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Secondary Airports Threatened By ‘Minimum Service’ Rule In CARES Act
As the COVID-19 pandemic continues to create havoc for air traffic around the world, airport companies are quickly adjusting to adapt to this new situation with significantly fewer passengers closing down terminals, consolidating traffic to their main facilities and, in some extreme cases, closing down secondary airports in metro areas commonly served by more than one installation.
In the United States, the CARES Act passed into law by the Government on March 27 will provide financial relief to airlines for an amount of almost $60 billion, but the conditions imposed to the airline in order to be eligible to receive the federal grants and cash loans could put some of the secondary airports around the country in a very difficult position.
The CARES Act requires carriers to maintain a minimum number of frequencies on existing routes in order to receive financial assistance, but as the wording of the law states, “…in cases where multiple airports serve the same point, carriers would not need to maintain service to all such airports, but would be able to consolidate operations at a single airport serving that point.”
This provision puts airports serving smaller communities but located in the proximity of larger metropolitan areas in danger of losing existing services. For example, Akron-Canton Regional Airport (CAK) in Northern Ohio is located only 55 miles from Cleveland Hopkins International Airport, and since the latter is considerably larger it is possible that carriers would decide to consolidate their services to Cleveland and leave Akron-Canton without flights. This would be “potentially damaging the short- and long-term viability of CAK – an important aviation infrastructure asset and economic impact driver whose success and market importance was established over years of progress,” Flightglobal reports quoting airport sources.
A similar situation is being faced by Newport News- Williamsburg International Airport (PHF) in Virginia, just 30 miles south of Norfolk International Airport. The city manager has written a letter to the Department of Transportation arguing that the loss of connectivity at their airport would severely harm the local businesses and have a negative impact on the region’s economy, which is exactly what the CARES Act wants to prevent by requiring airlines to maintain lifeline services to the destinations served before the COVID-19 pandemic.
Other airports around the country, however, have the opposite problem. After having entered co-marketing agreements with some carriers to subsidize new routes and guarantee minimum revenues, now they are not in a position to honor those commitments. Despite the lack of demand, carriers feel compelled to maintain the minimum frequencies that would allow them to be eligible for financial relief, even if that means flying with very low load factors. This would mean that airports will need to provide the subsidies contractually agreed without obtaining the passenger throughput they were expecting.
For example, Southwest Wyoming Sweetwater Regional Airport (RKS) in Rock Springs, Wyo., located approximately 200 miles east of Salt Lake City, entered a CPA (Capacity Purchase Agreement) with SkyWest Airlines for service to Denver. Now the airline is bound to maintain at least five services a week despite very low levels of demand in order to qualify for CARES Act subsidies, Flightglobal reports.
Stockton Metropolitan Airport (SCK), 80 miles east of San Francisco, has entered a similar agreement with SkyWest Airlines for a double-daily service to Los Angeles International and is now facing the possibility of having to support flights that will end up being mostly empty.
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