UNITED STATES OF AMERICA 

COMMODITY FUTURES TRADING COMMISION 

In the matter of: 

Account Ownership and Control 

Report 

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17 CFR Part 16 

COMMENTS OF THE AIR TRANSPORT ASSOCIATION 

OF AMERICA, INC. 

The Air Transport Association of America, Inc. ("ATA")1 respectfully 

submits these comments in response to the Advanced Notice of Proposed 

Rulemaking (the "Notice" or "ANPRM") concerning the Commodity Futures 

Trading Commission's ("CFTC" or "Commission") determination to collect 

additional ownership, control and related information for all trading accounts 

active on U.S. futures exchanges.2 ATA supports the Commission's 

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determination to collect account ownership and control data in order to better 

identify exchange trading activity that has market and regulatory consequence 

but which would go unrecognized absent such information. In addition to the 

proposed account Ownership and Control Report ("OCR"), we urge the 

Commission to consider mechanisms to obtain and aggregate similar account 

ownership and control information across all trading platforms, not just U.S. 

exchanges. We also support the collection of such data from the OTC market. 

This additional reporting- from non-U.S. exchanges and the OTC market1 ATA is the principal trade and service organization of the major U.S. air carriers- both 

passenger and cargo. ATA member airlines are: ABX Air; AirTran Airways; Alaska Airlines; 

American Airlines; ASTAR Air Cargo.; Atlas Air; Continental Airlines.; Delta Air Lines; Evergreen 

International Airlines, Federal Express Corporation.; Hawaiian Airlines; JetBiue Airways; Midwest 

Airlines; Southwest Airlines; United Airlines; UPS Airlines and US Airways; associate members 

are: Air Canada; Air Jamaica and Mexicana. 2 74 Fed.Reg. 31642 (July 2, 2009). 

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would bring true transparency to discrete trading activity by individual or related 

market participants that, in its totality, may cause extreme price volatility, 

excessive speculation, price manipulation or other trade practice abuses. 

Because the airline industry is a substantial consumer of jet fuel, and 

because individual airlines rely on strategic hedging to manage the financial risk 

associated with that consumption, ATA and its members have a significant 

interest in healthy and properly functioning energy commodity markets and the 

CFTC's oversight of those markets. 

The OCR is Needed to Enhance Transparency and Oversight 

The Notice makes a compelling case for the Commission's determination 

to establish the OCR. For example, the Notice states that in 2008, electronic 

trading accounted for approximately 80% of trading volume on CBOT, CME, 

NYMEX and ICE Futures U.S. (p. 31643) and that "electronic platforms are now 

dominant in the United States," /d., but that electronic trading has resulted in a 

"growing dispersion and anonymity of market participants." /d. Thus, the 

Commission concludes that "the OCR will allow the Commission to see more 

clearly and completely by identifying otherwise anonymous market participants 

and revealing links between apparently unrelated trading accounts whose 

aggregate behavior is of regulatory consequence." /d. 

We agree that the OCR will confer significant surveillance and 

enforcement improvements which the Commission needs to fulfill its statutory 

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obligation to protect commodities markets from excessive speculation, 

manipulation and other abusive trading practices. For example, the OCR will: 

• Allow staff to aggregate trading accounts under common ownership or 

control; 

• Link large trader reports and exchange trade registers; 

• Oversee trading by widely dispersed individuals and accounts; 

• Help staff link traders' intra-day transactions with end-of-day positions and 

assist investigations into intra-day manipulation and other trade practice 

abuses; and 

• Bridge gaps in current data reporting systems. 

These are important tools for the Commission in the execution of its surveillance 

and enforcement responsibilities. 

The importance of the ownership and control data the Commission intends 

to collect cannot be overstated. As the Commission notes: "the inherent 

absence of ownership and control information in Trade Capture Report data 

presents an obstacle when [the Division of Enforcement ] is investigating 

potential price manipulations or trade practice abuses ... " (p. 31645). For U.S. 

airlines, the CFTC's lack of ownership and control information inhibits its ability to 

investigate excessive speculation which, together with a sustained high level of 

volatility, has become a very real threat to the financial stability of the industry. 

For an airline, an oil market characterized by high volatility driven by speculation 

presents a number of serious problems. It increases the costs and risks of 

hedging; it has pushed fuel prices to levels so high that they have depleted the 

capital of the firms in our industry; and with each spike in oil prices, airlines are 

forced to reduce air service, ground aircraft and eliminate jobs. 

3 
Excessive Speculation Drives Volatility 

Since 2005 we have seen a significant increase in the volatility of oil 

prices. The increase has been particularly dramatic in the last two years. From 

1999 through 2004, the average annual variance between the high price of a 

barrel of oil for the year and the low price was about $16. From 2005 through 

2008 the average annual per-barrel variance was about $52. In 2007 the 

variance between the high and low prices was $48 and in 2008 it was $111. Daily 

volatility in 2004 was generally under one dollar. In 2008, the price of a barrel of 

oil rose $10.75 in a single day (June 6), and daily volatility of $3 or more became 

the norm. The average monthly difference in prices in 2008 was over $19 per 

barrel. 

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Intra month Price Differences for a Barrel of Oil 

(in dollars) 

-Price Difference 

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This increase in volatility has been associated with a massive increase in 

speculative investment in oil futures. A recent study by the Permanent 

Subcommittee on Investigations of the Senate Committee on Homeland Security 

and Governmental Affairs noted that over the last six years, financial institutions 

have aggressively marketed commodity index funds, which are heavily weighted 

to oil futures, as a way for hedge funds, pension funds, and other investors to 

diversify portfolios and speculate on rising commodity prices. The study noted 

that the total value of investment in commodity indexes has increased tenfold 

since 2003, from an estimated $15 billion in 2003 to around $200 billion in mid2008. During that period, the volumes of oil futures traded on the exchanges 

quadrupled, despite the fact that, over the same period, global demand for 

physical barrels of oil remained virtually unchanged. 3 This increase in 

speculative activity is closely correlated with the increased volatility of oil prices, 

which has caused so much harm. 

3 Total world demand for oil from 2005 to 2008 (in million barrels per day): 2005- 84.00; 2006-

84.98; 2007- 85.90; 2008- 85.33. Source: Energy Information Administration 

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NYMEX Crude Oil Contract Volume Soared in 2003-2008 Period 

In Mid-September of 2008, Open Interest Surpassed Equivalent of 3.23 Billion Barrels 

3,600 Note: uopen Interest" Is the total number of futures contracts long or short in a delivery month or market that has been entered into and 

not yet liquidated by an offsetting transaction or fulfilled by delivery. 

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Volatility and Excessive Speculation Harm U.S. Airlines and Their 

Employees 

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We estimate that the speculative oil price bubble that began in mid-2007, 

peaked in mid-2008, and then plummeted abruptly, cost U.S. airlines tens of 

billions of dollars. U.S. airlines spent nearly $58 billion on jet fuel in 2008, $16 

billion more than in 2007, and jet fuel surpassed labor as the largest cost 

category for most airlines. One airline, Delta, estimates an $8.4 billion cost 

increase, compared with what it would have spent on jet fuel if the price of oil had 

remained at $60 a barrel. This includes $1.7 billion in hedge losses and 

premiums. The result is that several airlines did not survive 2008. Since 

December 2007, eight airlines have ceased operations. 

6 
260 

200 

160 

100 

60 

• Dollar Value of Total 

Open Interest 

Volatility Charts 

'Iii DoUar Vale of Traditional 

Speculators' Positions 

• Dollar Value of Index 

Speculators' Positions 

800 

700 

600 

600 

400 

300 

200 

100 

Source: Bloomberg, CFTC Commitments of Traders CIT Supplement, calculations, Testimony of Michael W. 

Masters before the Senate Commmee on Homeland Security and Governmental Affairs on May 20 2008 

- In the chart above, the bubbles represent 

the size, measured in dollars (on the right 

axis), of the commodities futures market. 

Over time, not only has the total volume 

increased, but the amount of Index 

Speculators relative to the Total Open 

Interest has risen drastically. 

- On the left axis, the high, low, and settled 

prices for crude oil are displayed by month 

since 1999 through mid-July 2009. The 

distance between highs and lows has 

increased in recent years. 

- The two charts together show how the 

increase in volume has affected the volatility 

of market prices. 

Date 

Jul-99 

Jul-00 

Jul-01 

Jul-02 

Jul-03 

Jul-04 

Jul-05 

Jul-06 

Jul-07 

Jul-08 

Jul-09 

High Low 

21.12 19.15 

32.35 27.35 

28.29 24.60 

27.95 25.73 

32.05 29.17 

43.85 36.69 

62.10 56.10 

78.40 71.65 

78.28 69.57 

147.27 120.42 

71.85 58.32 

H-L 

Settle Spread 

20.04 1.97 

29.74 5.00 

26.45 3.69 

26.90 2.22 

30.62 2.88 

40.68 7.16 

58.93 6.00 

74.53 6.75 

73.91 8.71 

133.87 26.85 

62.86 13.53 

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In 2008 alone, some 28,000 pilots, flight attendants, mechanics, ramp 

workers, gate agents, reservation sales and service representatives, and office 

workers lost their jobs due to cutbacks in our industry, and air service was 

reduced at countless communities across the country. Further capacity 

reductions, layoffs, bankruptcies and liquidations will occur if oil price volatility is 

not reduced to more manageable levels. 

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Account Ownership and Control Data Will Support the Commission's 

Efforts to Ensure Fair, Open and Efficient Commodities Markets and 

Protect Consumers 

The Commission recently concluded hearings on regulatory mechanisms 

to fulfill its statutory responsibility "to ensure the fair, open, and efficient 

functioning of futures markets."4 In a July 7, 2009 press statement, Chairman 

Gensler announced the Commission would review and consider the imposition of 

aggregate position limits with respect to energy markets pursuant to its statutory 

obligation to "eliminate, diminish or prevent the undue burdens on interstate 

commerce that may result from excessive speculation."5 Chairman Gensler also 

announced that the Commission would review the criteria for granting hedge 

exemptions from such limits. 

The OCR directly supports these efforts and will be an important tool for 

staff, as well as the Commission, in achieving the level of market transparency 

and regulatory oversight needed to restore the public's confidence in the futures 

markets, particularly energy markets. The OCR complements the enhancements 

recently made to the weekly Commitments of Traders report and the ongoing 

special call to collect and report data from swaps dealers and index investors, 

and it will advance the goal to "provide the public with greater insight into the new 

types of trading activity"6 affecting the energy markets. 

4 Press Statement by Chairman Gary Gensler, July 7, 2009. 5 Id. 

6 Id. 

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... ' ' ' 

Conclusion 

For the reasons set forth above, we urge the Commission to quickly 

complete this rulemaking to establish the proposed Ownership and Control 

Report. The OCR will enhance the Commission's oversight of the futures 

markets, particularly energy markets, and will assist in its efforts to ensure fair, 

open and effective markets. The factors that support the OCR also support 

collection of the same kind of data across all markets. We urge the Commission 

to consider mechanisms to expand the reach of the OCR beyond regulated U.S. 

exchanges. 

Respectfully submitted, 

AIR TRANSPORT ASSOCIATION OF AMERICA, INC. 

David A. Berg 

Vice President & General Counsel 

Air Transport Association of America, Inc. 

1301 Pennsylvania Avenue, NW 

Washington, DC 20004 

202-626-4000 

Dated: August 13, 2009 

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