Aviation Associations Raise Concerns About Punitive Climate Change Proposal

Commercial aviation helps drive more than 10M American jobs and 5 cents of every dollar of U.S. GDP
Commercial aviation drives more than $1 trillion per year in economic activity
In 2012, U.S. airlines moved more than 48,000 tons of cargo per day
In 2012, the value of a kilogram of U.S. merchandise exported by air averaged 121 times the value exported by sea
For every 100 airline jobs, some 360 are supported outside of the airline industry
Federal taxes constitute $61 – or 20% – of the price of a typical $300 domestic round-trip ticket
In 2011, U.S. airlines carried 16 percent more passengers and cargo using 10 percent less fuel than in 2000
Domestically, airlines drive 5% of economic activity but account for 2% of man-made GHG emissions
From 2000-2011, airlines reduced GHG emissions by 11% while transporting 16% more passengers and cargo
From 1975-2011, U.S. airlines and their partners reduced significant noise exposure by 99%
Commercial air travel is the safest form of intercity transportation in the United States
In the most recent decade, scheduled air service on U.S. airlines was seven times safer than in the 1970s
From 2000-2012, U.S. airlines improved the on-time arrival rate from 72.6% to 81.9%
From 2000-2012, U.S. airlines reduced the flight cancellation rate sharply from 3.30% to 1.29%
Airfares are a bargain: From 2000-2012, U.S. CPI rose 33% while average domestic fare rose just 14%
Adjusted for inflation, the average round-trip domestic airfare fell 15% from 2000
2007 domestic flight delays cost the United States approximately $31 billion
In 2012, the value of U.S. merchandise exported by air reached an all-time high of $427B
In 2012, U.S. exports of air-travel services reached an all-time high of $39.5B, driving a $5.1B trade surplus
In 2012, U.S. passenger and cargo airlines spent more than $50B on fuel, averaging 36% of operating expenses
In 2012, U.S. airlines posted the lowest annual rate of mishandled baggage ever recorded
FAA projects U.S. air travel demand to top 1 billion passengers in 2027
In 2012, US airlines flew 83.4 million passengers in scheduled international service - a record high
In 2012, the total value of merchandise exported from or imported to the United States by air exceeded $927 billion
In 2012, 7.15 teragrams of merchandise was exported from or imported to the United States by air

	Aviation Associations Raise Concerns About Punitive Climate Change Proposal
	PubZone1 June 2, 2008 The Honorable Joseph Lieberman, Chairman The Honorable John Warner, Ranking Member Senate Subcommittee on Private Sector and Consumer Solutions to Global Warming and Wildlife Protection 456 Dirksen Office Building Washington, DC 20510 Dear Chairman Lieberman and Ranking Member Warner: As the Senate begins debate on the Lieberman-Warner Climate Security Act, the commercial aviation industry urges you to carefully consider the fuel price crisis presently facing the U.S. airline industry and the extremely negative effects that this punitive fuel tax legislation would have on our industry and on our national economy. Under the bill, fuel producers and importers will charge fuel consumers, including airlines, for greenhouse gas emissions allowances that must accompany the fuel they sell. Accordingly, in a rather perverse result, airlines will be forced to pay new fuel taxes to the oil companies. Imposing an additional punitive fuel tax on U.S. airlines on top of exorbitant market prices is particularly devastating. With no relief in sight, the airlines are reeling from skyrocketing fuel prices, likely spending nearly $62 billion on fuel in 2008 – $20 billion more than last year. Eight airlines have gone out of business in the past six months, and another is operating in bankruptcy. In turn, consumers and communities across America are feeling the pinch: commercial air service to 30-plus communities eliminated, more than 9,000 jobs cut, fares on the rise and added service costs for passengers. We urge you to consider the growing fuel crisis facing the country as you debate this bill. Environmental responsibility is of utmost concern to everyone in the commercial aviation industry. Indeed, our tremendous greenhouse gas efficiency record and continuous efforts to reduce emissions reflect our commitment to being part of the solution. However, we must act in a way that does not jeopardize the framework of the U.S. economy. A memorandum further describing the bill’s impact on aviation and our steadfast commitment to improving aviation’s environmental performance is attached. James C. May President and CEO Air Transport Association Capt. John Prater President Air Line Pilots Association Stephen Alterman President Cargo Airlines Association Thomas Zoeller President The National Air Carrier Association Roger Cohen President Regional Airline Association Memo: The Lieberman-Warner Climate Security Act – Severe Impact on Commercial Aviation and Passengers/Shippers/the Economy U.S. commercial airlines have a decidedly strong track record that is often overlooked or misstated. For example, U.S. commercial airlines improved their fuel efficiency – and therefore their greenhouse gas emissions (GHG) efficiency – by 110 percent since 1978. Between 2000 and 2006, we reduced fuel burn and GHG emissions by 4 percent on an absolute basis, while moving 12 percent more passengers and 22 percent more cargo. In fact, U.S. airlines account for only 2 percent of this nation’s GHG emissions while, at the same time, driving three times more economic activity. To accomplish this tremendous record, the airlines have undertaken an exhaustive array of fuel and emissions savings measures, including the purchase of new aircraft, the addition of winglets to improve aerodynamics and the implementation of new take-off and approach procedures, among other things.1 Moreover, the airlines are vigorously pursuing the development and deployment of commercially viable, environmentally friendly alternative jet fuels. Continuing such initiatives requires that airlines have the funds to expend on them. Indeed, the Federal Aviation Administration estimates that 90 percent of the fuel efficiency and emissions improvements that the airlines have achieved to date have come from their own investments. The Lieberman-Warner bill is styled as a cap-and-trade emissions initiative and, indeed, some industries would engage in emissions trading under it. However, its application to the transportation sector would come in the form of a highly punitive fuel tax. Specifically, the bill would require transportation fuel producers and importers to acquire sufficient GHG emissions allowances to cover the GHG content of the fuel they sell or import.2 The cost of these emissions allowances will be incorporated into the cost of the fuels, which then will be borne by fuel consumers, including airlines. Thus, in a particularly perverse result, the airlines (and other transportation industries) will pay the Lieberman-Warner bill’s required fuel tax to the oil companies. Furthermore, while the bill would provide for reinvestment of funds collected into many industries – none of which have done as much as aviation to improve greenhouse gas efficiency – none of the funds collected would be reinvested into aviation environmental projects or much needed aviation infrastructure improvements. Such a fuel tax is ill-conceived and does not make sense at any time, but it is especially harmful at a time when the industry is facing surging fuel prices. Fuel costs now are the U.S. airlines’ largest cost center, accounting for between 30 percent and 50 percent of airline costs. The U.S. airlines are projected to spend $61.2 billion on fuel this year, $20 billion more than in 2007 – an increase equivalent to the compensation and benefits of 267,000 airline workers or the acquisition of 286 new, more fuel-efficient jets. The fuel price spikes are wreaking significant havoc in our industry and across the economy. For example, nearly 30 cities across the country have completely lost scheduled air service in the past year, with more service cuts inevitable as airlines attempt to cope with soaring fuel prices. Eight U.S. airlines have gone out of business since the end of 2007 and another is operating in bankruptcy. More than 9,000 airline employees have lost their jobs this year, with more expected as the year continues. The proposed bill adds a significant additional increment to the cost of transportation fuel. Assuming that emissions allowances are modestly priced at $25/metric ton of carbon dioxide equivalent (CO2e) in 2012 when the bill would go into effect, this legislation would add another $5 billion to the U.S. airlines’ fuel costs, escalating each year thereafter. Assuming a lower end estimate for allowance prices in 2020 at $40/metric ton CO2e, the bill would impose a $10 billion additional fuel tax on the U.S. airlines, again escalating annually thereafter. Such costs will result in further job losses, loss in air services to small communities and negative economic ripple effects. In the face of current jet fuel prices and the myriad measures already employed by the airlines to reduce fuel consumption and emissions, there is no need for any further “price signal” for the commercial airlines. Moreover, we doubt that having the airlines pay additional exorbitant fees to the oil companies will bring environmental benefit. Rather than imposing additional taxes and fees on the airline industry, the federal government should focus on measures that complement the airlines’ initiatives and enhance our nation’s transportation infrastructure. For example, modernization of the nation’s outdated air traffic control system, which would enable more efficient flying routes, and decrease emissions by an additional 10 to 15 percent. In sum, the airline industry – if not the nation – is undergoing a fuel price crisis that greatly threatens our stability. We urge Congress to keep this in mind as it debates the Lieberman-Warner bill and the significant additional fuel tax it proposes to levy on aviation. 1 A detailed description of the U.S. airlines’ and pilot initiatives appears in the testimony delivered by James C. May and Captain Mary Ann Schaffer, both of whom appeared before the Aviation Subcommittee of the House Committee on Transportation & Infrastructure on May 6, 2008. 2 See Title II, Section 202(a)(2) (requiring transportation fuel producers and importers to cover the eventual GHGs from the fuels they sell with emission allowances). PubZone2	A4A advocates measures to support aviation safety, security and well-being.