Good afternoon. It’s a pleasure to be with you. It’s particularly appropriate that we are meeting in Chicago in the same year that we are celebrating the 75th anniversary of the signing of the Chicago Convention, which took place in December 1944, not too far from here.
We saw a small example over the just-ended Labor Day weekend. According to our friends at Airlines for America (A4A), an estimated 17.5 million passengers took to the air over the holiday period that marks the unofficial end of summer in the United States and Canada.
I’m sure many were reuniting with friends and family. Others were on journeys of discovery, rejuvenation or learning. And still others were traveling on business, or to attend conferences like this one.
The benefits of all of this aviation-enabled activity are massive. The United States is the world’s largest single aviation market. It supports 6.5 million jobs and contributes $779 billion to GDP including aviation-supported tourism, according to our just released analysis of the benefits of aviation to the US. And with the right policies and infrastructure, these benefits could reach approximately $1.26 trillion in GDP contribution and almost 8 million jobs in the next 20 years.
We will likely never know whether the visionaries who assembled in Chicago all those years ago conceived of the central role that aviation would come to play in our daily lives. Still, I believe that they would have welcomed this development and encouraged us to work even harder to grow aviation’s benefits for all.
How can we continue to live up to their legacy? In addition to maintaining safety as our highest priority, I believe we must be guided by some core principles:
- We must be environmentally sustainable.
- We must work with governments to ensure a policy framework that encourages competition and innovation. And,
- We must be supported by infrastructure that is efficient and affordable.
Let's begin with the environment. While this was not on the radar screen in 1944, today environmental sustainability is the greatest challenge to our industry's license to spread the benefits of air connectivity. And we have redoubled our resolve to address our climate change impacts by capping emissions from 2020 and cutting them to half of 2005 levels by 2050.
At the same time, we must be aware that the rise of anti-aviation sentiment over these last months, particularly in Europe, poses an immediate challenge to our efforts to grow aviation's benefits, while addressing our climate responsibilities.
Through campaigns like flight shaming, which started in Sweden, people are being presented with a false choice: to fly or not to fly. Simultaneously, governments are piling on with so-called environmental taxes that penalize airlines and air travelers but do little to support industry efforts to become greener. Raising airline costs reduces the industry's ability to invest in more efficient aircraft and ground equipment. And I have yet to see any aviation environmental tax actually being used to help reduce aviation's environmental impacts.
The fact is that we are already helping people to fly sustainably. The environmental impact of an individual traveler has been cut in half compared to 1990, and we have decoupled emissions growth from underlying traffic growth.
Now we are moving forward on our interim goal of capping net CO2 emissions through carbon-neutral growth. Since 1 January, airlines have been tracking their emissions and they will begin reporting them to governments in 2020 under CORSIA, the Carbon Offsetting and Reduction Scheme for International Aviation, agreed by member states of the International Civil Aviation Organization (ICAO).
At our Annual General Meeting in June, IATA members overwhelmingly passed a resolution calling on governments to support CORSIA, which is expected to mitigate around 2.5 billion tonnes of CO2 and generate over $40 billion in climate finance between 2021 and 2035.
We are mapping the way to our 2050 target. Sustainable aviation fuel (SAF) will play a huge role. We understand the science and we've proved it works with nearly 200,000 commercial flights having been operated with a partial mix of SAF. Reaching 2% SAF use by 2025 would be a tipping point on the flightpath to mass adoption. But getting to that figure will require governments to enact policies supporting commercialization.
Major advances in airframes and propulsion systems, such as the development of all-electric and hybrid-electric aircraft, will also play a big part in cutting our emissions in half by 2050. It will also require operational improvements and greater efficiency from air navigation services providers (ANSPs).
We know that environment will be high on the agenda at the 40th ICAO Assembly taking place in Montreal in just a few weeks. And we will advocate on behalf of CORSIA, the industrialization and commercialization of SAF, and the related measures to help us reach our 2050 goal.
We require governments to support these efforts, not make them more difficult. And as an industry, we need to do a better job of informing the public of the ways in which we are living up to our environmental commitments.
Pro-Competitive Policy Framework
That brings me to our next principle, which is the need for policy frameworks that support competition and innovation.
Competition unleashes innovation and helps drive prices lower. This is what occurred following airline deregulation. Subsequently, we've seen how removing regulatory barriers to international competition through Open Skies agreements has also spurred the market and benefitted consumers.
Despite these successes however, some in Washington are not satisfied with the market outcomes and have sought to tip the scale back towards a more regulated aviation system. This reached its zenith during the Obama Administration, when the US Dept. of Transportation (DOT) imposed three separate sets of consumer rights rules on the industry.
Since the Trump Administration took over in 2016, we have seen a halt to efforts to re-regulate. The DOT has launched a broad review of existing and proposed regulations to ensure that the costs to industry do not exceed the benefits to consumers. As yet however, there has been no rollback of the more egregious intrusions into the deregulated sphere of the previous Administration.
Areas where we believe the DOT should focus include:
- Eliminating the full fare advertising rule that allows the government to hide the many fees and taxes imposed on air travelers in the ticket price,
- Modifying the tarmac delay rule—as directed by Congress—to better meet operational realities, and,
- Providing relief for air travelers and airlines overwhelmed by an explosion in the number of so-called emotional support animals. US airlines are mandated to carry these in the aircraft cabin despite the discomfort and potential risk they may pose to other passengers and our crewmembers.
Let me be clear. Airlines do not oppose sensible, well thought out regulation based on open dialogue, rigorous cost-benefit analysis, global standards, and proportional compensation, when needed. These are all elements of what we call smarter regulation and they were taken into consideration when member states of ICAO agreed to their own principles on passenger rights.
Despite this, many governments persist in going it alone when it comes to passenger rights. And too often they do so in a knee-jerk reaction to an isolated incident.
The most recent example is Canada, which is in the process of implementing new Air Passenger Protection Regulations in response to a 2017 event that everyone agrees was deplorable. Unfortunately, smarter regulation principles were ignored in favor of an approach that is punitive as well as extraterritorial.
For example, some provisions apply to flights that never even touch Canadian soil, even where those flights are already covered by other passenger rights regimes. In addition to being inconsistent with general international law, this extra-territorial approach will cause significant confusion for passengers, the Canadian regulator and airlines.
IATA has joined with A4A and several airlines in issuing a legal challenge to the regulations.
Special interest groups with hidden agendas also pose a risk to aviation's ability to spread the benefits of connectivity. A new bill that is being pushed by some US labor groups seeks to undermine the 125 Open Skies agreements the US has signed since 1992 that have delivered enormous economic benefits to air travelers and the US economy.
Under the proposed law, the DOT will be required to determine that any new service by a foreign airline will not undermine labor standards and that the service is in the public interest. US labor groups argue that these infringements to existing Open Skies agreements are needed to protect US jobs and labor standards from lower cost foreign competitors. It's a tough argument to make when US airlines have added more than 59,000 jobs and average airline wages have risen approximately 41% since 2010, according to our friends at A4A,
It's clear that there is no basis in any of the US Open Skies agreements for the imposition of these new requirements. The Obama and Trump Administrations, the US courts and the European Union have all arrived at that conclusion. Furthermore, if this measure becomes law, it will invite Open Skies partners to retaliate with measures of their own against US airlines, or even worse, by cancelling the agreements entirely. The European Commission has already promised to take any necessary action to counter this labor effort.
US passenger and cargo carriers have expanded aviation markets dramatically based on the freedoms provided by the Open Skies Agreements, delivering jobs and growth to the US economy. Lawmakers should recognize this fact and reject this ill-conceived effort to retreat from Open Skies and the freedom aviation delivers.
Finally, if aviation is to grow its benefits, we must have adequate, affordable airport and air traffic infrastructure to support future demand.
That's certainly not the case today. Critically congested airports are spread the world over. New York, Sao Paolo, London, Amsterdam, Mumbai, Bangkok and Sydney are all examples of airport bottlenecks due to capacity constraints—both real and artificial.
The implications go beyond just capacity to aviation's climate impacts. Bottlenecks, whether on the ground or in the air lead to delays and inefficiencies, and these result in excess fuel burn and CO2 emissions. For an example, look no further than Europe. Last year, aircraft flying in Europe experienced 19.1 million minutes of en-route delays that added 5.6% to aviation's carbon footprint there. This year is not looking that much better. Europe is the worst case, but air traffic bottlenecks are also found in the US, in China, the Gulf and elsewhere.
While it is 's broadly correct that the US is better positioned than most in terms of concrete and airspace, costs matter too. The US already ranks 100 out of 136 countries in terms of its travel and tourism cost competitiveness, according the World Economic Forum. A proposal in Congress to almost double the cap on airport passenger facility charges (PFCs) will raise ticket prices and reduce the country's cost competitiveness further.
This proposal also comes despite the fact that there is no airport funding crisis. Airports collected $3.5 billion in PFCs in 2018, part of a record $32 billion in airport revenues that year, according to A4A. And more than $200 billion has been invested in infrastructure projects at US airports since 2008—without an increase in the PFC.
As an example, with the support of its major airline tenants, Chicago's O'Hare International Airport has launched an ambitious $8.5 billion expansion and modernization program known as O'Hare 21.
Taxes and fees on airline tickets, including PFCs, already account for around $64 of a typical $300 ticket, or 21%. We hope that Congress will reject this unnecessary proposal that will unfairly increase the financial burdens on air travelers.
Seventy-five years ago a group of individuals laid the foundation for the globally interconnected and interdependent world, whose benefits we enjoy today. Aviation made globalization possible, and since 1990, globalization has lifted 1 billion people from poverty. The more people who enjoy the freedom to fly, the greater the benefits to our global community . The world owes a debt of gratitude to the drafters of the Chicago Convention. But we in this room have an even higher obligation: to ensure that the business of freedom continues to deliver the enormous benefits of aviation connectivity for generations to come.