CHICAGO — Like many cab companies, Peace Taxi Association gets most of its business taking travelers to and from Chicago’s airports.
Or at least it used to. Before the coronavirus pandemic decimated air travel, owner Ali Poorian would have about 70 to 80 taxis on the road. Now, he’s down to seven or eight. Sometimes, drivers wait hours for a single passenger, he said.
The taxi industry was already having a tough time competing with ride-share companies like Uber and Lyft. The COVID-19 pandemic brought a whole new level of pain.
“Our life was already miserable, and with this situation, it’s become more miserable. I don’t see a future,” he said.
In normal times, Chicago’s airports are reliable, year-round economic engines for the city. More than 105 million passengers traveled through O’Hare International Airport and Midway Airport last year, and the city is pumping $8.5 billion into an expansion project at O’Hare that will help it attract even more.
Those millions of travelers bring more than tourism dollars and business for airlines. They support an entire network of businesses around Chicago’s airports, from catering companies that prepare in-flight meals to airport shops and restaurants where passengers kill time before boarding to airport hotels and car rental agencies.
“There’s an enormous group of businesses that rely on a constant flow of airline traffic … and most are hurting in a big way right now,” said Joseph Schwieterman, a transportation expert at DePaul University.
The federal government approved billions in financial assistance for the airlines and some companies in the aviation industry this spring, meant to help keep workers on the payroll as stay-at-home orders, travel restrictions and fear of COVID-19 kept flyers home. But not every company that depends on air travel got aid, and even some that did still cut jobs.
As a rise in COVID-19 cases nationwide stalls signs of growth, companies and workers alike are realizing what many assumed would be short-term pain isn’t going away anytime soon.
“That’s the No. 1 question, is when are we going back to work?” said Nakita Campbell, who was laid off from her job at a restaurant in O’Hare’s international terminal in March.
Campbell, 29, of Des Plaines, said she was initially told she might be called back in late July or August but has heard nothing from her employer about when, or if, her job will return. Meanwhile, an extra $600 a week in federal unemployment benefits expired late last month.
“We just need to get an idea. If we’re not going back for the rest of the year, we need to find different jobs,” Campbell said.
The federal coronavirus relief package passed by Congress in March not only gave passenger airlines $25 billion to cover employee pay and benefits, it set aside $3 billion for contractors that handle services like in-flight catering, cleaning and baggage handling. Like the airlines, companies that accepted assistance agreed to avoid involuntary furloughs or layoffs through Sept. 30.
But the prohibition on job cuts only applied after companies reached an agreement with the Treasury Department. United Airlines and other major carriers signed deals in late April, but some contractors’ agreements weren’t finalized for several more weeks, after workers had already been laid off.
Des Plaines-based Prospect Airport Services told Illinois it laid off more than 800 workers at O’Hare and Midway in March and April. Last month, the company signed an agreement with the Treasury Department that is expected to provide $73.2 million to fund employee wages and benefits through the Payroll Support Program funded by coronavirus relief legislation. Prospect declined to comment.
Airline catering company Gate Gourmet, which is expected to received $171.4 million in payroll funding through the same program, cut its April 1 roster of 808 employees by 44%.
Lamar Banks, 31, of Portage Park, said he volunteered for what he thought would be a temporary layoff from his job at Gate Gourmet because he was worried about exposing his fiancee and newborn daughter to the virus. Banks said he self-quarantined for 14 days without pay after a co-worker tested positive in late April, shortly before his daughter was born.
“I was so scared thinking I would possibly put my family at risk,” he said.
Banks said he later got a letter notifying him his temporary layoff had become permanent. He’s started looking at other jobs but wants to find something that feels safe. He’s also hesitant to give up his seniority at Gate Gourmet. Seniority gives him more control over his schedule, which helps with child care.
“You’re just trying to squeeze every penny you can because you don’t know what to expect,” he said.
No one at Gate Gourmet was laid off after the company finalized the agreement to receive federal funding, and 46 workers were brought back after the supplemental unemployment benefits ended last month, the company said.
“Our goal is to continue to bring people back to work as the airline industry returns to health,” the company said in an emailed statement.
Other companies didn’t qualify for federal relief for the aviation industry, even though they rely on Chicago’s airports for business. Some got other forms of assistance through the coronavirus relief legislation, including employee retention tax credits and loans for small businesses. The Chicago Department of Aviation is using about $40 million of funds it received through the legislation to assist businesses at the airport including car rental agencies, restaurants and shops.
The program forgives airport restaurants and shops’ April and May rent and lets them pay a reduced rent until revenues recover to 75% of last year’s levels. Companies have until March 2023 to pay back the difference.
Any business that accepts the assistance must commit to rehiring employees on pace with increases in revenue, determined by their revenues and headcount in December 2019.
A similar program forgives the vast majority of car rental agencies’ rent for April, May and June.
Almost every concession operator has applied, and the Aviation Department said it is reviewing their applications.
Early in the shutdown period, car rental agencies Hertz, Avis Budget Group and Enterprise all told Illinois they expected to lay off or furlough workers. Enterprise, which laid off 18 people and furloughed 154 at O’Hare and Midway, said airport locations were hit harder than neighborhood rental agencies.
“As travel has come back, some, we’ve been able to recall some of our employees, including at O’Hare and Midway, and hope we can continue doing so as business returns,” spokeswoman Lisa Martini said in an email.
A loan through the Paycheck Protection Program helped keep Chicago-based Nuts on Clark’s Midway store open throughout the pandemic, said Robert Kenney, who manages and directs sales at the family-owned business. According to the Treasury Department, the loan was between $350,000 and $1 million. Kenney declined to comment on the amount.
Nuts on Clark’s O’Hare and Midway stores have brought back nearly 25 of the 40 workers they employed before the pandemic, Kenney said.
Still, Nuts on Clark can’t bring everybody back yet, as business has plateaued at airport stores and hours remain more limited than usual, Kenney said.
Nationwide, the number of people passing through airport security checkpoints is still about 70% lower than a year ago, according to the Transportation Security Administration. United Airlines executives have predicted revenues could plateau at half of last years’ levels until a vaccine is widely available.
During the slowest period, when passenger numbers plummeted to roughly 5% of last year’s levels, all but six of the more than 60 restaurants HMSHost operates in O’Hare’s domestic terminals closed, and all but 50 of the company’s more than 1,500 workers were furloughed, said Brad Maher, HMSHost’s senior director of operations at O’Hare.
As “heartbreaking” as conversations about furloughs were, Maher was initially optimistic workers would be called back quickly.
“When I was telling people what was happening and that they were temporarily going to be unemployed, I honestly thought this was going to be a four-, six-, eight-week deal,” he said.
HMSHost started reopening O’Hare restaurants in late May as travelers started returning and has 170 people working at 17 locations. But as new pandemic hot spots began appearing, the growth in business plateaued, forcing the company to pause reopening, Maher said.
“We felt like we had to be extremely cautious going forward until see we how this COVID is going to react,” Maher said. “We really, really want to continue to grow, but we have to do it smart.”
HMSHost isn’t the only company slowing reopening plans. Travel convenience store chain Hudson permanently laid off 40% of its employees at the end of last month, including 311 at O’Hare and Midway, according to mass layoff notices filed with the state. The company blamed slow growth in travel and concerns about a potential “second wave” of COVID-19 infections.
About 450 of the company’s more than 1,000 stores are open nationwide, said Hudson, which reported a net sales decline of about 88.4% in the second quarter.
Areas, a restaurant operator with locations in O’Hare’s international terminal, said the dramatic decline in travel left “no choice” but to close all but one restaurant and lay off about 160 people. Nine employees are working at its one open location, though the company said it is working to bring back more.
Companies serving the city’s airports should recover as air travel picks up, but a full return to normal could take years, especially when it comes to business travel, Schwieterman said. Companies catering to convenience-focused corporate travelers in the belt surrounding the airport, like airport hotels, convention centers and nearby restaurants, are likely to be especially hard-hit, he said.
Between March and July, hotels near O’Hare and Midway warned the state of more than 1,000 upcoming temporary furloughs or layoffs.
Occupancy rates at Chicago’s airport hotels averaged 26.7% in June, down about 70% from the same month last year. Downtown hotels were even emptier, according to STR, a U.S. hotel industry research company. Average daily room rates at airport hotels are down more than 40%.
If anything, the figures underestimate the total number of empty rooms because they don’t include hotels that chose to close. The number of rooms available in Chicago in June was down 16.9% compared with the same month last year, according to STR.
A Holiday Inn Express & Suites in Des Plaines, which usually employs 20 to 25 people, was staffed by just one person per shift during the slowest stretch, said Patrick Palmer, vice president of operations at Prominence Hospitality Group, which also owns a Hyatt in Rosemont.
Prominence received a loan of between $150,000 and $350,000 through the Paycheck Protection Program, according to Treasury Department data, but the company said the funds were used at other hotels.
The Holiday Inn Express & Suites, which opened in October, had just recorded its busiest-ever week in late March when the pandemic brought occupancy rates down to 15% to 20%, Palmer said. The Hyatt, which gets some business from airline crew members, was at one point only 25% to 30% full.
Occupancy rates have climbed to roughly 40% at both properties — still about half of typical summer rates — and the company is evaluating how many employees to call back.
“The business traveler just has not come back, and we really need that to be successful,” he said.
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