I
103D CONGRESS
1ST SESSION
H. R. 2338
To amend the Federal Aviation Act of 1958 to provide emergency relief
to the United States airline industry by facilitating financing for invest-
ment in new aircraft and by encouraging the retirement of older, noisier,
and less efficient aircraft, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 8, 1993
Mr. MANTON 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 provide emer-
gency relief to the United States airline industry by
facilitating financing for investment in new aircraft and
by encouraging the retirement of older, noisier, and less
efficient aircraft, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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 indus-
try is currently suffering severe financial distress.
(2) Sustained record losses and excessive debt
burdens are causing air carriers to cancel new air-
craft options and orders which, in turn, is threaten-
ing the economic viability of the United States aero-
space manufacturing industry.
(3) Many air carriers are increasingly unable to
obtain financing at reasonable interest rates for pur-
chasing 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 PRO-
GRAM.—The Secretary is authorized to guarantee loans
for the financing of new aircraft, or new aircraft compo-
nents, for use by air carriers that meet the terms and con-
ditions 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 sub-
section (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 air-
craft, 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 deliv-
ery 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 finan-
cial 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 agree-
ment, the OECD Large Aircraft Sector Under-
standing, and bilateral air services agreements
with the United States.
‘‘(4) In the case of any air carrier taking deliv-
ery 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 les-
see 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 air-
craft being financed is placed on the air carrier’s op-
erations 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 re-
moved from service exceeds the number of seats or
cargo capacity required under this section, such ex-
cess 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 para-
graph (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
craft or new aircraft components being fi-
nanced, to provide sufficient collateral; and
‘‘(D) may not guarantee a loan amount
that is more than 85 per centum of the manu-
facturer’s price to the air carrier of the new air-
craft, or new aircraft components, being fi-
nanced.
‘‘(2) SECURITY INTEREST.—If the Secretary re-
quires 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 sec-
tion 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 sec-
tion 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 as-
sessed 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 recipi-
ent 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 guaran-
tee 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 fol-
lowing definitions apply:
‘‘(1) AGING AIRCRAFT.—The term ‘aging air-
craft’ 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 in-
cluded 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, in-
cluding jet engines, Administrator-approved Stage 3
hush kits for jet engines, and avionics systems.
‘‘(4) REMOVE FROM SERVICE.—The term ‘re-
move from service’ means to—
‘‘(A) eliminate, permanently and irrev-
ocably, aircraft from the fleet of an air carrier
on or after April 15, 1993;
‘‘(B) transfer aircraft to another air car-
rier, 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 Regu-
lations, as in effect on the date of enactment of this
section.
‘‘(7) STAGE 3 aircraft.—The term ‘Stage 3 air-
craft’ means one or more airplanes as defined by
section 36.1(f)(6) of title 14, Code of Federal Regu-
lations, as in effect on the date of enactment of this
section.’’.
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