Government Rules, Taxes Will Depress Travel, Study Shows
- Regulatory burden will result in 17.7 million fewer travelers -


Nov. 16, 2011 - Washington, D.C. – The crushing and increasing burden of new government rules and taxes on the airline industry will result in higher airfares, fewer visitors to more than 200 cities throughout the U.S. and cost the public $9 billion annually, a report from The American Aviation Institute has revealed.

Higher taxes and regulations will lead to 17.7 million fewer passengers per year traveling and reduce annual local tax collections by $443 million, AAI analysis shows. All of the top 200 U.S. cities are affected.

The fragile airline industry, reeling from 10 years of rollercoaster boom and bust cycles and fuel price swings since 9/11/2001, must raise airfares, cut costs and reduce air service as new taxes and U.S. Department of Transportation (DOT) regulations mount, the AAI report said.

“Because of this ever-increasing tax and regulatory burden on airlines and passengers, cities will suffer from fewer visitors,” said AAI Chairman Darryl Jenkins. “The travel industry has reached a tipping point.”

“Airlines face higher costs from new rules and new taxes. Either they raise fares, or they cut service as they absorb the cost. Fewer passengers travel either way,” said Joshua Marks, AAI Executive Director.

The government is proposing to dramatically step up aviation’s contribution to the federal deficit through higher taxes and more security fees, despite the fact that the average round trip ticket already includes $59 in taxes from up to 17 separate government taxes and fees. Proposed tax increases including a doubled 9/11 Security Fee and a new per-flight tax will harm local economies by $5.5 billion annually.

New regulations enacted this year by the DOT will cost airlines $1.7 billion annually and harm local economies by $3.5 billion annually, AAI’s analysis shows. “There is a cost to every rule. American cities can expect higher fares, less service to smaller communities and fewer visitors,” said AAI Vice President Strategy Michael Miller.

AAI’s analysis shows that all of the top 200 local markets in the U.S. will lose passengers and local taxes as federal taxes and regulations increase. The biggest annual hits will be felt in tourism-dependent markets: Orlando will lose 711,262 visitors and $367 million in local impact, including lost local taxes. Las Vegas will see 660,864 fewer visitors and $340 million in lost revenue. Denver, Los Angeles, Atlanta, Chicago, New York, Phoenix, Fort Lauderdale and Boston will each lose at least $160 million. Even smaller markets like Pensacola, FL (-$12.9 million) and Green Bay, WI (-$5.7 million) will be hurt.

“This is basic supply and demand. As airfares rise and airline costs rise faster than inflation, demand will drop,” Jenkins said. “When demand drops, communities lose.”

“AAI is calling on members of Congress and state representatives to stop and review all new non-safety regulations and taxes until a broad assessment can be done. A national aviation policy is needed to focus on the long-term viability and competitiveness of the travel industry,” Jenkins said.

The study was conducted independently and was reviewed by neutral academic experts. AAI is supported by both aviation companies and unions and is not affiliated with the Air Transport Association. Data for the study were drawn from public sources.

The American Aviation Institute is an independent think tank for commercial aviation based in Washington, D.C. AAI draws on business, academic, regulatory and consumer perspectives to analyze airline, airport and government practices and policies, and makes specific, quantitative recommendations for the industry's improvement.



Sept. 15, 2011
American Aviation Institute statement on GAO's new report on tarmac delays:

"This week's U.S. Government Accountability Office report confirms that the Department of Transportation's Three-Hour Tarmac Delay Rule causes an increase in airline flight cancellations. The tarmac rule unfairly penalizes hundreds of thousands of consumers and must be replaced with a more sensible approach that does not cause flight cancellations to surge. The rule should be abolished and new protections put in place."
"In June 2011, we called for a congressional investigation into DOT's rule making related to the tarmac rule, including a review of DOT's faulty analysis and estimates. While DOT continues to deny the connection between the three-hour rule and cancellations, the independent GAO report establishes beyond question that the rule harms consumers."

"GAO found the three-hour rule has led to a 24% increase in flights cancelled before departure, and a more than 300% increase in cancellations for flights with long taxi times. GAO's analysis confirms what we first demonstrated in July 2010 and tracked in our subsequent reports." (See http://www.tarmaclimits.com/Tarmac/Tarmac_Limits.html)

"Millions of consumers have been stranded by DOT's rule and fundamental changes are needed. The rule forces airlines to cancel flights prematurely to avoid massive potential DOT fines. Our previous recommendations establish a path to protecting consumers while minimizing cancellations. We have repeatedly requested that DOT collect and publish more comprehensive tarmac delay data from airlines and issue specific enforcement guidance that defines the fines to be assessed. These steps will help consumers."

"More than a year into the rule, DOT has told GAO it will finally study the results of its rule. This is too little, too late. A complete re-examination of DOT's rule-making process is needed. DOT's haphazard regulatory approach shows little regard to the justification or public welfare impact of its rules. DOT should recognize that its mistakes can and do harm millions of American consumers."

Darryl Jenkins
Chairman
American Aviation Institute


Note: GAO's report is available at: http://airlineinfo.com/gaoreports/d11733.pdf

The American Aviation Institute is an independent think tank for commercial aviation based in Washington, D.C. AAI draws on business, academic, regulatory and consumer perspectives to analyze airline, airport and government practices and policies, and makes specific, quantitative recommendations for the industry's improvement.


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American Aviation Institute, Citing High Airline Cancellations,
Calls For Congressional Investigation Into DOT Rulemaking

Washington, D.C. – June 9, 2011 – The American Aviation Institute (AAI), a Washington, D.C.-based commercial aviation think tank, today said that U.S. government data continue to show a massive and sustained jump in airline flight cancellation rates under consumer protection rules begun a year ago. While the objective of ending egregious tarmac delays is valid, AAI said DOT’s botched estimates, haphazard enforcement standards and intentional ambiguity about fines has caused more than $3.9 billion in consumer harm.

Today, AAI said it is calling on Congress to investigate DOT rulemaking.

“Nobody wants to be stuck for hours on a plane, but nobody wants to be stranded for days by cancellations either,” said Darryl Jenkins, AAI Chairman. “DOT refuses to acknowledge what is now perfectly clear after a year under the rule: the rule is wrong and it has caused consumer harm.”

DOT established a three-hour airline rule in April 2010. The rule forces airlines to return flights to the gate before three hours after departure or face multi-million dollar fines per flight, AAI said. Data show airlines elect often to cancel flights before the two-hour taxi mark, and usually before gate departure, rather than risk massive fines, AAI said.

DOT projected just 41 annual cancellations would result from the rule. The April 2011 flight cancellation data, where there were nearly 10,000 cancellations, is the start of the summer thunderstorm season when the risk of tarmac delays is greatest. DOT data show that cancellations increased to 2.0% of all flights in April from 0.69% in April 2010.

“In expanding the rule this year to international flights, DOT chose to ignore flight cancellation impact altogether,” said Joshua Marks, AAI Executive Director. “On similar operational levels, cancellations the first year under the rule increased 18%. Cancellation rates during bad weather jumped 42%.”

“DOT called for a full year of cancellation data under the rule before taking action. That year has passed. The impact is shocking,” said Marks. AAI called on DOT to work collaboratively with airlines to resolve ambiguity, introduce reasonable penalties and end tarmac delays without the collateral damage of cancellations.

“Each cancellation disrupts travelers’ vacations and meetings and costs the airlines thousands of dollars – which could lead to higher fares,” Jenkins said. “The airlines will work with DOT, but DOT isn’t listening. An expansion of the tarmac delay rule to international flights in August 2011 is likely to cause even more passenger harm from cancellations.”

AAI said it is calling for public and Congressional review of DOT’s regulatory impact analyses, which exclude any material discussion of cancellations resulting from the tarmac rule.

Data and background can be seen at TarmacLimits.com.

AAI is the airline industry’s independent business and policy-oriented think tank, drawing on business, academic, regulatory and consumer perspectives to analyze airline, airport and government practices and policies, and make specific recommendations for the industry's improvement.

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American Aviation Institute Launches First Commercial Aviation Think Tank


Washington, D.C. – Dec. 16, 2010 –The American Aviation Institute (AAI) launched today in Washington, D.C. as the commercial aviation industry/s first independent business and policy-oriented think tank. AAI said it will draw on business, academic, regulatory and consumer perspectives to analyze airline, airport and government practices and policies, and make specific, quantitative recommendations for the industry's improvement. Full Release