Airlines are under appreciated, overtaxed and over regulated despite their potential to be a resource to drive economic and job growth if the right policies are in place, Nicholas Calio, president and CEO of the Air Transport Association (ATA) said in recent remarks to the influential Boyd Group at their 16th Annual International Aviation Forecast Summit.
Calio also offered criticism of the Obama Administration and Congress for last month's legislative debacle over funding for the Federal Aviation Administration (FAA) and predicts another go-round in the funding war when Congress reconvenes this month.
"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," Calio said, urging the creation of a sensible national aviation policy.
The industry is at an inflection point and it requires immediate action, Calio said of this years “Summer of Discontent” in Washington. "As the debt-ceiling crisis loomed, so did the reauthorization of the 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, Calio said. "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."
"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," Calio said.
"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," Calio said.
He noted that Congressional debt-ceiling deliberations include two debt-reduction measures on the table involving the airline industry - the departure tax and a doubling of the aviation security fee.
"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," he noted.
"The case for change is compelling. 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," Calio said. "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. "
Calio reported that three federal airline panels have reviewed the challenges confronting the airlines, including most recently the Department of Transportation (DOT). Proposed solutions include:
• 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
• Enabling the U.S. airline industry to attract investment
Calio noted that while the U.S. debated the issues, 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."
Among the inaction problems cited by Calio are:
• 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, when implemented, is going to cost thousands of jobs, shrink capacity and network size in the U.S. and give foreign carriers, who have different 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," Calio said. This includes:
• 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
• development of metrics to gauge the outcome and performance of NextGen capabilities once implemented
The industry is at an inflection point, Calio said."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."