U.S. Relief Bill Sets Aside Billions for Aviation Industry

 - March 26, 2020, 7:28 AM

This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.

The U.S. Senate’s unanimous passage of the massive stimulus package late last night sets the stage for billions in loans and grants to flow to cash strapped air carriers, including Part 135 operators, along with numerous other aviation business. The Coronavirus Aid, Relief, and Economic Security (CARES) Act heads to the House for approval.

But since House members have returned to their districts, backers of the relief package are hopeful the lower chamber will pass it by “unanimous consent,” requiring only a couple of members to be present. If there are any objections, however, the entire House would have to return to vote, delaying its ultimate passage.

Senate passage of the act followed days of intense lobbying from across the industry—from general aviation organizations coalescing around the need to preserve airports and protect operators and small businesses and repair stations urging relief to airlines that are burning cash every day and manufacturers that included a Boeing request for up to $60 billion. That effort involved thousands of calls and letter-writing campaigns.

In the end, Congress specifically is directing almost $80 billion in loans and grants for certain aviation segments, as well as $10 billion in airport grants with $100 million set aside for general aviation facilities. For those that don’t qualify, Congress has set aside a loan pool of $454 billion that may be available to states, municipalities, and businesses in general, including aviation entities.

However, the bill does not include proposals brought up earlier this week—and pushed by environmental and other groups—that would tie funding to emissions caps or require mandatory labor representation on an airline board. These provisions immediately drew the ire of Republicans in both the Senate and the House.

While the CARES Act omits environmental requirements, it does stipulate that the grants provided to airlines and others must go to employee salaries and benefits. The CARES Act would provide up to $25 billion in grants to commercial passenger carriers. This also includes Part 135 on-demand operations, the National Air Transportation Association said. Other grants include $4 billion to cargo carriers and $3 billion for contractors. Contractors could include FBOs providing ground handling for airlines and caterers, NATA said.

The loans, meanwhile, include another $25 billion for commercial carriers (including Part 135) and Part 145 maintenance organizations and $17 billion for aviation entities involved in national security, which primarily is aimed at Boeing.

Those receiving relief must maintain current employment levels “to the extent practicable” through the end of September and then comply with limits on future cuts, as well as stock buy-backs.  

In addition, the CARES Act provides relief from the 7.5 percent passenger ticket tax (including Part 135 carriers) and commercial jet fuel tax through the end of the year.

Along with the direct funding, there are numerous other general provisions that will pertain to the industry broadly and small businesses in particular.

The resulting language is already drawing wide industry support. “On balance, this bill is helpful for general aviation,” NBAA president and CEO Ed Bolen said in a statement after the Senate vote. “The industry clearly made its voice heard in ensuring that the important provisions for general aviation airports, general aviation commercial operators, and other small businesses were considered as this legislation was assembled, and we look forward to the bill’s passage into law.”

The Aerospace Industries Association said the bill provides a roadmap for relief and recovery, while the Air Line Pilots Association welcomed the efforts to stabilize the airline industry and help frontline employees.

American Association of Airport Executives (AAAE) president and CEO Todd Hauptli, meanwhile, praised measures to aid airports. “Airports across the country are reeling from the impacts of coronavirus and the precipitous decline in travel that has occurred in a matter of a few short weeks. Congress and the Administration have stepped up in a significant way to provide desperately needed relief to the aviation system, including $10 billion to airports.”