[Congressional Record Volume 151, Number 69 (Monday, May 23, 2005)]
[Senate]
[Page S5787]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER (for himself and Mr. Burns):
  S. 1102. A bill to extend the aviation war risk insurance program for 
3 years; to the Committee on Commerce, Science, and Transportation.
  Mr. ROCKEFELLER. Mr. President, I rise today to introduce legislation 
to mandate that the Federal Aviation Administration (FAA) extend the 
offering of war risk insurance through August 31, 2007, to our Nation's 
air carriers. I am very pleased that Senator Burns, the Chairman of the 
Aviation Subcommittee, has agreed to co-sponsor this legislation.
  Prior to September 11, 2001, war risk insurance was generally 
attainable and affordable for U.S. airlines. But, as we know, that day 
changed everything for America. No industry was more dramatically and 
fundamentally changed than the U.S. aviation industry. Recognizing that 
the commercial insurance market was not willing to provide war risk 
insurance to the airline industry in the immediate aftermath of 
September 11, Congress required the FAA provide war risk insurance to 
U.S. air carriers. We expected that in time U.S. air carriers would be 
able to obtain commercial war risk insurance. Unfortunately, the 
commercial war risk insurance market has priced its products beyond the 
means of our air carriers. According to the Air Transport Association, 
a return to the commercial market to obtain war risk insurance could 
cost U.S. airlines $600 million to $700 million a year, up from the 
current $140 million. Because of the lack of a vibrant competitive 
commercial market, last year, Congress extended its mandate that the 
FAA provide this insurance.
  In a report to Congress, the FAA noted that even though war risk 
insurance is available in the private market, it is offered on terms 
that the industry just cannot afford. My bill would mandate the 
continuation of this vital program through August 31, 2008. In time, we 
should expect the private market to offer this coverage, but the 
reality is that the insurance industry continues to seek exorbitant 
rates for this coverage. The market has failed and it is the 
government's responsibility to provide this insurance as we have done 
in previous times of war.
  The financial conditions faced by domestic airlines have seen little, 
if any, improvement. This legislation is supported by the low-cost 
carriers who are the healthiest companies in the industry, as they know 
that their profitability would be at risk if they were forced to go to 
commercial market for this insurance at this time. The current 
commercial market is simply unable to provide adequate war-risk 
coverage without unreasonable cost to airlines. For airlines, private 
coverage would mean annual payment increases of millions of dollars. 
Even with FAA insurance coverage, airlines are projected to lose $5.5 
billion this year. This legislation will help the airlines weather 
their current financial crisis. If U.S. airlines were forced to go to 
the commercial market for this insurance, we would likely see more 
airlines in bankruptcy or cease to exist at all.
  I believe that airlines remain a prime targets for terrorist acts. It 
is because of this threat that the commercial insurance market is 
unaffordable for the airlines. My legislation seeks to address a 
pressing problem facing one of the most critical industries in the 
country. My bill is one small but important measure that Congress can 
take to make sure our nation has a vibrant and financially secure 
airline industry.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1102

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. EXTENSION OF AIRLINE WAR RISK POLICIES AND 
                   TERRORISM COVERAGE.

       (a) Extension of Policies.--Section 44302(f) of title 49, 
     United States Code, is amended by striking ``August 31, 2005, 
     and may extend through December 31, 2005,'' in paragraph (1) 
     and inserting ``August 31, 2008, and may extend through 
     December 31, 2008,''.
       (b) Extension of Terrorism Coverage.--Section 44303(b) of 
     title 49, United States Code, is amended by striking 
     ``December 31, 2005,'' and inserting ``December 31, 2008,''.
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