Rep. Oberstar Introduces US Airline Aid Bill

[PITbull]

Dow Jones Business News
US Rep Oberstar Introduces US Airline Aid Bill
Wednesday March 19, 3:29 pm ET


By Jennifer Corbett Dooren
Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- The top Democrat on the House Transportation

Committee introduced a bill Wednesday aimed at reimbursing U.S. airlines for up to $5 billion in projected losses from a near-certain war with Iraq.

Rep. James Oberstar, D-Minn., said the bill would help airlines purchase fuel - the cost of which has risen dramatically in recent weeks - and pay for security costs mandated since Sept. 11, 2001.

Last week the Air Transport Association, which represents major U.S. airlines, projected the industry could lose an additional $4 billion this year under a war scenario that goes well. Additional losses could mount if a war drags on for months.

The U.S. airline industry as a whole has suffered since the Sept. 11 terror attacks. After losing a collective $10 billion in revenues last year, the airline industry is projected to lose at least $6.7 billion this year - and that is without a war.

However, Oberstar''s bill so far has no Republican support, and it would reopen the federal loan guarantee program, which the industry has said isn''t necessary. That is because the industry is already in debt and loath to take on more.

The Bush administration has said it is in daily contact with the airlines and will help the industry in the event of war, although it hasn''t endorsed a particular proposal.

Oberstar''s bill would reopen the loan guarantee program to allow the airlines to purchase fuel. The measure would also direct the Department of Energy to reopen the Strategic Petroleum Reserve and release at least 500,000 barrels a day. Oberstar said this would help bring down fuel costs.

The measure would also reimburse the airlines for reinforced cockpit doors, a provision the carriers favor.

The bill would also direct the government to reimburse the airlines for any losses that the Department of Transportation deems directly related to the war. That would still require additional congressional approval.

The legislation would also require the government to fully reimburse airlines for costs associated with flying U.S. troops and equipment to various locations as well as pay for seats that are currently used by federal air marshals.

Oberstar said his bill hasn''t officially been given a price tag, but he estimates it would cost between $4 billion to $5 billion.

The bill would also extend until 2007 war-risk insurance provisions that were part of the 2001 airline aid package.

Unlike before the Persian Gulf War, the airline industry is already on shaky economic ground. UAL Corp''s (UAL) United Airlines and US Airways Group Inc. ( UAWQC) are operating under bankruptcy protection. All other major airlines expect Southwest (LUV) are losing money.

After the 2001 terror attacks, Congress approved a bill that gave the airline industry $5 billion in cash to compensate for losses during the airline shutdown and approved a $10 billion loan-guarantee program.

-By Jennifer Corbett Dooren, Dow Jones Newswires; 202-862-9294; jennifer.corbett@dowjones.com

 

[airlineorphan]

And for those interested in the actual text of Representative Oberstar''s bill, here you go!

-Airlineorphan




108TH CONGRESS
1ST SESSION
H. R.
IN THE HOUSE OF REPRESENTATIVES

Mr. OBERSTAR (for himself, Mr. DEFAZIO, and Mr. LIPINSKI) introduced the following bill; which was referred to the Committee on A BILL To amend title 49, United States Code, to provide relief to the airline industry, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Aviation Industry Stabilization Act of 2003’’.


SEC. 2. AMENDMENT OF TITLE 49, UNITED STATES CODE.
Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or a repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of title 49, United States Code.

SEC. 3. AVIATION INSURANCE.
(a) AUTHORITY.—Section 44302(a)(1) is amended by striking ‘‘may’’ and inserting ‘‘shall’’.
(B) EXTENSION OF POLICIES.—Section 44302(f)(1) is amended by striking ‘‘August 31, 2003, and may extend through December 31, 2003,’’ and inserting ‘‘December 31, 2007,’’.
© COVERAGE.—Section 44303 is amended
(1) in subsection (a) by striking ‘‘IN GENERAL.—’’ and inserting ‘‘IN GENERAL.—’’; and
(2) in subsection (B)—
(A) by striking ‘‘during the period beginning on’’ and inserting ‘‘on or after’’; and
(B) by striking ‘‘and ending on December 31, 2003,’’.
(d) TERMINATION DATE.—Section 44310 and the item relating to such section in the analysis for chapter 443 are repealed.

SEC. 4. LOAN GUARANTEES AND LINES OF CREDIT FOR AVIATION FUEL COSTS.
(a) EXTENSION OF APPLICATION PERIOD.—Notwithstanding section 1300.16 of title 14, Code of Federal Regulations, or any other provision of law or regulation, applications for Federal credit instruments authorized by section 101 of the Air Transportation Safety and System Stabilization Act (49 U.S.C. 40101 note; 115 Stat. 230) may be filed for a period of 30 days following the date
on which the President authorizes the military to use force against the Republic of Iraq in calendar year 2003, and the Air Transportation Stabilization Board determines that an extraordinary increase in jet fuel prices (as defined in section 11(a)(3)) has occurred.
(B) PUBLICATION OF NOTICE.—The Board shall publish a notice in the Federal Register announcing that applications may be filed under subsection (a) and another notice when the time for such applications will end.
© LIMITATIONS ON FEDERAL CREDIT INSTRUMENTS.—A Federal credit instrument issued by the Board in accordance with this section shall—
(1) be for the purpose of allowing an air carrier to secure financial obligations to pay for its aviation fuel purchases for a period of 6 months or the period that begins on the date the Board determines that an extraordinary increase in jet fuel prices has occurred and ends on the date that the Secretary of Transportation determines that the average price for jet fuel in calendar year 2003 is equal to or less than the average price reported by major air carriers for calendar year 2002, whichever period ends sooner; and
(2) be for the actual increased aviation fuel cost incurred by the air carrier or a reasonable estimate of such cost over the average price of commercial aviation fuel reported to the Secretary of Transportation by air carriers during calendar year 2002, as determined by the Board.
(d) MAXIMUM AMOUNT OF FEDERAL CREDIT INSTRUMENTS.—The maximum amount of Federal credit instruments that may be issued by the Board in accordance with this section shall be $3,000,000,000. The Board shall establish a formula setting the maximum amount of Federal credit instruments that may be issued to any air carrier based on the percentage of gallons of aviation fuel consumed by that air carrier in proportion to the total gallons of aviation fuel consumed by all air carriers during calendar year 2002.
(e) SPECIAL RULES.—
(1) LIMITATION ON APPLICABILITY.—Sections 102©, 102(d)(1), and 102(d)(2) of the Air Transportation Safety and System Stabilization Act (49 U.S.C. 40101 note; 115 Stat. 231–232) shall not apply to Federal credit instruments to be issued in accordance with this section.
(2) INCLUSION OF LINES OF CREDIT.—For purposes of Federal credit instruments to be issued in accordance with this section, the term ‘‘Federal credit instrument’’, as used in section 107(2) of the Air Transportation Safety and System Stabilization Act (115 Stat. 234), includes a line of credit and a guarantee of a line of credit issued by a third party.
(3) TREATMENT OF TIME PERIOD.—The 2-year period referred to in section 104(a) of the Air Transportation Safety and System Stabilization Act (49 U.S.C. 40101 note; 115 Stat. 233) shall be treated with respect to an application filed in accordance with subsection (a) of this section as being the 2-year period beginning on the date of enactment of this Act.
(f) SAVINGS CLAUSE.—Nothing in this section shall be construed as affecting an application filed before the date of enactment of this Act for a Federal credit instrument authorized by section 101 of the Air Transportation Safety and Stabilization Act (49 U.S.C. 40101 note; 115 Stat. 230).

(g) MAJOR AIR CARRIER DEFINED.—In this section, the term ‘‘major air carrier’’ has the meaning such term has under section 41720(a) of title 49, United States Code.

SEC. 5. AIR MARSHALS.
Not later than 90 days after all cockpit doors that are required to be strengthened under section 104(a) of the Aviation and Transportation Security Act (49 U.S.C. 44903 note; 115 Stat. 605–606) are strengthened, the Under Secretary for Border and Transportation Security of the Department of Homeland Security shall consider whether it is necessary to require Federal air marshals to be seated in the first class cabin of an aircraft with strengthened cockpit doors and report to Congress (in classified form if necessary) on the results of such reconsideration.

SEC. 6. SCREENING OF MAIL.
(a) IMPROVED SCREENING.—Not later than 30 days after the date of enactment of this Act, the Under Secretary for Border and Transportation Security of the Department of Homeland Security shall undertake, without a decrease in aviation security, such action as may be necessary to improve the screening of mail so that it can be carried on passenger flights of air carriers.

(B) REPORT.—Not later than 120 days after the date of enactment of this Act, the Under Secretary shall transmit to Congress a report on the Transportation Security Administration’s pilot program to determine whether canine teams can be used to screen mail before being placed aboard passenger-carrying aircraft.

SEC. 7. REIMBURSEMENT OF AIR CARRIERS FOR CERTAIN SCREENING AND RELATED ACTIVITIES.
The Under Secretary for Border and Transportation Security of the Department of Homeland Security, within available resources, shall reimburse air carriers and airports for the following:
(1) All screening and related activities that the air carriers or airports perform or are responsible for performing, including
(A) the screening of catering supplies;
(B) checking documents at security checkpoints;
© screening of passengers; and
(D) screening of persons with access to aircraft.
(2) The provision of space and facilities used to perform screening functions if such space and facilities have been previously used, or were intended to be used, for revenue-producing purposes.

SEC. 8. REIMBURSEMENT OF AIR CARRIERS FOR FORTIFYING COCKPIT DOOR.
The Under Secretary for Border and Transportation Security of the Department of Homeland Security shall reimburse air carriers for the cost of fortifying cockpit doors in accordance with section 48301(B) of title 49, United States Code.

SEC. 9. REIMBURSEMENT OF AIR CARRIERS FOR CERTAIN LOSSES RESULTING FROM WAR WITH IRAQ.
(a) IN GENERAL.—The Secretary of Transportation shall reimburse an air carrier for any financial losses that the Secretary determines are attributable to the loss of air traffic resulting from the use of force against the Republic of Iraq in calendar year 2003.
(B) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated such sums as may be necessary to carry out this section.

SEC. 10. AIRLIFT SERVICES.
Section 41106 is amended by adding at the end the following:
‘‘(e) COMPENSATION OF CONTRACTORS.—An airlift services contract entered into by the Secretary of Defense and an air carrier described in subsection (a) shall ensure that the air carrier is compensated for the positioning, depositioning, and other ferry portions of missions performed under the contract.’’.

SEC. 11. STRATEGIC PETROLEUM RESERVE.
(a) REQUIREMENT.—
(1) DRAWDOWN.—Notwithstanding any other provision of law, if the President authorizes the military to use force against the Republic of Iraq in calendar year 2003, the Secretary of Energy shall drawdown and distribute petroleum from the Strategic Petroleum Reserve in quantities of not less than 500,000 barrels per day, to the extent necessary to remedy a dislocation in the jet fuel market or an extraordinary increase in the price of jet fuel.
(2) DISLOCATION IN JET FUEL MARKET.—For purposes of paragraph (1), a dislocation in the jet fuel market occurs when the inventories of United States domestic jet fuel (as reported by the Department of Energy) decrease by more than 25 percent over the previous 3-year rolling average.
(3) EXTRAORDINARY PRICE INCREASE.
(A) IN GENERAL.—For purposes of paragraph (1) and section 4, an extraordinary increase in the price of jet fuel occurs when the quotient exceeds by 50 percent the average price for jet fuel reported to the Secretary of Transportation by air carriers for 2002.
(B) CALCULATION OF QUOTIENT.—For purposes of subparagraph (A), the quotient is calculated by dividing by 2 the sum of the Gulf Coast and New York Harbor 5-day spot average prices of jet fuel.
(B) CESSATION.— The Secretary of Energy may cease any drawdown under subsection (a) if the Secretary determines that
(1) there no longer is any dislocation in the jet fuel market; or
(2) in the case of a drawdown resulting from an extraordinary increase in the price of jet fuel, the quotient calculated under subsection (a)(3) no longer exceeds by 50 percent the average price for jet fuel reported to the Secretary of Transportation by air carriers for 2002.

SEC. 12. CARGO CARRIED ABOARD PASSENGER-CARRYING AIRCRAFT.
(a) ESTABLISHMENT OF WORKING GROUP.—The Under Secretary for Border and Transportation Security of the Department of Homeland Security shall establish an air cargo security working group with industry experts from the Transportation Security Administration, passenger airlines, indirect air carriers, shippers, small businesses, and other related groups to develop recommendations on the enhancement of the current known shipper program.
(B) DUTIES OF WORKING GROUP.—The working group shall analyze the effectiveness of the current known shipper program, develop recommended enhancements, and present its findings and recommendations to the Under Secretary. In developing its recommendations, the working group shall take into consideration the extraordinary air transportation needs of small or isolated communities and unique operational aspects of carriers that serve such communities.

SEC. 13. FACTORS CONTRIBUTING TO AIR CARRIER FINANCIAL DIFFICULTIES.
(a) ANALYSIS.—The Comptroller General shall analyze the factors contributing to the financial difficulties of air carriers for the purpose of determining possible approaches to alleviate such difficulties.
(B) REPORT.—Not later than 90 days after the date of enactment of this Act, the Comptroller General shall transmit to Congress a report on the results of the analysis, together with recommendations.
March 19, 2003 (10:20 AM)

 

[airlineorphan]

Thanks PITbull,

Here''s a summary I got from the House Transportation Committee folks.

-Airlineorphan

Aviation Industry Stabilization Act of 2003



War Risk Insurance

Permanent limitation on airline liability for 3rd party damages (i.e. injuries to people in a building or on the ground) from acts of terrorism to $100 million.

Extends existing war risk policies until December 31, 2007 at premiums no higher than now. Currently, DOT has been extending the policies for 60-day periods and raising the premiums.

Fuel Prices

Loan Guarantee Program for Fuel: Reopens the federal loan guarantee program established by the Air Transportation and System Stabilization Act (P.L. 107-42). The bill 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 a carrier or to guarantee a line of credit issued to a carrier by a third party.

Ø Carriers will have 30 days to submit applications if: 1) The President directs the military to use force against the Republic of Iraq during calendar year 2003; and 2) if the 5-day spot market average (for New York Harbor and Gulf Coast) of aviation fuel exceeds by 50% the average price for jet fuel reported to the Secretary of Transportation for calendar year 2002 (according to Air Transport Association – 71.4 cents per gallon).

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.

Ø A “dislocationâ€￾ in the jet fuel market occurs if the inventories of United States domestic jet fuel (as reported by the Department of Energy) decrease by more than 25% over the previous 3-year rolling average.

Ø An “extraordinary price increaseâ€￾ occurs if the 5-day spot market average (for New York Harbor and Gulf Coast) for aviation fuel exceeds by 50% the average price for jet fuel reported to the Secretary of Transportation for calendar year 2002 (ave. price is 71.4 cents per gallon, according to the Air Transport Association).

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.

Screening-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 person with access to aircraft. In addition, directs the TSA to reimburse such entities for the provision of space.

Cockpit Doors: Directs the TSA to reimburse air carriers for the costs of strengthening cockpit doors ($312 million, according to the Air Transport Association).

Mail/Cargo Screening: Directs the TSA to undertake action, without a decrease in aviation security, to improve the screening of mail so that it can be carried on passenger airlines, and prepare a report to congress on those efforts. Also directs the TSA to create a working group to develop recommendations on the enhancement of the known shipper program for cargo.

FAM Program: Require TSA to reevaluate the seating of air marshals on an aircraft after the cockpit doors are hardened.

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.

General Accounting Office Study: Directs the Comptroller General, within 90 days of enactment, to analyze the factors contributing to the financial difficulties of air carriers for purposes of determining possible approaches to alleviate such difficulties.

 

[BillLumbergh]

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