Sharon Pinkerton

Senior Vice President, Legislative and Regulatory PolicyJune 28, 2012

Advisory Committee for Aviation ConsumProtection 
U.S. Department of Transportation (DOT) Statutory Mission Explicitly R

Importance of (and Role in) Industry Viability and Competitiveness, WCompatible with Consumer Protection

2 

(6) placing maximum reliance on competitive market forces and on actual and potent(A) to provide the needed air transportation system; and (B) to encourage efficient managed air carriers to earn adequate profits and attract capital, considering an

differences between interstate air transportation and foreign air transportation.(14) promoting, encouraging, and developing civil aeronautics and a viable, private

States air transport industry.(15) strengthening the competitive position of air carriers to at least ensure equalair carriers, including the attainment of the opportunity for air carriers to maintain an

profitability in foreign air transportation.(16) ensuring that consumers in all regions of the United States, including those in smand rural and remote areas, have access to affordable, regularly scheduled air ser

Source: U.S. Code, Title 49, Sec. 40101. Policy, Subsection A: “Economic Regulation”
A Vibrant U.S. Airline Industry Will Enable Good Customer Service

A National Airline Policy is Needed

» The ability of the U.S. airline industry to invest in their workforce, training, service 

communities and newer, more efficient planes is contingent on a policy environmerecognizes that the a strong, competitive US airline industry is needed to accompgrowth, service to small communities and other consumer benefits. 

» The elements of a National Airline Policy will ultimately benefit consumers: 

» a rational tax and regulatory burden, » a modernized air traffic control system » reasonable jet fuel costs and » increased global competitiveness.
Value Proposition for Air Travelers Rising Steadily

It’s Safer, It’s Cheaper, It’s Greener and It’s Still ~80 Percent On-Time 

4 

0

20406080

100120140160180

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Index (1990 = 100)

* 5-year-moving-average fatal accident rate for U.S. air carriers operating under 14 CFR 121 scheduled service (http://www3.ntsb.gov/aviatio

On-Tim

Fares Fatal A

Noise Exposure

Fuel E
Product (Unit) 2000 2011 

College Tuition: Public (Year) $3,508 $8,244 Gasoline (Gallon, Unleaded) $1.51 $3.53 Eggs (Dozen, Grade A, Large) $0.91 $1.77 College Tuition: Private (Year) $16,072 $28,500 Baseball Game (Nonpremium MLB Ticket) $16.22 $26.91 Prescription Drugs (Index) 285.4 425.0 Movie Ticket $5.39 $7.89* Single-Family Home (New) $169,000 $227,200 U.S. CPI (All Urban Consumers)1 172.2 224.9 Vehicle (New) $24,923 $30,659 Air Travel (Round-Trip Domestic Fare + Ancillary)2 $316.95 $365.23 

Air Travel (Round-Trip Domestic Fare Only)2 $314.46 $343.46 

Apparel: Clothing/Footwear/Jewelry (Index) 129.6 122.1 Television (Index) 49.9 6.6 

Unlike Many Goods/Services, Price of Air Travel Has Not Kept Pace wAdjusted for Inflation, Domestic Fares Have Fallen 16.4% (11.8% incl. Anci

1. Bureau of Labor Statistics “measure of the average change over time in the prices paid by urban consumers for a market basket of consum2. A4A analysis of data collected by the Bureau of Transportation Statistics – excludes taxes; “ancillary” includes revenue from reservation ch

5 

* 2010 value, pending availability of 2011 da
2011 Passenger-Airline Earnings Reduced to Razor-Thin Margin of 0.4 

Cumulative 2001-2011 Net Loss for U.S. Passenger Airlines = $62.3 Billion 

$2

1.

($30)($20)($10)

$0

$10

$20

2001 2002 2003 2004 2005 2006 2007 2008 2009 20

Source: A4A analysis of DOT Form 41 data reported by U.S. airlines for which passenger revenue constitutes at least 25 percent of total op

6 

Profit (Billions) 
» Reduced earnings translate to a lower Return on Invested Capital (ROIC)

» Lower ROIC compels management to pursue means of improving ROIC» Reduced investment in the business has manifested in the form of less air service, 

delayed fleet renewal, reduced in-flight service options and, for some airlines, bank

» In the case of U.S. passenger airlines, employees were reduced by 160,200 from p

the post-recession trough that occurred in Spring 2010; departures remain sharply 

536.4 

376.2 

August 2001 April 2010

Scheduled Daily Domestic FliDown 21.5 Percent from 2001 to 

Full-Time Equivalent Employees (000)Down 160K from pre-9/11 to post-recession trough

Why Is a Comprehensive Airline Policy in the National Interest?

U.S. Airline Industry Financial Woes Lead to Cuts in U.S. Employment and 

30.1 

23.6 

March 2001 March 2
U.S. Airline Industry Continues to Post ~80 Percent On-Time Arrival Pe

2011 Best Year Ever Recorded for Accommodated Boardings and Baggage 

2007 2008 2009 2010 

On-Time Arrival Rate(% of domestic flights within 00:15) 73.4 76.0 79.5 79.8 Involuntary Denied Boardings(per 10,000 passengers) 1.12 1.11 1.19 1.09 Mishandled Bags(per 1,000 domestic passengers) 7.05 5.26 3.91 3.57 Flight Cancellations(as % of sched. domestic departures) 2.16 1.96 1.39 1.76 

Sources: Bureau of Transportation Statistics and DOT Air Travel Consumer Report (http://airconsumer.dot.gov/reports/index.htm)

8 
U.S. Airline Industry Continues to Post ~80 Percent On-Time Arrival Pe

2011 Best Year Ever Recorded for Accommodated Boardings and Baggage 

Success Rates (Percent) 2007 2008 2009 2010 On-Time Arrivals 73.42 76.04 79.49 79.79 Accommodated Boardings 99.989 99.989 99.988 99.989 Properly Handled Bags 99.297 99.474 99.609 99.642 Completed Flights 97.845 98.039 98.614 98.244 

Sources: Bureau of Transportation Statistics and DOT Air Travel Consumer Report (http://airconsumer.dot.gov/reports/index.htm)

9 
www.airlines.org