Aviation Bill's Hardly a Fix

CHARLOTTE, N.C. -- More than two years into its latest effort to convince Congress to reform an outdated system for funding the nation's aviation infrastructure, the airline industry has gotten nowhere.

One might think this summer's frequent delays that inconvenienced millions of travelers would have underscored the need for long-term change. After all, Congress has its first chance in 10 years to write a reauthorization bill for the Federal Aviation Administration.

The bill approved by the House last week finds new ways to extract money from airline passengers for improvements including airport bicycle racks. But as far as developing a formula to fairly distribute the cost of a much-needed $15 billion to $20 billion modernization of the air traffic control system, you won't find any change.

Airlines had hoped to shift part of this burden to users of corporate jets, who have long managed to avoid paying an equitable share for air traffic control. Instead, Congress stayed with a tried and true formula -- charge airline passengers a 7.5% ticket tax, and then add fees.

"Change is hard for a lot of people," says John Meenan, executive vice president of the Air Transport Association, an industry group that represents the airlines. "It's a lot easier to tweak a couple of numbers and move on."

It's no wonder that many investors shun the airline sector, a historically profitless venture where even the biggest companies, like AMR(AMR Quote) and United(UAUA Quote), have almost no say over their operating environment.

Instead, the FAA manages the air space with an outdated air traffic control system, causing delays that cost airlines about $6 billion annually. Airlines don't control the airspace, they barely control ticket pricing and they have no influence on the cost of jet fuel, their biggest expense. Only through recent bankruptcies did they regain a tenuous handle on labor costs.

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