Loopholes in Congress's $2 trillion coronavirus relief package could end up sending U.S. taxpayer funds to foreign workers in countries such as China and Mexico.
The Coronavirus Aid, Relief, and Economic Security Act—known as the CARES Act—fails to place safeguards on how U.S. commercial airline carriers spend the $50 billion they received to aid with the cost of maintaining their fleets. Many carriers rely on cheaper overseas facilities for their maintenance needs, meaning they will likely outsource the work to firms in China, Mexico, and other foreign nations.
Guidance on the stimulus money issued by the Treasury Department does not place restrictions on how this cash is used, raising concerns that American aviation workers who have been furloughed during the coronavirus pandemic will not benefit from the billions of dollars set aside for their industry.
The airline loophole is generating scrutiny in light of efforts by Congress and the Trump administration to scale down America's dependence on China for critical needs, such as the production of medication. As the airline industry faces an unprecedented collapse in its business, U.S.-based maintenance firms are also struggling to survive.
"We are fighting for our lives up here right now," Matt Yerbic, CEO of Aviation Technical Services (ATS), recently told the Seattle Times. "With the airlines in crisis, our work is at about 50 percent of where we thought we'd be in the next couple of weeks. It's pretty ugly."
For years, commercial airline carriers have looked abroad for maintenance needs, attracted by cheaper labor in countries such as China, Mexico, and El Salvador.
U.S. Airways and Southwest contract with firms based in El Salvador, while Delta employs a Mexico-based facility, according to a 2015 report in Vanity Fair. United Airlines repairs its planes in China.
While the coronavirus stimulus bill does place restrictions on how money can be spent with regards to medical and pharmaceutical needs, it does not address the airlines' reliance on foreign workers.
For instance, Congress ensured that U.S.-based medical manufacturers are given priority funding over manufacturers based in China. Other safeguards in the bill mandate that midsize businesses that receive funding do not outsource jobs for at least two years after repaying their government loan.
The Trump administration could still implement new rules forcing the airlines to rely on U.S.-based companies, a push that is gaining traction as these American firms teeter on the brink of collapse.
"The CARES Act is all about saving American jobs, yet there is a real likelihood that airlines could accept this taxpayer-backed relief, then turn around and pay foreign companies and workers to service their planes overseas while at the same time, thousands of American aircraft maintenance workers lose their jobs and the American [firms] they work for risk going out of business," said one aviation industry source who would speak only on background about the ongoing situation.
"Thankfully, the Trump administration still has the authority to prevent this from happening as they provide additional guidance to airlines seeking relief in the days and weeks ahead," the source said, adding that "without U.S.-based firms to do this work, we would become even more dependent on foreign countries like China to maintain our vital aviation infrastructure."
When speaking to radio show host Hugh Hewitt earlier this month, ATS CEO Yerbic said the stimulus funding should focus on American workers.
"One of my missions," Yerbic said, "in all of this, whether it's the aerospace and aviation or any others, is for—as the CEO of a business—for us to take charge of ourselves and say we can put American workers first, and bring them back to work as we start to fund this incredibly huge bill that is all about that."