Tiny Cape Air Paved Way for JetBlue, Spirit to Exit Big Cities

(Bloomberg) -- The U.S. Transportation Department on Tuesday allowed JetBlue Airways Corp. and Spirit Airlines Inc. to halt flights to several large U.S. cities through September, thanks in large part to a much smaller commuter airline based in New England.

Last month, the department granted a request by Hyannis, Massachusetts-based Cape Air Corp. to suspend service from New York City's John F. Kennedy International Airport to the coastal vacation isle of Martha's Vineyard. In its decision, the department said New Yorkers would continue to have abundant access to air travel from other carriers.

The department has since applied same criteria to other airlines, including JetBlue and Spirit on Tuesday. It granted JetBlue's request to suspend service to 16 large hubs including Chicago, Dallas, Houston and Seattle through September. Spirit Airlines had its request approved to suspend service to six cities, including Portland, Oregon, Denver and Minneapolis, through September.

Those carriers “will not be obligated to provide service at certain large hubs or focus city airports that have abundant service by large air carriers using the airports to provide connecting services,” the department said in a statement. “This grant of relief is in line with the Department's most recent action in the case of Hyannis Air Service d/b/a Cape Air.”

Earlier: Airlines Serving Most-Remote U.S. Cities Will Be Paid Not to Fly

The decisions illustrate how the Transportation Department is balancing its mandate to ensure continued nationwide access to air travel as demand has fallen by more than 90% due to the broad idling of much of the U.S. economy in response to the coronavirus outbreak.

The Trump administration's $50 billion in government loans and payroll grants to top carriers came with a requirement that they continue to provide minimum levels of service to locations they were flying to as of March 1, as deemed necessary by Transportation Secretary Elaine Chao.

Most major airlines have asked for exemptions to those minimum service requirements, nearly all citing the drop in demand. Delta Air Lines Inc., for example, said it had flown just one passenger per day to and from Worcester, Massachusetts through most of April in a request to halt flights to the city and eight other airports.

In a statement, the Transportation Department said its decisions require airlines to continue minimum flight schedules “to meet critical transportation needs during the Covid-19 public health emergency, but at the same time provide relief from financial and operational burdens, responding to the needs of public officials at the state, territorial, and local levels.”

The department invoked the same rationale in allowing Frontier Airlines to suspend flights through June 30 to three of more than 30 cities. It denied the bulk of Frontier's request, saying the airline had “not persuaded the department that we must strike a different balance” than ensuring communities maintain a minimum level of access to flights while not overly burdening airlines.

Cape Air, with a fleet of roughly 90 nine-seat airplanes, has based its business on serving summer holiday destinations in New England, such as Provincetown and Nantucket. It also receives government subsidies to fly to under-served markets including to parts of Kentucky, Illinois and Maine, according to government data.

Cape Air is so small it accounts for less than 0.5% of all U.S. passenger revenue, according to the Transportation Department.

Unlike the vast majority of airlines in the U.S. that sell tickets, Cape Air is certified under federal rules reserved for the smallest carriers using aircraft with nine or fewer passenger seats.