The Washington Perspective

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

	The Washington Perspective
	PubZone1 Nicholas E. Calio President and CEO Air Transport Association Remarks to the Boyd Group 16th Annual International Aviation Forecast Summit August 29, 2011 I have been head of ATA now for eight months. It’s been a deep immersion between reading, talking to my members and learning their businesses, talking to regulators and policymakers around the world, operations personnel, union representatives and consumers. Something that had become clear to me, which I’m sure most people in this room knew way ahead of me, was that airlines are underappreciated, they are overtaxed, they are overregulated and most importantly, they could be a resource to drive economic growth and job growth if the right policies are in place. That, of course, is the trick. The U.S. carriers are in reality Airlines for America: We connect the world; the businesses, passengers and packages of thousands to thousands of destinations, both domestically and internationally. As someone once put it, airlines are the physical Internet. Not long after I began at ATA, I was on a flight going out west. Before the flight took off, the pilot got on the intercom and said, “I want to thank all of you for flying my company today. Because you fly us, last year we have a profit for the first time in many years. The result was that last week we hired back 80 pilots and 220 flight attendants.” That’s what I want to talk about today: the airline industry and jobs, which is by far the top concern of the public, at least those who live outside the Washington Beltway. And, how the U.S. government can begin to drive job growth and exports – not just in the industry but across the economy by creating a National Airline Policy. I have said previously that the industry is at an inflection point and it requires immediate action. I think the “Summer of Discontent” in Washington helps to prove the point. As the debt-ceiling crisis loomed, so did the reauthorization of the Federal Aviation Administration (FAA). There are two options: come up with a long-term FAA bill or approve another extension, as Congress has done 20 times before. Neither happened. There was no long-term FAA bill and no short-term extension either. So the FAA operating authority lapsed, prompting a shutdown of many of its programs – the first time that had happened in 14 years. 4,000 FAA employees were furloughed; hundreds of construction projects were halted; NextGen planning was put on a back burner and, very significantly, the ticket tax lapsed. When the twenty-first short-term extension comes up on September 16, which is not that far away given that Congress is not scheduled to come back right away and some of the relevant parties toward any agreement are coming back even later for a variety of reasons, there’s going to be two likely scenarios again: Congress will pass another short-term extension or we are going to relive another shutdown. What is a certainty is that there will be no long-term extension passed by September 16, which is why ATA continues to implore the House and Senate leadership to finally all get together in the same room, face-to-face, and talk through the remaining differences between the House and Senate bills. This summer’s sequence of events made it clearer than ever that many of our policymakers lack an understanding of – or appreciation for – the airline industry, what it does for the American economy and jobs; it also underscores why we need a National Airline Policy. Start with debt-ceiling deliberations. As they dragged on into the middle of July, we learned that two of the potential debt-reduction measures on the table involved the airline industry, under the departure tax and a doubling of the aviation security fee. ATA, which had undertaken in the spring, a long-term campaign to educate policymakers about the state of the industry, including the crushing tax burden it bears, went into overdrive with a number of allies in this room. The case is simple: Airlines are the highest taxed industry in the United States – more than alcohol and tobacco, for which we try to discourage use – despite the fact that we are not consistently profitable but are still a key driver of economic growth and jobs. ATA launched a full-scale lobbying assault and a paid and earned-media campaign. We got traction. We got an agreement that we would not be part of any short-term deficit-reduction deal. It was pretty clear that we might be part of a longer term deal, which I will get to in a minute. Then, despite best efforts to bring the parties together, the FAA was not reauthorized and the ticket tax lapsed. When many carriers, based on sound individual business decisions, increased fares to keep ticket prices flat, we were asked, by Members of Congress: Why are these savings not being passed on to customers? Well it’s pretty simple: If you’re losing money, there are no savings to share. That’s the case and where the industry is this year. There was a profit in 2010 but fuel prices, given their increases, are making it very difficult for the industry. Brett Snyder, known to many of you as “The Cranky Flier,” described the reality of carriers’ decisions precisely in his blog: “When the taxes disappeared, the impact was bound to be short-lived (though longer than it should have been). So you have a two-week window where taxes are lower. What can you do as an airline? You aren’t going to be able to add capacity for such a short-term thing, so why would you want to pass on the tax savings and stimulate demand? You don’t have the supply to handle any demand increases anyway. Instead, you should just keep the price to the consumer where it was before, since that was the right price to fill the capacity you were putting out there." These facts are not within the grasp of many policymakers in the Administration or in Congress. We tried, and it wasn’t very pleasant. So, what’s the path forward? In our view it’s already defined. This industry is plagued by what I call a Groundhog Day phenomenon. You remember that movie with Bill Murray where he gets forced to relive the same scene over and over again? Well, in the industry, we keep talking about the same challenges, over and over again for years – and yet nothing seems to happen. The case for change is compelling. You know all of the facts. Airlines drive $1.2 trillion in economic activity every year and are responsible for more than 5 percent of the gross domestic product. But it could be more. We’re also responsible for 11 million jobs throughout the chain. At the same time, the counter facts are startling. The industry has lost, collectively, $55 billion and 160,000 U.S. jobs over 10 years. And they’re good jobs – jobs that were averaging between $50,000 and $120,000 annually. This industry cannot continue to lose money and jobs, and fly people from point A to point B for less than it costs to get them there, and be able to sustain themselves as a business model. So what do we do? Our strategy is to drive home the point that our carriers are Airlines for America, connecting the world and facilitating economic growth and jobs. It will be a long-term process but it is startling, if you talk to policymakers, how little they really know or understand about the industry. Therefore, we are asking them to create and execute a National Airline Policy. The issues of why the airlines struggle have been reviewed by congressional and business leaders many times over the years. Three federal airline panels have reviewed the challenges confronting this industry. Most recently Secretary LaHood’s Future of Aviation Advisory Committee proposed strikingly similar policy solutions, including: Reducing the industry’s tax burden; Reducing the industry’s regulatory burden; Expediting implementation of a satellite-based air traffic management system; Expanding access to rapidly growing global markets; and Enabling the U.S. airline industry to attract investment. We know the issues at their most basic level. This is an industry that faces daunting levels of taxation and regulation. And the infrastructure desperately needs repair and updating. Not addressing these matters now stifles our ability to help create growth and jobs, and puts us at greater risk to foreign competition. The days are gone when people would stick with an American carrier because they don’t recognize the names of the other carriers. Everybody knows Lufthansa, British Airways, Singapore – take your pick –and are very comfortable flying them. Meanwhile, countries outside of the United States, particularly in the Middle East, China and Brazil, are making massive investments in new airports and new airplanes. Carriers in the Middle East have more widebody aircraft on order than the current widebody fleets of United, Delta and American combined. Why they are doing it is simple: They understand the fundamental role that the airline industry plays in the financial health of their countries and their future growth. We are not making investments at that level and we need to. Further, if we continue to lose money and make choices to shrink our operations, we are opening the door to healthy foreign competitors. In the face of this, we have inaction problems, we have: Proposals on the table for increasing taxes on the airline industry as part of the long-term deficit-reduction plan due in November; A variety of regulations that add significant costs without real benefit; and that are poorly thought through For example, DOT is proposing that carriers be forced to give all their proprietary fee data to the Global Distribution Systems – for free! They also are proposing expensive new data-reporting requirements on revenues – unheard of for other industries or modes of transport A pilot flight/duty time rule that is not based on data or science, does little to promote safety, does not account for differing business models and which, when implemented, is going to do the following: Cost thousands of jobs Shrink capacity and network size in the United States, and Give foreign carriers, who have far more rational rules, a competitive advantage. In the face of these outcomes, it is proving impossible to get the attention of anyone in the Administration – the White House, DOT or the Office of Management and Budget, which is supposed to be reviewing the rule as it is passed by the agency. This is not where we should be. As I noted earlier, the issues examined over the years all have been reported out the same about what should be done. The work is there; it’s on paper. What is desperately needed now is action. Policymakers can actually build on that work to create a National Airline Policy and there’s precedent for it. Congress actually did it. I know there have been a lot of changes in Congress and how it does its business over the last 30 years but between 1970 and 1980, Congress enacted three laws to deal with what was going on in the railroad industry and it revitalized the U.S. railroads, which now are the envy of the world. Collectively, these bills lowered the rail industry’s tax and regulatory burdens, fostered consolidation and increased competition in the intercity freight market, which has lowered rates for consumers by 55 percent. In direct contrast with the airline industry, the rail industry is consistently profitable. Given the critical role the airline industry plays in the U.S. economy, policymakers need to follow suit and get down to business now. Current DOT and FAA funding should be prioritized to the most critical elements within the recommendations: Those that will create most benefit over the next 10 years. For example, the FAA should focus its resources on expediting the most cost-beneficial elements of NextGen, like performance-based procedures, which would pay immediate dividends for all stakeholders by increasing system capacity, reducing fuel burn, and reducing emissions. The agency should be commended for recently launching a program called “NAV Lean” to expedite the deployment of these procedures. The only problem is that the implementation is scheduled to occur over a five-year period. With our fuel costs up by more than 40 percent this year, we can’t afford to wait five years. We need a leaner NAV Lean program – FAA needs a program that is like 90-10 ground beef instead of 80-20. Here is a more specific recommendation. If I were the President, I would issue an executive order that called for: a one-year implementation schedule for NAV Lean; streamlining of the National Environmental Policy Act (NEPA) review processes to expedite the development and implementation of PBN and other environmentally beneficial NextGen procedures; and development of metrics to gauge the outcome and performance of NextGen capabilities once implemented. In conclusion, I would say we are at an inflection point. We can do what we have always done and get the same results. Because, as we know, doing what we have always done and expecting a different outcome is the definition of insanity. Or we can try, as an industry, to seek a different outcome, one that will benefit everyone involved. At ATA, we’re proposing the latter. We know that it’s not going to be easy but we think that over time, done the right way, being persistent and educating people over and over again, we can get there. 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