AIRLINES MUST REFORM

AIRLINES MUST REFORM
Dallas Morning News: The airline industry has returned to Congress' doorstep for more money.
Legislators gave the airlines about $5 billion in emergency cash and $10 billion in loan guarantees last year when grounded planes and rising insurance costs had the industry on course for swift financial disaster. This time, the industry requests that it not bear an inordinate cost of 9/11 security mandates.
The request is reasonable, but Congress must approach it cautiously.
Air travel is down now. And a war with Iraq would drive the industry's fuel costs into the stratosphere, virtually shut down international travel, and cause some carriers to tumble into bankruptcy. American Airlines chief executive Donald Carty even warns that the potential drop in travel would resemble an "economic anvil dropped on the industry."
The stakes are high. Scores of ground support services and many other businesses depend on the airlines' survival. Indirectly or directly, millions in taxes and fees support state and local governments. About 10 percent of the nation's gross domestic output relates to the airline industry.
Fuel tax relief
Carty and Delta Air Lines chief executive Leo Mullin last week asked the House aviation subcommittee to consider several requests. They include fuel tax relief, reimbursement for security costs, and an extension of the terrorism insurance policies the government issued after the Sept. 11 attacks.
Some critics blame the airlines for their financial problems. They would allow the marketplace to separate the weak from the strong, even if a few major airlines fail.
But that approach places ideology ahead of practicality. We should not minimize the broader consequences of widespread airline failure. Like it or not, the frail industry still needs a financial safety net.
That said, Congress should sift through the requests, accept some and reject others.
For example, Congress should not eliminate the tax added to pay for increased security measures. Congress, however, should provide additional money to allay some security cost burdens. Congress also should provide backup insurance and loan guarantees in the event of a terrorist attack. In reality, airline industry profits will not recover until the overall economy recovers and uncertainty over Iraq ends.
In return for the extended hand, airlines must keep retooling themselves. Some survived deregulation two decades ago and prospered. They have credibility. But surely they recognize an even different era has emerged. And the new period will demand innovation and creative models. Congress cannot demand such, but the airlines cannot ignore it, either. This bargain has two ends.