$25 billion in federal subsidies has not saved the airline industry, and 40,000 jobs are on the line

Travel is down 70% compared to this time last year. That’s why the federal government gave airlines $25 billion in grants, as long as they promised to keep employees on the payroll. That arrangement expires at midnight tonight. Now 40,000 airline workers are expected to lose their jobs.

Brian Sumers, senior aviation business editor for the travel industry publication Skift, says when that decision was made in spring, everyone expected airlines to be back to business by October.

“When the bill was passed, everyone thought, ‘We’ll just give airlines and a lot of other businesses six months. What we called then the coronavirus is going to go away, everything’s going to snap back, we’re going to have a V-shaped recovery, and we’ll never think about it again.’ That. Has. Not. Happened,” says Sumers.

Sumers says business travelers likely spend five to 10 times on a ticket as leisure travelers, since they fly business class and frequently book tickets last-minute. Between summer vacation and the holidays, airlines typically rely on that revenue. But that revenue disappeared now that so much work is done remotely.

“Until people start traveling again, airlines don’t need to be as big as they were before,” Sumers says.

Still, he predicts Congress will come up with some way to help the airlines. “Nobody wants to see this many people lose their jobs the month before an election. I just don’t know if it’s going to get done today, before this deadline.”