US Airways 2007 Annual Report Download - page 12

Table of Contents
requirements of the Aviation Security Act have resulted and will continue to result in increased costs for us and our passengers and has
and will likely continue to result in service disruptions and delays. As a result of competitive pressure, US Airways and other airlines
may be unable to recover all of these additional security costs from passengers through increased fares. In addition, we cannot forecast
what new security and safety requirements may be imposed in the future or the costs or financial impact of complying with any such
requirements.
Most major U.S. airports impose passenger facility charges. The ability of airlines to contest increases in these charges is restricted
by federal legislation, DOT regulations and judicial decisions. With certain exceptions, air carriers pass these charges on to passengers.
However, our ability to pass through passenger facility charges to our customers is subject to various factors, including market conditions
and competitive factors. The current cap on passenger facility charges is $4.50; however, there is legislation in Congress to raise the cap
on passenger facility charges to $7.00 per passenger.
At John F. Kennedy International Airport, LaGuardia, Newark Liberty International and Reagan National, which are designated
"High Density Airports" by the FAA, there are restrictions that limit the number of departure and arrival slots available to air carriers
during peak hours. In April 2000, legislation was enacted that eliminated slot restrictions in January 2007 at LaGuardia and Kennedy. On
December 20, 2006, the FAA implemented an interim rule to maintain the number of hourly operations at LaGuardia until a final rule is
adopted. The FAA proposed a comprehensive final rule for LaGuardia in August 2006. The proposed rule would require a minimum
number of seats on certain operations to/from LaGuardia. Failure to comply with the minimum seat requirement would lead to the
withdrawal of operating authority until compliance is achieved. The proposed rule also introduces a finite lifespan for "operating
authorizations" of no more than ten years. The FAA intends to seek Congressional approval for the introduction of market based
mechanisms for allocating expiring operating authorizations. We filed extensive comments with the FAA in December 2006 detailing the
numerous concerns we have with the proposed rule. Other than making some technical corrections to the current operating restrictions at
LaGuardia, no other action concerning the level of operations at LaGuardia was taken by the federal government in 2007. The DOT and
FAA convened an Aviation Rulemaking Committee ("ARC") to address congestion and delays in the New York region. While the short-
term changes associated with the ARC relate to technical improvements to increase air space efficiency, we anticipate that the DOT will
issue a proposed rulemaking addressing other issues discussed in the ARC, including technical operations issues and competition issues.
In addition, the government intends to cap operations at both Kennedy and Newark starting later in the first quarter of 2008. Thus,
airlines will not be able to add flights at LaGuardia, Kennedy or Newark without acquiring operating rights from another carrier. In the
future, takeoff and landing time restrictions and other restrictions on the use of various airports and their facilities may result in further
curtailment of services by, and increased operating costs for, individual airlines, including our airline subsidiaries, particularly in light of
the increase in the number of airlines operating at these airports.
The availability of international routes to domestic air carriers is regulated by agreements between the U.S. and foreign
governments. Changes in U.S. or foreign government aviation policy could result in the alteration or termination of these agreements and
affect our international operations. We could see significant changes in terms of air service between the United States and Europe as a
result of the implementation of the U.S. and the EU Air Transport Agreement, generally referred to as Open Skies Agreement, which
takes effect in March 2008. The Open Skies Agreement removes bilateral restrictions on the number of flights between the U.S. and EU.
The DOT has proposed several new initiatives concerning airline obligations toward passengers. These regulations involve
increases in the denied boarding compensation that airlines must pay for passengers involuntarily denied travel. In addition, new
regulations addressing how airlines handle irregular operations also are under consideration.
The industry also faces increased state government activity such as the recently implemented New York State Passenger Bill of
Rights law that requires airlines to provide certain services to passengers on flights within the state that undergo extended on-board
ground delays. Several other states have indicated a desire to move ahead with similar legislation.
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