Runway inflation: how flying wedding chapels and Alaskan bush pilots landed a share of the airline bailout - attack on America, 2001, how some airlines benefited from the disaster, thanks to handouts of taxpayer's money by Congress

Washington Monthly, March, 2002 by Stephanie Mencimer

IN THE DAYS IMMEDIATELY FOLLOWING September 11, members of Congress took to the airwaves and the floor of the Capitol with dire warnings that if Congress did not act quickly, the American airline industry would go belly-up, bringing the nation's business to a halt. The major airlines were estimated to be losing $300 million a day. Sen. John McCain (R-Ariz.) declared: "The effect on the airlines of the September 11 terrorist attack put Congress in the unenviable position of having to take immediate action to prevent the collapse of the aviation industry as a result of the federally ordered grounding of all aircraft."

With lightning speed, virtually no hearings, and almost unanimous support, Congress swept into action. The result was a bill designed to protect the nation's "essential air service," with a package of loan guarantees and outright cash grants, totaling $15 billion. In supporting the bill, Sen. Charles Grassley (R-Iowa) said that he was pleased that the Senate was "moving with great speed to insure the short-term stability of our nation's airlines.... the Senate has come together for the good of this great nation to do the right thing. That is, to keep the airlines in the air."

Despite the insistence of members of Congress that the airline bailout was of vital national importance, it was immediately decried as a boondoggle for big business. And why not? Companies like American Airlines and Northwest lobbied hard for its passage and are indeed its primary beneficiaries; $3.1 billion had already been paid to these big firms by the end of January, and billions more are still to come.

What most people don't realize, though, is that the bailout bill was also a boondoggle for hundreds of little aviation companies, far from the terrorist-crippled corridors of New York and Washington, whose business activities hardly qualify as critical public transport. Thanks to the aviation industry's friends in Congress, the term "essential air service" now includes practically every tour bus with wings.

Hub and Stroke

When Japanese businessmen want to take a vacation in the great American outdoors, they frequently seek the help of Warbelow's Air Ventures. Warbelow's is a charter service that, among other things, delivers mail to remote Alaskan villages and takes hunters and fishermen on guided trips into the Alaskan bush so they can shoot grizzlies and caribou. It also happens to be an unexpected beneficiary of the federal airline bailout. While it can't match the losses of Delta Airlines, Warbelow's has so far received $95,000 from the federal bailout fund.

Even company president Art Warbelow was a little surprised to hear that he'd been the recipient of so much government largess. "$95,000? Wow!" he exclaimed. Warbelow says his company was closed down for only two days after the terrorist attacks. He says his firm makes about $20,000 a day on average, so his payment more than covers the loss. So how did he come into such good fortune? Warbelow says the local industry group, the Alaska Air Carriers Association, prodded him to fill out some paperwork. Warbelow says he wasn't even required to submit any documentation with the seven-page form.

Along with Art Warbelow, helicopter companies have joined the rush for federal funds. At least 17 helicopter firms have claimed $2.6 million in compensation. Many of those companies are tour operators like Sundance Helicopters, which received $37,906, and which gives tours over the Grand Canyon. Las Vegas Helicopters specializes in tours of the Strip and airborne wedding services. (For an extra $175, you can be married in the air by Elvis.) It got $4,572, a paltry sum, but still ... Firms from Hawaii and Florida also dominate the list.

Other helicopter companies include Aircam National Helicopter Services in Englewood, Colo., which provides helicopters for film and video stunts, aerial photography for real-estate site surveys, as well as some corporate charters. (The photo on the web site looks like an ad for a Warren Miller ski movie.)

The helicopter firms getting the biggest hand-out, though, service the gas and oil industries in the Gulf of Mexico and Alaska. Included among the recipients of nearly $4 billion in federal aviation payments are companies such as Petroleum Helicopters, a chopper service that flies employees back and forth from off-shore oil landings. Petroleum Helicopters has so far received a whopping $688,785. Air Logistics, another oil-and-gas-related firm, received $450,836.

Because these companies cater to corporate clients rather than the general public, it's hard to see how they might qualify for federal aid. Some, too, apparently contract with the government for their services, making their businesses fairly recession-proof. But according to the U.S. Department of Transportation, it's all perfectly legal for them to claim bailout money, which they never have to pay back.

Still, you'd think that, given its proclivity for distinguishing between the "deserving" and the "undeserving" before giving out far more stingy federal aid to the poor, Congress would have made some distinctions when it came to the airline bailout. Even excluding, say, aircraft that fly in circles or that don't land on runways, might have narrowed the field a bit.