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GAO-04-406R 1 (2004-03-12)

handle is hein.gao/gaocrptapwx0001 and id is 1 raw text is: ~GAO Accountability * Integrity Reliability United States General Accounting Office Washington, DC 20548 March 12, 2004 The Honorable John McCain Chairman The Honorable Ernest Hollings Ranking Member Committee on Commerce, Science, and Transportation United States Senate The Honorable Trent Lott Chairman The Honorable John D. Rockefeller, IV Ranking Member Subcommittee on Aviation Committee on Commerce, Science, and Transportation United States Senate Subject: Summary Analysis of Federal Commercial Aviation Taxes and Fees For 2001 through the third quarter of 2003, the U.S. airline industry reported operating losses of $20.7 billion. A number of factors-including the economic slowdown, a shift in business travel buying behavior, and the aftermath of the September 11, 2001, terrorist attacks-contributed to these losses by reducing passenger and cargo volumes and depressing fares. To improve their financial position, many airlines cut costs by various means, notably by reducing labor expenditures and by decreasing capacity through cutting flight frequencies, using smaller aircraft, or eliminating service to some communities. Carriers have also reduced some airfares to encourage travel. Despite these efforts, several airlines filed for bankruptcy protection. It remains to be seen when the industry will emerge from this downturn. In response to the industry's financial condition, Congress has provided several forms of financial relief. In September 2001, Congress passed the Air Transportation Safety and System Stabilization Act,' which authorized payments of up to $4.5 billion in pretax cash assistance to reimburse air carriers for losses incurred as a direct result of the 4-day government shut-down of air traffic and incremental losses stemming GAO-04-406R Aviation Taxes and Fees 'P.L. 107-42.

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