17 New Eng. L. Rev. 807 (1981-1982)
Aircraft Financing and the Government: The Federal Aviation Administration's Loan Guarantee Program

handle is hein.journals/newlr17 and id is 835 raw text is: Aircraft Financing and the Government:
The Federal Aviation Administration's
Loan Guarantee Program
by Richard A. Smith*
The Federal Aviation Administration's (FAA) Loan Guarantee
Program initially was enacted as a means to allow smaller airlines
to obtain the necessary financing to replace their aging fleets and
serve the smaller communities. Since airline deregulation, however,
it is arguable that even the largest air carriers may qualify for loan
guarantee assistance. In this Article, the author traces the statutory
and regulatory framework of the loan guarantee program. The
priority system established by the FAA is discussed. In summary,
the author concludes that if all air carriers are now eligible for such
federal assistance, then the present priority system should be reap-
praised, taking into consideration that servicing the needs of
smaller communities for rapid and efficient air service remains a
major purpose of the program.
INTRODUCTION
With the advent of airline deregulation, segments of the airline in-
dustry have become intensely competitive. By September of 1981, the
Civil Aeronautics Board (CAB) had eliminated most regulatory barriers
to carriers which sought to establish new routes or service within the
continental United States. Consequently, the largest airlines, termed
major system air carriers, are encountering intense competition in many
of their traditional routes to large cities by the smaller national airlines
and a newly created class of regional feeder carriers. This competitive
effect may be attributed in large part to the Airline Deregulation Act of
1978,' which revived and broadened a dormant federal authority to
* Assistant Chief Counsel, Federal Aviation Administration, A.B., Colgate University; LLB,
Duke University; LLM, New York University. The views expressed in this Article are the author's
own, and are not intended to represent the views of his agency or any other agency of the federal
government.
1. Pub. L. No. 95-504, 92 Stat. 1705 (1978).
807

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