Friday, September 10, 2010

U.S. aviation eyes government financing

Aerospace Industries Association President and CEO Marion Blakey gestures as she speaks during the 2010 Reuters Aerospace and Defense Summit 2010 in Washington, September 8, 2010.

The U.S. aviation and aerospace industries are considering asking Congress for a slice of the $50 billion in infrastructure assistance proposed by President Barack Obama, a top trade group official said on Wednesday.

Marion Blakey, president of the Aerospace Industries Association, told the Reuters Aerospace and Defense Summit that her organization has had discussions with other industry groups about the prospect of financing for new cockpit navigation equipment required for air traffic modernization.

"The president has opened the door," Blakey said, adding that it was up to airlines and other industry interests to work with Congress to see what amount of money would be viable.

Obama is proposing the infrastructure financing as part of an election year plan to jump-start the U.S. economy and create jobs.

It is unclear whether Congress will follow through with any transportation financing or tax breaks for business that Obama has requested.

Aerospace contractors involved in air traffic programs include Boeing Co (BA.N), GE Aviation (GE.N), ITT Corp (ITT.N), Harris Corp (HRS.N), Textron Inc (TXT.N), which owns small-plane maker Cessna, Lockheed Martin Corp (LMT.N) and Honeywell (HON.N). The biggest airlines include United Airlines, a unit of UAL Corp (UAUA.O), Delta Air Lines (DAL.N), Continental Airlines (CAL.N) and American Airlines, a unit of AMR Corp (AMR.N).

The aviation industry, which includes commercial and business jet manufacturers, airlines and suppliers, has not arrived at a figure for assistance, Blakey said.

Nor does industry know yet what kind of financing the administration and Congress would propose for aviation. Obama has singled out the need for new funding to modernize the nation's aging air traffic system.

"Infrastructure is as much in the air as it is on the ground," Blakey said in explaining that money for aviation could help spur employment.

Blakey has previously said a $6 billion investment in air traffic modernization equipment would create 150,000 jobs. Sweeping legislation to authorize billions in spending on the next phase of air traffic upgrades has stalled in Congress, and lawmakers are unlikely to act before the end of the year.
The leading U.S. airline trade group, the Air Transport Association, said it was still "critically important to fully understand" Obama's plan.

"We are looking forward to learning more about what government decision-makers might have in mind," the group said in a statement.

Replacing the aging radar-based air traffic network with a multibillion-dollar system relying on satellites would require airlines to outfit jetliners with sophisticated cockpit displays, ground equipment and other technology.

The cost could run into the hundreds of millions of dollars, industry executives have said.

Airlines argue that efficient air traffic control is in the national interest and believe government should cover basic costs.

Carriers were upset that they were left out of the 2009 stimulus package while the Transportation Department received $8 billion for high-speed rail grants.

Airlines contribute passenger fees, fuel taxes and other money to a federal trust fund that pays for maintaining air traffic services run by the Federal Aviation Administration.

Carriers have not asked the government to do away with these levies, although they often complain of being overtaxed.

Airlines would still be responsible for training crews and maintaining equipment on those planes.

Source : http://www.reuters.com/article/idUSTRE6874VL20100909

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