Aviation workers will be protected from furloughs through September under the bill President Biden signed Thursday, but a full travel recovery could take years.
The pandemic relief bill that President Biden signed Thursday afternoon will protect tens of thousands of aviation jobs, providing a lifeline to an industry that is likely to struggle for some time even as vaccinations accelerate.
After Congress this week approved the legislation, which includes $14 billion for airlines and an additional $9 billion for airports and other businesses, American Airlines and United Airlines told 27,000 employees that they could ignore the furlough notices they had received in recent weeks. The airlines had issued the warnings, which are legally required in advance of sweeping cuts, as they prepared to carry out the furloughs at the end of this month when an earlier round of federal aid expired. The new bill extends that assistance through September.
“If you have one of those WARN Act notices we sent out in February, tear it up,” Doug Parker, American’s chief executive, said in an Instagram video. “There aren’t going to be any furloughs at American Airlines in April and, with vaccinations on the rise, hopefully never again.”
The relief package, which Mr. Biden has said is needed to protect the economy and workers and which many Republican lawmakers have criticized as excessive, is the third to provide funding to keep airline workers employed since the pandemic began. Last March, Congress provided passenger airlines $25 billion in loans and another $25 billion in payroll grants. It renewed the payroll funding in December with a further $15 billion and again this week.
The Biden relief bill also sets aside $1 billion for aviation contractors and $8 billion for airports to help them operate normally, limit the spread of the virus, and pay workers and service their debts. In exchange for the aid, airports, contractors and airlines are prohibited from large layoffs through September and were forced to make other concessions.
The aviation and travel industry has been among the hardest hit by the pandemic. A year ago, the number of people flying started to plummet as the virus spread widely and government officials restricted or discouraged travel. By early April, the number of people flying every day had dropped 96 percent from a year earlier.
Travel has recovered somewhat since then. An average of about a million people a day have been screened at airport security checkpoints over the past week, down about 46 percent from the same period in 2019, according to Transportation Security Administration data.
Still, airlines are collectively losing $150 million a day on average, according to Airlines for America, an association that represents American, United and the other major carriers. The widespread distribution of vaccines has given the industry hope for a rebound, but airlines are expected to continue to lose money through the summer, and most industry analysts and executives don’t expect travel to recover to 2019 levels until 2023 or 2024.
In a report on Thursday, Fitch Ratings said it now expected a slower air travel recovery in the first half of the year in the United States and Canada than it previously forecast. But the second half of the year could see a “fairly robust rebound,” Fitch analysts said, citing recent surveys that show that many people are eager to travel once they feel it is safe.
“Fitch believes reaching full herd immunity may not be necessary to at least begin to drive a rebound in travel,” the analysts wrote. “Rather, a decline in death rates spurred by vaccine coverage among vulnerable populations may be sufficient to loosen pandemic restrictions and build traveler comfort.”
Frequently Asked Questions About the New Stimulus Package
The stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more.
Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read more
This credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.
There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.
The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.
In the meantime, airlines are doing what they can to get people to book tickets, setting up direct flights to popular beach destinations, cutting fares and promising strict enforcement of safety procedures.
But obstacles remain. This week, the Centers for Disease Control and Prevention said people who had been fully vaccinated could safely engage in a wider range of activities than those who hadn’t, including gathering in small groups at home without masks or social distancing. To the frustration of airline and other industry executives, the agency continued to recommend that everyone avoid travel.
Airlines have argued that there is a low risk of virus transmission in flight because of high-end cabin ventilation systems, strong disinfection practices and strict mask requirements. But travel has nonetheless facilitated the spread of the virus around the world.
“We know that after mass travel, after vacations, after holidays, we tend to see a surge in cases,” the C.D.C. director, Dr. Rochelle Walensky, said Monday night on MSNBC. “And so, we really want to make sure — again with just 10 percent of people vaccinated — that we are limiting travel.”
Widespread distribution of the vaccines won’t solve all of the industry’s problems, either. It could be at least another year, if not much longer, before corporate and international travel, which tends to be much more profitable for airlines than leisure bookings, begins to rebound. Some people have speculated that business travel could be reduced permanently because salespeople and other professionals have grown accustomed to videoconferencing and have come to realize that many trips they used to make were wasteful.
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