Republican Plan to Aid Airlines Is Below Request

[Dave Farber <dave () farber net>]

Maybe if airlines (like DELTA) did not pay outrageous salaries and bonuses
to their executives, they could get by!!!

Dave


Republican Plan to Aid Airlines Is Below Request

March 27, 2003
By EDMUND L. ANDREWS




 

WASHINGTON, March 26 - Senate Republican leaders voiced
support today for providing as much as $3 billion in aid to
the nation's airlines, far less than what the industry says
it needs to offset the effect of the war in Iraq.

Republican leaders cautioned that the details were still in
flux. But they said the package would probably include an
extension of war-risk insurance and some compensation for
the costs from heightened security requirements.

The assistance would not include money to compensate
airlines for the steep drop in passenger totals, down 10
percent last week alone, nor would it offer much, if any,
money to offset higher fuel prices.

Airline executives have asked the government to pay up to
$4 billion to cover new security requirements and are
seeking additional relief from security fees and taxes.

Senator Kay Bailey Hutchison of Texas said the package
could be worth $1.5 billion to $3 billion. Senator Ted
Stevens of Alaska, chairman of the Senate Appropriations
Committee, said the measures would be included in
legislation to provide about $75 billion for costs related
to the war in Iraq.

"Yes, we will have something, I believe," Mr. Stevens said
after a meeting of Republican leaders this afternoon. The
Senate majority leader, Bill Frist of Tennessee, said the
Senate was likely to include help "in some shape or form"
but insisted that the amount had not been determined.

It is unclear how much relief the added money would provide
for the airlines. The Air Transport Association, the
industry's main trade group, said today that passenger
traffic dropped 10 percent last week and that advance
bookings for flights in the next two to three months have
plunged 20 percent. International bookings have dropped 40
percent, the association said.

"This is a direct consequence of the war," said James May,
president of the airline association. "If this were a
hurricane, the federal government would have declared a
state of emergency."

The association notes that in addition to an estimated $4
billion in costs from heightened security, the price of jet
fuel has doubled. 

Northwest Airlines has announced plans to eliminate 4,900
jobs, and Delta Air Lines plans to place at least 1,000
people on voluntary leave. United Airlines and US Airways
are already in bankruptcy proceedings, and American
Airlines has begun to seek financing in case it is forced
to seek protection from its creditors.

But many Republican lawmakers are reluctant to provide
anything in the way of a bailout of the airlines, and the
Bush administration is even more reluctant.

Critics of the airline industry, including people in the
administration, contend that the industry's problems
originated well before the war with Iraq and even before
the terrorist attacks on Sept. 11, 2001.

These critics argue that the industry has failed to reduce
its own overcapacity and that weak airlines need to be
consolidated. 

President Bush conspicuously omitted any money for the
airline industry in his request this week for $74.5 billion
to cover costs of the war against Iraq.

Today, White House officials remained aloof but strongly
suggested that they would accept a modest package along the
lines outlined by Republican lawmakers. "The administration
is listening to Congressional proposals on airline
assistance," said Trent Duffy, spokesman for the White
House Office of Management and Budget.

According to one Republican staff member, lawmakers who met
with Dr. Frist this afternoon envisioned providing about
$600 million for a one-year extension of special war-risk
insurance, which is set to expire this summer.

Also envisioned was several hundred million dollars to
cover costs of security measures required by the federal
government - fortified cockpit doors, the cost of armed sky
marshals aboard aircraft and more intense screening
systems. 

Lawmakers were also discussing some form of tax relief,
like a temporary waiver of fuel taxes, or relief from
certain security fees.

Some Democrats are pushing for much more generous
assistance to the industry. Representative Steny H. Hoyer
of Maryland, the Democratic whip, said he would support as
much as $9 billion in aid - about what industry officials
have been seeking. 

But House Republicans are leaning in the same direction as
Senate Republicans. Representative Don Young, Republican of
Alaska and chairman of the House Transportation Committee,
is focusing on issues like war-insurance security costs in
a package that might add up to about $2 billion or more in
help. 

http://www.nytimes.com/2003/03/27/business/27RELI.html?ex=1049761618&ei=1&en
=087fc841d69f22db



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