Remarks to MRO Americas 2012

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 13%
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

	Remarks to MRO Americas 2012
	PubZone1 Nicholas E. Calio, President and CEO Airlines for America Remarks to MRO Americas 2012 Dallas Convention Center Dallas, TX April 3, 2012 I have been president and CEO at Airlines for America, formerly the Air Transport Association, for only about 15 months but I like to think I have always understood the importance and value of this industry. Whether it’s the timely delivery of high-value goods or the fact that there is only so much you can accomplish by conference calls and e-mails, there are times you just have to be there in person – to see eye to eye, build relationships, seal the deal. I certainly appreciated that in my last job, where I had to travel, often at a moment’s notice, to another part of the country or another part of the world. The only way to do that efficiently and safely is by air. So for me, the move to an industry that is so critical to the success of commerce, tourism and in fact our entire economy, was not difficult despite the challenges that I knew confronted this industry. Once in my job, I quickly learned that what was apparent to me – the value of this industry and the challenges it faced – were not apparent to many in our government. My education got a jump-start one week into the job when John Mica, Chairman of the House Transportation and Infrastructure Committee, called asking me to testify. I read testimony back to the 1990s. I learned that over the years, we’d been saying the same things – over and over. Three commissions recommended change but nothing happened. Faced with this reality, A4A immediately began the work of changing the conversation in Washington to a discussion of airlines as a strategic asset – and building a better understanding of the debilitating issues that U.S. airlines confront – versus the role that airlines should play in enabling economic growth. I knew a year ago that established perceptions are very hard to shift. To get to a more meaningful conversation, the industry had to change everything about its approach and reputation as an industry in Washington, D.C. We had been the Air Transport Association for more than 75 years. That alone tied us to the past – to an era that was long gone – and to parochial issues completely disconnected from today’s dynamic and changed global commercial-aviation sector. We spent the better part of the year simultaneously restructuring, reorganizing, educating, and on outreach. In November, we launched a new name and brand to reflect our new mission and purpose – to underscore what this industry does for the United States and the fact that we, quite literally, connect America – and the world. This industry, which has brought all of us here together, does what no other industry can. We connect families and communities. We create commerce. We drive exports. We tie the U.S. economy to the global economy – and drive jobs and growth in both. While I am sure you know the numbers, many of our policymakers – and the public – do not. The commercial airline industry drives over $1.2 trillion in economic activity in the United States annually and provides more than 10 million good-paying American jobs. Each day 2 million passengers and 50,000 tons of cargo travel on more than 25,000 U.S. airline flights. Yet as an industry, we consistently fail to meet the most basic metrics in our own financial results. 2011 was a “good” year. We were profitable for the second consecutive year. That profit? About $239 million for the U.S. passenger industry. That means – as an industry – we generated less than a quarter of a penny profit margin. Who among you would consider that “a good year” in your own business? These two “good” years come after a decade of devastating losses, where the industry was $55 billion in the red and shed 160,000 jobs. The losses came about, frankly, because of some of our own mistakes but also because of extreme circumstances. The industry has worked hard to right itself – in all matters that are within its control. Our airlines in America have made significant business decisions and stuck with them. Gone are the days of suicidal pricing wars with fares as low as $9 – fares that gave consumers unrealistic expectations and a false sense of what it costs to fly from one city to another. Gone also are the thousands of extra seats that carriers would flood into any city pair to stave off another competitor’s market-share creep. Common sense – or good business sense – and the economic law of supply and demand are prevailing, particularly as it relates to capacity discipline and pricing our product to actually cover our cost – novel concept! Through wrenching restructurings – both in and out of court – U.S. airlines have revamped their businesses and substantially lowered their controllable costs to among the lowest in the world. At the same time, consumers today have many options. Customers can choose what they value most in an airline or the product and service offerings they want, creating consumer-driven revenue opportunities in what still is a starkly competitive industry. In other words, airlines have started to operate like any other business. And despite deep cost cutting, airlines continue to make improvements in running their operations. For example, U.S. airlines reported the best performance ever in 2011 for key customer-service metrics: the best on-time arrival rate for any fourth quarter in history; and for full year the lowest ever recorded rates in mishandled baggage and in bumped passengers – 99.7 percent of all passengers arrived with their bags and less than one out of every 12,000 passengers was bumped. That best-ever trend continued for numbers posted in January. Everyone in this room knows that given the level of complexity and uncontrollable variables inherent in airline operations, these levels of safety and customer service are matched by no other industry. Safety is always the top priority. The fact that we are operating today in the safest period in aviation history is no accident. And, it is a credit to you. Because of the work you do every day, working with our airlines and working with the FAA, flying remains the world’s safest form of transportation. And we will continue to improve, as we focus on growing and righting this industry and enabling it to compete on a level playing field with other global carriers. As a country, we need to look at where we stand globally. U.S. airlines provide the infrastructure – the physical Internet if you will – vital to U.S. economic health and development. We have always been the world leader; That is changing. The world around us is changing dramatically with important growth economies emerging outside of our borders. Other governments across the world are treating commercial aviation differently – as a strategic industry and as a key enabler of national economic development. They have been decisive about the role of airlines – removing obstacles – particularly regulations and taxation – and making huge investments in infrastructure. The environment in which these airlines operate puts U.S. carriers at a competitive disadvantage. These changes in leadership in commercial aviation are clearly reflected in the statistics on new aircraft on order and in the fleets operating today. International carriers, who are buying the majority of planes today, are providing the connectivity their governments envisioned – and driving economic growth in the process. This includes flying to the United States in increasing numbers to our major cities, which has caused U.S. carriers to pull down capacity in some international markets – the most profitable part of the business and the part of the business that subsidizes, to a great degree, our domestic routes. This is the free market at work and may be advantageous if you happen to live in the cities chosen by international carriers. But let’s talk about what’s at stake. These same foreign carriers will not directly serve our smaller markets. They will choose only profitable cities and rely on others to provide connectivity, at whatever cost, across the rest of the country. The U.S. network carriers have a vested interest. Their business model accommodates connecting every part of the country with the revenues from the more profitable segments subsidizing the much less profitable, smaller communities. Talk to the mayor of any city. We are not asking for any kind of special deal. Our airlines want to go head-to-head with their international competitors but we’d like to do so on a more level playing field. While U.S. airlines have taken significant steps to put themselves in a position to be competitive, there are major factors within the control of the government that need to change. U.S. carriers need a more rational, normalized business environment, with less government interference, and with a fair tax and fee structure. To that end, A4A’s overarching strategy is to pursue the implementation of a National Airline Policy, a comprehensive approach to putting the U.S. airline industry on the path to sustained profitability that will make it an even greater driver of economic growth than it is today. There is precedent…good precedent and bad precedent: Maritime industry Railroads industry The National Airline Policy has five core elements: Rationalize our regulatory structure; Reduce our tax burden; Accelerate the development of the necessary infrastructure; Enable global competitiveness; and Mitigate fuel price volatility Let’s focus on regulation and taxes. For a supposedly deregulated industry, our regulatory burden is onerous. No other industry is expected to track and report the myriad metrics that airlines do. We are regularly subject to new regulation based on the whim of the latest headline or the latest bad flight. Regulations that add complexity to our business, but don’t actually improve safety. Let’s look at a few examples: Full-Fare Price Advertising Tarmac Delay Third Consumer Rule with a separate rulemaking Aside from our regulatory challenges, we face a uniquely bad tax environment. For an industry that can’t seem to make any money for itself, we are very effective as a tax collector for the federal government. Airlines and our passengers currently pay 17 separate federal taxes and fees – a hodge-podge thrown together and added to over the years without any guiding rationale or consideration for their overall impact on demand or affordability. U.S. airlines and their customers pay about $60 of a typical domestic round-trip ticket in taxes. Most recently, there have been attempts to have airlines and our customers pick up the tab to reduce the federal budget deficit or to cover the cost for a payroll tax-cut extension. Last year and earlier this year, on multiple occasions, the Obama administration offered a proposal that would triple the security tax that you and I pay on each flight, as well as impose on airlines a $100 tax on every plane departure. In the end, the proposals were rejected but they are back. The White House budget proposal for Fiscal Year 2013 again proposes to triple the security tax and add a $100 departure tax. These new taxes alone would cost the airline industry $36 billion over the next 10 years. And the House Republican Budget proposes to double it. In summary…our government can ignore the future ramifications of an uncompetitive U.S. airline industry to our medium and small communities – who only have American carriers to connect them to the national and global economy. Our government can ignore the benefits of the industry to our own economy at the same time it talks about the need to create jobs and double exports. Or, we can work together in creating a business environment that will allow for future growth and global competitiveness. A4A is committed to working with all stakeholders to make the latter happen. PubZone2	A4A is a leading source for key aviation information.