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.