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AIRLINES LOSE ANOTHER $600 MILLION; CALL ON GOVERNMENT TO TAKE STEPS

 AIRLINES LOSE ANOTHER $600 MILLION;
 CALL ON GOVERNMENT TO TAKE STEPS
 WASHINGTON, May 27 /PRNewswire/ -- The nation's airlines, which lost $605 million in the first quarter and $6.5 billion in the last 18 months, say the government "is a significant part of the industry's runaway cost problem."
 Speaking to a meeting of the Greater Houston Partnership, Air Transport Association (ATA) President Robert J. Aaronson said: "The last two years were the worst in the history of the airline business; the Gulf War and the continuing recession have been devastating, costing the airline industry 50,000 employees and $6.5 billion in losses that will never be recovered. Three airlines have gone out of business, and three more are bankrupt.
 "The airlines are one of the businesses -- like oil and automobiles and housing -- that underpins this nation's economy. So what is our government doing to show their concern? They're calling for the privatization of Los Angeles International Airport," Aaronson said.
 Investment Incentives Needed
 The ATA spokesman said there were a number of things the government should do to get the airline industry, and the economy, back on its feet, including restoring investment tax credit and modifying the alternative minimum tax to provide investment incentives.
 "Currently," Aaronson said, "some U.S. airlines, while suffering operating losses, have to borrow money to pay taxes. Clearly, that was not the intent of the 1986 tax law. These kind of crippling restrictions to capital formation must end."
 Lower Ticket and Cargo Taxes
 He also called for lower taxes on airline tickets and cargo. "They were raised by 25 percent 18 months ago despite a $7.5 billion surplus in the Aviation Trust Fund. Lowering them to previous levels of 8 percent on tickets and 5 percent on cargo would have a positive effect on air travel demand and would provide sorely needed revenues for capital investments." Airlines have been mandated by the federal government to convert their fleet entirely to quieter jets by the end of the decade. This requires replacing or modifying 2,600 aircraft at a cost of $130 billion.
 High Cost of Regulation
 Aaronson said also that airlines today are being asked to spend billions of dollars on government regulations that are driving up the cost of air transportation while doing little or nothing to improve the safety of the system.
 "The notion that every rule and regulation imposed on the aviation industry has a valid safety purpose must be put to rest," Aaronson said. "Far too often the industry is saddled with measures that are unreasonably burdensome, with anticipated benefits that are marginal at best. And each time this happens, the cost of flying goes up. Airlines have limited financial resources and must invest them where they will bring the greatest benefit to safety."
 Aoyees, even though the requirement will not extend to foreign airports where all previous acts of terrorism have originated.
 He also noted the requirement to perform random drug testing on 50 percent of employees in certain jobs as another unnecessary expense. "Since the industry began performing drug tests in 1988, less than 1 percent of all tests have been positive -- and more than half of these came in pre-employment screening. Airlines support drug testing, but the same detection and deterrent benefits could be derived from reducing the test sample to 10 percent, while saving millions of dollars," Aaronson said.
 -0- 5/27/92
 /CONTACT: William E. Jackman, vice president, communications, Air Transport Association of America, 202-626-4000/ CO: Air Transport Association of America ST: District of Columbia IN: AIR SU:


MH -- DC016 -- 4354 05/27/92 15:08 EDT
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Publication:PR Newswire
Date:May 27, 1992
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