Connecting and Protecting

James C. May
President and CEO
Air Transport Association
to the Eco-Aviation in Action Conference
Washington, DC
May 27, 2009

I’m delighted to be here today to address the “Eco-Aviation in Action” conference. Based on what we’ve heard this morning – and the agenda to come – this is a very apt title for the conference – as this industry has a long and strong record of action in Connecting and Protecting Our Planet®.

I’d like to begin with a bit of history, which relates to three synergistic issues of aviation environmental action: climate change, energy and air traffic management.

With all of the challenges we have been facing recently in the world and world economy, it may be useful – and perhaps inspirational – to recall an event that could have been one of the great disasters in human exploration. But which stands instead as a classic example of human ingenuity and cooperation in times of crisis: the Apollo 13 mission to the moon.

As the Apollo 13 spacecraft was hurtling toward the moon on April 14, 1970, it was rocked by an onboard explosion, which caused Commander Jim Lovell to utter the famous words, “Houston, we have a problem.”

Some problem! The blast caused a sudden loss of oxygen, power and water. To conserve supplies, Lovell and his fellow astronauts shut down the main ship and moved into the lunar module. It was cramped and chilly and they were more than 200,000 miles from home.

Then, as the world watched, a new danger arose: rapidly rising levels of carbon dioxide – CO2 – inside their tiny cabin were making the cabin environment unsustainable. Ironically, the astronauts were in imminent danger of dying – due to a byproduct of their own act of breathing.

With only two hours to find a solution, experts from different disciplines at Mission Control frantically piled together materials identical to those onboard the spaceship, and set about building a crude but workable air filtration system. Then they guided the astronauts through the very same sequence of steps that they had just discovered themselves. Miraculously, it all worked, and the astronauts survived, splashing down in the Pacific three days later – cold, tired, dehydrated... but safe.

Apollo 13 never did make it to the moon. Against long odds, however, it did circle the moon and find its way home.

We – meaning all of us who are inhabitants of the spaceship Earth – are looking for the same kind of safe deliverance for our planet and ourselves. On a vastly larger scale, the earth’s atmosphere really is comparable to the pocket of air inside that lunar module.

We cannot allow rising levels of greenhouse gases – and of CO2 most especially – to jeopardize this air pocket, or to create conditions that are unfavorable to the sustainability of life on the planet. I think we can all agree on that.

By the same token, I think we can all agree that energy – and fuel – are also critical to the sustainability of life. The human body needs fuel – including the carbon intake from plants and meat to survive. In turn, we exhale CO2. But this happens in a closed system – the amount of carbon that we exhale cannot exceed the amount of carbon our bodies consume. Where the problem lies is in other critical human activities. We need fuel to run our power plants and factories and to provide for our transportation needs. This is no longer a closed system in human time scales. Turning fossil fuels into energy puts carbon back into the atmosphere that plants removed millions of years ago.

And here is the first synergy. The airlines are – and long have been – highly motivated to minimize our fuel burn and resulting emissions. Even before the fuel price spikes in 2008, fuel was our biggest cost center. Those price spikes sent our total bill even higher, to a record $58 billion dollars spent on jet fuel in 08, nearly three-and-a-half times the bill for 2000, though the number of gallons consumed was less. This played a central role in the U.S. airlines’ loss of almost $10 billion in 2008 – a devastating loss for us, but also for the country, as our airlines drive more than 10 million jobs and more than 5 percent of the nation’s economy.

So, how do we go about addressing this? Through a balanced, comprehensive U.S. energy policy that enhances a secure supply of environmentally-friendly energy and increasingly stable costs. ATA and its airlines are taking action. First, not unlike the Apollo 13 astronauts, we are doing everything we can to minimize fuel burn. The U.S. airlines improved their fuel efficiency by 110 percent between 1978 and 2007, saving over 2.5 billion metric tons of CO2. And that’s just the beginning. We are committed to an additional 30 percent fuel efficiency improvement between 2005 and 2025, when we do that, we will save an additional 1.2 billion metric tons of CO2 – the equivalent of taking 13 million cars off the road each and every year.

We have spent tens of billions of dollars to achieve those gains in fuel efficiency, and plan to spend tens of billions more over the next two decades as they replace older airplanes with the newest and most advanced airplanes, such as the Airbus A380 and the Boeing 787 Dreamliner.

This heavy continuing investment in new airplanes and new technology has led to an exceptional environmental track record. According to the U.S. Environmental Protection Agency, U.S. commercial aviation is responsible for just 2 percent of U.S. greenhouse gas emissions – in contrast to than the 25 percent produced by the balance of the transportation industry. Globally, we are only up to 3 percent of total greenhouse gas emissions and 2 percent of CO2 emissions.

While aviation’s greenhouse gas emissions are very small, and for the last several years the growth of the US carriers has been flat if not negative, we want our industry to return to growth. Some critics are exaggerating the effects of this growth to serve what may well be an anti-aviation agenda. We have to combat that with the facts. And the fact is that the Intergovernmental Panel on Climate Change – an independent body with no reason to favor the aviation industry – projects that under the most likely scenario, commercial airlines will remain a relatively small greenhouse gas emitter despite strong long-term growth in airline traffic. How much? 3% of CO2 emission by 2050 – 5% total GHGs.

Within the aviation community, we believe that we can do even better than that.

But there is only so much the airlines can do within the limits of the outdated air traffic management system.

If you’ll permit me, another example of human ingenuity during the Apollo 13 saga has relevance here. As you will recall, to make the return to Earth safely, the flight controllers had to change the course of the spacecraft – without turning on the primary propulsion engine, which had been damaged in the explosion. To do this, the astronauts used mathematical positioning and coaxed a slight nudge from the less powerful lunar descent engine – that had the effect of “slingshotting” the spacecraft around the moon on a trajectory that used the moon’s gravity to speed its return to Earth – and that is how they got back.

Today, we can put Space Age technology to work to further reduce aircraft emissions. We can do that right now by moving from talk to action on modernization of air traffic management.

We at ATA have worked long and hard in pushing for the adoption of a satellite-based air traffic management system – to replace the ground-based system of today. Because it lacks a true bird’s-eye view of what is happening in the airspace below, today’s ground-based system is unable to route planes to their destinations in the most direct and efficient manner... or to reroute them quickly for changes in weather patterns. We have ample studies that show that modernizing the air traffic management system by using satellite-based navigation technology will reduce fuel burn and resulting greenhouse gas emissions, in the range of 10 to 15 percent. It will also reduce costs, relieve congestion, optimize traffic flows, spare passengers the needless aggravation and inconvenience that come from far too many canceled and delayed flights, and open up new airspace for future growth. Now if there is a definite win-win-win, this is it.

All sectors of the broader aviation industry – airports, airlines, business aviation, manufacturers, passengers and shippers – agree that the FAA air traffic management system is badly in need of modernization and that the FAA Next Generation Air Transportation System (NextGen) is needed now. Indeed, now is the right time to accelerate several key NextGen components, ADS-B for instance, to drive “NowGen,” which will deliver many of NextGen’s benefits much sooner. NowGen accelerates the manufacture and installation of required avionics, the installation of associated ground infrastructure, and the development and implementation of new procedures by the FAA. Instead of achieving roughly 12 percent fleet readiness by 2012, which is under the existing FAA NextGen schedule, NowGen delivers 100 percent fleet readiness in 2012. As a result, NowGen can deliver tremendous public benefits immediately and total benefits will exceed costs two years from now.

We know that the technology to support a major advancement in this part of our aviation infrastructure exists, and we know that it works. For example, in tests conducted at Atlanta and at DFW, the airlines, working with FAA, have found that continuous descent arrivals (which will be a key feature of advanced ATM systems) result in significant savings of CO2 – one airline alone is saving 1,300 pounds of CO2 for every flight they make into those airports.

Modernizing air traffic management represents a smart investment for the environment...and for energy independence...alike. There clearly is a way. Now our government must summon the will to move forward expeditiously.

Another key aspect of the energy connection with climate change is the nature of the energy we use. In this regard, ATA and its carriers are committed to the development and deployment of commercially viable, environmentally friendly alternative jet fuel. Central to this, ATA and its members are playing a leading role in the Commercial Aviation Alternative Fuels Initiative (CAAFI), which is working to hasten the production and use of biofuels and other alternative fuels.

We have a built-in economic incentive to fly green – with fuel being the number-one cost center, representing between 30 and 40 percent of our overall costs. And with fuel prices rising over 200% in the last several years – we are highly motivated to invest in more fuel-efficient airplanes and technologies, alternative fuels and the drive to NowGen.

But the hard truth is that – like other businesses – we must generate profits in order to spend it on new investment.

Now I do not intend to burden you with a tale of woe regarding the financial condition of U.S. carriers. But I do wish to draw attention to a proliferation of new aviation taxes and charges that further threaten our business. Masquerading under the banner of supposedly “protecting” the environment, these measures are poised to do serious damage to the world’s aviation industry.

There are, for instance, the UK Air Passenger Duty and proliferating departure taxes. Though fashioned as “environmental measures,” the real purpose behind these taxes is to add to general revenues. Indeed, none of the funds collected, not a Euro or Pound, go to environmental projects, and yet the taxes take money from airlines that we could otherwise invest in more fuel-efficient and greenhouse gas-efficient technologies will not be available.

We also have the European legislation adding aviation to the European Emissions Trading Scheme, which is both a taxation measure – via the auctioning revenues collected by States – and a subsidization measure – as airlines will be forced to buy emissions allowances from industries that have done far less to improve their fuel efficiency and reduce greenhouse gas emissions. Among our other concerns, the European scheme will tax emissions from entire international flights, including portions not over Europe and in fact for parts of the United States. Frankly, inclusion of aviation is contrary to international law and bad policy, and will continue to be strongly opposed by us and I hope other countries around the world.

As you know, the U.S. currently is considering its own version of CC legislation, the Waxman-Markey “American Clean Energy and Security Act.” That legislation would cover the airlines through the fuel we buy, essentially operating as a hefty, additional tax on jet fuel. My counterpart at the American Petroleum Institute – API, says it could amount to an additional $1.40 to $1.70 per gallon. It also would amend the Clean Air Act criteria for aircraft engine emissions standards.

Although this legislation was just approved in the House Energy & Commerce Committee, it was referred to seven other House committees and also will be subject to Senate review. We are hopeful that upon further review that Congress will recognize and remedy what now is a punitive attitude toward aviation. For what this legislation shares with that proliferating in Europe is a failure to think through the environmental consequences of what is proposed in the very name of the environment.

How can it make any sense to have energy-efficient airlines, which are already struggling due to the combination of high oil prices and economic recession, pay huge subsidies to cement companies, which could have switched to natural gas a long time ago, but didn’t?

It is estimated that the European Cap-and-Trade System would impose an annual cost to airlines (over and above the cost of jet fuel) of several billion dollars in 2012, tripling by 2020. The Waxman-Markey bill would cost U.S. airlines alone approximately $5 billion in 2012, escalating to around $10 billion in 2020. Those are staggering amounts of money. They will drive some airlines to and beyond the brink – and have the effect of killing investment in new energy-saving and emissions-reducing technology.

Some – particularly those in Europe – have said that they couldn’t care less if half of the world’s airlines failed...because other modes of transport could take their place.

This is very dangerous nonsense. At the time of the last Great Depression, the world economy was not vitally dependent upon commercial aviation. Today it is. You don’t have to fly from Belgium to France; it is easy enough to go by train. But there is no real alternative to aviation if you want to go from Brussels to Tokyo or from New York to Sydney. As a matter of fact, fully 80 percent of the greenhouse gases in aviation occur on trips for which there truly is no substitute form of transportation.

Don’t forget air cargo as well. There’s an excellent reason why the cargo carried by air is 89 times more valuable per unit of weight than cargo carried by truck or train. Air cargo fills all sorts of critical needs. If there were no cargo-carrying planes, most of the people waiting in hospitals for organs – hearts, kidneys, livers and lungs – would be out of luck, because organs are normally delivered by commercial air. Think of how people in the oil field services industry would be affected if they were suddenly unable to get urgently needed tools and replacement parts. And think of the just-in-time inventory systems made possible by worldwide supply chains. Do we want these productivity-enhancing supply chains to collapse?

Common sense tells us that if global aviation were to shut down tomorrow, global commerce would soon follow...to the enormous detriment of people everywhere.

There is a better way.

It begins with recognition of the vital connection between energy and environmental issues. We cannot address the one without addressing the other and we must take advantage of all of the synergies that exist between them. This leads to my concluding points:

First, governments and politicians have delayed far too long in considering new ATM systems. They should get on with the task of building them – both to protect the environment and to lessen the need for imported oil. (Aviation Infrastructure should be to the Obama administration as Highway Infrastructure was to the Eisenhower administration)

Second, we must all recognize the need for developing alternative fuels is critical. This is a task that demands the development of comprehensive energy policies and genuine partnership between the public and private sectors and academia. There are some who doubt that we will ever be able to replace fossil fuels. I am not one of them.

Third, governments must recognize that policies that siphon money out of aviation are counterproductive: The airlines should not be prevented from reinvesting in ever-improving technologies that reduce emissions. If governments implement any new charges on aviation, then – at a bare minimum – they should reinvest the monies collected back into aviation – into such things as aircraft equipage for a satellite-based air traffic management system, alternative fuels, and research and development into further environmental breakthroughs in new aircraft and engine technology. Indeed, it was aviation environmental R&D that spawned Pratt & Whitney’s break-through geared turbofan engine, which brings us significant emissions and noise savings.

Further calibrations are sorely needed if governments choose to impose economic measures on aviation – things like free allowances to take into account aviation’s outstanding fuel efficiency record and carbon market controls such as safety valves to provide a stable investment environment. We can’t forget the role that credit default swaps have played in the nation’s housing and economic crises or that speculation in commodities swaps played in the run up on oil prices. The last thing we need is uncontrolled carbon swaps!

Finally, given that aviation is a global industry, and our planes – just like greenhouse gas emissions – know no geographic boundaries, we need a global, sector-specific approach to climate change. The International Civil Aviation Organization is uniquely poised to implement this. Over the years, ICAO has continually adopted standards that have driven down aircraft noise and emissions, and it crafted guidance on state-of-the-art approaches to minimizing fuel burn and emissions. ICAO is a proven change leader and is addressing climate change today. It commissioned the first – and only – sector-specific climate change analysis by the IPCC. It has even approved guidance on how mutually agreeing States might include aviation under emissions trading schemes – guidance supported by all ICAO Member States. So let us continue to support the efforts of the ICAO to come up with mutually agreed-upon next steps on aviation and climate change. As the Apollo 13 space mission proved, great challenges are best addressed collectively.

If I may draw one final lesson from that crippled spacecraft that made it back to earth on an empty fuel tank, it is that one should never underestimate the human capacity for doing “impossible” things. All through history, enterprising people have surprised themselves – and others around them – by finding ingenious solutions to the most complex problems. We can do that here.