Cancellation-plagued Southwest has raked in billions from US government for upkeep
Cancellation-plagued Southwest has raked in billions from US government for upkeepGabe Kaminsky
December 28, 11:44 AM December 28, 11:46 AM
Southwest Airlines, which has canceled or delayed tens of thousands of flights this holiday season, has received massive amounts in federal subsidies in the last several years, records show.
Southwest has canceled over 15,700 flights since winter weather began to affect air travel on Dec. 22, far more than any other commercial United States airline, according to records compiled by FlightAware. However, since 2020, the U.S. government has handed Southwest over $7.2 billion in taxpayer funds for payroll and operations, filings show, calling into question whether the airline has managed its resources correctly.
“Airlines continue to take our tax dollars, yet they never seem to make long-term changes that will improve the experience for customers,” Adam Andrzejewski, CEO of the financial watchdog OpenTheBooks, told the Washington Examiner. “As soon as demand recovered, there was industrywide disruption.”
“These major carriers should use profits to improve systems and position themselves to handle economic headwinds,” he added. “Until then, Congress and airlines will be addicted to subsidies.”
BIDEN SAYS AIRLINES WILL BE ‘HELD ACCOUNTABLE’ OVER FLIGHT CANCELLATIONS
The federal government has long given subsidies to airlines for maintenance and upkeep. As part of the Coronavirus Aid, Relief, and Economic Security Act, a $2.2 trillion stimulus bill signed by former President Donald Trump in March 2020 and meant to help people amid the spread of COVID-19, Southwest pulled in more than $3.3 billion for payroll support in September 2020.
In addition, the Treasury Department agreed to purchase over 1 million shares of Southwest stock as part of that aid. The stock has tumbled by over 24% in the last year and almost 50% in the last five years.
Then, in April 2021, Southwest received over $3.8 billion in subsidies and American Rescue Plan Act funding, records show. The $1.9 trillion COVID-19 stimulus bill was signed by President Joe Biden in March 2021 and, like the CARES Act, helped airlines avoid bankruptcy.
“Southwest had $116 million in 2021 profits to upgrade all of its information technology systems,” said Andrzejewski. “It was the first airline to declare profits after receiving massive $7.2 billion taxpayer subsidies during the pandemic. Unfortunately, Southwest had other priorities.”
On Monday, the Department of Transportation said it would investigate Southwest’s customer service policies that led to a “disproportionate and unacceptable rate” of flight cancellations and delays. Biden said in a Tuesday tweet that his administration “is working to ensure airlines are held accountable” and linked to a government webpage tracking examples of what airlines say customers could be compensated for.
Southwest has claimed that its holiday season failures are due to issues with “scheduling tools.” Capt. Mike Santoro, vice president of the Southwest Airlines Pilots Association, a union organization, said on Tuesday that the winter storm was a “catalyst” for Southwest’s problems and that the airline’s scheduling software is “outdated.”
“We were fully staffed and prepared for the approaching holiday weekend when the severe weather swept across the continent, where Southwest is the largest carrier in 23 of the top 25 travel markets in the U.S.,” a spokeswoman for Southwest told the Washington Examiner. “These operational conditions forced daily changes of an unprecedented volume and magnitude to our flight schedule and the tools our teams use to recover the airline remain at capacity.”
“The Southwest Team is working to accommodate Customers on available flights as soon as possible, and we apologize for the inconvenience to our Customers,” the spokeswoman added.
A portion of the COVID-19 relief that Southwest has received, $976 million, is a low-interest loan that the airline has 10 years to pay back. Southwest turned a profit of $116 million in 2021 — becoming the first airline since the start of the pandemic to become profitable.
The chaos in connection to Southwest this holiday season comes as other airlines, which also took massive amounts in COVID-19 relief, fare better in getting customers from one place to the other. Southwest’s over 2,500 canceled flights on Wednesday account for 62% of such cases in the industry, according to FlightAware.
However, Spirit Airlines only canceled 31 flights on Wednesday, according to FlightAware. JetBlue canceled 28 flights on Wednesday, Delta Air Lines canceled 12 flights, United Airlines canceled nine flights, and American Airlines canceled 23 flights.