UPDATE 1-US aviation bill stalls, proponents not giving up

* Provision benefiting US Airways a sticking point

* Momentum interrupted as Congress moves toward recess

* FedEx labor provision not expected to survive

(Adds Dulles airport, united, us airways comment)

By John Crawley

WASHINGTON, July 23 (BestGrowthStock) – Legislation to overhaul
aviation programs, including billions for modernizing the aging
U.S. air traffic system, has stalled as congressional
negotiators struggle to resolve stubborn issues, one of which
involves US Airways Group Inc (LCC.N: ).

Congressional and industry sources said momentum to pass
the measure before lawmakers break for August vacation was
interrupted this week with key lawmakers unable to reach
agreement on provisions affecting long-haul air service and
passenger fees that support airport operations.

Disagreements have also surfaced on how to proceed in the
Senate, which is scheduled to recess August 6. The agenda is
crowded with finance and small business bills and a Supreme
Court confirmation vote.

The House of Representatives breaks for a month next
Friday.

“We’re not that close to getting an agreement on
outstanding issues,” said one congressional aide not authorized
to publicly discuss details while the matter was still being
negotiated.

The bill is viewed by proponents as an important step
toward improving the efficiency of air traffic operations,
which are often blamed for delays that infuriate passengers and
cost carriers millions in wasted fuel and lost productivity.

It also includes new consumer protections and safety
measures sought by regulators in response to complaints of poor
service and accidents.

U.S. airlines flew more than 618 million passengers
domestically last year and nearly 200 million through April,
the latest available figures show.

Proponents of the bill, especially House and Senate
Democrats, are not giving up. But time constraints are now
working against expedited consideration.

The Federal Aviation Administration (FAA) has been without
a long-term funding blueprint for three years, a scenario that
has forced congressional approval of multiple temporary
spending measures so the agency can keep its airport towers and
other control centers operating.

FAA operations cost more than $14 billion annually.

The bill also includes a downpayment on the multi-year $20
billion effort to transform the air traffic network from one
relying on radar to a satellite-based system designed to handle
more planes more efficiently.

LAWMAKER-USED AIRPORT

But major sticking points include new fees that air
travelers pay to support airport operations, including
construction projects. Proposals would increase the charge from
$4.50 to more than $5 per ticket, which some lawmakers view as
a tax increase.

Airlines oppose any increase as an “unnecessary tax.”.

A second stumbling block involves proposals to increase the
number of long-haul flights from Ronald Reagan National Airport
— which is adjacent to Washington and the airport of choice
for lawmakers and others doing business in the capital.

Landing rights there are controlled by the Transportation
Department and there are government limits on the size of
aircraft that can operate there due to noise and other issues.

There are also political, industry and local interests
concerned with preserving suburban Dulles airport as a
long-haul departure point, industry officials say. United
Airlines (UAUA.O: ) has major operations at Dulles.

Some key lawmakers are resisting a plan that would give a
leg up to US Airways, the dominant carrier at Reagan National,
for more lucrative longer haul flights, including California
service. US Airways is based in Tempe, Arizona.

There is airline opposition to the benefit for US Airways,
which would give up some short-haul routes that certain
competitors could then fly.

US Airways government affairs chief C.A. Howlett said the
bill promotes competition to the largest markets without
harming small cities, a priority concern of lawmakers.

The carrier believes rivals United and low cost Alaska Air
Group (ALK.N: ), which operates flights to Los Angeles and
Seattle from Reagan National, and local transportation
officials are pulling Democratic political strings to thwart
new long haul competition from that airport.

Alaska had no immediate comment.

United has consistently opposed changes to restrictions on
long haul flying at Reagan National based on its presence at
Dulles. The airline said in a statement that it objects to any
proposal that “picks winners and losers.”

Negotiators also have not finalized how to handle another
potential dealbreaker, a House-passed proposal that would make
it easier for ground workers at FedEx Corp (FDX.N: ) to unionize.
That provision is not expected to survive, but negotiators have
yet to agree on how to dispose of it.

Stock Market

(Reporting by John Crawley)

UPDATE 1-US aviation bill stalls, proponents not giving up