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Airline Aid Focus of Discussions in White House, Congress

House Republicans Exploring Aid for Airports, Loans to Airlines

(Bloomberg) -- The White House is pressing for ways to assist U.S. airlines staggering under the weight of the coronavirus outbreak as House Republicans explore tax relief, loans and grants for the industry.

Airline aid is a key area under discussion, President Donald Trump’s economic adviser Larry Kudlow told Fox Business. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have been holding talks on airline assistance, Kudlow said Monday.

Trump officials are “talking with everybody,” Kudlow told reporters outside the West Wing. When asked if the White House had gotten calls from airlines, Kudlow replied, “Lots of them.” He declined to specify what actions were being discussed. “We’re in touch about their balance sheets and their cash flows.”

The discussions are among several in Washington as the travel industry reels from a massive loss of revenue due to flight cancellations and bans into some regions of the world. Some airlines are negotiating with their unions for voluntary leaves of absence and other measures.

“The incredibly dramatic drop in future bookings, combined with overwhelming cancellations, has far exceeded anything United or the rest of the industry has seen before, including after the attacks of 9/11,” Todd Insler, head of the Air Line Pilots Association at United Airlines Holdings Inc., told members. “The company asked for labor’s help” during a meeting with union leaders Saturday.

GOP leaders of the House Transportation and Infrastructure Committee are considering a federal loan program to help airlines buy jet fuel and are discussing unspecified “tax relief” for the industry, according to an emailed summary of proposals being discussed.

Under the GOP proposal, an existing stream of grants, the Airport Improvement Program, could be used to funnel money to the nation’s airports for operational costs including sanitation and janitorial work. Under AIP, the Federal Aviation Administration awarded $3.2 billion to airports in 2019, according to the agency.

The proposals are still being finalized and it isn’t clear yet whether they will be attached to stand-alone legislation or another bill, according to the summary.

Committee Democrats, who control the majority in the House, haven’t said what measures they’re considering. White House officials are discussing allowing airlines to keep some taxes and fees they collect as a temporary means to helping their bottom lines, Bloomberg News reported Friday.

White House officials were also discussing last week temporarily allowing cash-strapped airlines to keep some taxes and fees they collect from passengers.

The option is being discussed for the 7.5% tax on airline tickets, which provides a substantial part of the $16 billion a year collected for a trust fund used to help pay for the U.S. aviation system, according to three people familiar with the issue who asked not to be named.

Another possibility would be to allow airlines to temporarily keep a fee as high as $4.50 per passenger that goes to airports for construction and maintenance, the people said.

U.S. labor groups are joining with their airlines on ways to help reduce operating costs and address the manpower supply that will result as carriers drastically reduce flying amid the drop in travel demand.

The Air Line Pilots Association, the largest union representing flight crews, said in a letter to the White House Monday it is pushing for legislation and is working directly with individual carriers to negotiate agreements that will help them remain solvent.

“The public health and economic effects of the coronavirus disease have created an extraordinary challenge in the U.S. airline industry,” ALPA President Joseph DePete said in the letter.

American Airlines Group Inc. is offering voluntary leave options to its pilots after the carrier said it would cut international flying by 75% on the drop in travel demand.

The coronavirus outbreak has severely reduced travel, causing widespread financial hardship at airlines and airports. The rush to return to the U.S. this past weekend after a partial ban on travel to Europe prompted some airports to become overwhelmed as passengers faced additional screening.

--With assistance from Justin Sink, Jennifer Jacobs and Mary Schlangenstein.

To contact the reporter on this story: Alan Levin in Washington at alevin24@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman

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