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Lack of a coordinated national policy on aviation is “shocking”

By Patrick Burnson, Executive Editor
March 19, 2012

The International Air Transport Association (IATA) is urging U.S. policy makers to improve aviation competitiveness by easing the tax and regulatory burdens on the airline industry.

“Aviation generates up to $1.3 trillion in annual US economic activity and 10.5 million jobs and accounts for up to 5.2 percent of GDP, according to a Federal Aviation Administration (FAA) study. The U.S. has one of the most mobile populations on the planet thanks to commercial aviation. Each and every flight creates jobs, enables commerce and drives connectivity. Policy makers at the state and local level recognize these facts and they work hard to ensure connectivity by attracting air services. But while aviation gets a lot of attention in Washington, it is not always focused on the priority of using aviation as a catalyst for economic activity,” said IATA’s Director General and CEO Tony Tyler in his remarks to the recently-concluded 37th FAA Aviation Forecast Conference.

“If creating jobs and encouraging economic growth is a national policy priority, then the lack of a coordinated national policy on aviation is shocking. A national policy is needed and it must be aligned with the economic needs of communities, states and regions—with the goal of improving the competitiveness of the US aviation industry,” said Tyler.

U.S. airlines have gone through a decade of dramatic restructuring during which the industry has lost more the $62.5 billion, laid off 25 percent of the workforce and cut domestic departures by 21 percent. Many local economies have seen the impact of the reduced connectivity and are working hard to provide the conditions to maintain services. But there is a policy disconnect between what is happening locally and the national focus.

“If you want to discourage something, wrap it in a web of restrictive regulations and taxes. Taxes and fees now represent 20 percent of a U.S. ticket. The Administration’s 2013 budget proposal heaps even more taxes on aviation, with much of the receipts used to balance the budget or reduce the deficit. When Washington does look beyond taxes, the agenda often bogs down on complex problems that defy easy regulatory solutions or commercial matters that should be left to the workings of the free market,” said Tyler.

“Adam Smith’s Invisible Hand is a more reliable guide in commercial areas than the hand of regulators. Unfortunately, we are seeing the U.S. retreat from the free market principles for which it is so well known. This desire to regulate market behavior flies in the face of the U.S. deregulation experience, the undeniable conclusion of which has got to be that the market is ruthless with airlines that fail to meet customer expectations,” said Tyler.

About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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