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XVI Annual Aviation Summit: Key Takeaways from US Airline CEOs

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XVI Annual Aviation Summit: Key Takeaways from US Airline CEOs

XVI Annual Aviation Summit: Key Takeaways from US Airline CEOs
March 03
09:18 2017

WASHINGTON, D.C. — US Airline CEOs attending the U.S. Chamber of Commerce’s 16th annual Aviation Summit in Washington, D.C. used the event to push for the privatization of the air traffic control system, to restate their positions in the battle with the Big Three Middle East carriers and to address the looming pilot shortage.

One of the main issues the airline chiefs discussed during their recent meeting with President Donald Trump was the need to privatize ATC. United Airlines CEO Oscar Munoz was blunt. “It’s not about what United thinks. It’s what the industry thinks, and it’s all about safety,” he said, comparing the current system to a gravel road.

“We’re out here driving Ferraris, and you’d never drive your Ferrari on a gravel road. A privatized ATC system with consistent funding is best.”

JetBlue CEO Robin Hayes noted that executives were excited to meet President Donald Trump to talk about the ATC reform. “The president and his team seemed interested in the idea,” he said. “It’s the first time we’ve had an airline CEO as president of the United States. When you look at the Trump Shuttle 20 years ago, it took 55 minutes to fly between Washington and New York. Today, it’s 80 minutes. We need less talking and more doing, and the administration recognizes the issue.”

American Airlines CEO Doug Parker said he slashed the “nice speech” written by his staff so he could take audience questions, summing it up thusly: “One, on the need to reform ATC, I’m for that. Two, when it comes to unfair competition, I’m against that. And three, with increased Passenger Facility Charges (PFCs) I’m against that,” he quipped.

Dealing with the Big Three Middle East Carriers


United’s Munoz admitted that the issue of the U.S. carriers’ ongoing battle with the Big Three Middle East carriers has been difficult. “People want to know what United thinks. I like being fact-based. We’ve faced subsidization in the business before, but not at the order of this magnitude,” he said.

“Looking at the magnitude of the subsidies [at the Big Three Middle East carriers], even if they were cut in half, they are still enormous.”

Munoz cited planes landing with only 20 or 30 people onboard. “You can’t do that kind of flying and make money. It’s not about bias. It’s about having a level playing field.”

When asked about his feelings about the expansion of Norwegian in the U.S., Parker said it was a big distinction. “It’s not that we don’t want allow anyone to fly. If they follow the rules and have a valid certificate, then they can compete. And there’s nothing says that Norwegian is subsidized,” he stated.

“That’s our issue with the Middle East carriers. They are competing as countries, not airlines. They’ve been subsidized at $50 billion and we’ve proven it. There’s only one U.S. carrier flying to India now because those carriers can fly there cheaper, and we can’t compete with subsidized flying.”

They’re an “enormous threat,” Parker asserted. “Today they are flying JFK-Milan and Newark-Athens. But next, it could be Dallas/Ft. Worth-Paris, and the hub-and-spoke system starts to fall apart.”

This is not about not wanting to compete, said Parker. “It’s about keeping American jobs.”

Alaska Airlines’ Brad Tilden noted that he and JetBlue’s Hayes don’t agree on much, but noted they do agree on the need for Open Skies. “That’s the position smaller airlines find themselves in. We compete with airlines that have global networks,” he said. “We bring value to the airline industry, so the pitch we make is to keep a level playing field where Alaska and JetBlue can compete.”

Hayes noted that JetBlue is an airline that relies on Open Skies to grow. “An example of that is Mexico City. We’ve been trying to fly there for years,” he said. “We finally got a slot at 5:00 a.m., but who wants to fly then? JetBlue only got a better slot after the divestiture under the Delta-Aeromexico joint venture.”

Those with issues with the current Open Skies agreement have a way to address it: the 1974 International Air Transportation Fair Competitive Practices Act, said Hayes. This act gives the U.S. Department of Transportation the power to take action in response to anti-competitive, discriminatory, predatory or unjustifiable activities by a foreign government or foreign airlines against a U.S. airline.

“So if an airline has a problem, the DOT will hear it, but it hasn’t been used. If you have a competent case to be made, why not use [IATFCPA],” Hayes asked. “Instead, our competitors go to Capitol Hill for help.”

More Pilots Needed


The pilot shortage is real, said Alaska Air’s Tilden. “The pilot shortage has been discussed for my entire 26 years in the industry. But there’s opportunity,” he said. “We need to look at young people who need jobs and this is a fantastic opportunity for the airline industry to show there are jobs.”

Pilot training is expensive, going for $80,000 – $100,000 to go through ATC and multi-engine training, said Tilden, a pilot himself. “We need federal loan guarantees to train pilots and mechanics.”

United’s Munoz said he was “cautiously bullish” on jobs and opportunities. “But having enough pilots, I think it’s an issue we have to watch,” he said. “We look to regionals as a feeding ground for pilots, but flying will be affected if we don’t watch this.”

Labor relations can affect pilot availability, said Maurice Gallagher, chairman and CEO of Allegiant Travel Company. “Pilots don’t want to come to airlines with labor problems,” he said.

Allegiant’s attractiveness is that pilots can sleep in their own beds every night, said Gallagher. “That may not be important to a 25-year-old pilot, but older pilots care about that.”

“Regional airlines can’t be the only solution. Republic [Airways] has aircraft parked because it doesn’t have enough pilots. And when you talk to groups like AOPA, the feedstock of people aren’t coming into the system to become pilots.”

Being a pilot is a great career, said Hayes. “One thing we started was the Gateway Select program, where we take people who have never flown at all and train them to become a pilot and be hired by JetBlue.”

“The objective was to create a more diverse workforce. We want to see this program get more traction and in a few years, get more pilots,” he said.

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About Author

Benét J. Wilson

Benét J. Wilson

Mother, Aviation Queen, Veteran Aviation Journalist, AVgeek since age six, number one fan of the Boeing 747 and Student pilot (can't stick my landings). I would actually pay rent to live in an airport. bwilson@airwaysmag.com @AVQueenBenet

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