1122 Longworth House Office Building – Washington, D.C. 20515 – (202) 225-1880 (phone) & (202) 225-5914 (fax)

Mr. Chairman, I am concerned about the condition of the airline industry and the progress we’ve made over the last year. As one of the 435 members of the frequent flyer focus group called Congress, I understand how important the aviation industry is to our country’s economy and mobility.

This committee has worked in a bipartisan way to respond to the paradigm shift of last year when commercial airliners were turned into weapons.

I supported the $5 billion stabilization package we passed to help carriers recover from the federally mandated ground stop. I also supported the $10 billion loan guarantee as part of this package, but I had concerns about the federal government picking winners and losers in an industry that was already hurting before September 11^th of last year.

As airline CEOs, you are here today because you have concerns. Well, I have concerns, too. I am concerned about people at home in Northern California being furloughed from their jobs with airlines. I am concerned about airports in the Bay Area not being able to afford the cost of implementing new security measures because they have to reinforce the floors just so the new screening machines don’t fall through them.

I can’t use American taxpayer dollars to fix things that shouldn’t be fixed because you have a bad business model.

Congress should not be putting its thumb on the scale to keep bad business models afloat.

However, since the Air Transportation Stabilization Board has only actually approved one loan over the last year, we may need to re-examine their loan criteria. These loans were meant to help airlines bridge the gap until the American public regained their confidence in air travel. Congress has already taken action to establish a safety net, and loans that are not being issued are not helping the airlines as Congress intended. I know ten airlines, including United, have applications pending.

The Stabilization Board should take action on these requests immediately.

There is no question that the airline industry is in trouble. But there is one question we must ask: How much should the federal government intervene in an industry that was soaring during the economic prosperity of the 90s and is now faced with businesses cutting travel budgets due to a national recession?

Given the relative success the Southwest business model has shown over the last year, another question we must pose is how economically viable the ‘hub and spoke’ system is over the long term and through economic downturns.

There is no doubt the terrorist attacks have had a chilling effect on air travel and all the tourism industries.

Having spent fourteen years on Wall Street, I understand that since all the airlines except Southwest have been downgraded to junk bond status, it is virtually impossible to retain private capital to help stop the red ink.

I also understand the private risk insurance industry is incapable of providing competitive rates for war risk insurance. I believe it is appropriate for the federal government to be a backstop to help cover airlines’ terrorism insurance costs, and I would support extending this protection.

Mr. Chairman, as you’ve heard me say before, I believe that fortifying the cockpit doors is one of the most important security challenges we face. I am glad the FAA has finally approved a design, and I support providing a federal investment to carriers to install these doors as soon as possible. This federal investment will actually save money because it will eliminate the need to fund a costly program to arm pilots.

Finally, Mr. Chairman, I am concerned that the airline industry told this committee that they had no problem continuing to pay their share of security costs, and are now asking to be relieved of this obligation. We agreed that airport security would be a shared burden, with passengers paying a security fee.

I understand that homeland security has now become a function of the federal government, but we must find a way to ensure that we can afford the best security possible, which will in turn restore the confidence of the flying public and help with the current capacity problems.

The aviation industry is critical to our economy and we must find a responsible way to help it recover from the tragedies of last year without intervening in normal market corrections.

Thank you, Mr. Chairman. I look forward to hearing from today’s distinguished panelists.