U.S. Airlines, Aviation Workers Praise Latest PSP Extension
Federal Aid Extension Averts Further Employee Displacements
By John Perkinson, Senior Staff Writer, and Jeff Pavlak, Legislative & Policy Representative, ALPA Government Affairs Department
As the result of an aggressive lobbying campaign led by ALPA, other aviation unions, and airlines, the U.S. government on March 11 passed the American Rescue Plan Act of 2021, which contained a second extension of the highly successful payroll support program (PSP). Originally outlined in Division A, Title IV, of last year’s Coronavirus Aid, Relief, and Economic Security (CARES) Act, this newest installment of PSP allocates $14 billion in exclusive financial aid for U.S. airline employee salaries and benefits.
This second PSP extension also creates new, enhanced furlough protections developed and supported by ALPA and the AFL-CIO’s Transportation Trades Department to prevent a participating airline from furloughing employees until September 30, or until the carrier exhausts all of its PSP funding, whichever comes later. Carriers that receive aid must refrain from buying back stock or issuing dividends through Sept. 30, 2022, and compensation limits are placed on executive salaries that exceed $425,000.
Capt. Joe DePete, ALPA’s president, offered his gratitude to lawmakers, commenting, “Thanks to this bill, tens of thousands of airline workers and their families will avoid the prospect of finding themselves in the unemployment line or worrying about how they’ll pay their bills.”
He also observed, “For the first time in American history, rather than providing unfettered financial assistance to airlines, aid is conditioned to promote, rather than subordinate, the livelihoods of employees.” In addition, DePete underscored the role pilots and other frontline aviation employees play in contributing to the nation’s economic recovery.
In addition to the legislation’s passage, March 11 also marked the one-year anniversary of the World Health Organization’s declaration of COVID-19 as a global pandemic, the root cause of the aviation industry’s dramatic downturn. In a Feb. 4, 2021, memorandum, the House Committee on Financial Services observed, “According to some estimates, major U.S. airlines lost over $35 billion in 2020, and although demand for air travel has increased in recent months, airlines don’t expect to return to profitability until midway through 2021.”
Yet, even in the best of times, airlines operate in a volatile industry. They’re asset heavy, cyclical in operation, and burdened by fluctuating commodity costs, including jet fuel. Painfully ironic, at the beginning of 2020, the aviation industry was headed for a banner year. U.S. scheduled passenger airlines posted their 10th consecutive year of profitability; passenger travel was at an all-time high; and pilots, who’ve disproportionately borne the burden of the industry’s not-so-distant financial troubles, were finally able to reap the benefits of this stability and success.
The COVID-19 pandemic overturned all of that overnight as the demand for U.S. passenger air travel evaporated, declining by as much as 96 percent, and much of the country engaged in a shutdown to contain the spread of the virus. This similar overwhelming impact was felt around the globe; the international aviation industry has never witnessed a crisis of this breadth and magnitude.
ALPA and its allies on Capitol Hill immediately mobilized to initiate a vital, proworker framework in response to the pandemic’s devastating effects. From its informed experience, ALPA is well aware that in many recent industry-specific relief packages, intentionally or otherwise, employees are often harmed or, at the very least, overlooked.
Examples like the 1979 Chrysler bailout and the restructuring of the “Big 3” automakers in 2009, following the recession of 2008, highlight the reality that employees and collective bargaining agreements have been either major targets or collateral damage in industry-recovery efforts.
Following the terrorist attacks of 9/11, Congress passed the Airline Transportation Safety and System Stabilization Act (ATSSSA), which provided $5 billion in immediate cash assistance, an additional $10 billion in loan guarantees, tax aid, and other resources to help stabilize the airline industry under the auspices of the government-run Air Transportation Stabilization Board. Another $10 billion went to general aviation operators conducting flights under FAR Part 135; eligible businesses certified under FAR Part 145 to perform inspection, repair, replacement, or overhaul services; and ticket agents. However, the aid contained no meaningful employee protections, freeing airlines to pay off shareholders and address other priorities.
A Nov. 6, 2001, article in The Wall Street Journal observed that by mid-fall, many of the U.S. airlines utilizing ATSSSA funds had “blown through most of Washington’s $5 billion cash bailout” and their bleeding continued. The story noted, “The financial carnage is so bad that the industry could be headed for a major restructuring….”
Unfortunately, the ATSSSA didn’t significantly aid in the economic recovery of the U.S. aviation industry. According to the nation’s Bureau of Transportation Statistics, estimated airline losses between 2001 until 2007 totaled $40 billion. This decline prompted many carriers to manipulate 11 U.S. Code § 1113 of the U.S. Bankruptcy Code, “Rejection of collective bargaining agreements,” to sidestep labor obligations and impose drastic cuts. It also led to widespread worker layoffs and considerable industry consolidation, further hindering recovery. Consequently, it took the U.S. airline industry more than 15 years to bounce back to the performance levels it had enjoyed prior to Sept. 11, 2001.
Many don’t realize what’s involved in reinstating airline operations after significant employee displacements. As DePete pointed out to the U.S. House Aviation Subcommittee during testimony earlier this year, “Putting furloughed pilots back on the flight deck isn’t as simple as flipping a switch. Airline pilots are subject to training requirements and medical certifications that take time to requalify.” Backlogs can quickly overwhelm the networks in place to adequately process these requisites.
A Different Approach
From these lessons learned, ALPA worked with Congress to completely change the dynamic of relief legislation, taking an approach that gave special attention to the worker. And despite living through what has arguably been the worst year in aviation history, roughly 83 percent of airline workers remain employed. In addition, PSP has allowed ALPA negotiators to reduce pilot seniority lists, in light of the steep decline in air travel, through largely voluntary measures such as early-outs and short- and long-term leaves. Thousands of ALPA members selflessly took advantage of volunteer layoffs and early retirement opportunities offered by their carriers to help save the jobs of junior pilots.
If not for this unprecedented, comprehensive PSP relief, the airline industry would likely be in disarray: bankruptcies, including Chapter 7 liquidations, would be the norm; passenger throughputs would be irreparably harmed; and hundreds of thousands of pilots and other airline employees would be looking for other job opportunities.
In a public statement immediately following the announcement of the American Rescue Plan Act, DePete asserted, “During this global pandemic, ALPA pilots have repeatedly demonstrated their essential role by keeping supply chains moving and delivering medical staff and equipment around the world. And today, these same pilots remain on the front lines as they deliver shipments of vaccines, which day by day gets us one step closer to emerging from this crisis.”
In many respects, the third installation of PSP is a testament to the countless number of ALPA pilots who extensively engaged in the Association’s Calls to Action and social media campaigns to send hundreds of thousands of messages to Capitol Hill. Another important factor is ALPA’s relationships with its labor allies, fellow airline industry stakeholders, and pilot-partisan lawmakers. They all worked together to advance this groundbreaking legislation. However, the Association’s long-standing ability to draw from its experience and lessons learned from its past can’t be overlooked.
PSP is proof of the saying: Coming together is a beginning, staying together is progress, and working together is success.