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U.S. Airlines Got $39 Billion In Payroll Support. They Deserved Every Penny.

Date: July 18, 2021

By Ted Reed, Forbes

Congress provided $39 billion to pay the salaries of tens of thousands of employees at passenger airlines during the pandemic.  It looks like a good investment, one that both helped the U.S. economy and assured flight availability this summer.  

For airline labor, the programs known as PSP (for payroll support programs) represented a historic achievement. Unions helped write the legislation and then advocated for it. Flight attendant leader Sara Nelson became a TV fixture, even as she and others pursued the less visible work of engaging Congress.

But most airlines didn’t manage perfectly, failing to foresee the demand surge this summer. Congress didn’t manage perfectly either, enabling a gap between two tranches of airline support. The late summer/early fall gap encouraged layoffs.  Combined with unfavorable summer weather, these led to delays, cancellations and long wait times for calls to reservations.

Delta CEO Ed Bastian said Wednesday, on the carrier’s July earnings call, that reservations call “volumes are beyond anything we’ve ever seen.” On Thursday, American cancelled extended voluntary leaves for 3,300 flight attendants.

On Friday, Sen. Maria Cantwell, (D-Wash.), chairwoman of the Senate committee that oversees the airline industry, wrote letters to six airline CEOS asking why they have staffing shortages despite the cash infusion. She wrote to the CEOs of Allegiant, American, Delta, JetBlue, Republic, and Southwest: United was a notable exclusion.

“This reported workforce shortage runs counter to the objective and spirit of the PSP, which was to enable airlines to endure the pandemic and keep employees on payroll so that the industry was positioned to capture a rebound in demand,” Cantwell wrote.  While just an inquiry, it was a pointed one.

Now, airline union leaders are reminding that PSP was an unprecedented success. The program “kept 90% of our members employed with a pay check, health care and continuous contributions to their retirement plans,” said Sito Pantoja, an International Association of Machinists general vice president who headed the union’s transportation division for nine years.

“It also provided airlines with the capability to gear up as soon as possible,” Pantoja said. “Just imagine, if all those people had been furloughed, where would the airlines be now?

“All you have to do is take a photo of what airlines looked like a year ago, and what they look like now. All these airports, all these businesses, all these little stores are thriving,” Pantoja said. “And everybody knows, however the airlines go, that’s how the economy goes.”

IAM’s transportation division and the Transport Workers Union are the largest unions representing airline workers. Their legislative staffs worked closely with legislators: Pantoja met with both American President Robert Isom and United CEO Scott Kirby.

Nelson, president of the 50,000-member Association of Flight Attendants, said that while PSP was an overwhelming success, “What didn’t work was Congress’ ability to keep it in place.” Congress allocated $25 billion for commercial airline employees in March and then another $14 billion in a second allocation in December.

In the gap between allocations, some airlines moved to lay off or buy out workers. “They couldn’t afford to keep payroll in place,” Nelson said.

“We warned Congress that if they didn’t renew it last October, we wouldn’t be in our jobs,” Nelson said. “One of the key elements of the payroll support program is the knowledge that people certified with credentials and clearance cannot just show up for work the next day. You have to keep them qualified. Otherwise, it takes time to get them back to work.

“What you’re seeing now is the hangover from the lapse of funding in Congress,” Nelson said. “But it’s also confirmation that PSP works. If people are upset about the 1% to 2% pulldown in flights, imagine what it would have been with no funding.”

John Samuelsen, president of the Transport Workers Union, decried “the notion that the money didn’t do what it was supposed to do.” In the financing gap, Southwest sent warning layoffs, although it didn’t have to lay workers off, while American and United laid people off. Later, American and United called workers back and provided retroactive pay.

Bus and subway workers, including 46,000 TWU members in New York, kept working too. “In terms of the benefits of PSP, tens of thousands of workers on the public transit side were never laid off because of it,” Samuelsen said. “Imagine how bad the economy would be if the whole entire transportation industry had just imploded.”

Why didn’t United CEO Scott Kirby hear from Cantwell?

Todd Insler, chairman for the United chapter of the Air Line Pilots Association, said, “PSP was immensely successful for the U.S. economy and for workers, especially at United, where our operational performance is helping millions of our passengers return to pre-pandemic travel levels.”

Insler said the program worked best at United because a unique agreement with pilots prevented layoffs. That “enabled us to keep all United aircraft types flying throughout the pandemic, saved thousands of jobs, and kept our pilots current,” Insler said. “United pilots (could) return to flying quickly to match demand and not have the problems others are experiencing.”

By contrast, American and Southwest flew a larger share of their regular schedules and were trapped by unfavorable weather and crew shortages.

“The operational failures we see are not laid at the doorstep of PSP, but at the feet of managements that did not plan accordingly,” said Dennis Tajer, spokesman for the Allied Pilots Association, which represents 15,000 American pilots. During the funding lull, American laid off 1,600 pilots. “We told management that was a risky plan,” Tajer said. “It takes many months to train a pilot back up.”

Still, “PSP was an over-the-top success,” he said. “Without it, the airline industry would have collapsed. You would be reading about airlines selling assets.”

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