John Meenan
Executive Vice President and COO
Air Transport Association of America
to the China Aviation Congress 2007
Beijing, China
October 24, 2007
Ten, nine, eight, seven . . .
The countdown for the 29th Olympiad – what many expect to be the biggest and most spectacular Olympic Games of all times – has now begun. The opening ceremony, scheduled for the eighth day of the eighth month of 2008, is now less than ten months away. On, or shortly before that date, hundreds of thousands of visitors, from more than 175 countries around the world, will arrive in Beijing. What almost all of these foreign visitors will have in common is that they will arrive by air – and they will be relying on air travel to take them to different destinations within China.
I, for one, would like to congratulate the hosts of this conference – my counterparts at the China Air Transport Association and the China Civil Airports Association – for the part that they have played in making this extraordinary global convergence of people . . . and nations . . . possible.
The aviation sector in China has achieved a remarkable double feat. In recent years, it has combined the fastest growth in air traffic of any nation on earth, combined with the greatest improvement in air safety.
Air traffic, both within China and between China and the rest of the world, has been growing at a double digit compound annual rate. That is a blisteringly fast pace – sustained, amazingly, over a period of more than a decade.
At the same time, as the Wall Street Journal pointed out in a recent front-page article, China has recently emerged as “an acclaimed global leader in air safety.” As the Journal observed, “Despite frequent double-digit annual growth rates in the number of hours its airlines fly, their most recent fatal-accident rates are lower than America’s and Europe’s.”
Like the CATA in China, the Air Transport Association of America or the ATA, as we are called, represents almost all of the leading passenger and cargo carriers in the United States. Like the CATA, we are dedicated to promoting and ensuring the sustained growth of the air transport industry.
A vast body of evidence supports the view that removing barriers to competition stimulates growth in air traffic, which in turn is a major factor in driving the growth of dynamic, market-based economies. Invariably, countries and regions with the fastest-growing and most responsive air transport systems are the same countries and regions that enjoy the fastest economic growth.
In today’s fast-paced global economy, a robust and competitive aviation sector is one of the greatest enablers of commerce, stimulating economic opportunities that ripple widely across the economies of participating nations. With each new wide-body flight between the United States and China estimated to drive $213 million in annual economic activity for China, and every aviation job supporting, directly and indirectly, up to ten jobs, the benefits are clear.
In keeping with this mission and this view of the world, the ATA is strongly in favor of “open skies” – which is really the aviation equivalent of free-trade agreements between nations. From our point of view, this year’s new bilateral agreement between the U.S. Department of Transportation and China’s Civil Aviation Administration represents another giant step forward. But it still leaves us well short of the ultimate goal of “open skies” – removing all government restrictions on markets between China and the United States, thereby allowing U.S. carriers to serve any market in China and Chinese carriers to serve any market in the United States.
To speak in plain language, we recognize that the airlines of China will be formidable competitors in an open skies system. We look forward to that. Experience with other open skies agreements has taught us that everyone benefits from them – airlines, passengers and shippers. We know that is true based on years of experience.
The ATA and its members are thrilled at the opportunity that we now have to more than double nonstop traffic between our two countries – growing from where it is today, with just 11 flights a day, to more than 23 within the next few years. This reflects commendable diligence on the part of our respective governments’ civil aviation authorities. We just think we can and should move a little faster. After years of slow and halting progress, we think it is both possible and desirable to pick up the pace in moving toward further market liberalization – for the mutual benefit of businesses and travelers in both of our countries.
Let me review a few of the pertinent facts. While the ink is not yet dry on the new agreement, Delta has already announced that it intends to open up the first nonstop service between Atlanta, Georgia – one of the great regional centers for U.S. trade – and Shanghai. United Airlines, meanwhile, is now approved to launch San Francisco-Guangzhou flights beginning March 25, 2008, American, Continental, Northwest and US Airways are looking forward to opportunities for new service in the Spring of 2009. On the all cargo side of the business, both UPS and FedEx are developing or planning hubs in China which hold tremendous future opportunity for both China and the United States, and Polar, of course, looks forward to continued growth.
This enthusiastic reaction is just the beginning in responding to pent-up demand and correcting some obvious distortions in global air traffic patterns that are a major source of inconvenience and additional expense to many travelers who want to fly directly from Point A to Point B, without being required to connect in a third country along the way.
Right now, an estimated 16 percent or more of the natural traffic of passengers between our countries has been effectively diverted through third countries – most notably Japan and South Korea – as a result of the small number of nonstop routes granted to U.S. carriers, compared to the much larger number of routes awarded to carriers in those other countries.
In fact, by any objective measure, the current level of daily frequencies between the United States and China is completely out of balance with the volume of trade between our countries, with the United States as the leading importer of Chinese products, accounting for almost 25 percent of total Chinese air cargo exports. The U.S.-China pattern of air service lags far behind China and the European Union (with more than double the number of frequencies), South Korea (with triple the frequencies) and Japan (with about five times the frequencies).
It simply does not make sense to artificially limit the number of flights between countries that are primary trading partners. Consumers on both sides of the Pacific will be the beneficiaries if demand in the market, rather than governments, is allowed to set the patterns of air service between our two countries.
More than that, it must be recognized that a more liberalized air traffic regime between our two countries will help to promote improved relations in the political and diplomatic sphere. This is an important benefit that cannot be quantified but is of the utmost significance.
As I mentioned at the outset, the ATA and the CATA are kindred spirits. We share the same goals and challenges, beginning with the overriding objective of promoting the growth of a safe and prosperous air transport system, which is capable of investing – wisely – in the future and dealing with the growing concerns of global warming and the environment.
I can promise you that we at the ATA will do everything we can in getting our government to address problems that are of prime concern to you. We know, for instance, that post-9/11 security measures have become a major concern to people in China and many other countries wishing to travel to the United States, and we are working with our government to facilitate the procedures involved in obtaining visas and travel clearances. Indeed, ATA represents the U.S. airline industry on a U.S. Government committee that is examining ways to ease the entry of foreign travelers to the United States. “Open skies,” on a fundamental level, depend on secure yet “open borders.” With greater use of technology and automation, we will find a better way to reconcile security with openness.
At the ATA, we have also been campaigning for the past year and more for investment in a new satellite-based air traffic management system within the United States, which would make it possible to double and perhaps even triple the capacity of existing airports – through more efficient and even safer management of the air traffic control function.
Given the extraordinary development of China’s air traffic management system in the last few decades, you are well aware of the benefits of moving to a more advanced ATM system. An important benefit of more efficient direction of air traffic is the potential to reduce fuel burn, thereby reducing carbon dioxide and other emissions.
Indeed, at the ATA, we believe that continued fuel efficiency improvements are the best means for further improving our greenhouse gas profile, and that – unlike the unilateral greenhouse gas policies being proposed by the Europeans – such improvements are the types of measures that airlines from all over the world should support. Of course, in order to take full advantage of a modern air traffic management system, airspace restrictions must be kept to a minimum in order to optimize routings. This can be a “gold medal win” – better technology, improved safety, better use of airspace, reduced greenhouse gases and millions of dollars in improved economics.
So these are areas in which we look forward to cooperating with our friends and colleagues in China and other countries.
In closing, I would like to thank you for giving me the opportunity to address the China Aviation Forum and to wish you well in the fast-approaching 29th Olympiad with its well-chosen theme of “One World, One Dream.”