
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, January 7, 1994                   TAG: 9401070118
SECTION: BUSINESS                    PAGE: A-5   EDITION: METRO 
SOURCE: Journal of Commerce
DATELINE: WASHINGTON                                LENGTH: Medium

REFORM WOULD DEREGULATE AIR CARGO

The Clinton administration Thursday called for deregulation of the global air-cargo marketplace and said it would consider using funds traditionally allocated for specific use at airports for a wider range of transportation-related activities.

The proposals were included in what the White House touted as the most sweeping plan for industry reform since the airlines were deregulated in 1978. As expected, the administration adopted about 80 percent of the recommendations made last August by a federal panel created to revitalize the industry.

Also, as expected, the administration rejected any plan to offer tax relief to the airlines, saying the industry will gain from a rebounding economy and it should reap about $1.4 billion in financial benefits from incentives included in last year's budget bill.

"I believe the core elements of a strong revival for the U.S. airline and aircraft industries are emerging," Secretary of Transportation Federico Pena said.

Among the administration's recommendations:

Restructuring the nation's air-traffic control system into a government corporation. A committee of administration officials is drafting a plan to reorganize the troubled system, which is facing massive cost overruns in its attempts to modernize. However, key lawmakers oppose such a move.

Prohibiting the diversion of airport funds for non-airport use. Attempts by the city of Los Angeles to reroute airport funds for the hiring of additional police and firefighters sparked a conflict that almost shut down Los Angeles International Airport.

Allowing government agencies that have a stake in a bankrupt carrier's reorganization to serve on creditors' committees.

Writing into law recent court decisions protecting the right of a secured creditor to retake leased equipment 60 days after the filing of a bankruptcy petition, if the bankrupt entity fails to make lease payments or doesn't fulfill other obligations. The change would cover maritime and railroad leases, as well as leases covering aircraft equipment, the report said.

Requiring airlines proposing a merger, acquisition or route sale to furnish to the Department of Transportation any plans they have for protecting potentially displaced workers.

The administration said it might be able to reach "sectoral air-cargo service agreements" worldwide, either on a bilateral or multilateral basis.

Success in this area will hinge largely on talks with the European Union aimed at deregulating the transatlantic air-cargo market. Those talks are scheduled to start within the next few weeks.

Although the administration rejected the idea of diverting airport revenue for non-airport use, it said it might allow those funds - which are user fees paid by passengers and shippers - to be used to improve ground access, expand intermodal terminals, defray the costs of transport planning functions on the state and regional levels and help airlines cope with the cost of meeting federal regulations for quieting noisy aircraft.

by CNB