"Higher Security Costs Could Cripple Regional Industry"

Monday, September 23, 2002

Higher Security Costs Could Cripple Regional Industry
Unfunded Federal Mandates Threaten Small Community Service
Commuter/Regional Airline News 


Any new security charges forced on the regional carriers could seriously
damage the industry and cost small communities air service at a time
when the industry is poised to lead the recovery of the overall airline
industry, according to the Regional Airline Association (RAA). 

In a white paper expected to be released within the next few weeks, RAA
said that it has become critical to hold the line on unfunded federal
mandates "because they are crippling our industry," said Faye Malarkey,
RAA's director of legislative affairs. "We need to clear up the
misconception that the airline industry is able to pass every cost
increase onto the consumer," she said. "Some of the [regional] carriers
are actually starting to make a profit. But with the increased costs, we
may no longer be able to say that and service to the smallest
communities will be the first on the chopping block. We intend to
educate Congress on the damage done by increased taxes and fee on
airlines. If the current trend of saddling the industry with enormous
taxes and fees continues, regional carriers could be forced out of
smaller markets. It is critically important the government understand
this. This industry cannot absorb another single fee," she said. 

The white paper will be distributed as part of an educational program
aimed at the administration and Congress as to the "critical importance
of holding the line on unfunded federal mandates," Malarkey said. 

There are reports of additional security fees being proposed in a House
transportation appropriations bill. There remain 13 appropriations bills
waiting to be worked out between the House and Senate, and these are not
expected to be passed prior to Congress departing for its mid-October
break. The appropriation bills are now being held up by contentious
debate on the Homeland Security legislation. So while both the Senate
and House have passed some of their respective appropriations bills,
they have yet to hold conferences to work out differences. "They still
have a lot of work to do," Malarkey said. 

With this being an election year, it is not expected that the Congress
will stay in session beyond the mid-October break; "the Senate wants to
pass the Homeland Security bill before the October adjournment," she
said. Whether bills passed by both chambers will go to conference
committees right after Congress reconvenes after the elections or in
January is still unclear. 

One of the major items in the House's version of the Homeland Security
measure is a one-year delay in the deadline for deploying explosive
detection systems (EDS). The Senate Commerce Committee has now passed a
bill that will allow the Transportation Security Administration (TSA) to
grant waivers to up to 40 airports that cannot meet the Dec. 31, 2002
deadline. There has also been a suggestion that the issue of delaying
mandatory EDS at airports will be linked to the cargo screening issue.
Malarkey said that RAA is watching the issue of cargo screening,
"particularly the known shipper program and enhancing measures for
indirect carriers," Malarkey said. "We've been working on behalf of the
smaller carriers both on the passenger and all cargo side." Over 80 U.S
regional airlines are either cargo only or cargo and passenger
operators. Of the 4,033 aircraft operated by the regional carriers,
1,710 are cargo aircraft. 

Malarkey said the appropriation bills now before Congress are "very,
very important," particularly the issue of the $100 million for
hardening the cockpit doors. "At this moment, we are not positive where
this [money] is going to come from. However, DOT [Department of
Transportation] told us that they intended to submit a budget amendment
to Congress asking for the money. The president's request for DOT was
much lower than the Senate's level, which would invite a much lower bill
in the House. The budget amendment should help win support for including
this money in a House bill." 

In the DOT appropriations for fiscal year 2003, RAA wants full funding
for the airport improvement program. "We were very pleased with the
Senate level [and] want to see continuation of the small community air
service development zones pilot program that was in the Senate bill,"
she said. (C/R News, Aug. 5). 

Malarkey said that she expects the House to take up its version of the
DOT FY2003 appropriations issue this week. "We will be doing a 'Dear
Colleague' letter with some of our supporters in the house to come out
in support of the essential air service [EAS] and small community air
service development zones," she said. "We are particularly interested in
seeing that the airport improvement program is fully funded because of
things such as congestion pricing. Most analysts are saying capacity is
not going to return for the next few years. However, eventually it will
return. If you look at the situation in Boston, where the FAA is
requiring Logan to submit a demand management scenario before
construction of an additional runway is allowed, congestion pricing
clearly remains a troublesome issue threatening to price regional
carriers and small communities out of the market. While our paramount
issues are still safety and security, we want to make sure we don't take
our focus off issues such as capacity expansion both in the airport and
air traffic control system. That is going to be very important to us." 

Regarding Senate bill (S.1327) introduced last year by Senators John
McCain (R-Ariz.) and Trent Lott (R-Miss.) that would modify the Railway
Labor Act (C/R News, Sept. 16), Malarkey said that it is doubtful that
bill will get out of committee this year, considering the still pending
13 appropriation bills, as well the coming elections. However, RAA does
consider modification of the RLA to be critically important. "The
industry has put a lot of time and effort into developing a plan to
address the issue of the RLA over the next couple of legislative
sessions. The RLA, which currently prevents airline management and
personnel from holding successful and timely contract negotiations, must
be reformed. Given the recent distress in the industry, there is
pressure to control manageable cost. Unfortunately, within the current
RLA, labor issues are not a controllable cost any more. We want to keep
costs in line with productivity. Also, the RLA almost ensures that there
will be ill-will between management and labor because of protracted
negotiations. It is very unlikely that there will ever be a Presidential
Emergency Board [PEB] appointed for a regional carrier no matter what
negative systemic problems that will cause. We've seen that with Comair.
[The PEB] happens for larger carriers, but there is still a lack of
understanding of the enormous vulnerability of the small communities
with things like this," she said.


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