Congress Passes Aid for Airlines, Still Pondering Aviation Security

Article excerpt

Since the September 11 terrorist attacks, Congress has been under increasing pressure to pass legislation that will ensure the stability and safety of the aviation industry in the United States.

Airlines and airports have been facing the threat of bankruptcy and closures, stemming from the losses incurred when all air traffic was suspended for a period after the attacks on New York and Washington. Reagan National Airport in Northern Virginia was still closed at press time. In addition, the increased cost of new security measures, insurance for the facilities and a dramatic drop off in the number of people flying have added to the negative economic situation.

The Air Transportation Safety and System Stabilization Act of 2001 (H.R. 2926), sponsored by Rep. Don Young (R-Alaska), chairman of the House Transportation and Infrastructure Committee, was approved by Congress the same day it was introduced.

Within 24 hours of passage, President Bush signed the bill into law. The act was created to ensure the immediate continuation of airline operation. The legislation amounts to a $15 billion dollar relief package for the airlines industry.

This multi-billion dollar package combines direct compensation with federal loan guarantees: $5 billion for immediate compensation to the airlines for direct losses incurred beginning on September 11, 2001, a result of federal grounding of airplanes and $10 billion available in the form of federal loan guarantees.

This law creates an Air Transportation Stabilization Board that would review and decide on applications for federal credit. The board would be made up of the U.S. Secretary of Transportation, the U.S. Secretary of Treasury, the Federal Reserve Chairman and the U.S. Comptroller General. Finally, the act designates $3 billion of the previously approved $40 billion supplemental spending bill to increase airline security.

In addition to the federal assistance, the act has several policy provisions. First, it implements a salary cap for certain top airline executives, which would hold their salaries at the 2000 level for the length of the federal loans. Second, it guarantees the continuation of essential aviation services to small communities.

Additionally, the federal government will cover the cost difference of any increases in war risk insurance, which is bought by airlines and airports to cover their liabilities in times of war or crisis. The act creates a "special master" to be appointed by the U.S. Attorney General to administer a new Victims Compensation Fund.

The act will help the airlines with their immediate financial crisis, but public confidence in the security of the aviation system is vital for long-term stability. Last week, the Senate Commerce, Science, and Transportation Chairman, Ernest Hollings (D-S.C.), along with 21 co-sponsors, introduced the Aviation Security Act (S. …