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Airline industry goes to bat for another bailout

By Maxine Shapiro, KERA 90.1 business commentator

Dallas, TX – Two days ago the airline industry presented their case on Capitol Hill. Their plea, "Another bailout, please!" They might just have a case. I'm Maxine Shapiro with KERA Marketplace Middays.

Never thought the day would arrive when I would come to the aid and defense of the airline industry. You would think that with all the lost bags, hours upon hours of delays, food that has become so close to tasting like props for a commercial, I would be unforgiving for life. But my psyche has shifted and I'm much more understanding - conditionally, of course.

The airline industry is collectively looking to lose any where from $7 billion to $8 billion this year. The basis for such a high figure? Higher security costs, new security fees and war insurance costs that has skyrocketed. As reported in Tuesday's Wall Street Journal and according to the Air Transport Association, war risk insurance alone went from $20 million to $1 billion.

The airline industry is humbly aware that about half of that $7 billion projected loss is of their own making. That's why they were only asking for a $4 billion bailout. The Business Travel Coalition, an advocacy group for travelers, couldn't agree more. In a most unsympathetic statement, the Coalition says, "Congress should let the marketplace discipline this industry. The list of incompetent and greedy policy actions on behalf of unions and management is a long one." They're right, except September 11th added a $3 to $4 billion burden on the industry.

So yesterday the "House Transportation Aviation Subcommittee endorsed a package of loan guarantees, antiterrorism insurance and new procedures to lighten security costs airlines say are hurting the industry."* (from Thursday's New York Times) It only amounts to about half of the $4 billion the airlines were asking for. And there's the probability that it won't happen this year. This session in Congress is almost over and the Senate would need to agree on the same action. Either way, the airlines must take the necessary steps to clean up their mess that began long before September 11th. For KERA Marketplace Middays, I'm Maxine Shapiro.

Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m. To contact Maxine Shapiro, please send emails to mshapiro@kera.org.