Airlines warn of possibility of having to move passengers to foreign carriers

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Calio's comments came during a hearing to determine the competitiveness of U.S. airlines in the international aviation industry.

Calio said not addressing the disparities between the regulations applied to U.S. airlines and carriers in other countries would eventually result in "U.S. airlines increasingly shifting to feeding foreign-flag airlines at U.S. gateways, with significant adverse impact on profitability and on service that connects smaller cities and communities."

Wednesday's hearing took place amid a fight between the European Union and the U.S. aviation industry over a proposal to require airlines operating in EU countries to trade emissions. It also occurred during an increase in attention being paid to U.S. companies' global interactions with the focus on outsourcing that has dominated the presidential campaign.

Speakers on the panel Wednesday said the aviation industry was creating jobs in America.

"The aviation industry supports 10 million jobs and more than 5 percent of GDP," Calio said. "It could be an even bigger, more productive sector of the economy with the right policy framework."

Other issues discussed Wednesday included the effect the proposed sequestration cuts could have on the Federal Aviation Administration (FAA).

Aerospace Industries Association Vice President Dan Elwell said the proposal to cut $1.2 trillion in spending could result in the FAA's budget taking a big hit.

"Sequestration could reduce the FAA’s budget by $1 billion next January," Elwell said in testimony submitted to the Senate committee. "The FAA has never faced a reduction of that magnitude, particularly three months into the fiscal year."

Elwell said the cuts cut hamper the FAA's development of a satellite-based system air traffic control system that has been dubbed “NextGen.” The switch, from a radar-based navigation that has been around since World War II, is expected to cost the FAA $22 billion.

But Elwell said the FAA, which is already having a tough time finding money for the project, may severely delay the NextGen implementation, if the agency is hit with sequestration.

“If sequestration goes into effect, we believe FAA would seek authority to protect most of the daily operations of the air traffic control system, at least at the major hub airports,” he said.  “This means that NextGen would have to bear a heavier share of the reductions.”

Even if the FAA split the reductions evenly, Elwell said the budget for NextGen could be cut in half – going from $1 billion to $500 million. 

“We believe this would cause such chaos in the overall program that it would take years, if not decades, to recover,” he said.

Lawmakers on the panel were sympathetic to the aviation industry’s concerns, but Sen. Frank Lautenberg (D-N.J.) said airlines were making a “ton of money” and they were charging passengers more fees.

“We're hearing a lot of complaints from the traveling public about these things,” he said. 

Lautenberg said it was critical that Congress invest in the aviation industry, but he added that lawmakers also had to “keep in mind the consumers who make the industry possible.

“We must make sure that flying is always safe and that it remains a real, affordable option for Americans,” he said. “Airlines shouldn’t be able to nickel and dime passengers with new and exorbitant fees, such as fees for window and aisle seats.”

Calio defended the fees as an effort by airlines to give passengers more choice for “premium” options.
 


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