Airport Alert: Coronavirus Update - Evolving Washington Developments and Call to Action
March 11, 2020
As you are well aware, the situation in Washington regarding the government's response to coronavirus is incredibly fluid. While things are likely to change quickly, we wanted to provide you with a sense of where we believe things stand at the moment, encourage you to continue to share with us any impacts you are seeing at your airport, and urge you to press your congressional delegation to ensure that any potential federal response to the virus address evolving airport needs and concerns. With Congress scheduled to be out of session next week and with things moving quickly, now is the time to communicate with lawmakers and ask them to meet while they are back in your area.
Washington Response to Coronavirus
We have heard directly from House leaders involved in the ongoing discussions that things are still very much up in the air at this point. As has been reported in the press, House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) intend to focus initially on initiatives aimed at helping workers such as paid sick leave and enhanced unemployment insurance. The House will consider and likely approve a package this week focused on those items. Senate Democrats this afternoon released a package focused on unemployment insurance, paid sick days, loan payment relief, small business relief, housing assistance, food security and education. Several senior Senate Democrats have also called for the President to issue an emergency declaration that would allow FEMA to use $40 billion in disaster relief funding to assist local and state governments.
Meanwhile, the President has suggested a payroll tax deduction, which is a non-starter for Democrats. The Republican Senate is also reportedly lukewarm on a payroll tax deduction, although they are expected to follow the administration's lead on other emerging proposals that could include tax relief, loan guarantees, reimbursing workers for lost pay, and aid to small and mid-sized businesses. The White House has also indicated support for providing relief to airlines, hotels, and other travel businesses. Treasury Secretary Steven Mnuchin said today that tax relief and loan guarantees to airlines were a focus. It is reported that Mnuchin said he hoped to create $2 billion in liquidity for the airlines by delaying tax payments.
There has also been talk about possibly moving a broader stimulus package that could include infrastructure funding. It is our understanding that Secretary Mnuchin has floated the notion of a $200 billion infrastructure investment in conversations with House leadership, but Democrats in the House and Senate are proposing a substantially larger infrastructure package. Senior Senate Republicans have also publicly floated the idea of a significant infrastructure investment package. President Trump this afternoon said economic stimulus may not be necessary, however. The President is scheduled to speak tonight at 9 p.m. Eastern.
House Democrats, with strong input from Transportation Committee Chairman Peter DeFazio (D-OR), released a $760 billion infrastructure plan as we reported in late January. That plan, as you will recall, includes a proposal to increase the PFC and adjust it for inflation. We believe that Chairman DeFazio is still very committed to the Democratic infrastructure proposal outlined in January, including the PFC, and is likely to use that blueprint as a starting point for any negotiations with the administration on a possible infrastructure/stimulus package. With talk of airline relief swirling, Chairman DeFazio has told us and others that he believes that any airline relief should include a PFC increase - which is a message we need your help backing and echoing with your congressional delegation.
Possible Airport Relief
At this point, it is unclear how much of an impact coronavirus will have on passenger demand, airports, and other aviation stakeholders. However, we continue to work aggressively to alert policymakers to the potential impacts of the virus on airports, their revenue streams and operations. As we continue to remind policymakers of the importance of airports to the travel ecosystem and national and local economies, we have been asked for some initial thoughts on a menu of specific options that could benefit airports. In addition to continuing to push on the PFC, direct federal funding for infrastructure at airports including terminals, consideration of reimbursement for increased costs or lost revenue, more favorable tax treatment on airport bonds, and an end to the diversion of passenger security fee revenue are possible suggestions. There are other ideas that the airport community pushed after 9/11 that may merit consideration as well.
While it is unclear how Congress and the administration will respond and what sort of appetite there is for any specific potential relief efforts, we will want to be prepared to respond to requests for ideas from policymakers as we push to ensure that airports are a part of any coronavirus relief or infrastructure stimulus package that may emerge.
Playing Defense Against Excise Tax Holidays or PFC Remittance
On the "defense" side of the equation, it is our understanding that the airlines may ask for an excise tax holiday and possibly a reprieve from either collecting or remitting PFC collections. We have already expressed strong opposition to these possible proposals and urge airports - especially those with members on key committees, including House and Senate tax-writing committees - to highlight the negative impact these proposals would have on the Trust Fund and future airport infrastructure investments as well as on PFC-backed bonds. Given Secretary Mnuchin's comments today on airline tax relief, it is important that you relay concerns on these items to your elected officials. Stay tuned for more information and calls to action in this area.
TSA Impacts and Response
We have heard from a number of airports expressing concerns regarding ongoing checkpoint operations in the event a traveler or TSO presents with coronavirus. The issue was discussed by TSA Administrator David Pekoske at a congressional hearing today (see our report here). We are monitoring developments in this area closely and have raised airport concerns directly to the top levels of TSA and will continue to do so. We are told that more guidance will be issued later today by TSA to FSDs.
Request for Continued Information, Feedback and Engagement with Your Elected Officials
Given how quickly things are moving in Washington on coronavirus, it is imperative that we communicate with policymakers in Washington as soon as possible to make sure that airport concerns and impacts are addressed as part of any potential federal relief packages. While the path forward is unclear, if and when it all comes together, we will need to be nimble in communicating airport needs and concerns.
Finally, our sincere thanks to those of you who responded to our survey earlier this week. Although much of the information received is preliminary, it has been very helpful as we continue to communicate with the administration and key Capitol Hill leaders and staff. If you haven't already filled in the survey, we would still welcome your responses.
As you are well aware, the situation in Washington regarding the government's response to coronavirus is incredibly fluid. While things are likely to change quickly, we wanted to provide you with a sense of where we believe things stand at the moment, encourage you to continue to share with us any impacts you are seeing at your airport, and urge you to press your congressional delegation to ensure that any potential federal response to the virus address evolving airport needs and concerns. With Congress scheduled to be out of session next week and with things moving quickly, now is the time to communicate with lawmakers and ask them to meet while they are back in your area.
Washington Response to Coronavirus
We have heard directly from House leaders involved in the ongoing discussions that things are still very much up in the air at this point. As has been reported in the press, House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) intend to focus initially on initiatives aimed at helping workers such as paid sick leave and enhanced unemployment insurance. The House will consider and likely approve a package this week focused on those items. Senate Democrats this afternoon released a package focused on unemployment insurance, paid sick days, loan payment relief, small business relief, housing assistance, food security and education. Several senior Senate Democrats have also called for the President to issue an emergency declaration that would allow FEMA to use $40 billion in disaster relief funding to assist local and state governments.
Meanwhile, the President has suggested a payroll tax deduction, which is a non-starter for Democrats. The Republican Senate is also reportedly lukewarm on a payroll tax deduction, although they are expected to follow the administration's lead on other emerging proposals that could include tax relief, loan guarantees, reimbursing workers for lost pay, and aid to small and mid-sized businesses. The White House has also indicated support for providing relief to airlines, hotels, and other travel businesses. Treasury Secretary Steven Mnuchin said today that tax relief and loan guarantees to airlines were a focus. It is reported that Mnuchin said he hoped to create $2 billion in liquidity for the airlines by delaying tax payments.
There has also been talk about possibly moving a broader stimulus package that could include infrastructure funding. It is our understanding that Secretary Mnuchin has floated the notion of a $200 billion infrastructure investment in conversations with House leadership, but Democrats in the House and Senate are proposing a substantially larger infrastructure package. Senior Senate Republicans have also publicly floated the idea of a significant infrastructure investment package. President Trump this afternoon said economic stimulus may not be necessary, however. The President is scheduled to speak tonight at 9 p.m. Eastern.
House Democrats, with strong input from Transportation Committee Chairman Peter DeFazio (D-OR), released a $760 billion infrastructure plan as we reported in late January. That plan, as you will recall, includes a proposal to increase the PFC and adjust it for inflation. We believe that Chairman DeFazio is still very committed to the Democratic infrastructure proposal outlined in January, including the PFC, and is likely to use that blueprint as a starting point for any negotiations with the administration on a possible infrastructure/stimulus package. With talk of airline relief swirling, Chairman DeFazio has told us and others that he believes that any airline relief should include a PFC increase - which is a message we need your help backing and echoing with your congressional delegation.
Possible Airport Relief
At this point, it is unclear how much of an impact coronavirus will have on passenger demand, airports, and other aviation stakeholders. However, we continue to work aggressively to alert policymakers to the potential impacts of the virus on airports, their revenue streams and operations. As we continue to remind policymakers of the importance of airports to the travel ecosystem and national and local economies, we have been asked for some initial thoughts on a menu of specific options that could benefit airports. In addition to continuing to push on the PFC, direct federal funding for infrastructure at airports including terminals, consideration of reimbursement for increased costs or lost revenue, more favorable tax treatment on airport bonds, and an end to the diversion of passenger security fee revenue are possible suggestions. There are other ideas that the airport community pushed after 9/11 that may merit consideration as well.
While it is unclear how Congress and the administration will respond and what sort of appetite there is for any specific potential relief efforts, we will want to be prepared to respond to requests for ideas from policymakers as we push to ensure that airports are a part of any coronavirus relief or infrastructure stimulus package that may emerge.
Playing Defense Against Excise Tax Holidays or PFC Remittance
On the "defense" side of the equation, it is our understanding that the airlines may ask for an excise tax holiday and possibly a reprieve from either collecting or remitting PFC collections. We have already expressed strong opposition to these possible proposals and urge airports - especially those with members on key committees, including House and Senate tax-writing committees - to highlight the negative impact these proposals would have on the Trust Fund and future airport infrastructure investments as well as on PFC-backed bonds. Given Secretary Mnuchin's comments today on airline tax relief, it is important that you relay concerns on these items to your elected officials. Stay tuned for more information and calls to action in this area.
TSA Impacts and Response
We have heard from a number of airports expressing concerns regarding ongoing checkpoint operations in the event a traveler or TSO presents with coronavirus. The issue was discussed by TSA Administrator David Pekoske at a congressional hearing today (see our report here). We are monitoring developments in this area closely and have raised airport concerns directly to the top levels of TSA and will continue to do so. We are told that more guidance will be issued later today by TSA to FSDs.
Request for Continued Information, Feedback and Engagement with Your Elected Officials
Given how quickly things are moving in Washington on coronavirus, it is imperative that we communicate with policymakers in Washington as soon as possible to make sure that airport concerns and impacts are addressed as part of any potential federal relief packages. While the path forward is unclear, if and when it all comes together, we will need to be nimble in communicating airport needs and concerns.
Finally, our sincere thanks to those of you who responded to our survey earlier this week. Although much of the information received is preliminary, it has been very helpful as we continue to communicate with the administration and key Capitol Hill leaders and staff. If you haven't already filled in the survey, we would still welcome your responses.
