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US airlines seeking government support
Airline executives in the US are appealing to the Congress for financial support, should the country go to war with Iraq.
Reports published by the Washington Post and Wall Street Journal claim that airlines are seeking tax relief and insurance back-up, because of concerns that a war with Iraq would raise fuel and insurance prices and deter passengers from flying for fear of terrorist attacks.
According to the Air Transport Association (ATA), before September 11, the top 14 US airlines paid a total of about $2 million a year for terrorism insurance. Today, that figure has risen to about $900 million a year.
Aside from the issue of war with Iraq, many US airlines are already struggling. US Airways has filed for Chapter 11 bankruptcy, and United announced it could go to similar lengths.
Despite reports of increasing confidence in the safety of air travel, demand is still depressed. ATA reported that revenue passenger miles (RPMs), were down 10.6% for international travel and 7.3% for domestic travel in August, when compared to the same month last year.
ATA chief economist David Swierenga said: “The US airline industry made little progress toward economic recovery over the summer travel season, which is traditionally the strongest growth period of the year”.
The issue of airline subsidies was raised by Senator Harry Reid, a Democrat from Nevada who met with executives from United Airlines, American Airlines and Delta Air Lines. It will be debated by the House Transportation Subcommittee on Aviation tommorrow.
Read our previous stories:
27-August -2002 US prepares for Sept 11 slowdown
20-August-2002 Analyst predicts US airline failure
12-August-2002 US Airways files for bankruptcy
23-July-2002 Airline losses continue to pile up
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