UPDATE: Delta gets exemption to keep three routes halted

Delta Air Lines, which is getting nearly $2.9 billion in pandemic stimulus grants and loans, received a limited exemption from some of the relief-funding requirements to maintain certain levels of service.

Atlanta-based Delta filed a request seeking an exemption from requirements to restart flights to three small airports: Montrose and Steamboat Springs in Colorado and Harlingen, Texas.

The Colorado airports are typically ski destinations, while Harlingen is a snowbird destination. But, with the sharp decline in travel, Delta does not want to resume service, a condition of receiving stimulus money under the CARES Act.

In a second round of pandemic relief funding, Delta is getting a total of $2 billion in grants and $830 million in loans.

In return, the airline has agreed to issue warrants for 2.1 million shares of its stock to the U.S. Treasury Department and is required to maintain minimum levels of air service, limit executive compensation, halt share repurchases and dividends to shareholders, and refrain from laying off workers through March 31.

The airline got the first installment of federal money on Jan. 15 — $1.4 billion, 70% in the form of a grant and 30% as a loan.

In its filing for an exemption from service requirements, Delta said it “remains committed to serving as many points in its domestic network as reasonable and practicable to ensure that communities around the country will continue to be connected” to the air transportation system.

Delta said it determined last year that its winter service at the three locations was “no longer commercially viable in the highly depressed demand environment caused by the COVID-19 pandemic and related government-imposed travel restrictions.”

“Delta has no airport staff in place at these airports, in some cases has no contracted gate space, and has not been marketing or selling tickets for these winter services for over eight months,” Delta director of regulatory affairs director Steven Seiden wrote in the filing. “Suddenly re-establishing service to these airports would require several months’ lead time to hire, train and onboard staff; to negotiate new agreements with the airports; to reallocate aircraft and other equipment; and, in some cases, to set up facilities, kiosks and computer terminals (among other logistical, commercial and contractual arrangements).”

Delta on Jan. 20 asked the U.S. Department of Transportation “to exercise its ample authority and discretion” in considering the exemption. The DOT granted the exemption Jan. 29.