American Airlines eyes second-tier network cuts in 4Q20

American Airlines (AA, Dallas/Fort Worth) is pondering suspending routes to as many as 30 second- and third-tier cities in the United States after September 30, when current minimum service obligations imposed by the federal government expire, CNBC and the Associated Press have reported. The unnamed airline executive did not reveal any details as to which cities would be affected. Airlines receiving support under the USD25 billion federal CARES Act have been mandated to maintain service to all markets served before the pandemic albeit under certain restrictions. While the airlines were allowed to reduce frequencies to a level determined by their respective pre-COVID schedules, they had to apply for individual exceptions in the event they wanted to drop a destination altogether. The obligation pertained to destination cities served rather than particular routes. So far, American Airlines has received exemptions covering Duluth, Kahului, Kona, Lihue, Aspen, Montrose, Vail/Eagle, and Worcester through September 30, when the CARES Act’s provisions expire. The airline was denied exemption for Jackson Hole, WY. The Department of Transportation (DOT) was due to notify airlines by August 1, 2020, if the minimum service obligations had been extended beyond September 30. It has yet to confirm the extension as Congress has yet to agree on any COVID-related legislation beyond September 30. The minimum service obligations are related to CARES Act provisions establishing liquidity support for US airlines and are not related to the other part of the law, the Payroll Support Programme. The airlines, backed by President Donald Trump, have pleaded for the assistance to be extended beyond September 30, although thus far they have mostly focused on the payroll part of the scheme.