Op-Ed: Why We Need a National Airline Policy

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Sean D. Kennedy is the Senior Vice President of Global Government Affairs for Airlines for America (A4A).

Last week, airlines reported modest profits for the first half of 2013—about $1.6 billion for 10 passenger airlines. This narrow profit margin, about 2.1 percent, or two pennies for every dollar of revenue we gathered, enabled airlines to invest some $6 billion in new planes, improved airport terminals, Wi-Fi, better mobile technology, lounges and other customer improvements. At the same time airlines are performing well operationally. In the first half of the year, more than 98 percent of all flights were completed, and 78 percent of those were on time, despite some pretty challenging weather conditions.

These two performance metrics—profitability and operational performance—are remarkable given some of the challenges that impact all of us—airlines and customers alike.

First and foremost, the tax rate on air travel is beyond excessive. There are 17 unique aviation taxes and fees levied on the U.S. aviation industry and airline passengers. On a typical $300 domestic roundtrip ticket, roughly $61 – or 20 percent of the ticket – is taxes. This defies logic and must be rationalized.

Secondly, flight delays can frustrate both airlines and our customers, and costs us and the economy more than $30 billion annually. The benefits of a Next Generation Air Transportation System (NextGen) are just beginning to come to fruition with airlines having already made the significant technology equipage investments. For example, Alaska Airlines reported that by using NextGen arrivals and departures at Seattle and a handful of other airports, the carrier was able to save nearly $18 million in costs and 200,000 gallons of fuel and related emissions last year. Unfortunately though, the pace for NextGen implementation has been too slow – we need the government to implement related policies and procedures now so that we can reduce delays and have an even more efficient and dependable air travel experience.

For the reasons above, plus a few others, A4A and our members established a National Airline Policy campaign, which is based on five key pillars – reduce taxes, modernize the air traffic control system, reform the regulatory burden, compete globally and stabilize energy prices.

We believe the federal government must reexamine the burdens placed on airlines and our customers, and invest in the technology updates necessary to improve the travel experience. We encourage you to make your voice heard by signing the petition for a National Airline Policy to improve the passenger experience and overall economy.

The airlines are highly competitive with each other, but they recognize that working together, with their customers, we can enable a better travel experience that will benefit you and our overall economy.

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Comments (Showing 7 of 7)

  • AlwaysFlyStar at 12:07am August 29, 2013

    I went to your website, and must say, left very confused. You are asking for the airlines to contribute fewer taxes, yet also want the government to dramatically increase their investment in the industry. You claim you want shorter queues in customs, but remain opposed to pre-clearance in Abu-Dhabi. (Because the UAE has offered compensation, lowering the burden on the US taxpayer?) You argue that domestic airlines are the only airlines providing service to small US communities. Well, that is just a given. Russian carriers provide service to small Russian communities, and European airlines provide service to small European communities. Yet this remains an argument for reforming regulations. Well, as these small communities were significantly better served before airline deregulation, would you not recommend it is in their best interest to go back to those days?

  • BearX220 at 2:34am August 29, 2013

    If the airlines want public support, their business practices shouldn’t antagonize customers. It is no accident that US airline companies are among the most hated brands in the country. AFA has some nerve arguing for more taxpayer dollars and reduced tax obligations under these conditions.

  • dhuey at 4:22am August 29, 2013

    Jettison this one, folks:

    STABILIZE ENERGY PRICES. . .

    THE SOLUTION:

    Stabilize the cost of jet fuel and curb excessive oil speculation. Doing so would keep airfare affordable, preserve air service, and encourage investment in alternative fuels, advanced aircraft technologies, and more environmentally-friendly jet fuel supplies.
    Support a balanced and comprehensive national energy policy to improve U.S. energy security and result in more predictable and stable energy supply and costs.

    Oil is a world commodity. We could give the President tsar-like powers with regard to energy policy, and there would be very little he could do to manipulate the price of jet fuel. “Speculators” aren’t doing much to push this massive, global market one way or another. Even if we could define that term and ban oil speculation in this country, it would have barely any effect on the world market. Those nasty speculators would do their evil deeds in places where Airlines for America has no cachet. (That’s one of them non-Merican words.)

    I’m assuming you’re not talking about a government *subsidy* for jet fuel. That we could do, and it would indeed stabilize the price of jet fuel for airlines. It’d be very costly for taxpayers, and a really bad idea, but we could do it.

  • travelinmanS at 5:58am August 29, 2013

    Typical Washington blather from these chamber of commerce type groups. Lower the tax money the government takes in yet increase government investments in infrastructure and create an “energy policy” that is akin to destroying the environment. All to ensure Delta makes a keen profit. Give me a break.

    I have another suggestion. Airlines should have to do 100% of their heavy maintenance in the USA if they take advantage of the US transportation infrastructure built on the back of the tax payer, but I’m sure this is a proposal that wont be appreciated by these lobbyists.

  • PHL at 1:15pm August 29, 2013

    Regarding your pillar “reform the regulatory burden”, you comment that the airline industry was deregulated, but is still one of the most regulated sectors in our economy. I think you’re comparing apples and oranges. The “deregulation” in 1978 was gave airlines the ability to operate like a real businesses and choose the routes they wished to fly, and the fares they wished to charge based on market demand.

    The FAA regulations placed on our aviation infrastructure has been around since long before that deregulation act and has nothing to with what routes are flown and fares charged.

    As much as we like to criticize the FAA for its inefficiency, we have to also appreciate that we have by far the safest air transportation infrastructure in the world. Other countries look to us as a model to create their own safe aviation environment.

  • SOBE ER DOC at 4:18pm August 29, 2013

    I find the core tenets of this op-ed piece just rich. So, let me see if I understand you:

    1. The airlines have engaged for the last three decades in competitive behaviors that to not balance the the supply and demand curves hoping to make it up on volume and now you;re complaining that your margins are too thin? Interestingly, grocery stores, hospitals and a whole host of other industries survive on margins similar to where you are now.

    2. You want less government to invest in a NextGen ATC system that costs hundred of billions of dollars yet you don’t want to foot any of the bill? Why don’t you take some of the money you would save from the system and pay for it yourselves? It seems if you did the break-even analysis on this you wuld see that it’s in your best interests to do so.

    3. The “burden” placed on consumers have everything to do with behaviors on the part of the airline industry that amount to nothing short of price collusion and the continued scale back of the flight experience to the point that Greyhound is often a preferable option.

    4. You complain about taxes representing a significant portion of the base fare for an airline ticket. I’m wondering, how much does selecting a seat, checking a bag and have a bite to eat on the plane cost the average traveler? Oh, you conveniently forgot that, didn’t you?

    5. The airlines have been blatantly clear that you wish to push up prices by reducing capacity so any reductions in taxes, etc. would likely be offset by your desire to further consolidate the industry into three mega carriers that are too big to fail.

    Maybe before you ask for our support you should take your shoe off of our throats…

  • garydpdx at 5:34pm August 29, 2013

    Folks, do some research on how air transportation is already heavily subsidized in the US (compared to, say, Canada where folks are screaming over bearing most of the actual costs of flying).

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