Seeking to protect the nascent recovery in airline travel, the nation’s largest carriers have asked Congress to block efforts to scrap the industry’s $15 billion bailout program.
The House Appropriations Committee is to consider a proposal Thursday that would double the airline security ticket tax to $20 per round trip, while scrapping the $10 billion government guaranteed loan program and canceling the distribution of some of the money left in the $5 billion bailout fund.
Plans call for the tax and savings to be used to finance a $4.3 billion supplemental appropriation for the Transportation Security Agency. That agency is now proposing that it needs more than 60,000 employees to serve as air marshals and handle security at the nation’s 550 commercial airports.
But the effort to increase the ticket tax and wipe out the loan program is creating some strange bedfellows.
The airlines, which lost $7.7 billion in 2001 and more than $2.1 billion in the first quarter of this year, have been joined by a number of anti-tax groups, including Americans for Tax Reform, which opposed last year’s bailout legislation.
“Make no mistake: Raising airline `fees’ is a tax increase,” said Grover Norquist, who heads Americans for Tax Reform. “Only a Washington politician could come up with taxing an industry that lost billions last year and is teetering on bankruptcy.”
So far, one airline, Tempe, Ariz.-based America West, has sought a guaranteed loan, but Elk Grove Township-based United Airlines says it is considering applying before the June 28 deadline, while Arlington, Va.-based US Airways has said it will be applying. Indications are that a number of other airlines also will be filing loan applications.
The $15 billion bailout and guaranteed loan program were approved last fall, three weeks after the terrorist attacks of Sept. 11, as industry leaders warned that many airlines, including Houston-based Continental, faced bankruptcy if they did not receive assistance.
Both American Airlines and United decried efforts led by Rep. C.W. “Bill” Young (R-Fla.), the appropriations committee chairman, to scrap the bailout program and raise the ticket tax.
Under his plan, taxes would account for one-third of the price of a $150 ticket.
A spokeswoman for United said, “This is the wrong time to consider taking away a very important tool for the long-term viability of this industry.”
Young’s proposal has enraged some House and Senate Republicans, including House Majority Leader Dick Armey (R-Tex.) and U.S. Sen. John McCain (R-Ariz.).
Both legislators were heavily involved in negotiating the bailout program, according to staff members.
