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What the New Pandemic Relief Bill Means For The Beleaguered Transport Sector

Late on Monday night Congress passed $900 billion of pandemic relief funding, bringing much needed unemployment benefits and direct cash payments to millions of Americans just days before the provisions of the earlier CARES Act were due to expire.

The bill has not been without its controversy, with both President Trump and Speaker of the House Nancy Pelosi forming an unexpected alliance in calling for individual stimulus checks to be increased from $600 to $2,000 per American.

For the transport sector, however, the new relief package seems a welcome shot in the arm at a time of unprecedented industry turmoil. The package includes some $45 billion for the sector, broken down as follows:

  • $15 billion in payroll support for airlines

  • $10 billion for state highways

  • $2 billion for airports and related businesses

  • $1 billion for Amtrak

  • $14 billion for public transit, including $4 billion for New York’s Metropolitan Transportation Authority (MTA).

The funding has been praised as a life-saver by industry figures, with US Travel Association CEO Roger Dow hailing that the money will offer many struggling businesses a “bridge to 2021”. However, most experts agree that the funding will provide only temporary relief, with Dow qualifying that “more will be needed “ to restore the 4.5 million travel jobs that have been lost as a result of the pandemic.

For airlines, the funding will allow companies to bring back the 32,000 employees placed on involuntary furlough since October, with the new bill stipulating that no workers be made redundant until March 2021.

On Tuesday, American Airlines CEO Doug Parmer said the company would begin expediting payments to all 19,000 furloughed employees and would start to welcome team members back to work in stages throughout 2021.

As with most companies though, airline bosses have warned that these measures provide only temporary relief, as passenger numbers and revenues are expected to remain low throughout the early part of 2021.

"The truth is, we just don't see anything in the data that shows a huge difference in bookings over the next few months"

United’s CEO Scott Kirby and President Brett Hart issued a joint statement this week saying they expected furloughed employees to only return to work “temporarily” as the pandemic continues to disrupt air travel.

“The truth is, we just don’t see anything in the data that shows a huge difference in bookings over the next few months,” the pair said. “That is why we expect the recall will be temporary.”

This month carriers have been burning through as much as $180 million a day, with total industry losses standing at some $36 million in September. Further travel restrictions - including bans on many flights to the UK, where a new variant of the coronavirus has been identified - are expected to further blight the industry in 2021.

Elsewhere in the transport sector, the view is much the same. The $4 billion earmarked for New York’s MTA, for instance, is expected to stave off the expected 40% reduction in subway services and 9,000 layoffs. However, the agency will still be forced to cut service on the Long Island Railroad and contract over $2.9 billion in debts to cover operation costs while passenger numbers remain low.

In pandemic-speak, therefore, this latest bill is a necessary painkiller but it isn’t the vaccine the we were all hoping for. Further federal intervention will likely be necessary to keep the transport industry afloat, but this funding at least sets the tone for next congress to follow suit.

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