Fearful that military action in Iraq will threaten their already delayed recovery, US majors are lobbying Congress for a new financial package, including breaks on tax and insurance.
The renewed push comes a year after Congress passed a $15 billion bail-out package that gave the carriers $5 billion in compensation for revenues lost during the compulsory four-day grounding after 11 September, and up to $10 billion to guarantee loans for carriers that could not win private financing. Although only two airlines have won financing commitments, there is growing political and public scepticism about corporate management in general, spurred by financial scandals such as the Enron and WorldCom collapses.
Against this political backdrop, the carriers believe that seeking tax breaks on their 4.4¢ a gallon jet fuel duty and assurances that the government will pay most of the damages from acts of terrorism, together with trimming high insurance rates, are preferable to asking for direct aid. Before the terrorist attacks, the top 14 airlines paid about $2 million a year for terrorism insurance, but that sum has reached $900 million a year.
A major battle centres over the airline contribution to cover security costs. The airlines began lobbying several weeks ago as negotiations with the Department of Transportation broke down over airline objections to paying the government $750 million for security costs. That amount was agreed to last year when Congress federalised airport screening. But the airlines now argue that they should pay only $300 million because they still perform some security-related functions.
Source: Airline Business
