TSA Allocates $2.3 Billion to U.S. Carriers to Offset Security Costs

The Transportation Security Administration (TSA) sent out letters to 66 U.S. air carriers today informing them that their share of $2.3 billion will be electronically transferred into their accounts this week. The funds are for expenses and revenue forgone related to aviation security and are required by law to be disbursed by May 16, 2003.

"Air travel is a vital part of our nation's economy and a key aspect of the quality of life of Americans," said James M. Loy, Administrator of TSA. "Today, we are assisting the airlines for costs related to aviation security. Congress has taken an important step to support this critical part of our economy and TSA has once again played its part and met its mandate."

The $2.3 billion was distributed in proportion to the amount of security fees that eligible carriers have paid to TSA since February 2002. An additional $100 million has been set aside by Congress to compensate airlines for costs associated with reinforcing cockpit doors. TSA is coordinating the disbursement of this funding with a similar but already established program at the Federal Aviation Administration (FAA).

Loy cautioned that the program was "not simply a cash hand-out for airlines to restore them to economic health".

"In order to receive this money, Congress has required that the air carriers report how they allocated the funds to offset operating expenses and that in certain cases air carriers must sign agreements with TSA limiting the amount of compensation their top executives receive," Loy said.

Nine of the 66 carriers to receive funds were required to sign agreements limiting their executive's compensation. Under the law, airlines that flew commercial trans-Atlantic or trans-Pacific flights with more than 85 seats were required to agree to limit their executives' compensation to amounts equal to the executives' salary in the last fiscal year. The airlines are: American, American Trans Air, Continental, Delta, Northwest, Planet Airways, United, U.S. Airways, and World Airways.

The statute also suspends from June 1 through September 30 the per leg security fee that has been charged to airline passengers since February 2002. In addition, a separate fee charged to airlines has also been suspended for the same period. These fees help provide the government with funds that are used to implement security measures at airports. The suspension of these fees is expected to save airline passengers and airlines an estimated $700 million.