February 27, 2009
The Honorable Ray LaHood
Secretary
Department of Transportation
400 Seventh St., SW
Washington, DC 20590
Dear Secretary LaHood:
The war-risk insurance policies that the Department of Transportation (DOT) has issued to U.S. airlines are indispensable. As you are aware, airlines literally cannot operate without them. Statutorily mandated FAA-issued policies expire on March 31, 2009, but the Department has discretion to extend this coverage. We strongly urge you to exercise your option of extending war-risk policies through the end of the year, as far in advance of March 31 as is possible.
The most important function of war-risk insurance is to provide airlines coverage for acts of terrorism that they may suffer. Such acts are not ultimately aimed at airlines; instead, their target is our country. Given the nature of these acts, provision of war-risk insurance is an appropriate governmental function. Moreover, U.S. airlines pay substantial premiums for the FAA war-risk insurance. The federal government will receive $145 million in premiums from U.S. carriers in 2009.
The extension of war-risk insurance coverage and of the $100 million act-of-terrorism liability cap has been, and continues to be, necessary because the commercial market does not provide needed levels or quality of war-risk coverage at costs that are feasible for U.S. airlines. The airline industry has discussed with congressional leadership the pressing need to continue the aviation war-risk insurance program and, clearly, Congress has recognized the importance of continuing war-risk coverage. In H.R. 915, the FAA Reauthorization Act of 2009, Chairman Oberstar extended coverage through September 30, 2012. Further, the Senate FY09 THUD appropriations bill mandated coverage through the end of August, 2009. As you know, neither of these bills has yet been passed by both chambers. As a result, the current mandated coverage is set to expire on March 31, 2009.
Therefore, we request that the Department act as soon as possible, not only to avoid the lapse of existing policies, but also to provide marketplace certainty. Any change in current policy would cause serious disruption to carriers.
Secretary LaHood, we sincerely hope that you will expedite action on this most critical matter. As always, I stand ready to discuss this with you at your earliest convenience should you have questions.