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Officials Clash Over Airline Aid

Lawmakers push for another relief package, but senior White House aides suggest industry should restructure itself.

March 26, 2003|Richard Simon | Times Staff Writer

WASHINGTON — A clash is developing between the Republican-led Congress and the White House over whether to provide more federal aid to the U.S. airline industry, first hurt by the 2001 terrorist attacks and now struggling with passenger anxiety about flying during a war.

House Speaker J. Dennis Hastert (R-Ill.) is among those pushing for another airline relief package. Senate Majority Leader Bill Frist (R-Tenn.) on Tuesday called it likely that Congress would approve such aid.

But senior officials in the Bush administration are cool to the idea.

"I think the view will prevail in the administration that we're not going to be in the position to make any fundamental difference in terms of government largess," a senior administration official said. "The market is giving us a clear message that this industry should restructure, and if you get in the way of these economic forces, you just postpone" such changes.

Lawmakers are exploring a number of options, from providing the airlines with a "tax holiday" -- a break from the federal fuel tax -- to a package worth $4 billion to $5 billion that would include helping the airlines pay for heightened security measures.

"The airline industry is in desperate shape," House Majority Leader Tom DeLay (R-Texas) said Tuesday. "Hopefully, we can do something to offset the increased cost the federal government imposed" for security.

Shortly after the Sept. 11 terrorist attacks, Congress approved a $15-billion rescue package for the airline industry that included $5 billion in cash assistance and $10 billion in loan guarantees.

Even so, the airlines lost more than $10 billion in 2002 and could lose another $10 billion or more this year if the Iraq war does not end quickly, according to the Air Transport Assn.

UAL Corp.'s United Airlines and Northwest Airlines Corp. last week slashed more than 8,000 jobs and cut back on hundreds of flights. And Hawaiian Airlines joined United and US Airways in seeking reorganization under Chapter 11 bankruptcy laws.

Support for another relief package is receiving a strong push from lawmakers who represent areas hard hit by layoffs of airline employees. United Airlines, for example, is based in Hastert's state.

White House spokesman Ari Fleischer said Tuesday that the administration was monitoring the airline industry's situation.

"Obviously, there are some airlines that are thriving. There are other airlines that are faced with exceptional cost issues," Fleischer said. "It's a complicated picture. It's something that we are working, talking with the airlines about. And we'll see where it goes from here if Congress has any thoughts."

Airlines and their employees have stepped up their lobbying for additional aid.

Don Carty, chief executive of American Airlines' parent, AMR Corp., said in a message to employees last week, "I urge you to contact your senator and representative to ask for their help in securing much-needed government relief from burdensome taxes, security costs and the rising price of fuel."

Mary Frances Fagan, an American Airlines spokeswoman who was among 100 pilots, flight attendants, mechanics and other workers lobbying lawmakers on Capitol Hill on Tuesday, said she was optimistic Congress would provide aid.

"I think that members of Congress understand this is a customer service issue," she said. "If the airlines aren't around, their constituents aren't going to be able to get from point A to point B."

United flight attendants this week asked passengers at airports to sign postcards calling on Congress to provide industry aid. Some of the flight attendants plan to deliver the messages to congressional offices today.

Although international travel dropped during the 1991 Persian Gulf War, "we're seeing a sharp drop in domestic bookings because people are now afraid of a domestic attack," said Sara Dela Cruz, a spokeswoman for the Assn. of Flight Attendants, which also is seeking extended unemployment benefits and job retraining for laid-off workers.

What kind of assistance should be provided remains a subject of debate.

Rep. Pete Sessions (R-Texas) has proposed suspending the fuel tax for two years, a move that could save the airlines about $1.2 billion.

"If the airline industry continues to suffer, the downturn is likely to trickle down to other industries as well," Sessions said.

But some lawmakers said suspending the tax would reduce funding for politically popular airport-improvement projects.

Rep. James L. Oberstar (D-Minn.), the senior Democrat on the House Transportation Committee, has called for the federal government to reimburse airlines for security measures, most notably the cost of reinforcing cockpit doors. He has proposed releasing oil from the government's emergency stockpile to ease the airline's fuel bills.

The industry is seeking to do away with a passenger ticket tax imposed after the Sept. 11 attacks to finance security measures.

Such a move would allow the airlines to recover more money for their own operations -- if ticket prices remain at about the same level -- but shift security costs from passengers to the federal government.

Times staff writers Ronald Brownstein and Janet Hook contributed to this report.

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