ATA Articulates Energy/Economy Nexus

John P. Heimlich

ATA Vice President and Chief Economist

Consumer Energy Alliance (CEA) Energy Day on Capitol Hill

May 13, 2009

On behalf of the U.S. airline industry, I thank you for the opportunity to speak today. In the not-too-distant past, our industry was notably larger. Employment at U.S. passenger airlines peaked in May 2001 at more than 542,000 full-time jobs. Today that number stands at just 392,000, a drop of 150,000 jobs; regrettably, further cuts are likely. You might also be interested to know that commercial aviation ultimately drives more than 10 million U.S. jobs and more than five percent of the nation’s economy.

While virtually every U.S. industry has been harmed by the scope of today’s global recession, the airlines’ ability to rehire, to grow its employment ranks and to enable the growth and competitiveness of so many other industries depends immensely on the stability and security of our nation’s energy portfolio. In 2008, U.S. passenger and cargo airlines spent a record $58 billion on jet fuel, nearly three-and-a-half times the fuel bill for 2000. Unprecedented volatility in fuel prices and far-too-frequent disruptions to our fuel supply have rendered unsustainable significant levels of air service and staffing, forcing cuts in routes and frequencies in communities across the nation. Many of those communities lost all scheduled air service, with no sign of restoration anytime soon.

Yet, we embrace the future with great expectations. The transformation of our aging air traffic control system from radar-based to satellite-based navigation, along with the development of alternative jet fuels, offers aviation a golden opportunity to enhance U.S. energy efficiency and competitiveness while yielding tangible environmental benefits and creating tens of thousands of jobs.

The nation’s airlines applaud today’s congressional hosts, as well as President Obama and his administration, for their leadership and keen focus on the energy challenge facing America. We are extremely proud of our industry’s unrelenting environmental progress, having increased fuel efficiency more than 110 percent since 1978, including more than 25 percent since 2000 alone. And we have committed voluntarily to continue along that path, pursuing new equipment, environmentally friendly alternative fuels, and more efficient air navigation services.

But these efforts are not sufficient by themselves. Our industry, and many others, will long depend on fossil fuels for a substantial share of our energy. In addition to the development of wind, solar, nuclear and the like, a truly comprehensive, meaningfully balanced U.S. energy policy must include the expanded cultivation of conventional domestic resources, including oil and gas, as well as coal. To deny that is to deny reality. The good news is that twenty-first century technologies, engineering know-how and industry best practices allow us to tap these sources in a far more environmentally responsible manner than most are aware.

Let me be crystal clear on this – the Air Transport Association of America supports a truly comprehensive, meaningfully balanced U.S. energy policy that enhances a secure, responsibly produced supply of energy characterized by increasingly stable costs. What does that mean? First, I cannot stress enough the importance of promoting conservation and efficiency by upgrading our air traffic infrastructure and redesigning congested airspace. Second, we must accelerate the development and deployment of alternative aviation fuels. In 2006, ATA co-founded the Commercial Aviation Alternative Fuels Initiative, working in concert with the Federal Aviation Administration, the Air Force and several other government agencies, as well as academia and the energy community. Third, we must ensure that energy prices are determined by the fundamentals of supply and demand rather than the whims of financial players with no ties to the physical product. Reform of our energy commodities markets is essential, adding sorely needed transparency and oversight to the trading of petroleum, heating oil and, potentially, carbon futures. Last, but not least, we must expand access to traditional domestic sources of energy such as oil and gas, simultaneously cultivating alternatives.

With every new proposal emanating from Congress, let’s be sure to score each one not only on its environmental merits but also on its contribution to both energy security and economic security. After all, a truly comprehensive energy policy should treat these as compatible – not conflicting – goals. Too often, crafters of legislation have failed to appreciate the interrelationship among different petroleum products, for example not realizing the impacts that a policy aimed at motorists might have on trucking, maritime or aviation.

There are lots of paths to a greener future, but reducing the viability of air service and the thousands of associated jobs is not the right one – especially in our increasingly global society. As one University of North Carolina professor has written, aviation is the physical Internet. Others have called us the nation’s circulatory system. Constraining our growth is tantamount to constraining our economy. Let me assure you – the airlines want to help, and we are confident that a policy embracing technology, operations and infrastructure is the best way to ensure that America’s future is not only greener on the environmental scale, but also on the financial scale.

A thoughtfully crafted U.S. energy policy will recognize these goals as entirely compatible. In our case, we are certain that smarter skies will translate to smarter energy and vice versa, fostering air service levels that are both economically and environmentally sustainable. Simply put, when it comes to aviation and the jobs that depend on it, energy matters.