[Congressional Record Volume 149, Number 44 (Wednesday, March 19, 2003)]
[Extensions of Remarks]
[Pages E512-E513]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      INTRODUCING THE AVIATION INDUSTRY STABILIZATION ACT OF 2003

                                 ______
                                 

                         HON. JAMES L. OBERSTAR

                              of minnesota

                    in the house of representatives

                       Wednesday, March 19, 2003

  Mr. OBERSTAR. Mr. Speaker, today I have introduced the ``Aviation 
Industry Stabilization Act.'' The bill addresses the burdens placed on 
the industry by the terrorist attacks on September 11, the increased 
security required in response to the attacks, and additional burdens 
the industry will face if there is a war with Iraq.
  Although the events of September 11 were directed at our Nation as a 
whole, the airlines were used as the weapons of attack and, as a 
result, have incurred a disproportionate share of the costs of the 
attack.
  The effects of September 11 on the aviation industry were direct and 
far-reaching. Commercial airliners were totally grounded for several 
days and realized no revenues while incurring hundreds of millions of 
dollars in expenses. Even after the industry resumed flying, passenger 
traffic has not fully recovered because of public anxiety that the 
airlines could again become a weapon for terrorists. The events of 
September 11 have also added to the industry's expenses, including a 
billion dollars a year in increased insurance costs, and loss of 
substantial revenues because of security limitations on the carriage of 
freight and mail. In addition, we have required increased security for 
the aviation system after September 11. Although it was our intent that 
the general public pay most of these added costs, and that the new 
Transportation Security Administration take over many security 
functions, we have not fully compensated the airlines for the added 
costs involved in functions they continue to perform, such as screening 
catering facilities, checking documents, screening passengers and 
persons with access to aircraft, and cockpit door retrofit.
  The costs of a war with Iraq will also fall disproportionately on the 
airlines. A war with Iraq is likely to add substantially to the 
industry's financial distress, including increased fuel costs (fuel is 
approximately 15 percent of the airlines' total costs), loss of revenue 
from the reluctance of passengers to fly--especially in the trans-
Atlantic service--and the need of our military to use the airlines' 
aircraft to carry troops and equipment to the war zone.
  Shortly after September 11, Congress responded to the aviation 
industry's financial problems by passing a $15 billion package of 
direct assistance and loans. Even with this assistance, the Air 
Transport Association (ATA) states that passenger carriers reported 
over $10 billion in 2002 net losses. ATA forecasts $6.7 billion in net 
losses of 2003 if the United States does not go to war with Iraq. 
However, if the United States does go to war with Iraq, ATA forecasts 
that airline net losses for 2003 will be $10.7 billion to $13 billion.
  The costs of September 11 have fallen not only on airline creditors 
and stockholders, but also on their employees. Airline workers have 
suffered unprecedented job loss and economic uncertainty. Some 100,000 
airline employees are out of work or facing imminent lay-off. The ATA 
forecasts another 70,000 layoffs if there is a war with Iraq. And, with 
two major airlines in bankruptcy, and more likely to follow, the 
staggering job losses may grow.
  Mr. Speaker, we must act now to stem the tremendous costs of 
September 11 that are continuing to be imposed on the airlines and 
their hard-working employees, and the even greater costs and revenue 
losses that are likely once the war with Iraq commences. The airlines 
have already shouldered, and are continuing to shoulder a 
disproportionate share of the costs of September 11. We must not force 
them to bear a disproportionate share of the direct and indirect costs 
of a war with Iraq. We must act now to provide airlines with stable, 
low cost war risk insurance from the federal government, relief from 
security burdens that are the responsibility of the entire country, and 
assistance in coping with any major increase in fuel costs and any loss 
of traffic, resulting from a war with Iraq.
  Specifically, my bill provides:


                           war risk insurance

  A permanent limitation on airline liability for third party damages 
(i.e. injuries to people in a building or on the ground) from acts of 
terrorism to $100 million, and extends existing war risk policies until 
December 31, 2007 at premiums no higher than now.


                              fuel prices

  Loan Guarantees: Reopens the federal loan program established by the 
Air Transportation and System Stabilization Act (Pub. L. 107-42) and 
dedicates $3 billion of the $10 billion program to federal guarantees 
for loans or for lines of credit, or direct lines of credit for 
carriers to purchase fuel. In other words, the program authorizes ATSB 
to issue a loan guarantee, or issue a line of credit directly to 
carrier or to guarantee a line of credit issued to a carrier by a third 
party.
  Strategic Petroleum Reserve: Requires the Secretary of Energy to draw 
down not less than 500,000 barrels per day of petroleum from the 
Strategic Petroleum Reserve (SPR) to offset dislocation or price spikes 
in the jet fuel market due to a possible war with Iraq.


                       Air Carrier Reimbursement

  Air Traffic Losses: Authorizes the Department of Transportation to 
reimburse, subject to appropriations, an air carrier for any financial 
losses that the DOT determines are attributable to the loss of air 
traffic due to a war with Iraq.
  Security-Related Activities: Directs the TSA, within available 
resources, to reimburse air carriers and airports for screening related 
activities they are still performing, such as catering, document 
checks, and screening of passengers and persons having access to 
aircraft. In addition, directs the TSA to reimburse such entities for 
the provision of space. The bill also directs the TSA to reimburse air 
carriers for the costs of strengthening cockpit doors.
  Civil Reserve Air Fleet: Ensures that air carriers participating in 
the civil reserve air fleet program are compensated for positioning, 
de-positioning, and other ferry portions of such missions. During the 
gulf war, many air carriers performing CRAF missions lost revenue from 
the lack of return flight traffic.
  Mr. Speaker, my bill recognizes the ongoing plight of the aviation 
industry, for the costs imposed upon them by the terrorist attacks of 
September 11, the increased security necessitated by the attack, and 
the likely war with Iraq. National security is the responsibility of 
the entire nation; disproportionment costs should not be imposed on the 
industry that happens to be the means of terrorist attacks.
  I urge my colleagues to join me in working to pass this important 
legislation.

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