Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Memorandum by the Association of International Courier and Express Services (AT 20)



  AICES is the trade organisation in the United Kingdom for companies handling international express documents and package shipments. Our membership includes household names such as DHL, FedEx, TNT and UPS—employs tens of thousands of people and is responsible for over 95 per cent of the international courier and express shipments moved through the UK every day.

  The courier and express industry has expanded rapidly over recent years. In the global economy, business and industry requires fast and efficient transportation of goods, components and documents in order to ensure commercial competitiveness and success. AICES members provide the "just in time" delivery service required by British business and industry in order to compete effectively.

  The express sector has developed in response to a particular demand from our customers for the fast and secure delivery of important goods and documents. Our members carry anything from contract documents to urgent pharmaceutical and equipment deliveries for hospitals; just in time spare parts for car and aircraft companies; as well as machinery tools and goods ordered through the internet, that are all needed at destination next day or soon thereafter. The customers themselves are likewise diverse including the FTSE Top 100 companies through to SMEs—all which make up UK PLC.


  When considering the implications to the aviation industry of the events of 11 September it is important to extend this assessment beyond that of passenger aircraft to include our members and the services they provide to the UK economy. The recent DTLR sponsored study into UK Air Freight sited Boeing and Cranfield University predictions of a growth in "Express" cargo to 37 per cent of total air cargo by 2015, a growth rate of 18 per cent per annum from 2001. All current forecasts for the growth in the express sector remain optimistic, even in light of the effect of the tragic events of 11 September.

  However, one of the biggest business costs to our industry of this disaster has been in responding to the changes in the aviation security measures as directed by the DTLR.

Background to Security Measures in place prior to 11 September

  As an association we have been involved with the DTLR in the consultative process contributing to and helping in the development of the legislation that covers our industry. AICES has a seat on the National Aviation Security Committee and also participates on many of its working groups.

  Our industry has always worked with the Department in the interests of aviation security and is committed to compliance in this essential area.

  Our members move customers' consignments in a number of key ways:

    —  Members own dedicated aircraft. The integrators within our membership: DHL, Fedex, TNT and UPS are airlines in their own right operating fleets of all cargo aircraft.

    —  Courier traffic flown as baggage on commercial airlines;

    —  Uplift as cargo on commercial airlines.

Post 11 September

  The events of 11 September were tragic and our members fully appreciate the need for examination of the security measures that were in situ. However, the enhanced measures then put in place were more stringent than those introduced in the US or any other European country. In addition the threat was not seen to extend to the air cargo industry. Whilst we understand the need for precautionary measures, we believe the procedures already in place are sufficient. Furthermore given the current economic climate where the aviation industry is suffering particular hardship it is an additional cost that the businesses should not be required to bear.

  The effect of the change in security measures has particularly impacted the integrators when operating their own aircraft. The enhanced security measures put in place since the 11 September are equivalent to those for passenger aircraft and demand x-ray screening; the equipment and relating staffing costs are significant. To date the additional costs incurred by DHL, FedEx, TNT and UPS total £1,736,000. This figure includes the purchase and rental of additional equipment, staffing, training and cost of diverting aircraft in some instances.

  For goods forwarded using commercial airlines as courier baggage or cargo, the average cost that has been levied to cover the additional security measures and airline insurance is 9p per kilo. This figure when applied to the many thousands of tonnes of material sent by our members' runs into millions of pounds.

In Summary:

  AICES believes that the air cargo industry should be included in the inquiry, and that the debate surrounding the difficulties occurring in the aviation industry should not exclude the freight sector as we according to the UK Air Freight Study Report the contribution of airfreight to the UK economy, measured by gross domestic output, is for 1996 in 1998 prices £4.99 billion.

  AICES members already have stringent security measures in place to screen cargo and the additional measures taken by the DTLR, whilst understandable as precautionary measure, need to be re-evaluated. The costs incurred by AICES members thus far, and on an ongoing basis, are extremely high and must contribute to the overall costs to the aviation industry, as being examined by this Inquiry.

  AICES is happy to supply further written or oral evidence as required.

Memorandum by the Transport and General Workers' Union (AT 21)



  The Transport and General Workers' Union (T&G) welcomes the Transport Sub-Committee's of the Transport, Local Government and the Regions Committee decision to undertake a short inquiry into the immediate implications of the current situation on the air transport industry. We represent over 46,000 members in the industry, ranging from cabin crew, catering, ground handling, luggage handling and security and we are the largest trade union in the industry.

  We were obviously relieved that none of our members were killed in the tragic events of 11 September. However, it is difficult for our membership to come to terms with the fact that so many of their colleagues in the USA were killed while carrying out their lawful employment. The events of 11 September will always be a scar that the industry will have to bear.

  However, we do take pride in the fact that our members rose to the occasion to ensure that passengers were inconvenienced as little as possible by the disruption and returned to their families as soon as was possible.


Table 1
Air Transport
(000)(000) [16] (000) [17] (000) [18]
July 20004,3192,920 174,3322,296
July 20014,0432,691 183,5802,270

% Change
¸6.4 ¸7.85.3¸1.1
Source: CAA

  Prior to 11 of September the industry was already facing a serious downturn, in both passenger and freight. The tragic events of that day increased the speed of the downturn and its magnitude. The latest figures from the Civil Aviation Authority for July 2001—Table 1—show that on a year on year basis only terminal passengers grew between July 2000 and 2001. However, all other measures of UK airport activity were down on the previous year.

  The economic downturn in the US since the start of the year has seen transatlantic freight tonnes down 2.3 per cent, according to the International Air Traffic Association (IATA). However, trans-pacific volumes between North America and the Far East fell the hardest, with a 10.9 per cent plunge in freight tonnes.

  It might be useful at this time to explain the reason why the crisis in the aviation industry has occurred so quickly. The reason for this may not be obvious but it is due in part to the fact that airlines have no real inventory, unless you count plastic cutlery. So they have no inventory problems. But that doesn't stop them being hurt by sudden collapses in demand. Indeed, it is arguable that inventory-free businesses are actually more vulnerable to cash flow crises in such circumstances because they have no stocks to sell off at "fire-sale" prices.

  Even if airlines think the downturn in demand is likely to be short-lived, they cannot keep their capacity busy by producing for inventory. So they are reduced to mothballing their fleets and turning to the Government for help.

  In other words, having no inventory does not insulate you from sudden swings in demand. It just makes them more instantly damaging.

  In Table 2 we show the international scheduled services of the Association of European Airlines from January to September 2001 compared to the previous year. From this table we can see that North Atlantic passenger traffic was down 3.6 per cent while cargo was down 11.7 per cent.

Table 2

Passenger Data Freight Data
AreaLoad factor %[19] Change on
previous year
mill. RTKF[20] Change on
previous year
Geographical Europe64.3 ¸0.5616.7¸16.9
Europe—N Africa
  & Middle East
66.4¸3.4713.1 ¸9.2
North Atlantic76.1¸3.6 6,960.7¸11.7
Europe—Far East/Australasia78.7 ¸0.29,786.00.3
Europe—Sub Saharan Africa78.2 4.31,645.16.6
South Atlantic75.9¸4.8 1,469.42.5
Mid Atlantic80.10.5 981.817.3
Total Longhaul77.4¸1.5 20,843.8¸2.9
Total International73.1 ¸1.422,173.6¸3.5
Source: AEA

  The downturn in freight is economically possibly more significant than the downturn in passenger numbers. In Table 3 we show the year-on-year change for September; this shows that North Atlantic passenger capacity was down 11.1 per cent, and freight was down 30 per cent, while geographic Europe passenger capacity was down 4.8 per cent, and freight was down 24.9 per cent.

Table 3


Area  Passenger data Load factor[21]
per cent
Change on previous yearFreight data Mill
Change on previous year
Geographical Europe66.0 ¸4.865.3¸24.9
Europe—N Africa and Middle East62.1 ¸10.473.2¸12.7
North Atantic72.1¸11.1 655.8¸30.7
Europe—Far East/Australasia79.6 ¸4.21,063.2¸7.4
Europe—Sub Saharan Africa81.3 1.8167.0¸6.1
South Atlantic75.8¸11.1 140.14.6
Mid Atlantic80.311.1 103.24.9
Total Longhaul76.3¸6.7 2,129.3¸15.1
Total International72.4 ¸6.62,267.8¸15.4

  Source: AEA.

  With this collapse in demand and having no inventory it is not surprising that the industry was plunged into crisis, and especially those airlines who were dependent on North Atlantic traffic. Table 4 gives the year on year change in Revenue Passenger-Kms between weeks 35 and 44.

Table 4


WeekFrom-to EuropeNorth Atlantic Far East/
3527 August-2 September 3.8¸4.4¸4.9 ¸1.2
363 September-9 September 2.6¸2.3¸3.9 0.1
3710 September-16 September ¸6.1¸58.1¸8.2 ¸23.4
3817 September-23 September ¸5.8¸20.0¸8.9 ¸10.4
3924 September-30 September ¸9.9¸34.9¸14.0 ¸17.7
401 October-7 October ¸11.8¸33.5¸19.5 ¸19.5
418 October-14 October ¸14.3¸33.5¸22.9 ¸21.0
4215 October-21 October ¸14.4¸33.1¸23.4 ¸21.1
4322 October-28 October ¸15.0¸33.8¸22.6 ¸21.1
4429 October-4 November ¸6.7¸29.5¸18.4 ¸15.7

  Source: AEA.

  This shows that by week 44 the European market was starting to return to its previous trend. The North Atlantic market was returning to trend much more slowly. We will avoid making any predictions as to when or if the industry will return to upward trend rate. There are real difficulties normally in trying to predict the future trends based on past performance; it would be especially difficult in an industry that has been affected by such a large economic shock.

  We will now look at what has happened to employment since 11 September. According to the International Transport Workers' Federation (ITF) on 9 November 148,949 layoffs had been announced internationally. Due to using different sources we come up with a slightly higher figure of 151,487 (see Appendix 2). Table 5 gives a breakdown of the layoffs by region.

Table 5
Asia Pacific4,660
Latin America2,420
North America106,270

  The UK airlines have announced a loss of 8,800 jobs, but this does not include airport-related jobs. It is difficult to estimate but we believe that for every one job lost in an airline between four and 10 other jobs will be lost inside the perimeter of the airport and a minimum of a further three outside the perimeter; this we believe is a conservative estimate. The ILO meeting on the impact of September 11 events on civil aviation reported that "one operational aircraft provides 150 to 250 direct jobs and there is one additional indirect job for every direct airline job". We have attempted to extrapolate the range of potential job losses on the number of announced job losses, the results are given in Table 6. We estimate that between 57,200 and 125,840 jobs will be lost as a result of the announced job losses.

Table 6
Employment type4 airport related
job losses
10 airport related
job losses
Airport related35,200 88,000
Wider economy13,200 29,040

  We are working with the various employers within the industry to ensure that the effects of the crisis are minimised and we are taking a flexible approach to ensure our members' employment is not terminated unnecessarily. However, we will not accept a situation where employers might possibly try to exploit the situation for their own gain over and above that justified by the effects of 11 September.


  In this section we contrast the actions taken by the US Government and the EU Commission to the crisis. As the full extent of the consequences of 11 September for the airline industry emerged, carriers on both sides of the Atlantic began to press their respective governments for financial support. But according to The AVMARK Aviation Economist "The responses they received were oddly appropriate to a world newly turned upside down".

  In the USA, home of sturdy free enterprise, the carriers were bailed out to the tune of $15 billion. Conversely in the EU, often accused of state-corporate feather-bedding, the European Commission authorised a widow's mite to compensate the airlines for the four days of US airspace closures and sternly warned governments against using the crisis as a pretext for propping up inefficient national carriers.

  The reason the US airlines' have been so successful in protecting their interests may have had something to do with the quality of their representation. Putting their case in Washington was the Air Transport Association of America (ATA). Formed in the 1930's, when the Civil Aeronautics Board had tight control over route allocations and fare levels, ATA has developed over the years since deregulation into a formidable lobbying body. In addition, every airline with a presence in the US Market maintains a Washington office or is represented by legal or public affairs consultants, often both.

  The collective power of the US airline industry's ability to sway Congress was amply demonstrated in the immediate aftermath of 11 September. Realising that they were likely to run out of cash very quickly as a result of being grounded for four days, followed by the near-certainty of a severe traffic downturn when flights resumed, the airlines lobbied for and won a two-segment package.

  Some $5 billion was allocated as compensation for financial damage suffered during the closure of US airspace, which of course also affected foreign carriers serving the USA. The allocation among airlines was based on the available seat-mile capacity operated by each carrier during August.

  The mechanism is simple, its intent is generally agreed to be fair, and the distribution has proceeded without arguments. However, more controversy has surrounded the additional $10 billion in loan guarantees which may be requested by individual carriers through a four-member board. There are significant strings attached (see 4 for details) and some carriers have already proved reluctant to become involved on the grounds that participation would dilute their shareholders' interest.

  The scheme is not intended to rescue airlines that would have run into trouble in the normal course of economic events. A viable business plan must be submitted to the board, and the US Government may demand warrants or other claims on the equity of a participating carrier so that there is some potential for gain.

  The reason for this policy may be that the sheer size of the United States—4,000km from the Atlantic to the Pacific, 2,000km north to south along each coast—and the absence of an effective nation-wide passenger railway system make efficient air transport strategically essential to the overall economy.

  Conversely, in the European Union (EU) we believe that Loyola de Palacio, the EU's transport commissioner has been seeking to assert her authority over member states lobbying to stop national carriers going bankrupt. She said in an interview with the Financial Times: "We can no longer maintain in Europe 14 flags carriers plus a lot of regional carriers, as we do now.

  "In 12 countries we are going to put together our currencies. We must overcome the logic of the national flag carrier, to think only of European flag carriers". The Commission has long pushed for the consolidation and greater co-ordination of the sector and, not incidentally, for a greater role for itself. For a decade, Brussels has insisted that the European aviation sector is too fragmented and unable to measure up to its US counterpart. The downturn in the sector, greatly accelerated by the terrorist attempts, might be what finally sets off the consolidation it has long called for.

  The reason the Commission believes that consolidation is still a priority is because of the fragmentation of the European industry and markets. This means that European airlines and profits do not fully benefit from the size of the internal market. Each of the three biggest US companies transport an average of 90 million people against 30 million-40 million for each of the biggest European companies.

  It is expected that the European carriers would probably consolidated around the strongest players and the international alliances of which they are members: Lufthansa, which is part of the Star Alliance; Air France, which heads the SkyTeam group; and British Airways, which is part of OneWorld.

  The announced measures are only the latest in a series of proposals that the Commission has made to consolidate and co-ordinate Europe's aviation sector, notably the flagship carriers that are often wrapped up with national identity. Up to now, many of Brussels' initiatives have been stalled. But it now may believe that its hour has come.


  In this section we detail the extent of support which we are aware of that has been given by EU Commission, individual governments in the EU, the UK Government and various governments in the rest of the world who have given assistance to their national airlines.

4.1  The EU Commission

4.1.1 Airlines

  Brussels on the 24 September urged European Union member states to take a unified approach in helping the airline industry recover from the consequences of the 11 September terrorist attacks, avoiding "distortionary" effects on the single market.

  The European Commission also announced on the same day that it was setting up a working group to study the economic measures needed to support European airlines in the wake of the Suicide attacks in the US. The Commission said it ruled nothing out so far in its assessment of the state of the European airline industry, including possible direct state support for airlines. But it was concerned that airlines across the European Union were treated the same. The assessment would take just over two weeks to complete with the group due to present Brussels with its findings on 10 October so it is able to report to the 15 October meeting of transport ministers. But Brussels has made clear that it does not want to provide direct financial aid.

  EU governments had jointly agreed to provide airlines with third-party war risk insurance cover for a stop-gap period of one month, although member states' approaches have diverged. The Commission said it would need to be notified of such schemes to ensure they did not give airlines from some countries an unfair advantage over others. But it would not ask to be informed of such schemes before they were put into operation.

  On the 10 October, the Commission said European Union countries would be allowed only until December to underwrite airlines' insurance policies—a responsibility member states took on after insurers reduced cover in the wake of the 11 September attacks. So far, only seven of the 15 EU countries have formally sought Brussels' approval for the emergency insurance plans they have put into action.

  Ms de Palacio has said that a $15 billion (£11 billion) airline bailout in the US greatly added to the difficulties of her task of making sure the sector's consolidation was not put back by state aid for failing carriers:

    "The question is not maintaining a level playing field within the EU. The main difficulty at this moment is guaranteeing a level playing field with our competitors, the American airlines."

  However, the commissioner has signalled that she could approve Belgium's emergency

125 million month-long loan to Sabena under special rules for state aid for near-bankrupt companies. She also added that the Commission was still considering the issue and would not decide until the 17 October. Approval would be almost certain to lead other countries to ask for aid authorisation.

  The Commission believes there is a case for limiting compensation to airlines for the effects of the 11 September attacks to four days of revenues. "The idea of four days' compensation is no way equivalent to the $5 billion [£3.4 billion] direct aid the US airlines are receiving, which amounts to the revenues from their entire network for two weeks," said the Association of European Airlines. This has given them the financial strength to undercut their European rivals on transatlantic routes. The US bailout had allowed American carriers to halve fares on transatlantic routes that competed with European airlines—although it did not provide concrete examples. In a letter to Norman Mineta, US transportation secretary, Loyola de Palacio, European transport commissioner, said that several European airlines have complained of sharp cuts on ticket prices by their US rivals on some transatlantic routes following the announcement of the Bush administration's aid package. Ms de Palacio's letter says that if the complaints were proven right, this would be an unacceptable form of state aid that would distort competition in the airline sector.

  European airlines have criticised the Commission's measures as insufficient at a time when many large carriers, such as British Airways, Sabena, KLM, Aer Lingus, Alitalia and Olympic Airways, are restructuring and cutting jobs to cope with the fall in business caused by the attacks.

  The letter, sent on the 12 October, calls for a meeting between Mr Mineta and Ms de Palacio to discuss a US-EU code of conduct on state aid to airlines. Despite Ms de Palacio's action, the Commission has no powers as yet to negotiate a deal with the US as air transport remains an issue for national governments.

  But the Commission's position has become even more awkward because of widespread expectations it will approve an emergency Belgian government

125 million ($113 million) loan to Sabena, the near-bankrupt carrier. It says it has little option but to approve the loan if it complies with rules for rescue aid for stricken companies, but member states, notably Ireland, argue that if Sabena gets help they will push for authorisation to give the maximum assistance to their own troubled carriers.

  The Commission has also relaxed rules on the use of airport take-off and landing slots during the coming winter season.

  The European Commission on the 12 October left the door open for further state assistance to Europe's struggling airline sector when it said that governments might be allowed to help provide airlines with insurance cover next year.

  It also indicated that it could approve a

125 million (£78 million) loan for Sabena, the stricken Belgian carrier.

4.1.2 Airports

  Most European governments are already expected to indemnify airports against war-related risks. Another topic which was to be discussed on the 16 October was the struggle of Europe's airport operators, who warn that insurer's decision to restrict their cover for acts of terrorism or war have put them "just days away from complete shutdown".

  EU ministers agreed in September that their governments would help provide airlines and airports with insurance cover to make up for such shortfalls. Ms de Palacio has subsequently said the Commission would allow governments to maintain airlines' cover until the end of the year. She excluded the airports from her comments.

  Airports' revenues have been less dramatically hit than those of flagship carriers, since they depend less on transatlantic flights. But the airports complain that their cover for war and terrorism has been reduced and that they need continued government assistance to keep operating. On the 12 October the Airports Council International Europe, an industry group, asked Brussels to allow member states to extend emergency insurance cover to airports, warning that otherwise airports would have to close down.

  Commission officials say they are extremely unlikely to act against any move by a member state to ensure that airports are fully covered. But it said that it lacked information on the sector's problem, and added that it might not even have competence over airports.

4.2  Individual EC Countries

4.2.1  Belgium

  Originally the Belgium Government was to provide Sabena with a bridging loan to keep the airline afloat while it took legal action against Swissair Group which said that it would not provide the capital injection it has required to make. A spokeswoman for Minister of Public Enterprise, Rik Daems, said: "We are examining the possibility of helping Sabena. The Belgian Government is examining the possibility of giving the money itself. We want to recoup the money from Swissair, but in the meantime helping Sabena with a bridging loan". Sabena had signed a deal with its 49.5 per cent shareholder Swissair that the company along with the Belgian Government would provide Sabena with a

430 million ($391 million) capital injection. The first payment of

220 million was scheduled for approval on the 3 October shareholder meeting. Suffering under its fourth day of wildcat strike action by pilots, the Belgian national carrier says its management has decided to go on with operations and the airlines board of directors will meet in the next 48 hours.

  The Belgian prime minister announced on the 8 November that the Government had found a number of investors to provide the $179 million investment needed to expanded Delta Air Transport (DAT), just hours after national carrier Sabena filed for bankruptcy. The new expanded airline is to be owned 100 per cent by private investors and the Government says it will have no shareholding in the new airline. Sabena had said that plans are being developed to establish a smaller, primarily short-haul operator, based on Sabena's regional subsidiary Delta Air Transport (DAT). Meanwhile, government ministers continue to negotiate the redundancy plan for Sabena's thousands of employees that will not join DAT.

  Belgium's Government has hammered out an agreement with unions representing staff at bankrupt national carrier Sabena covering the social plan for the many job losses expected following the airline's demise. Following fresh talks, the Belgium Government announced that an agreement with the unions on the social plan had been reached. Attempts are continuing to establish a slimmed-down successor airline to Sabena, a privately-owned company based on Sabena's regional subsidiary Delta Air Transport (DAT), and it remains to be seen how many of Sabena's 12,000 employees will find work at the new airline.

4.2.2  France

  In Paris Jean-Claude Gayssot, transport minister, said on the 15 October that France planned to spend about FFr2 billion (305 million, $276 million) on supporting its air transport sector, half from the state and half raised from a special security tax on airline tickets.

  He told a news conference that the proposal would be discussed during the French parliamentary debate on the budget on the 16 October and would need the approval of Brussels. It was not immediately clear how much of the French money—which will be used to strengthen security measures and to compensate companies for the economic impact of the attacks—would go to Air France, the state-controlled national airline.

4.2.3  Germany

  The German government on 21 September offered airlines our weeks of cover against terrorist attack for up to DM40 billion ($19 billion) worth of damage. On the 7 November it announced a three-month extension to its interim war and terrorism insurance cover for its airlines but maintains a commercial solution must be arranged as quickly as possible. Germany's interim arrangement, introduced after insurance companies cut back war-risk cover after the events of 11 September, will now be extended until the end of January. Germany's finance Minster called for uniform regulations across Europe covering insurance policy for airlines.

4.2.4  Italy

  The government is considering announcing in its budget that it will waive VAT on tickets for domestic air travel. The Commission is unlikely to resist the move, particularly as VAT rates for domestic air transport vary throughout the EU. Italy has one of the highest rates in the European Union, at 10 per cent, in contrast to the UK where no VAT is levied at all.

4.2.5  Republic of Ireland

  The Irish government has said it will lobby the Commission for the right to dispense the maximum possible aid to Aer Lingus.

4.3  UK

  After crisis talks between government officials and airline and insurance executives, the Treasury agreed on 21 September to insure British airlines against third-party risk for more than $50 million per aircraft, initially for a month.

  If the cover has to be extended for longer, the airlines will have to pay premiums based on the commercial rates prevailing before the terrorist attacks in the US.

  But for the first month, the cover will be free—a decision, made a Treasury official said, "in the light of the financial difficulties faced by the airline industry in the current climate".

  The Treasury said it was not possible to calculate the value of the month's free cover to the airlines but added that no cash would be paid out except in the event of a crash.

  Officials were confident that the deal was unlikely to fall foul of EU restrictions on state aid as it was a response to exceptional circumstances and was in any case likely to be emulated by other EU members.

  We understand that Tony Blair has signalled that he would not let British Airways go bankrupt.

  Airports have also received the same cover from the Government due to the "market failure" of the insurance industry. According to a report in the Financial Times 16 October they [the airports] will need continued Government assistance to keep operating (see also EU section).

4.4  The Rest of the World

4.4.1  Canada

  On 27 September, the Canadian Union of Public Employees (CUPE) met with Transport Minister to urge help for workers. National President Judy Darcy and Airline Division President François Bellemare met with Transport Minister David Collenette to urge federal aid for flight attendants who would be affected by the devastating cuts announced by Air Transat and Air Canada. Darcy and Bellemare attended as part of a delegation of union leaders representing airline workers. The unions asked Collenette to earmark at least $600 million for aid to workers out of any assistance given to the industry. A key way to avoid further turmoil is to avoid massive layoffs. And that means support for workers on the front lines have to be a vital part of any stabilisation package, said Darcy. She added that the government must act immediately to stabilise the industry and restore the confidence of the travelling public. This crisis in the airline industry began long before the events of 11 September, said Darcy. This industry has been in turmoil for years due to the government's deregulation policies and restructuring, and it is unacceptable for workers to be made to pay the price once again.

  Canadian airlines have received a C$160 million ($101 million) financial aid package from the Canadian government. The package compensates only for losses between 11 September and 16 September, during which Canadian airspace was either closed or not operating at full strength. This is well short of the C$2 billion that the airline had sought. About C$100 million of the package will go to Air Canada, the country's largest carrier. David Collenette, Canada's transport minister, said the government "would prefer a private sector solution" to the company's problems, but did not rule out further financial support.

  Canadian carriers, led by Air Canada chairman and CEO Robert Milton, had asked officials in Ottawa for a multi-billion dollar aid package to compensate for general losses associated with the terrorist attacks in the USA, including a significant fall-off in passengers because of a heightened fear of flying. Government representative Collenette said a restructuring of Air Canada's ownership is likely needed, but rules out any government involvement, such as a renationalisation of the carrier or the government buying a large equity stake in the airline. He adds that the government is considering changing Canadian laws that limit shareholding stakes in airlines.

  Mr Collenette said he believed there were "other investors, who could come forward to assist Air Canada", but he declined to name them.

4.4.2  India

  India offered unlimited war-risk insurance cover to its two state-owned airlines for the next two weeks. Air-India, the international flag-carrier and Indian Airlines, its domestic sister, will be guaranteed third-party cover by the government, following Indian insurers' decision to place a cap of $50 million on any claim.

  Jet Airways, the largest privately owned domestic airline in India, has also appealed to the government to guarantee its war-risk insurance. It has managed to raise its claim level to $150 million—above the $50 million cap—but says this is not enough.

  A meeting between insurers and the Indian government on the 4 October examined ways of meeting insurance demand in the airline industry.

4.4.3 Japan

  The Japanese government will guarantee third-party war and terrorism insurance of up to $2 billion for all Japanese airline carriers. The decision was taken to ensure airlines would be covered for any shortfalls after insurers reduced their coverage of third-party payments to $50 million. Japan Airlines, All Nippon Airways, Japan Air System and other carriers will have the third-party coverage guaranteed for six months.

  The Japanese government is still considering whether it will assist airlines in other ways—including covering for the increased premium costs per passenger and extra costs for added security measures following the terrorist attacks.

  The government believes stricter security will cost the airline industry up to Y380 million per month in additional costs. Airlines are hoping the government will help pay part of these increased security costs.

4.4.4  New Zealand

  New Zealands government was on the verge of wrapping up a deal to take back control of troubled national carrier Air New Zealand (ANZ). How Star Alliance member ANZ, privatised in 1989, will revert back to state control is unclear. The Government is prepared to use taxpayer's money but will not be buying shares from existing investors. Government control or ownership is seen as a short-term panacea to set a new course for the airline before control reverts back to the private sector.

4.4.5 Russia

  Russia has stepped in to allow its airlines to keep operating by providing up to $1 billion in insurance guarantees for covering war and terrorism-related risks. The Government guarantees were valid for 30 days and will be effectively available only for those airlines that already had cover for those risks before 11 September. There were no more than five Russian airlines engaged in such operations.

4.4.6 USA Airlines

  US airlines are once again facing the spectre of bankruptcy that has loomed periodically over the industry since it was deregulated in 1978. Fierce competition during the 1980s and 1990s caused a succession of airlines to seek protection from creditors under Chapter 11 of the US bankruptcy law.

  Both Eastern Airlines and America West filed for Chapter 11 in the wake of the Gulf War, which triggered a precipitous fall in passenger traffic that many airline analysts expect to be repeated after the attacks on the US.

  Some carriers, such as Continental Airlines, have sought protection on more than one occasion and successfully emerged to trade profitably, while others, such as Eastern, were ultimately liquidated. The laws have been used to restructure companies ahead of sale, such as that of TransWorld Airlines to American Airlines earlier this year.

  Many US carriers were already in loss before the attacks, hit by the slowdown in the US economy, the plunge in business travel, higher fuel prices and rising labour costs. The leading US carriers account for four of the world's top five and six of the top 10 ranked by passenger traffic, and the US Government does not want to see permanent damage, to their civil aviation capacity. The Bush administration has approved a $15 billion rescue package for the US airline industry, a move that European carriers feel could undermine fair competition across the Atlantic (see Appendix 3 for details). This comprises of $5 billion of direct aid and $10 billion of indirect support. However, Mr Bush and his senior advisers have balked at giving too much government help to the aviation industry, whose financial troubles clearly predated the terrorist attacks in New York and Washington. This is because if the government were too generous it would open the floodgates to bailout requests from many other industries.

  The final legislation requires that any airline receiving any of the $10 billion in federal loan guarantees give the government warrants, or options to buy, the company's common stock. That gave the government the opportunity to profit from an upswing in the airlines', something Paul O'Neill, the US Treasury Secretary, seized on in justifying the government's assistance.

  "I wanted the government to share in the future profitability of the airline companies—when that day comes—and get something in return for its investment," said Mr Corzine. (Jon Corzine, is a former co-chairman of Goldman Sachs, the junior senator from New Jersey, a staunch liberal Democrat.)

  However, one airline analyst has cautioned that a $15 billion US government bail-out package, approved on the 21 September, may not avert bankruptcies in the industry.

  "The aid package could be the trigger for Chapter 11 [bankruptcy] filings in situations where liquidity is questionable," said Jim Higgins of Credit Suisse First Boston. Some analysts said the longer-term outlook for those airlines that survive was very promising. As airlines have reduced capacity by grounding about 20 per cent of their flights, an eventual recovery in the economy could have a "breathtaking" impact on earnings, Mr Higgins said.

  According to a report published on the 12 November, the nine major US airlines have blown through most of Washington's $5 billion cash bailout, and their bleeding continues. The financial carnage is so bad that the industry could be headed for a major restructuring, with well-capitalised airlines already sizing up faltering carriers on their gates and facilities. The Financial Times reported on the 15 November that the US Treasury on the previous day had provided "the country's struggling airlines with more financial breathing space by allowing carriers to defer up to $4 billion in tax payments until January".

  Eligible carriers had previously been given a two-month deferral of ticket taxes due after the terrorist attacks on 11 September. Industry groups lobbied the Treasury two weeks ago to extend the deadline from 15 November to 15 January. Wednesday's decision could avert potentially severe cashflow problems as airlines await the second half of a $5 billion cash bailout programme, which they expect to receive before the end of December.

  "This gives you a bridge to pay your bills until the remainder of the government assistance comes through," said John Heimlich, director of economic research for the Air Transport Association.

  "If you have money in your pocket you earn interest on that money, and you can use it as backing to get private financing or loans," he added.

  Jim Higgins, a Credit Suisse First Boston analyst, said the temporary tax relief could avert Chapter 11 bankruptcy filings which might otherwise have happened before the end of the year. But he added: "By the middle of January, [the industry] is not out of the seasonal cash burn woods."

  The industry's liquidity position typically declines from the end of the third quarter, and begins to strengthen again in April.

  The timing of the tax payments, which amount to an estimated $1 billion per month for the industry, could have a significant impact on some weaker carriers' prospects. America West, which this week became the first large airline to apply for federal loan guarantees, had expected to pay nearly $50 million in taxes in the fourth quarter—almost as large as the $60 million in additional bailout funds it expected from the government.

  Mark Weinberger, assistant secretary for tax policy at the Treasury, said: "[The] Treasury understands the need to allow the airline industry, which was greatly affected by the 11 September attacks, more time in making deposits and payments of their federal excise taxes."

  Airline revenues are recovering more slowly than many analysts expected from the slump seen after 11 September. The Air Transport Association said this week that traffic in October was down 24 per cent year-on-year, which was an improvement from the 35 per cent drop in September. But the American Airlines crash on 11 September in New York is expected to have some further impact on demand.

  UBS Warburg said on Wednesday it expected an industry net loss of $6.4 billion for 2001, above its previous $5.6 billion estimate.

  Carriers' liquidity at the end of the third quarter stood at about $15 billion, it estimated, as airlines drew down bank facilities, deferred tax payments and received the first instalment of the $5 billion government grant.  USA Airports

  US airport operators are lobbying Congress for financial aid, claiming that the aviation crisis could cost them $3billion over the next year. The US bailout plan, agreed last week, concentrated on the nation's airlines, but airports are also suffering from the disruption.

  Not all airports will be affected equally, Hub airports with a very high percentage of connecting traffic, secondary hubs [and] airports that are served by weaker carriers are the most vulnerable to declines in traffic.

  The airports are also pressing for similar insurance cover to that offered to the airlines in last week's bailout. While insurance companies have raised the price of war risk insurance for airlines, they are cancelling it for airports so that it is not available at any cost.

4.4.7 Venezuela

  Creditors of Venezuelan carrier Avensa are calling for the re-opening of dormant bankruptcy proceedings against the company after Venezuela's president Hugo Chavez last week declined to recapitalise the ailing airline. Avensa is currently under governmental administration following its grounding and bankruptcy a year and a half ago.

4.4.8 Summary

  It can be seen that there have been various responses from governments, but there appears to be a distinct difference between the stance taken by the EU and the rest of the world. The most worrying concern for us is that if the reports of support given to US airlines are correct, and the Commission will not allow similar support. This will not result in a level playing and this is something we have been arguing for since the start of the crisis. The UK civil aviation industry is as much a strategic industry as farming and therefore should receive support from one or other the Government or the Commission, there should be no buck passing.


  We believe that the civil aviation industry is facing a very serious crisis and in order for the UK industry to survive action has to be taken. The following points summarise the action that the T&G would like to see pursued:

    —  A Compensation for the four days USA airspace was shut down.

    —  A level playing field in regard to state aid, including the USA.

    —  That airlines be allowed to keep the revenue from the Airline Passenger Duty, to assist with their cash flow.

    —  The Government assist the industry with the increased cost of security.

    —  An early positive statement on the future of Heathrow Terminal 5, which would give a positive boost for the industry.

November 2001.


AirlinePassenger data Load factor
Change on
previous year
Freight data (000)
Change on
previous year
Adria Airways62.9¸0.3 2,936¸14.3
Aer Lingus72.3¸4.9 113,219¸7.4
Air France77.7¸2.2 3,441,346¸6.4
Air Malta73.24.9 15,386¸31.5
Alitalia75.61.6 1,148,570¸8.7
Austrian Airlines69.1 1.0197,125¸7.5
British Airways PLC70.8 ¸1.62,994,571¸10.9
BMI British Midland57.2 ¸1.718,960318.8
Cargolux* 2,619,956¸2.6
Croatia Airlines53.8 2.11,6679.2
CSA-Czech Airlines71.7 1.518,447¸20.0
Cyprus Airways71.3¸0.3 29,738¸5.1
Finnair63.81.1 124,894¸42.7
Iberia71.9¸3.2 552,438¸0.8
Icelandair73.90.8 82,7721.8
Jugoslav Airlines56.3 6.72,644¸38.7
KLM Royal Dutch Airlines79.3 ¸1.12,911,537 -3.8
Deutsche Lufthansa AG74.4 ¸3.05,314,491 2.5
Luxair55.61.8 91¸24.8
Malev Hungarian Airlines61.9 ¸1.429,674¸16.4
Olympic Airways67.0 0.568,122¸24.3
Sabena70.00.6 325,011
SAS Scandinavian Airlines67.5 ¸2.3444,737¸10.2
Spainair65.5¸5.1 5,1127.0
Swissair74.7¸0.1 1,335,838¸7.8
Tap Air Portugal69.4 ¸5.2147,251¸5.1
Tarom-Romainian Air Trans61.2 1.86,863¸22.5
Turkish Airlines64.7 ¸3.4220,181¸15.6
AEA Total73.11.4 22,173,577¸3.5


AirlineCapacity cuts % Announced layoffsEmployees Region
Aer Lingus252,026 20,000Europe
AeroMexico10 Latin America
Afghanistan1,300 Asia Pacific
Air Afrique4,000 Africa
Air Canada209,000 45,000North America
Air New Zealand1,500 Asia Pacific
Air Transat800 North America
Air Winconssin15300 3,000North America
Alitalia2,500 Europe
Alaska 9,531North America
Aloha Airlines250 North America
America West2,000 12,187North America
American Airlines20 20,000112,320North America
Ansett500 Asia Pacific
Aseana Korea360 Asia Pacific
Austrian Airlines Group 800Europe
British Airways207,000 55,263Europe
British Midland20600 Europe
Canada 30001,500 North America
Continental2012,000 42,468North America
Corporate Airlines100 North America
Delta Air Lines2013,000 71,384North America
Express Airlines30650 North America
Gulf Air450 Africa
Frontier Airlines400 2,500North America
Hawaiian Airlines20 4303,524North America
Icelandair18273 2,550Europe
JetBlue 2,085
KLM152,500 27,523Europe
Korean101,000 Asia Pacific
Lufthansa825 Europe
Lan Chile10650 7,672Latin America
Mesa Air (corp.)700 4,000North America
Mesaba20740 North America
Mexicana1070 Latin America
Midway Airlines1,700 North America
Midwest Express15450 3,750North America
Northwest2010,000 51,551North America
Sabena5,000 Europe
SAS123,500 21,820Europe
Southwest 28,671North America
Spirit Airlines800 2,400North America
Sun Country Airlines 2501,300North America
Swissair5,363 18,159Europe
Turkish Airlines2,100 Europe
TSA20200 North America
United Airlines2020,000 95,327North America
US Airways11,000 42,652North America
Varig Brasil101,700 Latin America
Virgin Atlantic201,200 7,896Europe
TOTAL151,487 694,533



CarrierAugust 2001
ASMs (million)
(per cent)
Estimated aid
($ million)
American17.40019.56 880.2
United15.80017.82 802.1
Delta12.90014.58 655.9
Northwest9.50010.68 480.5
Continental8.1009.17 412.9
USAirways6.3007.07 318.1
Southwest5.8006.48 291.8
America West2.4002.72 122.4
Alaska1.8001.98 88.9
AmTransAir1.5001.74 78.4
Hawaiian0.6400.72 32.2
AirTran0.6100.68 30.7
American Eagle0.522 0.5926.5
Continental Express0.520 0.5926.4
Spirit0.4600.51 23.1
National0.4400.50 22.3
Frontier0.4380.49 22.2
JetBlue0.3900.44 19.8
Atlantic SE0.3500.40 17.9
Others2.9003.28 147.9
TOTAL 4,500.2

  Source: ITF.

Memorandum by Virgin Atlantic Airways Limited (AT 22)



  1.  Virgin Atlantic Airways welcomes this opportunity to present its views to the Transport Sub-Committee on the state of the air transport industry following the tragic events of 11 September 2001. In particular, Virgin Atlantic has below set out some details of:

    —  the direct costs of the terrorist action and the subsequent four day "ground stop";

    —  the medium-term economic and political impact of the attacks on the industry;

    —  the role of international subsidies and Government assistance; and

    —  the effect of the rules of ownership and control of airlines.

  2.  Virgin Atlantic is a full-service long-haul scheduled airline, and the UK's second largest scheduled airline. The company is prominent in the trans-Atlantic market, currently operating to nine US destinations and three points in the Caribbean[23], as well as operating to points in Africa[24]and Asia[25]. The economic impact of the aftermath of the 11 September attacks has been most keenly felt in the trans-Atlantic market and Virgin Atlantic is, therefore, well placed to provide information to the Committee on this matter.

Direct Costs of the Ground Stop

  3.  The four day "ground stop" imposed on all airlines by the US federal authorities in the immediate aftermath of the attacks on New York and Washington naturally had a massive effect on all carriers operating to and within the US. In Virgin Atlantic's case the direct cost of the "ground stop" amounted to around £20 million, a figure which includes such items as lost revenue, refunds to passengers, increased crew costs and hotel accommodation, aircraft parking charges etc. This figure does not include any element of longer-term cost increases associated with the new operating climate, or the losses of revenue from the fall off in passenger numbers that has followed the terrorist attacks.

Medium Term Economic and Political Impact

  4.  It is true that the general global economic slow down was already having a significant effect on the airline industry as whole prior to the events of 11 September. This was reflected in reduced passenger numbers on flights, especially in business class. Virgin Atlantic, in common with several other carriers, had already taken steps to react to this economic slow down and to ensure that it remained profitable. A cost reduction programme had been put in place and savings of £80 million identified.

  5.  Passenger numbers on trans-Atlantic flights have fallen rapidly as a direct result of the 11 September attacks, and forward bookings are at much lower levels than would normally be the case. British Airways have already announced that their trans-Atlantic bookings have fallen by 30 per cent. Overall, Virgin Atlantic has seen bookings fall by around a quarter. This drop in passenger numbers is greater than anything experienced in the Gulf War.

  6.  Following the attacks it was quickly evident that there would be a crisis of confidence in air travel and as a consequence a significant fall in passenger numbers. Virgin Atlantic reacted quickly to this, announcing on 17 September a series of measures to reduce capacity and further reduce costs. Virgin Atlantic has withdrawn from three markets (Chicago, Toronto and Athens), put on hold expansion plans for other routes (Washington, Hong Kong and Orlando), reduced capacity on other routes and held off developing new markets. Capacity and operations have, in fact, been reduced by around 20 per cent. This will mean the eventual grounding of Virgin Atlantic's entire Boeing 747-200 fleet and the loss of around 1,200 staff[26]. The need to make so many staff redundant was particularly painful, especially as Virgin Atlantic's staff have been such an important part of the airline's success. This is the first time in the airline's history that such cutbacks have had to be implemented.

  7.  Overall, we currently expect the impacts of the attacks and the fall off in passenger numbers to continue for much of the remainder of the financial year. Tragic events such as the loss of the American Airlines flight on 12 November can only further damage confidence in the industry.

  8.  Besides the continued loss of revenue over forecasts, operating costs are also increasing. New and improved or heightened security measures have added around £5 million to our cost base and further measures may be imposed on the industry by Governments on both sides of the Atlantic. The cost of Hull and War Risk insurance has increased by around £3 million. Further increases in insurance costs cannot be ruled out because the insurance market is still in a state of flux following 11 September.

  9.  Of course, the impact goes much wider than direct consequences on Virgin Atlantic, or other individual carriers. Aviation is a huge industry in the UK. It contributes around £10 billion per annum to the UK's GDP. It directly employs 180,000 people, with a further 200,000 employed in the supply chain and supporting roles. Inbound tourism, already badly affected by the Foot and Mouth epidemic, has seen a sudden drop in numbers. Next year Virgin Atlantic is to become the launch customer for the Airbus A340-600, with an order for 10 aircraft whose wings are made by BAe Systems and engines by Rolls-Royce. Virgin Atlantic is also one of the launch customers for the Airbus A380, the world's largest passenger jet, which will have significant input from companies in the UK. It is too early to say with any certainty whether these aircraft delivery schedules will be affected by the events of 11 September.

  10.  Some airlines, which were admittedly already in financial difficulties have been tipped over the edge by the consequences of 11 September. Swissair and Sabena have gone bankrupt, despite a significant cash loan from the Belgium Government in the latter case, and Canada 3000 has also announced that it is to cease operations. Others will follow with many commentators predicting that some US carriers will file for Chapter 11 protection over the next few months.

Government Assistance & Subsidies

  11.  The level of government assistance and direct subsidy to the airline industry varies dramatically from country to country. Some governments have done a great deal to assist their carriers in terms of cash handouts, loan guarantees, and assistance with insurance and security costs. Others have, to date, done very little. But even where the latter is true, there is still some doubt whether that will remain the case. Many observers expect several European States to make moves to assist their national flag carriers over the coming weeks and months, and some may already have taken indirect action. The same is also true in Asia.

  12.  Perhaps the most striking example of state assistance has been the US. The US Government has secured emergency legislation which has enabled it to set aside substantial funds to compensate US carriers for the losses which they have incurred as a direct result of the ground stop following 11 September, and the ongoing losses and costs which have flowed from the attacks. To date the total value of the aid set aside by the US Government for its carriers amounts to $18.5 billion (nearly £13 billion). This aid is broken up as follows:

    —  $5 billion in direct and immediate payments to airlines;

    —  $10 billion of Federal credit instruments (loan guarantees);

    —  $3 billion to help offset the substantial new costs related to increased security; and

    —  $500 million for research and development of new in-flight security systems.

  13.  In addition to the above, US carriers have also received significant assistance with insurance cover, with the US Government underwriting all war risk damage, both at home and overseas, plus covering increased insurance premium costs for a period of 180 days.

  14.  Finally, US carriers have also been granted a three month "holiday" on tax payments to the Federal authorities. Taxes will still be owed, but payments have been deferred in order to assist airlines with their cash flow.

  15.  Attached at Annex A is a detailed list of the cash payments made to US carriers by the US Government as of 7 November. It is Virgin Atlantic's view that the significant payments that have been made to carriers such as American Airlines, United, US Airways etc have had the effect of skewing competition in international markets. Carriers that would otherwise have been in serious financial difficulties have been thrown a substantial lifeline.

  16.  In Europe, the EC has endorsed aid to airlines in a number of areas including the underwriting of third party insurance risk, assistance with additional security costs, and compensation for losses due to the "ground stop". It remains to be seen how many Member States will utilise this facility.

  17.  The EC proposals are very modest when compared to the US package, but despite this, and the fact that the Secretary of State for Transport and Local Government has said that he will not allow the competitive position of UK airlines to be weakened against US carriers as a result of events outside of our control, the level of assistance from the UK Government has, to date, been strictly limited. UK Government assistance so far has been limited to help with insurance cover following the decision by the insurance industry to withdraw certain aspects of cover at the end of September. This assistance was welcome, and the UK carriers are currently working with the Government to establish a longer-term and more effective method of maintaining insurance cover in the absence of a return to normality in the insurance market.

  18.  In line with other UK carriers and BATA, Virgin Atlantic hopes that the UK Government will be willing to supply assistance at least in line with recommendations of the EC, especially if other European Governments take such measures to assist their carriers. If the UK Government fails to at least match the assistance that others are receiving, or are likely to receive, then the entire UK industry will be put at a competitive disadvantage.

Ownership and Control Rules

  19.  The current, crisis in the aviation industry, and the failure of several carriers, has highlighted the archaic airline ownership and control rules that exist throughout the world, primarily because of the system of bilateral air services agreements that regulate international air transport. For instance, EU rules stipulate that European airlines must be majority owned and controlled by non-EU nationals. In the US, foreign entities cannot own more than 25 per cent of the voting rights in a US carrier. Such bars to foreign investment do not exist in other industry, and there is no real reason for them to exist in the aviation industry.

  20.  Virgin Atlantic has long campaigned for the abolition of these outdated ownership and control rules and for true liberalisation in the aviation industry. Such rules are currently preventing the much needed consolidation of the European aviation industry. However, this is not an issue that can be dealt with unilaterally or bilaterally. It can only be tackled at a multilateral level. Handing a negotiating mandate to the European Commission for Trans-Atlantic Common Aviation Area would be a first and very significant step in that direction. The US and the EU represent the two largest aviation markets in the world. Uniting them within a common aviation area would spell the end for the bilateral system and result in increased competition and consumer gains. Industry consolidation could then take place as it does in any other industry, subject only to normal competition law.

Virgin Atlantic Airways Limited

November 2001


List of Air Carrier Payments

  As of Wednesday, 7 November, payments have been transmitted to the following air carriers in accordance with sections 101 and 103 of the Air Transportation Safety and System Stabilization Act:

  Total Payments: $2,430,538,821

  Total Carriers Paid: 112

Carrier NamePayment Amount
40-Mile Air1,516
Air Nevada Dba Pacific Wings4,744
Air Transport International144,114
Air Wisconsin Airlines4,687,931
Airborne Express8,816,120
Airtran Airways Corp15,125,739
Alaska Airlines, Inc45,624,024
Alaska Seaplane Services1,688
Allegheny Airlines1,828,077
Allegiant Air61,549
Aloha Airlines, Inc4,317,060
Aloha Island Air83,804
America West Airlines, Inc60,281,956
American Airlines, Inc359,419,230
American Eagle Airlines, Inc12,844,310
American Trans Air, Inc32,293,436
Amerijet International588,787
Arrow Air, Inc2,050,000
Astral Aviation Dba Skyway Airlines738,844
Atlantic Coast Airlines5,722,621
Atlantic Southeast Airlines8,636,852
Atlas Air, Inc10,122,443
Big Sky Airlines, Inc253,253
Cape Air151,254
Capital Cargo International Airlines454,154
Casino Express245,454
Champion Air5,003,000
Chautauqua Airlines, Inc2,834,737
Chicago Express307,743
Colgan Air407,277
Comair, Inc10,347,727
Continental Air Lines, Inc191,212,249
Continental Express Airline12,267,855
Continental Micronesia9,133,488
Corporate Airlines241,751
Daystar Airways dba Nevis Express777
Delta Air Lines, Inc326,985,791
DHL Airways2,531,424
Eagle Canyon Airlines dba Scenic Air238,379
Edelweiss Holdings Dba Rio Grande5,324
Era Aviation204,531
Evergreen International, Inc7,189,975
Executive Airlines1,850,397
Express Airlines I2,356,531
Express One International413,843
Express.Net Airlines1,301,625
F.S. Air Service906
Falcon Air Express, Llc182,836
Federal Express Corp100,679,072
Florida West International819
Flying Boat, Inc dba Chalk's Ocean Air 30,282
Frontier Airlines, Inc10,118,474
Frontier Flying Service77,505
Gemini Air Cargo Airways6,404,500
Grand Canyon Helicopters340
Grant Aviation42,848
Great Lakes Aviation, Ltd982,220
Gulfstream International Airlines496,091
Hawaiian Airlines, Inc18,010,127
Horizon Air5,031,723
Island Air Service775
Jetblue Airways8,395,378
Kalitta Air Llc16,250
Kenmore Air Harbor18,045
Kitty Hawk Aircargo90,715
L.A.B. Flying Service Inc11,201
Larry's Flying Service6,811
Messa Airlines5,775,980
Mesaba Airlines6,571,704
Miami Air International1,173,661
Midwest Express Airlines7,530,299
National Airlines11,030,915
North American Airlines1,013,794
Northern Air Cargo, Inc235,102
Northwest Airlines, Inc248,520,230
Omni Air Express4,345,975
Ozark Airlines, Inc58,085
Pace Airlines141,100
Pacific Island Aviation33,954
Pan American Airways1,314,442
Piedmont Airlines2,607,483
Planet Airways Inc180,187
Polar Air Cargo Airways1,277,000
Psa Airlines, Inc1,260,382
Reliant Airlines101,906
Ryan International1,312,404
Samoa Aviation, Inc16,988
Seaborne Aviation, Inc13,322
Shuttle America Corporation291,763
Sky West Airlines, Inc5,656,835
Southeast Airlines398,033
Southern Air Inc724,673
Southwest Airlines, Co144,373,750
Spirit Air Lines10,799,992
Sun Country Airlines8,207,621
Sunworld International Airlines563,727
Taquan Air2,671
Tradewinds Airlines817,604
Trans States Airlines2,323,213
Trans World Airways, LLC78,047,235
Transmeridian Airlines419,936
United Air Lines, Inc390,671,788
United Parcel Service24,556,636
Us Airways, Inc159,746,129
Usa Jet Airlines, Inc110,268
Vanguard Airlines, Inc4,579,896
Vieques Air Link, Inc4,013
Warbelow's Air Ventures40,483
Wings Of Alaska15,000
World Airways, Inc3,218,730

  The payments represent approximately 50 per cent of the estimated compensation payments under the Act for these carriers.

  Air Carrier Loan Guarantee Programme: The regulations on the air carrier loan guarantee programme issued by the Office of Management and Budget (OMB) on 5 October 2001, are available by selecting the "Documents" link at the following Department of the Treasury web page:

16   Air transport movements are landings or take-offs of aircraft engaged on the transport of passengers, cargo or mail on commercial terms. All scheduled movements, including those operated empty, loaded charter and air taxi movements are included. Back

17   A terminal passenger is a passenger joining or leaving an aircraft at the reporting airport. A passenger travelling between two reporting airports is counted twice, once at each airport. A passenger who changes from one aircraft to another, carrying the same flight number (change of gauge) is treated as a terminal passenger, as is an interlining passenger. Back

18   Freight is the weight of property carried on an aircraft including for example, the weight of vehicles, excess baggage and diplomatic bags, but excluding mail and passengers' and crews' permitted baggage. Freight in transit through the airport on the same aircraft is excluded. Back

19   Load factor % is calculated by dividing Traffic Mill Revenue Passenger-Kms by Capacity mill. Available Seats-Kms. Back

20   Freight traffic is measured in Revenue Freight Tonne-Kms. Back

21   Load factor per cent is calculated by dividing Traffic Mill Revenue Passenger-Kms by Capacity mill. Available Seats-Kms. Back

22   Freight traffic is measured in Revenue Freight Tonne-Kms. Back

23   New York-JFK, Newark, Boston, Washington, Miami, Orlando, Las Vegas, San Francisco, Los Angeles in the US, Antigua, Barbados and St Lucia in the Caribbean. Back

24   Lagos, Cape Town and Johannesburg. Back

25   Delhi, Tokyo, Shanghai and Hong Kong. Back

26   73 per cent have taken voluntary redundancy. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 4 July 2002