US Airlines Seek Exemptions To Minimum Service Requirements

The United States Department of Transportation (DOT) has set out strict guidelines for minimum service that airlines must…

US Airlines Seek Exemptions To Minimum Service Requirements

The United States Department of Transportation (DOT) has set out strict guidelines for minimum service that airlines must maintain in order to receive government funding. However, this week, Hawaiian and American added on to previous requests from Spirit and JetBlue to cut down on minimum service. Of these four, Hawaiian was the most successful while American’s fate is being debated.

Hawaiian has received exemptions to end most mainland service while American has applied for exemptions. Photo: Hawaiian Airlines

The minimum service requirement

Airlines that receive government assistance under the CARES Act and have a market share of over 10% must maintain a minimum amount of domestic service as outlined by the DOT. For destinations that are served by the airline for at least 25 times per week, the airline must continue to fly five times per week. For destinations served between five and 25 times per week, the carrier only needs to operate at least three weekly flights to that destination. If a carrier flies to a destination fewer than five days a week, the airline must serve the destination with at least one flight on one day per week. Airlines can, however, consolidate services if a city was served from multiple hubs.

American Charlotte
Airlines can consolidate service out of hubs. Photo: Getty Images

Hawaiian, Spirit, and JetBlue have fewer requirements due to their smaller market share. These airlines only need to service a destination three times per week for cities that currently receive five or more weekly flights. To cities receiving service less than five times per week, the airline only needs to provide one flight per week.

JetBlue livery
JetBlue has a less than 10% share of domestic capacity. Photo: Getty Images

Airlines cannot cooperate on flights, however. Each carrier must serve its destinations per minimum service requirements. Regional carriers operating on behalf of the airline can help meet these requirements.

In terms of flight schedules, airlines can choose to either follow minimum service requirements based on their winter 2020 schedule or summer schedule from 2019. For places where service had ceased after March 1st, airlines will need to reinstate service within seven business days of receiving government assistance from the CARES Act.

Hawaiian Airlines is allowed to suspend most mainland flights

Hawaii currently has a stringent quarantine procedure in place for visitors. As a result, the island’s largest carrier sought exemptions to minimum service requirements per a report in Routesonline. The DOT approved the exemptions. As a result, Hawaiian Airlines will be ending service to Boston, Las Vegas, Portland, New York, Phoenix, Sacramento, San Diego, and Seattle. In addition, the airline will suspend a regional flight to Lahaina on the island of Maui. Instead, supplies and critical workers can fly into the larger Kahului airport.

Hawaiian flies the longest domestic route in the United States to Boston from Honolulu. Also, the JFK to HNL route is one of the longest domestic services in the US. Long-haul routes can be huge money-losers if planes are not going out full. Given Hawaii’s quarantine requirements, most of those A330s would be flying empty and place an unnecessary strain on Hawaiian’s financials and the environment. As a result, it is good that the DOT granted these requests. However, once leisure travel does start to rebound, hopefully, these routes make a comeback.

Spirit and JetBlue exemptions denied

In a separate report at Routesonline, Spirit and JetBlue sought further exemptions beyond airport consolidations in major cities. JetBlue sought to suspend service to Aguadilla, Albuquerque, Bozeman, Dallas Fort Worth, Houston Intercontinental, Mercedita, Minneapolis St. Paul, Portland, Reno, Sacramento, and Worcester. Of these, however, only Aguadilla and Mercedita were granted.

JetBlue E190
JetBlue sought to drop service to significant airports like DFW and IAH. Photo: Simple Flying

Spirit, on the other hand, wanted to drop a whopping 26 cities from its network. These included cities like Austin, New York, Pittsburgh, Portland, Richmond, and San Francisco. However, The DOT only approved a suspension of service to Aguadilla.

Spirit Airlines
Spirit only received an exemption for service to Aguadilla. Photo: Jay Singh – Simple Flying

These cuts would leave legacy carriers flying in and out of major airports with fewer point-to-point connections. As a result, it makes sense that the DOT did not grant broad waivers to these airlines in the interest of competition– even if planes are flying empty.

American Airlines seeks exemptions

American Airlines is also seeking exemptions to 12 cities after receiving $5.8 billion in government aid. One of these cities is Duluth, where the carrier flies regional jets to its hub in Chicago. Previously, the airline planned to cut this route permanently from April 27th. However, this would go against the DOT’s order. As a result, American is making for an exemption to end this service as planned.

American Eagle
American wants to cut regional jet service to Duluth. Photo: American Airlines

Also, American sought exemptions to end service for cities where it does not operate the entire season as defined by the IATA. These include Anchorage, Jackson (Wyoming), Kalispell, Martha’s Vineyard, and Nantucket, Aspen, Montrose, and Vail.

American Airlines
The airline wants to suspend service to Kahului, Kona, and Lihue in Hawaii until August. Photo: Getty Images

Lastly, American is also seeking exemptions to its Hawaii services in part due to the significant travel restrictions on the island. While the airline still will continue daily flights between Honolulu and Los Angeles, it wants to suspend Kahului, Kona, and Lihue service until August.

Based on previous behavior from the DOT, it is likely that the Hawaii suspensions will be granted. However, other exemptions may not be. While Duluth would make sense since American had previously intended to end service on April 27th before the crisis hit, the other cities may still see extended American service even if there are few travelers.

What do you make of these exemptions? Should the DOT grant airlines more exemptions? Let us know in the comments!

Source : Simple Flying More   

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South Africa Eyes New National Carrier From SAA Remains

We’ve all joked about how it’s impossible to kill off South African Airways, the Alitalia of the southern…

South Africa Eyes New National Carrier From SAA Remains

We’ve all joked about how it’s impossible to kill off South African Airways, the Alitalia of the southern hemisphere. But it seems not even SAA can weather the 2020 aviation crisis. The airline had suspended all international and domestic flying in late March, and the South African Government has discontinued financial support, crippling the carrier. But phoenix-like, the government is already busy working to ensure a new carrier emerges from the ashes of SAA.

The South African Government is working on a new airline should SAA fail. Photo: Alex Beltyukov via Wikimedia Commons.

With a history tracing back to 1934, the South African flag carrier flew to six continents in its heyday. But the government-owned airline has frequently struggled to make a profit. Longstanding government interference, mismanagement, and poor business practices have exacerbated SAA’s woes.

For some time, the airline has relied on financial assistance from the government to keep operating. The South African Government has poured more than USD$1.1 billion into the airline over the past three years.

The South African Government turns off the funding tap

Now, the South African Government has turned that tap off. SAA has been told there will be no more funding from the government, no more lending guarantees, and foreign financing of a rescue plan will not be allowed.

All of SAA’s 5,000 odd employees are due to have their employment terminated by the end of April. The airline’s administrators say this is by mutual agreement.

Adrian Saville, the founder of Cannon Asset Managers in Johannesburg, told Quartz Africa this week;

“For all intents and purposes, [SAA] has already collapsed. As it stands, it is very difficult to come to any conclusion other than its days are done in its current format.”

All of SAA’s domestic and international flights are now suspended. Photo: Aero Icarus via Flickr.

But Reuters is reporting that South Africa’s Public Enterprises Ministry is saying that the South African Government and various unions will team up to ensure that a “financially viable and competitive airline” rises from the remains of SAA.

It is a sharp turnaround for the South African Government. Earlier this year, the government set aside USD$863 million to repay guaranteed debt at SAA and was expecting a further call for funding.

No airline ready to step into the breach

But Corona is impacting all sectors of the South African economy, not just SAA. It is causing the government to refocus its thinking about SAA. However, the closure of SAA isn’t without its problems. Ogaga Udjo, founder of ZA Logics, an aviation consultancy in Johannesburg, says;

“If SAA were to collapse tomorrow, there would be no other local airline that could immediately take up its place.

“The business case for a strategic equity partner still holds, but the corporate structure and subsequent dynamics will have to be ironed out in order to provide any partner with confidence to invest in the entity. The future of SAA is fully dependent on political will.”

It has been a big fall for an airline that was once one of Africa’s best. Photo: Aero Icarus via Flickr.

The South African Government is being vague about what it plans to do with South African Airway’s assets. It isn’t keen on outside investment, but even if it was, would anyone tip money into an airline widely regarded as a basket case?

Moving forward, we could be looking at a half baked State-owned airline relying on old SAA assets that lurches from crisis to crisis. It’s a significant fall for an airline that was once the best in Africa.

Source : Simple Flying More   

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