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With airlines facing losses estimated at more than $10
billion in 2003 and recovery as far away as 2006, DOT Inspector General
Kenneth Mead last week told Congressional appropriators they should
consider extending the federal loan guarantee program and offering
reimbursements for security improvements and cutting some taxes
temporarily. But Mead cautioned members of the House Appropriations
transportation subcommittee that Congress should be wary of providing
assistance that could be seen by the international community as an unfair
subsidy, and that assistance should be tied to direct costs of security.
“Most of the current financial woes of the industry should be solved by the
marketplace.” He said airlines must document costs spent on security
enhancements, and Congress must ensure money the government offers in a
security relief package is not used to subsidize unrelated financial
losses. “Clarity is needed concerning whether financial assistance will be
restricted to future war-related costs or security-related costs already
incurred by the industry,” Mead said. “Whichever costs are deemed eligible,
the airlines must be held absolutely accountable for documenting the costs
the aid is applied toward.”
Short-Term Relief
Mead said any assistance “aimed at providing short-term
war relief should be just that — short term” — and should “not come to be
expected by the industry on a recurring basis.” Congress this week will
conference on the President’s war supplemental which contains about $3.5
billion in aid to the airlines, including extended federal war risk
insurance, a measure Mead supported in testimony. But the supplemental does
not include reopening the federal loan guarantee program, a move Mead also
supported and which was included in an airline assistance bill introduced
in March by Rep. James Oberstar (D-Minn.), ranking member on House
Transportation. Nor does it call on drawing down strategic petroleum
reserves that Mead said could be a potential form of relief and which is
also included in the Oberstar bill. -DM
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