.
The act was designed as a multi-faceted piece of legislation that aims, among other things, to: .
Compensate airlines for their direct and incremental economic losses resulting from the initial disruption of service and operations following the Sept. 11 attacks up to an aggregate of $ 5 billion; .
Authorize the issuance of federal credit instruments up to an aggregate of $ 10 billion and thereby assist airlines in gaining access to capital markets; .
Authorize the reimbursement of increased insurance costs, together with the provision of insurance and U.S. government indemnity against liability for loss or damage arising out of terrorist acts affecting U.S. aircraft.
Disappearing revenue.
Northwest, Continental, Delta and American lost $2.1 billion during the first three months of 2003 (Fedor and Wieffering). Despite a revenue slump that is now almost two years old, costs remain stubbornly high.
At Northwest, wages and benefits consumed 46.4 percent of all revenue during the first quarter, up from 42.4 percent a year ago. At Delta and American, labor rose to nearly 52 percent of revenue (Fedor and Wieffering).
Mark Gerchick, an aviation consultant based in Washington, D.C., said the airlines are focusing on cutting costs because their revenue problems won't disappear anytime soon (Fedor and Wieffering). He pointed to the nation's economic slowdown, ongoing passenger fears over terrorism and a pricing model that discourages business travel. Many companies refuse to pay fares that are five to six times higher than leisure fares.
The virus called severe acute respiratory syndrome (SARS) also continues to depress travel, and it poses the biggest problem for Northwest and United, which have several routes to Asia. The SARS-related concerns "look like they are going to get worse rather than better in the short term," Gerchick said. "Certainly that could add to a sense of urgency about getting whatever [labor] cuts are going to be made" (Fedor and Wieffering).
