Cantwell Opening Statement at Hearing on Aviation Oversight, PSP

Summary

Press release text of an opening statement by U.S. Senator Maria Cantwell, Chair of the Committee on Commerce, Science, and Transportation, at a full committee hearing on oversight of the U.S. airline industry and the Payroll Support Program (PSP). Listed witnesses include the chief executives of American, Southwest and United Airlines, a Delta Air Lines executive, Sara Nelson of the Association of Flight Attendants-CWA and economist Mike Tretheway. Cantwell says the program saved 386,200 direct full-time U.S. passenger airline jobs, according to data reported by the major airlines, and required airlines to serve 662 U.S. destinations. She says that, according to the Treasury Department, airlines must repay $14 billion of the $54 billion in PSP funds, and that there have been more than 5,500 refund complaints in 2021 so far.

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                                      VIDEO

  Cantwell Opening Statement at Hearing on
           Aviation Oversight, PSP
WASHINGTON, D.C. -- U.S. Senator Maria Cantwell, Chair of the Committee on
Commerce, Science, and Transportation, delivered the following opening statement
during today’s full committee hearing regarding oversight of the U.S. airline industry and
the impact of the Payroll Support Program (PSP) to protect the airline workforce,
support the continuity of safe and essential travel, and ensure the industry’s ability to
remain viable to meet future travel demand. The committee heard testimony
from: Doug Parker, CEO, American Airlines; Gary Kelly, CEO, Southwest Airlines;
Scott Kirby, CEO, United Airlines; John Laughter, Executive Vice President and Chief of
Operations, Delta Air Lines; Ms. Sara Nelson, International President, Association of
Flight Attendants-CWA; and Mr. Mike Tretheway, Chief Economist and Executive Vice
President, InterVISTAS Consulting Inc.




                   CLICK TO WATCH [VIDEO]
“The immediate question before the Committee today is whether the Payroll Support
Program (“PSP”) for the airlines worked? As we will hear from our panelists today –
economists, union presidents, and airline executives – the answer to that question is
“Yes.”

“The Payroll Support Program was a historic investment to sustain a critical sector of
the U.S. economy: aviation amounts to more than 5 percent of the U.S. GDP and
contributes $1.8 trillion in total economic activity.
“By ensuring airlines had funding to continue to pay their employee’s wages, salaries,
and benefits, the Payroll Support Program saved the jobs and livelihoods of hundreds of
thousands of workers. And I’m sure that is the story we are going to hear.
“Specifically, the relief saved 386,200 direct full-time U.S. passenger airline jobs
(approximately 85 percent of the pre-pandemic workforce), according to data reported
by the major airlines. In addition, the workforce aid indirectly supported over 340,000
jobs, including 74,000 – higher than 74,000 – in the supply chain. This is one of the
great things about this program – it went through the entire ecosystem of aviation.

“Today, U.S. domestic capacity is at 87 percent of the pre-pandemic levels, which is
above peer markets in Europe and Asia.

“I think these two charts (below) probably show it best – the gap- with the United States
being the blue line, and Europe in the red. The fact that the United States acted quickly
and continually built on that showed the difference in what we were able to restore for
aviation travel.
[Refers to second chart] “To look specifically over the same time period… over the
various months… and today, where you can see more people have started to catch up
where the United States is. But during this time period, the United States was able to
move faster. That meant a lot to our economy and meant a lot to those families and to
the workers. And the fact that as of September 2021, airlines were only 8% under their
pre-pandemic levels [of employment]. So we know that this means good news for the
future.




“We will hear testimony, as I said, from an economist who is going to tell us why the
United States proposal and program worked so well and how it helped us retain
experienced and trained workforce individuals, and why that is so important as we move
forward.

“In Mr. Tretheway’s words, ‘correctly focusing on the key objectives of retaining airline
industry workforce and ensuring continuity of economic and social conductivity was an
important goal.’

“Indeed, the Payroll Support Program provided relief to other parts of the aviation
system, including contractors, repair stations, service providers, and I want to thank my
colleagues, specifically Senator Duckworth and Senator Peters, who focused on that.

“Airlines were also required to service 662 U.S. destinations, including some small
communities that might otherwise have lost service in the pandemic, and as a result,
U.S. airlines continued to operate 5,936 weekly frequencies to these destinations
amounting to over 300,000 frequencies per year.

“This service guarantee ensured that the national system of air transportation network
remained open for business. It was critical for supplies, including vaccines in the health
care system, that everyone was counting on.

“But let's be clear, this success was not a foregone conclusion. This required Congress
to act immediately. And I want to thank my colleague, Senator Wicker and the team of
people on this committee on both sides of the aisle, who worked day and night for
weeks and worked with various counterparts in the House and in the private sector and
the White House to try to come up with this proposal.

“With the market demand collapsing at record speed, bottoming out at nearly 5% of pre-
pandemic levels, within weeks, the Payroll Support Program provided a degree of
confidence and certainty in the marketplace. We know the PSP program worked
because U.S. airlines kept frontline workers employed, and were able to capture the air
rebound that I just showed in those charts.

“In January 2021, the U.S. domestic passenger volumes were at 42% of pre-pandemic
levels, and by last week, they were at 87%. This is a 107% increase in domestic airline
capacity and 2021 indicates domestic travel could be fully back by 2022.

“In contrast, as the chart showed, other nations weren't at that same capacity. In fact, I
think Asia Pacific is lingering around 53%. Again, we have a different market, different
complexities. So as designed, the PSP helped us preserve skills and high paying jobs
critical to our economy.

“I can't wait to hear from the witnesses in more detail. According to the Treasury
Department, out of the $54 billion in PSP funds, the airlines must repay $14 billion
which is 26%. The Treasury holds warrants that are currently worth over $200 million.

“And the committee is asking for an assessment of what we would have spent if the
U.S. government would have taken care of that same population on unemployment
benefits. We've heard estimates of anywhere around $20 billion, so we know that in the
end, it would have been still a lot of cost to the federal government. So the committee
will be working on a full report in the new year about this program and today's hearing
informs us about some of those details the committee would like to know.

“Obviously during this time period, there were challenges; outages, weather events,
workforce challenges. I'm sure that we will hear from our witnesses about those and
questions from my colleagues on those disruptions and what we should do. We'll also
hear about consumer delays and cancellations of flights and consumer refunds and
complaints against you where U.S. airlines did skyrocket in 2020, and the Department
of Transportation reports a huge increase over [the prior years].
“While 2021 is better, there are still complaints with more than 5,500 refund complaints
so far. And we know that the law requires airlines to provide refunds to consumers for
airline driven cancellations, and we expect airlines to comply with that law.

“Tomorrow, we will hear from the General Counsel nominee to DOT who will be in
charge of this issue and we look forward to hearing their comments. So again, I want to
note that while we have witnesses here before us today, just in the interest of time and
committee participation and dialogue, we have asked other airlines Alaska, JetBlue, and
Spirit to provide written testimony that will be part of the record.

My colleagues should feel free to ask questions for the record of those airlines as well. I
know that we're in a better place than where we would have been we hadn't done the
PSP program. I hope that we can also share the thanks to Gerry Petrella in Senator
Schumer's office and Scott Raab in Senator McConnell's office for their hard work on
this program as well, and would like to now turn it over to my colleague, Senator Wicker
for his comments.”


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