I have a permanent residency card in Germany and have to fly to Austria for work. My US passport is being renewed. Will the card be ok for my flight?

It is, following the rules, not sufficient to only have your residence permit card, although in practice, it may not be noticed.

There are two aspects to consider:

1. You are by German law required to carry your passport when crossing the border. Since there are usually no immigration checks when flying between Germany and Austria, this will probably not be noticed. You may however run into a random check and in that case not unlikely be fined.

2. Airlines are not required by law to check your id when you fly, but many airlines still do. As a general rule of thumb, you can expect that at least most low-cost airlines will check your id and will not accept your residence permit as proof of identity.

I'm sorry that I can't give you a more definitive answer, but your plan may work out, but it is also not unlikely that it goes wrong.

Depending on where in Germany you travel from and where in Austria you travel to, going by car or train may be a better option. But if you cross back from Austria into Bavaria, the chances that you will run into a 'random' check at the land border are very high. All autobahn border crossings are permanently staffed and there are immigration checks on board most trains.

No, legally you need a government issued travel document, meaning a passport of European identity card (which you, being a US citizen rather than a German citizen, can likely not obtain).

This is a legal requirement to cross an international border even in the Schengen area (even though there are rarely any checks, especially at land crossings).

Now, in practice you MIGHT get away with it, depending on how stringent the employees at the checkin desks and gate agents are, but in my experience they always require a passport or European ID card even for travel within the Schengen area.

A valid driver's license MAY suffice, I've never tried, but your residence permit is an addition to your passport and not on its own sufficient. It WILL however give you the right to cross that border without a visa, so do carry it with you.

In your situation, if you really can't get your passport back in time, it's better to take a train to a town near the Austrian border and take a rental car from there, or a taxi.

I am a holder of a German permanent residence permit card. Will that be enough to fly?

No, a residence permit card (or a driver's license) is not a travel document.

They took my current valid one as collateral while they create my new passport.

I have been told by a Canadian friend, who is also a permanent resident in Germany, that when his passport is to be renewed his old passport will be taken away to be canceled in Canada and then returned with the new one.

Why this is done, knowing that their citizens cannot travel during this period, is unknown.

When I applied for my German ID and passport last year (the application is now paperless and took about 10 minutes) I had to show both documents but could retain them. When picking up the the new documents a few weeks latter, a pair of scissors were used to cut out the machine readable zone of the passport and was returned. An entry in the computer system was made to document that the previous passport was made unusable, so maybe that is the reason why other countries want this done by their passport offices.

I have to fly to Austria for work on Sunday

In theory, a travel document for foreign nationals could be issued for such cases.

You would, however, have to convince them that your trip to Austria is compelling.

Note on travel documents for foreign nationals:

• Foreign nationals from non-EU countries can be issued with a German substitute passport in the form of a travel document for foreign nationals in the case that it is not reasonably possible to obtain from the authorities of the country of origin a passport or substitute passport.
• If the state of non-possession of a passport is only temporary, then a travel document for foreigners can only be issued if compelling reasons exist for this.

Sources:

• Travel document - Reissue am Standort LEA, Zum Business Immigration Service (BIS) - Dienstleistungen - Service Berlin - Berlin.de