WashingtonWire - 2003-04-28

Commerce To Tap Industry Leaders To Tout USA

The U.S. Department of Commerce soon will appoint a board of eight to 12 people, which it is soliciting to help it spend $50 million to promote the United States as a destination. According to the notice appearing April 23 in the Federal Register, members of the board will serve until its charter expires on April 1, 2005. The money became available through the Fiscal Year 2003 Consolidated Omnibus Appropriation signed into law by President Bush two months ago. The inclusion of that funding reflects an increased awareness of the importance of the travel industry to the national economy by Congress and the Administration. Much credit for that goes to the eight-year-old Travel Business Roundtable, which counts as its members 81 travel industry CEOs including its chairman for most of those years, Jonathan Tisch, who also serves as CEO of Loews Hotels.

The clout that the organization wields was evidenced earlier this month when it cosponsored a meeting in Washington with the U.S. Chamber of Commerce on re-igniting travel growth. The meeting was attended by three cabinet members—Secretary of Commerce Don Evans, Secretary of the Interior Gale Norton and Secretary of Homeland Security Tom Ridge—senators, congressman and 12 mayors. More than 200 industry leaders also were in attendance, including Southwest Airlines chairman Herb Kelleher, JetBlue Airways CEO David Neeleman and Carlson Cos. CEO Marilyn Carlson Nelson. "In the history of the industry," said TBR chairman Tisch, "never have we had so much attention from an Administration or elected officials willing to discuss issues that our industry faces." Tisch expects that TBR members will be well represented on the United States Travel and Tourism Promotion Advisory Board. Applications to serve on the board can be obtained by calling (202) 482-5261 and must be submitted by May 12.



FAA Gears Up For Future Traffic

While traffic is down 8 percent in the top 30 markets, Federal Aviation Administration chief Marion Blakey said this is the time for planning a stronger future. That's why 19 of the 35 top U.S. airports have expansion projects underway, including 12 new runways. Congress this month began tackling the Bush Administration's four-year aviation reauthorization proposal that provides a substantial investment in safety research, air traffic control modernization, airport infrastructure improvements and aircraft/airport environmental initiatives. U.S. Department of Transportation Secretary Norman Mineta late last month submitted to Congress the Centennial of Flight Aviation Authorization Act, known as Flight-100, that "will help increase capacity and efficiency throughout our aviation system while improving the existing environmental review process," he said.

The proposal provides $2.9 billion in FY04 for FAA facilities and equipment, increasing to $3.1 billion by FY07. The agency would receive $7.5 billion in FY04 for operations and maintenance, a 7 percent increase over the FY03 budget request. These funds support implementation of airspace redesign and future air traffic controller staffing needs, as well as FAA's Operational Evolution Plan, a 10-year plan to increase the capacity and efficiency of the national airspace system while enhancing safety and security. Flight-100 also calls for an Airport Improvement Program investment of $3.4 billion each year over the entire term of the reauthorization. Among the measures, FAA would transfer more than $87 million in FY04 funds from large to small airports, thereby raising small airports' share of total grants.



Feds Finalize Airline Relief Legislation

The federal government this month passed the Emergency Wartime Supplemental Appropriations Act, which includes nearly $3 billion in airline aid. The legislation compensates carriers for security fees and cockpit door reinforcement, suspends from June through September a previously mandated passenger security segment fee, extends war risk insurance and extends jobless benefits for aviation industry workers. In return, airlines must adhere to specific limits on executive compensation and specifically allocate the funds "for security related expenses or revenue forgone as a result of meeting federal security mandates." Carriers expect to begin receiving their portion of the aid—hundreds of millions of dollars for the nation's biggest airlines—sometime next month. Many cheered the good news for a desperate industry, while others questioned the government's role in supporting a chronically unprofitable sector, the size of the relief package and the potential for interference with industry restructuring. Nevertheless, federal monies will help stabilize an industry on the brink. Said UBS Warburg analyst Sam Buttrick, "While one can certainly debate the policy wisdom of giving money to value destroyers, the liquidity benefits are incontrovertible."