Friday, April 4, 2003 | 5:51 a.m.
CONGRESS LAST WEEK debated whether the airline industry -- that vital piston in Nevada's tourism engine -- should be given more bailout money as part of the war budget.
President Bush had sent his $74.7 billion war request to lawmakers, imploring them not to attach a bunch of expensive amendments. But the House and Senate promptly tacked on more than $3 billion in airline aid.
This is familiar territory. Lawmakers after Sept. 11 approved $5 billion in direct airline aid and $10 billion in loan guarantees (airlines applied for about half of that).
Ultimately, will the second bailout help the airlines, and in turn, Las Vegas?
Yes, said Nevada's lawmakers in Congress, who supported the aid as much for the sake of the state's economy as for the sake of the airlines. (Only Rep. Jim Gibbons, R-Nev., did not want the aid attached to the war bill, but he supports the concept of airline aid if it weathers traditional congressional hearings.)
"This isn't just about airlines, it's about the half-million people in the hospitality industry in Nevada who are directly impacted by tourism," Rep. Jon Porter, R-Nev., said, noting that 44 percent of Las Vegas tourists arrive by air.
In the Senate, Harry Reid, D-Nev., one of the leading advocates of the aid, said the money was "badly needed."
There is no debate that the airlines are reeling. The industry group Air Transport Association has estimated airlines lost $10 billion last year and could lose another $10 billion this year. McCarran's third-largest carrier, United, is in bankruptcy; Air Canada, which shuttles tourists between Toronto and McCarran, filed for bankruptcy last week. In Las Vegas, American Airlines closed a 350-employee reservation center as part of a cost-trimming plan.
Analysts and insiders blame the troubles on unrecovered post-Sept. 11 losses, a shaky economy, passenger jitters over security and their annoyance at new hassles. More recently airlines suffered from a 10 percent passenger drop the week the war began and a dip in Asian bookings due to fears over Severe Acute Respiratory Syndrome.
"It's like Roseannadanna used to say, 'If it's not one thing, it's another,' " airline analyst Robert Mann of R.W. Mann & Co., mused last week.
But critics wonder if it's Congress' job to continue propping up the industry. Lawmakers on both sides of the aisle, even as they agreed to the bailout, said bad management decisions at the airlines date to before Sept. 11. Critics recommended letting the industry shake itself out without congressional interference. The industry needs long-term restructuring and in the short-term it should "go through the pain and get it over with," Darryl Jenkins, director of George Washington University's Aviation Institute, told the Washington Post.
Analyst Mike Boyd of the Boyd Group/ASRC Inc. agreed that the airlines had made a few "major misfires," including making tickets non-refundable and thereby discouraging far in-advance booking -- the kind of reservations many Las Vegas tourists like to make.
But Boyd supports government aid -- to the tune of $5 billion or more -- for airlines. The money, much of it in the form of tax and fee breaks, will help in concrete ways to keep major airlines stay afloat, Boyd said.
And Congress is partly to blame for the mess, Boyd said, for "inept government policy" that saddled airlines with expensive unfunded security regulations. The new rules aren't even very effective -- in actuality or in passenger perception, he said.
"No one believes the screening fiasco," Boyd told me last week. "It's not security, it's just screening for pointy objects."
The aid likely amounts to a real life preserver for airlines, analyst Mann agreed.
If airlines now are losing roughly $20 per passenger on a $200 ticket, they could get as much as $12 of it back under the proposals Congress debated, Mann said in an interview. That would "make a sizable dent in negative cashflows," Mann said.
That's important because it would help keep major airlines afloat, keep bigger planes flying and maintain service to smaller markets, Mann said.
And all of that is good for Las Vegas, the analysts said.
Rep. Shelley Berkley, D-Nev., shrugged off critics who said the war budget wasn't the place for airline aid. She noted the bill contained money for homeland security. If Congress is mandating airline and airport security measures, then lawmakers "should step up to the plate," Berkley said.
"It is imperative for the economic well-being of our community, and in order to keep our hotel rooms full and our workers employed, that the airlines keep flying," Berkley said.
archive
