- The Washington Times - Thursday, September 19, 2002

Airline executives are seeking assurances of financial support from Congress to protect them from the financial ruin they say would befall the industry during another war with Iraq.
The airlines are seeking tax breaks, insurance backstops or other government support. The executives say a war would drive up fuel and insurance prices and drive down the number of passengers with fears that al Qaeda and Iraqi military operatives might seek reprisal, just as the industry is beginning to regain financial footing after the September 11 attacks.
Sen. Harry Reid, Nevada Democrat, mentioned the airlines' concerns during a congressional debate this week on whether the United States should take military action against Iraq.
Executives from United Airlines, American Airlines, Delta Air Lines and other airlines met with Mr. Reid; Senate Minority Leader Trent Lott, Mississippi Republican; House Minority Leader Richard A. Gephardt, Missouri Democrat; Rep. John L. Mica, Florida Republican; and others on Capitol Hill in recent days.
The House Transportation subcommittee on aviation will hold a hearing Tuesday on airlines' financial plight, including potential effects of a war with Iraq.
Mr. Mica, chairman of the aviation subcommittee, said the U.S. airline industry has lost between $7 billion and $8 billion in the past year.
"If something does happen in the Middle East and there's a spike in oil prices and a drop in airline passenger travel, it could make a grave situation worse," Mr. Mica said. "I'm very concerned. We have to look at how we can assist this industry that is so vital to our national economy."
Options include tax breaks on jet fuel and assurances that the federal government would pay most of the damages from acts of terrorism, thereby reducing the risk of high insurance rates.
Mr. Mica cautions against additional government assistance for airlines that are unstable because of poor management. The government provides loan guarantees to airlines damaged by the September 11 attacks that appear capable of regaining solvency.
"We can't be feeding dinosaurs," Mr. Mica said. "Some may end up folding their tent. It has to be a careful balance."
Airline representatives described to lawmakers the added costs to the industry in a war with Iraq.
"The insurance issue is an important one," said Michael Wascom, vice president of the Air Transport Association, an industry group for major airlines. "Just since the first quarter of 2001 to the first quarter of 2002, airline insurance costs tripled. If commercial airlines are operating in a military theater, there are potential additional insurance concerns that could arise."
A disruption of oil supplies would increase fuel costs, and a curtailment of Middle Eastern flights would decrease revenue.
In addition, airlines anticipate service disruptions if some of its planes are requisitioned for the Defense Department's Civil Reserve Air Fleet. The last time the military activated commercial airlines was during the 1991 Gulf war.
"It does take aircraft out of passenger service, which could affect civilian travelers," Mr. Wascom said.
The airline executives also complained about proposed passenger fees to pay for security measures. The fees would create another disincentive to fly, airline officials say.
However, the airlines said they are not trying to stop U.S. military action. "We're willing to serve," Mr. Wascom said.
The Bush administration estimates that a war with Iraq would cost the U.S. economy as much as $200 billion but refuses to allow the cost to industry to interfere with its policy decisions.
"The president's concern is protecting the American people and people around the world from a regime that has gassed its own people, that possesses weapons of mass destruction," said Claire Buchan, White House spokeswoman.
She refused to estimate any costs to airlines or other industries. "It would be premature to speculate about potential effects of decisions the president has not made," she said.
Some airlines have projected their added costs in a new war with Iraq but are not willing to release the figures. The estimates are based on their experiences during the Gulf war.
"We can look at what that was like and for our own internal purposes project it," said Jeff Green, United Airlines spokesman.
"Using the early '90s as an example, we know the effects of that are fewer people flying, increased fuel costs," said Beth Harbin, Southwest Airlines spokeswoman.

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