This article is reprinted by permission from NerdWallet. When the 2008 financial crisis roiled banks, the federal government jumped in with an enormous bailout effort. Two years later, Congress slapped the industry with a sweeping set of reforms and important consumer protections.
That made sense. The government is by the people and for the people, after all. So bailing out banks meant that everyday people (i.e., consumers) were in a strong position to demand better treatment. Well, it’s been nearly two years since U.S. airlines received more than $50 billion in federal aid as part of the pandemic bailout efforts. So, air travelers should be receiving those consumer protections any day now. Right?Staffing shenanigans At least $25 billion of the airline bailout covered “payroll protection” for passenger air carriers. Basically, they were given money to keep employees on payroll while the pandemic cratered demand. Given this, why is the current air travel chaos being pegged on staffing shortages? Shouldn’t airlines have retained all those employees with the generous government bailout? Well, the airlines pulled a tricky move during the demand doldrums of 2020: They offered senior staff generous retirement packages. Technically, the airlines weren’t furloughing or laying these employees off, so they were able to keep the bailout money while cutting expensive staffing costs at the same time. This was likely a deft move from a business perspective, but it has resulted in a full-scale catastrophe for air passengers. Staffing shortages have caused widespread delays, cancellations and lost baggage, not to mention skyrocketing airfare prices due to constrained supply. In short, we the people are paying more for airfare and getting worse service because we bailed out the airlines. Huh? Related: These are the airlines with the most delays and c …