Editorial: Loan denial raises issue of fairness

Friday, Aug. 16, 2002 | 9:26 a.m.

After Sept. 11, Congress set aside $5 billion to provide loans for airlines whose losses surged after planes were grounded. Phoenix-based America West Airlines was the first to apply. Later, Las Vegas-based National Airlines also applied. America West is the second-busiest airline at McCarran International Airport but National is making inroads -- in passenger volume, it's the fifth-busiest carrier at McCarran.

In this highly competitive business (both America West and National were losing millions even before Sept. 11), airlines strive for the proverbial even playing field. They try to accomplish this by procuring a sufficient number of planes, creating desirable routes at desirable times and through other measures such as punctuality, efficiency, safety and customer service. National, which has been trying to emerge from Chapter 11 bankruptcy, was achieving all of that and had neared the break-even point when a force outside of its control turned the playing field into a lopsided canyon and landed the company on a precipice.

The force was the Air Transportation Stabilization Board, the agency set up to judge the loan applications. The board, in January, handed America West a $429 million loan. On Wednesday, National learned that it wouldn't get a dime. It had sought backing for a loan of only $50.5 million so that it could finalize a reorganization plan made necessary by its bankruptcy filing in December 2000.

The airline that has brought 1.5 million visitors to Las Vegas so far this year is now in danger of going under. We support National's request for a federal inquiry into how America West is using its loan money -- National alleges the money is being used to aggressively compete for Las Vegas passengers, which would be contrary to the business plan they submitted to secure the loan. At the same time, there should be a review of the loan decision, whose effect was to save one competitor while jeopardizing another.

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