By Linda Chiem

Law360 (April 8, 2020, 7:18 PM EDT ) The U.S. Department of Transportation said Tuesday that airlines accepting federal coronavirus relief funds must maintain a certain number of flights to various U.S. cities, giving smaller carriers some leeway from the requirements, while also establishing a process for exemptions.

The DOT issued a final order revising minimum service obligations for air carriers that accept grants, loans or other relief funds from the third COVID-19 economic relief package, the Coronavirus Aid, Relief and Economic Security Act, as the pandemic continues to decimate passenger volumes and revenues.

Most major airlines that have already slashed routes and flights in response to government stay-at-home mandates and travel restrictions will be allowed to maintain services at a fraction of their 2019 capacity and still qualify for CARES Act funds. However, airlines that may have already eliminated routes to certain cities may have to restore some of those flights if they fall below the DOT's prescribed minimums, according to Tuesday's order. The DOT's minimum air service obligations are in effect through Sept. 30.

The DOT final order states that any carrier with a more than 10%  share of total industry domestic capacity in 2019 that operated more than 25 flights a week to a specific city can reduce its flights to five times a week to that city.

For some airlines, that means they can cut capacity by as much as 90% through the end of September depending on where they're flying to and whether the region is a small, medium or large hub. For example, capacity to the New York City metropolitan area, which averaged more than 9,000 scheduled flights a week in 2019, would be slashed to 45 flights a week.

Meanwhile, airlines that operated between five and 25 flights a week to a certain city would only have to maintain three flights a week to that city. And airlines serving a city less than five times a week would only need to provide one weekly flight to that city, according to the DOT order.

Those minimum service obligations fall well below flight schedules that airlines had before the pandemic and are meant to offer "sufficient flexibility for carriers of all business models to meet their service obligations," the DOT said.

"The department believes this modification strikes an appropriate balance between the needs of communities to retain at least minimal connections to the national air transportation system during the public health emergency, as required by the CARES Act, and the economic needs of certain segments of the industry on which the original proposal would have had a disproportionate impact," the DOT said.

Additionally, low-cost and ultra-low-cost carriers, which typically beef up their seasonal flights during peak travel seasons like the summer or winter, were given some leeway from the DOT's requirements after they said it wouldn't be "reasonable, practicable, or in the public interest" for them to maintain those levels year round.

Additionally, the DOT set up a process for airlines to apply for exemptions if they need to eliminate one of their routes altogether or want some of their flight obligations relaxed.

JetBlue, which has already cut about 80% of its flights for April, is among the first airlines planning to apply for a DOT exemption.

The New York-based carrier announced Wednesday that it would consolidate flights to five major markets — Boston, Los Angeles, New York, San Francisco and Washington — to serve just one or two airports in those metropolitan areas. The temporary bundling of its flights will last from April 15 to June 10.

For example, JetBlue's flights to the Bay Area in California would be consolidated to just San Francisco International Airport, while flights to San Jose International Airport would be temporarily suspended.

In the New York area, JetBlue would just operate flights to John F. Kennedy International Airport and Newark Liberty International Airport, and suspend service to smaller airports such as LaGuardia Airport, Westchester County Airport and Stewart International Airport.

JetBlue also said it plans to apply for a DOT exemption in order to "temporarily suspend flying at other airports where the airline typically operates only a handful of daily flights and where current demand does not support JetBlue service."

"We face new challenges every day and can't hesitate to take the steps necessary to reduce our costs amidst dramatically falling demand so we can emerge from this unprecedented time as a strong company for our customers and crew members," JetBlue's head of revenue and planning Scott Laurence said in a statement Wednesday.

--Editing by John Campbell.

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