Washington Wire - 2005-10-31

Pension Legislation Still Struggles
Desperate airlines are pitted against automakers and other manufacturers over legislation struggling to pass Congress that would dramatically change the way companies must fund their pension obligations. The airlines are lobbying to be allowed 14 years to make pension payments otherwise due in a few years, saying the "leniency" will help keep them solvent. They're pitted against such automakers as General Motors, which are fighting a provision to require companies with bad debt ratings to pay higher premiums to the Pension Benefit Guarantee Corp., the quasi-governmental agency that insures traditional defined-benefit pension plans that last year posted a $23.3 billion deficit. GM's bonds were cut to junk in May. Sens. Mike DeWine (R-Ohio) and Barbara Mikulski (D-Md.) are blocking the legislation, saying the credit-rating issue would hurt manufacturers in their states. Mikulski said in a letter released last week that the credit-rating requirement would have only a "small" effect on the PBGC's deficit. Pension legislation in the House of Representatives doesn't contain the credit-rating provision. If no new pension law is enacted, a temporary law enacted two years ago will expire and airlines may be forced to turn their pension plans over to the PBGC, warned Sen. Rick Santorum (R-Pa.)

Senate: Airlines Must Honor Rivals' Tickets
The U.S. Senate on Oct. 21 passed legislation to require U.S. airlines to honor tickets issued by failed rivals for at least one year. The provision, which was part of a $66 billion transportation bill that passed the Senate 93-1, requires airlines flying on the same route as a carrier that stops operating because of bankruptcy to accommodate passengers if it has open seats on that route. The surviving airline could charge no more than a $100 roundtrip fee. The Senate's action, if adopted by the House of Representatives, would renew a similar provision in the law that expires Nov. 19. The new provision would be in effect until Nov. 30, 2006. It was backed by Sen. Conrad Burns (R-Mont.), the chairman of the Senate aviation subcommittee. The provision gives travelers confidence to buy airline tickets on bankrupt carriers and is backed by banks and credit card companies that don't want to cover the costs of unused tickets if passengers seek reimbursement when an airline stops flying. Airlines not under bankruptcy protection, such as American Airlines, objected because the provisions place too many limits on the amount they can charge to rebook passengers. The larger bill must still be reconciled with the House of Representatives, which didn't include the extension of the ticket requirement in its version of the legislation, passed June 30.

Hawaiian, Mesa, Frontier Must Disclose Delays
Hawaiian, Mesa and Frontier airlines have been ordered by the Department of Transportation to begin reporting data on their flight delays next year because they are generating at least 1 percent of scheduled passenger revenue—about $660 million—for the year ending March 31. The airlines also will have to begin reporting the number of mishandled baggage reports they receive each month, DOT said. DOT also dropped Independence Air from the list of airlines required to disclose because it took in only $618 million in revenue. DOT now requires 20 airlines to disclose. Frontier and Hawaiian already voluntarily report flight delay and mishandled baggage data, joining 18 other carriers. The airlines report cancellations and their causes to the department's Bureau of Transportation Statistics. That brings the current total of airlines required to disclose to 20. Separately, DOT dropped St. Louis Lambert and Portland International airports from those required to report flight delays because they didn't account for at least 1 percent of total domestic passenger enplanements in 2004.