This article from NYTimes.com has been sent to you by psa188@juno.com. Airline Executives Going to Congress to Ask for More Aid September 24, 2002 By EDWARD WONG Airline executives, facing industrywide losses that could approach $7 billion this year, will ask Congress today for additional financial aid. That would come on top of the $5 billion in cash the government handed out after closing down all air space in the United States after the terror attacks last year. Instead of demanding additional cash, however, the executives will go before the House aviation subcommittee to ask the government to pay for the new security measures it has mandated, to continue providing partial insurance coverage and to temporarily repeal a fuel tax if the United States goes to war with Iraq. Consumer groups and others who follow the industry say the government has to make sure that any additional aid is used only to pay for security measures imposed after Sept. 11. Otherwise, the aid could prop up companies that have made bad business decisions in the last several years, they say. "Major network airlines have refused to take any responsibility whatsoever for the financial crisis gripping their industry, and have not addressed fundamental cost and productivity problems that are at the root of their problems," said Kevin P. Mitchell, president of the Business Travel Coalition, which is an advocate for business travelers. Representatives of the industry say they are seeking no favors, only urging the government to pay for security costs that are related to national defense. "Neither the industry nor its passengers can shoulder any additional taxes or fees," said Michael Wascom, a spokesman for the Air Transport Association, an industry trade group. "The other part of the message is that there continue to be a variety of unreimbursed security costs falling on the airlines that are rightfully a duty of the government." Although several airline executives have personally lobbied the government to repeal a $2.50-per- flight-segment security tax imposed after the terrorist attacks, Mr. Wascom said his industry association was not asking officials to repeal this tax. The group does, however, want the government to pick up the tab on some recently imposed security requirements: reinforcing cockpit doors, screening catering supplies, checking passenger documents, giving free seats to undercover air marshals and so on. Mr. Wascom said that strengthening cockpit doors would cost $250 million, for example, but Congress has agreed only to give $100 million to help out. Free seats for air marshals will cost the airlines $200 million this year, said John Heimlich, an economist for the transport association. New postal and freight restrictions will cost $550 million a year, he added, while other security measures will raise costs by $380 million. As for the $2.50 security tax, the airlines say that the addition of this cost turns off customers because it results in higher overall prices for tickets. Raising it would only make things worse, they say. Those are all arguments that will be offered today by the group of chief executives, which includes Donald J. Carty of American Airlines, Leo F. Mullin of Delta Air Lines, Richard H. Anderson of Northwest Airlines and Joseph B. Leonard of AirTran Airways. They face a skeptical audience. Some legislators want to raise the security tax to help finance the Transportation Security Administration, which oversees airport security. At the same time, industry experts have repeatedly warned against bailing out airlines that have failed to control their costs or rein in their expansion. "I don't think it's the government's job to fix the problems of the airline industry with regard to demand or to cost," said Michael E. Levine, a former airline executive and professor at Yale Law School. "The only job the government has is to ease the impact of its own policing impositions." In that sense, he said, "there's a case to be made that it's the job of the government to protect citizens; for example, you shouldn't charge the banks specially because robbers target them." Steven A. Morrison, a professor of economics at Northeastern University, said that "clearly the industry has excess capacity, and this will prolong the process of shedding that excess capacity. "But on the other hand," he added, "some of the things they're asking for are for costs that have been foisted upon them in the aftermath of Sept. 11." Right after the attacks, Congress also created the Air Transportation Stabilization Board, which was charged with administering a $10 billion loan guarantee program. The agency gave backing to America West Airlines and conditional backing to US Airways, which has managed to get concession agreements from all its unions while operating under bankruptcy protection. The board is also reviewing an application from United Airlines for a $1.8 billion loan guarantee, but has told the carrier that it has to get more concessions from its labor groups and suppliers. http://www.nytimes.com/2002/09/24/business/24AIR.html?ex=1033873292&ei=1&en=0ac8043608da1bf3 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company