Allegiant Air is receiving nearly $172 million in federal stimulus grants and low-interest loans to keep serving San Antonio International and other airports, but it would prefer to take the money and ground part of its fleet.
By Randy Diamond
San Antonio Express-News
April 22, 2020
The no-frills airline says it shouldn’t have to “squander available resources” on markets where there is little to no demand — such as San Antonio.
The Transportation Department awarded Allegiant $171.9 million in stimulus money Tuesday — on the condition that it meet minimum federal requirements for serving its markets. In San Antonio, that minimum is one flight a week.
But Allegiant is seeking an exemption that would allow it to halt service in San Antonio and 20 other markets.
The carrier said those 21 airports had the lowest passenger demand among more than 115 it serves.
Allegiant says in an early April filing with the Transportation Department that demand is nonexistent on its routes from San Antonio to Las Vegas and Orlando because casinos and theme parks are closed.
It went on to say the goal was to use the federal aid to emerge from the COVID-19 pandemic as a viable competitor.
“But to achieve that goal, Allegiant can ill afford to directly or indirectly squander available resources,” the filing adds.
The airline said it couldn’t continue to fund “flight operations that would serve no useful purpose.”
Aviation industry analysts point out the stimulus money has two purposes. One is to allow airlines to pay their pilots, flight attendants and other personnel during a time of financial distress. The other is to maintain some semblance of an air transportation system in the U.S. during the health crisis.
“Allegiant’s argument is that they are happy to pay their employees with the federal stimulus money, but they don’t want to also waste money flying empty planes,” said Seth Miller, an aviation analyst at PanEx Aero. “The counterpoint to that is the stimulus act was not supposed to eliminate unprofitable routes, it was supposed to keep the airlines operating.”
Allegiant spokeswoman Hilarie Grey said the airline’s request “is not to suspend flying entirely, it just gives us some flexibility to adjust the frequency we fly various routes.”
The Transportation Department has yet to rule on Allegiant’s request, but it has denied most requests from airlines applying for stimulus aid that want to cut service to deal with drastic drops in passenger demand.
The agency put it bluntly to JetBlue Airlines last week in rejecting its application to stop service at the Worcester, Mass., regional airport.
It noted that the federal stimulus money for airlines was designed to “approximately balance the needs of communities to retain at least minimal connections to the national air transportation system during the public health emergency.”
Las Vegas-based Allegiant is the only one of eight domestic airlines at San Antonio International that has asked for an exemption allowing it to stop service.
Given that the budget airline has never been a major carrier at San Antonio International — even during peak weeks this past summer, it ran four flights a week — the Transportation Department required Allegiant to serve San Antonio just once a week in exchange for the money.
Major airlines such as United, American, Delta and Southwest, which will receive billions of dollars of stimulus money, have to fly just five times a week from San Antonio International under the federal rules.
The federal government is offering airlines up to $50 billion in loans and grants to keep workers on the payroll and to keep flying.
Allegiant is receiving one of the lowest aid packages because of its small size, but aviation industry analysts say its application for service exemptions raises broader questions.
With the number of air passengers dropping by more than 95 percent domestically in April compared with a year earlier, almost all flights are nearly empty, said Kurt Ebenhoch, a former airline spokesman who is executive director of Travel Fairness Now, a consumer group.
He said any airline could contend their routes are unprofitable.
Ebenhoch said the whole idea of the stimulus act is help airlines survive. In exchange, he said, the carriers are supposed to provide at least minimal service so those who must travel — such as medical workers trying to get to COVID-19 hot spots — are able to do so.
“What Allegiant is asking is unreasonable,” he said.
Allegiant spokeswoman Gray pointed out that demand for travel is nearly nonexistent.
“Like other airlines, we did request waivers providing flexibility with regard to service at a number of airports we serve, as we assess how demand for travel comes back over the coming months,” she said in a statement.
While the airline plans no service in April and May from San Antonio International, she said, Allegiant is planning to resume service in June.
A chart provided to the DOT shows the airline plans to offer two flights a week from San Antonio to both McCarren International Airport in Las Vegas and Orlando Sanford International Airport in June and July. In August, the frequency drops on average to 2.4 times a week; in September, Allegiant would have no service.
Miller said that if the exemption for San Antonio is granted, Allegiant would be free to drop all flights at San Antonio International between now and the end of September.
Without the waiver, Allegiant would be forced to fly at least once a week from the airport, he noted.
That scenario is the likely outcome, said Brian Sumers, senior aviation business editor at travel industry website Skift.
“So far, the Department of Transportation has been stingy with exemptions. They may be forced to fly empty planes from San Antonio,” he said.