Thinking for a New Century

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Thinking for a New Century thinking for a new century 2005 Economic Report for a new century new thinking Officers James C. May Contents Officers . .2 President and Chief Executive Officer Mission . .3 Goals . .3 John M. Meenan Executive Vice President and President’s Letter . .5 Chief Operating Officer Highlights . .6 Industry Review . .8 Paul R. Archambeault Safety . .8 Vice President, Environment . .10 Chief Financial Officer and Treasurer E-Business . .10 Basil J. Barimo Fleet . .11 Vice President, Operations and Safety Operations . .11 Revenues . .12 David A. Berg Expenses . .13 Vice President, 2 General Counsel and Secretary Earnings . .13 e g Capital Structure . .13 a p Lori Sharpe Day Jobs . .14 Vice President, Government Affairs Outlook . .14 Current Issues . .15 John P. Heimlich Vice President and Chief Economist System Funding . .15 Air Traffic Management . .16 Regina A. Sullivan Environmental Protection . .17 Vice President, Security . .18 Government/Congressional Affairs Glossary of Terms . .28 James L. Casey Index of Charts and Tables . .30 Deputy General Counsel ATA Member Airlines . .31 Patricia G. Higginbotham Associate General Counsel, Litigation and Regulatory Affairs Nancy N. Young Associate General Counsel, Environmental and International Programs for a new century new thinking Mission The Air Transport Association of Goals Founded in 1936, the Air Transport • Challenging government policies that America, Inc. (ATA) serves its member Association of America is the nation’s impose unwise regulatory burdens or airlines and their customers by: oldest and largest airline trade associa- impinge on marketplace freedoms • Assisting the airline industry in tion. The association’s fundamental • Reducing the disproportionate share continuing to provide the world’s purpose is to foster a business and of taxes and fees paid by airlines and safest system of transportation regulatory environment that ensures safe their customers • Transmitting technical expertise and and secure air transportation and permits • Advocating further deregulation to operational knowledge to improve U.S. airlines to flourish, stimulating improve the industry’s ability to safety, service and efficiency economic growth locally, nationally and attract capital • Advocating fair airline taxation and internationally. By working with members • Shaping international aviation policy regulation worldwide to foster a in the technical, legal and political to ensure that U.S. and foreign carriers healthy, competitive industry arenas, ATA leads industry efforts to can compete on equal terms • Developing and coordinating industry fashion crucial policy and supports p actions that are environmentally measures that enhance aviation safety, During its nearly 70-year history, ATA has a g beneficial, economically reasonable security and well-being. seen the airline industry grow from the e 3 and technologically feasible small, pioneering companies of the 1930s ATA goals include: into facilitators of the global economy. • Championing the world’s safest ATA and its members continue to play transportation system a vital role in shaping the future of • Protecting airline passengers, air transportation. crewmembers, aircraft and cargo, working collaboratively with the Department of Homeland Security (DHS) and the Transportation Security Administration (TSA) • Modernizing the U.S. air traffic management system via the Federal Aviation Administration (FAA) for a new century new thinking U.S. Airlines—2004 Majors (19)1 Nationals (35)2 Regionals (31)3 Commuters (55)3 AirTran ABX Aerodynamics 40-Mile Island Air Service Alaska Air Transport International Ameristar Air Midwest LAB Flying Service America West Air Wisconsin Asia Pacific Air St. Thomas Mountain Bird American Allegiant Capital Cargo Alaska Central Express Pacific Island Aviation American Eagle Aloha Caribbean Sun Alaska Seaplane Service Peninsula ATA Amerijet International Casino Express Aloha Island Piedmont Atlas/Polar ASTAR Centurion Arctic Circle Promech Comair Atlantic Southeast Chicago Express Arctic Transportation Seaborne Continental Champion Custom Arizona Express Servant Delta Continental Micronesia Express.Net Baker Shuttle America ExpressJet Evergreen International Falcon Air Express Bemidji Skagway FedEx Executive Freedom Bering Skyway JetBlue Florida West Gulf & Caribbean Big Sky Smokey Bay Northwest Frontier Kitty Hawk Boston-Maine Spernak SkyWest Gemini Lynden Cape Air Tanana Taquan 4 Southwest Hawaiian NetJets Cape Smythe e United Horizon Northern Chautauqua Valley Air Express g a Vintage Props & Jets p UPS Independence Pace Colgan Report Content US Airways Kalitta Pan American Commutair Warbelow’s Unless otherwise noted, the data provided in Mesa Planet Corporate Ward West Isle this report reflects the activity of the 140 U.S. Mesaba Primaris Ellis Air Taxi ERA Aviation Wings of Alaska passenger and cargo airlines shown on this Miami Renown Midwest Sierra Pacific Flying Boat Wright page, as recorded by the U.S. Department of North American SkyKing Frontier Flying Service Yute Air Alaska Transportation (DOT) in 2004, under Chapter Omni Southeast Grand Canyon Helicopters 411 of Title 49 of the U.S. Code. Pinnacle Southern Grant PSA Sunworld International Great Lakes In some cases, the sum of numbers in this Ryan International Tatonduk Gulfstream report may not exactly match the printed total, Spirit Tradewinds Hageland due to rounding. Also, certain historical data Sun Country Victory Iliamna has been restated to reflect the most current Transmeridian Zantop Inland Aviation information available. Trans States USA 3000 For further information, visit www.airlines.org. USA Jet World For questions on content, click on Economics. For further information on this and other ATA publications, click on Publications. 1 Annual revenues in excess of $1 billion. 2 Annual revenues between $100 million and $1 billion. 3 Annual revenues under $100 million. I Member, Air Transport Association of America, Inc. (ATA) Making Airlines Over the next few years, the legislative machinery in Washington will move to “Every day, the airline reauthorize the Airport and Airway Trust Fund. This once-a-decade process is industry propels the a National Priority critically important—not only to the aviation community, but also to the economic vitality of our country and the thousands of communities and millions of jobs economic takeoff of that depend on a healthy airline industry. Decisions made in this process will our nation. It is the great play a major role in fostering an economic climate in which the U.S. airline industry can either regain some altitude or continue its descent into fiscal chaos. enabler, knitting together all corners of the country, facilitating the Unquestionably, the last few years have been the industry’s most difficult ones. The 2004 net movement of people and goods that loss of $9.1 billion and 2001–2004 net losses of $32.3 billion collectively have left our airlines deeply in debt. Out of adversity, however, airlines are transforming themselves. Worker productivity s is the backbone of economic growth. and fuel efficiency have reached all-time highs. Operational reliability has improved, customer It also firmly embeds us in that complaints are down and our safety performance remains stellar. Unfortunately, with fuel prices at e record levels and an ever-increasing tax, fee and security burden being borne by airlines, these awesome process of globalization efforts have not proven sufficient to restore profitability. They do, however, reflect the undaunted that is defining the 21st century.” p determination of the industry and its employees to get things back on course. a g n Daniel Yergin, Pulitzer Prize winner e This situation raises the subject of those costs that are beyond airline control—specifically, aviation Chairman, Cambridge Energy 5 i excise taxes and other government-imposed fees. As Federal Reserve Chairman Alan Greenspan Research Associates Author, Commanding Heights: The has said, “Any tax increase inhibits economic activity in one way or another. Whatever you tax, you l Battle for the World Economy and get less of.” Should it surprise anyone that an industry carrying a tax burden that has tripled since “Fettered Flight: Globalization and 1991 is in crisis? r the Airline Industry” June 2005 i The issue at the heart of the reauthorization debate is this tax burden and the fact that it includes billions of dollars that support services and programs not consumed by commercial aviation. That money, which comes directly off the airlines’ bottom line, pays for public-policy initiatives and a services provided to other users of the aviation system—who pay virtually nothing for the services they consume. This inequity, rooted in a bygone era of regulation, must be corrected once and for all. “Because we have always done it that way” can no longer excuse the inequitable and destructive burdens imposed on America’s airlines—and ultimately on our economy. A vibrant airline industry must be a top national priority. We look forward to working in good faith with all parties-of-interest to “get it right,” applying new thinking for a new century. for a new century new thinking Aircraft Departures Ticket Prices vs. Passenger and Cargo— Operational Highlights U.S. Consumer Prices Scheduled Service U.S. Airlines—Scheduled Service (In millions, except as noted) 30.6 110 31 ) 105 s 2003 2004 % Change ) d 0 n 0 a 29 1 100 s Revenue Passengers Enplaned 646.3 697.8 8.0 = u 0 o 0 h Domestic Service 592.4 635.5 7.3 0 T 95 ( 2 27 ( s International Service 53.9 62.3 15.6 t x h e 90 g d i l Revenue Passenger Miles 656,909 731,926 11.4 n F I y l i 25 Domestic Service 500,271 550,472 10.0 85 a D International Service 156,638 181,455 15.8 80 23 Available Seat Miles 893,824 968,976 8.4 00 01 02 03 04 00 01 02 03 04 Domestic Service 689,069 739,540 7.3 Consumer Price Index (CPI) International Service 204,755 229,437 12.1 International Airfare Passenger Load Factor (%) 73.5 75.5 2.0 pts. Domestic Airfare Passenger Volumes Domestic Service 72.6 74.4 1.8 pts.
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