US carriers rally for national airline policy

Washington DC
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Stressing that the US airline industry is at a crucial inflection point, the country's airlines are uniting to push the government to adopt a national airline policy to break away from the "Groundhog Day" scenario of heavy taxation and regulation that has plagued the industry for decades. Spearheading the effort is the Air Transport Association of America, led by chief executive Nicholas Calio who has been in the job almost 10 months.

"We keep talking about the same challenges over and over again for years, and yet nothing seems to happen," he says.

The campaign is intensifying as ATA warns that airlines face a raft of new proposals to increase taxes on the airline industry as part of a long-term deficit reduction plan for the USA, due in November. During short-term debt-cutting negotiations among US lawmakers in the summer, ATA and its member carriers staved off two potential debt-reduction measures that involved the airline departure tax and a doubling of the aviation security fee.

"We went into overdrive," says Calio. "We know the issues at their most basic level. This is an industry that faces daunting levels of taxation and regulation - and the infrastructure desperately needs repair and updating."

Holden Shannon, Delta Air Lines senior vice-president of corporate strategy, highlights that the US government ranks low in six major issues facing the industry, and warns that in the long term "the USA becomes a key market for foreign airlines to operate in but with no national carrier".

One tool to combat that scenario touted by ATA and Delta is to use reform pushed through in the 1970s and 1980s to resurrect the US railroad industry as a blueprint for the development of a national airline policy. Shannon says that prior to the US Congress being prompted to act on railroad failures, the industry was on the brink of collapse, with an average return on capital of 2%.

After policy changes were introduced about 30 years ago that ended discriminatory taxes, improved merger procedures and allowing railroads to abandon unprofitable routes, the railroad industry's return on capital jumped to 8% in the 2000s. One immediate step ATA is pushing the administration of President Barack Obama to take is to accelerate portions of the Next Generation (NextGen) air-traffic management improvement programme.

Calio cites a "little bit of a success story" in meetings held with Obama's chief technology officer Aneesh Chopra. Calio states that Chopra views NextGen as "a way to create jobs quickly".

As a result of the meetings with Chopra, a dashboard has been created to measure FAA's application of Nav Lean, which was designed to reduce the time it takes for approval of arrival and departure procedures for performance-based navigation (PBN), required navigation performance (RNP) and area navigation (RNAV).

Calio stresses the administration is looking at a significant ramp-up to gain approval for procedures that reduce spacing between aircraft and cut fuel burn.

As momentum builds to push the administration to adopt a national airline policy, Calio says that the industry 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".