Speech by James C. May: Breaking the Silence

Correcting what ails the airline industry will only occur if all stakeholders are willing to discuss topics previously considered taboo, James C. May, president and CEO of the Air Transport Association, said in a speech to the International Aviation Club today:

Noting that he had just completed his first year as the head of the airline lobby, May said, “I’m still new enough, by the way, to touch on a few of the taboos that we seem not to want to talk about in polite airline society… but these taboos, from my observations, must be dealt with directly.”

According to May, the top three issues the industry as a whole must address are:

Taboo No. 1: Too many in the airport community believe they are separate from the airline industry and that the national interests are best served by moving control of aviation revenues into airport hands.

“The simple truth is that those revenues—AIP and PFCs, and airline landing fees and rents—are driven by customer demand and come directly from air carriers’ bottom lines,” May said. “We need to focus our efforts on maximizing the national aviation system, improving those facilities that will add to national capacity, and forego edifice complex projects.”

Taboo No. 2: The idea that it is impolite for us to speak out in asking for more balanced and evenhanded treatment from our government.

“There is a widespread perception, or rather, misperception, that the airlines are subsidized,” May said. “The fact is this industry does more than pay its own way. We and our customers contributed $14 billion in federal taxes and fees last year.” He added that taxes on a typical domestic ticket have risen from 15 percent to 26 percent during the past seven years, while, bus and rail pay none.

Taboo No. 3: The too often unbalanced and unhealthy relationship between labor and management.

“The reality is we are operating under rules that were largely written back in the ‘30s to apply to a radically different mode of transport—the railroads,”

May explained. “To achieve sustainable growth and maintain a growing number of well-paid jobs, we cannot have the continued repetition of a boom/bust pattern of contract negotiations. It will be to the advantage of both sides to forge a new set of rules specifically geared to commercial aviation and its unique challenges.”

May said there’s no one cure-all to restore the health of the industry. Instead, he called for the following reforms that will enable the industry to prosper:

• Tax and fee reform that imposes only justifiable burdens on the commercial aviation industry.
• A reformed dynamic for industry labor relations that moves away from confrontation, and toward an environment where employees and employers recognize the need for mutual prosperity.
• Reformed federal energy policies that encourage price stability and recognizes the industry’s dependence on petroleum.
• Regulatory policies that put airlines on equal footing with other industries and that permit them to be globally competitive.
• Support for the FAA in making hard decisions that develop needed capacity by advancing initiatives that improve system productivity at a low cost.
• Recognize that not every proposed airport facility is a required or prudent expenditure and foster policies that strengthen checks and balances to assure that national system capacity needs are met.

May also said that the airline industry itself must do a better job of educating the public on the benefits of a healthy airline industry. To do that effectively, he said that individual carriers will need to put their differences aside and speak with one voice on issues important to the industry.

“It’s the old story: Together we stand; divided we fall,” May said. “I believe this industry is coming together. As an industry, I believe we are ready to move from the miracle of bare survival to the even greater miracle of sustainable growth.

“And in doing so, we will make an even larger difference in the lives of millions of people and thousands of businesses,” May concluded.