------------------------------------
April 3, 2020
Executive Summary
U.S. passenger airlines play a critical role in the United States
by enabling commerce and trade, connecting families and friends,
transporting armed services personnel, and serving as a vital component
for much of the Nation's tourism, leisure, and hospitality industry,
the largest component of the U.S. economy.\2\ According to the U.S.
Federal Aviation Administration (``FAA''), civil aviation in the United
States drives 5 percent of U.S. Gross Domestic Product (``GDP'') and
helps to support over 10 million U.S. jobs (i.e., one of every 14 in
the U.S. economy).\3\ During the current COVID-19 pandemic, U.S.
passenger carriers--including American--have played a key role in
transporting urgently needed medical equipment, medicine, and personnel
to the most affected
---------------------------------------------------------------------------
\2\ See https://www.whitehouse.gov/briefings-statements/remarks-
president-trump-vice-president-pence-members-coronavirus-task-force-
press-briefing-13/ statement of President Trump on March 27th, 2020
(``. . . I also want to preserve airlines, because that's preserving
lots of other jobs. That's preserving the travel and leisure industry,
which is perhaps the largest industry in our country, if you add it all
up. You add up all the hotels and all of the traveling and all the
planes and everything else--probably, by far, the largest industry in
our country.)
\3\ Source: The Economic Impact of Civil Aviation in the U.S.
Economy, U.S. Federal Aviation Administration, January 2020, p.14.
---------------------------------------------------------------------------
regions of the country,\4\ and have likewise provided emergency
flights to repatriate U.S. citizens who were stranded abroad as
countries began to close their borders and freeze travel in response to
the rapidly spreading pandemic.\5\
---------------------------------------------------------------------------
\4\ On March 19, 2020, American Airlines announced that it would
operate cargo-only flights to move goods, including medical supplies,
between the U.S. and Europe. See http://news
.aa.com/news/news-details/2020/American-Airlines-Announces-Cargo-Only-
Flights-to-Help-Keep
-Business-Moving-OPS-DIS-03/default.aspx. In addition, American
Airlines has partnered with the American Red Cross to raise funds for
COVID-19 relief through offering air miles to Red Cross donors. See
http://s21.q4cdn.com/616071541/files/doc_news/American-Airlines-
Supports-COVID-19-Efforts-Through-American-Red-Cross-COMM-VOL-03-
2020.pdf. On March 28, 2020, United Airlines announced that it would
use its planes to transport medical supplies around the United States.
See https://www.businessinsider.com/united-ceo-thanks-america-bail-out-
planes-deliver-medical-supplies-2020-3, statement by CEO Oscar Munoz
(``Right now, aircraft flying the United livery and insignia, flown by
our aviation professionals, have been repurposed to deliver vital
medical supplies and goods to some of the places that need it most.'')
Delta is providing free flights to medical volunteers to regions in the
U.S. that have been highly impacted and operating cargo flights between
the U.S. and China to maintain the medical supply chain. See https://
news.delta.com/supporting-front-lines-medical-volunteers-can-book-free-
flights
-georgia-louisiana-and-michigan and https://news.delta.com/new-delta-
cargo-flights-between-us-china-help-keep-medical-supply-chain-flying.
\5\ For example, on March 19, 2020, after Haiti closed its two
international airports, both American and JetBlue decided to offer
repatriation flights (https://www.miamiherald.com/news/nation-world/
world/americas/haiti/article241442121.html). In addition, for the week
of March 25th, American and United offered repatriation flights from
various cities in Central and South America (https://hub.united.com/
united-helps-travelers-return-home--2645575499.html and http://
news.aa.com/news/news-details/2020/American-Airlines-Operating-
Repatriation-Flights-to-Get-Customers-Home-This-Week-OPS-DIS-03/
default.aspx).
---------------------------------------------------------------------------
Without healthy U.S. airlines that are in a position--both
financially and operationally--to quickly restore flights once the
pandemic in the United States has been contained, the recovery of the
broader U.S. economy will be far slower than it could otherwise be,
leaving millions of Americans unemployed or furloughed longer.
Recognizing the unique and critical role that U.S. passenger airlines,
including American, play in the Nation's economy--as well as how the
need for social distancing and various Federal and state-mandated
travel quarantines have crippled the industry virtually overnight--the
Coronavirus Aid, Relief, and Economic Security Act (``CARES'') Act
affords U.S. passenger carriers $25 billion to keep their employees on
their payrolls until September 30, 2020, when demand is anticipated to
have begun rebounding. Without these funds, evaporating passenger
demand--which has already resulted in one U.S. carrier liquidating\6\--
would leave U.S. carriers--including American--with no choice but to
furlough a substantial majority of their employees, as many airlines
around the world have already done.\7\
---------------------------------------------------------------------------
\6\ See ``Compass Airlines to cease operations in April,''
Minneapolis Star Tribune, March 19, 2020 (``Minneapolis-based Compass
Airlines is shutting down operations in April due to the coronavirus
outbreak. A statement from the company says Compass Airlines `has made
the difficult decision to cease operations, effective April 7.'
According to the statement, `Radical capacity reductions left Compass
without the ability to fly even minimally viable schedules.' '')
\7\ Several carriers outside of the United States have already
announced massive layoffs because of COVID-19. In Canada, for example,
the largest three carriers (Air Canada, WestJet, and Air Transat) have
all announced massive furloughs. See ``More than 5,100 Air Canada
flight attendants to be laid off amid massive COVID-19 slowdown,'' CBC,
March 19, 2020 (https://www.cbc.ca/news/canada/british-columbia/ more-
than-5-100-air-canada-flight-attendants-to-be-laid-off-amid-massive-
covid-19-slowdown-1.5504051), ``WestJet cuts 50 percent of its staff'',
FlightGlobal, March 24, 2020 (https://www.flightglobal.com/strategy/
westjet-cuts-50-of-staff/137507.article), and ``Air Transat to lay off
70 percent of workforce amid coronavirus pandemic'', Global News, March
23, 2020 (https://globalnews.ca/news/6716946/air-transat-layoffs-coro
navirus/). Similarly, Australia's largest carrier Qantas is furloughing
two thirds of staff (https://www.qantasnewsroom.com.au/media-releases/
qantas-group-outlines-customer-and-employee-impact-of-coronavirus-
related-network-cuts/) and SAS has furloughed 90 percent of its
workforce. See ``Airline SAS to half most traffic, temporarily lay off
10,000 staff'', Reuters, March 25, 2019.
---------------------------------------------------------------------------
American Airlines, along with its wholly-owned regional carriers
Envoy, Piedmont, and PSA (collectively ``American''), is the largest
U.S. carrier as measured by available seat miles (``ASMs''), accounting
for approximately one in every five U.S. airline seats.\8\ American
serves 237 U.S. destinations, including 211 small-and medium-sized U.S.
communities (see Appendix).\9\ Moreover, American provides the only
scheduled large network carrier service to 28 U.S. communities.\10\ As
the single largest U.S. airline employer with over 130,000 employees
(FTEs),\11\ American accounts for roughly 20 percent of the industry's
overall economic impact. Indeed, because American spends, on average,
over $39 million in employee wages and benefits each day,\12\ beyond
the devastating effect these furloughs would have on airline employees,
they also would have far reaching ripple effects throughout thousands
of U.S. communities where spending by American's furloughed employees
would be curtailed. Likewise, mass furloughs of American's team members
would add to the already surging number of jobless claims throughout
the U.S. economy,\13\ and impose even greater financial strain on all
50 states' finances due to as many as one hundred thousand potential
additional unemployment claims and reduced tax revenues.
---------------------------------------------------------------------------
\8\ In 2019, American was the largest U.S. carrier as measured by
systemwide seats, flights and available seat miles (``AMSs''). Source:
OAG.
\9\ Source: OAG for full year ending March 2020.
\10\ Source: OAG. Small and medium communities are defined as
airports having less than 1 percent of annual passenger boardings.
\11\ See American Airlines 2019 Form 10-K, page 9.
\12\ Source: U.S. DOT Form 41. The total salaries and benefits for
American Airlines, Envoy, and PSA, for 2019 quarters 2 and 3 (the last
two quarters available), increased by approximately 4 percent to
estimate 2020 Q2 and Q3 levels. Piedmont Airlines, another regional
carrier that is wholly owned by American, does not report to Form 41
schedule p-6. Adding Piedmont would increase daily salaries and
benefits by approximately $1.2 million per day.
\13\ Jobless claims for last two weeks reached nearly 10 million in
total, with 6.6 million claims for the week ending March 28 and 3.3
million claims for the week ending March 21. In comparison, the week
ending March 28, 2019 had 211,000 jobless claims. See U.S. Department
of Labor News Release, April 2, 2020.
---------------------------------------------------------------------------
By ensuring that American is able to keep its employees on its
payrolls for the next six months, the CARES Act provides a critical and
essential bridge for American and their employees so that they are in
the position to provide the most efficient, effective, and economical
air service to fuel the U.S. economy's rebound. Importantly--and as
detailed in the remainder of this white paper\14\--the primary
quantifiable economic benefits of American's award of $7.6 billion in
payroll assistance are estimated at between $10.6 and $12.3 billion in
direct economic value to the U.S. Treasury,\15\ State Treasuries, and
the broader U.S. economy, depending on the assumed level of furloughs
at American in the absence of the CARES Act's grants.\16\ This includes
$4.0-$5.7 billion of increased state and Federal tax revenue, avoided
unemployment insurance payments, and increased spending flowing
directly from the payment of American's employees' wages over the next
six months.
---------------------------------------------------------------------------
\14\ In a companion whitepaper prepared at the request of Airlines
for America (``A4A'') we studied the economic impact of the CARES Act's
payroll protections for the entire U.S. passenger airline industry. See
``U.S. Passenger Airlines Are Critical to the U.S. Economy's Ability to
Rebound From the Economic Turmoil Caused by the COVID-19 Pandemic'',
Eric Amel, Darin Lee and Ethan Singer, (``Compass Lexecon Airline
Industry CARES Study''). The analysis contained in this study applies
the same methodological approaches used in the Compass Lexecon Airline
Industry CARES Study to the employees of American, the largest U.S.
passenger airline.
\15\ American's application is for $7.6 billion in payroll support.
Nevertheless, even if American's pro-rata share of the CARES Act's $25
billion in industrywide payroll support is less than $7.6 billion, the
benefits described in this whitepaper will not be reduced, as American
is required to keep its employees on its payroll for the next six
months.
\16\ As discussed below, absent the CARES Act, American has
determined that it would furlough between 60 percent and 85 percent of
its employees due to evaporating demand for its flights.
---------------------------------------------------------------------------
Moreover, American's application under the CARES Act will pay
countless other dividends to the U.S. economy by incenting and enabling
American to restore capacity faster than it otherwise would, resulting
in a more rapid, robust, and resilient economic rebound throughout the
broader U.S. economy once the COVID-19 pandemic ends. During the last
three months of the payroll protection period, for example, assuming
that lower marginal costs of operating a flight due to the CARES Act
incents and enables American to restore 10 percentage points more of
their pre-COVID-19 capacity than it otherwise would have,\17\ the
quantification of just three of the additional benefits of this
incremental American capacity (i.e., additional supply chain activity,
domestic traffic stimulation, and more international visitors) brings
the total economic benefit to the U.S. economy during the period of the
payroll support to $5.0-$6.6 billion. Another significant--albeit
unquantified--benefit of the CARES Act's payroll support to American is
the fact that American will be required to maintain critically
important scheduled air service to hundreds of U.S. cities, including
many remote small- and medium-size communities that rely on air
transportation linkages for critical health and safety needs, as well
as for connectivity to the rest of the country (and the world).\18\
Absent the payroll assistance, many of these small U.S. communities
would undoubtedly lose their air service on American and all of the
associated benefits that come with it, and for those communities served
only by American (e.g., Abilene, Texas, Garden City, Kansas, etc.),
they would be cut off entirely from the Nation's scheduled air
transportation network.
---------------------------------------------------------------------------
\17\ By way of example, if American had reduced its capacity to 15
percent of its pre-pandemic capacity absent the CARES Act, it is
reasonable to assume that the lower marginal costs resulting from the
CARES Act would incent and enable American to supply 25 percent of its
pre-pandemic capacity.
\18\ See CARES Act, Sec. 4005, Continuation of Certain Air Services
(``When considering whether to exercise the authority granted by this
section, the Secretary of Transportation shall take into consideration
the air transportation needs of small and remote communities and the
need to maintain well-functioning health care and pharmaceutical supply
chains, including for medical devices and supplies.'') Among the scores
of small remote communities that American serves are: Texarkana,
Arkansas; San Angelo, TX; Dubuque, Iowa; Stillwater, Oklahoma;
Salisbury, Maryland; Williamsport, Pennsylvania.
---------------------------------------------------------------------------
However, these economic dividends will not end on September 30.
Because the CARES Act will position U.S. passenger airlines, including
American, to emerge from the COVID-19 pandemic with their workforces
both intact and highly motivated to lead the economic recovery, there
is every reason to believe that carriers will be both incented and able
to continue supplying more capacity than they otherwise would as the
economy's rebound accelerates.\19\ Put differently, because the CARES
Act provides American six more months to secure additional private
funding which, in turn, will better position it to retain their highly-
skilled workforces so that they are poised to grow, it will help to
minimize the number of involuntary furloughs and pay reductions that
may be required in the fall if the negative demand effects of the
COVID-19 pandemic persist beyond that time. Including the longer-term
benefits from American's incremental capacity (i.e., additional supply
chain activity, domestic traffic stimulation, and more international
visitors) over the two years following the period of the payroll
support brings the total primary economic benefits to the U.S. economy
to between $10.6 billion and $12.3 billion.
---------------------------------------------------------------------------
\19\ On the other hand, in the absence of the CARES Act, carriers
including American would not only be forced to engage in mass
furloughs, but would also seek to reduce the wages and benefits of
their remaining employees, resulting in disheartened and demoralized
work forces. Based on the U.S. airline industry's experience following
previous negative shocks (e.g., September 11th), this would leave U.S.
carriers severely handicapped in their ability to respond to the
anticipated return of demand once the pandemic ends. See, e.g.,
``Relationships, Layoffs, and Organizational Resilience: ``Airline
Industry Responses to September 11'', by Jody Hoffer Gittell, Kim
Cameron, Sandy Lim, and Victor Rivas, The Journal of Applied Behavior
Science, 42 (3), 2006, pp. 300-329 (``The presence of adequate
financial reserves reduces the need to rely on layoffs, thus preserving
relational reserves among employees, which boost an organization's
ability to bounce back after a crisis has passed.'')
---------------------------------------------------------------------------
Finally, in addition to the primary impacts of a larger and more
robust airline industry discussed above, the CARES Act will generate
significant secondary (or ``spillover'') benefits by facilitating more
face-to-face business meetings and other economic activity that will no
doubt lead to an accelerated economic recovery by spurring investment,
employment, and innovation in all sectors of the economy. Even under
highly conservative assumptions regarding these spillover effects, the
CARES Act-enabled capacity offered by American can be expected to
increase annual U.S. GDP by an average of 0.02 percent over the two
years following the end of the grant period, equivalent to $10.6
billion.\20\
---------------------------------------------------------------------------
\20\ The secondary GDP spillover effect for American is based on
its pro-rata share (based on ASMs) of the U.S. airline industry's
impact calculated in the Compass Lexecon Airline Industry CARES Study,
which conservatively estimated an average GDP impact of 0.1 percent for
the entire industry over the two years following the end of the
employee payroll support period.
---------------------------------------------------------------------------
Figure 1 below summarizes both the primary and secondary economic
benefits of the CARES Act's payroll support for American's employees
assuming that absent the Act, plummeting demand as a result of the
COVID-19 pandemic would have compelled American to furlough between 60
and 85 percent of its employees. Under these furlough assumptions,
Figure 1 shows that the total primary benefits of American's
application range from $10.6 billion (assuming avoided furloughs of 60
percent) to $12.3 billion (assuming avoided furloughs of 85 percent).
Including the secondary impacts on GDP, the total benefits range from
$21.2 billion (assuming avoided furloughs of 60 percent) to $22.9
billion (assuming avoided furloughs of 85 percent).
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Prior to the COVID-19 Pandemic, U.S. Passenger Airlines Were the Most
Efficient in the World
Over the past decade, the U.S. airline industry has become the most
efficient in the world, with (1) capacity utilization and passenger
levels at historically high rates,\21\ (2) airfares at their lowest
levels in history,\22\ and (3) record high levels of customer
satisfaction.\23\ U.S. carriers' ability to profitably achieve this
trifecta--while simultaneously increasing the number of airline
employees and average compensation\24\--is a testament to their high
degree of efficiency.
---------------------------------------------------------------------------
\21\ Capacity utilization, as measured by U.S. industry-wide load
factor, reached 84.2 percent in 2019--an all-time high, and 12.0
percentage points higher than in 2000. Source: Bureau of Transport
Statistics, T1 database for all scheduled passenger U.S. carriers. Load
factor is a standard industry utilization measure defined as revenue
passenger miles (RPMs) divided by available seat miles (ASMs). An ASM
is one seat flown one mile, and an RPM is one passenger flying one
mile.
\22\ See https://www.bts.gov/newsroom/third-quarter-2019-air-fare-
data, noting that ``U.S. domestic air fares in the third quarter of
2019 of $345 were the lowest on record, inflation adjusted, based on
Bureau of Transportation Statistics (BTS) records dating from 1995.''
\23\ For example, the 2019 Airline Quality Rating study by Embry
Riddle University was ``the best AQR score in the 29-year history of
the rating.'' Embry-Riddle Aeronautical University, ``Airline Quality
Rating 2019,'' Brent D. Bowen and Dean E. Headley, April 2019 (page 8).
Likewise, JD Power study showed record-high customer satisfaction in
2019, ``continuing an eight-year trend of satisfaction improvement.''
See JD Power North America Airline Satisfaction Study, 2019.
\24\ Passenger airline employment has been growing steadily since
2010 with approximately 70,000 new jobs added over this period. Over
this period, average compensation (wages and benefits) per airline
employee has increased from $90,000 to $132,000. Source: U.S. DOT
Form41 schedule P1(a) and schedule P-6. Salaries and benefits per
employee through full year ending 2019Q3.
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In 2019, U.S. airlines carried close to 930 million passengers--the
highest number ever.\25\ To meet growing passenger demand, U.S.
carriers expanded their capacity by 26.2 percent from 2010 to 2019, and
until the COVID-19 epidemic, were on track to expand capacity by over
five percent in 2020.\26\ And during January and February of this year,
U.S. carrier traffic grew on a year-over-year basis by 2.2 percent for
the two months combined.\27\ As a result, U.S. airlines have
experienced near record high load factors.\28\ American's performance
during the first two months of 2020 mirrored those of the broader U.S.
airline industry. For example, prior to March, American had planned to
grow its domestic capacity by 6.5 percent in 2020 and its international
capacity by 3.6 percent,\29\ and American's systemwide load factor in
January and February reached 80.5 percent and 79.0 percent,
respectively, the highest the carrier had ever experienced for these
two months combined.\30\ American had also planned to take delivery of
69 new aircraft in 2020, and had orders for an additional 184 aircraft
beyond that.\31\
---------------------------------------------------------------------------
\25\ Sources: Bureau of Transportation Statistics (https://
www.bts.gov/newsroom/december-2019-us-airline-traffic-data); U.S. DOT
T1 database; U.S. DOT 298C database.
\26\ See, e.g., Cowen Equity Research, ``2020 Skyscape: In Line For
Another Good Year Despite Concerns Of Max Re-Entry,'' Jan. 3, 2020,''
p. 1, predicting a 5.4 percent capacity increase, Barclays Equity
Research, ``North America Airlines Through from 4Q2019 Earnings,'' Feb.
4, 2019, p. 3, forecasting 5.7 percent growth, and Raymond James,
``Global Airlines Outlook: 2020 Vision,'' p. 13, forecasting 6 percent
U.S. domestic capacity growth in 2020.
\27\ Average daily traffic growth for A4A members. A4A members
include Alaska, American, Delta, Hawaiian, JetBlue, United, and
Southwest. Source: A4A data.
\28\ A4A member carriers had load factors in January and February
of 80.2 percent and 79.5 percent, respectively, for a combined 79.9
percent to start the year. The January/February 2020 load factor of
79.9 percent was only previously achieved in January/February 2014 with
an 80.0 percent load factor. Source: A4A data and U.S. DOT T100.
\29\ Source: OAG data for American as of March 5, 2020. Includes
flights marketed by American. Capacity measured as ASMs.
\30\ American Airlines, Envoy, Piedmont and PSA operations data and
U.S. DOT T100.
\31\ Source: American Airlines.
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COVID-19 Pulled the Rug from Under U.S. Airlines' Feet
Even before the COVID-19 pandemic reached the United States,
American had begun to experience a noticeable reduction in
international demand starting in February of this year (first to Asia,
and then to Europe). Until early March, however, U.S. passenger
airlines were able to weather the impact of Covid-19, as the negative
demand impact had not spilled over to the domestic market. Over the
course of ten days starting around March 8, however, airline demand
went into a freefall as the impact of the Covid-19 pandemic in the
United States became widely apparent and Federal, state, and local
officials across the country began to urge the public to engage in
social distancing and to stay at home.\32\ Likewise, starting on March
11, the Transportation Security Administration (``TSA'') began to issue
statements reporting on airport security screeners testing positive for
Covid-19, and for the 14-day period ending March 28, 2020, there were
49 TSA screening officers at 17 different airports that tested
positive.\33\ As a result of these factors, U.S. carrier flights went
from being approximately 80 percent full to less than 20 percent full
on average even as U.S. carriers cancelled almost half of all
flights,\34\ and the few passengers that did travel over this period
were primarily those rushing home to wait out the pandemic. Thus, on
each of the last seven available days of data from TSA (Thursday March
26-Wednesday, April 1, 2020), TSA security screened 8 percent or fewer
of the number of travelers that it screened on the equivalent days from
2019.\35\
---------------------------------------------------------------------------
\32\ On March 8, Dr. Anthony Fauci--Director of the National
Institute of Allergy and Infectious Diseases--advised older adults and
those with underlying health conditions to avoid air travel. On March
11, President Trump announced travel restrictions between the United
States and Europe (excluding the UK and Ireland), and, three days
later, extended those restrictions to all of Europe. On March 12, the
CDC began to advise the public to avoid groups of 250 or more people,
which was revised to 50 people on March 15 and only 10 people on March
16. On March 16, the White launched its 15 Day to Stop the Spread
campaign advising the public to ``Listen to and follow the direction of
your state and local authorities'', many of which subsequently
instructed their individuals to either shelter in place and/or
quarantine themselves after traveling from another state. See https://
dhss.delaware.gov/dhss/pressreleases/2020/cdcguidance_030
920.html, https://www.whitehouse.gov/briefings-statements/president-
donald-j-trump-taken-un
precedented-steps-respond-coronavirus-protect-health-safety-americans/,
https://www.whitehouse
.gov/briefings-statements/remarks-president-trump-vice-president-pence-
members-coronavirus-task-force-press-briefing/, https://www.cdc.gov/
coronavirus/2019-ncov/downloads/community-mitigation-strategy.pdf,
https://www.whitehouse.gov/ briefings-statements/remarks-president-
trump-vice-president-pence-members-coronavirus-task-force-press-
briefing-3/ and https://www
.whitehouse.gov/articles/15-days-slow-spread/.
\33\ Source: https://www.tsa.gov/coronavirus/
\34\ Source: A4A data and MasFlight, comparing the number of
completed flights on March 28th, 2020 versus the average number of
completed flights for the week ending February 15, 2020.
\35\ See https://www.tsa.gov/coronavirus/passenger-throughput.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Over this period of time, American has seen its passenger numbers
plummet to levels the carrier has never experienced (other than the
handful of days directly after September 11th that the Nation's air
transportation system was shut down entirely). As shown in Figure 3, as
recently as March 1, 2020, American carried over 600,000 passengers on
a single day, and enjoyed load factors on some recent days (e.g., March
1) as high as 83 percent. By Wednesday April 1, American carried only
33,341 passengers (a mere 7 percent of the number they carried four
Wednesdays earlier), resulting in a load factor on April 1 of only 10
percent.\36\ Faced with only a shrinking sliver of passengers relative
to its capacity, American has already dramatically pulled down its
schedule and will soon have over 380 aircraft out of service and
parked.\37\
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\36\ Source: American Airlines consolidated operations data.
\37\ Source: American Airlines.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
To make matters worse all evidence points to the demand for air
travel all but disappearing in the coming days, weeks and potentially
months as more local authorities adopt increasingly aggressive counter-
measures on a daily basis (including quarantining out-of-state visitors
or attempting to ban them all together) to slow the spread of COVID-19
and travelers continue to heed to the pleas of government and public
health officials to engage in social distancing and stay at home to
``flatten the curve.'' Indeed, for the first time in U.S. history, the
Federal government, along with 37 states (plus Washington, D.C. and
Puerto Rico) comprising over 294 million people (about 89 percent of
the U.S. population),\38\ have issued ``stay at home'' orders, and, as
of April 1, these orders will be in place until at least April 30.
These ``stay at home orders'' apply to each of American's hub cities
(i.e., New York, Dallas, Charlotte, Chicago, Miami, Washington D.C.,
Los Angeles, Phoenix, and Philadelphia). And even if--under the best-
case scenario--the United States ``re-opens'' for business by May, vast
portions of the traveling public--including those aged 65 and those
that have an underlying health condition--will be reluctant to return
to traveling until public health officials can assure them that the
risk of contracting the coronavirus is minimal (e.g., when a reliable
vaccine has been developed and is widely available),\39\ or until other
therapeutics or drugs to treat, cure or prevent COVID-19 becomes
available.
---------------------------------------------------------------------------
\38\ See https://www.nytimes.com/interactive/2020/us/coronavirus-
stay-at-home-order.html (accessed on April 1, 2020).
\39\ The CDC has identified several groups of individuals at high
risk of serious complications--including death--should they be infected
by COVID-19. These include adults aged 65 years and older, or persons
(of any age) with diabetes, chronic lung disease, cancer,
immunodeficiency, heart disease, hypertension, asthma, kidney disease,
and liver disease. These groups comprise a large portion of the U.S.
population. For example, there are approximately 49.2 million people in
the United States aged 65 and older (i.e., 15.2 percent of the
population), 26.8 million people in the United States with diabetes,
33.2 million with chronic lung disease, and 23.3 with cancer (CDC, U.S.
Census, https://www.census.gov/data/tables/2017/demo/popproj/2017-
summary-tables.html, https://www.cdc.gov/diabetes/pdfs/data/statistics/
national-diabetes-statistics-report.pdf, https://www.cdc.gov/nchs/
fastats/cancer.htm, and American Lung Association, https://
www.lung.org/research/trends-in-lung-disease/estimated-prevalence-and-
incidence-of-lung-dis-(1)/methodology. It is reasonable to assume that
a portion of these high-risk individuals will avoid traveling by air
until they are immune (by virtue of recovering from COVID-19) or until
a vaccine is available, and as a result will reduce airline demand
substantially.
---------------------------------------------------------------------------
The Decline in Passenger Traffic Is Unprecedented in Aviation History
and Can Be Expected to Last for Several Months If Not Longer
Based on the bookings for future air travel of the U.S.
carriers,\40\ the mass layoffs throughout the economy that have already
commenced \41\ and are certain to continue,\42\ and the fact that
governments across the United States and around the globe are placing
onerous restrictions on inbound travelers or restricting travel
altogether,\43\ there is every reason to believe that demand for air
travel will be suppressed for the foreseeable future.\44\ Indeed,
American's forward bookings for April and May travel paint an even
bleaker picture than March, and portend even deeper cuts in capacity as
what little demand for air travel there exists today dries up almost
completely.\45\ Sustained declines in airline demand of this magnitude
are simply unprecedented.\46\ By way of comparison, in September 2001--
in the wake of the September 11th terrorist attacks--U.S. carrier
traffic fell by approximately 34 percent vs. September 2000, but
improved (versus the year prior) to -22 percent in October, -19 percent
in November and -14 percent in December 2001.\47\ Likewise, during the
nadir of the Great Recession, passenger traffic for U.S. carriers fell
(year-over-year) by at most 13 percent (in November 2008 and February
2009).\48\
---------------------------------------------------------------------------
\40\ The number of bookings made for future travel for U.S.
carriers have declined by over 90 percent for the week ending 3/22/2020
compared to the same week last year. Source: ARC DDS Data.
\41\ ``In the week ending March 28, the advance figure for
seasonally adjusted initial claims was 6,648,000, an increase of
3,341,000 from the previous week's revised level. This marks the
highest level of seasonally adjusted initial claims in the history of
the seasonally adjusted series. The previous week's level was revised
up by 24,000 from 3,283,000 to 3,307,000.'' The previous high, before
the nearly 10 million total initial claims in the last two weeks was
695,000 in October of 1982. See U.S. Department of Labor News Release,
April 2, 2020 and U.S. Department of Labor News Release, March 26,
2020.
\42\ According to one estimate prepared by the Federal Reserve Bank
of St. Louis, the unemployment rate in the second quarter of 2020 could
reach 32.1 percent. See https://www.stlouisfed.org/on-the-economy/2020/
march/back-envelope-estimates-next-quarters-unemployment-rate
\43\ See, e.g., ``COVID-19 Updated Impact Assessment'', Brian
Pearce, Chief Economist, IATA, March 24, 2020 (``IATA COVID-19 Updated
Impact Assessment''), page 2, noting that globally ``Markets with
severe restrictions [quarantine for arriving passengers, partial travel
ban, or border closure] cover over 98 percent of global passenger
revenues''. On March 14, President Trump extended the European travel
ban to include the UK and Ireland (https://www.whitehouse.gov/
briefings-statements/remarks-president-trump-vice-president-pence-
members-coronavirus-task-force-press-briefing/). Since March 25 and
March 26, 2020, Alaska and Hawaii, respectively, ordered that
individuals arriving at their airports must self-quarantine for 14 days
(https://www.usatoday.com/story/travel/news/2020/03/24/coronavirus-
travel-restrictions-isolation-florida-hawaii-alaska/2906751001/).
Similarly, on March 27, 2020, Florida extended its 14-day self-
quarantine order, currently including individuals coming from New York,
New Jersey, and Connecticut, to Louisiana (https://www.usnews.com/news/
best-states/florida/articles/2020-03-27/florida-orders-louisiana-
arrivals-into-quarantine).
\44\ For example, according to IATA, even in countries have
successfully contained the coronavirus such as China and South Korea,
the number of forward bookings as of March 19 is down approximately 70
percent year over year. See ``IATA COVID-19 Updated Impact Assessment,
page 7.
\45\ Source: American Airlines.
\46\ See, e.g., ``Airline bookings: unprecedented slowdown in
travel'', Bank of America Securities Research Report, March 23, 2020.
\47\ Source: U.S. DOT T-100 data.
\48\ Source: U.S. DOT T-100 data.
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In response to the unprecedented decline in demand and uncertainty
as to when demand may start to return, U.S. airlines have already
announced substantial reductions in capacity. For example, Delta
recently announced a ``70 percent pullback of systemwide capacity''
\49\; United announced that it has cut April capacity by more than 60
percent and is ``planning even to make even deeper cuts in May and
June'' \50\; and Alaska announced capacity reductions of approximately
70 percent for April and May.\51\ Likewise, American has already
announced that it ``will suspend 60 percent of its capacity in April as
compared to the same period in 2019 and is planning to suspend up to 80
percent of its capacity in May compared to the same
---------------------------------------------------------------------------
\49\ See, Delta 8-K March 18, 2020 https://
d18rn0p25nwr6d.cloudfront.net/CIK-0000027904/66eddca5-a6ab-45b6-add8-
ff779c8c5c44.pdf.
\50\ See, ``A Message From Oscar Munoz and Scott Kirby'', PR
Newswire on March 27, 2020. https://www.prnewswire.com/news-releases/a-
message-from-oscar-munoz-and-scott-kirby-30103
1125.html
\51\ See, Alaska News Release on March 25, 2020. https://
investor.alaskaair.com/news-releases/news-release-details/alaska-
airlines-announces-schedule-reductions-and-other-changes
---------------------------------------------------------------------------
period in 2019.'' \52\ Moreover, American is closely monitoring the
evolution of the COVID-19 pandemic (and its likely impact on airline
demand) and fully expects to announce even deeper capacity cuts if the
pandemic's currently trajectory does not materially improve in the near
future.
---------------------------------------------------------------------------
\52\ See, ``American Airlines Announces Additional Schedule
Suspensions in Response to Reduced Customer Demand Related to COVID-
19'', American Airlines press release on March 27, 2020. http://
news.aa.com/news/news-details/2020/American-Airlines-Announces-
Additional-Schedule-Suspensions-in-Response-to-Reduced-Customer-Demand-
Related-to-Covid-19-OPS-DIS-03/default.aspx. American's plans with
respect to future capacity are being refined weekly and may be larger
than those predicted on March 27.
---------------------------------------------------------------------------
Absent the CARES Act Payroll Protection, American Would Have Had No
Choice but to Furlough a Substantial Majority of Their
Employees
With the overwhelming majority of airline passengers indefinitely
sidelined due to government or corporate travel restrictions and/or a
fear of flying until the COVID-19 pandemic has been contained,
American, like other U.S. airlines, would have no choice but to
furlough a substantial majority of their more than 130,000 employees,
as American would quickly run out of cash if it continued to fly empty
planes.\53\ Because the exact amount of likely furloughs absent the
employee grants in the CARES Act is unknown and would depend on the
speed at which the pandemic is contained and when the unprecedented
decline in consumer travel demand abates, American believes that absent
the CARES Act, it would have furloughed between 60 percent and 85
percent of American's employees. Under any of these scenarios, the
consequences to airline employees and communities throughout the United
States will be immense, with between 78,000-110,000 current American
employees left without jobs, leading to increased burdens on state and
Federal unemployment programs (and forcing some onto Medicaid),
decreased consumer spending, and increased mortgage defaults, and the
potential loss of air service to many small communities.
---------------------------------------------------------------------------
\53\ As noted earlier, the coronavirus pandemic has already
resulted in one U.S. regional carrier--Compass Airlines--shutting down.
---------------------------------------------------------------------------
The Primary Quantifiable Benefits to the U.S. Treasury, State
Treasuries and the U.S. Economy of Guaranteeing That American's
Employees
Remain on the Airline's Payrolls for the Next Six Months Will
Range from $10.6-$12.3 Billion
The CARES Act recognizes that, through no fault of its own, U.S.
airlines and their employees have seen the demand for their service
evaporate virtually overnight. And because airlines are the engine of
much of the Nation's economic activity, the CARES Act provides $25
billion in grants for U.S. passenger airlines, including American, to
continue to keep their employees on their payrolls. Today, American
directly employs more than 130,000 people (Full-Time-Equivalents) and
pays out, on average, over $39 million of salaries and benefits each
day.\54\ American has employees living in all 50 states, plus U.S.
territories including Puerto Rico.\55\ In addition American is a
significant employer of U.S. veterans, and also has numerous
employees--particular pilots--that actively serve in the U.S.
Reserves.\56\ As shown in Figure 4, American's employees are dispersed
throughout the entire country, and hence, the incomes they receive and
the corresponding local economic impact reaches all corners of the
country and is felt in both large urban areas as well as hundreds of
smaller U.S. communities. In 2019, there were over 3,400 unique zip
codes across the country that were home to American employees who--
collectively--accounted for more than $0.5 million of annual
income,\57\ and over 1,800 zip codes with over $1 million in annual
employee income.
---------------------------------------------------------------------------
\54\ Headcount is for full year 2019 from American Airlines 2019
SEC 10K filing, p. 9. Salaries and benefits based on U.S. DOT Form 41
(schedule p-6) for American Airlines, Envoy, and PSA combined. The
total salaries and benefits for 2019 quarters 2 and 3 (the last two
quarters available) are increased by approximately 4 percent to
estimate 2020 Q2 and Q3 levels. Piedmont Airlines, another regional
carrier that is wholly-owned by American, does not report to Form 41
schedule p-6. Adding Piedmont increases daily salaries and benefits by
approximately $1.2 million per day.
\55\ Source: American Airlines, Envoy, PSA and Piedmont W-2 tax
data for 2019.
\56\ American, including its wholly owned regional carriers, Envoy,
PSA, and Piedmont, employs a total of over 8,000 veterans, many of who
also serve in the reserves. Source: American Airlines.
\57\ Source: Analysis of American Airlines, Envoy, PSA and Piedmont
W-2 tax data for 2019.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The impact of American's employees on the local economies where
American has hubs is particularly significant. For example, Figure 5
shows that the impact of American employees' incomes is also dispersed
widely across the metro areas and communities surrounding American hub
cities, with virtually every zip code in the Dallas, Miami, Charlotte,
New York, Tulsa and Los Angeles metro areas, among others, home to
American airline employees. As detailed below, these incomes support
the livelihoods of not only airline employees and their families, but
also, countless other individuals and small businesses in the same
communities (and elsewhere) who benefit from the goods and services
American's employees purchase.\58\
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\58\ As discussed below, each dollar of airline wages generates
approximately $0.50 in additional economic activity throughout the
economy as the wages of the airline employees are spent and recirculate
throughout the economy.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
American is a substantial employer in each of its hub cities (plus
Tulsa, where American operates a large aircraft maintenance base), and
thus, contributes significantly to the economic vitality of the city
and its surrounding area. Consequently, absent the CARES Act, mass
furloughs of American's employees would deal another crippling blow to
their already hard-hit economies reeling from two weeks spiking jobless
claims. For example:\59\
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\59\ In addition to the examples of Dallas, Charlotte and Tulsa,
substantial numbers of American employees reside in the metropolitan
areas (CBSAs) surrounding American's other hubs: approximately 12,000
in Miami/Fort Lauderdale/West Palm Beach; 9,000 in Phoenix; 8,000 in
Chicago; 6,000 in New York; 6,000 in Philadelphia; 5,000 in Los Angeles
and 3,000 in Washington D.C. Source: American Airlines, Envoy, Piedmont
and PSA 2019 W-2 data.
Dallas/Fort-Worth: With over 31,000 employees residing in
the Dallas/Fort Worth metropolitan area in 2019, American is
the region's largest employer.\60\ In just the last two weeks,
Texas reported over 430,000 new initial unemployment claims,
more than 17 times the amount the area experienced over a two-
week period in March 2019.\61\
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\60\ Includes employees residing in the Dallas-Fort-Worth-Arlington
CBSA. Sources: American Airlines, Envoy, Piedmont and PSA 2019 W-2
data; Dallas Business Journal, ``North Texas Largest Employers,'' July
26, 2019, https://www.bizjournals.com/dallas/subscriber-only/2019/07/
26/dallas-fort-worth-largest-employers.html.
\61\ See U.S. Department of Labor News Release, April 2, 2020 and
https://oui.doleta.gov/unemploy/archive.asp
Charlotte: CLT is American's second-largest hub airport and
the metropolitan area is home to almost 10,000 American
employees.\62\ In just the last two weeks, North Carolina
reported over 264,000 new initial unemployment claims, more
than 47 times the amount the area experienced over a two-week
period in March 2019.\63\
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\62\ Includes employees residing in the Charlotte-Concord-Gastonia
CBSA. Source: American Airlines, Envoy, Piedmont and PSA 2019 W-2 data;
``American Celebrates Milestone of 700 Daily Departures at CLT Hub'',
February 19, 2020, http://news.aa.com/news/news-details/20
20/American-Celebrates-Milestone-of-700-Daily-Departures-at-CLT-Hub-
OPS-INF/default.aspx.
\63\ See U.S. Department of Labor News Release, April 2, 2020 and
https://oui.doleta.gov/unemploy/archive.asp
Tulsa: American employed over 5,000 Tulsa-area residents in
2019 and is one of the city's largest employers.\64\ In just
the last two weeks, Oklahoma reported over 66,000 new initial
unemployment claims, more than 17 times the amount the area
experienced over a two-week period in March 2019.\65\
---------------------------------------------------------------------------
\64\ Includes employees residing in the Tulsa CBSA. Source:
American Airlines, Envoy, Piedmont and PSA 2019 W-2 data; 2019 Tulsa
Largest Employers, http://www.growmetrotulsa
.com/sites/default/files/page-attachments/
EDD_%202019%20Largest%20Employers%20List.pdf
\65\ See U.S. Department of Labor News Release, April 2, 2020 and
https://oui.doleta.gov/unemploy/archive.asp
As detailed in the remainder of this whitepaper, when one accounts
for all of the quantifiable economic benefits that the employee payroll
support to American yields back to the U.S. Treasury, various state
treasuries, and the broader U.S. economy in the form of taxes, reduced
unemployment insurance payouts, follow-on economic activity, and
increased capacity that will accelerate the rebound of the U.S.
economy, American's share of the CARES Act payroll support is ``fully
funded'' from an economic standpoint. As detailed below, American's
award of $7.6 billion in payroll support will generate at least $10.6
billion in primary benefits and $10.6 billion in secondary benefits.
A. The Direct Benefits to the U.S. Treasury, State Treasuries and
Induced Spending Throughout the U.S. Economy from Guaranteeing
That American's Employees Remain on the Airlines' Payrolls for
the Next Six Months Will Range from $4.0-$5.7 Billion
The direct quantifiable benefits to the U.S. Treasury and state
treasuries due to higher disposable income for American's employees are
as follows, with the range of estimates reflecting potential furlough
assumptions in the absence of the employee grants to American under the
CARES Act ranging from 60 percent-85 percent:
Increased Federal Income Tax Revenues of $385-$545 million:
Because the $25 billion in employee grants under the CARES Act
are contingent on U.S. airlines not furloughing or reducing the
wages or salaries of any of their employees until at least
September 30, 2020, American's employees will have much higher
incomes for the next six months than if they had been
furloughed. These higher incomes are subject to standard
Federal income tax, which is estimated to be $385-$545
million;\66\
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\66\ While the employee grants under the CARES Act will provide $25
billion to the U.S. passenger airlines, American is requesting $7.6
billion for employee payroll support. The following estimates assume
that in the absence of the employee grants under the CARES Act, between
60 percent and 85 percent of American's employees would face furloughs,
consistent with the unprecedented decline in consumer travel demand.
The 85 percent furlough assumption is equivalent to a three-month total
shutdown, followed by a three-month period where American is operating
at 30 percent of normal capacity with 30 percent of its workforce.
Thus, as a result of the employee payroll support to American, it is
estimated that $6.1 billion in wages and benefits will be paid that
otherwise would have been eliminated, under the assumption of 85
percent avoided furloughs. The estimates of additional tax revenues and
reduced unemployment claims are based on an analysis of employee level
2019 W-2 earnings for American, which is used to compute the additional
taxes or reduced unemployment claims as a result of the employee grants
to American under the CARES Act as a proportion of the ``at risk''
wages for those employees. These proportions are then applied to the
wage component of the $6.1 billion (under the 85 percent avoided
furlough assumption) in ``at risk'' wages and benefits to obtain an
estimated dollar amount of additional taxes (or reduced unemployment
claims). Officers and Directors (where the information is available) or
the highest paid 1 percent of employees are excluded from the analysis
of employee W-2 data. See Figure 13-Figure 15 in the appendix for
estimates of the additional tax revenues and reduced unemployment
claims by state under avoided furlough assumptions of 60 percent, 70
percent, and 85 percent. The estimate of incremental Federal income tax
revenue includes only tax revenue that would be paid above and beyond
the Federal income taxes that would be owed for the state unemployment
insurance claims and Federal pandemic unemployment compensation that
employees would receive in the absence of the employee payroll support
to American under the CARES Act. Federal tax liability is estimated
assuming that taxes are paid at the marginal rates for single tax
filers and based on each employee's expected income as of April 1, 2020
and assumes that marginal rates increase during the year as each
additional dollar of income is earned. Source: Analysis of American
Airlines, Envoy, Piedmont and PSA W-2 data and Federal income tax
rates.
Increased State Income Tax Revenues of $51-$72 million:
Similarly, the additional income will be subject to standard
state income tax which is estimated to be $51-$72 million \67\;
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\67\ State income tax estimate includes income taxes in 42 states
plus the District of Columbia, Puerto Rico, and the Virgin Islands and
is based on the incremental employee income above and beyond the state
unemployment insurance claims and Federal pandemic unemployment
compensation. Income tax is estimated assuming that taxes are paid at
the marginal rates for single tax filers based on each employee's
expected income as of April 1, 2020 and assumes that marginal rates
increase during the year as each additional dollar of income is earned.
Source: Analysis of American Airlines, Envoy, Piedmont and PSA W-2 data
and state income tax rates. State income tax rates compiled by the Tax
Foundation.
Increased Municipal Tax Revenues of $0.8-$1.2 million: The
higher incomes protected by the employee grants to American in
the CARES Act will also be subject to municipal income tax in
some jurisdictions which is estimated to be $0.8-$1.2 million
\68\;
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\68\ While many municipalities collect income-based taxes, these
estimates include only the municipal income taxes in New York City,
Philadelphia, San Francisco, Indianapolis, Detroit, Louisville,
Baltimore, and Columbus. Analysis of American Airlines, Envoy, Piedmont
and PSA W-2 data and municipal income tax rates.
Reduced State Unemployment Insurance Claims of $0.9-$1.3
billion: Absent the employee grants under the CARES Act,
American would need to furlough the bulk of their employees,
who would then be eligible for state unemployment insurance
benefits estimated at $0.9-$1.3 billion between April 1, 2020
and September 30, 2020 \69\;
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\69\ Because the CARES Act extends unemployment benefits by up to
13 weeks, this calculation assumes that all eligible furloughed
employees would have received unemployment compensation for the period
between April 1, 2020 and September 30, 2020, if the employee grants
were not included in the CARES Act. Each employee's estimated
unemployment benefits are based on actual 2019 W-2 income. Although
some states provide increased unemployment benefits for unemployed
works with dependents, these estimates conservatively do not contain
increased payments for dependents. Source: Analysis of airline W-2 data
and unemployment benefit criteria; U.S. Department of Labor, Employment
and Training Administration, ``Significant Provisions of State
Unemployment Insurance Laws, Effective January 2020.''
Reduced Federal Pandemic Unemployment Compensation of $1.0-
$1.4 billion: Furloughed workers would also be eligible for the
Federal Pandemic Unemployment Compensation contained in the
CARES Act of $600 per week through July 31, 2020, at an
estimated cost to the Federal government of $1.0-$1.4 billion
\70\;
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\70\ The estimated Federal Pandemic Unemployment Compensation
assumes that all furloughed employees eligible for state unemployment
benefits would receive 16 weeks of Federal Pandemic Unemployment
Compensation. Source: Analysis of American Airlines, Envoy, Piedmont
and PSA W-2 data.
Increased Social Security and Medicare Tax Contributions of
$467-$662 million: The incomes protected by the employee grants
in the CARES Act would also be subject to the employee and
employer paid Social Security and Medicare taxes and protecting
these incomes will result in an estimated $467-$662 billion of
additional Social Security and Medicare tax contributions \71\;
and
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\71\ Estimated Social Security and Medicare tax contributions
include both employer and employee paid portions, as applicable, for
wages estimated to be paid for work between April 1, 2020 and September
30, 2020 that would not have been paid absent the employee grants in
the CARES Act. Although the CARES Act has provisions which may allow
the deferral of the employer portion of Social Security Taxes, these
taxes will continue to accrue as a liability that will need to be paid
once the deferral period ends. While some states--including California,
Massachusetts, Nevada, and New York--have additional payroll tax
deductions, these additional taxes that would be paid to the states are
not included in the estimates. Source: Analysis of American Airlines,
Envoy, Piedmont and PSA W-2 data and Federal payroll tax rates.
Increased State Unemployment Insurance Tax Contributions of
$14-$19 million: Employers, like American are also required to
pay state unemployment insurance taxes and the wages maintained
by the employee grants in the CARES Act would result in an
estimated $14-$19 million in additional contributions.\72\
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\72\ Estimated contributions based on the average state
contribution rates applied to the wages maintained as a result of the
employee grants in the CARES Act. Source: Analysis of American
Airlines, Envoy, Piedmont and PSA W-2 data and unemployment insurance
contribution rates; U.S. Department of Labor, Employment and Training
Administration, ``Average Employer Contribution Rates by State.''
In addition to the benefits that flow directly back to Federal and
state treasuries, each dollar of incremental income received by
American employees due to the CARES Act (i.e., the difference between
the wages they will receive through payroll continuation and what they
would have received if furloughed in the form of state and Federal
unemployment benefits) generates approximately $0.50 in additional
economic activity in the U.S. economy, an economic effect known as the
``induced multiplier''.\73\ This well-understood economic impact is
attributable to the extra income of airline employees being spent in
their local communities (and beyond), which then continues to
recirculate throughout the economy. Based on this multiplier effect,
the payroll support in the CARES Act results in an additional $1.2-$1.7
billion of induced economic activity.
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\73\ The induced multiplier of $0.50 per dollar of airline wages is
based on the average of the 0.4 multiplier in a study by Oxford
Economics and the 0.6 multiplier from government spending on real
private consumption during a recession in a well-cited academic paper
estimating multipliers during recessions. See Oxford Economics,
``Economic Benefits from Air Transport in the US,'' 2011, p. 14 and
``Fiscal Multipliers in Recession and Expansion'', by Alan Auerbach and
Yuriy Gorodnichnko, Chapter 2 in Fiscal Policy after the Financial
Crisis, Alberto Alesina and Francesco Giavazzi, Editors, University of
Chicago Press, 2013, Table 2.1.
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When combined, the subset of benefits discussed above--which are a
direct result of the payroll support American will receive under the
CARES Act--equal $4.0-$5.7 billion and should be viewed as highly
conservative estimates, as they exclude other avoided Federal and
state-level cost such as Medicaid,\74\ corporate income taxes,\75\ as
well as economic benefits related to the incremental capacity carriers
will be incented to add due to the CARES Act (as discussed in the
following sections).
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\74\ See, e.g., ``Booming Economy Helps Flatten Medicaid Enrollment
and Limit Costs, States Report,'' Kaiser Health News, October 25, 2018,
reporting that ``Medicaid spending and enrollment typically rise during
economic downturns as more people lose jobs and health benefits. When
the economy is humming, Medicaid enrollment flattens as more people get
back to work and can get coverage at work or can afford to buy it on
their own. The national unemployment rate was 3.7 percent in September,
the lowest since 1969'' and that ``Overall, the Federal government pays
about 62 percent of Medicaid costs with state's picking up the rest.''
Moreover, the costs of additional Medicaid enrollees vary significantly
by state and health status, ranging from an average of just under
$3,000 per year in some states to an average of over $7,000 per year in
others according to Medicaid program estimates. See https://
www.medicaid.gov/state-overviews/ scorecard/how-much-states-spend-per-
medicaid-enrollee/index.html.
\75\ To the extent it is determined that the employee grants under
the CARES Act are taxable income, American will face an increased
Federal and state corporate tax liability (now or in the future
depending on its net operating loss carryforwards).
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B. The CARES Act Also Ensures That U.S. Passenger Airlines, including
American, Will Be Prepared to Quickly Restore Flights When
Demand Returns, Thereby Stimulating Even More Economic Benefits
If the U.S. economy is to rebound quickly from the economic
slowdown the COVID-19 pandemic has caused,\76\ it is critical that U.S.
airlines, including American, be in position to quickly ramp up service
once the pandemic shows signs of ending. This is because airlines are
the engine for much of the Nation's economic activity. Indeed,
approximately one third of all U.S. airline travel is for the purposes
of conducting business,\77\ and to repair the economic damage that has
been caused by the pandemic, it is essential that both business and
leisure travelers are able to resume their travel plans in order to
jump start the U.S. (and global) economy. Moreover, while many other
travel-related industries have also suffered because of the pandemic
(e.g., hotels, cruise, casinos and gaming, theme parks), each of these
industries relies critically on airlines to bring their customers to
them. For example, the overwhelming majority of cruise passengers \78\
and visitors to Las Vegas or Orlando arrive by air.\79\ Likewise, many
states whose economies are dependent on tourism rely on plentiful and
affordable air service to bring visitors to their states.\80\ Simply
put, in order for the many other industries, cities, and states that
rely on tourism and business travel to get back on their feet once
demand returns, American and other U.S. airlines will need to be poised
to quickly add capacity to meet that demand.
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\76\ See ``Jerome Powell: `We may well be in a recession' '',
Politico, March 26, 2020.
\77\ Source: A4A, Status of Air Travel in the USA, April 13, 2016.
\78\ American is--far and away--the largest carrier serving the
Miami/Fort Lauderdale area, home to two the country's largest cruise
ports (Port Miami and Port Everglades). In 2019, for example, American
operated nearly half of all scheduled U.S. passenger carrier flights to
the Miami/Fort-Lauderdale area. Source: OAG.
\79\ According to Las Vegas Convention and Visitors Authority, in
2019, there were 42.5 million visitors to the city in 2019, and over 51
million enplanements/deplanements at Las Vegas McCarran International
Airport, implying that more than half of Las Vegas visitors arrive by
air. See https://assets.simpleviewcms.com/simpleview/image/upload/v1/
clients/lasvegas/Historical_1970_to_2019_ada0164b-b599-4fac-8f7a-
eb26bfe17187.pdf. Likewise, according to Orlando's visitor's bureau,
the city welcomed 75 million visitors in 2018, compared to 47.7 million
arrivals by air. See ``Orlando Announces Record 75 Million Visitors'',
May 8, 2019 (https://www.visitorlando.com/en/corporate-blog/post/
orlando-announces-record-75-million-visitors).
\80\ For example, in 2018, Hawaii welcomed 9.9 million visitors,
9.8 million of which arrived by air, while nearly over 51 million of
Florida's 125 million visitors in 2018 arrived by air. See https://
www.hawaiitourismauthority.org/media/4086/2018-annual-report-final-
repost-1-7-20
.pdf and https://www.visitflorida.org/resources/research/research-faq/.
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However, unlike many other industries that can recall furloughed
employees and quickly re-open for business once demand returns, it is
far more difficult for passenger airlines to quickly restore operations
by recalling furloughed employees. One reason, for example, is that per
FAA requirements pilots cannot simply return from furlough and resume
flying on short notice. Instead, because furloughed pilots lose their
``currency'' after 90 days of inactivity, they are required to be
retrained before they can be in command of a passenger aircraft.\81\
Moreover, because pilots' collective bargaining agreements dictate that
furloughs must occur in reverse seniority order (i.e., with the most
recently hired pilots being furloughed first), furloughing typically
triggers a set of time-consuming pilot training events as pilots get
displaced from their original aircraft type to smaller ones, and the
process of ``bumping'' and re-training occurs again once furloughed
pilots have been recalled. Furthermore, the process of bumping that
occurs when airlines furlough (and subsequently recall) pilots
generates additional training needs because many of the pilots that are
not furloughed are ``downgraded'' from captain to first officer (which
requires a training event), and when furloughed pilots are recalled and
start to return, these downgraded first officers are eventually
upgraded back to captain, which requires yet another training event.
This cycle of furlough- and recall-induced training significantly
reduces the speed at which carriers can restore capacity following
furloughs. By the same token, depending on the length of the furlough,
flight attendants and other employee groups would also need to be
retrained, and all employees would need to be re-badged to have access
to restricted areas of airports. In addition to the time-consuming
process of recalling and retraining employees, maintenance inspections
and recertifications required to bring aircraft out of long-term
storage also uniquely delay the process of quickly restoring operations
for airlines relative to other industries.
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\81\ See 14 CFR Sec. 61.57.(a)(1), requiring that ``no person may
act as a pilot in command of an aircraft carrying passengers or of an
aircraft certificated for more than one pilot flight crewmember unless
that person has made at least three takeoffs and three landings within
the preceding 90 day'' and that ``[t]he required takeoffs and landings
were performed in an aircraft of the same category, class, and type (if
a type rating is required)'' According to FAA regulations, take-off and
landings ``may be accomplished in a full flight simulator or flight
training device that is (i) Approved by the Administrator for landings;
and (ii) Used in accordance with an approved course conducted by a
training center certificated under part 142 of this chapter.''
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By keeping American's employees on the payroll (rather than
furloughing between 60 and 85 percent of its employees for at least the
next six months), the CARES Act creates the incentive and capability
for American to add flights back faster than they otherwise would,
because the labor cost component of those flights (which typically
accounts for a third or more of the operating cost of a flight) are no
longer marginal costs. Put differently, by effectively reimbursing
American for the labor costs associated with operating flights for the
next six months, the CARES Act lowers the hurdle rate for restoring a
flight, incenting American to restore more flights than it otherwise
would over this period. By positioning American to restore capacity far
faster than it otherwise would, the CARES Act will help American fuel a
faster recovery for the U.S. economy in at least three ways, each of
which creates additional economic benefits beyond the $4.0-$5.7 billion
already identified. Specifically, the additional CARES-Act induced
capacity will result in (1) American's supply chain (i.e., airports,
airline catering companies, jet fuel providers, etc.) ramping up more
quickly, (2) greater numbers of domestic passengers resuming their
travel plans on American, as increased capacity will result in more
convenient (and lower priced) air travel options, and (3) American
restoring more long-haul international routes on which it offers the
only non-stop service, stimulating inbound visitor travel to the United
States.\82\ As discussed below, when combined, these three quantifiable
benefits alone can be expected to generate approximately $920 million
of additional U.S. economic activity between July 1 and September 30,
2020.
---------------------------------------------------------------------------
\82\ Moreover, these estimates are conservative because they do not
attempt to calculate the value of the additional cargo that the
passenger airlines, including American, will be able to transport as a
result of the CARES-Act induced capacity, which will further enable the
restoration of global and U.S. supply chains to the benefit of business
throughout the U.S. economy.
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1. Incremental American Capacity Restoration Induced by the CARES' Act
Will
Result in Greater Demand for Products and Services in
American's Supply Chain, Resulting in Additional Economic
Activity
Airlines, including American have enormous supply chains, including
airports and airport services, jet fuel, catering, and third-party
ground handling services, and this supply chain supports hundreds of
thousands of jobs in the United States and generates substantial
economic activity throughout the economy. Because the CARES Act creates
the strong incentive and capability for carriers, including American,
to restore capacity faster than they otherwise would, this incremental
capacity (i.e., the amount of capacity above and beyond what carriers
would have deployed absent the $25 billion in employee grants) will
generate additional demand by U.S. airlines within their supply chain.
And because the incremental demand for these services will support
firms in those industries in recalling furloughed employees, this will
in turn create additional benefits to the Federal government, states,
and the broader economy by reducing unemployment costs and inducing
further spending throughout the economy.
Figure 6 below summarizes the additional benefits to the U.S.
economy from increased economic activity within American's supply chain
under a range of assumptions as to how much incremental capacity
American would be incented to add because of the CARES Act. The
salaries, wages and benefits at American over the next six months
(i.e., from April 1-September 30) are estimated to be approximately
$7.3 billion, or $1.2 billion per month.\83\ Because the CARES Act will
incent and enable American to increase capacity faster than it
otherwise would, Figure 6 presents a range of incremental capacity
additions between July 1, 2020 and September 30, 2020. As noted above,
this additional capacity will increase the spending throughout
American's supply chain, and this increase is captured by the indirect
multiplier. The indirect multiplier captures the downstream economic
activity that is generated when firms in an upstream industry (e.g.,
airlines) purchase the goods and services they need to perform their
operations (e.g., operate flights) and is expressed as a ratio of the
upstream firms' direct spending.
---------------------------------------------------------------------------
\83\ See footnote 66 above.
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Based on a previous study of the economic impact of the U.S.
airline industry by Oxford Economics, we assume an indirect multiplier
of 1.09.\84\ Thus, by way of example, if the CARES Act incents and
enables American to restore capacity (relative to pre-pandemic planned
levels) by an additional 10 percentage points between July 1 and
September 30,\85\ through the indirect multiplier effect, this increase
of flying translates into a $395 million increase in economy activity
through American's supply chain.\86\ Alternatively, if the CARES Act
incents American to restore capacity by an additional 15 percentage
points between July 1 and September 30, the supply chain impacts grow
to $593 million over this period.
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\84\ Oxford Economics, ``Economic Benefits from Air Transport in
the US,'' 2011, p. 14.
\85\ The assumptions that the CARES Act will incent and enable
American to restore 10 percent incremental capacity and that this
incremental capacity begins on July 1, 2020, are highly conservative
because as a condition of the CARES Act payroll protections, airlines
can be mandated by the Department of Transportation to maintain service
to all U.S. cities served as of March 1, 2020, as discussed on page 3
above.
\86\ The direct spending by American on salaries and benefits
needed to produce 10 percent of their pre-pandemic capacity for three
months is approximately $363 million. When multiplied by the indirect
multiplier of 1.09, this yields supply chain economic benefits of $395
million, much of which will flow to hard hit sectors such as those that
supply jet fuel and airline catering services.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
2. Incremental American Capacity Restoration Induced by the CARES' Act
Will Also Incent More Domestic Travel, Resulting in Additional
Economic Activity
Because the CARES Act creates the incentive and capability for
airlines, including American, to restore flights back faster than they
otherwise would, the availability of more domestic capacity earlier
will accelerate the recovery of the U.S. economy by stimulating
passengers (either because of lower prices or better schedule options)
who otherwise would not have flown.\87\ These incremental passengers
will, in turn, spend additional money on such items as hotels, car
rentals, and restaurants. Based on existing studies of the spending
patterns of U.S. domestic travelers, each passenger spends, on average,
$420 per trip.\88\ To be conservative, we assume that even with the
highly discounted pricing that carriers are likely to use to encourage
passengers to resume flying, the incremental capacity (i.e., that which
is enabled because of the CARES Act) will still be relatively empty,
with only 50 percent of the incremental seats filled. By way of
example, if the CARES Act incents American to restore 10 percentage
points more of pre-pandemic domestic capacity than it otherwise would
have, it would result in approximately 62,897 more domestic seats per
day, or an increase of 5.8 million seats between July 1 and September
30.\89\ Even at a 50 percent load factor, these incremental 5.8 million
seats result in an increase of 2.9 million passengers, which translates
into approximately 1.0 million incremental round-trip domestic
travelers.\90\ Based on average spending of $420 per round-trip
passenger, this incremental 10 percentage points of restored capacity
will inject an additional $435 million into the U.S. economy over the
period. Alternatively, if the CARES Act incents American to restore an
additional 15 percentage points of domestic capacity between July 1 and
September 30, the additional passenger spending grows to $653 million
over this period.
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\87\ Initially, some passengers may also be stimulated to travel by
air if the incremental capacity results in less crowded flights
allowing passengers to--for example--avoid having another passenger sit
directly beside them.
\88\ A trip is defined as a domestic traveler on a trip away from
home overnight in paid accommodations, or on a day or overnight trip to
places 50 miles or more, one-way, away from home. Source: U.S. Travel
Association, ``U.S. Travel and Tourism Overview (2019),'' March 2020.
\89\ This figure is based on pre-pandemic full capacity over this
period of 58 million seats on American, including flights marketed by
American but operated by regional carriers.
\90\ Conversion of onboard passengers to round-trip passengers
assumes 28 percent of these passengers make a connection, based on
analysis of U.S. DOT DB1B data.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
3. The Restoration of International Routes served by American Will
Stimulate
Additional Inbound Visitors--and Their Associated Economic
Impact--for the U.S. Economy
Because the COVID-19 pandemic has resulted in numerous foreign
travel restrictions, international flights on U.S. carriers have been
particularly hard hit. Because the CARES Act will enable U.S. carriers,
including American, to more quickly restore service on some
international routes where, absent the payroll support, service
restoration would have been further delayed, the U.S. economy will
benefit from additional inbound visitors, accelerating the pace of
recovery for hotels, restaurants, and retail establishments that rely
on visitor spending. For example, before the COVID-19 pandemic,
American offered regular non-stop service on 26 long haul international
routes not served by any foreign carriers,\91\ and it is well
understood that the availability of non-stop service on long-haul
international routes stimulates traffic between the endpoints because
of reduced travel times.\92\ Even assuming that the incrementally
restored flights because of the CARES Act are only half full at start-
up, and only half of these passengers would not have traveled without
the availability of non-stop service (consistent with economic studies
on non-stop traffic stimulation),\93\ each daily long-haul
international route that American is able to restore will bring 688
additional visitors to the U.S. per month.\94\ And because each
overseas visitor generates approximately $8,600 of spending in the
United States,\95\ the restoration of a single daily frequency on one
of these routes will generate $5.9 million in economic activity per
month at American's international gateway cities such as Charlotte,
Dallas, Philadelphia, Miami, and Los Angeles or $17.8 million if the
reinstatement of these routes is accelerated by three months (i.e.,
effective July 1 rather than September 1). As shown in Figure 8 below,
if 5 routes are reinstated three months earlier than they otherwise
would have been, inbound visitors will generate $88.9 million in
economic activity, and if 15 routes are reinstated three months earlier
than they otherwise would have been, inbound visitors will generate
$266.8 million in economic activity. Moreover, in addition to the
direct tourism spending by the new visitors on the reinstated non-stop
service, the U.S. economy will also benefit from additional economic
activity throughout the economy via indirect and induced ``multiplier
effects.''
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\91\ International city-pairs over 2,500 miles, served by American,
where U.S. carriers offered at least 200 roundtrips in 2019 and no
foreign carrier served the city-pair. Source: OAG 2019.
\92\ For example, research has shown that when an international
route gains non-stop air services, traffic between the endpoint cities
is stimulated by a factor of as much as 9.1 for small routes (1,000
passengers per year) and by a factor of 1.3 for routes with 50,000
annual passengers. See Market stimulation of new airline routes, SEO
Amsterdam Economics, January 2016.
\93\ Indeed, because of concerns about coronavirus, some passengers
may be reluctant to travel on connecting flights and thus would elect
not to travel absent the reintroduction of non-stop service.
\94\ The average flight operated by American on these city-pairs
had 252 seats in 2019 and in the most recent year of data,
approximately 36 percent of passengers on these flights had foreign a
point-of-origin. Source: OAG 2019, U.S. DOT DB1B FYE 2019-Q3.
\95\ Visitor spending, excluding education and airfare, is
calculated for passengers arriving from Europe as an approximation of
long-haul international passenger tourism spending. Source: National
Travel and Tourism Office, Market Profile of Overseas Visitors, Europe
(2018), https://travel.trade.gov/outreachpages/
inbound.general_information.inbound_overview.asp.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
C. The CARES Act Also Results in Longer Term Benefits from American's
Incremental Capacity, Beyond September 30, 2020
The benefits to the U.S. economy of the CARES Act will not end on
September 30, 2020. To the contrary, because the CARES Act will
position U.S. passenger airlines, including American, to emerge from
the COVID-19 pandemic with their workforces both intact and highly
motivated to lead the economic recovery, there is every reason to
believe that carriers will be both incented and able to continue
supplying incrementally more capacity than they otherwise would as the
economy's rebound accelerates.\96\ Indeed, during the first year beyond
September 30, 2020, it is reasonable to assume that a stronger and more
resilient American can be expected to continue supplying 10 percentage
points more incremental capacity (relative to pre-pandemic levels) than
it would have supplied absent the CARES Act (and the concomitant
negative impact on American employees).\97\ In the second full year
after September 30, 2020 (i.e., October 1, 2021-September 30, 2022), we
make the conservative assumption that the incremental American capacity
enabled by the enduring effects of the CARES Act's payroll support
falls to only five percentage points (relative to pre-pandemic
capacity). Under these incremental capacity assumptions, the CARES Act
will continue to pay large dividends to the U.S. economy well beyond
September 30 of this year in the form of more domestic tourism, more
economic activity in airlines' supply chain, and additional foreign
visitor spending valued at approximately $3.6 billion in year 1 (i.e.,
October 1, 2020-September 30, 2021) and $2.0 billion in year 2 (i.e.,
October 1, 2021-September 30, 2022).\98\
---------------------------------------------------------------------------
\96\ See footnote 19 above.
\97\ By way of example, if American would have reduced its capacity
during the first year beyond September 30, 2020,to 50 percent of its
pre-pandemic capacity absent the CARES Act, it is reasonable to assume
that the trailing benefits of the CARES Act would enable American to
supply 60 percent of its pre-pandemic capacity.
\98\ These estimates are conservative because they do not account
for the additional employee income and payroll tax revenue and reduced
unemployment claims that will result from the larger workforce required
to operate the longer-term incremental capacity enabled by the CARES
Act.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Primary Quantifiable Benefits from the CARES Act Payroll Support to
American Range From $10.6-$12.3 Billion
In sum, the primary quantifiable benefits resulting from the CARES
Act payroll support to American's employees, namely (1) the direct
quantifiable benefits to the U.S. Treasury and state treasuries (in the
form of additional taxes and reduced unemployment claims), (2) the
additional consumer spending in the U.S. economy due to higher
disposable income for American's employee, and (3) the direct benefits
to the U.S. economy arising from the incremental capacity offered by
American that the CARES Act enables, both during the period covered by
the payroll support and beyond, range from $10.6 billion under the
assumption that furloughs of 60 percent are avoided to $12.3 billion
under the assumption that furloughs of 85 percent are avoided. These
primary quantifiable benefits are summarized below in Figure 10 and
Figure 11, respectively.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The CARES Act Will Also Generate Substantial Secondary GDP Spillover
Effects Throughout the U.S. Economy
Even though the primary economic impacts that flow from the CARES
Act enumerated above are substantial, they still dramatically
understate the true and full economic benefit of the Act's assistance
to American employees on the U.S. economy. This is because the primary
economic impacts quantified above do not capture the secondary
spillover benefits that a larger and more robust U.S. airline industry
provides through facilitating more face-to-face business meetings--that
will no doubt lead to an accelerated economic recovery--or the broader
societal benefits that come from friends and families being able to
more easily resume their normal lives by attending weddings, reunions,
and other events, in all of which traveling by air plays a vital role.
Based on FAA's estimate that civil aviation in the U.S. drives roughly
5 percent of U.S. GDP, and taking into account that American provides
for approximately 23 percent of the U.S. industry's capacity (as
measured by ASMs), even under highly conservative assumptions regarding
how American's incremental CARES Act-enabled capacity would contribute
to GDP by facilitating more business travel--and the commerce,
innovation, and employment that flows from it--these secondary
spillover effects can be expected to have an incremental GDP effect of
about 0.02 percent, which translates into approximately $10.6 billion
during the two years following the end of the payroll support
period.\99\
---------------------------------------------------------------------------
\99\ The secondary GDP spillover effect for American is based on
its pro-rata share (based on ASMs) of the U.S. airline industry's
impact calculated in the Compass Lexecon Airline Industry CARES Study,
which conservatively estimated an average GDP impact of 0.1 percent for
the entire industry over the two years following the end of the
employee payroll support period. These estimates of secondary spillover
effects assume that the CARES Act enables American to restore 10
percentage points more of their pre-pandemic capacity than they
otherwise would for the one-year period Oct. 2020 to Sept. 2021 and an
incremental 5 percentage points for the one-year period Oct. 2021 to
Sept. 2022. The impact of civil aviation on GDP excludes aircraft
manufacturing, air couriers, and general aviation, and is based on the
fourth quarter 2019 U.S. GDP of $21.7 trillion. The GDP impact further
assumes that the incremental capacity enabled by the CARES Act
contributes to GDP at 50 percent its average rate (to account for lower
fares and load factors throughout the recovery) and excludes $5.6
billion of post-grant period impact that has already been accounted for
in primary economic impacts summarized in Figure 1. Sources: The
Economic Impact of Civil Aviation in the U.S. Economy, U.S. Federal
Aviation Administration, January 2020; U.S. BEA press release, ``Gross
Domestic Product, Fourth Quarter and Year 2019 (Third Estimate);
Corporate Profits, Fourth Quarter and Year 2019,'' March 26, 2020.
---------------------------------------------------------------------------
Conclusions
Over the past three weeks, the U.S. passenger airline industry has
been sent into a dramatic and unprecedented freefall due to the COVID-
19 pandemic that has paralyzed every major economy in the world. In
response to the evaporation of travel demand that came as a direct
result of public officials' pleas for Americans to stay at home,
Congress passed and the President signed the CARES Act into law,
which--among many other things--provided payroll support to U.S.
passenger airlines of $25 billion to keep their employees on their
payrolls until the end of September. Absent this payroll support,
American, would have had no choice but to furlough between 60 percent
and 85 percent of its employees, and the resulting service cuts would
have left many small, remote U.S. communities without any scheduled
airline service. Not only would this have crippled American's ability
to help the U.S. economy rebound from the seismic economic shock
created by the coronavirus, it would have imposed substantial economic
burdens on the U.S. Treasury and state treasuries by further increasing
the already historic number of unemployment claims and reducing Federal
and state tax revenues. Moreover, faced with dramatically reduced
incomes, up to one hundred thousand of American's potentially
furloughed airline employees would have been forced to curtail their
spending, resulting in negative economic spillover effects in countless
communities throughout the entire country, and particularly in
American's hub cities where the carrier is often one of the largest
employers. All told, these direct impacts of the CARES Act's payroll
support to American will provide approximately $4.0-$5.7 billion in
quantifiable benefits to U.S. Treasury, state treasuries, or increased
spending flowing directly from the payment of American's employees'
wages over just the next six months.\100\
---------------------------------------------------------------------------
\100\ As noted earlier, this $4.0-$5.7 billion figure is highly
conservative because it excludes the potential cost savings to the
Federal and state governments related to increased use of Medicaid by
furloughed American Airlines employees and excludes potential corporate
tax liability.
---------------------------------------------------------------------------
In addition, by positioning American to be able to restore capacity
far faster than it otherwise would, the CARES Act will help American
fuel a faster recovery for the U.S. economy by lowering the hurdle rate
for restoring its flights, resulting in $920 million in economic
benefits during the six-month period of the payroll support alone and
an additional $3.6 billion and $2.0 billion in the first and second
years following the grants, respectively. Including the benefits from
the capacity that the CARES Act incents and enables American to restore
earlier than it otherwise would brings the total primary economic
benefits to the U.S. economy to between $10.6 and $12.3 billion--far in
excess of American's award of $7.6 billion in payroll support--plus an
additional $10.6 billion in secondary GDP spillover effects during the
two years following the end of the grant period.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
______
Author Biographies
Eric Amel is a Vice President with Compass Lexecon (and previously
Sr. Managing Economist at LECG). He has worked on numerous aviation
cases including conducting extensive analysis for regulatory clearance
in airline mergers, alliance antitrust immunity filings, analysis for
independent expert reports in numerous labor disputes for U.S.
airlines, analysis of government slot proposals, and analysis for
expert reports in numerous airline bankruptcies. Prior to his current
position, Dr. Amel was the Chief Economist at Delta Air Lines and prior
to that he was the Chief Economist at Continental Airlines. He also
held a position at Federal Express. Dr. Amel was also an Assistant
Professor of Finance at Arizona State University College of Business
and has also been a Lecturer in Business Economics (MBA) at Boston
University School of Management. Dr. Amel received his Ph.D. in
Economics from Washington University where he specialized in Finance,
Industrial Organization, and Public Finance. He also holds an M.A. in
Economics from Washington University and a B.A. in Economics and
Government from Oberlin College.
Darin Lee is an Executive Vice President at Compass Lexecon and has
published numerous articles on various aspects of airline economics in
journals such as The Journal of Law & Economics, the Journal of Labor
Economics, Economics of Transportation and the Journal of Competition
Law & Economics. Dr. Lee is also the editor of volumes I and II of the
Advances in Airline Economics book series published by Elsevier. Dr.
Lee has over 20 years of experience in the airline industry analyzing
issues such as alleged anti-competitive behavior, bankruptcy
reorganization, codesharing, joint ventures and antitrust immunity,
labor disputes and business interruption. Dr. Lee has frequently
testified as an expert on the airline industry in U.S. Federal Court
and before numerous arbitration panels, and has also presented
empirical analyses of airline competition issues before the U.S.
Departments of Justice, State, and Transportation, as well as and
numerous foreign competition bureaus. Dr. Lee holds a Ph.D. in
Economics from Brown University, an M.A. in Economics from Queen's
University and a B.Sc. in Economics from the University of Victoria.
Ethan Singer is a Senior Vice President at Compass Lexecon. He has
over ten years of consulting experience in the airline industry as a
consultant to the aviation practice at Compass Lexecon, and previously,
as a Senior Associate at LECG. Dr. Singer holds a Ph.D. in Economics
from the University of Minnesota, an M.A. in Economics from the
University of Minnesota and a B.A. in Economics with Distinction from
Carleton College. Dr. Singer specializes in the analysis of airline
economics and has worked extensively on a broad range of airline
engagements including mergers, joint ventures and antitrust immunity,
labor arbitrations, bankruptcy restructuring and financial damages. His
research focuses on airline competition and the cost structure of
international trade and he has published articles on airline economics
in Economics of Transportation, the Journal of Competition Law &
Economics, Review of Industrial Organization, and the Journal of
Economic and Management & Strategy.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Dr. Mike Tretheway
U.S. Airline Industry Relief and International Comparisons. In many
ways, the United States was unique in its approach to ensuring the
stability of our aviation sector and our economy with the Payroll
Support Program. First, Congress acted very quickly when the pandemic
hit, passing the CARES Act on March 27, 2020. Second, we set
transparent and firm rules for Federal relief, like limitations on
executive compensation and minimum service obligations for airlines.
Third, we did not choose ``winners'' or ``losers'' among airlines.
The PSP program was open to all eligible applicants. Relief was not
targeted to only airline and airport workers, but also sustained jobs
in the supply chain, like at repair stations, airline contractors, and
service providers.
Question 1. What are the successful features of the U.S. response
that distinguish it from other models used by foreign countries? What
other steps should the United States take to strengthen its aviation
sector?
Answer. Other nations largely focused on supporting wages and/or a
specific carrier, sometimes referred to as a `champion' carrier.
The U.S. approach focused on the key policy objectives of a)
maintaining a basic level of air transport connectivity, b) maintaining
a workforce that is highly trained and focused on safety and security
and c) supporting the entire air transport supply chain and not merely
air carriers.
The focus on maintaining connectivity should be the fundamental
objective in any crisis. Air transport supports not only the continuity
and effectiveness of many economic sectors, it also provides social,
medical, educational, social services delivery and disaster response
connectivity. In Canada, one example among many others, while wage
support was provided, many communities, including at least one
provincial capital, lost all scheduled commercial air service. (I note
that Canada did provide support linked to maintaining connectivity in
the arctic, but not elsewhere.) Wage supports were useful, but they
were not focused on the fundamental objective of maintaining
connectivity during the pandemic. Commercial aviation was treated as
any other sector in providing wage supports, but these were not linked
to a requirement of maintaining connectivity.
Regarding maintain the workforce, I commented on this in my written
brief. Not only does it take months and years (especially pilots and
mechanics) to train aviation workers, but it has taken decades to
develop and reinforce a culture of safety and security, which could be
weakened with high rates of turnover during the pandemic crisis.
Providing support for a champion carrier, and not all carriers, as
was done in many nations (e.g., Germany, Singapore), undermines
competition and market forces. The U.S. approach was fundamentally
oriented to supporting the market, not selected champion carriers. As
recovery occurs, the U.S. is in a better position to enjoy the
considerable benefits of market competition. The U.S. approach lets the
market be the adjudicator of success and survival, not the judgement of
government.
The U.S. also recognized that airlines are dependent on an entire
supply chain and the entire chain needed to continue. This included
airports, ground and catering services, aircraft maintenance services
and manufacturing. A chain is only as strong as its weakest link, and
the U.S. policy provided support for the entire chain.
Regarding the issue of what other steps should the United States
take to strengthen its aviation sector, I note that this is a very
broad topic, and I will confine my comments to a few issues related to
the pandemic's impact on aviation.
First, I strongly urge action, either enforcement or new
policy, on the issue raised in the oral hearing regarding
passenger violence and non-conformity with safety and health
regulations onboard flights and in the airport. At the very
least, such behavior, if unconstrained, should be understood
will affect retention of skill employees with a safety and
security values, in addition to traveler attitudes toward
flying.
Second, with the upcoming 30th anniversary of the U.S. open
skies initiative, U.S. policy should `stay the course' on
relying on market determination of international airline routes
and fares, a policy that originated in the U.S. and which
provided significant benefits for billions of air passengers
(and cargo shippers) not only on flights to and from the U.S.
but elsewhere in the world. The U.S. was and still is the
global leader on many aspects of air policy. In the post-
pandemic period, other nations may seek to pursue protectionist
policies that favor the champion carriers they chose during the
pandemic. It would be a mistake for the U.S. to accommodate
this.
Third, the issue was raised in the hearing of an expanded
list of passenger rights. Certainly, regulations clarifying
passenger rights helps balance the playing field. But I caution
against any policy that seeks to establish cost-based prices or
rates for specific auxiliary services provided by airlines.
This would constitute a step into re-regulation of airline
industry.
Fourth, policy should support addressing long-term shortages
of the skilled aviation workforce, especially regarding pilots
and mechanics. The pilot and mechanic shortage predated the
pandemic, and the policies put in place by the U.S. Congress in
2020 and 2021 were critical in ensuring that the shortage did
not become worse, as it has in a number of other countries, but
it does remain a long-term issue.
Fifth, I urge a study of what happened in the industry
during the pandemic to draw out lessons learned and best
practices. Congress has mandated reviews of transportation
policy and issues in the past, such as those done the
Transportation Research Board, and these have guided subsequent
policy development. My own observation is that some lessons
learned in previous events, such as SARS in 2003, had been
forgotten and were not utilized in the early days of the COVID-
19 pandemic. There are lessons to be learned and remembered for
future events, both from the aviation and medical communities.
Question 2. When do you forecast a return to pre-pandemic levels of
air travel demand in the United States and globally?
Answer. There are two issues: When will air travel demand return to
pre-pandemic levels and when will it return to long term trends. In
answering this question, it is important to distinguish domestic from
international air travel, as the latter is dependent upon policies of
other nations and complex border health regulations.
While my company, InterVISTAS Consulting Inc., has prepared
forecasts of air travel demand recovery, so too have others including
the Federal Aviation Administration, the International Civil Aviation
Organization, the International Air Transport Association, and Airports
Council International. These are currently pointing to the following:
There is increasing optimism for traffic recovery. For
example, FAA's most recent forecast (November 2021) is for a
more rapid recovery than it made a year earlier, in November
2020, the latter being a point in time prior to the U.S.
vaccination program.
The U.S. will have a more rapid recovery than most other
nations/regions.
Domestic U.S. travel recovery could reach pre-pandemic
levels in late 2022 or early 2023. Recovery will be led by
visiting friends and relatives (VFR) and tourism travel, with
business travel lagging. The latter may not recover to 2019
levels until later in the 2020s. Business travel, while hard to
precisely define and measure, has many segments. Some, such as
conferences/exhibition and knowledge exchange events will
recover fully and sooner. Other segments such as intra-
corporate travel, will be permanently reduced, although to a
large extent the pandemic merely accelerated a trend that was
already in progress on the use of communications technologies.
International air travel is not expected to recover to pre-
pandemic levels until 2024 or later. This is a consequence of
continuing and differing policies of nations for international
border crossing. The requirement and inconvenience of testing,
for example, raises the cash and time inconvenience costs of
air travel.
All of the forecasts also expect air travel demand to
eventually return to previous long-term trends in the late
2020s or early 2030s. Here the forecasts differ in terms of
whether other factors may have reduced long term travel demand,
in particular regarding government policy and social attitudes
regarding aviation's impact on climate change. Boeing, for
example, which has an excellent record regarding long term
aviation forecasts, has somewhat reduced its global long term
traffic demand growth rate to 4 percent, down from 5 percent in
some of their earlier forecasts.
While forecasts became more optimistic as 2021 ended, all
the forecasters indicate that there is still significant
downward risk, primarily regarding potential evolution of the
COVID-19 virus, with some concerns (less in the U.S. than a
number of other nations) regarding downsized fleets and
shortages of key aviation professionals, notably pilots and
mechanics.
While Question 2 asks about air transport demand, markets also have
a supply side. The policy and financial response of the U.S. Congress
to the pandemic is observed to have retained the fleet capacity of the
U.S. commercial airlines. This is not the case for many other nations
who policies did not focus on maintaining air transport connectivity.
There have been U.S. carrier fleet changes, of course. In particular
(with the encouragement of Congress) the replacement of many older,
high fuel consumption and carbon impact aircraft with newer more
efficient aircraft. But the overall fleet capacity has been maintained
and can accommodate demand recovery. This is not the case in many other
nations, where fleets are now smaller. The U.S. focus on continuity of
connectivity helped to retain the supply capacity needed to support
demand recovery. Again, this underscores the effectiveness of the
response of the U.S. Congress to the pandemic.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Doug Parker
Payroll Support Program Impact. Congress created the Payroll
Support Program to protect the airline industry's workforce, support
the continuity of safe and essential travel, and ensure the industry's
ability to remain viable to meet future consumer travel demand. The
Department of the Treasury disbursed a total of $54 billion to
passenger airlines, across three rounds of PSP, to provide critical
relief during the pandemic.
We know that PSP made a difference in December 2020, when Congress
extended the program, because airline recipients had to recall
thousands of employees who were furloughed after September 30, 2020
when the first round of PSP ended.
According to the Bureau of Transportation Statistics (BTS), between
October 2020 and February 2021, major airlines hired or brought back
28,179 workers. These workers came back just in time for the air travel
rebound, which took off in March 2021. As of September 2021, airlines
were approximately 8.8 percent below their pre-pandemic employment
levels according to BTS data. I am interested in learning from your
airline on how the Payroll Support Program impacted your workforce and
operations. Mr. Parker, American received $12.6 billion in PSP funds.
Question 1. If not for PSP funding, what do you think the status of
your workforce would look like today? Would your airline have been able
to survive the pandemic, absent PSP funding?
Answer. It's not an exaggeration to say the Payroll Support Program
saved the airline industry.
That's because the devastation created by the COVID-19 pandemic was
profound and universal. In fact, nothing in history has ever come
remotely close to negatively impacting demand for air travel like
COVID-19. For American, in the final week of March 2020, our passenger
revenues were 96 percent lower than the same period in 2019 and our
load factor was 14 percent compared to 85 percent in the same week of
March 2019, even though we had reduced our capacity by nearly two-
thirds.
In response to the unprecedented evaporation of demand, we took
aggressive self-help measures like grounding aircraft, canceling flying
and implementing a major cost-reduction program. While these actions
were necessary, they were not sustainable.
Were it not for PSP, most airlines would have survived by shutting
down flying in April 2020, furloughing almost all our team members, and
waiting for demand to return to levels strong enough to justify
restoring flying. As it turns out, that would have been sometime in
2021.
Fortunately, PSP kept us flying by paying us to pay our team. In
exchange, we agreed not to involuntarily separate anyone or reduce pay
rates, and we agreed to maintain air service to the communities we
served prior to the pandemic.
Because of the support U.S. airlines received, our team and our
industry have been able to help prevent a hyper-stressed economy,
shocked by the spread of a novel virus, from grinding to a halt.
Throughout the worst stages of the pandemic, American Airlines
continued leading the industry in number of U.S. communities served. We
carried essential workers, including medical professionals, to the
locations where they were most needed. And we were proud to transport
critical supplies, including PPE and vaccines, on flights around the
country and across the globe.
It's because of the assistance extended to us through the CARES Act
and the PSP that we've been able to support a nation and a world in
crisis. It's brilliant policy, written during a time of extraordinary
uncertainty, and our entire industry remains incredibly grateful for
it.
Question 2. Since receiving PSP funding, do you believe your
airline is in a good position to meet current consumer travel demand?
Answer. As we made the case for the PSP, we understood that
receiving financial support from the Federal government would come with
an obligation to serve. It was an obligation we were ready, willing,
and humbled to accept. Demand for air travel came back swiftly in the
spring of 2021 as COVID-19 vaccines became available and more widely
distributed. Thanks to the PSP and just as intended, U.S. airlines were
ready, and we sprang into action.
At American, we grew our airline by 82 percent from the first
quarter to the second quarter of 2021, providing significantly more
service to the flying public than any of our competitors. We flew over
24 million customers in quarter one and 44 million customers in quarter
two, which is about one-third more than our next-closest competitor in
both cases.
This was an unprecedented ramp-up of our operation. No airline has
ever attempted to expand at the pace we did after a demand shock of the
magnitude we experienced during the pandemic. We took this aggressive
approach because the central purpose of the PSP was to ensure we were
able to provide air service when travelers decided they were ready to
get back to flying. We knew we had an obligation to fulfill, and we are
proud of how we have delivered.
We're pleased to report that our operational performance was as
good or better than before the pandemic. In fact, American closed the
month of September with the best operational performance in our
airline's history, 2020 notwithstanding. More recently, over the
Thanksgiving holiday period, American operated 95.7 percent of the
domestic capacity we operated during Thanksgiving 2019, and we did so
with stellar performance.
We continued that positive trend over the December holiday period
as well, despite the challenges associated with major winter storms and
the impact of the Omicron variant. We safely transported nearly 9.7
million customers on more than 96,000 combined mainline and regional
flights from Dec. 16th through January 2nd, canceling less than half
the number of flights our top three major competitors canceled on a
percentage basis. We did that while operating 35 percent more flights
per day on average than those same competitors. That led us to
outperform the entire industry in all combined operational metrics
during the holiday period, ranking first in on-time departures, on-time
arrivals. By every measure, we are ready to continue meeting current
travel demand and we look forward to providing our customers with safe,
reliable service in 2022.
Airline Relationships with Labor. Congress focused on sustaining
the airline workforce and ensuring continuity of operations during a
time of intense uncertainty.
From information shared with the Committee, it appears that those
airlines and unions that worked together found solutions to COVID-19
challenges, from addressing new health risks in the workplace to
ensuring currency and qualification of a highly-skilled workforce.
Question. How has your airline collaborated with unions to
establish policies to meet workforce needs in response to the COVID-19
pandemic? How did your airline's relationship with relevant labor
unions enhance your ability to meet operational needs and the rise in
air travel demand?
Answer. American's strong collaboration with the unions which
represent 84 percent of its team members began at the onset of the
pandemic and continues today. Initially, AA instituted frequent regular
meetings between the most senior leaders at AA, including our CEO and
President, and union leaders to foster the shared goal of preserving
jobs for our team members and services for our customers. And, over the
past two years, AA and its unions made dozens of agreements outside of
our collective bargaining agreements to support these same goals.
Examples of these agreements include: first in the industry voluntary
leave of absence programs which gave team members the option to
continue their employment at a reduced wage while decreasing AA's labor
costs; policies and agreements which provided paid time off to team
members impacted by Covid-19; pay protection provisions for flight
attendants whose schedules were impacted by reduced flying; providing
reservations agents an enhanced ability to work from home during the
pandemic; and programs to encourage vaccinations.
AA also worked extensively with its unions to create and enforce
Covid-19 safe workplace measures. These agreements and initiatives, by
keeping team members connected to their jobs and providing a safe work
environment, also supported AA's ability to meet operational needs and
add flying as air travel demand. AA and the unions continue to build on
this collaborative working relationship. For instance, a recent
agreement with our flight attendants union created a first in industry
holiday incentive program that contributed to AA's operational success
over the holiday period.
Contract Workforce Role and Staffing. At the height of the
pandemic, airport and aviation workers stood with airlines and called
on the Federal government to make sure our national air travel system
remained strong, aviation jobs were protected, and that airlines were
ready to meet consumer travel demand.
For decades, airlines have outsourced essential service airport
jobs like cabin cleaners, wheelchair attendants, security officers, and
baggage handlers to contractors at major airports across the country.
Contract workers play a critical role in our aviation system and
continue to work hard on the frontlines of the COVID-19 pandemic to
keep travelers safe.
The pandemic has exposed problems with how domestic travel
disruptions are being addressed and how such response affects the
airline industry's workforce. For example, an August 2021 SEIU survey
conducted in Houston to assess the experiences of contracted airport
workers detailed incidents of short staffing and mandatory overtime
policies causing workforce fatigue, which has created a strained
operational environment.
Question. How will your airline ensure that the contracted
workforce, which provides such critical services, is stable, well-
trained, and has adequate staffing levels needed to respond to
operational challenges?
Answer. Our vendors and suppliers are a critical extension of the
American Airlines team. As such, they are expected to complete the same
assigned training requirements that other AA team members must satisfy.
In order to guarantee that our high standards are being met, we conduct
supplier auditing and training program review where applicable.
Additionally, our stations, operations groups, and business support
groups work with suppliers to ensure they have adequate staffing levels
to perform the required contracted functions. We developed these
standards and processes because we strongly believe that it's in our
best interest to have an adequately staffed and properly trained
contract workforce.
Airline Workforce Recall. The Committee is aware that, in 2020,
airlines took varying approaches to temporarily reduce the number of
active employees on their payroll to avoid involuntarily furloughing or
laying off employees as they experienced growing pandemic-related
financial difficulties. Many airlines offered employee programs to
incentivize voluntary separations, including voluntary furloughs, early
retirements, and temporary leaves of absences.
Airlines that extended voluntary leave options to their employees
reserved the right to recall such employees from leave when necessary.
To the Committee's knowledge, most airlines started broad workforce
recall efforts in the first quarter of 2021, employing particularly
concentrated efforts to bring back employees in January and February
2021. However, recalling employees has not been an easy process as
airlines have reported higher workforce shortages and rates of
absenteeism in certain workgroups, leaving the airlines more ill-
equipped to meet consumer travel demand.
Question 1. Has your airline experienced challenges in recalling
your workforce? If so, did your airline anticipate such issues in
recalling employees from leave before initiating your recall efforts?
Please describe the scope of the workforce recall challenges your
airline faced in 2021.
Answer. On Oct. 1, 2020, approximately 19,000 American Airlines
team members were furloughed in conjunction with the expiration of the
original CARES Act and PSP. While we had recalled all furloughed team
members in late December 2020, we were still working to return all team
members to work, as the operation necessitated. When demand came back
swiftly in the spring of 2021, we executed the largest ramp up in our
operational history in order to deliver on the commitment we made in
accepting PSP funds. That created training and onboarding constraints
across several workgroups.
Our rapid growth in flying from Q1 to Q2 made pilot re-
qualification especially challenging. We had over 1,300 pilots who
needed to go through this training. First, the FAA's requirements of
three takeoffs and landings in a 90-day rolling period imposed timing
challenges. That, coupled with our own desire to train to pilot
proficiency rather than just to the minimums, strained our ability to
operate every flight that we had scheduled.
Not only were we returning 19,000 team members, but we were hiring
thousands more to meet the seemingly overnight return of travel demand.
Onboarding such a high volume of team members at the same time
pressured our teams to keep up with everything from standard hiring
procedures like background checks and fingerprinting, to getting all
team members--either returned or new hires--up to speed on all training
and compliance requirements.
Question 2. Has your airline's workforce fully returned as of
January 1, 2022? How did the status of your workforce's recall from
voluntary leave programs affect your airline's ability to meet consumer
air travel demand in 2021?
Answer. Our team is the lifeblood of our airline, and in 2021 we
were proud to welcome back team members who were furloughed when the
PSP lapsed, while adding new hires to meet travel demand. In fact, we
hired more than 16,000 new team members across all our workgroups last
year. This included more than 1,350 pilots, over 1,600 flight
attendants, an additional 1,000 tech ops and maintenance professionals,
and more than 2,000 reservations agents. We believe demand for travel
will remain strong in 2022, which is why we've set a target of hiring
an additional 18,000 team members in 2022. These new hires will ensure
that we have the team in place we need to operate the schedule we've
planned.
Airline Operational and Scheduling Data.
Question 1. For the months of October, November, and December 2021,
please provide the number of flights your airline operated, the number
of flights cancelled, the number of flights delayed more than 15
minutes, the number of flights delayed more than 90 minutes, and the
number of flights delayed more than six hours.
Answer.
Arrival-Based Delay Measurement (Time of delay measured on
scheduled arrival time) Example: A flight scheduled to aarrive at 08:00
with an actual arrival time of 09:45 would be counted in the total
flights delayed >90 and >360 minutes, regardless of departure time.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Question 2. For the month of January 2022, please provide the
number of daily flights your airline operated, the number of flights
cancelled, the number of flights delayed more than 15 minutes, the
number of flights delayed more than 90 minutes, and the number of
flights delayed more than six hours.
Answer.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Question 3. For the months of October, November, and December 2021,
and January 2022, please detail any preemptive schedule changes that
your airline made, including cancelling flights or changing the
departure time by more than one hour.
Answer. During the normal course of airline operations, schedule
changes close-in to departure can occur for a variety of reasons
including, but not limited to, international government restrictions,
local airport restrictions, civil unrests and major weather events.
Between October and December 2021, we faced some of these
circumstances, namely:
Hurricane Ida resulted in cancellations of our flight
schedule into New Orleans for several days in October as
airport ground conditions improved.
Government restrictions in Argentina required us to adjust
our flight schedule in and out of Buenos Aires in October and
November.
Civil unrest in Haiti led to the cancellations of our Port-
Au-Prince flights from MIA and FLL in the first half of
December.
Additionally, in December 2021, we focused on fortifying our
staffing and fine-tuning our schedule around the peak holiday period.
After the major DFW weather disruption at the end of October, we
recognized that we had to make adjustments to our schedule for the
second half of December and trimmed our schedule, at a time when we
typically grow our operations. This provided an additional buffer,
allowing us to meet customer demand while ensuring our schedule was
fully supportable by our staffing, especially as unforeseen issues
arose. Even after we made these cuts, we still ran an operation larger
than all our peers.
In early January 2022, we made proactive adjustments to our
regional schedule to mitigate travel disruptions related to near-term
pilot staffing challenges at several of our regional carriers,
including impacts associated with the Omicron variant. We made these
changes early to minimize disruptions to our customers' travel plans
during their journeys.
American's network offers more daily departures than any other
major U.S. carrier, and the number of customers affected by these
changes has been minimal. Importantly, we consistently contacted those
affected to provide alternate travel options to get them to their
destinations.
Airline Employment and Absenteeism Levels
Question 1. For the months of October, November, and December 2021,
please provide the number of full-and part-time employees employed by
your airline.
Answer.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Question 2. For the months of October, November, and December 2021,
and January 2022, please detail any significant absenteeism problems
experienced by your airline.
Answer. We have made it clear to our team members throughout the
pandemic that if they are sick, they should stay home from work.
Importantly, we have a pandemic leave policy in place to ensure team
members have paid time away if they have to miss work due to COVID-19.
Like many businesses across the economy, we saw an increase in sick
calls toward the end of the year as omicron spread throughout the
country. We worked to address that challenge while protecting our team,
our customers and our airline. We developed holiday pay programs for
peak travel days from mid-November to early January to support our
operation and customers as they return to travel. We are particularly
proud of how we ended the year, certainly relative to our competitors.
Our team handled far more customers than any other airline over the
holidays and we did so with much less disruption than our primary
competitors. American was the top performing airline among our peers in
December on each of the key operating metrics.
Pilot Training and Requalification Delays. In early 2021, airlines
started broad efforts to recall high numbers of employees from
voluntary leaves of absences. Unlike other workgroups, pilots require
significant flight training in order to meet qualifications to safely
fly. With the rapid surge in air travel demand from the spring to the
summer, the need to have pilots trained on time to fulfill airline
schedules was crucial for airline flight operations.
American had a problem with recalled pilots tasked to fly the
airline's Boeing 737 series fleet. It's the Committee's understanding
that these pilots needed to be qualified and ready to fly by the start
of the summer schedule. However, an estimated 40 pilots did not receive
their final recertification training by the end of June. This training
delay impacted flight lines during the summer and contributed to
American cancelling up to 1 percent of flights during June and July
2021.
The Allied Pilots Association, representing 15,000 of American's
pilots, noted in June 2021 that ``every pilot that was furloughed must
go through retraining before they can fly again. That's a key reason
why the airline now finds itself short of fully trained, qualified
pilots who can perform their tasks legally.''
Question 1. Given that it takes months for a pilot to be retrained
and requalified in the aircraft they are designated to fly, what were
some of the reasons that these pilot training delays occurred?
Answer. American has as many or more pilots and flight attendants
per scheduled crew block hour this year as we had in the years
preceding the pandemic. This is the best measure of the adequacy of our
crew staffing because it reflects the number of active pilots and
flight attendants who are eligible to fly, the number of aircraft we
have available and scheduled for deployment, and the number of
crewmembers we need for each flight based on the equipment and the
destination.
In early 2021, with the increased availability of COVID-19
vaccines, we saw demand for air travel return faster than predicted. In
response, our team executed the largest operational ramp-up in the
history of our airline. This rapid growth presented challenges we've
never experienced before, but ones we addressed proactively and
aggressively.
As we began to ramp-up, we prioritized getting those pilots who had
been furloughed back into training and recertification as quickly as
possible. The vast majority of our recalled pilots completed training
by the end of June 2021. However, it took us slightly longer than we
anticipated to complete training for a subset of our pilots, especially
Boeing 737 first officers. That meant some of our 737 pilots weren't
available early in the summer.
We worked quickly to address this situation and after we fortified
our pilot training and staffing, we entered July with a deeper bench of
pilots. With that additional resilience, we saw continued operational
improvement throughout the summer, which culminated in our best
September operational performance in our airline's history. As noted
above, we also performed well operationally--relative to our historical
performance, and relative to our competitors--over the Thanksgiving,
Christmas, and New Years holidays.
Question 2. For pilots and other workgroups, what steps are you
taking to plan for and ensure enough time to properly train current and
new employees? How have lessons learned from the pandemic informed how
you conduct workforce training now?
Answer. As detailed previously, the training issues we experienced
last spring were specific to Boeing 737 pilots and attributable to
bringing back a large number of pilots very quickly. That backlog was
remedied by summer and we experienced no further operational
disruptions due to pilot training delays. We continue to monitor our
training programs closely and we do not anticipate similar conditions
arising in 2022.
Airline Cancellations and Staffing. Following the Biden
Administration's vaccine rollout in the first quarter of 2021, consumer
travel demand began to rebound. On January 1, 2021, less than 2 percent
of Americans had received one vaccine dose, and on that same day, only
805,990 travelers passed through TSA security checkpoints.
But on March 25, 2021, when more than 30 percent of Americans had
received at least one dose, over 1.4 million travelers passed through
TSA checkpoints. This uptick encouraged airlines to ramp up projected
flight schedules for summer travel.
American was one of a few airlines that set aggressive schedules to
capture this demand. As one aviation data analyst observed, airlines
acted ``very bullish on domestic opportunities,'' and were ``way more
eager to be risk tolerant than they would [have been] pre-pandemic.''
Some airlines struggled to provide staffing required to meet the
returning demand, however, and were forced to cancel or delay thousands
of flights during the peak travel periods over the summer. From March
to the end of September, for example, American cancelled nearly 17,000
flights. In these cases, bad weather was exacerbated by staffing
shortages, exposing a brittle system susceptible to even minor hiccups.
And of course, when flights are cancelled it is consumers that are the
ultimate victims.
Operations did get better. The airline industry, including
American, has performed much better, particularly over the Thanksgiving
holiday period when passenger volumes reached 90 percent of pre-
pandemic levels. TSA set COVID-era record of 2.4 million passengers
screened on November 28, yet we didn't hear any reports of mass
cancellations and delays, or hours-long lines.
In fact, the airlines hit an on-time performance rate of 85 percent
during the Thanksgiving period, the best since 2017. American cancelled
less than 1 percent of its mainline and regional flights during this
time.
Question 1. In your view, did American have enough staff to meet
the return of air travel demand this year?
Answer. Thanks to the PSP, we have the team we need to operate the
schedule we've planned. We've continued to welcome team members back to
the company, and we are aggressively onboarding new hires. To be more
specific, American has as many or more pilots and flight attendants per
scheduled crew block hour this year as we had in the years preceding
the pandemic. This is the best measure of the adequacy of our crew
staffing because it reflects the number of active pilots and flight
attendants who are eligible to fly, the number of aircraft we have
available and scheduled for deployment, and the number of crewmembers
we need for each flight based on the equipment and the destination.
Question 2. What did American and the industry as a whole do
differently that enabled travel during the Thanksgiving holiday to go
so smoothly?
Answer. The holidays are a time our customers count on us most and
we take that responsibility seriously. To ensure that we could provide
certainty for both our customers and team members, we took aggressive
measures to address potential absenteeism by offering extra pay to
frontline employees during the holidays. This holiday pay program was
targeted to peak travel days through early-January. Put another way, we
doubled down on our efforts to ensure a smooth operation and I'm proud
to say we delivered.
During the Thanksgiving holiday period--from November 19th through
November 30th--we safely transported more than 6.7 million customers on
more than 66,000 flights. On average, American operated nearly 1,500
more flights per day than our major competitors. This represents about
92 percent of our 2019 domestic flying for the same period. And while
we're proud of these numbers and what they represent for American and
the industry, it's the way we operated this holiday travel season that
is even more impressive:
On-time departures: Our combined mainline and regional D-0
was 70.9 percent, our best departure performance over the
Thanksgiving period since 2017 (excluding 2020).
On-time arrivals: Our combined mainline and regional A+14
was 85.3 percent, 1.1 points better than our goal for the
period and our best A+14 Thanksgiving performance since 2017
(excluding 2020).
Completion factor: Our combined mainline and regional
completion factor was 99.5 percent. This was 0.4 points better
than our goal for the period and our best Thanksgiving
completion factor performance since 2017 (excluding 2020).
Hiring Delays. The Payroll Support Program allowed U.S. carriers to
continue to employ almost 700,000 American workers as the pandemic
decimated travel. Those workers and their families were able to keep
the lights on and food on the table during an incredibly uncertain time
in our Nation's history. I am happy that PSP worked, and jobs were
saved. That was the goal. But now, it is up to the airlines to continue
hiring to reach full capacity.
This spring, as people returned to travel, staffing gaps were
clear. Staffing shortages coupled with outside forces like weather, IT
issues, or staff calling in sick left a fragile system vulnerable to
disruption. These are the conditions that we saw over the summer. While
some airlines have made progress in hiring, overall, U.S. passenger
airlines employ 8.8 percent fewer employees than in pre-pandemic
September 2019.
Question. For the last several months instead of hiring more
employees, it appears that American is falling more and more short of
2019 levels according to information from DOT. Does American need to
hire more employees to meet travel demand?
Answer. Many of the reductions in our team have come from
management and support staff, as opposed to frontline team members.
American has as many or more pilots and flight attendants per scheduled
crew block hour this year as we had in the years preceding the
pandemic. This is the best measure of the adequacy of our crew staffing
because it reflects the number of active pilots and flight attendants
who are eligible to fly, the number of aircraft we have available and
scheduled for deployment, and the number of crewmembers we need for
each flight based on the equipment and the destination.
Despite the rapid return of travel demand in 2021, our airline
operations remain below 2019 levels, so we do not believe our 2019
staffing levels are the best measure for evaluating our current
staffing needs. Early in the pandemic, we recognized that American
would be smaller moving forward and we had to right-size all aspects of
our airline to adjust to that new reality. However, when we did
experience a rise in travel demand, were pleased to begin recalling
team members who had been on voluntary leave. The recovery was strong
enough that we were even able to add 16,000 new employees across all
our workgroups. We believe demand for travel will remain strong in
2022, which is why we've set a target of hiring an additional 18,000
team members in 2022. These hires will ensure that we continue to have
the team in place we need to operate the schedule we've planned.
Consumer Refunds. In 2020, the Department of Transportation
(``DOT'') received 29,687 refund complaints against U.S. airlines, a
4,634 percent increase over 2019. And while the problem has started to
get better, DOT still received 5,129 refund complaints in September
2021, well above the 627 filed against U.S. airlines for all of 2019.
DOT has a rulemaking in the Unified Agenda which says that it is
looking at defining what constitutes a ``cancellation'' and a
``significant delay''--the two things that entitle a customer to a
refund. Currently, DOT lets airlines make their own determinations as
to whether or not a flight is cancelled, and the number of hours that
account for a ``significant'' delay.
Question 1. In your view, how many hours does a flight have to be
delayed before a passenger is entitled to a refund?
Answer. American Airlines offers refunds to our customers if their
flights are cancelled or delayed for more than four hours. We provide
even greater flexibility closer to travel. Specifically, if there is a
schedule change or delay of more than 90 minutes within 72 hours of
scheduled travel, we will also provide a refund.
Question 2. If the reluctance to issue refunds was just an issue of
preserving cash on hand, then why were refund complaints still so high
in 2021?
Answer. AA has honored its refund policy and processes refund
requests within the Department of Transportation's (DOT) refund
processing timelines. We did not withhold refunds, attempt to give
travel credit when refunds were due, or retroactively apply a change to
the contract of carriage. We have honored our commitments, in a timely
fashion, throughout the pandemic, which is evidenced by the fact that
we paid $3.2 billion in refunds in 2020 alone.
PSP Compliance. Under section 4116(a)(2) of the CARES Act, no
corporate officer or employee of your airline whose total compensation
exceeded $425,000 in calendar year 2019 (other than an employee whose
compensation is determined through an existing collective bargaining
agreement entered into prior to the enactment of the CARES Act) was
permitted to receive from your airline, severance pay or other benefits
upon termination of employment which exceeds twice the maximum total
compensation received by the corporate officer or employee in 2019. Yet
in the first quarter of 2021, your airline reported to the Department
of the Treasury that some employees and corporate officers had received
severance pay or other benefits after March 24, 2020 which more than
doubled their 2019 total compensation.
Question 1. Please explain whether the severance pay or other
benefits provided to these employees and corporate officers complied
with the CARES Act and associated Payroll Support Program requirements.
Answer. American Airlines did not have any employees or corporate
officers who received severance pay or other benefits after March 24,
2020 that exceeded twice their 2019 total compensation. Accordingly, in
our first quarter 2021 compliance report to the Department of the
Treasury (UST), we reported this amount as 0. Since we received your
question, we have looked at the way our Q1 2021 reporting was recorded
by UST and it appears UST may have recorded our response incorrectly.
We are reaching out to UST to ensure their reporting system reflects
the response we provided.
Question 2. Are you aware of any non-compliances associated with
your airline's receipt of Payroll Support Program funding?
Answer. No.
______
Response to Written Questions Submitted by Hon. Richard Blumenthal to
Doug Parker
Compensation for Consumers. Since March 2020, flight delays and
cancellations have disrupted plans for countless travelers--and the
most recent cancellations left people stranded in airports and away
from family during the winter holiday season. Senator Markey and I have
repeatedly called for full cash refunds for impacted consumers. But
U.S. airlines have been slow to provide credits and legally-required
refunds and have hidden behind vague ticketing policies. Media reports
indicate that airlines are currently holding approximately $20 billion
worth of travel vouchers and unrefunded ticket values.
Question 1. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that American Airlines currently owes consumers? Please provide the
amount of each value mechanism as well.
Answer. American Airlines offers refunds to our customers if their
flights are cancelled or delayed for more than four hours. We provide
even greater flexibility closer to travel. Specifically, if there is a
schedule change or delay of more than 90 minutes within 72 hours of
scheduled travel, we will also provide a refund.
AA has honored its refund policy and processes refund requests
within the Department of Transportation's (DOT) refund processing
timelines. We did not withhold refunds, attempt to give travel credit
when refunds were due, or retroactively apply a change to the contract
of carriage. We have honored our commitments, in a timely fashion,
throughout the pandemic, which is evidenced by the fact that we paid
$3.2 billion in cash refunds in 2020 alone--about 2.5x more than the
$1.3 billion in cash refunds we issued in 2019.
We also eliminated change fees on a broad basis allowing customers
the flexibility to change their travel plans.
For people who purchased a nonrefundable ticket and then wanted to
cancel their plans, we are proud of the additional flexibility we have
offered to these customers during the pandemic. For tickets purchased
in 2019 and 2020 that were scheduled to expire or were for scheduled
travel from March 1, 2020 through March 31, 2021 we have extended the
period for travel to March 31, 2022. In addition, customers with stored
value related to unused tickets for travel to several international
destinations can use the value of their unused ticket through December
31, 2022.
If special circumstances prevent a customer from traveling by these
dates, our team will work closely with that customer to ensure they are
well cared for.
Question 2. Does American Airlines gain revenue (such as from
interest) from the value of unused travel vouchers that are currently
held in company accounts? If so, how much revenue has American Airlines
collected from the funds in your accounts that are linked to unused
travel vouchers since March 2020?
Answer. Since the beginning of the pandemic in early 2020 AA has
incurred significant cash operating losses, even after the application
of funds from the Payroll Support Program, due to the material
deterioration in our revenues. Any cash proceeds related to unused
tickets were utilized to fund operations rather than generate
additional revenue such as interest income.
Question 3. If American Airlines still owes consumers under
Question 1, by when will it have completed issuing its refunds? What is
the reason for this delay?
Answer. American Airlines has honored its refund policy\1\ and
consistently processes refund requests within the Department of
Transportation's refund processing timelines.
---------------------------------------------------------------------------
\1\ American Airlines offers refunds to our customers if their
flights are cancelled or delayed for more than four hours. We provide
even greater flexibility closer to travel. Specifically, if there is a
schedule change or delay of more than 90 minutes within 72 hours of
scheduled travel, we will also provide a refund.
Question 4. American Airlines reportedly cancelled nearly 200
flights in the last week. How many consumers were impacted by these
cancellations?
Answer. During the holiday period (the last half of December,
American Airlines performed better than the entire industry in all
combined operational metrics, ranking first in on-time departures (D-
0), on-time arrivals (A+14) and completion factor, including two zero-
cancel mainline days during the period. By and large, American was the
most reliable carrier by an incredible margin, including delivering a
D-0 that was 15 percentage points higher and completion factor that was
a full 2.5 percentage points better than the industry average.
Moreover, American Airlines achieved these industry-leading metrics
while operating 35 percent more flights per day on average than those
same competitors. For the period from December 24th through 28th,
51,116 passengers out of more than 2.5 million were affected by
cancellations. Of those passengers impacted, 66 percent were rebooked
automatically by our systems with 55 percent of those re-booked on
flights for the same day. The balance of the impacted passengers were
accommodated by our airport or reservations teams, in compliance with
our Customer Service Plan.
Question 5. Will American Airlines commit to providing full cash
refunds to all impacted consumers? If not, explain why not and what
compensation you will issue to consumers.
Answer. As stated previously, American Airlines has honored its
refund policy\2\ and consistently processes refund requests within the
DOT's refund processing timelines. That remains the case for passengers
impacted by cancellations during the recent holiday season.
---------------------------------------------------------------------------
\2\ American Airlines offers refunds to our customers if their
flights are cancelled or delayed for more than four hours. We provide
even greater flexibility closer to travel. Specifically, if there is a
schedule change or delay of more than 90 minutes within 72 hours of
scheduled travel, we will also provide a refund.
Question 6. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that American Airlines owe consumers for these cancellations? Please
provide the amount of each value mechanism as well.
Answer. American Airlines prioritized the rebooking of impacted
passengers and has provided refunds for those customers whose flights
were canceled. We continue to process refund requests within the DOT's
refund processing timelines.
Question 7. By when does American Airlines plan to have fully
reimbursed consumers?
Answer. As stated in previous responses, AA has consistently
honored its refund policy and processes refund requests within the
DOT's refund processing timelines. That remains the case for passengers
impacted by cancellations during the recent holiday season.
Question 8. Please explain the causes of the recent flight
cancellations as well as the steps that American Airlines is
implementing to prevent a repeat of these cancellations.
Answer. American Airlines, like others in the industry, has been
impacted by the Omicron surge, which resulted in higher than normal
COVID-related sick calls. In some instances, we made the difficult
decision to pre-cancel some flights to allow us to proactively notify
and accommodate our customers and avoid last-minute disruptions at the
airport.
Our operation was also impacted by significant winter weather,
including winter storms in Chicago, the Washington, D.C. region, and
certain popular skiing destinations. We recovered our operation quickly
from each storm and worked in advance to pre-cancel flights when
appropriate to prevent late-arising disruptions for our customers.
Despite these challenges, during the busy holiday travel season,
American performed better than its peers in all combined (mainline and
regional) operational metrics including completion factor, D-0 and
A+14. Moreover, we accomplished this while operating 35 percent more
flights per day than our major competitors.
We've recovered our operation quickly after each weather event and
for other cancels from this period, but there could be additional
weather events that cause disruption to our operation and our crew
members' flight sequences. As we did during the holidays, we'll be as
proactive as possible in our approach to accommodate both customers and
our team members.
Our COVID-related sick rates have been consistent over the past few
days and our crew scheduling team is managing any open crew time.
Question 9. Does American Airlines maintain interline agreements
with other carriers to allow passengers affected by disruptions an
alternate means of getting to their destinations? If not, why not?
Answer. American Airlines is a participant in many interline
agreements with other U.S. and international carriers including but not
limited to our oneworld and codeshare partners. Re-accommodation of
customers is part of these agreements and is routinely used to ensure
customers get to their destinations.
______
Response to Written Questions Submitted by Hon. Brian Schatz to
Doug Parker
Question 1. The Hawaiian Tourism Authority has made available
public service videos to educate the public about being respectful
tourists when they visit Hawaii.*
In what ways are these videos made available to Hawaii-bound
travelers on your aircraft?
Is one or more of these videos mandatory in some form for
in-bound Hawaii travelers using in-flight entertainment?
If not, what hardware, software or policy barriers prevent
the videos from being made mandatory?
Will you commit to making these videos mandatory for all
Hawaii-bound travelers using in-flight entertainment within the
next six months?
*Videos available here: https://www.youtube.com/c/gohawaii
Answer. As the world's largest airline, American Airlines operates
numerous different aircraft across our fleet, and those aircraft
contain a variety of in-flight entertainment systems. Because we
operate both aircraft that have seatback in-flight entertainment
systems and those without, we do not make route specific video
passenger announcements mandatory for our passengers. However, we have
instructed flight attendants on Hawaii-bound flights, using aircraft
with seatback in-flight entertainment systems, to play a short video
describing the plants and animals declaration form the State of Hawaii
requires passengers to complete upon arrival. In November 2021, at the
request of the Hawai`i Visitors & Convention Bureau, we added a 30-
second video from the Malama Hawaii series that now plays immediately
after the video describing the agricultural declaration form.
Question 2. The 2018 FAA reauthorization directed the agency to
establish minimum seat sizes. There was an acknowledgement at the time
that tighter seats and cramped quarters were causing conflicts between
passengers and a potential safety hazard if there was an emergency.
That seems even more important today. Most of the airline industry
opposed the measure and the last administration failed to advance the
rulemaking.
Do you oppose minimum seat size standards?
Do you believe the FAA should finalize regulations on
minimum seat dimensions?
Answer. Safety will always be American's top priority. We supported
the provision you referenced during the consideration of the FAA bill,
and we continue to fully support the FAA's evaluation of seat sizes and
evacuation procedures. We believe any study and evaluation will show
that American's current seat sizes across our various fleets are safe
for the travelling public.
______
Response to Written Question Submitted by Hon. Jacky Rosen to
Doug Parker
Jet Fuel Supply. In July of this year, Reno-Tahoe Airport, the
second largest airport in Nevada, faced a severe shortage of jet fuel
available for aircrafts flying out of the airport. This was a
potentially catastrophic issue that could have adversely impacted tens
of thousands of travelers coming to and from Nevada and risked delays
in vital cargo coming to the state. We have since learned that jet fuel
shipments are based on travel trends from the previous year to decide
how much jet fuel pipeline space they need to purchase in order to meet
current travel demand. But in 2020, demand was artificially low, as we
dealt with an unpredictable global pandemic that completed halted air
travel. As such, the data on air travel trends for 2020 was not a
reliable gauge for predicting air travel demand in 2021, or the jet
fuel necessary to accommodate that demand. Fortunately, my office, in
partnership with the airport and impacted airlines, worked together to
manage the situation. However, we must be better prepared to face
similar situations in the future--it was jet fuel this time, but one
could easily imagine relying on past year's numbers to determine future
demand for staffing, scheduled flights, or supply purchases--
potentially with serious negative effects.
Question. Mr. Parker, would you please briefly discuss what
American Airlines is doing to ensure that you have sufficient jet fuel
supply to meet demand for travel in 2022, which may very well
significantly exceed travel in 2021? And can you discuss how you make
predictions for future air travel demand, generally, given that 2020
was a statistical anomaly?
Answer. As you noted, jet fuel shortages at Reno-Tahoe Airport
(RNO) this summer contributed to concerns over the potential for
operational disruptions at the airport. The situation required numerous
airlines to employ measures such as tankering, technical stops and
outright flight cancellations to reduce jet fuel uplifts and conserve
limited inventory at RNO. However, it should be noted that the
situation at RNO this summer did not occur because airlines failed to
procure enough fuel. Rather, the challenge was attributable to a lack
of available capacity for jet fuel shippers on the Kinder Morgan North
Line to get the fuel that we did have to the right location amid supply
chain challenges.
The primary challenge in RNO is pipeline allocation, which is
derived by prior 12-month shipping history. Due to a dramatic decrease
in aviation operations because of COVID-19, much of jet shippers' line
space was shifted to gasoline and diesel shippers as demand for road
fuels did not fall as dramatically as demand for air travel. The
challenge in RNO was further compounded by a lack of alternatives to
get fuel into the airport. This is attributable to the national truck
driver shortage, which was further amplified by intense forest fire
fighting that also needed fuel trucked in. Additionally, our ability to
tanker fuel to RNO was hampered by the extreme heat and high altitude
of the location.
We recognized the significance of this issue even before the busy
summer travel season and the aviation industry was engaged with FERC to
find solutions to the allocation impacts on airlines in an effort to
restore pipeline capacity to pre-pandemic levels. However, such efforts
ultimately did not come to fruition. We have asked FERC to improve
transparency on basic, non-proprietary statistics about the types and
volume of product moved on a given pipeline, which would dramatically
improve our ability to predict pipeline fuel supply shortfalls, and
plan accordingly. Additionally, we continue to seek a restoration of
pipeline capacity and improvement in the availability of trucks and
truck drivers to transport fuels to prevent the same situation from
happening again.
______
Response to Written Questions Submitted by Hon. Raphael Warnock to
Doug Parker
Crew Safety. The Payroll Support Program has been a critical tool
for protecting airline workers' jobs throughout the pandemic. Most of
the airlines testified to the various policies and programs they have
implemented to help protect passengers and prevent further spread of
the coronavirus. However testimony was also given about the terrible
harassment and violent abuse airline crew members have faced at an
alarming rate since the beginning of the pandemic. The Federal Aviation
Administration and Department of Justice, under the Biden
Administration have stepped up enforcement and prosecution efforts
related to unruly passengers.
Question. What is your airline doing to protect your employees'
physical health and wellbeing--not just against COVID, but unruly
passengers, as well?
Answer. As you know, customer misconduct incidents have increased
over the last 18 months. And while these incidents are decreasing now,
even one is too many and we are continuing to do everything we can to
mitigate them. Since this disturbing trend began, we have taken
numerous steps to protect our team members and lessen the severity and
number of these incidents, including:
Enforcing a zero-tolerance policy against harmful or
threatening behavior toward our team members and placing any
customer who violates this policy on our Internal Refuse List,
ensuring they're never allowed to fly with American Airlines
again;
Ending the sale of alcohol in the main cabin;
Working with our airport, law enforcement and union
partners, as well as government agencies, to find ways to
mitigate passenger misconduct on the ground and in the air,
including by discouraging vendors from permitting ``to go''
alcohol sales in airports;
Encouraging participation in TSA's Crew Member Self Defense
Program for interested crewmembers;
Staying in regular contact with state and local law
enforcement agencies, the FAA, FBI and TSA to ensure incidents
are followed through on and properly prosecuted; and,
Hosting town halls throughout our network to hear team
member concerns and share updates.
Voluntary Separation Programs & Rebuilding the Workforce. The
Payroll Support Program was able to keep hundreds of thousands of hard
working Americans--including many Georgians--on the job throughout the
pandemic. However, no one Federal program could make up for all the
losses or solve all the challenges inflicted upon the airline industry
by the pandemic. And airlines had to adjust. As a result, we saw the
airline workforce reduced significantly--mostly through voluntary
separation and early retirement packages offered by airlines.
Question 1. Could you expound on the need for these programs and
how you worked with your employees to implement them?
Answer. At the outset of the COVID-19 pandemic, American Airlines
had to act quickly to adjust to dramatically lower demand for air
travel. These changes included significantly reducing our schedule
beginning in March 2020 and continuing into the summer. The company
considered different options that would help adjust to lower demand and
to do what's best for team members.
From the time the CARES Act was signed in March 2020, we had a
stated goal of avoiding furloughs because we believed demand for air
travel would steadily rebound as the impact of COVID-19 dissipated.
That unfortunately was not the case. In June 2020, our passenger
revenues were more than 80 percent lower than June 2019. And with
infection rates increasing and several states reestablishing quarantine
restrictions, demand for air travel was slowing again.
We knew American would be smaller moving forward and we had to
right-size all aspects of our airline to adjust to that new reality.
Although we did not want to lose any team members, we created generous
programs--all of which were voluntary--intended to help offset as many
frontline furloughs as possible. We worked with our union partners to
offer both (a) packages to encourage early retirements for those to
whom it made sense; and (b) packages to encourage temporary leaves for
those to whom it made sense. We asked everyone to carefully consider
the voluntary options as they thought about what was best for their
families.
Question 2. How did these programs allow you to invest in and
support your employees?
Answer. These programs allowed us to care for as many team members
as possible in a manner that met their individual needs. It also meant
that we would be in a position to have the team necessary to ramp up
operations as soon as demand for travel returned. As travel rebounded
quicker than anticipated, it necessitated canceling the voluntary
leaves of absence for some of our team members.
Ultimately, these programs and the overwhelming success of PSP mean
that we now have the team we need to operate an ambitious schedule that
matches consumer demand.
Question 3. As air traffic has begun to bounce back, what are your
plans for rehiring and rebuilding your workforce?
Answer. Our team is the lifeblood of our airline, and in 2021 we
were proud to welcome back team members who were furloughed when the
PSP lapsed. We were also pleased to share with the committee that
American hired more than 16,000 new team members across all our
workgroups last year. This included more than 1,350 pilots, over 1,600
flight attendants, an additional 1,000 tech ops and maintenance
professionals, and more than 2,000 reservations agents. Early
indicators suggest that demand for travel remains strong, which is why
we've set a target of hiring an additional 18,000 team members in 2022.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Gary C. Kelly
Payroll Support Program Impact. Congress created the Payroll
Support Program to protect the airline industry's workforce, support
the continuity of safe and essential travel, and ensure the industry's
ability to remain viable to meet future consumer travel demand. The
Department of the Treasury disbursed a total of $54 billion to
passenger airlines, across three rounds of PSP, to provide critical
relief during the pandemic.
We know that PSP made a difference in December 2020, when Congress
extended the program, because airline recipients had to recall
thousands of employees who were furloughed after September 30, 2020
when the first round of PSP ended.
According to the Bureau of Transportation Statistics (BTS), between
October 2020 and February 2021, major airlines hired or brought back
28,179 workers. These workers came back just in time for the air travel
rebound, which took off in March 2021. As of September 2021, airlines
were approximately 8.8 percent below their pre-pandemic employment
levels according to BTS data. I am interested in learning from your
airline on how the Payroll Support Program impacted your workforce and
operations. Mr. Kelly, Southwest received $7.2 billion in PSP funds.
Question 1. If not for PSP funding, what do you think the status of
your workforce would look like today? Would your airline have been able
to survive the pandemic, absent PSP funding?
Answer. At Southwest Airlines, the Payroll Support Program (PSP)
helped preserve our Employees' jobs, pay, and benefits, protecting the
livelihoods of thousands of airline workers. If PSP funding had not
become available, we would have faced the likely potential of
furloughing thousands of Employees and cutting the pay of many
thousands more--two actions we have never done in our 51-year history.
Southwest would have survived the pandemic without PSP--thanks in part
to having record cash-on-hand, low debt, and investor-grade credit--but
our Company would have been a lot smaller in terms of Employee
headcount and the number of cities served. PSP allowed us to not only
maintain service at every one of our domestic airports, but we were
able to add 18 new airports in 2020 and 2021 because the Company had
the people and the planes to serve new markets. We also implemented
voluntary, temporary paid leave programs for our Employees, with
reduced flight schedules to align supply with the reduced demand for
air travel. PSP allowed us to build programs that could also support
quick recall and training of Employees to aid in our business recovery.
Question 2. Since receiving PSP funding, do you believe your
airline is in a good position to meet current consumer travel demand?
Answer. As explained above, in addition to the critical support
provided by PSP, Southwest Airlines entered the pandemic in a strong
financial position and responded with aggressive measures to keep the
company solvent. These actions allowed us to maintain service at every
domestic airport we served before the pandemic. In addition, in the
last 22 months, we launched service to 18 new airports, meeting rising
consumer demand for adventure and outdoor travel as well as driving
competition in the market. We have also continually made adjustments to
our schedule to better align our resources, hire more people, and
prepare for continual challenges in this fluid environment to better
serve our Customers.
Airline Relationships with Labor. Congress focused on sustaining
the airline workforce and ensuring continuity of operations during a
time of intense uncertainty.
From information shared with the Committee, it appears that those
airlines and unions that worked together found solutions to COVID-19
challenges, from addressing new health risks in the workplace to
ensuring currency and qualification of a highly-skilled workforce.
Question. How has your airline collaborated with unions to
establish policies to meet workforce needs in response to the COVID-19
pandemic? How did your airline's relationship with relevant labor
unions enhance your ability to meet operational needs and the rise in
air travel demand?
Answer. Southwest Airlines is in near-daily contact with our unions
to work through the numerous unique issues this pandemic has caused. We
have strong, productive working relationships with each of the eight
unions who represent 12 Employee workgroups. During the pandemic we
have implemented Company policies and negotiated a number of
contractual changes with our unions to further safety, wellness, and a
successful operation. These include agreements on quarantine leave and
pay policies, changes to our onboard cleaning procedures, and many
others.
Like many industries, Southwest is faced with the challenge of
retaining and hiring enough staff to keep up with demand and the high
rates of absenteeism that each of these COVID-19 spikes can cause. We
have worked with our unions to address starting pay for a number of our
operational positions in order to present desirable career
opportunities in a very competitive hiring environment. Additionally,
to help make the holiday travel season successful, our unions partnered
with us on multi-layered incentive plans, allowing our airline to be
better staffed during a very high-demand time of the year.
Contract Workforce Role and Staffing. At the height of the
pandemic, airport and aviation workers stood with airlines and called
on the Federal government to make sure our national air travel system
remained strong, aviation jobs were protected, and that airlines were
ready to meet consumer travel demand.
For decades, airlines have outsourced essential service airport
jobs like cabin cleaners, wheelchair attendants, security officers, and
baggage handlers to contractors at major airports across the country.
Contract workers play a critical role in our aviation system and
continue to work hard on the frontlines of the COVID-19 pandemic to
keep travelers safe.
The pandemic has exposed problems with how domestic travel
disruptions are being addressed and how such response affects the
airline industry's workforce. For example, an August 2021 SEIU survey
conducted in Houston to assess the experiences of contracted airport
workers detailed incidents of short staffing and mandatory overtime
policies causing workforce fatigue, which has created a strained
operational environment.
Question. How will your airline ensure that the contracted
workforce, which provides such critical services, is stable, well-
trained, and has adequate staffing levels needed to respond to
operational challenges?
Answer. The challenges you referenced are not limited to the
airline industry. We have witnessed staffing shortages throughout the
travel and hospitality sectors. This includes hotels and airport
concessions, as well as airport and airline contracting services. While
the majority of our workforce is comprised of full-time and unionized
Southwest Employees, we have a network of suppliers that manage various
lines of business. We are working with our suppliers to make sure they
can perform the contracts to our standards and to our Customers'
standards. This includes in many cases our suppliers raising their wage
rates well above the Federal or state minimum wage.
Overall, we are pursuing a myriad of solutions in an effort to
overcome the staffing challenge, including:
Supplier Stability
Ensuring our suppliers' pay rates are competitive and
sustainable (adjustments due to minimum and living wage changes
and market challenges)
Empowering multiple teams (at both the local and corporate
levels) to review contracts and manage relationships
The ability for Southwest to request financials from
suppliers as needed
Having a performance plan in place. If a supplier is not
performing, they will be placed on probation, and if they
continue to have poor performance, they would be replaced
Training
Requiring third-party suppliers to successfully complete
Southwest and Federally required training (initial and
recurrent)
Requiring below-the-wing suppliers to receive on-the-job
training prior to attending initial training class
Tracking training compliance in our Vendor Management System
and our internal training management system
Dedicating a Team of Southwest Employees to oversight of
contracted workforce training
Staffing
Requiring staffing updates on a regular basis during peak
operational timeframes and holding regularly scheduled meetings
with suppliers to better understand any specific challenges
that they may be having as well as what is being done to
address them
Holding operational calls with suppliers and their corporate
representatives to address challenges and request action plans
Airline Workforce Recall. The Committee is aware that, in 2020,
airlines took varying approaches to temporarily reduce the number of
active employees on their payroll to avoid involuntarily furloughing or
laying off employees as they experienced growing pandemic-related
financial difficulties. Many airlines offered employee programs to
incentivize voluntary separations, including voluntary furloughs, early
retirements, and temporary leaves of absences.
Airlines that extended voluntary leave options to their employees
reserved the right to recall such employees from leave when necessary.
To the Committee's knowledge, most airlines started broad workforce
recall efforts in the first quarter of 2021, employing particularly
concentrated efforts to bring back employees in January and February
2021. However, recalling employees has not been an easy process as
airlines have reported higher workforce shortages and rates of
absenteeism in certain workgroups, leaving the airlines more ill-
equipped to meet consumer travel demand.
Question 1. Has your airline experienced challenges in recalling
your workforce? If so, did your airline anticipate such issues in
recalling employees from leave before initiating your recall efforts?
Please describe the scope of the workforce recall challenges your
airline faced in 2021.
Answer. As explained below, there are hurdles in quickly recalling
certain Employees who require extensive and specialized training, with
our Pilots (Flight Operations) being the one work group that requires
the most lead time and coordination. As mentioned in Southwest's August
2, 2021 letter to Senator Cantwell, there were two issues we did not
foresee a year ago, which are related to the Employee recall issue.
First, the rapid increase in consumer demand beginning around June of
2020 and thus the need to recall more Employees at a faster rate than
anticipated. And second, higher-than-normal rate of Employee
absenteeism since June of last year, which requires more Employees to
operate the schedule (i.e., more Employees per flight on average) than
it did prior to the pandemic.
In Southwest's Flight Operations department, there were known
training resource constraints that limited the rate of recalls for our
Pilots. Pilots were metered in from June 1, 2021 through January 1,
2022, and the last remaining group will be recalled effective February
1, 2022. Requalifying Pilots is a lengthy process that can take up to
two months because of the recency requirements involved in maintaining
FAA-required currency. For those Pilots who participated in our
Extended Time Off (``ExTO'') programs, many lost their currency which
requires a training curriculum of ground school and flight training
upon recall to active status. Upon the return of Customer demand in
early 2021, we acted quickly to become adequately staffed again and
began recalling Pilots with a planned recall process that involved both
voluntary and involuntary recall actions. Pilots voluntarily wishing to
return before their scheduled ExTO return date were recalled before
those not wishing to return in order to best serve our People while
supporting the restoration of air service.
For Southwest's Inflight department, we followed our process for
recalling Flight Attendants. Six-month ExTO Flight Attendants came back
in March 2021 after six months of the ExTO program were completed. All
12-and 18-month ExTO Flight Attendants were recalled early to support
the summer operation. They were notified of this in spring 2021 and
were officially returned on June 1, 2021. The 12-month ExTO program was
designed for Flight Attendants to have returned in September 2021, and
the 18-month program was designed for them to return in March 2022.
Question 2. Has your airline's workforce fully returned as of
January 1, 2022? How did the status of your workforce's recall from
voluntary leave programs affect your airline's ability to meet consumer
air travel demand in 2021?
Answer. We had 244 Employees still on ExTO as of January 1, 2022.
Of those, 115 Employees returned to work on January 2, 2022, leaving
129 on ExTO.
The vast majority of these Employees are Pilots. All Pilots have
now been notified of their recall with the last 125 Pilots returning
effective February 1, 2022. We expect Pilots returning on February 1,
2022 to enter into requalification training and the vast majority to
integrate within our operation by March 31, 2022. A limiting factor on
our ability to train more Pilots is the supply of Flight Instructors.
The current training time from hiring to completion of training for a
Flight Instructor is just over six months.
For Inflight, no Flight Attendants remained on ExTO after June 1,
2021.
Airline Operational and Scheduling Data.
Question 1. For the months of October, November, and December 2021,
please provide the number of flights your airline operated, the number
of flights cancelled, the number of flights delayed more than 15
minutes, the number of flights delayed more than 90 minutes, and the
number of flights delayed more than six hours.
Answer.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Question 2. For the month of January 2022, please provide the
number of daily flights your airline operated, the number of flights
cancelled, the number of flights delayed more than 15 minutes, the
number of flights delayed more than 90 minutes, and the number of
flights delayed more than six hours.
Answer.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Question 3. For the months of October, November, and December 2021,
and January 2022, please detail any preemptive schedule changes that
your airline made, including cancelling flights or changing the
departure time by more than one hour.
Answer. As is the normal course of business for airlines, we adjust
our flight schedules on a regular basis to address a variety of issues.
Airline Employment and Absenteeism Levels.
Question 1. For the months of October, November, and December 2021,
please provide the number of full-and part-time employees employed by
your airline.
Answer.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Question 2. For the months of October, November, and December 2021,
and January 2022, please detail any significant absenteeism problems
experienced by your airline.
Answer. Southwest Airlines has experienced higher rates of
absenteeism, not unlike many companies during the pandemic, and the
reasons for the absenteeism are varied. Despite the challenges we have
faced, our Employees continue to demonstrate integrity and pride in
their work. They are our greatest strength. In response to the added
pressures that our Employees now operate under, we have offered several
different pay incentives over the past few months.
This includes paying time-and-a-half for original trips and double-
time for extra trips during the week of Thanksgiving, the last two
weeks of December, and continuing through February 8, 2022, with
further extensions possible.
For Inflight, absenteeism rates are higher than historical rates.
We continue to plan more Flight Attendant Reserves to account for this
increase in the trends. We have also experienced higher rates of
Inactive Flight Attendants (i.e., Flight Attendants who are not bidding
for work, mostly due to long-term medical leaves).
Pilot Training and Requalification Delays. In early 2021, airlines
started broad efforts to recall high numbers of employees from
voluntary leaves of absences. Unlike other workgroups, pilots require
significant flight training in order to meet qualifications to safely
fly. With the rapid surge in air travel demand from the spring to the
summer, the need to have pilots trained on time to fulfill airline
schedules was crucial for airline flight operations.
The Southwest Airlines Pilots Association (``SWAPA'') expressed
concerns to airline management in early 2021 about having enough pilots
to carry out Southwest's 2021 flight schedule. SWAPA recommended
recalling flight crews early for training to get them requalified to
fly again before peak summer travel periods. SWAPA warned in July they
anticipated it would take until August for recalled pilots to get
requalified. Southwest experienced notable operational disruptions in
June and July 2021. In discussions with the Committee, Southwest
admitted it took longer than anticipated to recall pilots from leave
and get them requalified through flight simulator training and other
means.
Question 1. Given that it takes an extended period of time for a
pilot to be retrained and requalified in the aircraft they are
designated to fly, what were some of the reasons that these pilot
training delays occurred?
Answer. Recall efforts for Southwest Pilots began as soon as
airline industry demand began to recover. Training resources were added
as quickly as possible by initiating a recall of all Flight Instructors
on voluntary leave, beginning the hiring process of additional Flight
Instructors, and training additional Check Pilots.
While a number of factors--including facilities, devices, and
personnel--limit the amount of training that can be conducted in any
given month, our ability to train has been particular limited by the
supply of our Flight Instructor workgroup. Flight Instructors conduct
the majority of classroom and simulator training. As a whole, the group
has been near 100 percent utilization every month since the start of
2021.
As with employees from many work groups, Flight Instructors
participated in the Company's voluntary separation program (``VSP'')
and ExTO. As such, we were required to build our Flight Instructor Team
which includes hiring and training a new group of employees. The work
is ongoing today and we are in the process of more than doubling the
Flight Instructor Team. The current training time from hiring to
completion of training for a Flight Instructor is just over six months.
In the meantime, the constraints on our Flight Instructor Team requires
us to balance our load of other Training demands between recurrent
training (Continuing Qualification), Flight Instructor New Hire,
Extended-range Twin-engine Operations Performance (ETOPS), FAA required
737-MAX8 Return to Service training, and Requalification for Pilots
returning from ExTO to have available Pilots for the operation.
Question 2. For pilots and other workgroups, what steps are you
taking to plan for and ensure enough time to properly train current and
new employees? How have lessons learned from the pandemic informed how
you conduct workforce training now?
Answer. With the onset of the COVID-19 pandemic, SWA University
(``SWA U'') leveraged all training modalities--classroom training,
online learning, on-the-job training, and virtual training--to
accomplish required training. Because regulations dictate most of our
training requirements, we constantly monitor compliance and proficiency
reports, partnering with our scheduling teams to prioritize training
scheduling when opportunities are identified. The pandemic also helped
reinforce the importance of running effective and efficient programs to
enable Employees to be competent and confident. We continue to focus on
leveraging all training modalities to match the evolving needs of our
Employees.
In Southwest's Flight Operations department, we track available
Employee time, resources, and required training to staff for the
training load. In addition, our recordkeeping system is frequently
checked by the FAA to confirm the training was conducted and signed off
properly. The FAA also attends our classes as an oversight function
utilizing a Data Collection Tool. Lessons learned from the pandemic
include rethinking the hiring pipeline and adding curriculum/days to
the requalification course. These changes were very successful and
continue to be used. Southwest's Tech Operations department, which
includes our aviation mechanic workforce, did not defer or extend
Training Requirements through the pandemic, so the hourly commitment to
training did not change. Our Employees in Tech Ops maintained their
training currency and qualifications so Southwest could continue to
support our Customers and Flight Operations. In regard to lessons
learned, we are now better prepared to manage the delivery of our
training programs more effectively, as we can now deliver training
virtually and are equipped to quickly add Instructors and/or increase
class capacity to fulfill our training requirements, with an emphasis
on meeting regulatory training demands first.
Airline Cancellations and Staffing. Following the Biden
Administration's vaccine rollout in the first quarter of 2021, consumer
travel demand began to rebound. On January 1, 2021, less than 2 percent
of Americans had received one vaccine dose, and on that same day, only
805,990 travelers passed through TSA security checkpoints.
But on March 25, 2021, when more than 30 percent of Americans had
received at least one dose, over 1.4 million travelers passed through
TSA checkpoints. This uptick encouraged airlines to ramp up projected
flight schedules for summer travel.
American was one of a few airlines that set aggressive schedules to
capture this demand. As one aviation data analyst observed, airlines
acted ``very bullish on domestic opportunities,'' and were ``way more
eager to be risk tolerant than they would [have been] pre-pandemic.''
Some airlines struggled to provide staffing required to meet the
returning demand, however, and were forced to cancel or delay thousands
of flights during the peak travel periods over the summer. From March
to the end of September, for example, Southwest cancelled over 13,000
flights. In these cases, bad weather was exacerbated by staffing
shortages, exposing a brittle system susceptible to even minor hiccups.
And of course, when flights are cancelled it is consumers that are the
ultimate victims.
Operations did get better. The airline industry, including
Southwest, has performed much better, particularly over the
Thanksgiving holiday period when passenger volumes reached 90 percent
of pre-pandemic levels. TSA set COVID-era record of 2.4 million
passengers screened on November 28, yet we didn't hear any reports of
mass cancellations and delays, or hours-long lines.
In fact, the airlines hit an on-time performance rate of 85 percent
during the Thanksgiving period, the best since 2017. Southwest had only
12 cancellations the entire Thanksgiving week.
Question 1. In your view, did Southwest have enough staff to meet
the return of air travel demand this year?
Answer. Yes, we operated well into June 2021 fully staffed, as
leisure demand ramped up quickly reaching over 90 percent load factors
in many of our airports. We entered the summer with a strong
operational strategy designed with appropriate summer staffing levels
based on historical methodologies to operate our published schedule.
For example, the ratio of crew per aircraft in service--both Pilots and
Flight Attendants--was well within the acceptable and historical norms
for running an on-time operation. However, like many employers in the
travel/hospitality industries and the economy at large, lower labor
force participation--in terms of both people leaving the workforce
(aka, the ``Great Resignation'') and higher absenteeism/sick rates for
current workers--and increased competition from other employers have
collectively made it challenging to meet personnel requirements. In
response, we are pursuing short-term strategies to meet present and
future growth, including hiring more than 5,000 new Employees in 2021.
We are making additional investments to attract and retain talent,
including our recent decision to further raise our starting hourly pay
rates to a minimum of $17 per hour (plus health, leave, and retirement
benefits). We are currently in discussions with our workgroups to enact
this increase in pay rates.
Question 2. What did Southwest and the industry as a whole do
differently that enabled travel during the Thanksgiving holiday to go
so smoothly?
Answer. During the Thanksgiving Holiday period, Southwest Airlines
was able to offer reliable operational performance primarily due to the
favorable weather conditions across the country. Additionally, our
Incentive Program helped improve the staffing environment for Pilots,
Flight Attendants, and Airport employees. All of this allowed our On-
Time Performance to jump to an impressive 88.3 percent while enplaning
over 3,000,000 passengers and only cancelling 12 flights.
Consumer Refunds. In 2020, DOT received 29,687 refund complaints
against U.S. airlines, a 4,634 percent increase over 2019. And while
the problem has started to get better, DOT still received 5,129 refund
complaints in September 2021, well above the 627 filed against U.S.
airlines for all of 2019.
The Department of Transportation (``DOT'') has a rulemaking in the
Unified Agenda which says that it is looking at defining what
constitutes a ``cancellation'' and a ``significant delay''--the two
things that entitle a customer to a refund. Currently, DOT lets
airlines make their own determinations as to whether or not a flight is
cancelled, and the number of hours that account for a ``significant''
delay.
Question 1. In your view, how many hours does a flight have to be
delayed before a passenger is entitled to a refund?
Answer. Southwest distinguishes between a significant delay (which
we view as close-in to the date of departure) and a significant
schedule change (which we consider to be an itinerary change that is at
least 3 days prior to departure). Southwest applies a common sense,
pro-consumer approach in each scenario.
Like DOT, Southwest evaluates the significance of each delay or
schedule change on a case-by-case basis to determine whether to make a
cash refund available in addition to the option to rebook or receive
travel funds. This gives our Employees flexibility to exercise good
judgment and do right by our Customers. Our goal is to be flexible and
responsive insofar as the Customer Service we provide.
In the future, Southwest may revise our Contract of Carriage to
define these terms. However, as DOT has recognized, each situation is
unique, and it can be advantageous to the Customer to not have specific
definitions.
Question 2. If the reluctance to issue refunds was just an issue of
preserving cash on hand, then why were refund complaints still so high
in 2021?
Answer. Southwest Airlines was not reluctant to issue refunds to
Customers who qualified for refunds. Of the $3.4 billion in flight
credits that were originally issued or extended following the onset of
the COVID-19 pandemic, as of September 30, 2021, only $1.4 billion in
Customer flight credits remain available to redeem for future travel,
with a September 7, 2022, expiration date. Customers continued to
redeem flight credits throughout fourth quarter 2021 and continue to do
so into 2022.
Southwest has previously and will continue to comply with all
regulatory refund requirements as defined by the DOT Aviation Consumer
Protection guidelines or implementing rule 14 CFR Part 374. Southwest
has not changed its refund policies in recent years, other than to
extend the expiration date for unused flight credits during the
pandemic.
The majority of refund complaints are from Customers who purchased
non-refundable itineraries that the Customers chose to not utilize
(i.e., the airline operated the flight and the Customers made the
decision to not travel) who were given flight credits but not cash
refunds. Southwest does not control when or how often a Customer files
a DOT complaint. Customers may still file a complaint when the Company
has operated and acted in accordance with DOT guidelines. That said,
Southwest has had the lowest ratio of Refund Complaints per 100,000
enplaned passengers out of all the other Marketing Carriers in 2020 and
2021.
______
Response to Written Questions Submitted by Hon. Richard Blumenthal to
Gary C. Kelly
Compensation for Consumers. Since March 2020, flight delays and
cancellations have disrupted plans for countless travelers--and the
most recent cancellations left people stranded in airports and away
from family during the winter holiday season. Senator Markey and I have
repeatedly called for full cash refunds for impacted consumers. But
U.S. airlines have been slow to provide credits and legally-required
refunds and have hidden behind vague ticketing policies. Media reports
indicate that airlines are currently holding approximately $20 billion
worth of travel vouchers and unrefunded ticket values.
Question 1. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that Southwest Airlines currently owes consumers? Please provide the
amount of each value mechanism as well.
Answer. Southwest Airlines does not have any unfulfilled refund
requests that fall outside of the parameters defined by the Department
of Transportation Aviation Consumer Protection guidelines or
implementing rule 14 CFR Part 374.
Of the $3.4 billion in flight credits that were originally issued
or extended following the onset of the COVID-19 pandemic, as of
September 30, 2021, only $1.4 billion in Customer flight credits remain
available to redeem for future travel, with a September 7, 2022,
expiration date. Customers continued to redeem flight credits
throughout fourth quarter 2021 and continue to do so into 2022.
In summer 2020, in order to provide additional flexibility to
Customers who hold unredeemed flight credits, the Company significantly
relaxed its pre-COVID-19 policies with regard to the time period within
which these flight credits can be redeemed, which is typically twelve
months from the original date of purchase. Specifically, for all
Customer flight credits (1) that expired between March 1, 2020 and
September 7, 2020, and (2) were created because the Customer cancelled
a flight between March 1 and September 7, 2020, the Company extended
the expiration date to September 7, 2022--an extension of at least two
years.
Question 2. Does Southwest Airlines gain revenue (such as from
interest) from the value of unused travel vouchers that are currently
held in company accounts? If so, how much revenue has Southwest
Airlines collected from the funds in your accounts that are linked to
unused travel vouchers since March 2020?
Answer. No, Southwest Airlines does not gain revenue (such as from
interest) from the value of unused travel vouchers or Customer flight
credits. Southwest does not hold vouchers or flight credits in any
interest bearing account. To be clear, Southwest does earn interest on
the cash that Customers have provided to the Company for travel
bookings.
Southwest invests cash on hand primarily in short-term U.S.
government obligations and government focused money market funds (which
invest in U.S. government obligations). Per the most recent public SEC
filing, the Company's interest income on its investment balances was
minimal.
Question 3. If Southwest Airlines still owes consumers under
Question 1, by when will it have completed issuing its refunds? What is
the reason for this delay?
Answer. Southwest Airlines does not have any unfulfilled refund
requests that fall outside of the parameters defined by the Department
of Transportation Aviation Consumer Protection guidelines or
implementing rule 14 CFR Part 374.
Question 4. Southwest Airlines reportedly cancelled more than 100
flights in the last week. How many consumers were impacted by these
cancellations?
Answer. Of the roughly 22,500 flights scheduled to operate from
December 19-25, 2021, only 110 flights (or 0.0049 percent of Southwest
flights) were canceled--primarily due to winter weather. These
cancellations impacted approximately 0.47 percent of our Customers
traveling that week.
Southwest completed over 98 percent of our scheduled service from
December 23-29, 2021, and we completed over 88 percent of our scheduled
service from December 30, 2021, through January 5, 2022.
For the Customers who were affected by bad weather-related flight
disruptions, Southwest offered rebooking at no cost, vouchers to offset
incidental travel expenses, and refunds upon request for any unused
portions of itineraries.
Question 5. Will Southwest Airlines commit to providing full cash
refunds to all impacted consumers? If not, explain why not and what
compensation you will issue to consumers.
Answer. Southwest Airlines has previously and will continue to
comply with all regulatory refund requirements as defined by the
Department of Transportation Aviation Consumer Protection guidelines or
implementing rule 14 CFR Part 374.
For Customers impacted by Southwest Airlines-initiated flight
cancellations, Southwest works with each Customer to book alternate
flights or issue a flight credit for the value of the fare paid for
unused travel. We also provide a refund to the original form(s) of
payment upon the Customer's request if they choose not to be rebooked,
were unable to travel, or did not choose a flight credit. Gift card
holders are provided a flight credit.
Question 6. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that Southwest Airlines owe consumers for these cancellations? Please
provide the amount of each value mechanism as well.
Answer. For Customers impacted by Southwest Airlines-initiated
flight cancellations, Southwest works with each Customer to book
alternate flights or issue a flight credit for the value of the fare
paid for unused travel. We also provide a refund to the original
form(s) of payment upon the Customer's request if they choose not to be
rebooked, were unable to travel or did not choose a flight credit. Gift
card holders are provided a flight credit.
Southwest has previously and will continue to comply with all
regulatory refund requirements as defined by the Department of
Transportation Aviation Consumer Protection guidelines or implementing
rule 14 CFR Part 374.
Question 7. By when does Southwest Airlines plan to have fully
reimbursed consumers?
Answer. Southwest Airlines is well within the Department of
Transportation defined guidelines for issuing Customer refunds, and the
Company will continue to comply with all regulatory refund requirements
as defined by the Department of Transportation Aviation Consumer
Protection guidelines or implementing rule 14 CFR Part 374.
For Customers impacted by Southwest Airlines-initiated flight
cancellations, Southwest works with each Customer to book alternate
flights or issue a flight credit for the value of the fare paid for
unused travel. We also provide a refund to the original form(s) of
payment upon the Customer's request if they choose not to be rebooked,
were unable to travel, or did not choose a flight credit. Gift card
holders are provided a flight credit.
Question 8. Please explain the causes of the recent flight
cancellations as well as the steps that Southwest Airlines is
implementing to prevent a repeat of these cancellations.
Answer. The winter storms before Christmas through the end of the
calendar year caused significant operational challenges at several
commercial airports and thus our entire network. Thankfully, the
weather-related challenges were not long-lived nor did they cause
extended service outages. That said, we have had to work around some
recurring bad weather patterns after New Year's Eve/Day.
On top of the winter weather, the impact of the COVID-19 pandemic
on Employee retention, recruitment, and absenteeism remain incredibly
challenging. Southwest's priority throughout the pandemic has been to
staff all areas of our operation appropriately. Since the surge in
Customer demand beginning in the summer of 2021, our People Department
has aggressively hired new Employees, with over 5,000 new hires in 2021
and a goal of another 8,000 Employees in 2022. We have worked to
improve our hiring process, as well as shorten the time it takes to
clear background. We also raised our minimum pay to $15/hour, began
offering Employee referral bonuses, and are holding hiring events
across the country.
Southwest is not immune to ``The Great Resignation'' and the
resulting nationwide labor shortages. Our Operational Teams partnered
with our Network Planning Department to rein in our capacity plans so
they mirror our current staffing environment, specifically reducing the
peak days in our flight schedule for November and December 2021.
On top of winter weather and pandemic-related challenges, the
potential disruptions caused by the Federal government's failure to
approve the rollout of 5G in the C-band frequency in a way that does
not cause aviation safety concerns or result in flight restrictions at
airports could make an extremely challenging operating environment all
the more difficult.
Question 9. Does Southwest Airlines maintain interline agreements
with other carriers to allow passengers affected by disruptions an
alternate means of getting to their destinations? If not, why not?
Answer. Southwest has long had resources and policies in place to
minimize the inconvenience to our Customers when significant
disruptions occur. This includes reaccommodating a Customer on another
flight, issuing flight credits, or refunding the unused portion of the
ticket. We also empower our Employees to make decisions to deploy these
tools based on their best judgment to minimize inconveniences to
Customers. As a general rule, for passengers affected by controllable
disruptions, Southwest may purchase travel on other carriers when
passengers are not scheduled to arrive within 24 hours and no
availability exists on our flights.
Even when disruptions impact our On-Time Performance (OTP), lower
OTP does not necessarily translate into higher numbers of displaced
Customers and therefore a lower completion factor. It only means
flights ran late so Customers could still get to their intended
destinations. The table below provides data to that effect, using the
last week of December as an illustrative example:
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
______
Response to Written Questions Submitted by Hon. Brian Schatz to
Gary C. Kelly
Mandatory Public Service Videos. The Hawaiian Tourism Authority has
made available public service videos to educate the public about being
respectful tourists when they visit Hawaii.
Question 1. In what ways are these videos made available to Hawaii-
bound travelers on your aircraft?
Answer. At Senator Schatz's request and in support of the Hawaii
Tourism Authority (HTA), Southwest includes these HTA videos in pre-
trip e-mails sent to our Hawaii-bound Customers. We periodically review
and update the content of these e-mails as we strive to provide concise
and manageable pre-trip messages, particularly given the need to
communicate Hawaii-related restrictions during the COVID-19 pandemic.
Question 2. Is one or more of these videos mandatory in some form
for in-bound Hawaii travelers using in-flight entertainment?
Answer. The HTA videos are included among our inflight
entertainment options (i.e., movies, on-demand TV shows, and live TV),
which are completely free to Customers. Customers are able to view
these entertainment options at their discretion using their personal
devices and headphones. Therefore, use of the in-flight entertainment
system is entirely voluntary.
Question 3. If not, what hardware, software, or policy barriers
prevent the videos from being made mandatory?
Answer. Southwest provides free in-flight entertainment to all
Customers via their devices. We choose not to include seat-back screens
on any of our aircraft because they add weight (which creates
additional fuel burn and emissions), increase costs (which are then
passed on to Customers), and add complexity to aircraft maintenance.
Without seat-back screens, we cannot show mandatory videos. Also, our
aircraft that serve the Hawaiian Islands (including our interisland
service) are not limited to Hawaii flights. These aircraft operate
throughout our national and international network, and the in-flight
entertainment system cannot be adjusted based on the route that a
particular aircraft is serving on a particular date.
Question 4. Will you commit to making these videos mandatory for
all Hawaii-bound travelers using in-flight entertainment within the
next six months?
Answer. We will continue to share these videos via our pre-trip e-
mails to our Hawaii-bound Customers. Our in-flight entertainment system
is accessed voluntarily and therefore does not support mandatory
videos.
Minimum Seat Size. The 2018 FAA reauthorization directed the agency
to establish minimum seat sizes. There was an acknowledgement at the
time that tighter seats and cramped quarters were causing conflicts
between passengers and a potential safety hazard if there was an
emergency. That seems even more important today. Most of the airline
industry opposed the measure and the last administration failed to
advance the rulemaking.
Question 1. Do you oppose minimum seat size standards? Do you
believe the FAA should finalize regulations on minimum seat dimensions?
Answer. Southwest Airlines does not oppose Federal minimum seat
size standards, provided they are based solely on passenger safety (as
the statute prescribes) and rely completely on objective scientific and
data-based reviews and analyses. With that said, we do not believe any
seating configuration among the U.S. airlines is unsafe. For Southwest,
our average seat pitch and widest seat width have actually increased
with our newer planes (i.e., the Boeing 737-800 and 737 MAX-8) as our
older planes (i.e., the 737-700) are being gradually retired and
replaced through our fleet modernization program.
______
Response to Written Questions Submitted by Hon. Raphael Warnock to
Gary C. Kelly
Crew Safety. The Payroll Support Program has been a critical tool
for protecting airline workers' jobs throughout the pandemic. Most of
the airlines testified to the various policies and programs they have
implemented to help protect passengers and prevent further spread of
the coronavirus. However testimony was also given about the terrible
harassment and violent abuse airline crew members have faced at an
alarming rate since the beginning of the pandemic. The Federal Aviation
Administration and Department of Justice, under the Biden
Administration have stepped up enforcement and prosecution efforts
related to unruly passengers.
Question 1. What is your airline doing to protect your employees'
physical health and wellbeing--not just against COVID-19, but unruly
passengers, as well?
Answer. As of December 2021, 93 percent of Southwest Airlines
Employees are vaccinated against COVID-19 or have been granted an
accommodation. We appreciate that our Employees have taken this action
to support the comfort and well-being of Customers and fellow Employees
during the ongoing pandemic. This development does not change the fact
that we continue to encourage all Employees who are able to get
vaccinated against COVID-19, including getting a booster vaccination.
In May 2020, Southwest initiated the Southwest Promise--a series of
measures to protect the physical health and well-being of our Employees
and Customers. As part of the Southwest Promise, we have employed
stringent cleaning practices, such as using electrostatic and anti-
microbial spray treatments in the aircraft cabin; daily cleanings of
the ticket counters, gate hold rooms, and baggage claim areas; and
providing masks and hand sanitizer in airport common areas and
disinfecting wipes in the cabin. As always, Southwest will remain
focused on creating a safe environment for all who travel with us or
come to work--Employees and Customers alike.
With respect to unruly passengers, we protect our Employees in
several ways. When passengers threaten or assault our Employees, we can
ban those passengers from future travel on Southwest. In addition to
summoning law enforcement to respond, we support the arrest and
prosecution of those passengers. In fact, Southwest led the airline
industry's effort to seek greater DOJ involvement in holding unruly
passengers accountable for physical assaults against airline Employees.
Finally, we encourage our Employees to cooperate fully with law
enforcement officers and the judicial system, giving them paid time off
to do so.
Voluntary Separation Programs & Rebuilding the Workforce. The
Payroll Support Program was able to keep hundreds of thousands of hard-
working Americans--including many Georgians--on the job throughout the
pandemic. However, no one Federal program could make up for all the
losses or solve all the challenges inflicted upon the airline industry
by the pandemic. And airlines had to adjust. As a result, we saw the
airline workforce reduced significantly--mostly through voluntary
separation and early retirement packages offered by airlines.
Question 1. Could you expound on the need for these programs and
how you worked with your employees to implement them?
Answer. Southwest Airlines introduced voluntary extended time off
(ExTO) and a voluntary separation program (VSP) in July 2020 with the
goal of aligning staffing to the reduced flight schedules we had that
year and in early 2021. Approximately 15,000 Employees--representing
almost 25 percent of our workforce--volunteered and were approved for
participation in these two programs based on careful consideration of
the facts and forecasts that were available at that time, given the
unpredictable nature of a once-in-a-century global pandemic. When
making those staffing decisions, we also closely assessed our current
and future operational needs, optimal staffing levels by work group,
and the regional distribution to provide a balanced operation. Over
4,200 Employees initially elected to participate in VSP and left the
Company, while roughly 11,000 Employees took varying lengths of ExTO.
We have since recalled those Employees on ExTO, in many cases far
earlier than they had planned on returning to work full time.
Question 2. How did these programs allow you to invest in and
support your employees?
Answer. Under ExTO, we provided Employees with partial income and
full health care and other benefits. Under VSP, we provided generous
separation packages, including health care and other benefits.
Southwest Airlines is known for its commitment to its Employees, and we
have proudly maintained our 50-year history of no involuntary
furloughs, layoffs, or pay cuts throughout the COVID-19 pandemic. We
would not have maintained our proud tradition without the Payroll
Support Program, and Southwest remains deeply grateful for that
critical support during our darkest hour as a Company.
Because we are mindful of the impact working through this pandemic
has had on our People, Southwest launched various Holiday Incentive
Programs for our Customer-facing workgroups to reward those frontline
Employees for their continued hard work in a challenging operating
environment. Our Employees are Southwest Airlines' greatest asset.
Their resilience and resolve have been nothing short of inspirational
during this critical and unpredictable time for our Company, so we do
all we can to invest in them and support them as they do the work of
serving our Customers.
Question 3. As air traffic has begun to bounce back, what are your
plans for rehiring and rebuilding your workforce?
Answer. In 2021, Southwest reached our goal of hiring approximately
5,000 new Employees. For context, we hired a little over 5,200 People
for the entire year in 2019, and that was our last year of full hiring
pre-pandemic. We worked to improve our hiring process, raised our
minimum pay to $15/hour, began offering Employee referral bonuses, and
held hiring events across the country. In 2022, we plan to add at least
8,000 new Employees.
If accomplished, our workforce should exceed 2019 employment levels
by the end of 2022.
______
Response to Written Question Submitted by Hon. Roger Wicker to
Gary C. Kelly
Question. One condition of the Payroll Support Program was that
recipients of the funds were required to continue air service to the
communities they previously served, unless a waiver was received from
the Secretary of Transportation. However, with the expiration of PSP
and passenger travel on the rebound airlines are beginning to make
adjustments to their service routes, and there are concerns smaller
communities will bear a brunt of the cuts. According to a recent news
article, Delta Air Lines intends to cut service to seven routes to
three small communities. United Airlines announced last month they will
be pulling out of eleven small communities, all serviced by regional
airline partners.
Several airlines have announced cuts in service to small
communities in the last month or so. As I am sure you are aware, small
communities rely on their air service to connect them to the rest of
the country. In light of recent service cuts to small communities can
you assure us that air service to small and rural communities will
remain at or above pre-COVID levels once your networks return to those
same levels?
Answer. The Payroll Support Program enabled Southwest Airlines to
avoid involuntary layoffs, furloughs, and pay cuts and to maintain
service. In fact, as passenger numbers declined during the pandemic,
Southwest not only did not exit any of our U.S. airports, we expanded
our domestic network to 18 additional airports, including Jackson,
Mississippi (JAN); Bozeman, Montana (BZN); and Bellingham, Washington
(BLI). This expansion allowed us to bring Southwest's low fares and
Hospitality to more communities (including many smaller communities)
and Customers, and it provided needed work for our Employees while
putting idle aircraft to use. We cannot guarantee the permanent
continuation of service to any airport, as we respond to changes in
Customer demand and costs. However, we are committed to the communities
served by Southwest, and we take great pride in working hard to
continue bringing our service to all such communities.
______
Response to Written Questions Submitted by Hon. Shelley Moore Capito to
Gary C. Kelly
Question 1. Based on today's testimonies, domestic commercial
aviation is on the rebound. According to the TSA, just under 21 million
travelers were screened during the 10-day Thanksgiving holiday. That is
near the 2019 record of 26 million travelers for the same period. Do
you anticipate passenger travel to be at or near 2019 levels for the
Christmas season?
Answer. While demand trends have been choppy in this environment,
Southwest has observed a fairly strong return of leisure travel demand
in 2021. On January 27, 2022, we reported our Q4 2021 financial
performance, including the results of passenger travel demand during
the holiday season. During calendar year 2021, Southwest carried over
99 million revenue passengers, which is an 83 percent increase from
2020, during which we carried 54 million revenue passengers. While we
made significant progress in 2021, the Omicron variant has delayed the
demand improvement we were previously expecting in early 2022. With
COVID-19 cases trending downward, we are optimistic about trends
beginning in March 2022.
For industrywide context, the Transportation Security
Administration (TSA) has reported checkpoint throughput for the month
of December 2021. Passenger throughput numbers in December 2021 were
83.7 percent of December 2019 levels, but more than double the numbers
from December 2020.
TSA checkpoint monthly travel numbers:
58,863,955 (Dec. 2021)
26,417,472 (Dec. 2020)
70,250,692 (Dec. 2019)
Question 2. Have you seen an increase in airfare over the past
couple months? If so, what do you contribute for this increase?
Answer. Southwest is proud to be the leading low-cost carrier in
the United States. Our average airfare for the fourth quarter 2021 was
in-line with our average airfare in fourth quarter 2019 in terms of
nominal dollars (slightly lower in constant or real dollars). We fight
hard to keep fares low and competitive for our Customers. Notably, our
base fare includes two free checked bags (weight and size limits apply)
and no change or cancellation fees. We regularly offer sales with fares
as low as $49 on many routes, as well as a fare sale in January with
fares as low as $39 one-way. As one would expect, Southwest's average
passenger fares have fluctuated with demand during the COVID-19
pandemic.
For context, the airline industry is highly competitive. According
to the U.S. Department of Transportation's Bureau of Transportation
Statistics (BTS), average airfares have been at an all-time low in
recent years, including the year immediately preceding the COVID-19
pandemic.
Question 3. In 2018, Congress passed a bipartisan five-year
reauthorization of the FAA. In the near future, Congress will have to
consider and debate policy in order to reauthorize the FAA before 2023.
An important component of the reauthorization will be the FAA's Next
Generation Transportation System (NextGen) initiative and its
deployment. The success of this initiative is entirely dependent on how
quickly the FAA and aircraft operations can fully implement NextGen.
Could you each discuss some of the investments your airlines have made
in implementing NextGen?
Answer. Years ahead of any mandate, Southwest Airlines invested
roughly $175 million to fully equip our entire fleet to be compatible
with core NextGen technologies and to train all Southwest Pilots to
utilize NextGen procedures. Our investments make Southwest NextGen-
ready, including with Required Navigation Performance (RNP)
capabilities, DataComm retrofits, and Automatic Dependent Surveillance-
Broadcast (ADS-B) equipage. We made these early investments in good
faith, relying on the FAA's then-assurance that the best-equipped
aircraft for NextGen would be best-served by the Air Traffic Control
system. Put simply, we were told if we invested to equip our aircraft
in NextGen capabilities, we would be able to take advantage of more
energy-efficient, modernized flight operations, such as performance-
based navigation (PBN) approaches to airports. The government has not
lived up to its side of the equation in this regard, even at airports
where PBN procedures have been published but not fully utilized despite
the environmental benefits associated with PBN.
Question 4. In your opinion, what are some of the current barriers
to NextGen implementation?
Answer. In March 2021, the DOT Inspector General found that
``NextGen's actual and projected benefits have not kept pace with
initial projections due to implementation challenges, optimistic
assumptions, and other factors'' and that ``benefits actually achieved
to date have been minimal and difficult to measure.'' Southwest agrees
with this assessment. While it is difficult to provide a concise
summary of the current barriers to NextGen implementation, we do have a
few suggestions. First, there should be a dedicated Performance Based
Navigation (PBN) Program Office at the FAA to oversee the program
elements such as procedure design, community outreach, and the suite of
controller ``tools'' that enable the management and sequencing of
aircraft. Second, the FAA should prioritize PBN projects that lead to
significant reduction in greenhouse gas emissions and energy
consumption. Third, Congress should dedicate robust funding for the PBN
Office and direction that safety and reducing emissions should be the
PBN Office's guiding priorities for its future work.
______
Response to Written Question Submitted by Hon. Jerry Moran to
Gary C. Kelly
Question. As you continue working to restore and rebuild your
network and schedule to pre-pandemic levels, can you comment on the
role the 737 MAX will play in your efforts?
Answer. Rebuilding our network is a priority for Southwest. As you
know, Southwest operates the largest all-Boeing/all-737 fleet in the
world, and we have been committed to the 737 throughout our 51-year
history. Southwest recognizes and appreciates the tremendous aerospace
workforce in Kansas and across our country, which builds and
contributes components to the 737 MAX. Southwest currently has 69 737
MAX8's in our fleet. As explained in our Q4 2021 quarterly earnings
report, Southwest's current order book with Boeing contains 406 MAX
firm orders (271 MAX-7's and 135 MAX-8's) and 226 MAX options (-7 or -
8) for years 2022 through 2031.As you can see, Southwest remains
committed to the Boeing 737, and the 737 MAX will play an important
role in the restoration of our network and schedule, not to mention the
significant environmental and noise reduction benefits associated with
the MAX aircraft.
______
Response to Written Questions Submitted by Hon. Rick Scott to
Gary C. Kelly
Question 1. Last year, the American taxpayers bailed out the
airline industry with nearly $54 billion in tax dollars, while many
small and medium-sized businesses closed their doors for good. Your
company entered an agreements with the U.S. Treasury with the promise
of return on the taxpayers' investment. Can you provide an update on
what kind of return on investment the American taxpayers can expect?
Answer. One-hundred percent of the assistance provided by the
Payroll Support Program (PSP) went to the salaries, wages, and benefits
of our Employees--including thousands of Florida-based Southwest
Employees. Our country enjoyed a return on this investment in that we
still have an airline industry that is able to connect people to what's
important in their lives, including the approximately 114 million
people who traveled on airlines to and from Florida in the most recent
12-month period for which data are available. Southwest was able to
grow our route map, including new service to airports in Florida, such
as Miami International Airport (MIA), Sarasota Bradenton International
Airport (SRQ), and Destin-Fort Walton Beach Airport (VPS). The
expansion of our route map to these new Florida destinations would not
have occurred without the ability to keep our Employees on the payroll
during the pandemic. The PSP also enabled us to maintain service to all
the Florida communities Southwest served prior to the pandemic: Ft.
Lauderdale (FLL), Ft. Myers/Naples (RSW), Jacksonville (JAX), Orlando
(MCO), Panama City Beach (ECP), Pensacola (PNS), Tampa (TPA), and West
Palm Beach (PBI). Notably, approximately 30 percent of the payroll
support provided was in the form of loans, which the industry must
repay. In addition to direct benefits to the U.S. economy by keeping
airplanes flying and Employees on the payroll, secondary benefits
included increased Federal and state tax revenue, reduced unemployment
payments, additional consumer spending (e.g., tourist dollars flowing
into the Florida economy), and economic benefits related to incremental
airline passenger and cargo capacity.
Question 2. It has been reported that both United and American have
entered agreements to sell planes to the Bank of China Aviation, which
is a state-owned bank, and lease them back to their companies long-
term. Does Southwest also participate in this practice?
Answer. Southwest owns the vast majority of the aircraft in our
fleet of over 700 aircraft, and our preferred approach remains buying
our aircraft directly from Boeing. Sale-leaseback transactions can
provide needed capital, and Southwest occasionally enters into such
arrangements with various aircraft lessors, consistent with applicable
U.S. law and state laws. Leasing aircraft can provide added flexibility
in our fleet strategy, as well. Such leases provide quiet enjoyment
provisions that prevent the owners of the leases from taking aircraft
from Southwest, unless we are in default. We have no obligation to any
entity other than to make our payments and perform our normal duties
under such leases.
______
Response to Written Questions Submitted by Hon. Ron Johnson to
Gary C. Kelly
Question 1. On what basis are you mandating the vaccine for your
employees? Is it only because of the Federal contractor mandate or is
it also due to a company decision?
Answer. The purpose of Southwest's COVID-19 Vaccine Policy is to
comply with Executive Order 14042, which requires Employees of Federal
contractors to be fully vaccinated against COVID-19. This policy was
not based on a Company decision. Exemptions are allowed and are granted
as required by applicable law. Employees with a disability, medical
condition, or sincerely held religious belief that prohibits
vaccination against COVID-19 are strongly encouraged to request an
accommodation. Please note that, so long as the Federal government is
not enforcing the vaccine mandate for Federal contractors, we will not
either; instead, we continue to encourage our Employees to vaccinate or
seek accommodations.
Question 2. What data are you keeping related to infections of
COVID-19 and reactions to vaccines among your employees and passengers?
Answer. When an Employee reports a COVID-19 infection, we note that
information and provide them with needed support. Questions related to
vaccine reactions can be best answered by the Food and Drug
Administration, which has managed the Vaccine Adverse Event Reporting
System (VAERS) since 1990. We do not maintain a database of COVID-19
health information related to our Customers.
Question 3. How many employees have had COVID-19?
Answer. We do not plan to share information related to our
Employees' health externally.
Question 4. How many were hospitalized?
Answer. We do not plan to share information related to our
Employees' health externally.
Question 5. How many died?
Answer. We do not plan to share information related to our
Employees' health externally.
Question 6. How many were vaccinated versus unvaccinated?
Answer. We do not plan to share information related to our
Employees' health externally.
Question 7. How many fully vaccinated employees have had a
breakthrough case of COVID-19?
Answer. We do not plan to share information related to our
Employees' health externally.
Question 8. Have there been any COVID-19 outbreaks that were traced
to a commercial flight? If so, how many?
Answer. A multi-layered approach helps to provide for our
Customers' comfort and well-being during the COVID-19 pandemic. We
equip all our aircraft with a sophisticated air distribution system
that introduces fresh, outdoor air and HEPA (High Efficiency
Particulate Air) filtered air into the cabin. HEPA filters onboard
remove at least 99.7 percent (measuring 0.3 micrometers or greater in
diameter passing through the filter) of airborne particles. HEPA
filters are also used in hospitals. We have employed stringent cleaning
practices such as using electrostatic and anti-microbial spray
treatments in the cabin. Our Employees wear masks, and Customers are
also required to wear masks due to the Transportation Security
Administration's (TSA) mask requirements. As you know, with the
prevalence of infections, it is difficult to trace a specific COVID-19
case or ``outbreak'' to a particular point of transmission. We continue
to evaluate our policies and procedures based on public health
guidance, scientific research, and advice from medical and aviation
organizations, such as: Harvard T.H. Chan School of Public Health,
IATA, Boeing, and our own medical professionals and infectious disease
experts that we've retained to advise us during the pandemic.
______
Response to Written Questions Submitted by Hon. Roy Blunt to
Gary C. Kelly
Question 1. There are a lot of challenges that continue to face the
airline industry, whether it's decreased passenger ridership, workforce
related challenges, or continued emergence of COVID variants. Can you
elaborate and share with the Committee what you think the airline
industry needs in order to operate successfully during these
challenging times, and what can Congress do to help the airline
industry return to pre-pandemic operational levels? Do you ever see the
airline industry returning to how it used to operate before the
pandemic?
Answer. Airlines and the aviation industry are deeply affected by
broad economic conditions. Air carriers face cost pressures associated
with the effects of the COVID-19 pandemic and other economic factors,
such as fuel and labor costs, as well as a reduction in revenue due to
lower consumer demand for air travel, especially from business
travelers. A period of economic stability and growth would help the
industry to regain its footing and to reduce the impact of self-help
measures (i.e., debt) that the industry took on during the pandemic. In
general, Congress can assist with our industry's recovery by
implementing policies that will enable post-pandemic economic recovery.
For airlines, unnecessary and burdensome new regulations would drive-up
costs. Increased taxes or fees on passengers will discourage a return
to travel. Most recently, on top of the pandemic-related challenges,
the potential disruptions caused by the Federal government's failure to
approve the rollout of 5G in the C-band frequency in a way that does
not cause aviation safety concerns or result in flight restrictions at
airports could make an extremely challenging operating and revenue
environment all the more difficult. However, it is important to
continue to keep in mind how much worse shape the airline industry
would be if the Payroll Support Program (PSP) had not been enacted. So
we remain ever so grateful for the support our Employees received from
Congress via three tranches of PSP assistance. The question now is how
much time will be required to rebuild and restore the industry to pre-
pandemic levels.
Question 2. Ms. Nelson mentioned in her testimony that not all
aircrafts are equipped with high efficiency particulate (HEPA) filters
used to create a safe traveling environment in airplane cabins. Can you
provide the Committee which aircrafts in your fleet currently have
these HEPA filters installed and which aircrafts do not? For those
aircrafts that do not have these HEPA filters currently in place, what
plans, if any, are there to ensure smaller, regional aircrafts have
these safety measures installed?
Answer. We operate an all-737 fleet, and we equip all our aircraft
with a sophisticated air distribution system that introduces fresh,
outdoor air and HEPA filtered air into the cabin. HEPA filters onboard
remove at least 99.7 percent (measuring 0.3 micrometers or greater in
diameter passing through the filter) of airborne particles.
Question 3. I would agree with all the airlines executive witnesses
that some of the success stories from the earlier CARES act packages
are the investments Congress made in programs like the Payroll Support
Program (PSP) and the Paycheck Protection Program (PPP) to help sectors
like the airline industry sustain during the pandemic. I have spoken
with many of you throughout the pandemic and leading up to today's
hearing. And an interesting observation I have noticed that has emerged
from the pandemic is a general shift in how employees view work
nowadays and the reluctance to return to the workplace. Can the
airlines offer the Committee your thoughts on this and the challenges
you have experienced in addressing this mentality shift in terms of
incentivizing and encouraging employees to return to work?
Answer. Southwest is known as one of the best places to work, and
yet we have faced unprecedented hurdles in our efforts to hire and
retain Employees in 2020 and 2021. There are numerous reasons for this
phenomenon, many of which are not unique to the airline industry. As I
explained in my written response to the Committee's inquiry in August,
we have introduced financial incentives (e.g., paying time-and-a-half
or double pay) to address Employee absenteeism. Concerning staffing,
our People Department has aggressively hired new Employees, with over
5,000 new hires in 2021 and a goal of another 8,000 Employees in 2022.
We have worked to improve our hiring process, as well as shorten the
time it takes to clear background. We also raised our minimum pay,
began offering Employee referral bonuses, and are holding hiring events
across the country. The higher wage rates represent increases for new
hires and other entry-level Employees at call centers and within our
airport operations. The higher wage scales will be in addition to
industry-leading health and retirement benefits.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Scott Kirby
Payroll Support Program Impact. Congress created the Payroll
Support Program to protect the airline industry's workforce, support
the continuity of safe and essential travel, and ensure the industry's
ability to remain viable to meet future consumer travel demand. The
Department of the Treasury disbursed a total of $54 billion to
passenger airlines, across three rounds of PSP, to provide critical
relief during the pandemic.
We know that PSP made a difference in December 2020, when Congress
extended the program, because airline recipients had to recall
thousands of employees who were furloughed after September 30, 2020
when the first round of PSP ended.
According to the Bureau of Transportation Statistics (BTS), between
October 2020 and February 2021, major airlines hired or brought back
28,179 workers. These workers came back just in time for the air travel
rebound, which took off in March 2021. As of September 2021, airlines
were approximately 8.8 percent below their pre-pandemic employment
levels according to BTS data. I am interested in learning from your
airline on how the Payroll Support Program impacted your workforce and
operations. Mr. Kirby, United received $10.9 billion in PSP funds.
Question 1. If not for PSP funding, what do you think the status of
your workforce would look like today? Would your airline have been able
to survive the pandemic, absent PSP funding?
Answer. The COVID-19 pandemic is the most disruptive global crisis
in the history of commercial aviation. In addition to the devastating
human toll, at the beginning of April 2020, we saw the sharpest,
deepest drop in market demand on record. We cut our domestic and
international schedules by 90 percent and were burning as much as $100
million per day.
United Airlines would be in a very different position today had
Congress not passed the Payroll Support Program and refunded the
program twice. United took several self-help actions to reduce the
significant losses, including reducing flying, voluntary pay cuts for
executive and management staff, raising private funding, and other
efforts to reduce our costs. Without funding from the PSP, we would
likely have needed to both suspend flying for a period as well as
involuntarily furlough a significant number of employees, having
devastating personal and economic consequences of our workforce. PSP
funding allowed us to maintain our workforce, pay employees, ensure
employees' training remained current and they were able to meet travel
demand once travelers returned to the skies. Additionally, it allowed
us to move critical medical supplies and personnel during the most
challenging days of the pandemic when we may otherwise have needed to
suspend flying to survive. While United would have survived the
pandemic without PSP funds, it would have been significantly less able
to meet travel demand, connect people and cargo to communities across
the globe.
Question 2. Since receiving PSP funding, do you believe your
airline is in a good position to meet current consumer travel demand?
Answer. Yes. Thanks to the support of the PSP program, as well as
our own self-help measures, United is well positioned to meet today's
travel demand. PSP, as well as the many self-help steps United has
taken, have positioned us to serve travelers through growth in demand.
Airline Relationships with Labor. Congress focused on sustaining
the airline workforce and ensuring continuity of operations during a
time of intense uncertainty.
From information shared with the Committee, it appears that those
airlines and unions that worked together found solutions to COVID-19
challenges, from addressing new health risks in the workplace to
ensuring currency and qualification of a highly-skilled workforce.
Question. How has your airline collaborated with unions to
establish policies to meet workforce needs in response to the COVID-19
pandemic? How did your airline's relationship with relevant labor
unions enhance your ability to meet operational needs and the rise in
air travel demand?
Answer. We coordinated closely with our unions, who stepped up to
work on creative agreements to get us through the crisis, reduce the
number of affected employees where possible, and set up the airline for
a strong rebound. United worked with our union partners on the many
challenges of the pandemic, including day-to-day operational
challenges, such as cleaning aircraft, modifying service and crew
travel issues into international markets. Additionally, United worked
closely with our pilots' union to reach a unique agreement in the
summer of 2020 which prevented any involuntary furloughs of our pilots
once PSP expired, including during the 3 months in the fall of 2020
when there was significant uncertainty regarding a second round of
funding for the program. Thanks to our union partners, the Air Line
Pilots Association (ALPA), International Brotherhood of Teamsters
(IBT), International Association of Machinists and Aerospace Workers
(IAM), Association of Flight Attendants (AFA) and Professional Airline
Flight Control Association (PAFCA) for understanding the enormity of
the challenge we collectively faced, for keeping our employees engaged,
and for working with us to prevent furlough(s).
Contract Workforce Role and Staffing. At the height of the
pandemic, airport and aviation workers stood with airlines and called
on the Federal government to make sure our national air travel system
remained strong, aviation jobs were protected, and that airlines were
ready to meet consumer travel demand.
For decades, airlines have outsourced essential service airport
jobs like cabin cleaners, wheelchair attendants, security officers, and
baggage handlers to contractors at major airports across the country.
Contract workers play a critical role in our aviation system and
continue to work hard on the frontlines of the COVID-19 pandemic to
keep travelers safe.
The pandemic has exposed problems with how domestic travel
disruptions are being addressed and how such response affects the
airline industry's workforce. For example, an August 2021 SEIU survey
conducted in Houston to assess the experiences of contracted airport
workers detailed incidents of short staffing and mandatory overtime
policies causing workforce fatigue, which has created a strained
operational environment.
Question. How will your airline ensure that the contracted
workforce, which provides such critical services, is stable, well-
trained, and has adequate staffing levels needed to respond to
operational challenges?
Answer. United works with our vendor partners to meet our standards
for training and providing services to our customers. Given the
workforce challenges in the larger economy, no industry or service
provider is immune from staffing challenges at this time. Each local
labor market may face unique issues too, including low unemployment
levels that can make it difficult to fill open positions.
Additionally, United has established daily touch points with our
vendors at all hub and large line stations to assess staffing and the
impact of Omicron. Our vendors continue to be very dedicated to
maintaining safety, proper staffing levels and direct leadership/
oversight, to ensure United can operate the schedule as efficiently as
possible, while never compromising on safety.
Airline Workforce Recall. The Committee is aware that, in 2020,
airlines took varying approaches to temporarily reduce the number of
active employees on their payroll to avoid involuntarily furloughing or
laying off employees as they experienced growing pandemic-related
financial difficulties. Many airlines offered employee programs to
incentivize voluntary separations, including voluntary furloughs, early
retirements, and temporary leaves of absences.
Airlines that extended voluntary leave options to their employees
reserved the right to recall such employees from leave when necessary.
To the Committee's knowledge, most airlines started broad workforce
recall efforts in the first quarter of 2021, employing particularly
concentrated efforts to bring back employees in January and February
2021. However, recalling employees has not been an easy process as
airlines have reported higher workforce shortages and rates of
absenteeism in certain workgroups, leaving the airlines more ill-
equipped to meet consumer travel demand.
Question 1. Has your airline experienced challenges in recalling
your workforce? If so, did your airline anticipate such issues in
recalling employees from leave before initiating your recall efforts?
Please describe the scope of the workforce recall challenges your
airline faced in 2021.
Answer. United has not experienced any issues with recall of our
workforce who have been participating in temporary leave programs.
Question 2. Has your airline's workforce fully returned as of
January 1, 2022? How did the status of your workforce's recall from
voluntary leave programs affect your airline's ability to meet consumer
air travel demand in 2021?
Answer. The vast majority of our workforce has returned from
voluntary temporary leave programs. Note, as a normal course of
business, United offers voluntary temporary leave programs given the
seasonality of some parts of our operation and staffing needs. These
programs have not impacted our ability to meet customer demand.
Additionally, United hired 6,500 new employees in 2021 with plans to
hire another 9,500 employees in 2022.
Airline Operational and Scheduling Data.
Question 1. For the months of October, November, and December 2021,
please provide the number of flights your airline operated, the number
of flights cancelled, the number of flights delayed more than 15
minutes, the number of flights delayed more than 90 minutes, and the
number of flights delayed more than six hours.
Answer.
Flights Departing Flights Departing Flights Departing
Month Scheduled Cancellations more than 15 more than 90 more than 360
Departures Minutes Late Minutes Late Minutes Late
Oct-21 58,156 331 28,521 1,253 84
Nov-21 58,194 287 9,187 1,768 92
Dec-21 62,036 1,911 16,046 2,953 130
Note: Includes United Mainline operations only
Question 2. For the month of January 2022, please provide the
number of daily flights your airline operated, the number of flights
cancelled, the number of flights delayed more than 15 minutes, the
number of flights delayed more than 90 minutes, and the number of
flights delayed more than six hours.
Answer.
Flights Departing Flights Departing Flights Departing
Month Scheduled Cancellations more than 15 more than 90 more than 360
Departures Minutes Late Minutes Late Minutes Late
Jan-22 33,891 1,869 8,627 1,856 103
Note: Includes United Mainline operations only, through 1/18/2022
Question 3. For the months of October, November, and December 2021,
and January 2022, please detail any preemptive schedule changes that
your airline made, including cancelling flights or changing the
departure time by more than one hour.
Answer. United proactively reduced its scheduled departures by up
to 6 percent for this period to provide more operational flexibility
and risk mitigation resources:
------------------------------------------------------------------------
Oct-21 Nov-21 Dec-21 Jan-22
------------------------------------------------------------------------
Scheduled Flights-- 128.5 125.9 129.5 122.0
60 Days Out1 (000s)
Actual Scheduled 122.1 119.0 121.5 113.9
Flights (000s)
Schedule Reduction (5.0%) (5.5%) (6.2%) (5.8%)
percent
------------------------------------------------------------------------
1. As measured from the start of month, includes all mainline and
regional flights by affiliate airlines operating under a capacity
purchase agreement
Airline Employment and Absenteeism Levels.
Question 1. For the months of October, November, and December 2021,
please provide the number of full-and part-time employees employed by
your airline.
Answer.
U.S.-Based Employees:
October 2021: 77,828
November 2021: 78,115
December 2021: 78,852
Question 2. For the months of October, November, and December 2021,
and January 2022, please detail any significant absenteeism problems
experienced by your airline.
Answer. Prior to late December 2021, United's absentee rates were
consistent with previous years and did not impact our ability to
operate our committed schedule. When Omicron began to spike in late
December, the new variant drove unprecedented levels of absenteeism as
our essential workforce began to test positive for COVID. Just as an
example, in one day alone at Newark in late December, nearly one-third
of our workforce called out sick.
Refund Complaints. Mr. Kirby, even though many airlines had
challenges over the summer and even this fall, you have told me that
United was able to avoid these problems by being more conservative with
scheduling, and by negotiating with your pilots to keep them on payroll
and current on their training.
In 2020, DOT received 29,687 refund complaints against U.S.
airlines, a 4,634 percent increase over 2019. And while the problem has
started to get better, DOT still received 5,129 refund complaints in
September 2021, well above the 627 filed against U.S. airlines for all
of 2019. Unfortunately, United was responsible for about 34 percent of
all refund complaints against U.S. airlines 2020, and 24 percent from
January through September of 2021.
The pandemic was unprecedented and I know that as bookings suddenly
plummeted, there was an immediate concern about a liquidity crisis that
could be caused by processing mass refunds. I applaud United and many
of its peers for voluntarily waiving flight change fees during the
pandemic, even for non-refundable flights. However, when the airline is
the one cancelling the flight, or when the flight is delayed for
several hours, it seems pretty basic for consumers to be entitled to a
refund and receive that refund within a reasonable timeframe.
Question 1. Why has United been the subject of so many of these
refund complaints--more than twice as many as any other U.S. airline in
2020? What is United doing to improve here?
Answer. By virtue of our network, United was impacted earlier and
more acutely than many of our competitors. There was great uncertainty
at the beginning of the pandemic and a real risk that such widespread
disruption could shut down the system. With the benefit of hindsight,
we would do things differently. But ultimately, we worked to ensure
that we provided refunds to all passengers who were owed them and
worked closely with regulators to answer their questions and alleviate
their concerns.
Question 2. The U.S. Public Interest Research Group recently
estimated that airlines are sitting on $10 billion worth of liquidity
from flight credits, and a CBS News article suggested that number might
actually be as high as $20 billion. What is the dollar-number value of
the flight credits that United has issued during the pandemic? What is
the dollar value of the United flight credits that consumers have not
yet utilized?
Answer. Since the start of the pandemic, United processed more than
$5 billion dollars in refunds. United currently does not owe any long-
standing refunds to passengers. The refunds that United currently owes
to passengers are from recent refund requests and the company is
processing those expeditiously and in accordance with the legal
requirements (e.g., for credit card purchases within 7 days). For
example, United's average response time for refund requests for 2021
was within 3.8 days.
Question 3. The Department of Transportation (DOT) has a rulemaking
in the Unified Agenda which says that it is looking at defining what
constitutes a ``cancellation'' and a ``significant delay''--the two
things that entitle a customer to a refund. Currently, DOT lets
airlines make their own determinations as to whether or not a flight is
cancelled, and the number of hours that account for a ``significant''
delay. In your view, how many hours does a flight have to be delayed
before a passenger is entitled to a refund? If the reluctance to issue
refunds was just an issue of preserving cash on hand, then why were
refund complaints still so high in 2021?
Answer. Carriers should be given some leeway to define these terms
for its passengers with guardrails from the DOT. United currently
treats a flight as significantly delayed if the arrival or departure
time changes by more than 2 hours for both domestic and international
flights. But all carriers should not be required to adopt United's
policy and there should be room within the rules for carriers to
differentiate themselves from one another. As the DOT has pointed out,
whether a delay is significant or not will depend on the circumstances
(e.g., length of flight, duration of trip, time of schedule). In the
initial stages of the pandemic, there were significant numbers of
refund complaints because carriers could not respond quickly to the
huge volume of refund requests. The number of refund complaints
currently pales in comparison to the volume of refund complaints
initially during the pandemic. But refund complaints are relatively
high--compared to before the pandemic--because there remains
significant uncertainty driven by the pandemic. For example, passengers
may be traveling to see family and that family may develop COVID
symptoms shortly before the trip--causing the passengers to no longer
wish travel. Additionally, the pandemic has driven second and third
order impacts that have caused passengers to want to cancel their trips
or shift their travel (e.g., museum temporarily closes due to staffing
shortages). Although passengers have the option to purchase refundable
tickets, many chose not to do so.
PSP Compliance. Under section 4116(a)(2) of the CARES Act, no
corporate officer or employee of your airline whose total compensation
exceeded $425,000 in calendar year 2019 (other than an employee whose
compensation is determined through an existing collective bargaining
agreement entered into prior to the enactment of the CARES Act) was
permitted to receive from your airline, severance pay or other benefits
upon termination of employment which exceeds twice the maximum total
compensation received by the corporate officer or employee in 2019. Yet
in the first quarter of 2021, your airline reported to the Department
of the Treasury that some employees and corporate officers had received
severance pay or other benefits after March 24, 2020 which more than
doubled their 2019 total compensation.
Question 1. Please explain whether the severance pay or other
benefits provided to these employees and corporate officers complied
with the CARES Act and associated Payroll Support Program requirements.
Answer. No response required due to error in report. United is in
full compliance and did not report severance pay double employees' 2019
compensation.
Question 2. Are you aware of any non-compliances associated with
your airline's receipt of Payroll Support Program funding?
Answer. United is in full compliance with the requirements of the
Payroll Support Program.
______
Response to Written Questions Submitted by Hon. Richard Blumenthal to
Scott Kirby
Compensation for Consumers. Since March 2020, flight delays and
cancellations have disrupted plans for countless travelers--and the
most recent cancellations left people stranded in airports and away
from family during the winter holiday season. Senator Markey and I have
repeatedly called for full cash refunds for impacted consumers. But
U.S. airlines have been slow to provide credits and legally-required
refunds and have hidden behind vague ticketing policies. Media reports
indicate that airlines are currently holding approximately $20 billion
worth of travel vouchers and unrefunded ticket values.
Question 1. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that United Airlines currently owes consumers? Please provide the
amount of each value mechanism as well.
Answer. Since the start of the pandemic, United processed more than
$5 billion dollars in refunds. United currently does not owe any long-
standing refunds to passengers. The refunds that United currently owes
to passengers are from recent refund requests and the company is
processing those expeditiously and in accordance with the legal
requirements (e.g., for credit card purchases within 7 days). For
example, United's average response time for refund requests for 2021
was within 3.8 days.
We have also taken other steps to give customers travel
flexibility, including:
Permanently eliminated change fees.
Extended validity period for travel credits.
Credit purchased before December 31, 2021 will be valid
through December 31, 2022.
Allowing greater flexibility to combine and share travel
credits.
Made travel credits easier to apply when rebooking.
Question 2. Does United Airlines gain revenue (such as from
interest) from the value of unused travel vouchers that are currently
held in company accounts? If so, how much revenue has United Airlines
collected from the funds in your accounts that are linked to unused
travel vouchers since March 2020?
Answer. No, United issues travel vouchers for a variety of reasons
including goodwill compensation and, in some cases, credit for
customers who are not eligible for refunds. Travel vouchers are carried
on our accounts as liability for provision of as-yet unbooked future
transportation and are not recognized as revenue until the bearer's
travel is completed.
Question 3. If United Airlines still owes consumers under Question
1, by when will it have completed issuing its refunds? What is the
reason for this delay?
Answer. Please see Question 2.
Question 4. United Airlines reportedly cancelled more than 200
flights in the last week. How many consumers were impacted by these
cancellations?
Answer. During the week of December 20th, United and its United
Express partners cancelled a total of 986 operations, or 3.4 percent of
consolidated flights, affecting a total of 104,254 customers.
Notwithstanding, we were able to re-accommodate 80 percent of those
customers:
40 percent reached their final destination within four hours
of their originally scheduled arrival time, including 20
percent that arrived before their originally scheduled time of
arrival
40 percent reached their final destination with a delay of
four hours or more
6 percent were issued refunds
14 percent had not requested a refund or resumed travel as
of January 4th, 2022. Their travel funds remain available as a
credit for future flights.
Question 5. Will United Airlines commit to providing full cash
refunds to all impacted consumers? If not, explain why not and what
compensation you will issue to consumers.
Answer. As stated in Question 4, 80 percent of impacted passengers
were reaccommodated. Six percent were issued refunds. The remaining
passengers' travel funds remain available for future flights.
Question 6. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that United Airlines owe consumers for these cancellations? Please
provide the amount of each value mechanism as well.
Answer. Please see Question 4.
Question 7. By when does United Airlines plan to have fully
reimbursed consumers?
Answer. Please see Question 4.
Question 8. Please explain the causes of the recent flight
cancellations as well as the steps that United Airlines is implementing
to prevent a repeat of these cancellations.
Answer. Since the beginning of December, the majority of mainline
cancellations have been due to uncontrollable circumstances, like
weather. In those cases, we reach out as early as possible to customers
booked on those flights to offer alternative plans. Toward the end of
December, however, we started experiencing a high volume of COVID-
related sick calls from our flight crew members. To mitigate this, we
are taking a multiprong approach by pre-cancelling flights up to 7 days
in advance, allowing us to re-accommodate passengers with ample notice,
reducing scheduled operations further out and offering economic
incentives for non-affected crew members to pick up uncovered lines of
flying.
Question 9. Does United Airlines maintain interline agreements with
other carriers to allow passengers affected by disruptions an alternate
means of getting to their destinations? If not, why not?
Answer. When it is not possible to re-accommodate customers on
United-branded flights, we will re-accommodate on other airlines,
including direct competitors. As an example, of the 104,254 customers
affected by cancellations during the week of December 20th, six percent
of affected customers were re-accommodated on other carriers.
______
Response to Written Questions Submitted by Hon. Brian Schatz to
Scott Kirby
Question 1. The Hawaiian Tourism Authority has made available
public service videos to educate the public about being respectful
tourists when they visit Hawaii.*
---------------------------------------------------------------------------
\*\ Videos available here: https://www.youtube.com/c/gohawaii
In what ways are these videos made available to Hawaii-bound
---------------------------------------------------------------------------
travelers on your aircraft?
Is one or more of these videos mandatory in some form for
in-bound Hawaii travelers using in-flight entertainment?
If not, what hardware, software or policy barriers prevent
the videos from being made mandatory?
Will you commit to making these videos mandatory for all
Hawaii-bound travelers using in-flight entertainment within the
next six months?
Answer. All of the Malama videos produced by Hawaiian Visitors and
Conventions Bureau are available on the video library on flights
serving Hawaii, including our ``Personal Device Entertainment'' library
which passenger access through the on-board Wi-Fi system.
Inflight crew encourages and invites all passengers to watch the
Malama videos.
We have also added language referencing the Malama videos in the
announcements to our classic ``Halfway to Hawaii'' game.
Up to 80 percent of flights to Hawaii are onboard aircraft that
either do not have seatback entertainment or the ability to push videos
to customers throughout the cabin. As part of our United Next plan
announced in June 2021, we will be adding seatback entertainment
screens to nearly all mainline narrowbody aircraft by 2025.
Additionally, we are working on our next-generation IFE system that has
more capabilities of serving more tailored messaging to customers that
we anticipate will debut in 2023.
Beginning in later part of 1st quarter of 2022, this landing page
to plan trips (Book flights to Hawaii | United Airlines) will include
Malama messaging. United's Global Community Engagement team leads
United's relationship with Conservation International (CI). The work
with CI is focused on efforts to amplify the Malama sentiment across
multiple platforms. CI has a contractual relationship with State of
Hawaii's Department of Education to integrate the pledge locally and
eventually will be made available to United and our customers.
Question 2. The 2018 FAA reauthorization directed the agency to
establish minimum seat sizes. There was an acknowledgement at the time
that tighter seats and cramped quarters were causing conflicts between
passengers and a potential safety hazard if there was an emergency.
That seems even more important today. Most of the airline industry
opposed the measure and the last administration failed to advance the
rulemaking.
Do you oppose minimum seat size standards?
Do you believe the FAA should finalize regulations on
minimum seat dimensions?
Answer. Each time the FAA has examined the issue, it has concluded
that existing aircraft seat configurations do not present a safety
hazard in the event of an emergency. A variety of seat dimensions are
available in the market for customers to select a travel experience
that best fits their preferences and budgets. United makes every effort
to inform customers of their seating options, and we believe travel
purchasers are well aware of these options when they book. We have in
place a thorough, multi-layered strategy to prevent and de-escalate
potential in-flight conflicts, as described in more detail in United's
answer to Sen. Warnock's question below, that has proven effective
regardless of passengers' seat dimensions.
______
Response to Written Question Submitted by Hon. Jacky Rosen to
Scott Kirby
Jet Fuel Supply. In July of this year, Reno-Tahoe Airport, the
second largest airport in Nevada, faced a severe shortage of jet fuel
available for aircrafts flying out of the airport. This was a
potentially catastrophic issue that could have adversely impacted tens
of thousands of travelers coming to and from Nevada and risked delays
in vital cargo coming to the state. We have since learned that jet fuel
shipments are based on travel trends from the previous year to decide
how much jet fuel pipeline space is needed to purchase in order to meet
current travel demand. But in 2020, demand was artificially low, as we
dealt with an unpredictable global pandemic that completed halted air
travel. As such, the data on air travel trends for 2020 was not a
reliable gauge for predicting air travel demand in 2021, or the jet
fuel necessary to accommodate that demand. Fortunately, my office, in
partnership with the airport and impacted airlines, worked together to
manage the situation. However, we must be better prepared to face
similar situations in the future--it was jet fuel this time, but one
could easily imagine relying on past year's numbers to determine future
demand for staffing, scheduled flights, or supply purchases--
potentially with serious negative effects.
Question. Mr. Kirby, would you please briefly discuss what United
Airlines is doing to ensure that you have sufficient jet fuel supply to
meet demand for travel in 2022, which may very well significantly
exceed travel in 2021? And can you discuss how you make predictions for
future air travel demand, generally, given that 2020 was a statistical
anomaly?
Answer.
Jet Fuel Supply: In summer of 2021, with rapid recovery in domestic
leisure demand and a pandemic-induced subordination of jet fuel in the
transportation fuel supply chain, we and other passenger and cargo air
carriers faced an unprecedented level of supply challenges at up to 40
airports at one time. We took all possible measures to prevent or
mitigate customers from being impacted by these challenges that were
driven by lower pipeline allocations for jet fuel and the scarcity of
trucking resources, particularly in smaller leisure-focused
destinations. At RNO, United, with extraordinary efforts, was in a
relatively well-situated supply position compared to other airlines,
however, we do not wish to see fuel supply chain challenges at any
airport we serve, big or small.
To that end, our planning and operational teams are working even
more closely to continually adjust our fuel supply planning and
logistics and build more flexibility to rapidly adapt to changes in our
requirements at every airport. This continual assessment and re-
assessment helps us identify and proactively address potential
developing gaps while engaging our third-party suppliers,
infrastructure and service providers. At the same time, there is only
so much we can do as United alone with fuel supply infrastructure,
which is largely inflexible in the short term. In cooperation with A4A,
we have petitioned the FERC regarding the pipeline allocation issue and
have exhausted all options to help jet fuel recover its rightful space
on major pipelines and reduce its dependence on trucking. With
continued travel demand recovery and potential increase in 2022 demand
relative to pre-pandemic, there is a prospect of inadequate jet fuel
shipments on pipelines impacting large airports that are dependent on
them.
Future Travel Demand: Forecasting of future year demand is done by
two core areas at the airline: Network Planning (builds the schedule)
and Revenue Management (sells/prices the schedule). In normal times,
these groups typically start with the prior year demand metrics and
then make adjustments for known dynamics such as GDP growth and high
growth cities/geographic areas. In 2021, traditional demand forecasting
was not applicable given the significant disruption in air travel in
2020. Rather, we focused on deploying capacity in more leisure-focused
markets, as well as adjusted schedules to localized demand changes as
they developed throughout the year. For 2022, traditional demand
forecasting is also not applicable. Our general approach has been to
assume a 2019-like demand profile, with some general adjustments such
as durable gains in many leisure-oriented markets (e.g., Florida).
Business travel is also expected to have an uneven recovery in 2022,
and demand recovery expectations have been tempered in business travel-
heavy markets (e.g., Chicago to Boston).
______
Response to Written Questions Submitted by Hon. Raphael Warnock to
Scott Kirby
Crew Safety. The Payroll Support Program has been a critical tool
for protecting airline workers' jobs throughout the pandemic. Most of
the airlines testified to the various policies and programs they have
implemented to help protect passengers and prevent further spread of
the coronavirus. However, testimony was also given about the terrible
harassment and violent abuse airline crew members have faced at an
alarming rate since the beginning of the pandemic. The Federal Aviation
Administration and Department of Justice, under the Biden
Administration have stepped up enforcement and prosecution efforts
related to unruly passengers.
Question. What is your airline doing to protect your employees'
physical health and wellbeing--not just against COVID, but unruly
passengers, as well?
Answer.
United is taking concrete actions to reduce the number and
rate of unruly passenger incidents.
At the forefront of these initiatives, United addresses
unruly passenger behavior utilizing our robust, industry-
leading safety program (established over a decade ago) that
includes a cross-functional committee tasked with investigating
and determining the appropriate corporate response following
physically abusive or physically threatening behavior by
passengers against United Airlines employees.
United's passenger programs under this safety program's
umbrella have been expanded beyond employee-assault incident
reviews to include investigations into passengers who:
(1) Violate the Federal face mask-mandate
(2) Physically assault other passengers, or
(3) Directly impact our operations by their unruly behavior.
The program includes post-incident employee support, such as
access to Employee Assistance Programs (``EAP'') and legal
guidance. It also ensures accountability for passengers
involved in incidents at the airport and on-board United
Airlines or United Express aircraft. We regularly communicate
to our team members that they have the full support of the
airline to report incidents and access to company resources
should an employee wish to press charges resulting from such an
incident.
In addition, United's commitment to mitigating unruly
passenger behavior is further reflected in our collaborative
engagement with a broad spectrum of industry stakeholders to
develop and advocate for best practices, such as with our
airport partners and concessionaires to seek more consistent
and frequent messaging throughout the air travel journey about
expected behavior and the ramifications for unruly incidents.
United has a vaccine requirement for all U.S.-based
employees subject to certain exemptions, which includes our FAs
who are domiciled in the U.S.
United had the first mask requirement for FAs in the
industry (April 2020). Provisioning KN95 masks onboard for any
FA would like one.
United had a customer mask requirement predating the Federal
mandate. Additionally, Flight attendants are provided with mask
compliance cards in 16 languages that they may hand out to non-
compliant customers. These cards outline the Federal mandate
and the potential penalties for non-compliance.
De-escalation training is included in continuing
qualification for flight attendants and included in initial
training for new hires. The mandatory training includes
specific scenarios and tools to navigate conflict.
Basic self-defense training is included in continuing
qualification for flight attendants and included in initial
training for new hires. The approved required training includes
instructor-facilitated lessons with interactive hands-on basic
self-defense techniques training, including assailant restraint
training with onboard restraint devices.
Resources through EAP (both company and AFA), as well as
Ginger (a confidential, on-demand mental healthcare at no cost
for all full-and part-time U.S.-based United employees and
their dependents ages 18 and older), for mental wellbeing
support.
Voluntary Separation Programs & Rebuilding the Workforce. The
Payroll Support Program was able to keep hundreds of thousands of hard-
working Americans--including many Georgians--on the job throughout the
pandemic. However, no one Federal program could make up for all the
losses or solve all the challenges inflicted upon the airline industry
by the pandemic. And airlines had to adjust. As a result, we saw the
airline workforce reduced significantly--mostly through voluntary
separation and early retirement packages offered by airlines.
Question 1. Could you expound on the need for these programs and
how you worked with your employees to implement them?
Answer. United offered both voluntary unpaid leaves of absence and
voluntary separation programs during 2020 and 2021. At the end of 2021,
we had a small number of employees still participating in leave of
absence programs. Regarding voluntary separation programs:
During 2020, the Company offered voluntary separation
programs (``VSPs'') to its U.S.-based front-line employees and
management and administrative employees. The Company offered
certain of its eligible front-line employees, based on employee
group, age and completed years of service, special termination
benefits in the form of additional years of pension service and
additional subsidies for retiree medical costs. Approximately
5,500 employees elected to voluntarily separate from the
Company.
During the first quarter of 2021, the Company offered
Voluntary Separation Leave (``VSL'') programs to certain U.S.-
based front-line employees. The Company offered, based on
employee group, age and completed years of service, pay
continuation while on leave of absence, health care coverage
and travel benefits. Approximately 4,800 employees elected to
voluntarily separate from the Company.
Question 2. How did these programs allow you to invest in and
support your employees?
Answer. The rapid implementation of the Payroll Support Program
(PSP) prevented what would have been an unprecedented shutdown of air
service that would have impacted the U.S. and world economy for years
to come. The PSP allowed us to maintain operational consistency,
avoiding the challenges that shutdowns, mass involuntary layoffs and
furloughs would have created. In addition, the PSP enabled us to
maintain our workforce and protect the livelihoods of tens of thousands
of United employees--keeping pilots and others current and at-the-ready
to respond to a rebound in demand.
Question 3. As air traffic has begun to bounce back, what are your
plans for rehiring and rebuilding your workforce?
Answer. Through 2026, we expect to create 25,000 new careers,
totaling thousands of openings at each of our seven domestic hubs.
These union jobs have compensation above the Federal minimum wage and
come with company-sponsored medical coverage, company-funded retirement
programs, paid sick leave and vacation, and flight benefits. We are not
interested in offering just a job. We want to provide a rewarding,
long-term career--69 percent of the senior leaders at United came up
through the ranks in jobs like these. The following tables provide our
hiring targets and goals for 2021 and 2022 in each job category.
2021 Hiring Results
----------------------------------------------------------------------------------------------------------------
Dec 2021
Jan-Nov 2021 (projected) 2021 Total
----------------------------------------------------------------------------------------------------------------
Pilots 1,300 100 1,400
Flight Attendants 850 300 1,150
Airport Ops 2,200 200 2,400
Technicians 300 50 350
Other (including M&A) 950 50 1,000
Totals 5,600 700 6,300
----------------------------------------------------------------------------------------------------------------
2022 Hiring Forecast
------------------------------------------------------------------------
2022
(projected)
------------------------------------------------------------------------
Pilots 2,000
Flight Attendants 2,500
Airport Ops 2,600
Technicians 600
Other (including M&A) 1,800
Totals 9,500
------------------------------------------------------------------------
______
Response to Written Question Submitted by Hon. Roger Wicker to
Scott Kirby
Question. One condition of the Payroll Support Program was that
recipients of the funds were required to continue air service to the
communities they previously served, unless a waiver was received from
the Secretary of Transportation. However, with the expiration of PSP
and passenger travel on the rebound airlines are beginning to make
adjustments to their service routes, and there are concerns smaller
communities will bear a brunt of the cuts. According to a recent news
article, Delta Air Lines intends to cut service to seven routes to
three small communities. United Airlines announced last month they will
be pulling out of eleven small communities, all serviced by regional
airline partners.
Several airlines have announced cuts in service to small
communities in the last month or so. As I am sure you are aware, small
communities rely on their air service to connect them to the rest of
the country. In light of recent service cuts to small communities can
you assure us that air service to small and rural communities will
remain at or above pre-COVID levels once your networks return to those
same levels?
Answer. Providing comprehensive access to customers from
communities of all sizes, including small communities, is a fundamental
objective of United's global route network. However, the ongoing
operating environment within the regional airline space has resulted in
a need to prioritize due to limited pilot staffing resources. In
addition, some individual markets have become or remained unprofitable,
making them even more difficult to sustain in light of this pilot
shortage.
The nation's mainline carriers are in the midst of a massive pilot
hiring initiative as a result of record fleet growth and a large
buildup of mandatory near-term pilot retirements. Given the limited
flow of military pilots into the commercial ranks, the vast majority of
these vacancies are being filled by the current regional pilot
population. To put this into context, projected industry mainline
hiring through 2023 alone is greater than the entire U.S. regional
pilot workforce today.
We are working on solutions in collaboration with our pilot union
that will address pilot supply to our regional carriers, but over time,
the mainline pilot recruitment issue will grow. Service to small and
mid-sized communities continues to be an important component of
United's network and we continue to look for opportunities to provide
our customers access to these locations.
______
Response to Written Questions Submitted by Hon. Shelley Moore Capito to
Scott Kirby
Question 1. Based on today's testimonies, domestic commercial
aviation is on the rebound. According to the TSA, just under 21 million
travelers were screened during the 10-day Thanksgiving holiday. That is
near the 2019 record of 26 million travelers for the same period. Do
you anticipate passenger travel to be at or near 2019 levels for the
Christmas season?
Answer. United's passenger volumes for the period December 16,
2021-January 2, 2022, were down 21 percent compared to the same day-of-
week mapped period in 2019. Seat capacity for the same period was down
17 percent. It is important to note this period was impacted by the
surge in Omicron cases which drove higher levels of passenger
cancellations and operational disruptions.
Question 2. Have you seen an increase in airfare over the past
couple months? If so, what do you contribute for this increase?
Answer:
Question 3. In 2018, Congress passed a bipartisan five-year
reauthorization of the FAA. In the near future, Congress will have to
consider and debate policy in order to reauthorize the FAA before 2023.
An important component of the reauthorization will be the FAA's Next
Generation Transportation System (NextGen) initiative and its
deployment. The success of this initiative is entirely dependent on how
quickly the FAA and aircraft operations can fully implement NextGen.
Could you each discuss some of the investments your airlines have made
in implementing NextGen?
Answer. Since 2018, United has made significant investments in
NextGen in several ways, not least of which is in aircraft equipage,
specifically in:
1) Required Nav Performance--Authorization Required (RNP AR)
2) Advanced RNP
3) GPS Landing System (GLS)
4) DataComm--Datalink Clearance (DCL) and Controller Pilot Datalink
Communication (CPDLC)
5) Automatic Dependent Surveillance--Out (ADS-B Out--FAA Mandate)
Our human capital investments have been significant as well. The
United employees are ever present in the industry engagement and
collaborative sessions vital to the FAA's implementation of NextGen.
United was very involved in airspace redesign, NextGen Advisory
Committee, Performance Based Operations ARC, RTCA, and many other
meetings to support, inform and deploy NextGen initiatives. We have
also made IT infrastructure investments to align with FAA's System Wide
Information System (SWIM) evolution, an important building block for
NextGen in terms of data exchange and more rapid development of
operational support capabilities.
Question 4. In your opinion, what are some of the current barriers
to NextGen implementation?
Answer. Some of the current barriers to NextGen implementation are
structural in nature. For example, the FAA's self-imposed and broken
acquisition management system. While it works, perhaps, for procuring
systems like radar systems, it is not nearly nimble enough to keep pace
with emerging technologies. A glaring example is the FAA's antiquated
and fragile Traffic Flow Management System. By the time TFMS is
replaced the solution will likely be considered old technology. Another
challenge is the FAA's inconsistent funding stream, which makes it
difficult for them to plan. While the funding stream has improved in
recent years, there is likely more that can be improved upon.
______
Response to Written Questions Submitted by Hon. Rick Scott to
Scott Kirby
Question 1. Last year, the American taxpayers bailed out the
airline industry with nearly $54 billion in tax dollars, while many
small and medium-sized businesses closed their doors for good. Your
company entered an agreements with the U.S. Treasury with the promise
of return on the taxpayers' investment. Can you provide an update on
what kind of return on investment the American taxpayers can expect?
Answer. United is immensely grateful for the CARES Act and its
Payroll Support Program (PSP) which enabled the industry, a driver of
the economy, to survive the most disruptive crisis in commercial
aviation. The PSP prevented what would have been an unprecedented
shutdown of air service that would have impacted the U.S. economy for
years to come. The PSP allowed us to maintain operational consistency,
avoiding the challenges that shutdowns, mass involuntary layoffs and
furloughs would have created. In addition, the PSP enabled us to
maintain our workforce and protect the livelihoods of tens of thousands
of United employees--keeping pilots and others current and at-the-ready
to respond to a rebound in demand. Importantly, we supplemented this
Federal support with our own, unprecedented cost-cutting and
fundraising efforts. The PSP gave us the time and the bridge to capital
markets where we raised $23 billion in debt and equity that were
crucial to our survival and our ability to serve a role in the COVID
response and in the economy. To support the pandemic response, we
activated our people and capabilities to operate more than 130
repatriation flights bringing home more than 18,000
Americans who were stranded abroad, and booked nearly 3,000 free
flights for medical professionals to areas in need. Through a
combination of cargo-only and passenger flights, United transported
more than 401 million pounds of freight, including 154 million pounds
of vital shipments, such as medical kits, PPE, pharmaceuticals, and
medical equipment, and more than 3 million pounds of military mail and
packages. And once the vaccines were ready for distribution, we sprang
into action. United has flown approximately 400 million vaccines around
the world. Throughout the pandemic, United has been committed to
providing our unique resources and relationships to assist in those
areas hardest hit by COVID-19. We are grateful to Congress for
recognizing the importance of the industry's workforce, the service we
provide, and our role as a driver of the economy.
Question 2. I am hearing from Floridians who work for your company
that they are being placed on UNPAID leave after being granted a
religious exemption to your vaccine mandate. Title VII of the Civil
Rights Act prohibits employment discrimination based on religion
[1], and yet your company is placing employees who decline
to receive the COVID vaccine based upon their sincerely held religious
beliefs on unpaid leave. Do you believe you are currently in compliance
with Title VII of the Civil Rights Act?
Answer. United's vaccine policy is in full compliance with all
applicable laws, including Title VII. The policy was implemented in
response to the grave risks posed by COVID-19. The data available at
that time showed that unvaccinated individuals were about 50 times more
likely to be hospitalized for COVID-19 than a vaccinated person, and
nearly 300 times more likely to die. Before we implemented the policy,
more than one United employee per week, on average, was dying of COVID-
19. Since our vaccine policy went into effect, the hospitalization rate
among our employees has been 100 times lower than the general
population. Based on United's prior experience and the nationwide data
related to COVID fatalities among the unvaccinated, that means there
are approximately 8-10 United employees who are alive today because of
our vaccine requirement.
In accordance with Federal law, our policy provides for religious
and medical accommodations. United welcomed and carefully considered on
a case by case basis all applications. Indeed, we went beyond the
minimum legal requirements and accepted requests based on any valid
medical ground (not just disability) and/or any sincerely held belief.
That is reflected in the fact that we granted the majority of religious
accommodation requests and medical accommodation requests. Employees
seeking an accommodation under United's policy were required to submit
their requests through Help Hub, a web-based portal maintained by
United. Based on the information submitted, follow-up requests for
information were issued, clarification questions were asked, or third-
party attestations were requested.
At present, none of our accommodated employees are required to
remain on unpaid leave; they all have other alternatives. Our ``non-
customer facing'' employees--including ramp service employees,
mechanics, and other ``below the wing'' personnel--remain at work in
their regular positions, subject to masking and testing requirements.
Others, including customer service representatives, were transitioned
to temporary assignments that do not require direct interaction with
customers. Similar measures were not possible for flight crew--pilots
and flight attendants--due to their unique working conditions as well
as constraints imposed by union contracts and Federal regulations. As a
result, they were placed on temporary unpaid leave, but they all have
preferential consideration to available non-customer facing jobs at
United. Because there are many open positions, there is abundant
opportunity for accommodated employees on leave to apply for these
roles and earn a paycheck.
Question 3. Mr. Kirby, during the hearing I asked you, rather than
putting employees on unpaid leave if they did not get vaccinated, to
offer testing every day instead. You stated that United Airlines does
not do this because it's all about ``safety''. What could be safer than
having proof, in the form of a negative test, that your employees do
not have COVID? We know that breakthrough infections occur, so even for
fully vaccinated individuals the safest option would still be frequent
testing.
Answer. United made the decision to require COVID-19 vaccines
because those who are vaccinated have a significantly reduced risk of
contracting a serious case of COVID that requires hospitalization or
leads to death. While testing is certainly a tool to support a strategy
aimed at reducing the spread of COVID-19, it is not a replacement for
vaccination. Testing only provides a snapshot in time of a person's
COVID-19 status but does not provide the vaccine's reduction in risk of
death or severe disease. Please also refer to the vaccine policy answer
to question No. 2 above.
Question 4. Does United Airlines vaccine mandate for employees
including provisions for individuals who have natural immunity having
recovered from COVID-19 infection? If not, why?
Answer. At the time it was implemented, the policy allowed, on a
case by case basis, for certain employees who had contracted COVID-19
to delay vaccination. The policy does not otherwise provide for
exemptions based on natural immunity. Following Centers for Disease
Control and Prevention (CDC) guidance, vaccination is the best form of
protection against COVID-19. A study by the CDC found unvaccinated
people who have had COVID-19 are more than twice as likely to be
reinfected with the virus compared with people who were fully
vaccinated after contracting the virus. Please also refer to the
vaccine policy answer to question No. 2 above.
Question 5. Other companies on this panel have created policies
that do not effectively fire their employees, while still complying
with all Federal laws. Why have you taken the stance that denying a
paycheck to employees who object to the vaccines based upon a sincerely
held religious belief is appropriate and fair?
Answer. Please refer to the vaccine policy answer to question No. 2
above which describes that employees who were approved for a religious
exemption to the policy were provided accommodation options that
enabled them to remain working.
Question 6. It has been reported United has entered agreements to
sell planes to the Bank of China Aviation, which is a state-owned bank,
and lease them back to their companies long-term. Do you believe there
are national security implications with the Bank of China Aviation
owning your assets? Do you plan to continue this practice?
Answer. Investors all over the world are eager to invest in the
U.S. aviation sector. United complies with all applicable laws and
safeguards in international aircraft transactions.
______
Response to Written Questions Submitted by Hon. Ron Johnson to
Scott Kirby
Question 1. On what basis are you mandating the vaccine for your
employees? Is it only because of the Federal contractor mandate or is
it also due to a company decision?
Answer. United's vaccine policy is in full compliance with all
applicable laws, including Title VII. The policy was implemented in
response to the grave risks posed by COVID-19. The data available at
that time showed that unvaccinated individuals were about 50 times more
likely to be hospitalized for COVID-19 than a vaccinated person, and
nearly 300 times more likely to die. Before we implemented the policy,
more than one United employee per week, on average, was dying of COVID-
19. Since our vaccine policy went into effect, the hospitalization rate
among our employees has been 100 times lower than the general
population. Based on United's prior experience and the nationwide data
related to COVID fatalities among the unvaccinated, that means there
are approximately 8-10 United employees who are alive today because of
our vaccine requirement.
In accordance with Federal law, our policy provides for religious
and medical accommodations. United welcomed and carefully considered on
a case by case basis all applications. Indeed, we went beyond the
minimum legal requirements and accepted requests based on any valid
medical ground (not just disability) and/or any sincerely held belief.
That is reflected in the fact that we granted the majority of religious
accommodation requests and medical accommodation requests. Employees
seeking an accommodation under United's policy were required to submit
their requests through Help Hub, a web-based portal maintained by
United. Based on the information submitted, follow-up requests for
information were issued, clarification questions were asked, or third-
party attestations were requested.
At present, none of our accommodated employees are required to
remain on unpaid leave; they all have other alternatives. Our ``non-
customer facing'' employees--including ramp service employees,
mechanics, and other ``below the wing'' personnel--remain at work in
their regular positions, subject to masking and testing requirements.
Others, including customer service representatives, were transitioned
to temporary assignments that do not require direct interaction with
customers. Similar measures were not possible for flight crew--pilots
and flight attendants--due to their unique working conditions as well
as constraints imposed by union contracts and Federal regulations. As a
result, they were placed on temporary unpaid leave, but they all have
preferential consideration to available non-customer facing jobs at
United. Because there are many open positions, there is abundant
opportunity for accommodated employees on leave to apply for these
roles and earn a paycheck.
In further response to your question, we implemented the vaccine
policy prior to the Federal Contractor mandate being issued.
Question 2. What data are you keeping related to infections of
COVID-19 and reactions to vaccines among your employees and passengers?
Answer. We are only keeping data related to COVID-19 infections as
provided by United employees to the company. We do not have any
information related to employee reactions to vaccines or any
information related to customers' vaccine records or potential
reactions to COVID-19 vaccinations.
Question 3. How many employees have had COVID-19?
Answer. As of January 27, 2022, United has had approximately 18,800
employees report to the company that they have tested positive for
COVID.
Question 4. How many were hospitalized?
Answer. Since our vaccine policy went into effect, the
hospitalization rate among our employees has been 100 times lower than
the general population.
Question 5. How many died?
Answer. Before we implemented the policy, more than one United
employee per week, on average, was dying of COVID-19.
Question 6. How many were vaccinated versus unvaccinated?
Answer. Ultimately, 99.7 percent of our domestic U.S.-based
employees, excluding those individuals who requested and were approved
for an exemption, were vaccinated.
Question 7. How many fully vaccinated employees have had a
breakthrough case of COVID-19?
Answer. Since our vaccine policy went into effect, the
hospitalization rate among our employees has been 100 times lower than
the general population.
Question 8. Have there been any COVID-19 outbreaks that were traced
to a commercial flight? If so, how many?
Answer. We do not have any information from the CDC that indicates
a COVID-19 outbreak was traced to a United commercial flight.
______
Response to Written Questions Submitted by Hon. Roy Blunt to
Scott Kirby
Question 1. Mr. Kirby, in your testimony you referenced a pilot
shortage multiple times. According to data from the Federal Aviation
Administration (FAA), over the past 10 years the U.S. has issued an
average of 6,000 Airline Transport Pilots (ATPs) certificates to new
pilots each year while the number of retirements from all the airlines
has averaged about 1,800 each year during that same time. Based upon
these figures it seems like we are producing more pilots than there are
jobs for them, so where is the pilot shortage coming from that you said
is causing your airline to pull out of small communities like Columbia,
MO?
Answer. While approximately 6,000 Airline Transport Pilot (ATP)
certificates are issued annually and the industry expects approximately
2,600 annual retirements in the coming years, we are facing a dramatic
shortfall in pilot supply due to a number of factors. COVID caused many
airlines to offer early retirements and other exits to thousands of
pilots and that, coupled with the cessation of hiring for nearly two
years, has created a short-term industry deficit of more than 5,000
pilots. Additionally, industry growth will require thousands of
incremental pilots annually for many years. ATP certificates are also
issued to pilots who gain employment outside the U.S. certificated
airline (Part 121) world and Part 121 attrition includes factors beyond
retirement such as medical retirements and exits to career
opportunities outside of aviation.
Question 2. There are a lot of challenges that continue to face the
airline industry, whether it's decreased passenger ridership, workforce
related challenges, or continued emergence of COVID variants. Can you
elaborate and share with the Committee what you think the airline
industry needs in order to operate successfully during these
challenging times, and what can Congress do to help the airline
industry return to pre-pandemic operational levels? Do you ever see the
airline industry returning to how it used to operate before the
pandemic?
Answer. Two proposals currently under consideration in Congress
that would benefit the airline industry include increasing access to
financial assistance for student pilots and improving security
screening. A challenge that existed prior to the pandemic, but has been
accelerated by the pandemic, is pilot supply. Pilot shortages are not
impacting United mainline hiring but are a challenge for the regional
carriers today which impacts the ability of United and other mainline
carriers to support desired regional aircraft flying schedules.
Congress should pass legislation to improve access to student loan
funding for aspiring pilots as the high cost of pilot training can
prevent those with the aptitude but not the means from becoming a
commercial airline pilot. Another recommendation to help the airline
industry is for Congress to pass legislation establishing a one-stop
security pilot program to reduce redundant screening at TSA checkpoints
and allow TSA to focus its resources on passengers who have not yet
been screened. Congress should also work to modernize air traffic
management through the Next Generation Air Transportation System
(NextGen) to improve aviation fuel usage and efficiency; and establish
a Sustainable Aviation Fuel (SAF) Blender's Tax Credit to help scale
production.
We have full confidence that all types of travel will return,
however we still face a number of challenges. If the virus evolves from
being pandemic to endemic, and hospitalizations and deaths wane, we
would encourage the government to reevaluate the travel requirements
that exist today. Decisions to modify these requirements must be rooted
in science-based data to clearly demonstrate to the traveling public
how and why these decisions are being made.
Question 3. Ms. Nelson mentioned in her testimony that not all
aircrafts are equipped with high efficiency particulate (HEPA) filters
used to create a safe traveling environment in airplane cabins. Can you
provide the Committee which aircrafts in your fleet currently have
these HEPA filters installed and which aircrafts do not? For those
aircrafts that do not have these HEPA filters currently in place, what
plans, if any, are there to ensure smaller, regional aircrafts have
these safety measures installed?
Answer. All United mainline aircraft are equipped with HEPA filters
on air recirculation systems. For our United Express partner aircraft,
all aircraft used in the Express fleet are equipped with HEPA filters
on air recirculation systems, with the exception of the CRJ200 fleet
which is not equipped with an air recirculation system (no recirculated
air, no HEPA filter needed). Note that the EMB145 aircraft was not
equipped with HEPA filters on the air recirculation system pre-
pandemic. United worked with our Express partner and industry to
implement a retrofit of HEPA filters on the air recirculation system
for this fleet. That retrofit effort has been completed on all EMB145
aircraft.
Question 4. I would agree with all the airlines executive witnesses
that some of the success stories from the earlier CARES act packages
are the investments Congress made in programs like the Payroll Support
Program (PSP) and the Paycheck Protection Program (PPP) to help sectors
like the airline industry sustain during the pandemic. I have spoken
with many of you throughout the pandemic and leading up to today's
hearing. And an interesting observation I have noticed that has emerged
from the pandemic is a general shift in how employees view work
nowadays and the reluctance to return to the workplace. Can the
airlines offer the Committee your thoughts on this and the challenges
you have experienced in addressing this mentality shift in terms of
incentivizing and encouraging employees to return to work?
Answer. Most United Airlines employees work in the operation--
helping customers or working on aircraft--and have continued to come to
work throughout the pandemic. Airline work is challenging and rewarding
and airline jobs are highly desirable. For most jobs, we receive
applications for far more people than we can hire. We have adjusted to
changes in a few categories of jobs, for example by offering hiring or
referral bonuses in select positions and markets for some airport jobs
to make sure we can attract the best applicants, and by offering
additional pay for select roles during busy times, as well as overtime
and shift options. For office-based workers, we have shifted to a
hybrid approach where that combines our past in-person culture with
flexibility set by each department. At every United location, our
masking rules are in line with local regulations to maximize safety for
all of our employees.
______
Response to Written Questions Submitted by Hon. Mike Lee to
Scott Kirby
Question 1. In your testimony you referenced your partnerships with
DARPA and the Cleveland Clinic to study the unique airflow
configuration of airplanes. And you proudly noted that United uses HEPA
filtration systems. In response to a question from Senator Wicker, you
noted that airplanes ``are far safer'' than most other indoor
environments related to COVID-19 transmission. Given your
acknowledgment that airplanes ``are far safer'' than most indoor
environments, do you believe Federal mask mandates on planes are
necessary? Why or why not?
Answer. As an industry, we've been proactive and successful in
implementing multi-layered, risk-based measures to protect travelers
and employees. We implemented a mask mandate for passengers and
employees as one of these measure before the Federal mask mandate was
established. The current mandate is set to expire in March. If the
virus evolves from being pandemic to endemic, and hospitalizations and
deaths wane, we would encourage the government to reevaluate the travel
requirements that exist today. Decisions to modify these requirements
must be rooted in science-based data to clearly demonstrate to the
traveling public how and why these decisions are being made.
Question 2. Do you support COVID-19 vaccination mandates for
domestic air passengers?
Answer. It is the government's responsibility to determine if a
vaccination mandate for domestic air travel is in the best interest of
the traveling public. For example, the Federal government has now
instituted a vaccine requirement for all international flights to the
U.S., with limited exceptions, and we are in compliance with that. Our
focus with our vaccine policy was to ensure the safety of our employees
and our workplace.
Question 3. Have you advocated to any official within the White
House or a Federal agency advocating or supporting such a mandate for
interstate domestic air travel?
Answer. No.
Question 4. Has the White House or any Federal official advocated
that you or United Airlines implement a COVID-19 vaccination mandate
for domestic air passengers?
Answer. No.
Question 5. During the hearing you noted that United Airlines
implemented its vaccine mandate ``well ahead of any government
directive'' and you proudly stated that ``we remain the only airline to
successfully complete a vaccination requirement for employees.'' Given
the other airlines have chosen to not comply with the Federal vaccine
mandate, or not impose a mandate of their own, along with the lack of
evidence that the virus has spread on airplanes, why did you implement
such a mandate; especially if as noted above there is little to no
evidence that aircraft pose a greater risk of spread than indoor
environments?
Answer. United's vaccine policy was implemented in response to the
grave risks posed by COVID-19. The data available at that time showed
that unvaccinated individuals were about 50 times more likely to be
hospitalized for COVID-19 than a vaccinated person, and nearly 300
times more likely to die. Before we implemented the policy, more than
one United employee per week, on average, was dying of COVID-19. Since
our vaccine policy went into effect, the hospitalization rate among our
employees has been 100 times lower than the general population. Based
on United's prior experience and the nationwide data related to COVID
fatalities among the unvaccinated, that means there are approximately
8-10 United employees who are alive today because of our vaccine
requirement.
Moreover, any risk of transmission on airplanes is not the sole or
even primary consideration. Our flight crew employees also spend time
outside of airplanes in environments where they could be exposed to the
virus, including in airports, crew vans, hotels, and other indoor
facilities. In addition, many of our employees, such as ground crew, do
not work inside of our aircrafts and instead work in more traditional
indoor environments that do not have the same filtration systems.
Question 6. How many employees of United Airlines have you
terminated due to being unvaccinated?
Answer. There are approximately 190 employees who did not comply
with the policy and did not seek or were not approved for an exemption
and accordingly have been separated from the company.
Question 7. How many employees of United Airlines have you placed
on unpaid leave, due to being unvaccinated?
Answer. There are approximately 1,080 employees who are presently
on a temporary unpaid leave of absence and who have elected not to
pursue alternative employment within the company.
In accordance with Federal law, our policy provides for religious
and medical accommodations. United welcomed and carefully considered on
a case by case basis all applications. Indeed, we went beyond the
minimum legal requirements and accepted requests based on any valid
medical ground (not just disability) and/or any sincerely held belief.
That is reflected in the fact that we granted the majority of religious
accommodation requests and medical accommodation requests. Employees
seeking an accommodation under United's policy were required to submit
their requests through Help Hub, a web-based portal maintained by
United. Based on the information submitted, follow-up requests for
information were issued, clarification questions were asked, or third
party attestations were requested.
At present, none of our accommodated employees are required to
remain on unpaid leave; they all have other alternatives. Our ``non-
customer facing'' employees--including ramp service employees,
mechanics, and other ``below the wing'' personnel--remain at work in
their regular positions, subject to masking and testing requirements.
Others, including customer service representatives, were transitioned
to temporary assignments that do not require direct interaction with
customers. Similar measures were not possible for flight crew--pilots
and flight attendants--due to their unique working conditions as well
as constraints imposed by union contracts and Federal regulations. As a
result, they were placed on temporary unpaid leave, but they all have
preferential consideration to available non-customer facing jobs at
United. Because there are many open positions, there is abundant
opportunity for accommodated employees on leave to apply for these
roles and earn a paycheck.
Question 8. Does ``unpaid leave'' come with the loss of
unemployment benefits and/or healthcare coverage?
Answer. The benefits available to employees on a leave is dependent
on the type of leave being taken and the terms of the applicable
collective bargaining agreement governing the employee. In some
instances, employees on a leave of absence may be eligible for
unemployment benefits which depends on state specific requirements.
Please also refer to the vaccine policy answer above.
Question 9. How many employees of United Airlines have you granted
religious exemptions from the vaccine mandate? And how many have you
denied?
Answer. Over 2000 requests for religious and medical accommodations
were granted. Please also refer to the vaccine policy answer to
question No. 7 above.
Question 10. Is ``unpaid leave'' the only ``reasonable
accommodation'' that you provide for an individual whose religious
exemption is approved? If not, what are the other ``reasonable
accommodations that you provide'' and how often have you provided them?
Answer. Temporary unpaid leaves were not the only accommodation
option made available to employees who were approved for an exemption.
For details on the types of accommodation options offered, please refer
to the vaccine policy answer to question No. 7 above. In addition, the
company has accommodated some employees who have non-operational job
duties with a fully remote work schedule.
Question 11. How many employees of United Airlines have you granted
medical exemptions from the vaccine mandate? And how many have you
denied?
Answer. Over 2000 requests for religious and medical accommodations
were granted. Please also refer to the vaccine policy answer to
question No. 7 above.
Question 12. As I'm sure you are aware, Title VII of the Civil
Rights Act of 1964 requires that medical and religious exemptions be
made available in the context of COVID-19 vaccination requirements,
including at United Airlines. I was sent a YouTube video of you
speaking at an internal United townhall meeting dated August 25, 2021
\1\ where you stated,
---------------------------------------------------------------------------
\1\ https://www.youtube.com/watch?v=OU95QYSEOXQ
``By the way there are going to be very few people that get
through the medical and religious exemptions. There are some
pretty strict rules about that. So, any pilot or any employee
that's all of a sudden decided that `I'm really religious'. .
.you're putting your job on the line. You better be very
---------------------------------------------------------------------------
careful about that.''
This statement seems to show hostility to employees who might want
to seek a religious accommodation. Does United have a presumption that
someone seeking a religious accommodation to the vaccine mandate should
be denied?
Answer. We carefully considered all requests for exemptions based
on a person's sincerely held religious belief and deny that employees
were discouraged from seeking exemptions. As previously noted in our
response to question No. 7 above, the majority of religious exemption
requests were granted. The quoted statement was addressing the problem
of individuals who might try to submit an exemption request for reasons
other than a sincerely held belief, which is not appropriate under
company policy or applicable law.
Question 13. In your testimony, you noted that ``we are proud of
our actions and transparency on diversity, equity, and inclusion.''
Does your DEI policy cover religious beliefs?
Answer. Yes, our DEI policies include religion and religious
beliefs.
Question 14. I've heard from former United Airlines employees that
the process for filing for a religious exemption at your company
requires individuals to submit a third-party letter from a pastor,
clergy member, or other religious leader that ``vouches'' for the
employee's sincerely held religious beliefs. In 29 CFR 1605.1, the
Federal Equal Employment Opportunity Commission (EEOC's) regulations
note that ``The fact that no religious group espouses such beliefs or
the fact that the religious group to which the individual professes to
belong may not accept such belief will not determine whether the belief
is a religious belief of the employee or prospective employee.'' How
does your ``third-party letter requirement'' comply with current
Federal EEOC regulations?
Answer. Our policy and the review and approval process for
exemption requests was in full compliance with Title VII and EEOC
regulations. In addition, please refer to the vaccine policy answer to
question No. 7 above.
Question 15. During the hearing you mentioned that you had a worker
shortage, including pilots. You've stated that United Airlines has
fired employees who refused to get the COVID-19 vaccine. Aren't you
exacerbating your own workforce shortage?
Answer. We experienced a small number of terminations of employees
who refused to comply with the policy or obtain an exemption, but the
numbers were so small and decentralized that they didn't impact our
operation.
______
Response to Written Questions Submitted by Hon. Marsha Blackburn to
Scott Kirby
Question 1. Please indicate how many employees United had on the
following dates:
a. March 27, 2020
Answer. 89,432
b. August 27, 2021
Answer. 78,820
c. December 15, 2021
Answer. 78,852
Question 2. How many employees applied for a religious
accommodation from United's COVID-19 vaccine?
Answer. In accordance with Federal law, our policy provides for
religious and medical accommodations. United welcomed and carefully
considered on a case by case basis all applications. Indeed, we went
beyond the minimum legal requirements and accepted requests based on
any valid medical ground (not just disability) and/or any sincerely
held belief. That is reflected in the fact that we granted the majority
of religious accommodation requests and medical accommodation requests.
Employees seeking an accommodation under United's policy were required
to submit their requests through Help Hub, a web-based portal
maintained by United. Based on the information submitted, follow-up
requests for information were issued, clarification questions were
asked, or third-party attestations were requested.
Question 3. How many of these applications for religious were
granted?
Answer. Over 2000 requests for religious and medical accommodations
were granted. Please also refer to the vaccine policy answer to
question No. 2 above.
Question 4. During our hearing, Mr. Kirby indicated that United
granted most of the requests for a religious accommodation. Prior to
processing the accommodation request, were United's employees informed
that this accommodation would be in the form of unpaid leave? Please
provide the committee a sample of this notification.
Answer. As described earlier, employees approved for an
accommodation under our policy were provided various types of
accommodations. For example, non-customer facing employees such as ramp
service employees and mechanics have remained working in their regular
positions, subject to masking and testing requirements. Information
regarding temporary unpaid leaves of absence as an accommodation was
communicated to employees the second week of September 2021, before the
accommodation application process for employees closed.
Furthermore, United's vaccine policy is in full compliance with all
applicable laws, including Title VII. The policy was implemented in
response to the grave risks posed by COVID-19. The data available at
that time showed that unvaccinated individuals were about 50 times more
likely to be hospitalized for COVID-19 than a vaccinated person, and
nearly 300 times more likely to die. Before we implemented the policy,
more than one United employee per week, on average, was dying of COVID-
19. Since our vaccine policy went into effect, the hospitalization rate
among our employees has been 100 times lower than the general
population. Based on United's prior experience and the nationwide data
related to COVID fatalities among the unvaccinated, that means there
are approximately 8-10 United employees who are alive today because of
our vaccine requirement.
In accordance with Federal law, our policy provides for religious
and medical accommodations. United welcomed and carefully considered on
a case by case basis all applications. Indeed, we went beyond the
minimum legal requirements and accepted requests based on any valid
medical ground (not just disability) and/or any sincerely held belief.
That is reflected in the fact that we granted the majority of religious
accommodation requests and medical accommodation requests. Employees
seeking an accommodation under United's policy were required to submit
their requests through Help Hub, a web-based portal maintained by
United. Based on the information submitted, follow-up requests for
information were issued, clarification questions were asked, or third-
party attestations were requested.
At present, none of our accommodated employees are required to
remain on unpaid leave; they all have other alternatives. Our ``non-
customer facing'' employees--including ramp service employees,
mechanics, and other ``below the wing'' personnel--remain at work in
their regular positions, subject to masking and testing requirements.
Others, including customer service representatives, were transitioned
to temporary assignments that do not require direct interaction with
customers. Similar measures were not possible for flight crew--pilots
and flight attendants--due to their unique working conditions as well
as constraints imposed by union contracts and Federal regulations. As a
result, they were placed on temporary unpaid leave, but they all have
preferential consideration to available non-customer facing jobs at
United. Because there are many open positions, there is abundant
opportunity for accommodated employees on leave to apply for these
roles and earn a paycheck.
______
Response to Written Questions Submitted by Hon. Ted Cruz to
Scott Kirby
Question 1. Mr. Kirby, during the hearing, we discussed United's
COVID-19 vaccine mandate. Specifically, we discussed the impact the
mandate is having on a number of United employees. I would like to get
more information from you on that as well as some of the specifics of
exactly when things occurred. On August 6, 2021 United announced it
would require all employees to be fully vaccinated by October 25, but
then pushed that deadline up to September 27 after the FDA fully
approved the Pfizer-BioNTech COVID vaccine.
Did United publish the process for requesting a religious or
medical exemption at the same time it announced the vaccine mandate on
August 6? If not, when did United publish the procedures for applying
for a religious or medical exemption?
Answer. United's vaccine policy is in full compliance with all
applicable laws, including Title VII. The policy was implemented in
response to the grave risks posed by COVID-19. The data available at
that time showed that unvaccinated individuals were about 50 times more
likely to be hospitalized for COVID-19 than a vaccinated person, and
nearly 300 times more likely to die. Before we implemented the policy,
more than one United employee per week, on average, was dying of COVID-
19. Since our vaccine policy went into effect, the hospitalization rate
among our employees has been 100 times lower than the general
population. Based on United's prior experience and the nationwide data
related to COVID fatalities among the unvaccinated, that means there
are approximately 8-10 United employees who are alive today because of
our vaccine requirement.
In accordance with Federal law, our policy provides for religious
and medical accommodations. United welcomed and carefully considered on
a case by case basis all applications. Indeed, we went beyond the
minimum legal requirements and accepted requests based on any valid
medical ground (not just disability) and/or any sincerely held belief.
That is reflected in the fact that we granted the majority of religious
accommodation requests and medical accommodation requests. Employees
seeking an accommodation under United's policy were required to submit
their requests through Help Hub, a web-based portal maintained by
United. Based on the information submitted, follow-up requests for
information were issued, clarification questions were asked, or third-
party attestations were requested.
At present, none of our accommodated employees are required to
remain on unpaid leave; they all have other alternatives. Our ``non-
customer facing'' employees--including ramp service employees,
mechanics, and other ``below the wing'' personnel--remain at work in
their regular positions, subject to masking and testing requirements.
Others, including customer service representatives, were transitioned
to temporary assignments that do not require direct interaction with
customers. Similar measures were not possible for flight crew--pilots
and flight attendants--due to their unique working conditions as well
as constraints imposed by union contracts and Federal regulations. As a
result, they were placed on temporary unpaid leave, but they all have
preferential consideration to available non-customer facing jobs at
United. Because there are many open positions, there is abundant
opportunity for accommodated employees on leave to apply for these
roles and earn a paycheck.
Question 2. My understanding is that the process to request a
religious accommodation initially required a third-party verification,
to be submitted via a portal called Help Hub or some similar process,
which was a form of attestation by someone who would vouch for the
person's religious beliefs. Is this correct? If not, why not?
Answer. Please refer to the vaccine policy answer to question No. 1
above.
Question 3. Further, I understand that this third-party
verification or attestation requirement evolved over time. Initially a
letter from a pastor or other spiritual leader was required, then at
some point a letter from a third party was acceptable regardless of
whether the individual was a member of the clergy, and then at some
point United discontinued this third-party attestation feature
altogether. Is this understanding correct?
If so, please provide the date ranges which correspond to each
iteration of the attestation requirement and, for each time the
requirement changed, the reasoning for making that change. Please also
explain how employees seeking a religious exemption were notified of
the change each time. If specific correspondence exists that went out
to employees, please provide an example of that.
If not, please specify what is incorrect and provide an accurate
timeline of how the process evolved, including any third-party
verification or attestation requirements which were a part of that.
Answer. Please refer to the vaccine policy answer to question No. 1
above.
Question 4. During each of these date ranges, how many requests
were granted, and how many were denied?
Answer. Over 2000 requests for accommodations were granted. Please
refer to the vaccine policy answer to question No. 1 above for
additional details.
Question 5. As part of this process, were United employees also
asked questions regarding their religious beliefs and how those beliefs
pertained to receiving certain types of medical treatments such as
certain vaccines and medications? If so, please provide the exact
questions asked to employees seeking religious exemptions and how their
responses to the questions were used.
Answer. Please refer to the vaccine policy answer to question No. 1
above.
Question 6. What other measures did United take at any point in the
religious accommodation process to probe the sincerity and specific
beliefs of employees, and for what date range did United use each of
these measures?
Answer. As described earlier, depending on the original submission
in support of an accommodation request, follow-up and clarification
questions were asked. Please refer to the vaccine policy answer to
question No. 1 above for additional details.
Question 7. Does United regularly probe the sincerity of the
beliefs of its employees in other matters? For example, does a Jewish
employee need to provide a verification from their rabbi in order to
avoid being scheduled to work on the Sabbath? Or does a Muslim employee
need to provide verification from their imam in order to avoid being
scheduled to work during Ramadan? If so, please specify exactly how
United measures the sincerity of an employee's religious beliefs.
Answer. In responding to requests for accommodations under Title
VII or the ADA, United complies with all applicable laws and
regulations. Follow-up requests for information to support
accommodation requests are also in full compliance with applicable laws
and regulations.
1. Is it your understanding that requiring third-party attestation
and probing the sincerity and specific attributes of your employees'
religious beliefs are permitted under Title VII of the Civil Rights
Act?
Answer. United's vaccine policy is in full compliance with all
applicable laws, including Title VII. Furthermore, the review and
approval process for accommodation requests under this policy is in
full compliance with all applicable laws, including Title VII.
2. Are you aware of EEOC guidance or other authorities stating that
such efforts are inconsistent with Title VII?
Answer. United's policy is in compliance with EEOC guidance.
3. On what date was the decision made to offer indefinite unpaid
leave as the only religious accommodation? Who made that decision? How
was that decision arrived at?
Answer. At present, none of our accommodated employees are required
to remain on unpaid leave; they all have other alternatives. Our ``non-
customer facing'' employees--including ramp service employees,
mechanics, and other ``below the wing'' personnel--remain at work in
their regular positions, subject to masking and testing requirements.
Others, including customer service representatives, were transitioned
to temporary assignments that do not require direct interaction with
customers. Similar measures were not possible for flight crew--pilots
and flight attendants--due to their unique working conditions as well
as constraints imposed by union contracts and Federal regulations. As a
result, they were placed on temporary unpaid leave, but they all have
preferential consideration to available non-customer facing jobs at
United. Because there are many open positions, there is abundant
opportunity for accommodated employees on leave to apply for these
roles and earn a paycheck.
4. When employees were told to apply for a religious accommodation
by a certain date, were they told prior to applying that the only
accommodation that would be offered to them was unpaid leave? If not,
why not?
Answer. Temporary unpaid leave is not the only accommodation option
that was made available to employees who were approved for
accommodations under United's policy.
5. My understanding is that there was a deadline to request a
religious accommodation, and that for at least some employees, requests
made after that point were denied as untimely. Is that correct? If so,
how many such requests were denied?
Answer. United's accommodation procedures included a reasonable
deadline for submission of requests, which was fully compliant with
Federal law. Furthermore, we granted the majority of religious
accommodation requests and medical accommodation requests.
Question 8. Mr. Kirby, as you know United made the decision to
place a significant number of employees with approved exemptions on
unpaid leave. You testified that ``. . . we've got about 2,000
employees that have either medical or religious exemption the majority
of those are working in positions . . . where they're outside and don't
work with other customers and we're letting people do that.'' I just
want to dig into this a little deeper.
For the questions 9 through 22, as well as question 26, in addition
to providing a topline answer please also provide a detailed breakdown
of all job functions represented in the group (that is how many pilots,
flight attendants, gate agents, mechanics, etc.) as well as where the
employees are based geographically. For example, the answer to the
question of ``how many United employees applied for a religious or
medical exemption'' should be broken out as follows:
The topline of: In total XXXX employees applied for a religious
or medical exemption, specifically XXXX applied for a religious
exemption and XXXX for a medical exemption.
Then the job function breakdown of: Of the XXXX employees who
applied for a religious exemption, XXX were pilots, XXX were
flight attendants, XXX were gate agents, etc. Of the XXXX
employees who applied for a medical exemption, XXX were pilots,
XXX were flight attendants, XXX were gate agents, etc.
Then finally a geographic breakdown of each job function for
each category of exemption applied for: For the pilots who
applied for a religious exemption, XX were based at IAD, XX
were based at IAH, etc. For the pilots who applied for a
medical exemption, XX were based at IAD, XX were based at IAH,
etc. For the flight attendants who applied for a religious
exemption, XX were based at IAD, XX were based at IAH, etc. For
the flight attendants who applied for a medical exemption, XX
were based at IAD, XX were based at IAH, etc.
No answer needed.
Question 9. How many United employees applied for a religious or
medical exemption? Please break this answer down as specified in the
instructions.
Answer. Please refer to the vaccine policy answer to question No. 1
above.
Question 10. Did any United employees request both a medical and
religious exemption? If so, how many were granted and how many were
denied? Please break this answer down as specified in the instructions.
Answer. Some employees requested both religious and medical
accommodations under the policy. Please refer to the vaccine policy
answer to question No. 1 above.
Question 11. How many religious and medical exemptions were
granted?
Answer. Over 2,000 religious and medical accommodations were
approved. Please also refer to the vaccine policy answer to question
No. 1 above.
Question 12. How many United employees to date have been fired for
not complying with United's vaccine mandate?
Answer. There are approximately 190 employees who did not comply
with the policy and did not seek or were not approved for an exemption
and accordingly have been separated from the company.
Question 13. For the employees that have been fired for non-
compliance, how much Payroll Support Program (PSP) money do they
represent? That is to say, what is the exact dollar amount of PSP
funding United received to preserve these jobs before firing these
employees for non-compliance?
Answer. The grant portion of the PSP funds (which excludes the PSP
funds that are to be repaid) covered 60 percent of the eligible pay and
benefits through September 30, 2021.
Question 14. Do these employees qualify for unemployment benefits?
If this answer varies by location of the employees, please provide a
specific breakdown of which employees qualify for unemployment benefits
and where.
Answer. United policy does not govern eligibility for state
unemployment benefits.
Question 15. What benefits, if any, do these employees retain? Do
they retain their health insurance, for example, as they would if they
had retired? Please provide a specific breakdown, by job function, of
all benefits lost and retained.
Answer. The benefits available to employees on a leave is dependent
on the type of leave being taken and the terms of the applicable
collective bargaining agreement governing the employee.
Question 16. Is there any impact to the retirement planning, such
as a reduction or elimination a pension plan, for employees fired for
non-compliance with the vaccine mandate? Please provide a specific
breakdown, by job function, of all such impacts.
Answer. The benefits available to employees on a leave is dependent
on the type of leave being taken and the terms of the applicable
collective bargaining agreement governing the employee.
1. How many United employees with a religious or medical exemption
were moved into a non-customer facing role and are currently actively
working in that role? Please also specify what their job function was
before receiving the exemption, what their job function is now, and
provide a complete list of which roles United considers customer-facing
and which it considers non-customer facing.
2. How many United employees with a religious or medical exemption
are currently on unpaid leave?
Answer. There are approximately 1,080 employees who are currently
on a temporary unpaid leave of absence.
Question 17. For the employees with a religious or medical
exemption currently on unpaid leave, how much PSP money do they
represent? That is to say, what is the exact dollar amount of PSP
funding United received to preserve these jobs before placing these
employees on unpaid leave?
Answer. The grant portion of the PSP funds (which excludes the PSP
funds that are to be repaid) covered 60 percent of the eligible pay and
benefits through September 30, 2021.
Question 18. While on unpaid leave, do these employees qualify for
unemployment benefits? If this answer varies by location of the
employees, please provide a specific breakdown of which employees
qualify for unemployment benefits and where.
Answer. United policy does not govern eligibility for state
unemployment benefits.
Question 19. Would an employee currently on unpaid leave, say a
pilot for example, be able to earn income working for a different
passenger or cargo air carrier while on unpaid leave? If not, why not?
Please provide a breakdown, by job function, of any contractual
limitations on a United employee's ability to earn income performing
their same job function at a different passenger or cargo air carrier.
Answer. Employees may apply for positions with other passenger
airlines or cargo air carriers subject to compliance with any
applicable United policies that govern outside employment.
United has recently granted a number of such requests from
employees on temporary unpaid leave.
Question 20. What benefits, if any, do these employees retain? Do
they retain their health insurance, for example, while on unpaid leave?
Please provide a specific breakdown, by job function, of all benefits
lost and retained while on unpaid leave.
Answer. The benefits available to employees on a leave is dependent
on the type of leave being taken and the terms of the applicable
collective bargaining agreement governing the employee.
Question 21. Is there any impact to the retirement planning, such
as a reduction or elimination a pension plan, for employees put on
unpaid leave? Are these employees able to access their retirement
accounts, for example, while on unpaid leave? Please provide a specific
breakdown, by job function, of all such impacts to retirement planning.
Answer. The benefits available to employees on a leave is dependent
on the type of leave being taken and the terms of the applicable
collective bargaining agreement governing the employee. Yes, employees
on temporary leave of absence may be eligible for multiple different
types of early withdrawal options from their United 401k plan.
Question 22. For those employees with a religious or medical
exemption on unpaid leave, what is the average length of time, by job
function, they have been on unpaid leave?
Answer. Please refer to the vaccine policy answer to question No. 1
above.
Question 23. Do you think it is fair that you are not offering an
accommodation that allowing your employees to continue making an income
to support themselves and their families?
Answer. At present, none of our accommodated employees are required
to remain on unpaid leave; they all have other alternatives. Our ``non-
customer facing'' employees--including ramp service employees,
mechanics, and other ``below the wing'' personnel--remain at work in
their regular positions, subject to masking and testing requirements.
Others, including customer service representatives, were transitioned
to temporary assignments that do not require direct interaction with
customers. Similar measures were not possible for flight crew--pilots
and flight attendants--due to their unique working conditions as well
as constraints imposed by union contracts and Federal regulations. As a
result, they were placed on temporary unpaid leave, but they all have
preferential consideration to available non-customer facing jobs at
United. Because there are many open positions, there is abundant
opportunity for accommodated employees on leave to apply for these
roles and earn a paycheck.
Question 24. In practical terms of supporting a family and
maintaining a household--both economically and otherwise--how is your
religious accommodation of unpaid leave any different from termination
from employment at United Airlines?
Answer. At present, none of our accommodated employees are required
to remain on unpaid leave; they all have other alternatives. Our ``non-
customer facing'' employees--including ramp service employees,
mechanics, and other ``below the wing'' personnel--remain at work in
their regular positions, subject to masking and testing requirements.
Others, including customer service representatives, were transitioned
to temporary assignments that do not require direct interaction with
customers. Similar measures were not possible for flight crew--pilots
and flight attendants--due to their unique working conditions as well
as constraints imposed by union contracts and Federal regulations. As a
result, they were placed on temporary unpaid leave, but they all have
preferential consideration to available non-customer facing jobs at
United. Because there are many open positions, there is abundant
opportunity for accommodated employees on leave to apply for these
roles and earn a paycheck.
In addition, employees on temporary unpaid leave continue to accrue
seniority and retain rights to return to work as defined by applicable
collective bargaining agreements, which is not true of employees who
are terminated.
Question 25. United Airlines cancelled flights on Christmas Eve,
Christmas, New Year's Eve, and New Year's Day, at least in part due to
staff shortages. How many flights did United cancel for the period
December 20, 2021 through January 4, 2022? Please break this down by
day and airport as well.
What was the loss of revenue from those cancellations?
Answer.
Approximately 8 percent of tickets originally booked on cancelled
flights (including those operated by our partners doing business as
United Express) have been refunded. In addition, we were able to re-
accommodate 77 percent of passengers, with the balance of tickets not
yet rebooked or exchanged.
Question 26. For each day for the period from December 20, 2021
through January 4, 2022, how many employees was United short from
necessary staffing levels? Please break this down by job function and
geographic location.
Answer. Toward the end of December, we started experiencing a high
volume of COVID-related sick calls from our flight crew members. To
mitigate this, we are taking a multiprong approach by adjusting our
schedule up to 7 days in advance, allowing us to re-accommodate
passengers with ample notice, reducing scheduled operations further out
and offering economic incentives for non-affected crew members to pick
up uncovered lines of flying.
Question 27. It has been suggested that the number of pilots and
flight attendants that United grounded for not taking the vaccine would
have supplied the capacity to avoid, or at least significantly reduce,
the number of flights United cancelled from December 20, 2021 through
January 4, 2022. Per your answer to question #16, how many flights
could the United employees currently on unpaid leave have collectively
covered on the dates in question assuming they were all available to
work during that period?
Answer. Our crew reserves for December were in line, if not better
than what we had during the same period in 2019. In that sense, we
believe that the gross of the cancellations we experienced towards the
end of December due to COVID infections would not have been materially
reduced if pilots and flight attendants who are not vaccinated had been
available to fly.
Question 28. Was there any discussion about bringing the United
employees with a religious or medical exemption who are currently on
unpaid leave back to work to address the staffing shortages? If not,
why not?
Answer. Please refer to the answer above.
Question 29. Breitbart News recently published an article that
alleged United was using London-based flight crews, who are not
mandated to be fully vaccinated, in December of 2021 and January of
2022. Exactly how frequently does United use foreign-based flight crews
in domestic operations? Please provide a breakdown of the domestic use
of all foreign-based flight crews by United in December of 2021 and
January of 2022 including the specific routes flows, where the foreign-
based flight crew is based, and whether, under the laws of that nation,
the flight crew is subject to United's vaccine mandate and if not, what
the vaccination status is of those flight crews.
Answer. The information in the article was false. United's London-
based flight attendants were not and have not been used to augment
staffing on our domestic schedules.
Question 30. What is the process by which pilots from other
airlines are able to ride in cockpit jumpseats on United flights, and
does United check the vaccination status of these pilots before
allowing them to ride in the cockpit jumpseat? Please be specific as to
which pilots from which airlines may ride in cockpit jumpseats on
United flights, and what the procedures are for a pilot to do that.
Answer. United has reciprocal agreements with other airlines for
flight deck Jumpseat for pilots. A requesting pilot's identity and
eligibility is confirmed before Jumpseat Authorization is issued at the
departure gate. If a cabin seat is available, the requesting pilot will
receive a seat assignment and board the airplane without the need to
occupy the flight deck Jumpseat.
The Captain of the flight verifies the requesting pilot's
credentials and has the discretion to grant or deny access to the
flight deck Jumpseat with consideration to safety, security, and
operational concerns.
Question 31. For unvaccinated non-customer facing United employees,
does United require they use an N95 mask or respirator? If so, what are
the OSHA safety guidelines that outline the use of such equipment?
Answer. Currently, accommodated non-customer facing employees in
the operations are required to wear a KN95 mask. N95 respirators can be
worn on a voluntary basis, but it is not required.
Question 32. Have these United employees been properly trained and
fitted for this equipment? If so, what is that training exactly?
Answer. KN95 masks are not considered respirators and are not
subject to OSHA respirator training requirements.
Question 33. What specific policies does United have in place for
these employees regarding disposal of masks and respirators, breaks off
from having to wear the equipment, etc.?
Answer. KN95 masks are single use masks, and can be discarded after
use, soiled or wet. KN95 masks are not required when actively eating/
drinking. During prolonged meal and drinking periods, masks must be
worn between bites and sips. Masks are not required in a closed room
occupied by a single person, and while communicating with person who is
deaf or hard of hearing, and when the ability to see the mouth is
essential for communication.
Question 34. Mr. Kirby, you have repeatedly said United's vaccine
mandate is about ``safety,'' including when you were testifying
recently. In this context, what precisely does that mean to you?
Has that changed over time? If so, how?
Answer. At United, we don't compromise on safety and the vaccine
policy has always been about saving lives. Getting the vaccine is the
best thing our employees can do to protect themselves and others from
hospitalization or death.
Question 35. What is the end goal of United's COVID-19 vaccine
mandate? Would it be fair to characterize the end goal as developing,
in all United employees, immunity to COVID-19?
Answer. The end goal of our vaccine policy is to save lives and we
know it is doing just that. Since our vaccine policy went into effect,
the hospitalization rate among our employees has been 100 times lower
than the general population. Based on United's prior experience and the
nationwide data related to COVID fatalities among the unvaccinated,
that means there are approximately 8-10 United employees who are alive
today because of our vaccine requirement. Prior to our vaccine policy,
tragically, more than one United employee on average per week was dying
from COVID.
Question 36. For the purposes of complying with United's vaccine
mandate, is natural immunity, that is immunity gained from being
infected with and subsequently recovering from COVID-19, accepted? If
not, why not? Please be specific, and provide the full scientific
rationale including any supporting medical or scientific literature.
Answer. At the time it was implemented, the policy allowed, on a
case by case basis, for certain employees who had contracted COVID-19
to delay vaccination. The policy does not otherwise provide for
exemptions based on natural immunity. Following CDC guidance, we
believe vaccination is the best form of protection against COVID-19. A
study by the Centers for Disease Control and Prevention found
unvaccinated people who have had COVID-19 are more than twice as likely
to be reinfected with the virus compared with people who were fully
vaccinated after contracting the virus.
Question 37. With the growing rate of breakthrough infections among
the vaccinated, how exactly is it safer to require a vaccine than to
require testing among both vaccinated employees and unvaccinated
employees?
Answer. United made the decision to require COVID-19 vaccines
because those who are vaccinated have a significantly reduced risk of
contracting a serious case of COVID that requires hospitalization or
leads to death. While testing is certainly a tool to support a strategy
aimed at reducing the spread of COVID-19, it is not a replacement for
vaccination. Testing only provides a snapshot in time of a person's
COVID-19 status but does not provide the vaccine's reduction in risk of
death or severe disease.
Question 38. Would you acknowledge that as vaccine effectiveness
percentages drop over time, and drop with regards to new variants like
Omicron, that a general program of regular testing would be more
effective statistically at detecting COVID infections, and thus
preventing the spread of the disease?
Answer. Being vaccinated against COVID-19 reduces the risk of
developing serious illness or dying should a breakthrough case occur.
While testing is an available tool to detect some cases, Omicron is
spreading at such a rapid rate that testing alone will not stop the
spread of the disease in the workplace.
Question 39. Again, you have said this mandate is all about safety,
and that things are most safe when everyone is vaccinated. Does United
plan to require proof of vaccination for travelers? If so, when? If
not, why not, and how do you justify requiring all United employees to
be vaccinated but not requiring any of the travelers?
Answer. United believes it is a government responsibility to
determine eligibility requirements for traveling public. For example,
the Federal government has now instituted a vaccine requirement for all
international flights to the U.S., with limited exceptions, and we are
in compliance with that. Our focus with our vaccine policy was to
ensure the safety of our employees and our workplace.
Question 40. Are there any other vaccines that United requires all
employees to have as a condition of employment? If so, what vaccines
and what has the religious and medical exemption process been for
those? Please note that this is not intended to include vaccinations
required by other nations to which United flies, such as yellow fever
or polio vaccination requirements around the world, but rather solely
to include those vaccines which United, on its own, requires employees
to have as a condition of employment.
Answer. Please refer to the vaccine policy answer to question No. 1
above.
Question 41. Under Part 5 of Title 14 of the Code of Federal
Regulations (14 CFR), part 121 air carriers, which includes United, are
required to develop and implement a Safety Management System (SMS). Per
the FAA's Advisory Circular 120-92B--Safety Management Systems for
Aviation Service Providers--a quality SMS, as part of its foundation,
should have ``policies and processes that foster open reporting while,
at the same time, stressing the need for continuous diligence and
professionalism. The organization should encourage disclosure of error
without fear of reprisal, yet it should also demand accountability on
the part of employees and management alike.'' Aside from the hardships
placed on the employees fired over non-compliance with the vaccine
mandate or those placed on employees with exemptions on unpaid leave, I
have to wonder what kind of impact this mandate might be having on the
safety culture at United.
Has United done any research or assessment as to whether its
vaccine mandate has impacted safety? This would include things like
whether employees have a greater fear of reprisal for raising an issue
or whether they feel less confident self-reporting something.
Answer. United used its Safety Management System to assess the
decision to implement a vaccine policy and did not find any negative
impacts to the safety of the airline or United's safety culture. United
continues to review voluntary safety reports for trends related to the
vaccine policy and has not seen any data to indicate safety concerns.
Question 42. Since instituting the vaccine mandate, have the rates
of safety incidents changed at all? If so, how? Have there been any
changes to observed safety incident? For example, has there been an
increase of pilots making an unplanned deviation from the speed or
altitude filed in their flight plan?
Answer. No, we have not seen an increase in safety incidents since
the vaccine requirement went into effect.
Question 43. United Airlines recently announced the cancelled
service out of 11 cities across the United States, including ending
service to Easterwood Field Airport (CLL), in College Station, Texas,
and Killeen-Fort Hood Regional Airport (GRK), in Killeen, Texas.
Killeen and College Station play a vital role in support of
national defense and national security. Killeen is home to Fort Hood,
the Army's premier installation to train and deploy heavy forces.
College Station is home to Texas A&M University, the Nation's largest
Senior Military College, which continually commissions more officers
into the United States Armed Forces each year than any other college
outside of the Federal service academies.
For both College Station and Killeen, what specific analysis did
United undertake or use to justify ending service on January 3, 2022?
Please provide supporting documentation, including future projections
for enplanements, load factors, fuel costs, labor shortages, etc.
Answer. United constantly evaluates the placement of aircraft
across its route network to ensure proper alignment with consumer
demand and market conditions. We constantly evaluate consumer demand
and market conditions to provide our customers comprehensive global
connectivity to places across small, mid-size, and large communities.
United achieves this using seven strategically-placed U.S. hubs,
including our substantial operating base at Houston George Bush
Intercontinental Airport (IAH).
The natural mobility of our assets and vast geographical scope of
operations allows us to respond to changing consumer behaviors and air
travel demand by redeploying aircraft to where there is most demand.
Unfortunately, demand for United services at both College Station and
Killeen have underperformed peer routes for some time. Specifically,
the 2016-2019 occupancy of available seat miles, commonly referred to
as load factor, was 60 percent and 66 percent for CLL and GRK,
respectively. Load factor of other routes flown by similar regional
aircraft was 82 percent during the same time. This underperformance at
CLL and GRK has persisted throughout 2021 leading to the recent
decision to end operations. Further exacerbating the situation has been
significant industry capacity growth at nearby large city airports in
Austin, Dallas, and Houston. For example, Austin-Bergstrom
International Airport (AUS) is approximately an 80-mile drive from
Killeen. Per current published schedules, departing seats from Austin
are scheduled to increase from 663,000 in July 2016 to 1.3 million by
July 2022, nearly doubling in size. This considerable increase has
almost certainly attracted scores of customers from Killeen's passenger
catchment area to use Austin instead of Killeen-Fort Hood Regional
Airport. Material growth at Dallas and Houston presents a similar
challenge at CLL. In addition, individual markets that are not
sustainable for the long-term are even more difficult to sustain in
light of the pilot shortage within the regional airline space.
Aviation stakeholders such as airport authorities can access demand
and load factor performance from U.S. Department of Transportation
(DOT) reports including the ``Airline Origin and Destination Survey''
(DB1B) and ``Air Carrier Traffic and Capacity Data by Non-Stop Segment
and On-Flight Market'' (T-100). Additionally, published schedules at
nearby airports are available via sources such as OAG. While United
seeks collaboration with its airport stakeholders, we also encourage
them to proactively evaluate their performance versus other U.S.
destinations utilizing these public data resources.
We never want to end service in any of the communities we serve.
Unfortunately, when market factors necessitate, we need to end service
to ensure alignment with customer demand. United's Network Planning
team and CLL leadership are in discussions regarding possible
alternative options to serve CLL.
Question 44. What conversations, if any, did United have with the
Department of Transportation about ending service to College Station
and Killeen prior to March 1, 2022, the end of the ``Minimum Air
Services Guarantees'' requirements in Public Law 116-260? Please
provide copies of any correspondence related to this matter.
Answer. Throughout the pandemic, United complied with its minimum
service obligations that stemmed from the CARES Act and its
corresponding DOT Orders. In the CARES Act, Congress delegated its
implementation of the minimum service obligations to DOT. With the
Department's oversight and approval, United maintained service to more
than 200 domestic airports beginning on April 7, 2020 and spanning
throughout the first 18 months of the pandemic. The vast majority of
this service could not have been maintained by United if it had not
been for the financial assistance it received through the CARES Act. On
September 30, 2021, the Department chose to no longer extend the
minimum service obligations for all carriers. As a result, United has
adhered to all conditions and requirements relating to the minimum
service obligations in the CARES Act and imposed by the Department.
3. What conversations, if any, did United have with local officials
in College Station or Killeen regarding any underperformance issues
prior to deciding to end service to these airports?
4. Did United ever alert College Station or Killeen that it was
possible these cities might lose air service in the future if
enplanements or load factors did not improve? If so, when and what was
the outcome of those discussions?
5. Did United have any conversations with the Department of Defense
(DOD) regarding the decision to end service to Killeen and consequently
Fort Hood? If so, to what extent did United and DOD discuss the impact
ending service might have on movement of members of the armed forces
and their families to and from Fort Hood?
6. Did United discuss, either internally or with key stakeholders
including DOD, or otherwise consider the impact ending service to
Killeen, and consequently Fort Hood, would have on military readiness
and consequently national security? If so, please provide those
communications. Additionally, please provide any analysis done weighing
national security implications, such as the ability to move service
members to and from Fort Hood, against the ``long-term sustainability''
of this route for United.
Answer. Please refer to the answer to question No. 43 above.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
John Laughter
Payroll Support Program Impact. Congress created the Payroll
Support Program to protect the airline industry's workforce, support
the continuity of safe and essential travel, and ensure the industry's
ability to remain viable to meet future consumer travel demand. The
Department of the Treasury disbursed a total of $54 billion to
passenger airlines, across three rounds of PSP, to provide critical
relief during the pandemic.
We know that PSP made a difference in December 2020, when Congress
extended the program, because airline recipients had to recall
thousands of employees who were furloughed after September 30, 2020,
when the first round of PSP ended.
According to the Bureau of Transportation Statistics (BTS), between
October 2020 and February 2021, major airlines hired or brought back
28,179 workers. These workers came back just in time for the air travel
rebound, which took off in March 2021. As of September 2021, airlines
were approximately 8.8 percent below their pre-pandemic employment
levels according to BTS data. I am interested in learning from your
airline on how the Payroll Support Program impacted your workforce and
operations. Mr. Laughter, Delta received $11.9 billion in PSP funds.
Question 1. If not for PSP funding, what do you think the status of
your workforce would look like today? Would your airline have been able
to survive the pandemic, absent PSP funding?
Answer. We are extremely grateful to the U.S. taxpayers and
Congress for the support you have provided to our employees. It has
made a tremendous difference and enabled Delta to preserve thousands of
jobs. As you mention in your question, Delta received $11.95 billion in
aggregate PSP funds. These funds were used for wages, salaries, and
benefits of eligible employees. While Delta cannot say for certain what
our workforce would look like without PSP support, we can state that we
would not be as ready to accommodate the return of air travel demand.
This point is particularly poignant as the Omicron variant of COVID-19
continues to impact workforces across the globe.
Without PSP funds, our airline almost certainly would not look like
the Delta we have today.
Question 2. Since receiving PSP funding, do you believe your
airline is in a good position to meet current consumer travel demand?
Answer. Yes, Delta is in a good position to meet current consumer
travel demand. Recent flight disruptions that impacted the airline
industry in late December 2021 and early January 2022 were largely due
to adverse weather conditions and staffing absences due to the Omicron
variant of COVID-19. By many measures, 2021 was Delta's best performing
year, surpassing 2019. As the data provided in Tables 1-3 below
demonstrate, in October and November of 2021, Delta flew more flights
with fewer delays and fewer cancellations than December 2021 and
January 2022.
To address weather issues, Delta has implemented many measures over
the past several years to improve service recovery, including advanced
notification of bad weather, and weather waivers so customers can
change their flights at no cost. Our operations leadership often
activates our Peach Corps at hubs during significant disruptions to
provide customers delayed at airports with food, drinks, and assistance
with rescheduling. Delta is also unique in the industry as an employer
of 25 meteorologists who provide 24-hour monitoring of weather across
our operations. This team begins monitoring flights 5 days before
departure and produces hourly forecasts 30 hours ahead of any flight.
All airlines have been challenged by the Omicron chapter of the
COVID pandemic, and Delta is no exception. Omicron is much more
contagious than other versions of the virus, and this is reflected in
both the broader number of U.S. COVID cases and in Delta's absenteeism
rates over the past month. The U.S. has seen daily cases reported
double to nearly 1 million on January 3, 2022. Delta saw its flight
attendant and pilot absenteeism rates spike in late December. The
flight attendant absenteeism rate early in December was just under 16
percent higher than the same period in
2020; by the end of the month, it had peaked at nearly 77 percent
year-over year. The pilot absenteeism rate early in December was
comparable to the same period in 2020; by the end of the month, it had
peaked at nearly 14 percent year-over year. As cases of the Omicron
variant have begun to subside, we believe that we are well staffed to
meet demand.
Delta has also continued to hire additional employees to meet
increased demand. In 2021, we hired over 8,700 new employees--6,100
Airport Customer Service agents, 625 new pilots, and over 1,000 flight
attendants. We continue to bring on new employees as quickly as
possible to avoid cancellations.
To improve service to customers, we have implemented several other
measures. Delta hired over 1,400 reservation agents last year to
address heightened call volumes. We also improved the Fly Delta app and
delta.com to make quick flight changes easier without waiting in line
at the airport or on the phone. Despite weather challenges, Delta
employees continue to provide industry leading performance with minimal
cancellations and late arrivals.
Airline Relationships with Labor. Congress focused on sustaining
the airline workforce and ensuring continuity of operations during a
time of intense uncertainty.
From information shared with the Committee, it appears that those
airlines and unions that worked together found solutions to COVID-19
challenges, from addressing new health risks in the workplace to
ensuring currency and qualification of a highly-skilled workforce.
Question. How has your airline collaborated with unions to
establish policies to meet workforce needs in response to the COVID-19
pandemic? How did your airline's relationship with relevant labor
unions enhance your ability to meet operational needs and the rise in
air travel demand?
Answer. At the core of Delta's strong, award-winning culture is a
continuous focus on putting people first. We listen to our employees
through a variety of feedback mechanisms and employee feedback has
guided continuous investments in Delta people and how they support our
customers.
Maintaining a strong focus on our employees--both through the
relationship we have with our pilot union and through the direct
relationship with those employee groups that have chosen to remain non-
union--is something we prioritize at every level of leadership within
Delta.
During the pandemic, we worked with our pilot union to negotiate
contractual agreements that outlined work rules, time away, and pay
provisions related to the impact of COVID on our people and operation.
We also worked directly with our ground and flight attendant
employee involvement groups and Delta Board Council to receive
feedback, which guided our decisions regarding paid time off due to
COVID, voluntary leaves of absence, personal protective equipment, and
the ability to offer convenient testing and vaccines for employees and
their family members.
We have been successful because of our people and taking care of
them is our number one job. To help facilitate this goal, Delta created
the Delta Board Council (DBC) in 1996, and it currently comprises one
representative from each of Delta's major employee operating units:
Airport Customer Service, Inflight Service, Management and
Administrative employees, Reservation Sales, and Technical Operations.
The DBC is tasked with holding employee meetings at every level below
corporate director to gauge feedback and disseminate information.
Employee Involvement Groups also exist within each of our major
operating units and are much larger--from dozens to hundreds of
employees per workgroup. They talk with their colleagues regularly and
work on team-specific improvements based on employee feedback.
Our strong culture of feedback and continuous improvement was
maintained during the pandemic, with employee survey scores remaining
above the benchmark for large corporations.
Contract Workforce Role and Staffing. At the height of the
pandemic, airport and aviation workers stood with airlines and called
on the Federal government to make sure our national air travel system
remained strong, aviation jobs were protected, and that airlines were
ready to meet consumer travel demand.
For decades, airlines have outsourced essential service airport
jobs like cabin cleaners, wheelchair attendants, security officers, and
baggage handlers to contractors at major airports across the country.
Contract workers play a critical role in our aviation system and
continue to work hard on the frontlines of the COVID-19 pandemic to
keep travelers safe.
Question. How will your airline ensure that the contracted
workforce, which provides such critical services, is stable, well-
trained, and has adequate staffing levels needed to respond to
operational challenges?
Answer. Our contractors have experienced significant attrition due
to macro labor market pressure that has limited their ability to fully
staff certain services. Cabin Cleaning, Wheelchair, and Ground Handling
have been hit particularly hard. To address the contractor staffing
challenges, we have onboarded approximately 1,400 new frontline Delta
employees since May 2021 with the specific goal of supplementing
business partners across our hubs for these services, particularly with
respect to Cabin Cleaning.
Airline Workforce Recall. The Committee is aware that, in 2020,
airlines took varying approaches to temporarily reduce the number of
active employees on their payroll to avoid involuntarily furloughing or
laying off employees as they experienced growing pandemic-related
financial difficulties. Many airlines offered employee programs to
incentivize voluntary separations, including voluntary furloughs, early
retirements, and temporary leaves of absences.
Airlines that extended voluntary leave options to their employees
reserved the right to recall such employees from leave when necessary.
To the Committee's knowledge, most airlines started broad workforce
recall efforts in the first quarter of 2021, employing particularly
concentrated efforts to bring back employees in January and February
2021. However, recalling employees has not been an easy process as
airlines have reported higher workforce shortages and rates of
absenteeism in certain workgroups, leaving the airlines more ill-
equipped to meet consumer travel demand.
Question 1. Has your airline experienced challenges in recalling
your workforce? If so, did your airline anticipate such issues in
recalling employees from leave before initiating your recall efforts?
Please describe the scope of the workforce recall challenges your
airline faced in 2021.
Answer. Delta has not had problems recalling our because we did not
furlough or involuntarily terminate any employees. Nor has Delta had
staffing shortages--by which we mean a lack of qualified candidates for
open positions. Delta has had plenty of applications for the jobs we
have posted. Delta has experienced COVID-19 staffing challenges as the
virus has created significant volatility in demand and increased
employee absences during the last month of 2021. COVID-19 has made
forecasting demand and operational planning difficult at best, with
absenteeism exacerbating the situation during December. Overall, we
hired over 8,700 new employees in 2021--6,100 Airport Customer Service
agents, 625 pilots, and 1,000 flight attendants to respond to the surge
in passenger demand.
Question 2. Has your airline's workforce fully returned as of
January 1, 2022? How did the status of your workforce's recall from
voluntary leave programs affect your airline's ability to meet consumer
air travel demand in 2021?
Answer. As of January 1, 2022, Delta's workforce has fully returned
from long-term, nonquarantine, COVID-related leave. Other than the
challenges that the Omicron variant presented, Delta was able to meet
travel demand.
Airline Operational and Scheduling Data.
Question 1. For the months of October, November, and December 2021,
please provide the number of flights your airline operated, the number
of flights cancelled, the number of flights delayed more than 15
minutes, the number of flights delayed more than 90 minutes, and the
number of flights delayed more than six hours.
Answer.
Table #1--System Cancellations & Delays
October-December 2021
------------------------------------------------------------------------
System Wide October November December
------------------------------------------------------------------------
Flights Cancelled 700 63 3,274
------------------------------------------------------------------------
Flights Operated 130,645 127,255 124,308
------------------------------------------------------------------------
Flights Scheduled 131,345 127,318 127,582
------------------------------------------------------------------------
Delay >= 15 minutes 14,731 12,979 22,078
------------------------------------------------------------------------
Delay >= 90 minutes 2,928 2,394 5,209
------------------------------------------------------------------------
Delay >= 360 minutes 303 232 568
------------------------------------------------------------------------
Table #2--Domestic Cancellations and Delays
October-December 2021
------------------------------------------------------------------------
Domestic System October November December
------------------------------------------------------------------------
Flights Cancelled 673 56 2,995
------------------------------------------------------------------------
Flights Operated 122,380 119,176 115,181
------------------------------------------------------------------------
Flights Scheduled 123,053 119,232 118,176
------------------------------------------------------------------------
Delay >= 15 minutes 13,624 11,827 20,050
------------------------------------------------------------------------
Delay >= 90 minutes 2,742 2,248 4,848
------------------------------------------------------------------------
Delay >= 360 minutes 293 220 544
------------------------------------------------------------------------
Question 2. For the month of January 2022, please provide the
number of daily flights your airline operated, the number of flights
cancelled, the number of flights delayed more than 15 minutes, the
number of flights delayed more than 90 minutes, and the number of
flights delayed more than six hours.
Answer.
Table #3--System Cancellations & Delays
January 2022
----------------------------------------------------------------------------------------------------------------
Flights Flights Flights delay >= delay >= delay >=
Date Cancelled Operated Scheduled 15 min 90 min 360 min
----------------------------------------------------------------------------------------------------------------
1/1/2022 380 2664 3044 686 142 22
----------------------------------------------------------------------------------------------------------------
1/2/2022 490 3919 4409 1549 327 13
----------------------------------------------------------------------------------------------------------------
1/3/2022 585 3824 4409 1336 291 20
----------------------------------------------------------------------------------------------------------------
1/4/2022 218 4124 4342 1075 196 19
----------------------------------------------------------------------------------------------------------------
1/5/2022 153 3925 4078 1066 215 6
----------------------------------------------------------------------------------------------------------------
1/6/2022 275 3969 4244 687 159 20
----------------------------------------------------------------------------------------------------------------
1/7/2022 452 3791 4243 1061 296 21
----------------------------------------------------------------------------------------------------------------
1/8/2022 70 3359 3429 592 111 15
----------------------------------------------------------------------------------------------------------------
1/9/2022 67 4109 4176 693 135 5
----------------------------------------------------------------------------------------------------------------
1/10/2022 32 4379 4411 431 99 7
----------------------------------------------------------------------------------------------------------------
1/11/2022 29 4072 4101 348 67 5
----------------------------------------------------------------------------------------------------------------
1/12/2022 32 4127 4159 277 61 7
----------------------------------------------------------------------------------------------------------------
1/13/2022 18 4409 4427 372 73 4
----------------------------------------------------------------------------------------------------------------
1/14/2022 27 4412 4439 520 104 17
----------------------------------------------------------------------------------------------------------------
1/15/2022 32 3212 3244 421 67 10
----------------------------------------------------------------------------------------------------------------
1/16/2022 497 2917 3414 548 114 7
----------------------------------------------------------------------------------------------------------------
1/17/2022 153 4247 4400 815 177 8
----------------------------------------------------------------------------------------------------------------
Table #4--Domestic Cancellations & Delays
January 2022
----------------------------------------------------------------------------------------------------------------
Flights Flights Flights delay >= delay >= delay >=
Date Cancelled Operated Scheduled 15 min 90 min 360 min
----------------------------------------------------------------------------------------------------------------
1/1/2022 360 2350 2710 606 127 21
----------------------------------------------------------------------------------------------------------------
1/2/2022 484 3572 4056 1441 310 12
----------------------------------------------------------------------------------------------------------------
1/3/2022 571 3491 4062 1246 283 19
----------------------------------------------------------------------------------------------------------------
1/4/2022 200 3802 4002 993 182 18
----------------------------------------------------------------------------------------------------------------
1/5/2022 149 3612 3761 976 204 6
----------------------------------------------------------------------------------------------------------------
1/6/2022 272 3653 3925 602 145 20
----------------------------------------------------------------------------------------------------------------
1/7/2022 433 3483 3916 970 270 21
----------------------------------------------------------------------------------------------------------------
1/8/2022 69 3020 3089 503 95 15
----------------------------------------------------------------------------------------------------------------
1/9/2022 66 3788 3854 618 129 5
----------------------------------------------------------------------------------------------------------------
1/10/2022 32 4056 4088 374 91 7
----------------------------------------------------------------------------------------------------------------
1/11/2022 28 3756 3784 308 63 3
----------------------------------------------------------------------------------------------------------------
1/12/2022 27 3815 3842 252 57 7
----------------------------------------------------------------------------------------------------------------
1/13/2022 17 4092 4109 338 69 4
----------------------------------------------------------------------------------------------------------------
1/14/2022 27 4085 4112 484 103 17
----------------------------------------------------------------------------------------------------------------
1/15/2022 28 2877 2905 353 58 9
----------------------------------------------------------------------------------------------------------------
1/16/2022 480 2615 3095 489 105 7
----------------------------------------------------------------------------------------------------------------
1/17/2022 122 3959 4081 760 169 5
----------------------------------------------------------------------------------------------------------------
Question 3. For the months of October, November, and December 2021,
and January 2022, please detail any preemptive schedule changes that
your airline made, including cancelling flights or changing the
departure time by more than one hour.
Answer. Any preemptive schedule changes made within 7 days of a
flight are considered cancellations or delayed flights. Therefore,
these flights would be included in the data from questions 2 and 3.
Airline Employment and Absenteeism Levels.
Question 1. For the months of October, November, and December 2021,
please provide the number of full-and part-time employees employed by
your airline.
Answer. At the end of each month, Delta employed:
Table #4--Domestic Cancellations & Delays
October-December 2021
------------------------------------------------------------------------
October November December
------------------------------------------------------------------------
Number of Employees 86,312 87,601 88,208
------------------------------------------------------------------------
Question 2. For the months of October, November, and December 2021,
and January 2022, please detail any significant absenteeism problems
experienced by your airline.
Answer. For October and November 2021, there were no non-COVD-
related significant absentee problems experienced at Delta. Omicron is
much more contagious than other versions of the virus, and this is
reflected in both the broader number of U.S. COVID cases and in Delta's
absenteeism rates over the past month and a half. The U.S. has seen
daily cases reported double to nearly 1 million on January 3, 2022.
Delta saw its flight attendant and pilot absenteeism rates spike
towards the end of December 2021, and this continued into January 2022.
The flight attendant absenteeism rate early in December was just under
16 percent higher than the same period in 2020; by the end of the
month, it had peaked at nearly 77 percent year-over year. The pilot
absenteeism rate early in December was comparable to the same period in
2020; by the end of the month, it had peaked at nearly 14 percent year-
over year.
Voluntary Separation Programs. The Payroll Support Program
prohibited any airlines that received Federal funding from conducting
involuntary layoffs or furloughs. Nonetheless, in the wake of
plummeting air travel demand in the spring of 2020, many airlines
aggressively incentivized voluntary separation programs to reduce the
cost of maintaining their workforce. These programs generally included
voluntary leaves of absences, early retirements, and separation
incentives.
Given the reported challenges that many airlines faced as consumer
travel demand began to rebound this summer, I am concerned that deep
employee cuts left airlines unprepared to capture the returning demand.
As reported to the Securities and Exchange Commission in July 2020,
Delta Air Lines reduced its total headcount by over 45,000 workers--
approximately 40 percent of its workforce--through the use of a
voluntary leave of absence program. Approximately 18,000 Delta
employees left the company via early retirement and voluntary
separation programs. During the Thanksgiving holiday that year, Delta
cancelled hundreds of flights as it struggled with staffing shortages.
Delta is not alone. American Airlines and Southwest have also cancelled
hundreds of flights due to staffing challenges.
Question 1. Did Delta's use of voluntary leave and separation
programs contribute to its operational challenges? If so, how?
Answer. No.
Question 2. Have all of the employees who elected to take a leave
of absence returned back to the airline? If not, why not?
Answer. Yes, all employees who have elected to take a leave of
absence due to the COVID-19 pandemic have returned or decided to
permanently separate.
Payroll Support Program Employee Salary and Wage Terms. Under the
CARES Act, passenger air carriers collectively received $25 billion
from the first round of the Payroll Support Program (PSP1). Air
carriers could only use PSP funds to continue paying employee wages,
salaries, and benefits. To preserve the pay and benefits of airline
workers, the Payroll Support Program expressly prohibited airlines from
reducing the hourly wages of their employees. Nonetheless, it has been
reported that some airlines elected to reduce the number of hours their
employees worked rather than their hourly rate of pay. The consequence
for the airline employees, however, is the same: less pay.
Delta Air Lines received approximately $5.59 billion in funding
from PSP1, but it has been reported that Delta reduced employee hours
and salaries from April to June 2020.\1\
---------------------------------------------------------------------------
\1\ According to the Atlanta Journal-Constitution, Delta Air Lines
reduced the work hours of its ground workers and headquarter employees
to ``three-or four-day work weeks in April [2020] and cut salaries by
25 percent to trim payroll expenses.'' See: Kelly Yamanouchi, ``More
than 21,000 Delta employees volunteer for unpaid leave, other workers'
hours reduced,'' The Atlanta Journal-Constitution, March 26, 2020,
available at: https://www.ajc.com/blog/airport/more-than-000-delta-
employees-volunteer-for-unpaid-leave-other-workers-hoursreduced/
v3lmxHwpYMZ
rON8DYvsnxH/ and Kelly Yamanouchi, ``Delta to restore employees to full
pay, hours,'' The Atlanta Journal-Constitution, December 9, 2020,
available at: https://www.ajc.com/news/business/delta-torestore-
employees-to-full-pay-hours/FE7NT2CB3RBZHILGFMZPFBBRH4/.
Question 1. Did Delta reduce the hours or benefits for any of its
employees during the effective period of the Payroll Support Program?
Answer. Delta did not reduce employee benefits. Delta did reduce
the hours of many employees by 25 percent, but there were several
groups exempted from this reduction based on the needs of the
operation, such as our Reservations and Care and Airport Customer
Service teams, as well as some maintenance teams. Delta's pilots and
flight attendants did not have a reduction in hours. Delta's Officers
took a 50 percent pay cut except for the CEO, who announced in March
2020 that he would forgo his salary and did forgo it through December
2020.
Question 2. If so, please explain how Delta views these reductions
as consistent with the terms and objectives of the Payroll Support
Program?
Answer. Delta is in full compliance with the Payroll Support
Program. All funds we received were used for wages, salaries, and
benefits of eligible employees to protect jobs during the pandemic, in
compliance with the terms of the PSP agreements.
Consumer Refunds. In 2020, the Department of Transportation
(``DOT'') received 29,687 refund complaints against U.S. airlines, a
4,634 percent increase over 2019. And while the problem has started to
get better, DOT still received 5,129 refund complaints in September
2021, well above the 627 filed against U.S. airlines for all of 2019.
DOT has a rulemaking in the Unified Agenda which says that it is
looking at defining what constitutes a ``cancellation'' and a
``significant delay''--the two things that entitle a customer to a
refund. Currently, DOT lets airlines make their own determinations as
to whether or not a flight is cancelled, and the number of hours that
account for a ``significant'' delay.
Question 1. In your view, how many hours does a flight have to be
delayed before a passenger is entitled to a refund?
Answer. Delta passengers are entitled to a full refund, regardless
of fare class, if there is a flight cancellation, diversion, delay of
greater than 120 minutes, or that will cause a passenger to miss
connections.
Question 2. If the reluctance to issue refunds was just an issue of
preserving cash on hand, then why were refund complaints still so high
in 2021?
Answer. While we cannot speak for the industry, Delta has provided
full refunds for all eligible travelers from the outset of the
pandemic. At Delta, we believe that customer loyalty is a key driver of
our success. In 2020, we processed more than 6.7 million refunds,
totaling over $3 billion.
We understand that passengers not eligible for a refund need
additional flexibility as a result of the unpredictability stemming
from the pandemic. Therefore, we went a step further and waived change
fees and provided e-credits during 2020 and 2021 for Basic Economy and
other nonrefundable tickets. We continually monitor pandemic
developments and adjust our policies accordingly. More recently Delta
announced that we are redoubling our efforts with another industry-
leading eCredit extension through year-end 2023. Effective Jan. 12, all
existing eCredit holders will have an additional year of flexibility
for rebooking and traveling. Customers will be able to rebook their
ticket by December 31, 2023, for travel throughout 2024. Furthermore,
all Delta customers with upcoming 2022 travel or who purchase a ticket
in 2022 also have the flexibility to rebook their ticket through
December 31, 2023, and travel throughout 2024, with no fee for most
fare types.
Delta's internal complaint data indicate we have received a higher-
than-normal volume of complaints during the 2021 holiday period. We
expect many of these complaints are driven by the service disruptions
due to weather and impacts of the Omicron variant, but unfortunately,
we are still in the process of analyzing them, so we cannot share any
detail at this time as each complaint is reviewed by the Department of
Transportation (DOT) and airline staff. DOT's final resolution of each
complaint is not published for approximately 2 months after any given
month in the Air Travel Consumer Report (ATCR). We are meeting DOT's
guidance of responding to complaints within 60 days--our current
average is 27 days.
______
Response to Written Questions Submitted by Hon. Richard Blumenthal to
John Laughter
Compensation for Consumers. Since March 2020, flight delays and
cancellations have disrupted plans for countless travelers--and the
most recent cancellations left people stranded in airports and away
from family during the winter holiday season. Senator Markey and I have
repeatedly called for full cash refunds for impacted consumers. But
U.S. airlines have been slow to provide credits and legally-required
refunds and have hidden behind vague ticketing policies. Media reports
indicate that airlines are currently holding approximately $20 billion
worth of travel vouchers and unrefunded ticket values.
Question 1. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that Delta Air Lines currently owes consumers? Please provide the
amount of each value mechanism as well.
Answer. At Delta, we believe that customer loyalty is a key driver
of our success. During the pandemic Delta provided full refunds to all
customers requesting a refund for an eligible ticket. In 2020, we
processed more than 6.7 million refunds, totaling over $3 billion. For
Basic Economy tickets and other non-refundable tickets, we waived
change fees and provided e-credits during 2020 and 2021. During 2020
and 2021, passengers accumulated a total of $6.9 billion in eCredits,
with $2.7 billion outstanding at the end of 2021--this includes credits
issued for all reasons, not just those related to the pandemic.
We understand, however, that passengers who have remaining eCredits
need additional flexibility as a result of the unpredictability
stemming from the pandemic. We continually monitor pandemic
developments and adjust our policies accordingly. During 2019, 2020,
and 2021 Delta extended the expiration dates of e-credits to address
this concern. More recently Delta announced that we are redoubling our
efforts with another industry-leading eCredits extension through year-
end 2023. Effective Jan. 12, 2022, all existing eCredit holders will
have an additional year of flexibility for rebooking and traveling.
Customers will be able to rebook their ticket by December 31, 2023, for
travel throughout 2024. Furthermore, all Delta customers with upcoming
2022 travel or who purchase a ticket in 2022 also have the flexibility
to rebook their ticket through December 31, 2023, and travel throughout
2024, with no fee.
Delta has also modified our broader policies to provide travelers
with flexibility through the elimination of change and cancellation
fees for all ticket fare classes except for Basic Economy--a change
that reverts back to pre-pandemic policies. Customers may need to pay
the difference in the cost of the ticket when they rebook for certain
tickets. Details of our ticket cancellation and change policies can be
found at this site on Delta.com.
Question 2. Does Delta Air Lines gain revenue (such as from
interest) from the value of unused travel vouchers that are currently
held in company accounts? If so, how much revenue has Delta Air Lines
collected from the funds in your accounts that are linked to unused
travel vouchers since March 2020?
Answer. Interest on unused travel voucher revenue has some level of
impact on revenue; however, the cumulative effect is minimal, so we do
not track this information.
Question 3. If Delta Air Lines still owes consumers under Question
1, by when will it have completed issuing its refunds? What is the
reason for this delay?
Answer. All Delta customers who have requested a refund for an
eligible ticket have been issued a refund or their refund is currently
being processed by Delta. Delta is currently processing eligible
credits and refunds within 7 business days. Tickets paid in cash or by
check are refunded in the form of a check to the person named as the
passenger on the ticket, typically within 20 days of Delta's initial
receipt of the credit/refund request. Eligible tickets paid for by a
credit card will be refunded to the original form of payment, typically
within 7 business days of Delta's initial receipt of the credit/refund
request.
Question 4. Delta Air Lines reportedly cancelled more than 450
flights in the last week. How many consumers were impacted by these
cancellations?
Answer. Due to weather and the Omicron variant, Delta has had to
cancel 4,606 flights between December 15 and January 4. These flight
cancellations impacted 368,141 customers. 261,742 of these passengers
were rebooked within an average delay of 12 hours and 49 minutes. As
compensation for these delays, Delta provided more than $8 million in
eCredits and 1 billion SkyMiles to impacted passengers.
Question 5. Will Delta Air Lines commit to providing full cash
refunds to all impacted consumers? If not, explain why not and what
compensation you will issue to consumers.
Answer. Delta has and will continue to provide full refunds to
passengers who are eligible for refunds upon request. In recognition of
pandemic impacts, we also have provided additional flexibility for
passengers who decide not to purchase refundable tickets. More recently
Delta announced that we are redoubling our efforts with another
industry-leading eCredit extension through year-end 2023. Effective
Jan. 12, all existing eCredit holders will have an additional year of
flexibility for rebooking and traveling. Customers will be able to
rebook their ticket by December 31, 2023, for travel throughout 2024.
Furthermore, all Delta customers with upcoming 2022 travel or who
purchase a ticket in 2022 also have the flexibility to rebook their
ticket through December 31, 2023, and travel throughout 2024, with no
fee for most tickets.
Question 6. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that Delta Air Lines owes consumers for these cancellations? Please
provide the amount of each value mechanism as well.
Answer. During 2020 and 2021, passengers accumulated a total of
$6.9 billion in eCredits, with $2.9 billion outstanding at the end of
2021--this includes credits issued for all reasons, not just those that
are pandemic related.
Question 7. By when does Delta Air Lines plan to have fully
reimbursed consumers?
Answer. Delta has and will continue to provide full refunds to
passengers who are eligible for refunds upon request. Delta is
currently processing eligible credits and refunds within 7 business
days. Tickets paid in cash or by check are refunded in the form of a
check to the person named as the passenger on the ticket, typically
within 20 days of Delta's initial receipt of the credit/refund request.
Eligible tickets paid for by a credit card will be refunded to the
original form of payment, typically within 7 business days of Delta's
initial receipt of the credit/refund request. In recognition of the
impacts the pandemic has had, we have provided additional flexibility
for passengers who decide not to purchase refundable tickets. During
2020 and 2021 we also provided travel credits to passengers with Basic
Economy fares--credits to which they are not contractually entitled.
Further, Delta has recently extended the eCredit expiration date to
December 31, 2023, for all tickets purchased or expiring in 2021. This
extension will not require a fee for all tickets except for basic
economy fares.
Question 8. Please explain the causes of the recent flight
cancellations as well as the steps that Delta Air Lines is implementing
to prevent a repeat of these cancellations.
Answer. The flight disruptions experienced by the airline industry
in late December 2021/early January 2022 are largely the result of
adverse weather conditions and staffing absences resulting from the
Omicron variant of COVID-19.
Delta operations have during that time were significantly impacted
by winter weather, including at most of our major U.S. hubs. To address
weather issues, Delta is unique in the industry as an employer of 25
meteorologists who provide 24-hour monitoring of weather across our
operations. This team begins monitoring flights 5 days before departure
and produces hourly forecasts 30 hours of ahead of any flight.
All airlines have been challenged by the Omicron chapter of the
COVID pandemic, and Delta is no exception. The Omicron variant is much
more contagious than other versions of the virus, and this is reflected
both by the broader number of U.S. COVID cases and in Delta's
absenteeism rates over that time. The U.S. saw daily cases reported
double to nearly 1 million on January 3, 2022. Delta's flight attendant
and pilot absenteeism rates spiked leading up to this date. In early
December, the flight attendant absenteeism rate was just under 16
percent higher than the same period in 2020; however, by the end of the
month it had peaked at nearly 77 percent year-over year. The pilot
absenteeism rate early in December was comparable to the same period in
2020, but by the end of the month it peaked at nearly 14 percent year-
over year.
To minimize the spread of the virus among our employees, Delta
partnered with Georgia to host the state's largest COVID vaccination
site to support the state's vaccination program. Over 117,000 vaccines
were administered at the site, located at Delta's headquarters. We
continue to offer COVID testing and vaccinations to our U.S.-based
employees, free of charge. These efforts resulted in more than 90
percent of our employees being vaccinated.
Delta has also continued to hire additional employees to meet
increased demand. In 2021 we hired over 8,700 new employees--6,100
Airport Customer Service agents, 625 new pilots, and over 1,000 flight
attendants. We continue to onboard new employees as quickly and safely
as possible to avoid cancellations.
To improve service to impacted customers, we have implemented
several measures. Delta hired over 1,400 reservation agents last year
to address heightened call volumes. We also improved the Fly Delta app
and delta.com to make quick flight changes easier without waiting in
line at the airport or on the phone. Despite weather challenges, Delta
employees continue to provide industry leading performance and customer
service.
Question 9. Does Delta Air Lines maintain interline agreements with
other carriers to allow passengers affected by disruptions an alternate
means of getting to their destinations? If not, why not?
Answer. Yes.
______
Response to Written Questions Submitted by Hon. Brian Schatz to
John Laughter
Question 1. The Hawaiian Tourism Authority has made available
public service videos to educate the public about being respectful
tourists when they visit Hawaii.*
In what ways are these videos made available to Hawaii-bound
travelers on your aircraft?
Is one or more of these videos mandatory in some form for
in-bound Hawaii travelers using in-flight entertainment?
If not, what hardware, software or policy barriers prevent
the videos from being made mandatory?
Will you commit to making these videos mandatory for all
Hawaii-bound travelers using in-flight entertainment within the
next six months?
*Videos available here: https://www.youtube.com/c/gohawaii
Answer. These videos are currently available for optional viewing
through a browser on our in-flight entertainment options but are not
mandatory. We welcome working with the Hawaiian Tourism Authority to
support their efforts.
Question 2. The 2018 FAA reauthorization directed the agency to
establish minimum seat sizes. There was an acknowledgement at the time
that tighter seats and cramped quarters were causing conflicts between
passengers and a potential safety hazard if there was an emergency.
That seems even more important today. Most of the airline industry
opposed the measure and the last administration failed to advance the
rulemaking.
Do you oppose minimum seat size standards?
Do you believe the FAA should finalize regulations on
minimum seat dimensions?
Answer. The safety of Delta's passengers and employees will always
be our number one priority. Accordingly, Delta supports all efforts to
identify and mitigate safety risks, including ensuring aircraft are
designed in a manner that meets safety requirements for passenger
evacuations.
______
Response to Written Question Submitted by Hon. Jacky Rosen to
John Laughter
Jet Fuel Supply. In July of this year, Reno-Tahoe Airport, the
second largest airport in Nevada, faced a severe shortage of jet fuel
available for aircrafts flying out of the airport. This was a
potentially catastrophic issue that could have adversely impacted tens
of thousands of travelers coming to and from Nevada and risked delays
in vital cargo coming to the state. We have since learned that jet fuel
shipments are based on travel trends from the previous year to decide
how much jet fuel pipeline space they need to purchase in order to meet
current travel demand. But in 2020, demand was artificially low, as we
dealt with an unpredictable global pandemic that completely halted air
travel. As such, the data on air travel trends for 2020 was not a
reliable gauge for predicting air travel demand in 2021, or the jet
fuel necessary to accommodate that demand. Fortunately, my office, in
partnership with the airport and impacted airlines, worked together to
manage the situation. However, we must be better prepared to face
similar situations in the future--it was jet fuel this time, but one
could easily imagine relying on past year's numbers to determine future
demand for staffing, scheduled flights, or supply purchases--
potentially with serious negative effects.
Question. Mr. Laughter, would you please briefly discuss what Delta
Air Lines is doing to ensure that you have sufficient jet fuel supply
to meet demand for travel in 2022, which may very well significantly
exceed travel in 2021? And can you discuss how you make predictions for
future air travel demand, generally, given that 2020 was a statistical
anomaly?
Answer. Fuel costs are one of the largest and most difficult to
predict expenses for the airline industry. This is why, in 2012, we
purchased our own refinery to help provide some predictability for
Delta. As you point out, predicting demand for jet fuel has been
incredibly difficult due to the volatile impact the pandemic has had on
demand. At Delta, we have short and long-term flight schedule forecasts
that we utilize to understand and plan for our fuel supply needs by
airport. We then work with our suppliers to coordinate that the right
amount of supply is available at the airports. We share your optimism
for travel in 2022 and are projecting strong demand, particularly after
the first quarter. We are basing operational decisions on this
forecast.
______
Response to Written Questions Submitted by Hon. Raphael Warnock to
John Laughter
Crew Safety. The Payroll Support Program has been a critical tool
for protecting airline workers' jobs throughout the pandemic. Most of
the airlines testified to the various policies and programs they have
implemented to help protect passengers and prevent further spread of
the coronavirus. However, testimony was also given about the terrible
harassment and violent abuse airline crew members have faced at an
alarming rate since the beginning of the pandemic. The Federal Aviation
Administration and Department of Justice, under the Biden
Administration have stepped up enforcement and prosecution efforts
related to unruly passengers.
Question. What is your airline doing to protect your employees'
physical health and wellbeing--not just against COVID, but unruly
passengers, as well?
Answer. Our number one priority at Delta is the safety of our
passengers and our employees. As our CEO stated last year, ``Respect
and civility to others on our planes, at our airports, in our
workplaces, and in our society--even when we have differences of
opinion--have always been a requirement for our people and our
customers. Those who refuse to display basic civility to our people or
their fellow travelers are not welcome on Delta. Their actions will not
be tolerated, and they will not have the privilege of flying our
airline.''
In the face of a growing number of unruly passenger incidents that
escalate into physical attacks to our frontline workers and other
passengers, Delta took immediate action to protect our employees and
passengers. We reviewed our training, policies, and procedures to make
sure they addressed the current reality.
We made sure our crews and gate agents received de-escalation and
self-defense training. We also provided time off should unruly
passenger incidents require legal and court proceedings. We also make
sure that employees have appropriate support and time off for self-
care. We engaged with pilots, flight attendants, gate agents, and other
employees to be sure they have the tools to provide safe flights.
Delta took the initiative to ban unruly passengers, provide
information to law enforcement, and called for other airlines to share
passenger information of those passengers placed on their no fly lists.
Delta has also remained engaged in advocating with FAA, TSA, and DOJ to
use their authority to enforce civil and criminal cases reported to
these agencies.
On the COVID front, Delta has led the industry by establishing
rigorous cleaning and safety protocols on the ground and in the air,
blocking of middle seats through April 30, 2021, facilitating contact
tracing for inbound international passengers, and implementing mask
requirements for all passengers and crew.
Early in the onset of the pandemic, we partnered with the world-
renowned Mayo Clinic, whose experts advised us on employee testing,
strategies for cleanliness, and operational tactics to reduce the
transmission of the virus. These efforts led to the establishment of
our Global Cleanliness Division, which sets a new standard of
cleanliness for our customers, known as the Delta CareStandard
SM. In a first for the U.S. airline industry, we hired Mayo
Clinic's Dr. Henry Ting as our Chief Health Officer to oversee our
efforts and ensure they are based on rigorous scientific research. Dr.
Ting is also responsible for leading our efforts to reimagine Delta's
efforts to ensure the physical and mental health and well-being of our
employees. All of these efforts protect our customers and our
employees.
Operationally, we created a dedicated team of more than 100 Clean
Ambassadors to oversee our Global Cleanliness Division's goal of
increasing the number of cleaning crews and implementing the DeltaCare
Standard at more than fifty airports. We also partnered with the makers
of Lysol and Purell to ensure each flight complies with our extensive
preflight cleaning checklist and that all our planes include hand
sanitizer stations and provisional Purell disinfecting wipes for each
passenger. Additionally, we continue to electrostatically spray our
aircraft interiors with high-grade disinfectant and use HEPA air
filters to remove 99.99 percent of airborne particles on-board.
As part of our broader efforts to protect our customers and our
employees, Delta partnered with Georgia to host the state's largest
COVID vaccination site to support the state's vaccination program. Over
117,000 vaccines were administered at the site, located at Delta's
headquarters. Overall, Delta has spent more than $25 million to promote
and administer a total of 151,000 vaccines to Delta employees and
members of the public. We continue to offer COVID testing and
vaccinations to our U.S.-based employees, free of charge. These efforts
resulted in more than 90 percent of our employees being vaccinated.
Delta remains committed to continuing our collaboration with
industry and government partners to ensure the safety and security of
those traveling.
Voluntary Separation Programs & Rebuilding the Workforce. The
Payroll Support Program was able to keep hundreds of thousands of hard-
working Americans--including many Georgians--on the job throughout the
pandemic. However, no one Federal program could make up for all the
losses or solve all the challenges inflicted upon the airline industry
by the pandemic. And airlines had to adjust. As a result, we saw the
airline workforce reduced significantly--mostly through voluntary
separation and early retirement packages offered by airlines.
Question 1. Could you expound on the need for these programs and
how you worked with your employees to implement them?
Answer. The pandemic presented an extraordinary challenge to Delta
and other airlines. In 2020, passenger volumes dropped by as much as 95
percent by the end of March. At one point, Delta had a cash burn rate
of almost $90 million per day. For the entire year, Delta lost $12.4
billion, the largest loss in our history.
Thankfully, Congress acted by creating the Payroll Support Program
(PSP). There is no doubt that this support saved tens of thousands of
airline jobs and allowed the industry to be better prepared for the
recovery.
However, since no one could predict how long the pandemic would
endure, Delta made efforts to make the PSP funds last as long as
possible, precisely to protect Delta people and preserve jobs. To get
through this difficult time, we had to respond quickly and
strategically. We took decisive action to preserve jobs by reducing our
cost base and protecting liquidity. We worked with employees, in full
compliance with the PSP, to find the best path for each employee.
Thousands of our people volunteered to take unpaid leaves of absence.
Some elected an early retirement option. In March of 2020, our CEO
announced he would forgo his salary in 2020 and salaries of Delta
officers were reduced by 50 percent.
This approach was part of Delta's strong culture that values
sharing sacrifices needed during difficult times, while also sharing
the benefits during the good times through our profit-sharing program.
While we will not be profitable for the full year of 2021, we were
profitable in the 3rd and 4th quarters, and recently announced we will
be distributing 20 percent of these profits--approximately $100
million--to employees. This generally amounts to about $1,250 for each
employee hired prior to July 1, 2021; employees hired after July 1,
2021, will receive a $625 payment. This payment is in addition to the
$850 earned through the Shared Rewards program for 2021.
Question 2. How did these programs allow you to invest in and
support your employees?
Answer. We are also grateful to Congress for their support of the
CARES Act, and subsequent relief packages, which included vital support
for Delta's employees through the PSP. This pandemic has affected all
of us in profound ways, and our industry has faced unique challenges.
The PSP enabled Delta to preserve thousands of jobs that would
otherwise have been lost. In full compliance with the terms governing
the PSP, Delta used the PSP funds exclusively to pay wages, salaries,
and benefits of PSP-eligible employees.
Question 3. As air traffic has begun to bounce back, what are your
plans for rehiring and rebuilding your workforce?
Answer. We have hired more than 8,700 new employees since the
beginning of 2021--6,100 Airport Customer Service agents, 625 new
pilots, and over 1,000 flight attendants. Throughout 2021, Delta's
Reservations and Care team hired over 1,400 specialists to improve long
customer support wait times. We expected the recovery to be choppy as
we have recently seen with the Omicron variant, and we continue to
monitor demand closely and adjust our hiring goals accordingly.
Collectively, these recent hires demonstrate Delta's strong
commitment to diversity, equity, and inclusion. To achieve these goals,
Delta has removed the traditional 4-year degree requirement from 93
percent of its jobs and is currently adopting a skills-first hiring and
promotion approach for more of its jobs, which emphasizes the specific
competencies a candidate needs to be successful in the role. Delta will
focus on three talent pathways to fill middle-skill roles, including:
hiring external black talent from talent providers and community &
technical colleges; promoting internal talent from our front line into
middle-skill merit (support and leadership) positions; and from our new
apprenticeship program. While starting with an emphasis on careers and
building a talent ecosystem, Delta has a greater aim is to shatter
systemic barriers and create economic opportunities for Black families
in America.
Delta also established the Delta Propel Pilot Career Path Program
in 2018 to identify, select, and develop the next generation of pilots,
allowing us to enhance the diversity of the candidate pool and support
a more inclusive selection process. This industry leading program
complements the traditional, existing paths to becoming a Delta pilot
and has three main areas of focus--college, company and community. This
three-pronged approach will help Delta support future aviators as well
as current Delta employees who have a passion for aviation and strong
interest in becoming a Delta pilot. The Propel Program supplements
Delta's current recruiting structure, which includes recruiting and
hiring pilots currently flying in the airline, military, and corporate
sectors.
______
Response to Written Question Submitted by Hon. Roger Wicker to
John Laughter
Question. One condition of the Payroll Support Program was that
recipients of the funds were required to continue air service to the
communities they previously served, unless a waiver was received from
the Secretary of Transportation. However, with the expiration of PSP
and passenger travel on the rebound airlines are beginning to make
adjustments to their service routes, and there are concerns smaller
communities will bear a brunt of the cuts. According to a recent news
article, Delta Air Lines intends to cut service to seven routes to
three small communities. United Airlines announced last month they will
be pulling out of eleven small communities, all serviced by regional
airline partners.
Several airlines have announced cuts in service to small
communities in the last month or so. As I am sure you are aware, small
communities rely on their air service to connect them to the rest of
the country. In light of recent service cuts to small communities can
you assure us that air service to small and rural communities will
remain at or above pre-COVID levels once your networks return to those
same levels?
Answer. The pandemic continues to present an extraordinary
challenge to Delta and other airlines. At the beginning of the crisis,
travel restrictions and stay-at-home orders were effective at slowing
the spread of the virus, but severely impacted demand for travel. In
2020, passenger volumes dropped by as much as 95 percent by the end of
March. Travel rebounded during the recent holiday season, approaching
84 percent of 2019 levels. This demonstrates how much volatility the
virus creates for the industry. The Omicron variant of COVID has
continued this uncertainty into 2022. Delta will continue evaluate
markets and adjust to the changing travel patterns and demands of our
customers. As demand for travel returns to pre-pandemic levels Delta
will be there to support our customers' needs.
______
Response to Written Questions Submitted by Hon. Shelley Moore Capito to
John Laughter
Question 1. Based on today's testimonies, domestic commercial
aviation is on the rebound. According to the TSA, just under 21 million
travelers were screened during the 10-day Thanksgiving holiday. That is
near the 2019 record of 26 million travelers for the same period. Do
you anticipate passenger travel to be at or near 2019 levels for the
Christmas season?
Answer. We expected travel to continue to grow toward the volume
the industry saw in 2019. From the period of December 15, 2021 to
January 4, 2022 the TSA screened just under 84 percent of the number of
travelers compared to the same period 2 years previous. This period saw
an average of 1.9 million daily passengers compared to 2.3 million from
2 years previous.\1\ We expect to see a slight downward trend due to
the Omicron variant of COVID-19 in January and February but expect
travel to rebound during the remainder of 2022.
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\1\ TSA checkpoint travel numbers (current year versus prior
year(s)/same weekday) | Transportation Security Administration
Question 2. Have you seen an increase in airfare over the past
couple months? If so, what do you contribute for this increase?
Answer. We have not seen an increase. Ticket prices dropped
drastically during the pandemic, especially during 2020 as passenger
volumes dropped by as much as 95 percent. The prices that passengers
are seeing now are a partial return to 2019 levels. However, on
average, ticket prices are still lower than 2019. Fares have
consistently fallen since 1978, and given the competitive environment
in aviation, we expect they will continue to fall over time.
Question 3. In 2018, Congress passed a bipartisan five-year
reauthorization of the FAA. In the near future, Congress will have to
consider and debate policy in order to reauthorize the FAA before 2023.
An important component of the reauthorization will be the FAA's Next
Generation Transportation System (NextGen) initiative and its
deployment. The success of this initiative is entirely dependent on how
quickly the FAA and aircraft operations can fully implement NextGen.
Could you each discuss some of the investments your airlines have made
in implementing NextGen?
Answer. Delta has made substantial investments in new aircraft and
avionics equipage for existing aircraft. There are significant
investment challenges for airlines that have ``middle-aged'' regional
aircraft where there are neither the resources nor a business case to
justify the investment. Moreover, we actively participate in several
FAA forums such as the NextGen Advisory Committee to push modernization
forward. However, the FAA needs to begin delivering benefits to justify
the investments the airlines and the agency have made. We recognize
modernization is incredibly complex and difficult--NextGen requires
implementing several complex programs simultaneously--all while
continuing to operate the existing system.
The current situation is analogous to buying a new iPhone--when you
upgrade from an iPhone 7 to an iPhone 12, you expect better performance
and additional benefits from the upgrade. While FAA has implemented
much of the foundational infrastructure to modernize the ATC system,
they have not integrated the new capabilities in a manner which
improves performance and provides additional benefits to its users. To
extend the analogy, the aviation industry and the government have paid
for the new iPhone, but it hasn't come with the upgraded applications
that provide additional functionality--such as texting and GPS
mapping--that provide substantial benefits and justify the billions in
investments.
Question 4. In your opinion, what are some of the current barriers
to NextGen implementation?
Answer. There are three main areas that create barriers to NextGen
implementation. The first is improving coordination between industry
and the Federal Aviation Administration (FAA). The National Airspace
(NAS) is a system, and the FAA needs to ensure that new technology is
implemented in a manner that provides benefits to all of its users.
While the FAA has made significant progress implementing the physical
infrastructure and basic programming required to modernize its air
traffic control system (ATC), it needs to execute on developing the
tools needed for airlines and other users to realize significant
benefits. This is best done through robust engagement with the industry
to prioritize implementation.
The second barrier is equipping regional jets with updated avionics
so they can take advantage of advanced procedures that produce
significant benefits. Currently, there is just not an economic case to
be made to equip these aircraft with such updated avionics. Moreover,
the full safety and efficiency benefits of NextGen cannot be realized
until all operators in the system are appropriately equipped.
Finally, the FAA needs long-term funding stability and management
flexibility to effectively implement NextGen. Implementing ATC
modernization is a complex, multi-decade, and sophisticated
infrastructure program. This requires long-term decision-making and
investment that is difficult to support within the context of the
annual appropriations process that has been broken for years and often
includes policy riders that undermine NextGen's progress.
______
Response to Written Question Submitted by Hon. Jerry Moran to
John Laughter
Question. As you continue working to restore and rebuild your
network and schedule to pre-pandemic levels, can you comment on the
role the 737 MAX will play in your efforts?
Answer. Delta Air Lines does not operate the 737MAX, nor do we have
any on order.
______
Response to Written Questions Submitted by Hon. Rick Scott to
John Laughter
Question 1. Last year, the American taxpayers bailed out the
airline industry with nearly $54 billion in tax dollars, while many
small and medium-sized businesses closed their doors for good. Your
company entered agreements with the U.S. Treasury with the promise of
return on the taxpayers' investment. Can you provide an update on what
kind of return on investment the American taxpayers can expect?
Answer. First, thank you and Congress for the support that Delta
received during the pandemic. The PSP saved thousands if not tens of
thousands of jobs at Delta. Retaining these jobs and these employees
has been key as demand for travel has begun to recover. Delta's use of
PSP funds has provided both a direct and indirect return on investment.
The direct return on investment has been jobs saved by the program.
Dr. Tretheway testified to the specifics of the number of jobs impacted
and the economic scope of the impact at the hearing. He cited figures
that show that hundreds of thousands of jobs are directly related to a
reliable airline industry. He also contended that because of the
Federal Government's support, the industry has recovered relatively
well compared to the airline industry in other nations.
The indirect returns on investment are much more difficult to
calculate but just as important. Reliable air travel is vital to
national security. Many in the medical, military, scientific, non-
profit, and government communities needed to travel during the
pandemic. PSP funds allowed airlines to maintain routes which were
utilized for critical travel. Another indirect return on investment has
been airline readiness as both leisure and business demand has
returned.. From March 2020 to December 2021, the industry saw about a
95 percent drop in demand to a return of nearly 84 percent of 2019
levels. This dramatic shift was weathered in large part thanks to PSP
funds. Everyone enjoying travel today can thank the investment made by
the Federal Government.
Question 2. It has been reported that both United and American have
entered agreements to sell planes to the Bank of China Aviation, which
is a state-owned bank, and lease them back to their companies long-
term. Does Delta Air Lines also participate in this practice?
Answer. Delta does not have any sale/leaseback agreements with the
Bank of China Aviation.
Question 3. Given Delta's public statements about Georgia's actions
to increase election integrity, is it the policy of Delta to engage in
voting laws in all countries that the airline operates in, such as the
People's Republic of China?
Answer. In the United States, Delta is a member of the Bipartisan
Policy Center's Business Alliance for Effective Democracy, which
prioritizes policies that enhance the voting experience, inspire
confidence in election results, and foster collaboration and
bipartisanship in our governing institutions, especially Congress.
______
Response to Written Questions Submitted by Hon. Ron Johnson to
John Laughter
Question 1. On what basis are you mandating the vaccine for your
employees? Is it only because of the Federal contractor mandate or is
it also due to a company decision?
Answer. Delta has not mandated the vaccine for our employees.
Rather, we have provided a combination of education, counseling, and
incentives to achieve a vaccination rate of over 90 percent of our
workforce.
Question 2. What data are you keeping related to infections of
COVID-19 and reactions to vaccines among your employees and passengers?
Answer. Delta collects and processes data related to COVID-19 in
compliance with privacy laws and regulations. We collect, use, and
retain data related to employees' testing, vaccination, and booster
status to protect Delta's workforce and those with whom our employees
interact.
Question 3. How many employees have had COVID-19?
Answer. 23,027 employees as of Jan. 14, 2022.
Question 4. How many were hospitalized?
Answer. 201 employees as of Jan. 14, 2022.
Question 5. How many died?
Answer. 49 employees as of Jan. 14, 2022.
Question 6. How many were vaccinated versus unvaccinated?
Answer. 12,399 unvaccinated employees had COVID-19 and 10,628
vaccinated employees had COVID-19 as of Jan. 14, 2022.
Question 7. How many fully vaccinated employees have had a
breakthrough case of COVID-19?
Answer. 10,078 employees as of Jan. 14, 2022.
Question 8. Have there been any COVID-19 outbreaks that were traced
to a commercial flight? If so, how many?
Answer. To our knowledge, there has not been any outbreak that has
been traced to infections contracted during a commercial flight.
______
Response to Written Questions Submitted by Hon. Roy Blunt to
John Laughter
Question 1. There are a lot of challenges that continue to face the
airline industry, whether it's decreased passenger ridership, workforce
related challenges, or continued emergence of COVID variants. Can you
elaborate and share with the Committee what you think the airline
industry needs in order to operate successfully during these
challenging times, and what can Congress do to help the airline
industry return to pre-pandemic operational levels? Do you ever see the
airline industry returning to how it used to operate before the
pandemic?
Answer. Regarding immediate COVID-19 challenges, the Omicron case
surge is impacting business travel and international recovery the most
as business meetings are canceled, planned office re-openings are
postponed, and countries put restrictions back in place. While this
downturn in demand has been quick, we expect an equally rapid
improvement once U.S. case counts begin to decline. We remain confident
in a strong spring and summer travel season, with significant pent-up
demand for consumer and business travel both domestically and
internationally. The most helpful support from the Federal Government
would be continued communication to the American people regarding
travel policies and regulations, such as, but not limited to, mask
wearing, as well as working with other nations to establish a clear
understanding of their policies.
More broadly, we appreciate the help that Congress is able to give
related to agency coordination. The current 5G deployment of the C band
spectrum has demonstrated the importance of agency communication and
coordination. We also need to build out our relationships with our
foreign partners. Partnering with foreign carriers allows more flights,
lower prices, more convenient travel options, and more competition for
air travel. Congressional support for overseas partnerships will help
provide improved options for travelers.
One area that will not return to the pre-pandemic ``normal'' are
the improvements we have made to the airport and aircraft environment
that protect our employees and passengers from COVID. These efforts
have been institutionalized through the establishment our Global
Cleanliness Division and the hiring of Dr. Henry Ting as our Chief
Medical Officer--a first in the airline industry. Much as our security
efforts were expanded and institutionalized after 9/11, we now have a
permanent division to track, mitigate, and prevent pandemic and related
risks to our employees and passengers.
Question 2. Ms. Nelson mentioned in her testimony that not all
aircrafts are equipped with high efficiency particulate (HEPA) filters
used to create a safe traveling environment in airplane cabins. Can you
provide the Committee which aircrafts in your fleet currently have
these HEPA filters installed and which aircrafts do not? For those
aircrafts that do not have these HEPA filters currently in place, what
plans, if any, are there to ensure smaller, regional aircrafts have
these safety measures installed?
Answer. The Boeing 717 is the only aircraft in the Delta mainline
fleet without HEPA filters. This aircraft does not recirculate air from
the cabin. Instead, 100 percent of the air is brought into the cabin
from the exterior of the plane which achieves similar results to
aircraft with HEPA systems.
Question 3. I would agree with all the airlines executive witnesses
that some of the success stories from the earlier CARES act packages
are the investments Congress made in programs like the Payroll Support
Program (PSP) and the Paycheck Protection Program (PPP) to help sectors
like the airline industry sustain during the pandemic. I have spoken
with many of you throughout the pandemic and leading up to today's
hearing. And an interesting observation I have noticed that has emerged
from the pandemic is a general shift in how employees view work
nowadays and the reluctance to return to the workplace. Can the
airlines offer the Committee your thoughts on this and the challenges
you have experienced in addressing this mentality shift in terms of
incentivizing and encouraging employees to return to work?
Answer. We believe that a large part of the ``Delta difference'' is
our people. We run Delta as a people first company and believe that
this culture has helped us become and remain a workplace of first
choice among applicants. We have not had staffing shortages--by which
we mean a lack of qualified candidates for open positions. Delta has
had plenty of applications for the jobs we have posted. Overall, we
hired over 8,700 new employees in 2021--6,100 Airport Customer Service
agents, 625 pilots, and 1,000 flight attendants.
We have seen that some employees that appreciate the flexibility of
work policies during the pandemic--they still want to work but are
choosing to work differently. Often, this means working from home or
living in one place and being based in another. Many are choosing a new
hybrid model of working from home, virtual work, and traveling to
meetings. At Delta, we are striving accommodate the preferences of our
employees where practical.
______
Response to Written Questions Submitted by Hon. Deb Fischer to
John Laughter
Question 1. It was recently announced that Delta would be ending
daily service between Lincoln and Minneapolis on January 10th. Could
you explain what factors are considered when Delta terminates a service
route?
Answer. In June 2021, SkyWest made an independent decision to re-
enter LNK-MSP with their Delta-branded prorate program. SkyWest takes
the commercial and financial risk for this flying, and Delta receives a
prorated portion of the fare for passengers who connect in MSP onto our
network. SkyWest has decided not to continue to serve LNK. We will
transfer the airplane from the prorate program to our capacity purchase
agreement and deploy it in larger, more strategic markets. United has
historically been the largest carrier in Lincoln and continues to serve
the station with multiple daily flights to both Denver and Chicago
(currently 3 daily to each).
Question 2. Will Delta return flight routes if passenger travel
rebounds to 2019 numbers?
Answer. This decision was made by SkyWest, and we cannot speak to
their plans.
______
Response to Written Question Submitted by Hon. Richard Blumenthal to
Sara Nelson
Flight attendant safety. As you testified, not only have flight
attendants been frontline workers staffing planes throughout the COVID-
19 pandemic, they have also borne the brunt of passengers' ill-
behavior. You raised concerns about the Centers for Disease Control and
Prevention's recent update to its COVID-19 guidance regarding
quarantine times and the omicron variant.
Question. Please elaborate on your concerns and explain the changes
necessary to ensure flight attendants are safe at work.
Answer. Delta Air Lines lobbied CDC publicly to reduce the
guidelines for quarantine time from 10 to 5 days in the midst of the
operational meltdown Delta was experiencing at the start of the
Christmas holiday rush, omicron rise, and winter storms. Delta did not
ask for public health changes, it asked for flexibility to schedule
crews. AFA opposed this effort by Delta with a written letter to the
CDC sent on December 23, 2021.
But when CDC announced a change on Dec 26, 2022 it was almost
unbelievable. It is never good governance to change policy in the
middle of a holiday, especially as the airline or any company is in the
middle of an operational meltdown. There are too many distractions and
too much room for error. Attempting to communicate a change in policy
that is already in effect can be chaotic in and of itself. If someone
was on day 4 when the policy changed, are they now subject to the new
rules under 5 days of quarantine. What if the employee was on day 7?
None of these issues were addressed. Communicating a new policy
throughout a world wide network, all levels of management, supervisors,
and frontline workers trying to do the right thing in the middle of a
pandemic, the busiest travel season of the year, winter storms, and an
operational meltdown was just not possible and AFA received numerous
questions about issues that even Delta's stated policy addressed but
individual supervisors were providing different instruction.\1\ Worse
though was that Delta's widely reported celebratory words after the CDC
change stated, ``The updated guidance allows more flexibility for Delta
to schedule crews and employees to support a busy holiday travel season
and a sustained return to travel by customers.'' Delta's public
statement, which was widely reported, said nothing about science,
public health, or the safety of the staff; it's sole focus was on
staffing and scheduling. This led frontline employees and the
supervisors working to staff flights to assume job number one was
staffing, not working to stop the spread of omicron.
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\1\ https://d3n8a8pro7vhmx.cloudfront.net/afacwa/pages/103/
attachments/original/16419293
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The next day, December 27, Delta announced its new policy based on
the new CDC guidelines, but sure enough the airline omitted the
reference to returning to work without symptoms and did not explain how
it would enforce proper mask wearing in all work spaces, including
those that are exempt from mask wearing, unlike Delta had professed to
the CDC in its original advocacy to change the guidelines because it
had not properly planned for staffing over the holiday period.
AFA immediately wrote to all of our AFA member airlines (example
letter to United Airlines) to address our concerns about implementation
and to especially press good communication on the significant points in
the CDC guidance including:
1. asymptomatic and
2. wearing a proper mask when returning to work 5 days after testing
COVID+.
We were seriously concerned that workers in the airline industry
and beyond would feel pressure to come back to work while still sick,
exacerbating the spread of the virus and extending the harm of the
pandemic. No worker's life is worth sacrificing in order to staff an
airline, or prioritize the economy over public health in any way. Many
airlines agreed and held off making changes to their policies even
though they too were stretched thin on staffing due to the high number
of staff calling out sick mostly due to omicron. Most of these airlines
had also negotiated with us to provide incentive programs for those who
were not sick to pick up additional voluntary overtime to help ease
staffing.
The reduction in the isolation period from 10 days to 5 puts more
pressure on workers to return to work sick, and even CDC admitted that
10-15 percent of COVID+ individuals will still be infectious stage at
five days after testing positive. We as a country were knowingly
putting infectious people back to work, exposing other workers and the
traveling public, all in the name of the economy. We cannot allow
pandemic fatigue to lead to decisions that extend the life of the
pandemic or put policies on the backs of workers. Already the lack of
paid sick leave creates pressure on workers to come to work sick.
Corporations that fail to recognize this with paid sick leave, or
pressure workers to come to work sick or face discipline, are failing
their workers and their customers.\2\
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\2\ https://www.afacwa.org/key_comp_new_cdc_asymptomatic_mask
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______
Response to Written Question Submitted by Hon. Kyrsten Sinema to
Sara Nelson
Assaults on Flight Attendants. In November, the Transportation
Security Administration extended its mask rule through March 18, 2022,
which requires most passengers to wear an approved covering over their
nose and mouth for the duration of their flight. The Federal Aviation
Administration has reported nearly four thousand incidents related to
passengers refusing to comply with the TSA's mask rule this year. Your
organization released a survey in July that indicated eighty-five
percent of flight attendants have dealt with unruly passengers and
seventeen percent have experienced a physical incident.
Question. As air travel has increased during the holiday season,
are flight attendants continuing to receive abuse from passengers? If
so, what actions should this committee consider to address the issue?
Answer. Yes, although it's a relatively small number of bad actors,
passengers are continuing to create disruption at a high rate. Flight
attendants continue to face abuse from passengers when doing their job
and enforcing safety regulations.
We commend the leadership of FAA Administrator Dickson to make this
a top priority and use all of the tools available to the FAA to address
this issue and bring stakeholders together to fix it. Still, incidents
remain high and we have several recommendations for reducing these
incidents.
With clear support from President Biden, Attorney General Garland
made the correct move to advise the DOJ this issue is a top priority
and prosecution, including coordinating with the FAA on reports
investigated by the agency, must lead to convictions that deter future
bad behavior. We look forward to the justice system working without
delay to levy criminal punishment of jail time so that passengers are
fully aware of the severe consequences they face.
We support the creation of a centralized list to ban passengers who
engage in disruptive behavior from flying. There must be a real-time
sharing of information throughout the aviation system to deny travel to
anyone who has caused a disruption on that day followed by a due
process investigation. Passengers who are fined or convicted for
disruptive behavior should be banned from flying for a period of time
commensurate with the crime. Currently airlines are maintaining their
own lists and will ban an aggressive passenger from their carrier.
Unfortunately this passenger can just book and fly on another carrier.
Mask enforcement in the airports is abysmal. We need to be clear
about who is charged with this responsibility and it needs to be done
consistently. Requiring passengers to acknowledge they must wear a mask
from the moment they enter an airport until they leave it again at the
destination airport, and then failing to enforce this requirement in
the airport, sets up conflict on the plane when a Flight Attendant is
sometimes the first person during the travel experience to enforce this
Federal requirement. To be clear, it is our experience that the vast
majority of passengers want to wear masks and want others to do the
same. The consistent communications around this Federal requirement is
a large part of the confidence travelers have gained in purchasing
airline tickets in the midst of a pandemic. Vaccines returned demand
for air travel. Masks, deep cleaning, air filtration, and altered
service procedures also help travelers understand the airplane can be a
controlled environment and one of the safety locations out of the home.
Alcohol is a major contributor to disruptive passenger events. To-
go alcohol should be banned in airports. It sends a message that a
passenger can bring an open container onto the plane, serve themselves
and board even if inebriated. None of this is true and in fact, all are
violations of Federal regulations. Even passengers who are not
belligerent after drinking alcohol, find it hard to comply with safety
policies such as wearing the mask over the mouth and nose, only
lowering it momentarily when taking a sip or bite to eat. This makes
the jobs of Flight Attendants more difficult and raises the anxiety of
other travelers who were counting on a controlled environment to reduce
the risk of exposure to COVID.
We also need clear and consistent reporting and response from law
enforcement. When an incident is reported we need law enforcement to
respond and take action. Airlines also need to support crew members by
giving them time to fill out reports with law enforcement and
communicate clearly that the airline will provide both emotional and
financial support to follow through on court appearances and the like
without a loss of pay. Each airline should report to the FAA how this
program works and how they will communicate it to frontline workers.
United Airlines has had a program in place since 2007, based on
guidance from the FAA. It is a good model for all airlines to study and
duplicate.
We also urge the DOJ to conduct criminal prosecution of passengers
who commit abuse or act up on planes and in airports. Flight Attendants
report half of the incidents in the air showed some sign of trouble on
the ground. Better responding, supporting, and arresting violent
passengers who act out against agents on the ground will make aviation
safer for everyone and reduce the number of incidents in the air. No
passenger should be allowed to punch or harm a Transportation Security
Officer, a Passenger Service Agent, or another airport employee and
then get on a plane with more than one hundred people who will be put
at further risk in the air.
Losing the freedom of flight is another way to communicate the
seriousness with which people must follow the rules to keep aviation
safe.
______
Response to Written Questions Submitted by Hon. Raphael Warnock to
Sara Nelson
Crew Safety. The Payroll Support Program has been a critical tool
for protecting airline workers' jobs throughout the pandemic. Most of
the airlines testified to the various policies and programs they have
implemented to help protect passengers and prevent further spread of
the coronavirus. However testimony was also given about the terrible
harassment and violent abuse airline crew members have faced at an
alarming rate since the beginning of the pandemic. The Federal Aviation
Administration and Department of Justice, under the Biden
Administration have stepped up enforcement and prosecution efforts
related to unruly passengers.
Question. What are airlines that your members work for doing to
protect their employees' physical health and wellbeing--not just
against COVID, but unruly passengers, as well?
Answer. On protecting workers health and well being, the airlines
did work with us to update announcements and communicate with pilots,
agents, controllers and local law enforcement about the need to take
this issue seriously and back up the work of flight attendants. Some
airlines have altered service based on our advocacy, including halting
the service of alcohol on the planes. The more that airlines addressed
this issue as a company-wide problem, not just a flight attendant or
gate agent problem, the more successful efforts have been. Getting
pilots to make announcements about masks, not serving your own alcohol,
and listening to flight attendant instructions has made a significant
difference in the tone of the flight.
Much more could be done to work on diversity and inclusion
throughout the workgroups. Our studies demonstrate that most disruptive
behavior is also accompanied by racial, gender, and homophobic slurs.
These issues are rarely reported or addressed and it is paramount that
everyone at the airline understand allowing discrimination and
threatening, hostile aggressions to persist toward anyone undermines
the safety of everyone. For example, if a Flight Attendant is
conducting safety checks or enforcement and meets resistance with
derogatory comments related to race, gender, gender identity or
national origin, those actions undermine the authority and leadership
of the crewmember working as a team with others to keep everyone safe.
It sends a signal to other passengers that a hostile environment is
tolerated and it may lead to others shrinking away from being a helper
or simply setting the necessary tone that we are all in this together
for the safety of flight. More can be done at all airlines to promote
awareness and strategies for eradicating discrimination of all kinds.
On disruptive passengers, the airlines have worked with us to
address this issue and protect workers subjected to these incidents.
But not every time, nor every issue. Workers need to know their
experiences will be taken seriously, given time to submit the proper
reports, and receive follow up about the status of action on the
reported incidents. There needs to be better coordination between
airlines and the government to ban disruptive passengers across all
carriers and communicate to those on the frontlines that they are not
alone.
Voluntary Separation Programs & Rebuilding the Workforce. The
Payroll Support Program was able to keep hundreds of thousands of hard
working Americans--including many Georgians--on the job throughout the
pandemic. However, no one Federal program could make up for all the
losses or solve all the challenges inflicted upon the airline industry
by the pandemic. And airlines had to adjust. As a result, we saw the
airline workforce reduced significantly--mostly through voluntary
separation and early retirement packages offered by airlines.
Question 1. Could you share your perspective on the need for these
programs and how you and your members worked with your employers to
implement them?
Answer. When Congress did not extend PSP on October 1, 2020, all
airlines either furloughed and/or encouraged voluntary separation/early
retirement. In some cases, these programs were welcome to workers who
otherwise were very concerned, especially pre-vaccine, about their own
pre-existing condition or that of a family member. They were able to
bridge medical insurance in some cases and add a modest amount of pay
to be able to consider a separation earlier than they otherwise would
have chosen without the pandemic. Among the major carriers, Delta had
voluntary separation numbers that were more than double their
competitors. The airline also cut hours of employees who stayed on the
job and in doing so did not use the PSP in the spirit it was intended.
Of course airlines had to adjust and take steps to reduce costs,
especially as it seemed Congress would not extend the PSP beyond
September 30, 2020. But, PSP was intended to save jobs, stabilize the
industry and economy, cap executive compensation, and ban stock
buybacks. It was not intended to be used as a competitive tool between
airlines. The low level of unionization at Delta allowed the airline to
take steps other airlines did not and steps that were not in the spirit
of the program as it was discussed in the final hours of negotiations
during the creation of the CARES Act.
The PSP was absolutely necessary. Aviation demand dropped by 97
percent overnight in March 2020. The industry would have collapsed and
hundreds of thousands of aviation workers would have been furloughed
overnight if the PSP included in the CARES Act had not been enacted,
and subsequent extensions had not been passed. The program kept workers
on the job, connected to their paychecks and benefits, and maintained a
critical sector of our economy. Without PSP, we would have faced
layoffs, bankruptcies, consolidation, and weakening of the U.S.
aviation industry. That would have been bad for aviation workers, the
flying public, and U.S. national security.
Additionally, because of PSP, aviation workers and U.S. airlines
were able to assist in Operation Allies Welcome flying Afghan evacuees
to safety. We paid taxes and supported city and state programs. We paid
into social programs and continued to utilize our employer healthcare.
The PSP utilized the payroll programs already in place to ensure no
additional burden on the government, and consistency in paychecks and
benefits for the workers. Maintaining systems in place proved to be
good for government, workers, taxpayers, and the overall economy. It is
being celebrated around the world as the most effective COVID relief
program.
Question 2. How did implementing these programs help shape the
airline industry workforce long-term--for better or for worse?
Answer. Congress's investment of $54 billion to pay tens of
thousands of airline employees during the pandemic not only helped
workers and their families but also airlines would not have been able
to meet the demand for flights again last summer, fall and over the
2021 holidays. As you know, there was a temporary lapse in PSP funding
in late 2020 which meant workers certified with credentials and
qualifications were temporarily laid off. Our highly skilled workforce
needs to maintain their qualifications because it takes months to re-
qualify and certify them.
PSP saved our jobs and industry in real time, and it protected our
profession for the long-term. In 2020, airline workers across the
industry were finally set to negotiate above and beyond all that we
lost following September 11, 2001. After September 11, the result of
insufficient action from the government was a string of bankruptcies
across the airline industry. We, the workers, were the bailout. Our
jobs were cut. Our pensions gutted. Those who remained shouldered
massive pay cuts and many more hours on the job.
Wall Street was ecstatic with the enormous cuts to labor costs.
Workers were devastated. Consumers eventually felt the hit too as
capacity was cut, seat sizes shrunk, and pricing became segmented with
all kinds of fees. There was no hiring for a long time, but the
diminished jobs later made it hard to attract pilots, mechanics, and
others to aviation careers.
Not this time, thanks to PSP.
Question 3. As air traffic has begun to bounce back, what have you
noticed about the workforce as airlines have begun rehiring and
rebuilding the workforce?
Answer. The airline industry is 80 percent union density. We
preserved good jobs defined by union contracts throughout the pandemic,
had the ability to address health and safety directly through our
unions, and even negotiated incentive agreements to support COVID
vaccines, voluntary overtime, or prudent use of sick leave during the
pandemic. Workers all over the country have seen that the value of
these union jobs is self-evident and it attracts new workers to the
industry.
As the industry continues to recover, most carriers have plans or
are already hiring new employees bringing a new, more diverse
generation to good-paying, union careers. But the job has changed and
that will require returning to a pre-9/11 model that does not as
heavily count on voluntary overtime hours. Aviation workers are not as
willing to pick up overtime due to the combative passengers and
concerns around COVID. American worker productivity was higher than any
developed country in the pre-pandemic world. This is also true in
aviation, but this level of worker productivity is not sustainable
anywhere.
______
Response to Written Questions Submitted by Hon. Richard Blumenthal to
Ted Christie
Compensation for consumers. Since March 2020, flight delays and
cancellations have disrupted plans for countless travelers--and the
most recent cancellations left people stranded in airports and away
from family during the winter holiday season. Senator Markey and I have
repeatedly called for full cash refunds for impacted consumers. But
U.S. airlines have been slow to provide credits and legally-required
refunds and have hidden behind vague ticketing policies. Media reports
indicate that airlines are currently holding approximately $20 billion
worth of travel vouchers and unrefunded ticket values.
Question 1. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that Spirit Airlines currently owes consumers? Please provide the
amount of each value mechanism as well.
Answer. No response at time of this printing.
Question 2. Does Spirit Airlines gain revenue (such as from
interest) from the value of unused travel vouchers that are currently
held in company accounts? If so, how much revenue has Spirit Airlines
collected from the funds in your accounts that are linked to unused
travel vouchers since March 2020?
Answer. No response at time of this printing.
Question 3. If Spirit Airlines still owes consumers under Question
1, by when will it have completed issuing its refunds? What is the
reason for this delay?
Answer. No response at time of this printing.
Question 4. Spirit Airlines reportedly cancelled more than 250
flights in the last week. How many consumers were impacted by these
cancellations?
Answer. No response at time of this printing.
Question 5. Will Spirit Airlines commit to providing full cash
refunds to all impacted consumers? If not, explain why not and what
compensation you will issue to consumers.
Answer. No response at time of this printing.
Question 6. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that Spirit Airlines owe consumers for these cancellations? Please
provide the amount of each value mechanism as well.
Answer. No response at time of this printing.
Question 7. By when does Spirit Airlines plan to have fully
reimbursed consumers?
Answer. No response at time of this printing.
Question 8. Please explain the causes of the recent flight
cancellations as well as the steps that Spirit Airlines is implementing
to prevent a repeat of these cancellations.
Answer. No response at time of this printing.
Question 9. Does Spirit Airlines maintain interline agreements with
other carriers to allow passengers affected by disruptions an alternate
means of getting to their destinations? If not, why not?
Answer. No response at time of this printing.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Robin Hayes
Payroll Support Program Impact. Congress created the Payroll
Support Program to protect the airline industry's workforce, support
the continuity of safe and essential travel, and ensure the industry's
ability to remain viable to meet future consumer travel demand. The
Department of the Treasury disbursed a total of $54 billion to
passenger airlines, across three rounds of PSP, to provide critical
relief during the pandemic.
We know that PSP made a difference in December 2020, when Congress
extended the program, because airline recipients had to recall
thousands of employees who were furloughed after September 30, 2020
when the first round of PSP ended.
According to the Bureau of Transportation Statistics (BTS), between
October 2020 and February 2021, major airlines hired or brought back
28,179 workers. These workers came back just in time for the air travel
rebound, which took off in March 2021. As of September 2021, airlines
were approximately 8.8 percent below their pre-pandemic employment
levels according to BTS data. I am interested in learning from your
airline on how the Payroll Support Program impacted your workforce and
operations. Mr. Hayes, JetBlue received $2.08 billion in PSP funds.
Question 1. If not for PSP funding, what do you think the status of
your workforce would look like today? Would your airline have been able
to survive the pandemic, absent PSP funding?
Answer. On behalf of more than 22,000 crewmembers at JetBlue, I
again thank you for your leadership and advocacy for the Payroll
Support Program (PSP). COVID-19 has been a challenge unlike any we have
ever faced and without Congress' efforts, the airline industry would
have been irrevocably damaged. Without PSP, this summer's travel surge
would not have been possible and the magnitude of job losses in the
industry would have been catastrophic. JetBlue is proud to have never
furloughed a single crewmember in our over 21 year history. We were
only able to keep to this pledge because of PSP.
Question 2. Since receiving PSP funding, do you believe your
airline is in a good position to meet current consumer travel demand?
Answer. Yes. We have previously and continue to meet customer
demand since receiving PSP funds. Even during the recent holiday season
and the impacts of the Omicron COVID-19 variant, where we canceled
flights, we also saw customers proactively canceling their reservations
and thus our load factors never spiked. Similarly, we see the ability
to continue to meet demand despite the uncertainty to the market caused
by Omicron.
Airline Relationships with Labor. Congress focused on sustaining
the airline workforce and ensuring continuity of operations during a
time of intense uncertainty.
From information shared with the Committee, it appears that those
airlines and unions that worked together found solutions to COVID-19
challenges, from addressing new health risks in the workplace to
ensuring currency and qualification of a highly-skilled workforce.
Question. How has your airline collaborated with unions to
establish policies to meet workforce needs in response to the COVID-19
pandemic? How did your airline's relationship with relevant labor
unions enhance your ability to meet operational needs and the rise in
air travel demand?
Answer. Only two workgroups at JetBlue are represented by labor
unions, and JetBlue has a direct relationship with all other
Crewmembers. JetBlue pilots are represented by the Airline Pilots
Association (ALPA) and our inflight crewmembers by the Transport
Workers Union (TWU).
During the pandemic, we have negotiated numerous Memoranda of
Understanding (MOU) and Letters of Agreement (LOA) with ALPA with the
purpose of:
1. Protecting the health of our crewmembers;
2. Reducing cost during the initial stage of the pandemic; and 3.
Partnering to effectively train and qualify pilots in their
return.
For our Inflight crewmembers, we are one of the few-and perhaps
only-airlines that continued negotiations toward a Collective
Bargaining Agreement (CBA) during the pandemic. We partnered with the
TWU to achieve our first CBA, which was ratified December 13, 2021.
Contract Workforce Role and Staffing. At the height of the
pandemic, airport and aviation workers stood with airlines and called
on the Federal government to make sure our national air travel system
remained strong, aviation jobs were protected, and that airlines were
ready to meet consumer travel demand.
For decades, airlines have outsourced essential service airport
jobs like cabin cleaners, wheelchair attendants, security officers, and
baggage handlers to contractors at major airports across the country.
Contract workers play a critical role in our aviation system and
continue to work hard on the frontlines of the COVID-19 pandemic to
keep travelers safe.
The pandemic has exposed problems with how domestic travel
disruptions are being addressed and how such response affects the
airline industry's workforce. For example, an August 2021 SEIU survey
conducted in Houston to assess the experiences of contracted airport
workers detailed incidents of short staffing and mandatory overtime
policies causing workforce fatigue, which has created a strained
operational environment.
Question. How will your airline ensure that the contracted
workforce, which provides such critical services, is stable, well-
trained, and has adequate staffing levels needed to respond to
operational challenges?
Answer. We work with our Business Partners on an ongoing basis to
set them up for success to maintain a stable and trained staff. Among
the initiatives we put in place are:
In 2021 we made agreements with over 75 lines of service
across our network regarding minimum and or competitive wage
increases. Ultimately, raising hourly rates of pay for a
Business partners significantly increases retention and hiring
ability.
We have, and continue to waive staffing based Service Level
Agreements which in allows our Business Partners to put that
money into staff retention initiatives.
We have, and continue to, offer attendance based incentives
to some of our hardest hit frontline Business Partner teams. We
generally cover these incentives financially.
We continue to support our hardest hit Business Partners by
sending our own Crewmembers to work in their JetBlue
operations. This allows our Business Partners the time
necessary to get their folks hired, trained and retained.
We continue to have ongoing conversations with our Business
Partners on all things staffing related with the goal of
ensuring a stable workforce, which in turn drives more
efficient and safer operations.
Related to training, we have added more ad hoc local
training to maximize the ability of our Business Partners to
hire and train quality employees.
We have added more training instructors as well as Business
Partner classes at our Orlando training facility allowing for a
higher throughput.
Airline Workforce Recall. The Committee is aware that, in 2020,
airlines took varying approaches to temporarily reduce the number of
active employees on their payroll to avoid involuntarily furloughing or
laying off employees as they experienced growing pandemic-related
financial difficulties. Many airlines offered employee programs to
incentivize voluntary separations, including voluntary furloughs, early
retirements, and temporary leaves of absences.
Airlines that extended voluntary leave options to their employees
reserved the right to recall such employees from leave when necessary.
To the Committee's knowledge, most airlines started broad workforce
recall efforts in the first quarter of 2021, employing particularly
concentrated efforts to bring back employees in January and February
2021. However, recalling employees has not been an easy process as
airlines have reported higher workforce shortages and rates of
absenteeism in certain workgroups, leaving the airlines more ill-
equipped to meet consumer travel demand.
Question 1. Has your airline experienced challenges in recalling
your workforce? If so, did your airline anticipate such issues in
recalling employees from leave before initiating your recall efforts?
Please describe the scope of the workforce recall challenges your
airline faced in 2021.
Answer. As travel demand began to return in 2021, we did recall
some crewmembers that had taken Long Term Time Off (LTO) at the
beginning of the pandemic in 2020. We saw a very high return rate in
2021--only 20 of the 1200 crewmembers that participated in the LTO
program elected to resign rather than return to work at JetBlue when
recalled.
Question 2. Has your airline's workforce fully returned as of
January 1, 2022? How did the status of your workforce's recall from
voluntary leave programs affect your airline's ability to meet consumer
air travel demand in 2021?
Answer. As noted above, JetBlue offered a Long Term Time Off
program originally intended to run from Q2 2020 to Q3 2021. Early in
2021, as we saw demand start to return, we began recalling LTO
crewmembers. More than 98 percent returned from LTO; the rest chose not
to return to JetBlue. The small number of crewmembers that did not
return had minimal impact on our ability to meet consumer demand, as we
increased our hiring for all front line positions concurrently with the
recall.
Airline Operational and Scheduling Data.
Question 1. For the months of October, November, and December 2021,
please provide the number of flights your airline operated, the number
of flights cancelled, the number of flights delayed more than 15
minutes, the number of flights delayed more than 90 minutes, and the
number of flights delayed more than six hours.
Answer. The chart below details the number of JetBlue flights (both
domestic and international) operated in the last quarter of 2021, as
well a count of canceled flights and those delayed by 15, 90, and 360
minutes.
----------------------------------------------------------------------------------------------------------------
Delay >=
Completed Cancelled Delay >= 15 Delay >= 90 360
----------------------------------------------------------------------------------------------------------------
October 2021 24,700 85 5,646 1,069 54
November 2021 24,743 40 6,201 956 51
December 2021 26,720 1,052 9,512 2,060 103
----------------------------------------------------------------------------------------------------------------
Question 2. For the month of January 2022, please provide the
number of daily flights your airline operated, the number of flights
cancelled, the number of flights delayed more than 15 minutes, the
number of flights delayed more than 90 minutes, and the number of
flights delayed more than six hours.
Answer. The chart below details the number of JetBlue flights (both
domestic and international) operated from January 1 to January 26,
2022, as well a count of canceled flights and those delayed by 15, 90,
and 360 minutes.
----------------------------------------------------------------------------------------------------------------
Delay >=
Completed Cancelled Delay >= 15 Delay >= 90 360
----------------------------------------------------------------------------------------------------------------
January 2022* 21,917 1,152 7,251 2,023 123
----------------------------------------------------------------------------------------------------------------
Question 3. For the months of October, November, and December 2021,
and January 2022, please detail any preemptive schedule changes that
your airline made, including cancelling flights or changing the
departure time by more than one hour.
Answer. In the period from October to December 2021, we implemented
limited preemptive schedule changes--consistent with our usual
practice. We generally do not make close-in schedule changes as our
internal timeline is to finalize a month's schedule 45 days in advance.
Our internal guidelines for schedule changes are 180 days out for major
changes, 90 days out for moderate changes, and 45 days out for small
changes. While we have adjusted this timeline in 2020 to manage through
the uncertainties of the pandemic, but not during the fourth quarter of
2021.
We had prepared extensively for this holiday period with staffing
levels at their highest level since prior to COVID and we successfully
operated through the Thanksgiving holiday without a single
cancellation. However, the exponential rise in COVID-positive cases in
late December 2021- particularly in the Northeast, where about 75
percent of our crew are based -strained our operation as crew
availability drove a significant increase in last minute flight
cancellations. In response to these operational challenges, even though
thousands of JetBlue crewmembers stepped in and picked up additional
shifts to mitigate some of the impact, we preemptively announced
schedule changes to January 2022 in order to manage limited crew
resources and reaccommodate impacted customers in advance, rather than
face last-minute cancellations at airports.
January Schedule Changes
1) Schedule change impacting January 5--January 14, primarily
designed to provide operational relief (Crew absences/call-
outs)--roughly 536 segments (flights) removed from the January
schedule
2) Schedule change impacting January 14--January 31, driven by a
combination of operational relief and revenue (cancellations)--
roughly 382 segments (flights) removed from the January
schedule
Airline Employment and Absenteeism Levels.
Question 1. For the months of October, November, and December 2021,
please provide the number of full-and part-time employees employed by
your airline.
Answer.
JetBlue Total Crewmember Headcount
October 2021: 21,713
November 2021: 21,932
December 2021: 22,151
Question 2. For the months of October, November, and December 2021,
and January 2022, please detail any significant absenteeism problems
experienced by your airline.
Answer. Overall, we experienced an increase in unplanned absence
hours and/or daily call outs in late 2021 and early 2022 compared to
the previous year. In the four months from October 2021 to January
2022:
Flight Operations Crewmembers (Pilots)--The percentage of
Daily Call Outs in October,
November and December was two percent higher in 2021 than each of
the same months in 2020. In January 2022, the rate actually decreased
one percent relative to January 2021.
Inflight Crewmembers (Flight Attendants)--The percentage of
Daily Call Outs were three to six percent higher in each of the
past four months compared with October 2020 through January
2021.
Airports Crewmembers--The percentage of Unplanned Absent
Hours for Airports
Crewmembers was three to four percent higher in each of October,
November and December 2021, and 10 percent higher in January 2022
compared to January 2021.
Consumer Refunds. In 2020, the Department of Transportation (DOT)
received 29,687 refund complaints against U.S. airlines, a 4,634
percent increase over 2019. And while the problem has started to get
better, DOT still received 5,129 refund complaints in September 2021,
well above the 627 filed against U.S. airlines for all of 2019.
DOT has a rulemaking in the Unified Agenda which says that it is
looking at defining what constitutes a ``cancellation'' and a
``significant delay''--the two things that entitle a customer to a
refund. Currently, DOT lets airlines make their own determinations as
to whether or not a flight is cancelled, and the number of hours that
account for a ``significant'' delay.
Question 1. In your view, how many hours does a flight have to be
delayed before a passenger is entitled to a refund?
Answer. A customer whose flight is delayed or who is impacted by a
preemptive schedule change of greater than 2 hours is eligible for a
refund to original form of payment.
Question 2. If the reluctance to issue refunds was just an issue of
preserving cash on hand, then why were refund complaints still so high
in 2021?
Answer.
There were two drivers for increased refund complaints in 2021:
1) Customers who had voluntarily cancelled their flights (sometimes
due to COVID or exposure to COVID) and were unhappy about
receiving a travel credit rather than a refund to original form
of payment; and
2) Some customers who had used their Travel Bank funds to book a
flight that JetBlue ultimately canceled or significantly
delayed--which would generally qualify for a refund to their
original form of payment--were unhappy because their refund for
the canceled or delayed flight was returned as a travel credit
rather than cash. In these cases, the customers who paid for
the impacted flight with travel credits were refunded to that
form of payment.
PSP Compliance. Under section 4116(a)(2) of the CARES Act, no
corporate officer or employee of your airline whose total compensation
exceeded $425,000 in calendar year 2019 (other than an employee whose
compensation is determined through an existing collective bargaining
agreement entered into prior to the enactment of the CARES Act) was
permitted to receive from your airline, severance pay or other benefits
upon termination of employment which exceeds twice the maximum total
compensation received by the corporate officer or employee in 2019. Yet
in the first quarter of 2021, your airline reported to the Department
of the Treasury that some employees and corporate officers had received
severance pay or other benefits after March 24, 2020 which more than
doubled their 2019 total compensation.
Question 1. Please explain whether the severance pay or other
benefits provided to these employees and corporate officers complied
with the CARES Act and associated Payroll Support Program requirements.
Answer. JetBlue did not provide severance pay or other benefits to
employees and corporate officers in violation of CARES Act and PSP
requirements, and we are not aware of any filing to the Treasury
Department that indicates such. If there is confusion with JetBlue's Q1
2021 report to Treasury or any other filing, we would be happy to meet
and resolve the misunderstanding.
Question 2. Are you aware of any non-compliances associated with
your airline's receipt of Payroll Support Program funding?
Answer. No. We believe we are in full compliance with the
requirements associated with the PSP.
______
Response to Written Questions Submitted by Hon. Richard Blumenthal to
Robin Hayes
Questions Regarding State of Current Operations
Question 1. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that JetBlue currently owes consumers? Please provide the amount of
each value mechanism as well.
Answer. As of January 8, 2022, the total value of Travel Bank
Credits held by JetBlue customers is $586 million. As detailed below,
customers who have purchased non-refundable fares and proactively
cancel their flights receive travel credits in a JetBlue Travel Bank
for future use. If JetBlue cancels or a significant schedule change
occurs (generally a schedule change of over two hours is considered
significant) the customer has the option of a refund to the original
form of payment. We immediately process refund requests for eligible
customers that request a refund to their original form of payment.
Question 2. Does JetBlue gain revenue (such as from interest) from
the value of unused travel vouchers that are currently held in company
accounts? If so, how much revenue has JetBlue collected from the funds
in your accounts that are linked to unused travel vouchers since March
2020?
Answer. JetBlue does not gain any revenue from the value of unused
travel vouchers. The interest income on credit balances, if there were
any, would be de minimus.
Question 3. If JetBlue still owes consumers under Question 1, by
when will it have completed issuing its refunds? What is the reason for
this delay?
Answer. Customers who have purchased non-refundable fares and
proactively cancel their flights receive travel credits in a JetBlue
Travel Bank for future use. If JetBlue cancels or a significant
schedule change occurs (generally a schedule change of over two hours
is considered significant) the customer can opt either for a refund to
the original form of payment or for a Travel Bank Credit. Therefore,
every customer with a canceled reservation should have received either
a credit (when the customer proactively canceled) or the option of a
refund or credit (when JetBlue canceled or significantly changed the
flight). Refund requests for eligible customers are immediately
processed without delay.
A Customer's JetBlue Travel Bank, funded when the customer
proactively cancels a reservation originally purchased with a non-
refundable fare, remains available for a customer to apply toward
future JetBlue travel. We extended expiration dates for Travel Bank
funds a number of times through the pandemic. Our current policy
permits eligible customers with a Travel Bank credit to extend that
credit until Oct 31, 2022, upon request, for travel through the end of
our published schedule. Because JetBlue flights are available for
booking up to 331 days in advance, a customer could to use the Travel
Bank credit today to book flights through December 2022. If the
customer wanted to hold on to the credit until just before their Travel
Bank funds expire in October 2022, they could apply the funds, for
flights through September 2023. Additional information is available at
https://www.jetblue.com/help/travel-bank-credits.
Of course, if you hear from travelers with specific concerns about
a canceled JetBlue flight, we encourage them to contact JetBlue's
Customer Support Team for assistance. Our Government Affairs team can
also assist with inquiries from your office to address specific
concerns on a customer-by-customer basis.
Questions Regarding December 2021 Operations
Question 1. Please explain the causes of the recent flight
cancellations as well as the steps that JetBlue is implementing to
prevent a repeat of these cancellations.
Answer. The striking increase in COVID-19 cases is impacting
families, businesses and organizations across the country and
unfortunately, JetBlue is not immune. We had prepared extensively for
this holiday period with staffing levels at their highest level since
prior to COVID and we successfully operated through the Thanksgiving
holiday and the first part of December without a single cancellation.
However, the exponential rise in COVID-positive cases in late
December--particularly in the Northeast, where about 75 percent of our
crew are based -strained our operation as crew availability drove a
significant increase in close-in flight cancellations.
In response to these operational challenges, thousands of JetBlue
crewmembers have stepped in and picked up additional shifts to mitigate
some of the impact. Even so, we anticipate the need to cancel some
flights through the next couple of weeks. On December 28, 2021 we
proactively canceled about 1,280 flights through January 13 in order to
better manage our limited crew resources and reaccommodate impacted
customers in advance, rather than face last-minute cancellations at
airports. Though we would rather not have customers inconvenienced
during their holiday travel, we are pleased that despite the
disruptions 84 percent of impacted customers were reaccommodated within
24 hours (Dec 15-Jan 10).
Question 2. JetBlue reportedly cancelled more than 100 flights in
the last week (12/22 to 12/29). How many consumers were impacted by
these cancellations?
Answer. The rise in COVID-positive cases in late December--
particularly in the Northeast, where about 75 percent of our crew are
based -strained our operation as crew availability drove a significant
increase in close-in flight cancellations.
Question 3. Will JetBlue commit to providing full cash refunds to
all impacted consumers? If not, explain why not and what compensation
you will issue to consumers.
Answer. When flights are canceled, whenever possible we
reaccommodate customers on another JetBlue flight. In cases where we
cannot accommodate a customer within a reasonable period of time, that
customer is entitled to a full refund to their original form of
payment. We have also waived change and cancellation fees on Blue Basic
bookings through January 31, 2022 and there are no fees to change or
cancel our other fares.
Question 4. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that JetBlue owe consumers for these cancellations? Please provide the
amount of each value mechanism as well.
Answer. As of January 8, 2022, the total value of Travel Bank
Credits held by JetBlue customers impacted by these flight
cancellations is $75.8 million
Question 5. By when does JetBlue plan to have fully reimbursed
consumers?
Answer. As mentioned previously, every customer with a canceled
reservation should have received either a credit (when the customer
proactively canceled) or the option of a refund or credit (when JetBlue
canceled or significantly changed the flight). Refunds to original form
of payment for eligible customers who choose that option are
immediately processed.
Question 6. Does JetBlue maintain interline agreements with other
carriers to allow passengers affected by disruptions an alternate means
of getting to their destinations? If not, why not?
Answer. JetBlue has a number of Kprotection agreements with other
airlines that provide options for reaccommodating customers in the
event of a JetBlue flight disruption. Subject to the conditions of the
individual agreements, we have the option of reaccommodating customers
in the midst of irregular operations on American Airlines, Alaska
Airlines, Hawaiian Airlines, Silver, Cape Air, and JSX, plus a large
number of international airlines. For cases when an advance JetBlue
schedule change requires reaccommodation on another carrier, JetBlue
has agreement with American and Alaska.
______
Response to Written Questions Submitted by Hon. Richard Blumenthal to
Ben Minicucci
Compensation for consumers. Since March 2020, flight delays and
cancellations have disrupted plans for countless travelers--and the
most recent cancellations left people stranded in airports and away
from family during the winter holiday season. Senator Markey and I have
repeatedly called for full cash refunds for impacted consumers. But
U.S. airlines have been slow to provide credits and legally-required
refunds and have hidden behind vague ticketing policies. Media reports
indicate that airlines are currently holding approximately $20 billion
worth of travel vouchers and unrefunded ticket values.
Question 1. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that Alaska Airlines currently owes consumers? Please provide the
amount of each value mechanism as well.
Answer. Consistent with our policy and Federal law, Alaska Airlines
is providing prompt refunds back to the original form of payment to
guests that choose not to accept the alternatives offered for a
canceled flight or for significantly delayed flights.
Question 2. Does Alaska Airlines gain revenue (such as from
interest) from the value of unused travel vouchers that are currently
held in company accounts? If so, how much revenue has Alaska Airlines
collected from the funds in your accounts that are linked to unused
travel vouchers since March 2020?
Answer. Our guest facing policies when it comes to guest ticket
credits or E-Wallet funds are designed to allow for flexibility and
generosity compliant with Federal regulations, while also encouraging
predictability to allow us to schedule and operate our network
nationwide, all of which is separate from our accounting policies.
Question 3. If Alaska Airlines still owes consumers under Question
1, by when will it have completed issuing its refunds? What is the
reason for this delay?
Answer. For ticket values associated with travel dates in the past,
those values are valid for 12 months from the original issuance of the
ticket. The customer can elect to keep the stored value in the ticket
or request a refund to the original form of payment (if a refundable
ticket or if Alaska canceled or significantly delayed the flight) or
request travel credit for the residual value.
Alaska's policy is to process refunds to customers under the
Department of Transportation refund requirements (7 days for credit
card refunds, 21 days for cash--from the date of request). We are
providing these refunds back to the original form of payment to our
guests that choose not to accept an alternative (i.e., travel credit)
when offered for a canceled flight or for significantly delayed flights
according to our contract of carriage and DOT requirements.
As refund request volumes are significantly higher than normal due
to the cancellations over the last several days of December, our
refunds team is working tirelessly to ensure we provide refunds to our
guests in a timely manner. Alaska Airlines has provided premium pay for
overtime and is utilizing additional resources to assist with these
requests.
We have also posted a public guide on refund eligibility on our
website: https://www.alaskaair.com/content/travel-info/help/refund-
eligibility.
Question 4. Alaska Airlines reportedly cancelled more than 400
flights in the last week (12/22 to 12/29). How many consumers were
impacted by these cancellations?
Answer. Due to winter weather impacts on our operation at key
airports in our network we had to slow down our operation and ensure
the safety of our employees and our guests. Unfortunately, during this
period between 12/22 and 12/29 over 130,000 passengers were impacted by
cancellations.
Question 5. Will Alaska Airlines commit to providing full cash
refunds to all impacted consumers? If not, explain why not and what
compensation you will issue to consumers.
Answer. As mentioned above, and consistent with our policy and
Federal law, Alaska is providing prompt refunds back to the original
form of payment to guests that choose not to accept the alternatives
offered for a canceled flight or for significantly delayed flights.
Question 6. What is the total value of unrefunded tickets,
unredeemed flight credits, and other similar stored value mechanisms
that Alaska Airlines owe consumers for these cancellations? Please
provide the amount of each value mechanism as well.
Answer. The company processes refunds as our customers request
them. If no refund is processed, these tickets will retain their value
for the 12-month period of validity as mentioned above and in our
contract of carriage.
In addition to unused tickets that have not yet been refunded, we
issued approximately $38 million in refunds over the period from
December 22 to December 29, $25 million of which were refunded in the
form of travel credits. These refunds include those for cancelled
flights during this time or for future travel. If the flights were
canceled or significantly delayed, and the customer did not accept an
alternative offered by Alaska, the values were refunded to the original
form of payment.
Question 7. By when does Alaska Airlines plan to have fully
reimbursed consumers?
Answer. As mentioned above, Alaska is current on refunds due to
customers that have requested them. We fully expect further refund
requests to come in from customers over the weeks and even months ahead
and we will endeavor to process all refunds promptly according to DOT
requirements.
Question 8. Please explain the causes of the recent flight
cancellations as well as the steps that Alaska Airlines is implementing
to prevent a repeat of these cancellations.
Answer. Despite our efforts to overstaff the holiday travel season
in case of unforeseen challenges, for the week leading up to Christmas
and into New Year Alaska Airlines was impacted by winter weather in the
Pacific Northwest followed and combined with increased staffing
challenges due to the omicron COVID-19 variant. We know that it's
incredibly frustrating when travel doesn't go as planned, especially as
many of us are eager to connect with friends and family.
The safety of our operation is our top priority so when it comes to
winter weather we need to take the added time to de-ice aircraft and
ensure that we're working with the FAA and our airport partners to have
a safe and metered operation, as well as ensuring our crew is compliant
with all FAA-regulated duty periods. That also means when it comes to
COVID we ensure our crew are safe and keeping each other safe if
they've been exposed to COVID-19 and are following all protocols both
required by the government, and by Alaska Airlines.
Throughout December and into January we used our full toolbox to
communicate with guests and reaccommodate them as much as possible,
including keeping our blog updated daily, using social media, personal
calls, etc. Additionally, we offered flexible travel policies for our
guests.
As we entered 2022, our leadership made the call to proactively
reduce the schedule by 10 percent to rebuild reliability in our
operation. I would welcome you to read our statement here: https://
blog.alaskaair.com/alaska-airlines/operations/schedule-changes-ahead/.
Finally, Alaska Airlines Chief Operating Officer, Constance von Muehlen
sent a video message to every impacted guest. In her video she both
apologized and outlined that we are continuing a review of our
operations to ensure we can avoid similar situations when we face
confluences of events such as those faced at the end of December 2021
and into 2022.
Question 9. Does Alaska Airlines maintain interline agreements with
other carriers to allow passengers affected by disruptions an alternate
means of getting to their destinations? If not, why not?
Answer. Alaska maintains interline agreements with many of the
major U.S. airlines and we utilize those agreements where possible to
provide alternate means of getting our customers to their destinations.
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