I

103D CONGRESS

1ST SESSION H. R. 1433

To amend the Federal Aviation Act of 1958 to authorize the Secretary

of Transportation to guarantee loans for the acquisition of Stage 3

aircraft, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 23, 1993

Ms. DUNN introduced the following bill; which was referred to the Committee

on Public Works and Transportation

A BILL

To amend the Federal Aviation Act of 1958 to authorize

the Secretary of Transportation to guarantee loans for

the acquisition of Stage 3 aircraft, and for other

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Aviation Enhancement

5 Act of 1993’’.

6 SEC. 2. FINDINGS.

7 Congress finds and declares that—
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1 (1) the United States commercial airline indus2 try is currently suffering severe financial distress;

3 (2) sustained record losses and excessive debt

4 burdens are causing air carriers to cancel new air5 craft options and orders, thereby threatening the

6 economic viability of the United States aerospace

7 manufacturing industry;

8 (3) although most air carriers would benefit

9 from acquiring new generation, quieter, more fuel-ef10 ficient aircraft, there is already more capacity than

11 demand for seats, resulting in downsizing, not ex12 pansion, of fleets;

13 (4) many air carriers are increasingly unable to

14 obtain financing at reasonable interest rates for pur15 chasing new equipment;

16 (5) the inability of many air carriers to acquire

17 new, quieter Stage 3 aircraft may jeopardize the

18 planned phase out of noisier Stage 2 aircraft;

19 (6) States and local communities, the traveling

20 public, airline employees, and airline shareholders

21 would all benefit from stronger, healthier air carriers

22 operating modern, fuel efficient, quieter aircraft;

23 (7) as the owner and operator of the Nation’s

24 air traffic control system, the Federal Government is

25 a partner of the commercial aviation industry and
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1 must do its part to strengthen the air carrier and

2 aerospace industries;

3 (8) it is estimated that the Airport and Airway

4 Trust Fund will contain an unobligated surplus in

5 excess of $4,300,000,000 on October 1, 1993;

6 (9) a prudent shift of the investment of the Air7 port and Airway Trust Fund surplus into mod8 ernization of the commercial aviation industry’s fleet

9 can provide vitally needed economic stimulus for car10 riers and manufacturers and will ensure that both

11 industries remain competitive into the next century;

12 and

13 (10) the Airport and Airway Trust Fund sur14 plus should, therefore, be made available to guaran15 tee loans for the acquisition of new aircraft if such

16 acquisition will assure the phasing out of less fuel

17 efficient and noisier or older aircraft at the same

18 time.

19 SEC. 3. LOAN GUARANTEES FOR ACQUISITION OF STAGE 3

20 AIRCRAFT.

21 (a) IN GENERAL.—Title XI of the Federal Aviation

22 Act of 1958 (49 U.S.C. App. 1501–1518) is amended by

23 adding at the end the following new section:
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1 ‘‘SEC. 1119. LOAN GUARANTEES FOR ACQUISITION OF

2 STAGE 3 AIRCRAFT.

3 ‘‘(a) IN GENERAL.—The Secretary is authorized,

4 subject to appropriations Acts, to guarantee any lender

5 against loss of principal or interest on any loan made to

6 an eligible air carrier for the purpose of financing the ac7 quisition of new Stage 3 aircraft.

8 ‘‘(b) TERMS AND CONDITIONS.—A loan may be guar9 anteed by the Secretary under this section only if the loan

10 is made subject to the following terms and conditions:

11 ‘‘(1) TERM.—The term of the loan does not ex12 ceed 20 years.

13 ‘‘(2) RATE OF INTEREST.—The loan bears in14 terest at a rate which is less than the maximum rate

15 for such loans determined by the Secretary. The

16 maximum rate for such loans may not be less than

17 the current average market yield on outstanding ob18 ligations of the United States with remaining peri19 ods to maturity comparable to the maturity of the

20 loan.

21 ‘‘(3) PREPAYMENT.—There is no penalty for

22 prepayment of the amount of the loan.

23 ‘‘(4) USE OF LOAN AMOUNTS.—The loan will be

24 used only for the acquisition of Stage 3 aircraft

25 which—
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1 ‘‘(A) are manufactured in the United

2 States; and

3 ‘‘(B) will be delivered to the borrower not

4 later than 3 years after the date on which

5 amounts are appropriated to carry out this sec6 tion.

7 ‘‘(c) DOMESTIC MANUFACTURE.—For the purposes

8 of subsection (b)(4), an aircraft shall be considered to

9 have been manufactured in the United States only if 50

10 percent or more of the parts of the aircraft, by value, are

11 manufactured in the United States.

12 ‘‘(d) RETIREMENT OF AGING AND STAGE 2 AIR13 CRAFT.—The Secretary may guarantee a loan under this

14 section to an air carrier which owns or operates aging air15 craft or Stage 2 aircraft only if the carrier agrees that,

16 upon delivery of the aircraft being acquired with amounts

17 of the loan, the air carrier will—

18 ‘‘(1) retire from service Stage 2 aircraft or

19 aging aircraft containing a number of seats which

20 equals or exceeds 200 percent of the number of seats

21 contained in the aircraft being acquired; or

22 ‘‘(2) retire from service all of the air carrier’s

23 remaining Stage 2 aircraft and aging aircraft.

24 ‘‘(e) DEFAULT.—The Secretary may guarantee a

25 loan under this section only if the air carrier applying for
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1 the loan agrees that, in the event of a default, the air car2 rier will transfer to the Department of Transportation title

3 to all equipment acquired with the proceeds of the loan.

4 ‘‘(f) DISTRIBUTION OF LOAN GUARANTEES.

5 ‘‘(1) DETERMINATION OF AVAILABLE SEAT

6 MILES.—Not later than 30 days after the date on

7 which amounts are appropriated to carry out this

8 section, the Secretary shall determine the percentage

9 of available seat miles attributed, for the most re10 cent 12-month period for which such data is avail11 able, to each eligible air carrier certificated on or be12 fore October 1, 1992.

13 ‘‘(2) ALLOCATION.—

14 ‘‘(A) CARRIERS CERTIFICATED ON OR BE15 FORE OCTOBER 1, 1992.—An amount equal to

16 95 percent of the funds appropriated to carry

17 out this section shall be available for guarantee18 ing loans to eligible air carriers certificated on

19 or before October 1, 1992, and shall be allo20 cated among such carriers based on the per21 centage of available seat miles attributed to

22 each such carriers under paragraph (1).

23 ‘‘(B) OTHER CARRIERS.—An amount equal

24 to 5 percent of the funds appropriated to carry

25 out this section shall be available for guarantee-
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1 ing loans to eligible air carriers certificated

2 after October 1, 1992, and shall be allocated

3 among such carriers based on a fair and equi4 table formula to be established by the Sec5 retary.

6 ‘‘(C) TRANSFER OF ALLOCATIONS.—An el7 igible air carrier may transfer to other eligible

8 air carriers all or part of the amount of loan

9 guarantees allocated to such carrier under this

10 paragraph.

11 ‘‘(g) ENFORCEMENT.—

12 ‘‘(1) IN GENERAL.—The Secretary is authorized

13 to take such actions as may be appropriate to en14 force any right accruing to the United States, or any

15 officer or agency thereof, as a result of the commit16 ment or issuance of a loan guarantee under this sec17 tion.

18 ‘‘(2) COLLATERAL.—All loan guarantees under

19 this section shall be secured by the equipment being

20 financed and any other assets necessary to provide

21 sufficient collateral.

22 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There

23 is authorized to be appropriated out of the Airport and

24 Airway Trust Fund to carry out this section
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1 $4,300,000,000 for fiscal years beginning after September

2 30, 1993.

3 ‘‘(i) DEFINITIONS.—For the purposes of this section,

4 the following definitions apply:

5 ‘‘(1) AGING AIRCRAFT.—The term ‘aging air6 craft’ means an aircraft which has been in service

7 for at least 15 years.

8 ‘‘(2) ELIGIBLE AIR CARRIER.—The term ‘eligi9 ble air carrier’ means an air carrier which has been

10 issued an operating certificate under part 121 of

11 title 14, Code of Federal Regulations.

12 ‘‘(3) STAGE 2 AIRCRAFT.—The term ‘Stage 2

13 aircraft’ means an aircraft which complies with

14 Stage 2 noise levels under part 36 of title 14, Code

15 of Federal Regulations, as in effect on the date of

16 the enactment of this section.

17 ‘‘(4) STAGE 3 AIRCRAFT.—The term ‘Stage 3

18 aircraft’ means an aircraft which complies with

19 Stage 3 noise levels under part 36 of title 14, Code

20 of Federal Regulations, as in effect on the date of

21 the enactment of this section.

22 ‘‘(5) SECRETARY.—The term ‘Secretary’ means

23 the Secretary of Transportation.’’.

24 (b) CONFORMING AMENDMENT TO TABLE OF CON25 TENTS.—The table of contents contained in the first sec-
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1 tion of the Federal Aviation Act of 1958 is amended by

2 adding at the end of the matter relating to title XI of

3 such Act the following:

‘‘Sec. 1119. Loan guarantees for acquisition of Stage 3 aircraft.

‘‘(a) In general.

‘‘(b) Terms and conditions.

‘‘(c) Domestic manufacture.

‘‘(d) Retirement of aging and Stage 2 aircraft.

‘‘(e) Default.

‘‘(f) Distribution of loan guarantees.

‘‘(g) Enforcement.

‘‘(h) Authorization of appropriations.

‘‘(i) Definitions.’’.

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