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The federal government ordered airlines accepting financial aid to maintain minimal service levels to cities they served before the COVID-19 pandemic ravaged the transportation system, but made adjustments for low-cost carriers and those that fly to some destinations only part of the year.
The U.S. Department of Transportation eased some requirements it made in a March 31 proposal after airlines and other industry groups asked for more flexibility, the department said in the order April 7.
The final order was a regulatory win for ultra-low-cost carriers such as Spirit Airlines Inc. and Allegiant Travel Co., which would have been forced to make potentially hundreds of new flights beyond their normal schedules to satisfy the department’s initial proposed rule. Under the revisions, an airline that served a city less than five times weekly would need to provide only one weekly flight. For carriers with more than 25 weekly flights, they could trim their flying to five per week.
Spirit shares surged nearly 28% while Allegiant gained more than 18%. The Standard and Poor’s 500 Airlines Index was up more than 11% as of 10:35 a.m. in New York.
The original proposal set required flights based on March 1 service, but the final DOT rule gave carriers that fly to some destinations for only portions of the year the flexibility to make seasonal changes.
The rule was required by the CARES Act, which provided more than $70 billion in aid to airlines, airports and contractors that have seen more than 90% of their business disappear as a result of stay-at-home orders. In most cases, it requires that airlines maintain at least some service to cities served before the pandemic.
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