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Airlines, Business Groups Aim to Block U.S. Customs Facilities in Foreign Airports

A coalition of U.S. airlines, their employee unions and business groups is opposing a proposal that would allow companies to foot the bill for U.S. customs agents to clear passengers at foreign facilities, saying it would give international competitors an unfair advantage.

A provision tucked into an early draft of the Senate’s fiscal 2013 continuing resolution (HR 933) would have allowed U.S. Customs and Border Protection to establish up to five new preclearance facilities at foreign airports, with the costs reimbursable by foreign companies.

While the version of the stopgap spending bill now on the Senate floor has dropped that provision, it would still allow the government to accept reimbursement for domestic customs facilities. Airlines worry that could drive staffing decisions at customs facilities and ultimately shift more of the costs to domestic carriers. An amendment by Sens. Sherrod Brown, D-Ohio, and Johnny Isakson, R-Ga., would strike the language from the bill.

U.S. customs facilities are already in place in Canada, the Caribbean and Ireland, where both U.S. passengers and airlines are commonplace. The facilities are intended to reduce congestion at U.S. ports of entry and improve convenience. They also allow international travelers to connect to flights into U.S. airports without regular customs inspections.

American carriers generally oppose proposals to expand preclearance facilities, contending it would allow foreign flag carriers — including those backed or owned by their governments — to buy their way into a competitive advantage in an otherwise highly regulated industry.

Capt. Lee Moak, the president of the Air Line Pilots Association, the nation’s largest pilots’ union, calls the idea a “serious handicap” for U.S. carriers. After years of tumult, which have included significant staffing downsizing, U.S. carriers remain only marginally profitable and are sensitive to anything threatening their valuable international routes, which usually turn larger profits.

But the prospect of recovering personnel and facilities costs from foreign airlines while easing congestion at U.S. gateways could be enticing for the Department of Homeland Security, as the agency wrestles with the effects of the sequester. Homeland Security Secretary Janet Napolitano warned travel industry officials in a letter last month that the automatic budget cuts could increase wait times at passport and customs inspection stations by “50 percent or more, with peak waits up to 3-4 hours or more at some gateway airports.”

At the center of the debate is the Abu Dhabi-based Etihad Airways, a flag carrier of the United Arab Emirates. The carrier’s top executive, James Hogan, has stressed his company’s desire to pay for a preclearance facility at its hub in the UAE.

The airline, like many of the fast-growing carriers in the Middle East and Asia, has focused its growth on profitable international routes backed, at least in part, by deep government pockets that finance new, flashy planes with snazzy interiors. Allowing customers to clear passport and customs checks in Abu Dhabi before boarding flights to the U.S. would give the airline significant competitive advantage in flying American travelers home from the Middle East and Asia, both important growth markets.

Etihad’s quest for a preclearance facility in Abu Dhabi especially irks its American rivals, because none currently fly there. They say it would be unfair to use U.S. taxpayer resources at a facility that benefits no American carriers. American-owned carriers fly at least 40 percent of the U.S.-bound traffic from the 15 foreign airports that currently have preclearance facilities.

The U.S. airlines worry that budgetary pressure might force Homeland Security officials to put too much emphasis on staffing facilities that make money for Customs and Border Protection.

“This initiative could shift the resource-allocation dynamic to those most willing to pay, rather than those with the greatest need,” a coalition of industry groups, including the U.S. Chamber of Commerce, wrote to Senate Appropriations Committee leaders.

Moak urged lawmakers to support Brown and Isakson’s amendment, warning that allowing customs facilities subsidized by carriers would create a “slippery slope” that could strain checkpoints in the U.S.

The pilots’ union also warned the White House last month that it will oppose “any authorization” in the president’s fiscal 2014 budget that would allow reimbursed preclearance facilities.

An earlier version incorrectly described the status of a provision in the Senate CR to allow foreign airlines to subsidize U.S. customs facilities at overseas airports. The provision was altered.

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