RAA Voices Concern with Treasury’s Administration of PSP in Statement for House Aviation Hearing

Washington, DC, March 2, 2021. Media contact: media@raa.org

Aligned with today’s House Committee on Transportation and Infrastructure, Subcommittee on Aviation hearing titled, “COVID-19’s Effects on U.S. Aviation and the Flight Path to Recovery,” Regional Airline Association (RAA) President and CEO Faye Malarkey Black issued the following statement:

“On behalf of RAA and its members, I thank the Committee and its staff for their critical support of the regional airline industrs workforce through a third extension of the highly successful Payroll Support Program in H.R. 1319, American Rescue Plan Act of 2021. We also appreciate the Committee’s support for small community air service in the Consolidated Appropriations Act, 2021 through supplemental funding to the Essential Air Service Program and Small Community Air Service Development Program along with important flexibility to help protect small community air service during the pandemic.

Regional airlines specialize in serving smaller communities with aircraft that are rightsized for markets with fewer passengers. With fewer passengers over which to amortize demand fluctuations or cost increases, small community markets can be fragile, and are often hardest hit when network carriers are forced to retract service. Despite air service requirements that helped communities protect air service, one in five markets being served in November 2019 was no longer being served by November 2020. When the PSP program expired last year, four communities lost all air service altogether.

Because of the budget reconciliation framework, minimum air service guarantees included in the CARES act and the first PSP extension are not expected in the next PSP extension, although the Department of Transportation has authority to extend them. We ask Congress work with DOT to ensure communities are able to protect their air service and propose temporarily expanding the Essential Air Service program to allow new communities to participate until market conditions stabilize. 

Regional airlines are been among the hardest hit by the pandemic and uneven implementation of airline relief programs by the US Department of Treasury has further hindered recovery. The vast majority of regional airlines are not publicly traded, and their business models have more in common with a small business than a large multinational company. Yet, because of the size of their payroll, some regional airlines will be required to pay a portion of the payroll assistance back, adding a debt burden that will further delay the industry’s economic recovery and the return of air service and employment levels to those reached prior to the pandemic. Additionally, despite this Committee’s clear directive to protect small community air service, the Department of Treasury (USDT) declined to utilize its authority under the CARES Act to make unsecured loans so that smaller carriers could access the Air Carrier Loan Program to help offset operating costs. Some smaller air carriers, because of a calculation error in the CARES act, received underfunded payroll support awards under the CARES Act relative to larger air carriers. While Congress directed a correction through the PSP extension, Treasury still has not implemented the correction or dispersed PSP2 funds to these carriers and in some cases their employees are still awaiting recall over eight weeks since Congress directed relief. Overwhelmingly, small carriers have had to make do with less aid for longer than their much larger counterparts. Five regional airlines ceased operating last year under the pandemic’s influence and without the ability to access the more diverse range of support accessible to larger air carriers. These inequities, which threatens small community air service and has decreased competition, have yet to be addressed.  

We ask the Committee to urge the Department of Treasury to quickly process PSP2 awards before the passage of the American Rescue Plan Act by the Congress, and then process PSP3 awards before the end of March to help support the workforce of small air carriers and the smaller communities that rely on them for air service.”

RAA’s full statement is available [here].  

About RAA  
The Regional Airline Association (RAA) provides a unified voice of advocacy for North American regional airlines aimed at promoting a safe, reliable and strong regional airline industry. RAA serves as an important support network connecting regional airlines and industry business partners. In the United States, regional airlines operate 40% of scheduled passenger flights and provide the only source of scheduled air service to 66% of the nation’s airports. Regional airlines provide 75% or more of the air service in Alabama (76%), Alaska (88%), Arkansas (83%), Idaho (75%), Iowa (76%), Kansas (78%), Maine (77%), Mississippi (77%), Montana (78%), Nebraska (90%), North Dakota (87%), South Dakota (85%), Vermont (77%), West Virginia (92%), and Wyoming (78%). Regional airlines provide half or more of the air service in Indiana (61%), Kentucky (67%), Michigan (57%), New Hampshire (61%), New Mexico (53%), North Carolina (54%), Ohio (58%), Oklahoma (51%), Oregon (50%), Pennsylvania (53%), Rhode Island (54%), South Carolina (54%), Tennessee (47%), Virginia (58%) and Wisconsin (61%).