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Bailout: Airlines vs. airports

Plane landing in sunset

Airlines and airports reeling from the coronavirus-related loss of passenger traffic and flights are seeking immediate relief from governments. And they support aid for each other with the knowledge that the aviation industry is interdependent.

But the harmony ends with airlines seeking a holiday from taxes and other charges that go to airports around the world to help pay for infrastructure, security and other functions.

In the United States, Congress could pass a major financial lifeline for airlines as part of a broader economic stimulus package as soon as today. How the money is allocated was still being ironed out late Tuesday.

Passenger and cargo airlines want $58 billion in direct cash infusions, loans and loan guarantees. In addition, they are asking for rebates from federal excise taxes paid to the aviation trust fund in the first quarter and the repeal of all taxes, including on tickets, cargo and fuel, through at least the end of 2021.

The aviation trust fund pays for construction and safety improvements at airports, as well as technological upgrades for the air traffic control system. One of the accounts that money goes to is for grants-in-aid for airports to support current and future needs.

Airports say they are already losing revenues from landing and parking charges paid by airlines, and passenger service and security charges paid by passengers. Unlike airlines that cancel flights and scale their fleets, airports’ assets are fixed.

Airports worldwide are projected to lose $4.3 billion in revenue in the first quarter, most of it in Asia, according to the Airports Council International. Airlines, by contrast, are projecting up to $252 billion in full-year revenue losses if borders are closed for up to three months.

Airport authorities, who are seeking $10 billion to prevent defaults that would raise future borrowing costs and expanded eligibility for tapping the trust fund, say a rescue plan shouldn’t benefit one industry segment at the expense of another.

“Airports rely heavily on airport charges to fund their operating and capital costs and operators find themselves under intense pressure during periods of traffic decline. Airport revenues must be sufficiently protected to ensure safe and sustainable operations,” ACI said in a statement.

Airlines are also seeking blanket relaxation through October of rules governing takeoff and landing slots at congested airports. Airlines must use 80% of their allocated slots under normal circumstances or risk losing them the following season.

ACI says it supports suspending airport slot usage through June 30, with any extension to be determined on a case-by-case basis using hard data.

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