President And Congress At Odds

The White House may not be able to talk Congress out of approving more than $3 billion in airline aid, but the Bush administration prefers that any package be structured so it can be dispersed quickly.

Congressional negotiators begin work this week on competing House and Senate plans, hoping to quickly craft a compromise that will be attached to the Iraq war spending bill.

The Transportation Department says a lesson regulators learned from the bailout approved for the airlines after the Sept. 11, 2001, hijack attacks was the length of time it took to analyze requests for aid and distribute grants. That program took effect more than a year ago and included $5 billion in cash and $10 billion in loan guarantees.

Still Processing The First Bail-Out

While most major carriers did not take advantage of the loan program, all of them sought cash reimbursements for losses related to the attacks on New York and Washington. As of mid-March, the Transportation Department had received more than 400 applications for compensation and still had a full-time staff handling a backlog of requests.

The agency has stretched payments over three installments, analyzing complex applications and validating calculations from the airlines on how much money they should receive.

Amounts have varied from $774 million for United Airlines, owned by UAL Corp., which is in bankruptcy, to under $1,000 for a tiny aviation firm. Big carrier payments were completed months ago.

Tax Relief

But senior Transportation Department officials have told Congress and said in interviews they hope the new aid plan will coalesce around proposals to reimburse or forgive certain fees or taxes. They hope the payout or credit could be done within weeks, rather than over a period of months.

"We do want the bills to be written in a manner that is practical. The simpler and more straightforward, the better," one administration official said.

"It is essential that a financial aid package designed to assist just one affected industry -- the airlines -- include narrowly defined relief terms and be of limited duration," said Transportation Department Inspector General Kenneth Mead.

Airline Aid Plan Options

The separate aid plans would suspend certain fees for aviation security for the next six months. The government would pay the carriers between $900 million and $1.1 billion.

But the $3.2 billion House proposal offers a retroactive fee reimbursement to significantly boost the amount of money each airline would receive. That would add more than $1 billion to the cost of the bailout and require applicants to account for the amount of fees each has collected since the early part of last year. The payout would vary for each carrier.

The $3.5 billion Senate plan would also reimburse airlines for some of the estimated $300 million cost of replacing cockpit doors with stronger ones on thousands of planes. The Federal Aviation Administration has said all big airlines will meet this week's deadline for completing the job. The Senate bill would also authorize $225 million in extended unemployment benefits for airline workers.

Is It Fair?

While some members of Congress say aiding a single employment sector is unfair to workers in other hard-hit industries, a bipartisan group of lawmakers on the conference committee that will determine the scope of the aid urged President Bush on Friday to support the worker aid proposal. The airline industry has cut 10,000 jobs since the Iraq war began almost three weeks ago.

But one senior Transportation Department official said he could not see the administration supporting this provision or another one offering $375 million to help airports with security costs. There is a $235 million airport security provision in the homeland security section of the war spending bill.

But the administration has in the past supported extending government help for airlines to meet their high-end liability insurance premiums, which accounts for nearly $1 billion in the Senate plan and has widespread support in Congress even though such a request was not included in the House package.

FMI: www.air-transport.org