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The
US federal government should assume aviation security costs immediately as a matter of national defense, lower air travel taxes and enable
appropriate industry restructuring, while airlines heighten their cost reduction efforts, Delta Air Lines
Chairman and CEO Leo F. Mullin told attendees during remarks today before the Economic Club of
Chicago.
"An industry structure that does not allow financial success for
most of its participants is by definition a failure and can no longer be allowed
to prevail," said Mullin. It is possible, Mullin asserted, for carriers that are
currently solvent to survive, but only if three major actions are undertaken
immediately. The three-point plan includes: 1.
Airlines must continue cost reduction
efforts "Airlines must continue a program of cost reductions that outsizes any
undertaken in its history, fundamentally restructuring the way we do
business," Mullin stated. Employee numbers have already been reduced, said Mullin, and labor contracts are being reopened at most airlines. "Labor
contracts agreed to in prosperous times will need to be re-negotiated," said
Mullin. Airlines also need support from suppliers, financial organizations and
airport operators, he added. 2.
Government should assume aviation security costs, lower
taxes/fees The government should re-set policies that are financially punishing the
airline industry, Mullin said. Government-imposed security changes had an
approximately $4.3 billion negative impact on the industry. "These costs are
appropriately part of national defense. Airlines, like all other industries,
should be released from this unique burden," Mullin said. "For our industry
to recover, the government must remove both the unique burden of national
security costs and the punishing level of taxation that continues to hobble
the airlines’ self-help efforts." 3.
Government should enable appropriate
restructuring The government must enable appropriate industry restructuring to take
place, including steps by bankrupt carriers, as well as possible mergers,
alliances, or asset sales among the various carriers in the industry. "Given
the current industry circumstances, all governmental assumptions about
appropriate industry stimulus need to be re-examined," said Mullin. "I strongly believe that this three-step program can and will bring the
industry back to its feet," said Mullin. "Decision makers, particularly in the
public sector, know full-well that our country crucially needs a vibrant
aviation system to serve as the engine for a healthy economy." |
