Says Soaring Costs Have Crippled US Economy, Environmental Investments

The Air Transport Association of America (ATA), lobbying group for the nation's leading airlines, testified Wednesday before the Senate Committee on Commerce, Science and Transportation to outline its continued, proactive efforts to further reduce the industry's greenhouse gas (GHG) emissions while identifying the severe economic consequences of the current "fuel price crisis."

ATA Executive Vice President and Chief Operating Officer John M. Meenan presented statistics demonstrating the airline industry represents just two percent of all domestic GHG emissions, as compared to 25 percent for the balance of the transportation sector. He testified that the investments the airlines have made that have resulted in the industry's outstanding environmental track record are being threatened by the historically high cost of jet fuel.

Meenan urged Congress to craft policies that will help solve the problem, pointing out the severe consequences of inaction.

Meenan told the committee that the industry continues to improve fuel efficiency, while also reducing its GHG output despite the high costs of jet fuel. Largely through use of more fuel-efficient aircraft that have come available in recent years, US airlines improved fuel efficiency by 110 percent between 1978 and 2007, resulting in 2.5 billion metric tons of carbon dioxide savings -- roughly equivalent to taking 18.7 million cars off the road each of those years.

Furthermore, according to ATA, US carriers burned almost 3 percent less fuel in 2007 than in 2000, but carried 20 percent more passengers and cargo on a revenue ton mile basis.

According to ATA, fuel prices now average 30 to 50 percent of airline operating expenses, costing $41.2 billion in 2007. Those costs are projected to grow to $62 billion in 2008. These costs significantly threaten the US airline industry's growth and ability to invest in fuel efficiency improvements, ATA says... a sign of dire consequences for the United States.

"The nation's airlines expect to lose in the range of $10 billion this year -- a loss on par with the worst year in this industry's history," Meenan said. "High fuel prices are the sole reason."

In addition to its fuel efficiency improvements, statistics show that the growth of the US economy is strongly influenced by the growth of the commercial aviation industry. Annually, the commercial aviation industry drives $1.1 trillion in economic activity, contributing 5.2 percent of US gross economic output. The Bureau of Transportation Statistics recently assessed that in 2006, 5.3 percent of the total value of international merchandise trade was shipped by air and that air shipments accounted for 32.4 percent of the value of all exports, more than any other transportation sector.

"This nation's economy is inextricably linked to the viability of its air transportation system," Meenan said. "If the airlines continue to spiral downward, so will the economy," said Meenan. "Aviation contributes $690 billion to the US GDP -- that's 10 million new jobs.

"Unlike the temporary revenue hits from 9/11 and other one-time demand shocks, the airlines now are facing a massive structural cost increase," he added. "Not even Chapter 11 can lower the price of fuel. More than 14,000 airline jobs have been cut so far this year, and that is just the tip of the iceberg. Scores of communities stand to lose all scheduled air service by early next year. More airlines -- in addition to the nine that have already filed for bankruptcy or stopped operating -- may simply shut down."

FMI: www.airlines.org