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Regional Aviation News
Airlines Lobby for Tax Relief March 28, 2003 Congressional leaders — including key members of Arizona's delegation — are considering more federal assistance to airlines as the withering sector braces for the economic backlash of the Iraq war. The two top carriers at Phoenix Sky Harbor International Airport — America West and Southwest airlines — covet tax relief out of Washington, D.C., but also want to make sure a new aid package does not favor their traditional rivals. Federal lawmakers are looking at several avenues to help airlines avoid catastrophe as the war impact adds to already massive financial losses. They include temporary or permanent tax cuts, expanded federally backed war insurance coverage and easing anti-trust regulations. One possible anti-trust relaxation would be to let carriers do more code sharing, which allows airlines to coordinate schedules. Tempe-based America West and Dallas-based Southwest airlines may be heated rivals, but they are on the same page when it comes to federal assistance issues. Both carriers support tax relief, especially on post-9/11 security levies, but worry about relaxed code-sharing restrictions giving an unfair advantage to larger rivals. Southwest Legislative Counsel Tom Chapman and America West Chief Executive Doug Parker both said they oppose a proposed code-sharing alliance between Northwest, Delta and Continental Airlines that could gain federal approval if anti-trust regulations are relaxed. Delta, Northwest and Continental proposed a code-sharing alliance last year to help them coordinate schedules and cut costs. Parker termed the Continental-Delta-Northwest deal as anti-competitive, saying it would give those three carriers a leg up when industry success is defined as not filing for bankruptcy. Chapman wants the issue kept separate from a war-related assistance package. But some members of the Arizona Congressional delegation are open to looking at allowing such code sharing to help airlines avoid mass bankruptcies. A recent study by the Air Transport Association forecasts the war costing airlines between $11 billion and $13 billion and resulting in as many as 98,000 layoffs. Several airlines, including America West, already have announced substantial cost-cutting measures and layoffs. Congressmen J.D. Hayworth and Jim Kolbe, both Republicans from Arizona, say they are open to allowing for more code sharing as well as tax relief in order to keep the industry afloat. "We are going to see airline consolidations anyway," said Kolbe. Kolbe, who chairs the House Appropriations Subcommittee on Foreign Operations, said he would oppose any effort to tack an airline rescue package onto President Bush's $75 billion Iraq war supplemental budget request. Airline assistance is not part of the White House request. GOP Congressman Jeff Flake said he opposes any move that would help individual airlines, such as loan guarantees like those doled out to individual carriers after 9/11. But like Kolbe and Hayworth, Flake is interested in tax relief. "The airlines have a valid complaint," said Flake, referring to the tax burden on carriers. Airline executives lament the fact that the new taxes as well as rising fuel costs are taking a huge bite out of their bottom lines in a time when consumer demand remains low. "We're basically eating those fees," Chapman said. Sen. John McCain, R-Arizona, who chairs the Senate Commerce, Transportation and Science Committee, penned a letter to President Bush earlier this month with Mississippi Sen. Trent Lott asking what the administration would be proposing. There are some in the Bush administration who prefer a more modest aid package and letting market forces help restructure the industry. McCain met March 26 with Senate leaders including Majority Leader Bill Frist, Tennessee, and Lott, who chairs Commerce's Aviation Subcommittee regarding an airline package. The Senate Republicans, including McCain, are coalescing behind a temporary suspension of security-related airline fees but do not want any package viewed as a long-term bailout. Parker has been a strong advocate of such a security-fee holiday. A source familiar with the Senate meeting who asked not to be identified said short-term security-fee relief was the focus of the discussions and not other tax cuts or anti-trust relaxations. Senate leaders are considering tacking airline assistance onto the Iraq supplemental budget. Mike Sunnucks The Business Journal
Get connected Southwest Airlines: http://www.southwest.com/ Find this story at: http://www.bizjournals.com/industries/travel/airlines_airports/2003/03/31/phoenix_story4.html
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