GA may get own form of gov’t assistance

 - May 27, 2008, 9:37 AM

Now that Congress has completed its $15 billion bailout of the airlines as a result of September 11, attention is finally turning to the small aviation businesses that lost and continue to lose money.

On December 13 the House aviation subcommittee unanimously approved H.R.3347, The General Aviation Industry Reparations Act of 2001, which authorizes $5 billion in loan guarantees for GA “entities” and compensation for direct losses to these entities up to a total of $2.5 billion.

“General aviation has been a forgotten victim of September 11,” said Rep. John Mica (R-Fla.), chairman of the subcommittee and chief sponsor of the bill. “Out of fear, out of haste, out of caution, the federal government closed down major portions of our National Airspace System to general aviation flights.”

In addition to the loans and compensation for losses as a result of any federal ground-stop order or any subsequent order that continues or renews such a stoppage, it would also provide compensation for incremental losses incurred beginning on September 11 and ending on December 31 last year. Further, it would make general aviation entities eligible for war-risk insurance and expands the definition of GA entities to include GA airports.

H.R.3347 must still be approved by the entire House Transportation and Infrastructure (T&I) Committee before it can be submitted to the House floor for a vote. T&I chairman Don Young (R-Alaska), an original cosponsor of the bill, and Rep. James Oberstar (D-Minn.), the ranking minority member of the full committee, are both in agreement that GA has a good case for compensation, although Oberstar would like it to include aid for displaced workers.

Mica said that unlike the airlines, which were grounded for a few days, GA flights around major metropolitan areas were prohibited for weeks. In fact, he said, “countless general aviation businesses around Boston, New York and Washington are still prohibited from conducting business.”

Mostly ‘Mom and Pop’ Shops

Most of these are small, locally owned enterprises that Mica described as “mom and pop” shops. He said that many have already closed their doors and hundreds more may soon follow.

General aviation trade groups hailed the House vote. “Most of these companies are too small to have significant cash reserves, are not publicly traded and do not have access to capital markets,” said Ed Bolen, president of the General Aviation Manufacturers Association. Added National Air Transportation Association president James Coyne, “It is simply unbelievable that general aviation operators, more than three months after the September 11 attacks, continue to have airspace restrictions imposed on them in certain locations by the federal government and have yet to see a dime in financial relief.”

AOPA sent a letter to every member in the House, requesting that they sign on as co-sponsors. Members of the General Aviation Coalition testified before Congress that the losses incurred by GA small businesses do not appear to qualify for relief under any established federal law or program.

In October, Rep. Bill Shuster (R-Pa.) introduced H.R.3007, The General Aviation Small Business Relief Act of 2001, and Sen. Tom Harkin (D-Iowa) offered a similar–but not identical–version in the Senate: S.1552, The General Aviation Small Business Assistance Act. Both provide grants and loans through the Small Business Administration for losses incurred as a result of the attacks. Although there had been no direct action on either bill by early last month, there was an unsuccessful attempt to add H.R.3007 as an amendment to the aviation security bill, which was signed into law in mid-November.

S.1552 complements The American Small Business Emergency Relief and Recovery Act of 2001 (S.1499) introduced by Sens. John Kerry (D-Mass.) and Christopher Bond (R-Mo.). Its companion bill in the House, H.R.3073, was sponsored by Rep. Donald Manzullo (R-Ill.).

The Harkin bill (S.1552) would provide for direct “grants” to GA small businesses affected by the shutdown of airspace, whereas the Kerry-Bond bill would grant disaster “loans.” Terms of these loans include deferred payments and forgiven interest for two years.

NATA asked its members to call their House representatives immediately, asking them to cosponsor Mica’s bill. “It is imperative that NATA members contact their House representatives to support this measure so that it garners support for consideration as an amendment to the economic stimulus package currently being considered by Congress,” NATA said.

The association said that members should stress that no financial relief has been provided to America’s GA aviation businesses as a result of the airspace restrictions mandated by the federal government, describe the amount of revenue that they lost and the employee furloughs that have occurred or are imminent, and state that many aviation businesses throughout the country have furloughed employees; and in some cases are being operated only by the owners of the company.

NBAA pointed out that Mica’s bill authorizes the Air Transportation Stabilization Board to consult with the Small Business Administration to enter into agreements to issue federal credit instruments if the obligor is a general aviation entity for which credit is not reasonably available at the time of the transaction and the intended obligation by the obligor is prudently incurred.

It also requires the President to give priority compensation to small businesses based on the length of time that the business has been unable to operate as result of restrictions placed after September 11.