Major airlines have accepted a share in the $25 billion Payroll Support Program to stay afloat during the coronavirus pandemic, but according to longtime discount-airline investor Bill Franke, the airlines will need more government aid and health checks for travelers to get through the crisis.
Franke, founder and managing partner of private-equity firm Indigo Partners, which owns Frontier Airlines, believes a quick turnaround is unlikely, even after air travel resumes in full. Franke is also a major investor in three other budget carriers in Europe and Latin America.
"Revenue is depressed across those regions," he said.
By accepting a portion of the $25 billion in government aid, the airlines have agreed that the government is included in the carriers' decision making. Some of the government requirements include not furloughing or cutting the pay of nearly 750,000 airline workers through September 30 and deferring to the Department of Transportation to cut services to particular destinations. According to Franke, additional aid may be necessary.
Frontier Airlines, for example, will receive a share of the $25 billion package, but will also apply for a loan from a separate $25 billion pool of aid that Congress approved last month in the $2 trillion coronavirus relief package.
"We're going to face as much as a year or two of recovery," Franke said, adding that it's "pretty clear that there's going to have to be additional aid to the sector" without signs of a rebound this Fall. Air travel in the U.S. alone has dropped more than 95 percent.
According to CNBC, Franke states that another problem airlines will face after the pandemic subsides is the public feeling safe to start traveling again.
"There will be an effort to convince the customer that it's safe to travel," he said. "There should be some process where everybody who gets on an airplane knows that every other passenger doesn't have a fever."
Airlines have already begun disinfecting aircraft, and many continue to uphold social-distancing policies by blocking off middle seats. Additionally, many airports are implementing passenger health checks and temperature screenings.
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