U.S. weighs aiding airlines with air traffic upgrades

WASHINGTON Tue Mar 9, 2010 7:16pm EST

Related Topics

WASHINGTON (Reuters) - The Obama administration is weighing help for U.S. airlines to meet the costs of modernizing the air traffic control system, Transportation Secretary Ray LaHood said on Tuesday.

Airlines are pressuring the government not to saddle them with the bulk of expenses for the planned multibillion-dollar upgrade of the air traffic system to one relying on satellites rather than ground-based radar.

LaHood told the annual Federal Aviation Administration industry forecast conference that the White House was looking into the matter and should have something to say to them soon.

"The administration wants to be helpful to the airline industry," LaHood said in remarks to airline and government officials.

LaHood, speaking to reporters after his appearance, did not offer any details, including how much the government might be willing to cover or defer, or how any assistance would be achieved.

Airlines contribute passenger fees, fuel taxes and other money to a federal trust fund that pays for maintaining FAA-run air traffic services.

Carriers are not asking the government to do away with these expenses -- although they often complain of being overtaxed.

But the airlines were unhappy about being left out of the U.S. economic stimulus package in 2009 while high-speed rail got $8 billion, and would like help for meeting their contribution to air traffic modernization.

The change will require new cockpit displays, ground equipment and other technology.

Congress is weighing separate legislation that would authorize a modernization timetable and cost formulas. Details will be left to congressional negotiators in the months ahead.

Although executives are beginning to see a rebound in air travel and tout new revenue-raising strategies, they caution the industry is far from a recovery and any additional costs would be unwelcome.

Gerard Arpey, the chief executive of American Airlines, a unit of AMR Corp told reporters on Tuesday at the FAA conference that American's cost alone for equipping its planes with satellite-based navigation upgrades would run from the tens to the hundreds of millions of dollars.

Arpey and other executives believe government should cover the basic costs to airlines of air traffic infrastructure, since, they say, it is in the national interest to maintain a seamless system for air travel.

"That would be my starting point," Arpey said.

Airlines would still be responsible for training crews and maintaining equipment on those planes.

Major airlines have made similar arguments over the years about aviation security, and continue to oppose government-imposed fees on the price of a ticket that go to help cover security costs of passenger and bag screening.

Separately, the FAA forecast a 2.2 percent annual decline in takeoffs and landings by the mainline -- or major carriers -- and regional airlines this year. The projection follows a 6.9 percent drop in 2009.

Mainline and regional airlines flew 631 million passengers on domestic flights in 2009.

The number of passengers expected to fly on those routes this year is expected to increase 0.4 percent, the FAA said. Regional airlines will account for the growth, while major carriers are expected to board nearly 1 percent fewer passengers domestically.

The total number of passengers for international travel on U.S. and overseas airlines is projected to grow 3.3 percent this year from 147 million in 2009, a lone bright spot for the industry. U.S. carriers handled about half the total last year.

Asia-Pacific is the fastest-growing region, the FAA said.

(Reporting by John Crawley; Editing by Tim Dobbyn)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
Oliver.R wrote:
Should not be the fuel saving pay for the airlines equipment ?

Mar 10, 2010 2:38pm EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

Full focus