US Airlines Owe Customers $10 Billion Due to Coronavirus Cancellations
According to a group of Senators, US airlines have given $10 billion in travel vouchers to customers for canceled flights over the coronavirus outbreak. The vouchers should have been cash according to the Senators. Airlines are canceling as much as 80% of their flights, which entitles to a cash refund for affected passengers under federal law.
As a result of airlines being one of the most negatively affected sectors of the economy by the Covid-19 outbreak, the federal government announced a $25 billion bailout in grants and loans to prop up the industry.
Airlines got $25B bailout after spending 96% of free cash in the last decade on buybacks.
But the deal was worse than that: it requires minimum service levels, so planes are flying on average 90% empty, spewing tons of carbon into the atmospherehttps://t.co/11wOjpNRDj
— Dan Price (@DanPriceSeattle) April 17, 2020
According to TSA screenings, flights are down 95% in the US. It is difficult to predict what the future for airlines holds and whether there will be a reshuffling of the major carriers and their flight paths. For now, many investors are dropping airline stocks and airlines are parking their planes to sit idly.
The International Air Transport Association is predicting that airlines will lose over $300 billion in revenue over the course of the year, which is about 25% of their expected revenues before the coronavirus pandemic.
The lack in travel comes at an especially difficult time for airlines as many of them rely on summer travelers for much of their revenues. Some countries are slowly starting to open their economies up, which is great news for airlines; however, a return to normal is still far-off for much of the world.