ATA Expresses Airline Views on H.R. 915

May 21, 2009

TO: Members of the House of Representatives

I am writing today to reiterate the Air Transport Association’s concerns about the current version of H.R. 915, which have been previously voiced in our letter of March 4, 2009. Commercial aviation represents an indispensable element of America’s infrastructure and our nation’s economic well-being. Commercial aviation drives over $1.1 trillion in economic activity and 10.2 million domestic jobs. Aviation also enables the global economy, and the improvements that we are seeking create opportunities for the United States to be more relevant in the aviation sector – and to effectively participate in future global economic development. By any measure, the U.S. airline industry is a valuable national asset and its continued economic health should be a matter of national concern. However, the current economic environment and an outdated air traffic control system (ATC) represent a real threat to our ability to create jobs and produce environmental benefits for our country. In fact, our industry (including both cargo and passenger carriers) lost $9.5 billion in 2008, creating a cumulative net loss from 2001-2008 of $36 billion.

In this context, we want to express our concern that the current legislation does not make the needed changes to ensure acceleration of ATC modernization, and hinders our ability to regain solid financial footing. As it is currently crafted, we respectfully cannot support the bill.

Commercial aviation faces stark challenges given the decrease in demand resulting from current economic insecurity. The industry suffered tremendously from last year’s skyrocketing fuel prices and carriers had to respond by reducing capacity, which means jobs lost and service to cities reduced or lost completely. Airline employment has dropped over 28 percent since 2001, marking a loss of one out of every four industry jobs. Last year alone, mostly as a result of skyrocketing fuel prices, over 28,000 airline employees lost jobs, and thousands more job losses are expected in 2009.

Given these perilous economic times, we have asked that key provisions be modified. However, it appears that these provisions were not modified and, in fact, Congressman Minnick was denied the opportunity to replace the $2 billion Passenger Facility Charge (PFC) tax increase with a pilot program. We have asked that Congress:

• Expedite investment in and deployment of NextGen. The United States is at a critical juncture right now. Either we can accelerate the transformation of the ATC, to allow air transportation to grow in a safe and efficient manner while achieving environmental benefits, or we can risk bringing our economy and leadership in technology to a halt by failing to address our growing aviation capacity constraints. Leadership from the committee is needed to ensure that appropriate funding and program direction is in place to accelerate the deployment of this critical program.
• Reject increasing taxes and fees on passengers. An increase in the maximum passenger facility charge (PFC) from $4.50 per segment to $7 per segment would impose an additional and unwarranted $2 billion tax increase per year on commercial passengers. With airport revenue eclipsing record levels – over $12.7 billion in 2007 – and with $27 billion in unrestricted financial assets, the imposition of an increased PFC tax is not only unwarranted, but also will further reduce demand for travel.
• Protect our valued U.S. aviation repair facilities by ensuring that any requirements are applied in a manner consistent with U.S. obligations under international agreements. During recent conversations between U.S. trade associations and European officials, the Europeans have indicated that as a result of the current language in Section 303, many U.S. facilities would be subject to new, regulatory requirements by the European Aviation Safety Agency (EASA). Such duplicative, burdensome impositions are in no one’s interest.
• Reject the automatic elimination of previously granted antitrust immunity (ATI) to carriers for international marketing alliances. DOT has approved international airline alliances because they produce numerous and substantial benefits, both to the public and the participating carriers. Arbitrarily terminating antitrust immunity will have a harsh impact on airline employees and cause a ripple effect across the travel and tourism industry at a time when the industry is already hobbled.
• Maintain safety without requiring overly strict fire-fighting standards. Federal Aviation Administration (FAA) regulations have safely dictated staffing and equipment requirements for airport fire stations for years based on the needs within the airport boundary. Increasing staffing and equipment based on surrounding populations will not enhance airport safety but will increase costs unnecessarily. These are not legitimate safety claims and should be rejected.
• Allow carriers to continue improving customer service without imposing unsafe or unreasonable deplaning requirements. In particular, we oppose a hard-and-fast rule requiring airlines to give passengers the option to deplane after three hours. Mandatory deplaning will have numerous unintended consequences that, ultimately, will create even more inconvenience for passengers and lead to even more flight cancellations.

Furthermore, according to data compiled by the FAA and certified by the IRS, airlines and their customers contributed $11 billion to the Aviation Trust Fund, well in excess of 90 percent of total Trust Fund receipts, yet the FAA Cost Allocation Report shows that passenger and cargo airline operations only account for approximately two-thirds of ATC costs. In contrast, business jets (general aviation, turbine aircraft and fractional aircraft) contributed only 5 percent of the revenue ($573 million) but accounted for 17 percent of the costs. While HR 915 takes a step in the right direction toward mitigating the subsidy that passengers are paying for corporate jets, it does not achieve a balance in which each user group is paying for the costs that they impose on the system.

Finally, a number of amendments will be considered today, which raise additional concerns. Specifically, an amendment to stop the implementation of the Northeast airspace redesign will certainly contribute to further air traffic delays in the Northeast. Airspace redesign is an essential element of modernization and a more efficient and environmentally responsible air traffic control system. Airspace redesign was started by the FAA over a decade ago – it was badly needed then and is desperately needed now. Another amendment would impose operating limits on flights at one airport – which essentially waives the Airport Noise and Capacity Act (ANCA) requirements for this airport, as well as impeding travel and commerce.

The Air Transport Association stands ready to work with Congress in ensuring that a final FAA reauthorization bill addresses these concerns and provides for investment in ATC modernization. The environmental, capacity and efficiency benefits of NextGen are critical to meeting the needs of the flying and shipping public.

Sincerely,

James C. May
President and CEO