Aviation Revitalization Act of 1993

Summary: Aviation Revitalization Act of 1993 - Amends the Federal Aviation Act of 1958 to authorize the Secretary of Transportation (Secretary) to guarantee loans to eligible air carriers to finance the acquisition of new aircraft and encourage the retirement of older or Stage two aircraft.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Aviation Revitalization Act of 
1993''.

SEC. 2. DECLARATION OF POLICY.

    Congress finds and declares the following:
            (1) The United States commercial airline industry is 
        currently suffering severe financial distress.
            (2) Sustained record losses and excessive debt burdens are 
        causing air carriers to cancel new aircraft options and orders 
        which, in turn, is threatening the economic viability of the 
        United States aerospace manufacturing industry.
            (3) Many air carriers are increasingly unable to obtain 
        financing at reasonable interest rates for purchasing new 
        equipment.
            (4) The inability of many air carriers to acquire new, 
        quieter, more fuel efficient Stage 3 aircraft may jeopardize 
        the planned phaseout of noisier Stage 2 aircraft.
            (5) A Federal loan guarantee program should, therefore, be 
        established to support the financing of new aircraft, or new 
        aircraft components, in a way that assures the phasing out of 
        less fuel-efficient, noisier, and older aircraft at the same 
        time.

SEC. 3. AUTHORIZATION TO GUARANTEE FINANCING OF NEW AIRCRAFT.

    Title XI of the Federal Aviation Act of 1958 (49 App. U.S.C. 1501 
et seq.) is amended by adding at the end the following new section:

``SEC. 1119. FINANCING OF NEW AIRCRAFT.

    ``(a) Authorization of Loan Guarantee Program.--The Secretary is 
authorized to guarantee loans for the financing of new aircraft, or new 
aircraft components, for use by air carriers that meet the terms and 
conditions set forth in subsection (b) and that agree to pay (directly 
if the carrier is the loan guarantee recipient, or indirectly if 
another person is loan guarantee recipient) subsidy fees assessed under 
subsection (e). Subject to subsection (b), such guarantees may be made 
with respect to--
            ``(1) loans to an air carrier that will use such new 
        aircraft or such new aircraft components; or
            ``(2) loans to a person purchasing such new aircraft, or 
        such new aircraft components, for lease to and use by an air 
        carrier.
    ``(b) Terms and Conditions.--A loan guarantee under this section 
shall be subject to the following terms and conditions:
            ``(1) The loan guarantee must lead to the delivery of new 
        aircraft, or new aircraft components, to an air carrier 
        certificated under part 121 of title 14, Code of Federal 
        Regulations, and such delivery shall occur no later than 
        December 31, 1999.
            ``(2) The loan guarantee must be made for the purpose of 
        financing the acquisition of new aircraft, or new aircraft 
        components, that comply with Stage 3 noise standards.
            ``(3) The loan guarantee shall only be available for the 
        purchase of new aircraft, or new aircraft components, from 
        companies that both--
                    ``(A) publish independently audited financial 
                disclosure information and financial results; and
                    ``(B) also are domiciled in countries that comply 
                with all major international agreements governing 
                aerospace trade, including but not limited to the GATT 
                Civil Aircraft Agreement, the GATT Subsidies Code, the 
                United States-European Community bilateral aircraft 
                agreement, the OECD Large Aircraft Sector 
                Understanding, and bilateral air services agreements 
                with the United States.
            ``(4) In the case of any air carrier taking delivery of a 
        new aircraft financed under this section which owns or operates 
        either aging aircraft or Stage 2 aircraft, such air carrier as 
        borrower or lessee must, except as provided in paragraph (5), 
        agree that, after April 1, 1993, it did remove from service, or 
        that no later than the sixtieth day after the aircraft being 
        financed is placed on the air carrier's operations 
        specifications under part 121 of title 14, Code of Federal 
        Regulations, or December 31, 1999, whichever occurs first, it 
        will remove from service--
                    ``(A) sufficient aging aircraft or Stage 2 aircraft 
                which, at maximum certified capacity, equal or exceed, 
                in the aggregate and pursuant to rules promulgated by 
                the Secretary, 200 per centum of the number of seats 
                (or in the case of all-cargo aircraft 200 per centum of 
                cargo capacity) of the new aircraft being financed; or
                    ``(B) all of its remaining aging aircraft and Stage 
                2 aircraft,
        whichever number of aircraft is less; except that in the event 
        the maximum capacity of such aircraft removed from service 
        exceeds the number of seats or cargo capacity required under 
        this section, such excess seat or cargo capacity may be carried 
        forward as a credit available to be added to the capacity of 
        other aircraft removed from service for the purpose of 
        complying with this section for subsequent loan guarantees.
            ``(5) When an air carrier described in paragraph (4) is 
        taking delivery of only all-cargo aircraft, the carrier may, in 
        lieu of removing Stage 2 all-cargo aircraft from service, 
        modify on or after April 15, 1993, such Stage 2 aircraft in 
        order to meet Stage 3 noise standards on the same number of 
        such Stage 2 aircraft that otherwise would have had to be 
        removed from service within the contiguous States of the United 
        States under paragraph (4); except that such modified aircraft 
        must remain configured for all-cargo service and shall not be 
        converted to passenger-cargo combination service.
            ``(6) Each aircraft removed from service by an air carrier 
        under paragraph (4) shall be taken off the registry of 
        certificated aircraft by the Secretary and may not subsequently 
        be registered in the United States; except that--
                    ``(A) the Secretary may continue to keep an 
                aircraft on the registry of certificated aircraft if 
                such aircraft--
                            ``(i) is not based in any of the several 
                        States of the United States and is engaged in 
                        common carriage entirely outside the several 
                        States; or
                            ``(ii) is used solely outside the 
                        contiguous States of the United States; and
                    ``(B) in a case where the aircraft removed from 
                service is owned by a person not affiliated with such 
                air carrier and was operated by such air carrier under 
                lease on or before April 1, 1993, the Secretary may 
                continue to keep such aircraft on the registry of 
                certificated aircraft if such owner brings such 
                aircraft into compliance with Stage 3 noise standards 
                prior to its lease or sale to another air carrier or 
                lessor.
            ``(7) An air carrier which is to take delivery of a new 
        aircraft, or new aircraft components, financed under this 
        section must warrant that it did not after August 1, 1993, and 
        will not on and after the date of enactment of this section, 
        place in service any aging aircraft or Stage 2 aircraft to its 
        fleet.
            ``(8) An air carrier's violation of the warranty under 
        paragraph (7) shall constitute a revocation of all outstanding 
        loan guarantees under this section that were made for the 
        purpose of financing delivery of new aircraft, or new aircraft 
        components, to such air carrier.
            ``(9) The Secretary may not grant a waiver, to any air 
        carrier that takes delivery of a new aircraft, or new aircraft 
        components, financed by a loan guarantee under this section, 
        that would allow such air carrier to operate Stage 2 aircraft 
        beyond December 31, 1999, in interstate air transportation.
            ``(10) At least 75 per centum of any new aircraft, or new 
        aircraft components, financed by a loan guarantee under this 
        section shall be manufactured or produced in the United States.
    ``(c) Regulations.--No later than sixty days after the date of 
enactment of this section, the Secretary shall promulgate regulations 
implementing the loan guarantee program authorized by this section.
    ``(d) Fiduciary Duties of Secretary.--
            ``(1) In general.--To implement this section, the 
        Secretary--
                    ``(A) shall apply reasonable and prudent fiduciary 
                standards in determining whether to make any specific 
                loan guarantee, and is authorized to take such action 
                as may be appropriate to enforce any right accruing to 
                the United States or any officer or agency thereof as a 
                result of making a loan guarantee under this section;
                    ``(B) shall make loan guarantees on rates, terms, 
                and conditions which, in the judgment of the Secretary, 
                offer reasonable assurance of repayment;
                    ``(C) may require that loans guaranteed under this 
                section be secured by the new aircraft or new aircraft 
                components being financed, to provide sufficient 
                collateral; and
                    ``(D) may not guarantee a loan amount that is more 
                than 85 per centum of the manufacturer's price to the 
                air carrier of the new aircraft, or new aircraft 
                components, being financed.
            ``(2) Security interest.--If the Secretary requires 
        collateral under paragraph (1)(C)--
                    ``(A) such collateral, to the extent of the 
                guaranteed loan and associated fees, shall be deemed to 
                be subject to a purchase-money equipment security 
                interest in the new aircraft or new aircraft components 
                for purposes of section 1110 or title 11, United States 
                Code; and
                    ``(B) the Secretary may also authorize a security 
                interest in such collateral, or an equal and pro rata 
                basis or as may be otherwise agreed by the Secretary, 
                for persons providing loans that are not guaranteed 
                under this section but that finance any portion of the 
                price of such new aircraft or new aircraft components.
    ``(e) Assessment of Fees.--
            ``(1) In general.--A loan guarantee under this section 
        shall remain in effect only so long as the loan guarantee 
        recipient pays the subsidy fee assessed under paragraph (2).
            ``(2) Subsidy fee.--For each loan guarantee under this 
        section, the Secretary shall assess and collect a subsidy fee 
        from the loan guarantee recipient that is equal to the cost, as 
        defined by section 502(5) of the Federal Credit Reform Act of 
        1990 (2 U.S.C. 661a(5)), of such guarantee.
    ``(f) Annual Report.--The Secretary shall, not later than March 1 
of each year, submit to the Committee on Commerce, Science, and 
Transportation of the Senate and the Committee on Public Works and 
Transportation of the House of Representatives a report that--
            ``(1) describes the progress of the loan guarantee program 
        authorized by this section;
            ``(2) identifies any problems with such program; and
            ``(3) describes the loan guarantees made under this 
        section, including the identity of the air carriers and other 
        persons receiving loans to which such guarantees apply.
    ``(g) Definitions.--As used in this section, the following 
definitions apply:
            ``(1) Aging aircraft.--The term `aging aircraft' means one 
        or more airplanes that were placed into service more than 
        twenty-two years prior to the date of enactment of this 
        section.
            ``(2) New aircraft.--The term `new aircraft' means one or 
        more newly manufactured airplanes, including associated spare 
        parts and engines included in the original purchase, that have 
        not been previously registered or placed into service.
            ``(3) New aircraft components.--The term `new aircraft 
        components' means components or parts (or both), of an 
        aircraft, that can be financed separately from the body or 
        frame of the aircraft, including jet engines, Administrator-
        approved Stage 3 hush kits for jet engines, and avionics 
        systems.
            ``(4) Remove from service.--The term `remove from service' 
        means to--
                    ``(A) eliminate, permanently and irrevocably, 
                aircraft from the fleet of an air carrier on or after 
                April 15, 1993;
                    ``(B) transfer aircraft to another air carrier, 
                after April 1, 1993, but before the date of enactment 
                of this section, for use in common carriage entirely 
                outside the several States of the United States; or
                    ``(C) remove aircraft permanently and entirely from 
                use in common carriage in the United States.
            ``(5) Secretary.--The term `Secretary' means the Secretary 
        of Transportation.
            ``(6) Stage 2 aircraft.--The term `Stage 2 aircraft' means 
        one or more airplanes as defined by section 36.1(f)(4) of title 
        14, Code of Federal Regulations, as in effect on the date of 
        enactment of this section.
            ``(7) Stage 3 aircraft.--The term `Stage 3 aircraft' means 
        one or more airplanes as defined by section 36.1(f)(6) of title 
        14, Code of Federal Regulations, as in effect on the date of 
        enactment of this section.''.