US Airways 2011 Annual Report Download - page 13

Table of Contents
• Authorizes eight additional daily flights beyond the 1,250 mile perimeter restricting flights to and from Reagan Washington National
Airport. Four flights are allocated to new entrant and limited incumbents, and four are set aside for incumbent carriers serving DCA as of the
date of enactment (that is, one for each of American, Delta, United and US Airways);
• Dedicated title of the legislation is intended to help accelerate implementation of the NextGeneration air traffic control system. Among the
provisions included are mandated performance metrics, as well as a requirement that modernization projects at 35 major airports are to
receive streamlined environmental review; and
• Sunsets costly and redundant line checks for pilots over 60.
In addition, the TSA mandates the federalization of certain airport security procedures and imposes additional security requirements on airports and
airlines, most of which are funded by a per ticket tax on passengers and a tax on airlines. The federal government has on several occasions proposed a
significant increase in the per ticket tax, including most recently in the Administration's proposed fiscal year 2013 budget. The proposed ticket tax increase, if
implemented, could negatively impact our financial results.
The DOT allows local airport authorities to implement procedures designed to abate special noise problems, provided such procedures do not
unreasonably interfere with interstate or foreign commerce or the national transportation system. Certain locales, including Boston, Washington D.C.,
Chicago, San Diego and San Francisco, among others, have established airport restrictions to limit noise, including restrictions on aircraft types to be used and
limits on the number of hourly or daily operations or the time of these operations. In some instances, these restrictions have caused curtailments in service or
increases in operating costs, and these restrictions could limit the ability of our airline subsidiaries to expand their operations at the affected airports.
Authorities at other airports may adopt similar noise regulations.
International
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
continue to 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 the Open Skies Agreement, which took effect in March 2008. The Open Skies Agreement removes bilateral
restrictions on the number of flights between the U.S. and EU. One result of the Open Skies Agreement has been applications before the DOT for antitrust
immunity between various domestic and international airlines. The DOT approved two such transatlantic immunities in 2010 involving other carriers.
Presently, none of our international operations benefit from antitrust immunity.
Security
The Aviation and Transportation Security Act (the "Aviation Security Act") was enacted in November 2001. Under the Aviation Security Act,
substantially all aspects of civil aviation security screening were federalized, and a new Transportation Security Administration (the "TSA") under the DOT
was created. The TSA was then transferred to the Department of Homeland Security pursuant to the Homeland Security Act of 2002. The Aviation Security
Act, among other matters, mandates improved flight deck security; carriage at no charge of federal air marshals; enhanced security screening of passengers,
baggage, cargo, mail, employees and vendors; enhanced security training; fingerprint-based background checks of all employees and vendor employees with
access to secure areas of airports pursuant to regulations issued in connection with the Aviation Security Act; and the provision of certain passenger data to
U.S. Customs and Border Protection.
Funding for the TSA is provided by a combination of air carrier fees, passenger fees and taxpayer monies. A "passenger security fee," which is
collected by air carriers from their passengers, is currently set at a rate of $2.50 per flight segment but not more than $10 per round trip. An air carrier fee, or
Aviation Security Infrastructure Fee ("ASIF"), has also been imposed with an annual cap equivalent to the amount that an individual air carrier paid in
calendar year 2000 for the screening of passengers and property. The TSA may lift this cap at any time and set a new higher fee for air carriers.
In 2011, we incurred expenses of $50 million for the ASIF, including amounts paid by our wholly owned regional subsidiaries, PSA and Piedmont, and
amounts attributable to our other regional carriers. Implementation of and compliance with the requirements of the Aviation Security Act have resulted and
will continue to result in increased costs for us and our passengers and have resulted 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.
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