II

105TH CONGRESS

1ST SESSION S. 1013

To provide for the guarantee of the payment of interest on loans to certain

air carriers for the purchase of regional jet aircraft to improve air

transportation to underserved markets, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 14, 1997

Mr. FRIST (for himself, Mr. LOTT, Mr. BURNS, and Ms. SNOWE) introduced

the following bill; which was read twice and referred to the Committee

on Commerce, Science, and Transportation

A BILL

To provide for the guarantee of the payment of interest

on loans to certain air carriers for the purchase of regional jet aircraft to improve air transportation to underserved markets, 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 ‘‘Regional Jet Air Serv5 ice Improvement Act’’.

6 SEC. 2. AMENDMENT OF TITLE 49, UNITED STATES CODE.

7 Subtitle VII of title 49, United States Code, is

8 amended by adding at the end thereof the following:
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1 ‘‘PART E.—REGIONAL AIR SERVICE INCENTIVE

2 PROGRAM

‘‘Sec.

‘‘49201. Purpose.

‘‘49202. Definitions.

‘‘49203. Loan guarantees.

‘‘49204. Conditions and limitations.

‘‘49205. Fees.

‘‘49206. Use of Federal facilities; assistance.

‘‘49207. Receipts; payments.

‘‘49208. Termination.

3 ‘‘§ 49201. Purpose

4 ‘‘The purpose of this chapter is to improve service

5 by jet aircraft to underserved markets by providing assist6 ance, in the form of loan guarantees, to air carriers, com7 muter air carriers, and intrastate air carriers that pur8 chase regional jet aircraft for use in serving those mar9 kets.

10 § 49202. Definitions

11 ‘‘As used in this part:

12 ‘‘(1) AIRCRAFT PURCHASE LOAN.—The term

13 ‘aircraft purchase loan’ means any loan, or commit14 ment in connection with a loan, made for the pur15 chase of commercial transport aircraft, including

16 spare parts normally associated with the aircraft.

17 ‘‘(2) AIR CARRIER.—The term ‘air carrier’

18 means any air carrier (as that term is defined in

19 section 40102(2)) holding a certificate of public con-
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1 venience and necessity issued by the Secretary under

2 section 41102.

3 ‘‘(3) COMMUTER AIR CARRIER.—The term

4 ‘commuter air carrier’ means air carrier operating

5 pursuant to section 40104(a)(1)(A) who operates at

6 least 5 round trip flights per week between 1 pair

7 of points in accordance with published flight sched8 ules.

9 ‘‘(4) INTRASTATE AIR CARRIER.—The term

10 ‘intrastate air carrier’ means any citizen of the Unit11 ed States who undertakes, whether directly or indi12 rectly or by a lease or any other arrangement, to en13 gage primarily in intrastate air transportation (as

14 such term is defined in section 40102(26)).

15 ‘‘(5) NONHUB AIRPORT.—The term ‘nonhub

16 airport’ means an airport that each year has less

17 than .05 percent of the total annual boardings in the

18 United States.

19 ‘‘(6) REGIONAL JET AIRCRAFT.—The term ‘re20 gional jet aircraft’ means a civil aircraft (as defined

21 in section 40102(16))—

22 ‘‘(A) powered by jet propulsion;

23 ‘‘(B) with seating for not less than 30 nor

24 more than 70 passengers (except that the Sec-
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1 retary may, for good cause shown, permit a

2 variance of up to 5 passengers).

3 ‘‘(7) SMALL HUB AIRPORT.—The term ‘small

4 hub airport’ means an airport that each year has at

5 least .05 percent, but less than .25 percent, of the

6 total annual boardings in the United States.

7 ‘‘(8) UNDERSERVED MARKET.—The term ‘un8 derserved market’ means a passenger air transpor9 tation market (as defined by the Secretary that—

10 ‘‘(A) is served (as determined by the Sec11 retary) by a nonhub airport or a small hub air12 port; and

13 ‘‘(B) is not within a 50-mile radius of a

14 primary airport (as defined in section

15 47102(11).

16 ‘‘§ 49203. Loan guarantees

17 ‘‘(a) IN GENERAL.—The Secretary may guarantee

18 any lender against loss of principal or interest on any air19 craft purchase loan made by that lender to—

20 ‘‘(1) any air carrier with respect to which the

21 certificate issued that air carrier under chapter 41

22 of title 49, United States Code, authorizes—

23 ‘‘(A) the air carrier to provide local or

24 feeder air service;
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1 ‘‘(B) scheduled passenger operations the

2 major portion of which is conducted within the

3 State of Hawaii; or

4 ‘‘(C) operations (the major portion of

5 which is conducted either within Alaska or be6 tween Alaska and the 48 contiguous States),

7 within the State of Alaska (including service be8 tween Alaska and the 48 contiguous States, and

9 between Alaska and adjacent Canadian terri10 tory);

11 ‘‘(2) any commuter air carrier; or

12 ‘‘(3) any intrastate air carrier.

13 ‘‘(b) FORM, TERMS, AND CONDITIONS.—A guarantee

14 shall be made under subsection (a)—

15 ‘‘(1) in such form, on such terms and condi16 tions; and

17 ‘‘(2) pursuant to such regulations, as the Sec18 retary considers to be necessary and consistent with

19 this part.

20 ‘‘§ 49204. Conditions and limitations

21 ‘‘(a) LIMITATIONS ON FUNDS.—

22 ‘‘(1) IN GENERAL.—Subject to subsection (d),

23 no loan guarantee shall be made under this part—

24 ‘‘(1) extending to more than the unpaid interest

25 and 90 percent of the unpaid principal of any loan;
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1 ‘‘(2) on any loan or combination of loans for

2 more than 90 percent of the purchase price of the

3 aircraft, including spare parts, to be purchased with

4 the loan;

5 ‘‘(3) on any loan with respect to which terms

6 permit full repayment more than 15 years after the

7 date the loan is made;

8 ‘‘(4) in any case in which the total face amount

9 of the loan, and any other loans to the same air car10 rier, commuter air carrier, or intrastate air carrier

11 or corporate predecessor of that air carrier, com12 muter air carrier, or intrastate air carrier that are

13 guaranteed and outstanding under the terms of this

14 part exceed $100,000,000.

15 ‘‘(b) CONDITIONS FOR MAKING LOANS.—Subject to

16 subsection (c), the Secretary may only make a loan guar17 antee under this part if the Secretary finds that—

18 ‘‘(1) the aircraft to be purchased with the loan

19 is a regional jet aircraft needed to improve the serv20 ice and efficiency of operation of the air carrier,

21 commuter air carrier, or intrastate air carrier;

22 ‘‘(2) the air carrier, commuter air carrier, or

23 intrastate air carrier agrees to use the aircraft to

24 provide service to underserved markets; and

25 ‘‘(3) the prospective earning power—
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1 ‘‘(A) of the applicant air carrier, together

2 with the character and value of the security

3 pledged, furnish—

4 ‘‘(i) reasonable assurances of the abil5 ity of the applicant to repay the loan with6 in the term for the loan; and

7 ‘‘(ii) reasonable protection to the

8 United States; and

9 ‘‘(B) of the applicant commuter air carrier

10 or intrastate air carrier, together with the char11 acter and value of the security pledged, fur12 nish—

13 ‘‘(i) reasonable assurances of the ap14 plicant’s ability and intention to repay the

15 loan within the term of the loan—

16 ‘‘(I) to continue its operations as

17 a commuter air carrier or intrastate

18 air carrier; and

19 ‘‘(II) to the extent that the Sec20 retary determines to be necessary, to

21 continue its operations as a commuter

22 air carrier or intrastate air carrier be23 tween the same route or routes being

24 operated by the applicant at the time

25 of the loan guarantee; and
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1 ‘‘(ii) reasonable protection to the

2 United States.

3 ‘‘(c) REQUIREMENT.—Subject to subsection (d), no

4 loan guarantee may be made under this part on any loan

5 or combination of loans for the purchase of any new turbo6 jet-powered aircraft that does not comply with the noise

7 standards prescribed for new subsonic aircraft in regula8 tions issued by the Secretary, acting through the Adminis9 trator of the Federal Aviation Administration, contained

10 in 14 CFR part 36, as those regulations were in effect

11 on January 1, 1977.

12 ‘‘(d) OTHER LIMITATIONS.—

13 ‘‘(1) IN GENERAL.—No loan guarantee shall be

14 made by the Secretary under this part on any loan

15 for the purchase of a regional jet aircraft unless the

16 air carrier, commuter air carrier, or intrastate air

17 carrier agrees that it will provide service to the un18 derserved market for which the aircraft is purchased

19 for a period of not less than 12 consecutive months

20 after the aircraft is placed in service and the air car21 rier, commuter air carrier, or intrastate air carrier

22 is authorized to provide service to that market.
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1 ‘‘§ 49205. Fees

2 ‘‘The Secretary shall prescribe and collect from a

3 lending institution a reasonable guaranty fee in connection

4 with each loan guaranteed under this part.

5 ‘‘§ 49206. Use of Federal facilities; assistance

6 ‘‘(a) USE OF FEDERAL FACILITIES.—To permit the

7 Secretary to make use of such expert advice and services

8 as the Secretary may require in carrying out this part,

9 the Secretary may use available services and facilities of

10 other agencies and instrumentalities of the Federal Gov11 ernment—

12 ‘‘(1) with the consent of the appropriate Fed13 eral officials; and

14 ‘‘(2) on a reimbursable basis.

15 ‘‘(b) ASSISTANCE.—The head of each appropriate de16 partment or agency of the Federal Government shall exer17 cise the duties and functions of that head in such manner

18 as to assist in carrying out the policy specified in section

19 49201.

20 ‘‘(c) OVERSIGHT.—The Secretary shall make avail21 able to the Comptroller General of the United States such

22 information with respect to the loan guarantee program

23 conducted under this part as the Comptroller General may

24 require to carry out the duties of the Comptroller General

25 under chapter 7 of title 31, United States Code.
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1 ‘‘§ 49207. Receipts; payments

2 ‘‘(a) MISCELLANEOUS.—Amounts received by the

3 Secretary pursuant to this part shall be credited to mis4 cellaneous receipts of the Treasury.

5 ‘‘(b) PAYMENTS.—Payments to lenders required as a

6 consequence of any loan guarantee made under this part

7 may be made from funds appropriated pursuant to the au8 thorization under section 3 of the Regional Jet Air Service

9 Improvement Act.

10 ‘‘(c) ADMINISTRATIVE EXPENSES.—In carrying out

11 this part, the Secretary shall use funds made available by

12 appropriations to the Department of Transportation for

13 the purpose of administration to cover administrative ex14 penses of the loan guarantee program under this part.

15 ‘‘§ 49208. Termination

16 ‘‘The authority of the Secretary under section 49203

17 shall terminate on the date that is 5 years after the date

18 of enactment of the Regional Jet Air Service Improvement

19 Act.’’.

20 SEC. 3. AUTHORIZATION OF APPROPRIATIONS.

21 There are authorized to be appropriated such sums

22 as may be necessary to carry out part E of subtile VII

23 of title 49, United States Code.

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