US airline bailout needed further planning - claim

Airline Industry Information, March 19, 2002

AIRLINE INDUSTRY INFORMATION-(C)1997-2002 M2 COMMUNICATIONS LTD

An aviation expert who supported the multibillion-dollar bailout for the US airline industry last year has conceded that the aid package could have been planned better.

Darryl Jenkins, director of the Aviation Institute at George Washington University, now believes that the USD5bn payout to compensate air carriers for lost business should not have been rushed through without more conditions attached.

"Longtime structural problems could have been better addressed through Chapter 11 than a bailout," he said.

Jenkins is concerned that major US carriers have less incentive and leverage to tackle fundamental problems, such as high labour costs, now that the intense financial pressure has been lifted, The Associated Press reported.

Other industry experts and some economists are reportedly in agreement with Jenkins.

Clifford Winston, an economist at the Brookings Institution in Washington, suggests that the government should have cut airfare taxes instead, a move that would have spurred revenues by enabling carriers to make more profit out of each ticket sold.

((Comments on this story may be sent to aii.feedback@m2.com))