Before we begin the program, I would like to thank our presenting sponsor, Delta Airlines. And we will have a chance to hear in a few minutes from Delta’s senior vice president for government affairs, Heather Wingate. For the first segment of our program we’re pleased to be joined by Senator Roy Blunt of Missouri, the Chairman of the Subcommittee on Aviation Operations, Safety, and Security; and from Senator Maria Cantwell of Washington State, the subcommittee’s ranking member. Both senators are right in the center of important policy debates on Capitol Hill about how our nation’s aviation system operates now and how it will in the future. Please welcome them both along with Washington Post congressional reporter Sean Sullivan who will lead our first discussion.
Taking Flight: A View from Capitol Hill:
Sullivan: Good morning. I’m Sean Sullivan. I’m a national political reporter here at The Washington Post. My guests today are Senator Roy Blunt, Republican of Missouri—he is the Chairman of the Senate Subcommittee on Aviation Operation, Safety, and Security—and we’re also joined by Senator Maria Cantwell of the state of Washington. She is the top Democrat on the panel. Welcome, to both of you.
Cantwell: Thank you.
Sullivan: Before we begin our discussion I just wanted to let our audience here in the room and those watching online know that if you want to ask some questions to the senators you can tweet those questions with the hashtag #TakingFlight. And so I’ll try to get to some of those questions throughout the course of our discussion. So let’s jump right in. I wanted to ask both of you a question about regulations. The Airline Deregulation Act became law 40 years ago this year. Has deregulation worked, in your opinion? And what do you think some of the challenges and some of the opportunities are that lie ahead in terms of regulation and the industry?
Blunt: Well, I think if you look at the response to deregulation and how many more people fly now than they did, how many people not only fly for business but fly for family vacations and other things, you’d have to argue that deregulation made it possible for a lot more people to use the airlines. I think the airlines continue to work on systems that hopefully make that more competitive and better. But deregulation works in my view, but that doesn’t mean that there’s not a continued role for both the congress and the FAA to be sure that it continues to work and address the problems as they arise. It is a huge system, bigger than anybody else’s in the world. And whether it was regulated or not it would have challenges. And we need to pay attention to those challenges.
Cantwell: Well, first of all, I want to say thanks to The Washington Post for doing this focus on aviation. I think if you ask who has the most interest in aviation in the United States Senate, Roy Blunt and I’s name would come up because we see the importance of aviation every day. I think the larger question—not to turn your subject on its ear, but in the context of what’s happened to aviation in that time period during deregulation as well, the safety and technology has improved immensely. We constantly keep focus on whether there is true competition in the marketplace. We want more transparency and consumer bill of rights. So it’s not just taken in and of itself, but the changes that have happened in the industry. So do we continue to need to be vigilant about these issues particularly as they relate to consumers? Yes. But we’ve seen improvements in the aviation sector, and that’s what we want to continue to see.
Sullivan: So we live in a social media age. We live in an age of cell phone cameras where it’s become easier and almost instant for passengers to document their travel experiences, both their good experiences and their bad experiences. And we’ve seen passengers document bad experiences that have gone viral online. You know, we saw a man get dragged off an overbooked flight. We’ve seen computer malfunctions ground flights. We’ve seen two girls barred from boarding a flight because they were wearing leggings. Do you think that the government and the airline industry has done enough to protect passengers, their rights, and their safety? Or should the government, should the industry do more to do that, to safeguard the interests of the passenger?
Blunt: Go ahead, Maria.
Cantwell: I think we continually need to monitor this. But we need to make sure that no one who is a ticketed passenger who sits down on a seat in a flight gets removed from that flight just to be bumped for somebody else. We need that. We need to make sure that no one is captured on an airline for hours, if you’re out on a tarmac and the plane is not leaving that passengers have the ability to get off the flight as well. So there are things here that we need to continue to monitor. Yes, a digital age is making a lot of things apparent to people. But we want consumers to feel that they have rights.
Blunt: Well, and I think that this is a—you know, we’re adjusting as a society to social media generally. But I think social media in these cases allows a lot of accountability. It also allows some significant passenger accountability. We saw an instance just in the last few days where there was a passenger who clearly was not behaving the way a passenger should behave. So both the passenger and the airlines knowing that somebody is watching what they’re doing, I think, generally turned out to be a good thing, and it’s made us address in our committee—Senator Cantwell and I had a hearing pretty quickly after the incident where someone was taken off an airline. And it raised that whole question of overbooking and is that a reasonable practice, and if it’s a reasonable practice is it unreasonable that the airlines would then need to be willing to do whatever it took to solve the problem that they had created. And at some point somebody is going to be willing to get off that airline, in my opinion, for some amount of money and to see what—this is a problem that we shouldn’t let continue. And people that bought a ticket shouldn’t be told they’re not going to be allowed to fly, but there’s a way to deal with a plane full of people that is oversold, and that’s up to the airlines, I think, to figure that out in a way that passengers are feeling good about whatever was offered to them as a determination that they wouldn’t be on that plane.
Sullivan: I want to ask the both of you about fees, which is something that comes up a lot when passengers book flights. There are baggage fees; there are change fees; there are all sorts of fees. Sometimes people will book flights and say, “Oh, I didn’t know that I was going to pay for this fee or that fee.” A couple of your colleagues, Senators Blumenthal and Markey have introduced a plan that would prohibit these airlines from charging some of these fees if they think they are exorbitant or they’re not justified. Is this a good idea, do you guys think? And is this something that congress should explore? And is this a space that lawmakers should be wading into?
Cantwell: Well, I think transparency is essential. Everybody wants to know what price they’re going to pay, and they don’t want to see hidden fees here, so transparency is a good idea. If you look at the airlines that are receiving the highest rankings right now, they are the airlines that really focus on trying to drive down fees for their consumers. And what we want to see is competition that is going to allow that, to continue to see people who are going to offer discount fees and that that level of competition gives consumers a choice. So transparency and choice.
Blunt: Well, I think transparency is the key here, where everything is available to you. Now, I don’t think some of the proposals are reasonable, where if you’re dealing with a travel agent they’d have to read everything that is possibly available to know about that flight, but that’s going to be available to you in multiple ways. Now, if you say, “No, I don’t have a computer. I don’t have an iPhone. I don’t have any way,” and you want to go through every possible fee that could be charged or what could happen with that flight, that’s an appropriate thing.
But to say that you have to be sure you’ve verbally heard from someone selling you a ticket everything they need to possibly know, eventually that’s going to add cost and it’s also going to mean you’re not going to have the kind of help you might otherwise, in your case, think you need. But as long as that information is available I think what Senator Cantwell said is the key to this. If people want to be on airlines that don’t charge fees and those airlines still have a competitive ticket price, they’re going to choose that airline. And I think that’s what we see happening. The less you see that you’re going to be surprised by, the more willing you’re able to take that second flight on the airline that’s not full of surprises.
Sullivan: Let’s talk a little bit about the big piece of legislation when it comes to the industry on Capitol Hill. That’s, of course, the FAA Reauthorization Bill. It’s quite a mouthful. It’s passed the House. I wonder if the two of you could provide an update on where you see this legislation going in the Senate and what we can expect on the horizon this year.
Blunt: Well, I think the good news there is that it’s now in the public discussion about one of the things we hope to get to this summer and get finished. I think both Chairman Thune, the chairman of the Commerce Committee, and Senator Nelson, the ranking member, are both advocating that we get to that bill, as Senator Cantwell and I are. We need to have some understanding. There’s a tax title. There are other reasons we need to have, I think, some at least broad understanding of how we’re going to approach the bill and the time we would take on it. But we need to get that done.
The biggest obstacle over the last year and a half has been what we do in terms of air traffic control and moving to the next generation of air traffic control. And there was, I think, a very healthy discussion of having a different system that would be more like the system in Canada, but that discussion just never produced the votes to get it done. And so that issue, I think, being out of the way and a willingness to find some way to be sure that we’re all comfortable with pilot training are the two things that have held the bill back, that and the tax title. And I think we’ve got a broader base of interest in not just extending the current law but actually getting the bill that we’ve worked on and the House has worked on to come to a compromise there that updates TSA procedures, that updates some of these fee and funding procedures.
Cantwell: Well, the good news is the discussion between the House and Senate is about four years or five years and not just a short-term extension. And so that’s the good news. For us in the Northwest, Sea-Tac is the fastest growing airport in the United States and has been. And we need to continue to make the investments that are going to allow us to grow. We want to continue to make progress on what we call greener skies, the ability to have a clearer, shorter landing path and to have digitization of our air traffic control system. But we want the infrastructure investments that are going to allow us to serve this growth capacity. Airports are a key economic development tool for any community. Most businesses operate within 10 miles of an airport. So the United States continuing to give predictability in an FAA bill about how we’re going to keep moving forward on that investment is really critical to our economic growth in the country.
Sullivan: I want to remind our viewers that if you want to submit a question for the senators you can go on Twitter and use the hashtag #TakingFlight, and we’ll try to get to some of those question. Senator Bunt, you brought up the issue of air traffic control, and that was something that became a flashpoint in the FAA Reauthorization Bill debate. In the House there was an effort at one point to talk about privatizing the air traffic control system. What do you make of that argument, both of you? And do you think any discussion of that will resurface as this bill proceeds through the Senate?
Blunt: Well, I think there is merit to looking at maybe a different way to have this structure. But that didn’t seem—again, let me say that just didn’t produce the votes necessary to get it done. The congress about 10 years ago said, “We’ve got to move to a better system; we’ve got to move to a system that doesn’t fly from tower to tower but does this in a better way, has planes and passengers in the air less time, keeps better track of what’s up there and knows where those planes are,” and we need to do that.
Now, to do that if we’re not going to have a different system we need to figure out how to fund the improvement in the system we’re moving toward. Last year in the funding bill that we did at the end of the year there was another billion dollars put into the air traffic funding amounts, and we think we’ll do another billion dollars again this year. Whether it’s that billion dollars or some amount of money, if we’re going to get to next gen by—I think the goal was 2025. But we’re not much further along than we were 10 years ago. We have to figure out how to get there. And it will benefit safety, passengers’ cost of flying because we’ll just know where planes are and have them in the air less time.
And, by the way, on safety, as Senator Cantwell mentioned, really the deregulation—the safety numbers have gotten better and better all the time. And we always hope there is never an aircraft problem or a loss of life or injury. And we saw the tragic loss of life not too long ago, but that’s a very rare occasion in the country that has the most airline traffic in the world.
Cantwell: Well, Sean, to your question, fuel efficiency, fuel efficiency, fuel efficiency.
Cantwell: Who benefits from fuel efficiency? The consumer, hopefully with lower fares—the business itself, our competitiveness. So moving towards and getting next gen implemented is all about the aviation industry taking the advantage of better fuel efficiency by more direct routes. So we want to see that happen. And the debate that’s ensued over this private versus not private has really been more of who is going to represent us as you make those decisions on how to fund the implementation of next gen. I hope we can just get in a room and make progress on getting next gen done.
I mentioned the greener skies initiative in the Northwest and the fact that our aviation has been able to get a lot of our flights landing this way and moving the efficiency. And I think, as Senator Blunt said, there has been some frustration that that’s not happened in more spots in the United States to date. So the question is having those sectors of our economy that help fund this aviation infrastructure be comfortable with how that’s going to get done and to make sure that they’re represented in those discussions in the future, that they have somebody to go to. Where right now a lot of people like the fact that they can come and have this in a public forum in the United States Congress and have this discussion, and people sometimes get anxious that if it’s going to be this private sector entity, what’s going to happen to them and whether those fees are going to become exorbitant and then they’ll have no say in the matter. So, look. I just want to accomplish the fact that next gen is critical to that efficiency and it’s going to help make us more competitive.
Blunt: And on that topic, Sean, you know, probably flue is the biggest unpredictable cost in airline travel. And we’ve just been reading this week that jet fuel is going up and airlines are figuring out if they need to adjust their ticket prices to that. And, of course, by the time they adjust the ticket prices airline fuel may be back down. But it is a big unpredictable. So the more you can make this system work in an efficiently way, the more you take that unpredictable cost that I’m sure ticket costs try to anticipate what might happen; and the less you’re worried about what might happen, the more you can be competitive on that ticket price.
Sullivan: So we’re obviously in an election year right now, and air travel is something that voters all across the country go through, experience on a regular basis. Are there things, items potentially in the FAA bill or maybe even outside of that that you guys think would resonate with voters, that they care about, that could be an issue potentially that could make a difference on whether a voter votes for a candidate of one party or another this fall?
Cantwell: Well, I don’t know if it’s about whether somebody will vote for somebody, but I know this, that in our state these issues of long lines and the dual goal of having security and making sure that our aviation centers are secure and to make sure that they’re efficient. And so we have seen the utilization of canine units as a way to expedite the checking and security at our airport. It has been a huge success. So the FAA just does not have enough canine units to do all of that work. So Senator Blunt and I and Senator Thune and others have been working to improve the capacity of canine units throughout the United States. They are our best line of defense, but they also can go down a row of passengers who might be waiting extra long time because of long lines and clear that line in a matter of minutes.
So what we’re proposing is to say that airports can also make investments and meet the FAA standard for training of canine units. Now, we hope that this will be added to the package before it’s finally passed. Part of this is also working with Homeland Security. But our air transportation system needs this level of efficiency. Plus, that canine—anybody who walks into the front door of that airport, that canine can detect explosives. They are a deterrent in and of themselves in just having them in the airport. So we want to see this massively upgraded in the United States, and we think that it works very, very well.
Blunt: I think, you know, one of the things we’ve talked about this, when TSA comes in, when Homeland Security comes in, when airport managers come in they understand how good dogs are here. And even some new ability to lease dogs, to not have the government have to be responsible for all the training and all of this, we can do this in a better way. And it does clear the lines. You know, something that in this discussion we’re having now that hasn’t been there before is drones in the air and drone activity and how much FAA responsibility there is, in some cases what’s the line between FAA and the Department of Defense. Drones can add a lot to the commercial opportunities in the air, but they also raise a lot of questions.
Where are they? How do you be sure you keep them in a way that they don’t interfere with commercial air travel? And then you get into the whole topic of how much oversight of your property do you want drones to have. In my view, virtually none. But how do you deal with that and have drone delivery and other things? And how do you identify every drone? You know, when you’re talking about putting thousands of things in the air in the next five years that aren’t in the air today, how do you deal with that? And then how do you offset the cost? Is this a new obligation for people that are using drone delivery vehicles to have to be part of the cost of the FAA? If the FAA is going to regulate them, the answer appears to be absolutely that should be part of that discussion. But it’s an area that we’re just now dealing with in the way that the future obviously requires us to deal with it.
Cantwell: Another thing I wanted to mention. I’ll comment about drones, because we certainly want the FAA and the interoperability of those systems to keep moving forward in a safe and secure way. We have so many things that are used for helping us with fighting fires and Coast Guard issues. But I don’t know if anybody here has been through the airport with the automated conveyer system where you get a container and put your luggage on it and move through. I don’t know if there are people here. But that is also being deployed across our airport. So, you know, the frustration, people get in the line and the person in front of you is taking—you know, you think, “Oh, my gosh. I have to wait for this person to do all this.” This new automated system, when you’re ready you move. You know, you stick your luggage on, you stick it on the conveyor belt, and it moves and you move. You can walk around to people. So these kinds of automations are improving the speed at which people are also being able to be vetted through the secure system. And they also like it at TSA because then they can take luggage and better evaluate that. So all of these things that are helping us move people through the system are part of what we want to see as a continued improvement of the consumer experience, but we also want to make sure that the safety and security still remain there.
Sullivan: We have our first social media question for the two of you. Stacy on Twitter asks, “What are we doing to protect the aviation grid from Russians and other countries hacking our infrastructure?”
Cantwell: Well, this is a big issue because we do have state actors who are attacking our power system. So we want the Department of Energy to play a very big leadership role working with other federal agencies to upgrade our cybersecurity. And this is an ongoing effort. Senator Murkowski and I have passed legislation out of the Senate. We hope our House colleagues would get more serious about this and take it up because it’s not just our air traffic control system, but it’s other things that they are maneuvering through. I would say the FAA feels good about everyday experiences writ large, but we have to keep making improvements across our entire grid.
Blunt: Well, cybersecurity—I’m on the intel committee. That’s probably the thing of greatest concern across the board, whether it’s the financial structure, the aviation structure, the water infrastructure. So much is dependent now on having a cyber system that works well. And, you know, one of the things we are I’m sure working on as a country will be trying to be sure we have more certainty about where an attack might come from. We’re pretty good at defense. We have no real theory on offense. You know, how do you fight back? How do you make an attack on our critical infrastructure an attack that someone wouldn’t want to make or wouldn’t want to see happen from their country, whether it was state led or individually led? And this is a huge topic. If you want to really slow down America in a dramatic way and create health and safety issues, not just the airlines and the airspace, but cybersecurity is something that we have to be very focused on because it’s the quickest way to bring our country to a standstill.
Sullivan: We’re about a year and a half into the new administration. And I wonder if either of you detect any changes in this administration’s approach to aviation, to security, to safety versus the last administration. And has it changed the way that congress has worked with this administration on these issues? What are the big differences that we see?
Cantwell: Well, I am concerned about the president’s trade policies. When we talk about aviation, Roy and I are sitting here talking about aviation and we’re today discussing a lot of the consumer issues, but aviation is a major employer in the United States of America. It employs over 100,000 people in the Northwest in what are manufacturing jobs of good middle-class wages. We don’t want to lose that competition. So when we get into these—you know, 50% of our planes are sold overseas into overseas markets, and you start putting tariffs on steel and aluminum, you start to have an impact. We don’t want to see a trade war erupt and make the United States less competitive in that important aviation market.
Blunt: I would think from the specific FAA point of view you’re going to—Secretary Chao is going to be here later. She brings great skills to the Department of Transportation. We do need to do a better job filling the jobs that need to be filled by the president. But I detect a continued increase in engagement on security issues, on the issues that make people feel as safe as they can possibly feel about flying. I just think the more we get in the post-9/11 world, the more we’re all comfortable with the importance of that goal and also asking the questions that need to be asked. And generally I think the answers have been pretty good.
There’s always some hiring concerns. You know, we’re going to have a pilot concern in future years. The pilots that were trained by the government in World War II and Korea and Vietnam are retiring. And I know one of the airlines recently put a pattern in place where they’re going to be training more of their own pilots or training more pilots and encouraging pilots to be trained. That’s one of the things we need to be thinking about. But generally I think we just continue to hopefully get better and demonstrably better at the parts of air travel that the government is obligated to be responsible for.
Sullivan: And along those same lines—we only have a couple of minutes left—you raise the interesting point, Senator Blunt. I often hear about a pilot shortage around the country. Are there other macro steps that can be taken to address that? And how do we explain what’s going on in terms of the number of pilots versus the demand?
Blunt: Well, it was one of the training. You know, we had this hours-of-service or training discussion. That’s one of the things that’s held the FAA bill back a little bit, is trying to reach a conclusion there as about how much training and what kind of training is the right training to put a pilot in the air. But these are good jobs. They’re going to be very competitive jobs in the near term, as pilots do retire. And I think the airlines themselves are for the first time taking more responsibility and looking at what they need to be thinking about to be sure that people can get the training they need, have access to the loans they in most cases need to have to get it, and then have the kind of jobs that allow those loans to be paid back. We want good pilots in the air. We want lots of people prepared to do a job that takes lots of people. And I think we’re seeing a lot, a number of things happen now to meet that pilot shortage. I believe there is a pilot shortage, most of the airlines do. Particularly in the regional airline areas, finding the people you need that have the skills you need is very important.
Cantwell: That regional issue is the real issue. You know, obviously the big carriers can do well and attract the people that they want to attract, but then you have these regional airlines. And so we have to focus on what are the tools that can be used to continue to build that pipeline. We never, never want to shortchange on the training. Captain Sullenberger gave testimony to our hearing. I think it was one of the most dramatic testimonies ever, where he said, “You know what? When it’s you and the copilot sitting next to you, sometimes you don’t even have time to communicate. You’re just going to do your job, and they’re going to do their job.” And after the Colgan Air incident, which was a regional carrier in which a woman from the Northwest was one of the copilots and lost her life, we need to do better at training. So let’s focus on what we can do to make sure the regional carriers continue to get a workforce for the future.
Sullivan: All right. Well, that’s all the time that we have. Senator Cantwell, Senator Blunt, thank you guys so much for joining us. I’m going to turn things over to my colleague Lori Aratani who is going to have our next discussion.
Cantwell: Thank you. Thanks to everybody.
Blunt: Thank you, all.
Sullivan: Thank you, guys.
Blunt: Thank you, all.
Cantwell: Thank you, Sean.
Sullivan: Thank you so much.
Taking Flight: The Regulatory Landscape:
Aratani: Good morning, all. Thank you for coming today. I’m Lori Aratani. I’m a transportation reporter here at The Washington Post, and I’d like to introduce our panelists today. We have Sean Kennedy, who’s senior vice president of Global Government Affairs at Airlines for America. We have Paul Hudson, president of FlyersRights.org. And Kevin M. Burke, president and CEO of Airports Council International of North America.
Now before we begin, I’d like to remind the audience in the room and online that you can tweet your questions to us, hashtag #TakingFlight. Please do. we’d like you to participate. That makes the discussion really rich. And we’ll try and work those in as we chat.
So I think these days, you can’t really have a conversation about the aviation industry without talking about the passenger experience. It’s been more than a year since the infamous United Dr. David Dao incident, and there has been some progress. Overbooking is down, bumping is down, and United even made good on that pledge to give out that $10,000 flight voucher. But one thing you have to wonder if you’re a traveler—and I bet many of you are traveling this year, this summer—is enough being done? Sean, you want to start us off?
Kennedy: Great. Well, first, thank you, The Washington Post, for bringing us together today. On the notion of customer service and what does the customer expect, what’s great about this industry is you have so many more carriers that are participating, from not only the larger carriers—American, United, Delta—but you have the smaller ones, the ultra-low-cost carriers like Spirit—they’re each offering a different product aimed at a different segment of society, and that’s why we have record numbers of people traveling.
To answer your question on things like overbooking, if you look at the numbers for where we were last year, it was 6.2 customers were overbooked or bumped per 100,000 flyers. This first quarter of this year, 1.2—1.2 passengers, which is an all-time low. What it shows is that the industry was immediate and quick in responding to the incidents of last year. It was unacceptable. Everyone acknowledges across the board that mistakes were made, but what’s more important is that the industry took corrective actions immediately, and you’re seeing that in this new record low number of people that have been denied seating.
Aratani: Paul, I’d imagine you might make an argument?
Hudson: Yeah, I have a somewhat different take on—I think almost a billion people saw that infamous Dr. Dao video. You go on our website, you’ll see there’s lots of other videos showing passenger abuse. And if you recall the incident, the CEO initially defended the airline, saying that the removal was okay—they did everything proper. The police officers all swore that they did everything proper. But when the video came out, everything changed. That wasn’t because of voluntary action by the airlines. I think social media has really played a major part in the reforms here.
Aratani: Kevin, do you have any—?
Burke: Well, I think Sean’s done a really good job of explaining the challenges there. It was disappointing. It’s disappointing every time it happens, and it’s encouraging to hear that the airlines are investing those issues in particular, and to hear that those numbers have gone down. That’s good, but I think it’s something—we, as an industry, have to be diligent.
Aratani: And I know, right now, lots of us are watching a lot of the action Capitol Hill, particularly if you’re interested in airlines and the aviation industry. It’s FAA reauthorization time. There are some interesting provisions in there, and I know there’s always a tug and pull between how much regulation is enough, how much regulation should be? I’d be interested in hearing all your thoughts on some of the provisions that are in there.
They’re talking about things including a minimum seat size, an aviation consumer advocate, more disclosure of fees that folks would pay as part of their ticket, and I’d be curious if you all feel this is something that moves the industry forward in making it more customer friendly and responsive, or if you have a different view. Paul, do you want to start?
Hudson: Yes. I guess broadly speaking, we favor reasonable regulation coupled with more competition. After deregulation, it’s been the mantra that competition will solve everything. Problem is, with mergers, we now have very little competition. Seats is a case in point. In every other area of transportation, seats are getting bigger. Only in airlines are they getting smaller. People are getting bigger. [LAUGHTER] We now have three-quarters of the population of the United States that’s rated as obese or overweight, and the one-quarter that are still considered normal are squeezed by the others. [LAUGHTER]
Now, we brought a case— had to go to the appeals court, and a year ago, the court said, the FAA, you need to really look at regulating seat size. But so far, we haven’t heard anything. And as a result, the airlines are continuing to shrink seats, and there’s really no limit, because there is no regulation of any kind right now on seat size.
Kennedy: Well, there is regulation on seat size, obviously, for safety. So number one, the FAA has safety requirements to ensure that people can safely evacuate the plane in the event of an incident. What you’re referring to is should there be a comfort standard—should they regulate how cushy the chairs are? One of the most popular questions I get is, “Why isn’t there an airline that just has every seat like a first class seat?” And the answer is, if that existed, there would be an airline doing it. But the problem is, for virtually every customer right now, what they’re looking for is cost. If you look at the airlines that have the most growth right now, the ones that are adding the most seats, it’s Spirit. People don’t pick Spirit because they think they’re going to have a comfortable experience. People pick Spirit because what they care about, that particular segment of the population—they want the lowest price possible, and Spirit offers that.
We have this new market. What’s exciting is that if you are a family that cares about—you can pick what you want. You can get a product—if you care about comfort, there’s an airline product that offers that. If you want convenience—every one’s going to have the same level of safety. The industry remains safe, but you can pick and choose what’s right for you. We haven’t had that historically. It’s one of the things that deregulation has done.
To answer your question, one of the challenges that we have in the FAA bill is a provision that’s—and it was mentioned in the last panel—it’s called the FAIR Fees Act, and it would allow the government to reregulate the pricing of certain products that airlines offer. What’s been great about deregulation is that you have a highly-segmented structure now, where different carriers offer a different experience and different products. And some charge for things and some don’t. Passengers vote with their wallets every day. That’s why there are more people—it’s why we’re at record levels flying right now. Removing that is going to completely upend that system.
Hudson: Excuse me, but there is no regulation for seat size. And every year, the airline industry people have a convention or two where they come up with new seats, and they’re always smaller. I don’t know if you’ve seen this, but you go on our website, there’s a new one called the Skyrider. Now, I’m not a fan of it, but it involves sitting like this. They can get three times as many people in the same space with the Skyrider. Now, this is about—and the seat makers are selling it this way—this is not about consumer choice. This is about generating more revenue for airlines. The idea is if you squeeze people into torture class, then you can force them into buying more expensive seats. And we had some things like that on the Titanic. It didn’t work out so well. [LAUGHTER]
But leaving that aside, we are getting now where some of the seating arrangements being proposed are without seats whatsoever. And all we’re saying is we need to have some reasonable standard. He mentioned fees. Well, one of the problems with deregulation is that there is no definition of airline tickets. And so, arguably, you could have airfare for a dollar and everything else could be extra. Spirit has over 70 “optional fees.” This is an exception or a loophole that you can drive a 747 through. And so what’s happening is, you get low fares advertised, but they don’t include the full price of the ticket. And the purpose of that, by the airlines, is to make price shopping difficult to impossible, because the airlines hate price shopping.
Aratani: I want to get back to this, because this is clearly a topic that the audience is engaged in and we are, but I also want to give Kevin a chance to talk. And I know one thing—it’s not just about the airplane and getting on there. Airports are a big part of this. And there’s been a lot of talk about infrastructure in the transportation world. We hear it about roads and bridges. If you live in New York and D.C., you hear it about your subway systems. But I don’t know that we always hear a lot about airports and infrastructure and the state of infrastructure in airports, and I think Kevin might have something to say about that, maybe a bit.
Burke: Well, Lori, first of all, thank you for having me here. Second of all, yes, I have lots to say [LAUGHTER] about airports. Infrastructure is probably our most important issue. We have airports, on average, the terminals are 40 years old. We have about 840 million people going through U.S. airports last year. Those airports were designed for about half that amount of traffic. So, what we need to do in U.S. airports is make them 21st century airports to enhance the customer experience.
Really, it’s all about the customers. It’s about customer service. It’s being able to move the customer, from the time they enter the airport, when they go through TSA, to go to the terminal to buy lunch, to buy a shirt, buy a tie, buy whatever they want to buy, get onto one of Sean’s aircraft, and get to where they need to go. The infrastructure we have today doesn’t enhance that experience. So airports need to modernize. And some are further ahead than others, but our goal is to make certain that the transportation system, our sector, is modernized 21st century.
That means both the airlines and the airports have to be modernized to make certain that the customer has a fabulous experience, both going through security—making sure there’s enough TSA officers to be able to handle that—that technology exists to be able to handle that part of it, both in the front of the airport with TSA and inbound international with customs and border protection. And then while they’re in our airports, that they have a great customer experience so when they get on their planes to go where they’re going, they’re not stressed and they feel really good about being where they are.
Long lines do not help airports. Two years ago, when we had those long lines, social media lit up with pictures of long lines. And it wasn’t about the great service when they got past the line, it was about the lines themselves, which we had nothing to do with. And we worked together with the airlines to help solve that problem, but more needs to be done.
Hudson: We agree with a lot of what you said, but the part that’s left out by the airport lobby is we need not just fancier airports, we need more airports. The United States is the only first-world country in the world, and probably even second and third-world country, that has built zero new airports for decades. And we are favoring repeal of some of the laws and regulations that prohibit, for instance, private airports, that prohibit the United States government from operating an airport.
So what we have now, and the number one complaint of passengers, traditionally, is delay. Congestion delays is a major part of that, and 60% of the congestion delays are from one place—New York City. Has three airports, all controlled by the Port Authority, which is a monopoly. We need a fourth airport there. Now, the locals don’t want a fourth airport. The Port Authority likes their monopoly. They don’t want a fourth airport. Chicago—two airports, owned by the city of Chicago. Major cash cow. They have lobbied against a third airport for decades successfully.
We need to build more airports. The amount that’s being talked about, of $12 billion for improving airports is a drop in the bucket. So, we favor, at the very least, a fourth airport for New York, a third airport of Chicago, and probably another one for Atlanta.
Burke: Can I jump in here on this? I agree with what you’re saying here, but I think we have to start with modernizing the ones we have now. And then, if in fact the local communities decide that they need another airport—whether it be JFK, whether New York or Atlanta or L.A. or San Francisco, then we go to the next level. But immediately—and we know how long that takes to do. it’s not like when we go to China and the Chinese rules are little bit different—they can build an airport pretty quickly. In the United States, there are regulations. And of course, we are supportive of ridding the airport business of unnecessary regulations, and we let the Trump administration know that.
But in terms of your answer there, yes, we’d like to have new airports, but I do think we need to take those airports we have today, modernize them, make sure that the passenger experience is first rate, and then, if we can build new airports, let’s do it.
Hudson: Problem is, we’ll all be gone by the time that happens. [LAUGHTER]
Aratani: Sean, do you have any thoughts on this?
Kennedy: No, I mean, Kevin’s right. I’m not sure about the 12 billion. I mean in general if you look at the top 30 airports—and Kevin knows these numbers better than I, but it’s about $300 billion of development is underway right now, or has just been completed. Airlines are a big part of that. We work well with the airports on that. They’re sort of our landlords, in a sense. But it’s a good relationship because obviously we need that infrastructure. Airports and airlines, it’s a completely symbiotic relationship. We need a place to land.
The notion of creating more airports isn’t something that a lot of communities are saying to us right now. It’s more, how do we make sure that there are adequate gates, how do we make sure—another big issue that hasn’t been touched on is just the infrastructure in the sky. Air traffic control reform. We’re still using 1950s-era radar technology, which is very safe, but very inefficient. We’re one of the only modernized country that’s still using backward technology. We can do a lot better.
Burke: Airports have a hundred billion dollars of needs in the next five years. That’s up 35% from two years ago when we surveyed our members. That’s a hundred billion dollars, $20 billion a year. Of that 20 billion, 10 billion of that is handled by certain funding through certain government programs, but $10 billion short. So we have to focus on making airports modern by being able to change the funding structure to allow airports to make decisions that are best for local communities—not for what the FAA tells us to do, but for local communities. That’s when, in fact, airports will begin to grow and we get the funding—working with Senator Blunt and Senator Cantwell and others in the Senate and the House to be able to make that happen.
Aratani: So more modern airports, more competition. One thing I did want to talk about is competition. Sean talked about the rise—and if you’ve ever flown Spirit, Allegiant—you had low-cost carriers, now you have ultra-low-cost carriers. I don’t know if we get to ultra, ultra-low-cost carriers and what that means, but even so, about four airlines control about 80% of the market. So what can we say about competition and what it will mean for consumers and flyers, for airports? Whoever wants to start with that one.
Burke: First of all, competition’s good. It’s what drives America. It will help the passenger experience, it will lower fares, and it also will help airports develop into 21st century airports. Your number is correct. About 85% of the people who fly in the United States are carried by four airlines. I don’t consider that competition.
When you enter the market of ultra-low carriers, we welcome that, because we’re not just talking about large hub airports, we represent medium and small airports that, on a hub and spoke system, service the larger airports. So the more competition that we have in the United States for passengers to make a choice, the more those local airports will be able to take people from small places like Dubuque to Chicago, from St. Louis to Atlanta—to make those type of connections. So the more choice Americans have, the better travel experience they have, based upon the type of airline they want to fly. If they want to fly Allegiant, that’s great. But we need to have more of them. That helps the U.S. airport structure, it allows passengers to fly in different places, and it helps local economies.
The one thing I’ve learned in this job is an airport is a magnet for business development around the country. If you have an airport that’s a good airport and it’s modernized, companies want to locate there, because one good reason—they can get in and out, both on a supply basis for cargo, as well as passengers. So competition is good.
Hudson: I’m glad to hear that you favor that, and perhaps you favor getting rid of the antitrust exemptions that airports have. And perhaps if airlines were truly in favor of competition, they would be in favor of getting rid of the antitrust exemptions that allow them to control international—at least two-thirds of international flights through joint ventures.
But really, we think there are three things that need to be done to make competition a reality. One, we need to allow more foreign competition. And there is a bill out by Congressman Brat, called Free to Fly that would reduce the strong restrictions—the United States has the strongest restrictions of any country for any foreign carrier. You cannot have a foreign subsidiary here. You cannot own more than 25%, if you’re a foreign company, of a U.S.-based carrier. You cannot control a U.S.-based carrier. Now these are Cold War era things. And there is certainly national security interest.
But if you’ve flown in Europe recently, you’ll know that it often costs more to take a cab ride to the airport than a flight, say, from Berlin to London. Now that’s not the case in the United States. There is a lot of competition outside the U.S., but not here. We’ve seen with one airline, WOW airline, and I think there’s another one you might have heard of, Norwegian—$99 to Europe. Try to find $99 anywhere in the United states.
M: How long will that last? How is that sustainable?
Hudson: Well, that’s another thing. You have to have competition, but we’ve seen what unbridled competition resulted in. In the ‘80s and ‘90s, it caused a lot of bankruptcies. So maybe there’s an in-between model. But the fact is, we have right now very little competition, and what’s happened is service has gone down, and airfares have gone up, and profits have gone to the roof for U.S. carriers.
Aratani: I have a feeling Sean has something to say about that.
Kennedy: Well, no, so, let’s look at this by the numbers instead of the rhetoric. The profit margin for the airline industry for the first quarter of 2018—4.9%, which has decreased from what it was last year. Let’s compare it to other ones. Boeing, 12%. Disney, 24%. McDonald’s, 36%. All great companies, all great products—don’t my wife about McDonald’s—but they’re great companies, but they are deregulated and they’re offering a product that they’re able to price at a point where they can make a profit and people will still feel that they’re getting value. If they didn’t want to buy a Big Mac, they wouldn’t. If they thought the cost of a Disney ride—which is going up—was too high, they wouldn’t go. If a carrier thought that they weren’t getting a good deal from Boeing, they’d go to Airbus.
Before deregulation, it was against the law for any U.S. carrier to fly between New York and L.A. for less than $1,400. That was the law. We all had to charge the same amount. How much is that now, 40 years later, in today’s dollars—$1,400 in 2017 dollars? It’s now $320. 10 years ago, the top three carriers—American, United, Delta—had about 72% of the market. It’s now at 52. That’s 20 points drop. Where did that 20 points go? That 20 points went to new carriers offering new products in this deregulated world. The original low-cost carrier of Southwest, niche players—hybrids like JetBlue, Hawaiian, Alaska. Then you have the ultra-low-cost carriers, ones like Spirit and Allegiant. They’re all targeting different segments of the population. When it costs $1,400 to go to California, you are not a low income or a family of four that was taking a casual trip. There’s a reason why one-third of all passengers that are traveling now have annual income of less than $50,000—because you have this new product.
Paul spoke about this—I hadn’t seen this product that you were talking about, but the one where you’re leaning back—and none of A4A’s members are ever going to offer that. But I can tell you if someone wants to offer it, if someone wants to ride it, then they’ll make a dollar, then they’ll continue to exist. If I went to you all and said, “Will you join me? I’m going to offer $99 service to Europe. I want you to invest in me.” Good luck. I don’t think that’s sustainable. We saw that in the airline industry when people would just do these rock-bottom fares competing for market share. It wasn’t sustainable. We finally have reached this point where we have a small profit—no one’s getting rich yet—but a small profit which we’re reinvesting in our personnel, more routes. We have the highest number of seats right now in small and midsize communities in 10 years.
Hudson: Excuse me. I don’t know where all these numbers came from, but—
Kennedy: DOT, FFA.
Hudson: —the latest IOTA figures say that U.S.-based carriers have half the profits in the world, own 20% of the traffic. Warren Buffett used to say airlines were a terrible investment. He now thinks they’re great, because they’ve got a big—
M: He’s right.
Hudson: —moat around them.
Burke: I need to jump in here on the profit side. Sean, you mentioned that you have a six-or-so percent across the board profit margin.
Burke: The way we look at it from airports, you made last year $14 billion in ancillary fee revenue—profit from change fees, from bag fees, things like that. Airports have no problem at all with airlines making money. We look at it as a healthy airline helps airports. But when we talk about modernizing airports—and we’re talking about raising a minor fee, a user fee, to be able to pay for that without airlines directly paying for it. And we have $10 billion in needs per year for the next five year—we have a shortfall, and you’re making $14 billion in profit, and the airline’s response to that is, if you raise these fees to modernize American airports, people will stop flying.
I would say the opposite. I would say if we create a competitive environment by modernizing American airports, we’ll see more people flying. And the fee is not a tax. It’s basically paid as a user fee. The government doesn’t collect it. It’s a fee paid by everybody in this room who travels, and it’s a fee to be able to pay for the use of a public facility. Now, when I hear profits like that, I’m happy, but when I look at the deficit that airports have in trying to modernize airports, one doesn’t equate to the other.
Kennedy: Well, you said profits. It’s—
Aratani: I know, Sean, you want to—we’ve got one, though. Apparently, the question of seat size has captured the imagination of our audience. [LAUGHTER] But also, with all these new options, there are some questions about, you know, how you accommodate people—not everyone is built the same. Some of us are very tall, some of us are very small. And so I’d like to hear what our panel has to say about accommodations for folks that have disabilities—how you sort of work with people who are tall. You know, will tall people just always have to pay more to get a seat that they can be comfortable in? What can airports and airlines do to help accommodate passengers that have special travel needs—older people, things like that?
Burke: If we modernize our airports [LAUGHTER], and are able to build them out, we can build seats that are for big and small—I never have a problem on an airline, because I’m only 5 foot 8, but I’ve sat next to people who are 6 foot 5 and I can see why they’re uncomfortable.
Hudson: Maybe we could take some of their airport seats on the airplanes, but [LAUGHTER] until then—in 2015, we proposed we thought a very reasonable proposal, which was to have a standard which would accommodate at least 90% of passengers. Not the way we’d like them to be, but the way they are. And for that other 10%, which at the time we felt were people over 6 foot 2, over 250 pounds, you need to offer larger seats. And you need to probably charge more, but proportionally more—not three to five times as much as what you have to go to to get to business class in many cases. But that was rejected by the FAA. And so we’re now back—the court rejected their rejection. We’ll see where it goes. But that I think is a reasonable solution.
Aratani: Sean, do you—?
Kennedy: Obviously a big part of this is the need to upgrade our aircraft. And you have aircraft that were built, somewhere—you know, 10, 12 years old. We can do a lot better than that. There are new technologies, new designs. Boeing and Airbus are doing great things. One of the things that airlines do when they are profitable is reinvest in their product—either retrofitting the cabin—there’s nothing like getting on a plane and that new plane small of 757.
But that is an expensive investment. Airlines have stepped up. Now that we’ve become finally sustainably profitable, we have ordered a lot of new aircraft. We’re taking about one new Boeing or Airbus aircraft online every day in the United States. Those kinds of technologies have better seating, better options, better lavatory access for disabled, and it’s all part to try to improve the experience.
Hudson: Excuse me—
Aratani: I’m sorry. I know we could talk more, which would be great, but we have to wrap it up. So I thank you all so much. This was a great discussion. Now we’re going to move on to our next panel. But thank you all, and thank you for your questions.
M: Thank you.
M: Thank you.
Burke: Thank you, Lori.
Aratani: Of course.
Content from Delta Air Lines:
Wingate: Good morning. My name is Heather Wingate and I’m the senior vice president for government affairs at Delta Airlines. I would like to thank The Washington Post and its publisher and CEO Fred Ryan for the opportunity to say a few words here this morning. Delta is proud to support an event series like this one. The conversations this morning among these distinguished panelists have touched on a range of regulatory issues, impacting airlines, airports, and the flying public. And I know we’re all looking forward to hearing from Secretary Chao in just a few moments about the administration’s aviation priorities. This audience may know Delta best for the policy issues that we’ve been engaged in, or perhaps you’ve flown Delta a time or two. And for that, we are grateful.
But this morning, I would like to just spend a minute telling you a little bit about Delta, the company that we are and what we truly care about. Ninety-four years ago, Delta actually started as a tiny regional carrier. As our founder, C.E. Woolman was often common to say—and which we still say to this day—we try to put ourselves on the other side of the ticket counter and treat our customers as we would like to be treated. That concept has been fundamental to our success. In a business known as much for its volatility as for its ingenuity, Delta’s commitment to being a great place to work, to fly, and a positive force in the communities in which we operate have enabled us to maintain our position as the world’s most reliable customer-centric, and employee-focused airline in the world.
Now, nearly a century later, through mergers, acquisitions, and yes, our fair bit of headwinds, we’re up to 800 aircraft and counting. We employ 80,000 people and hiring. We’re flying 185 million customers every year to 321 cities around the world. We have a truly global network through a unique partnership strategy with leading international airlines, such as Virgin Atlantic, Air France, KLM, Korean Air, and Aeroméxico, among others.
We’ve invested $7 billion in infrastructure just over the last decade alone and we have $12 billion more slated for infrastructure investment over the next five years. These investments will allow Delta to create the airports of the future. In New York, Atlanta, Seattle, Salt Lake City, as well as Los Angeles. In recent years, Delta has seen strong profits. Increased confidence from financial markets and unmatched investment in our people. The company has continued to lead the industry with innovations that improve the travel experience. From technology on bag tags that allow customers to see when their bags are loaded onto an airplane, one of my true favorites, to as well, a groundbreaking app that allows Delta pilots to avoid turbulence for a smoother flight.
So far in 2018, Delta has ranked among Fortune’s 100 Best Companies to work for for the second consecutive year. We’ve also ranked as one of Fast Company’s most innovative companies in the world worldwide and we’ve paid $1 billion in profit sharing to our employees for the fourth consecutive year. We’ve also launched biometric optional check-in at all 50 of our Delta Sky Clubs here domestically after a successful test run of that product here at Reagan National Airport’s Sky Club last year.
We’ve also contributed—and this is core to who we are and who the Delta people are—thousands of volunteer hours and millions of dollars to a host of causes across the country, as well as across the world. Delta actually gives 1% of its net income from the previous year to charitable causes. Some examples of those contributions include building homes with Habitat for Humanity. We’ve had a partnership with Habitat since 1995 and Delta employee volunteers have built 259 homes in 12 countries. We have another five more builds slated for this year.
In addition, we’ve partnered with KaBOOM! since 2013 and built 22 playgrounds across the country for youth recreation centers in schools. Delta will build six more of these playgrounds this year. Our employees have truly embraced our partnership with the Red Cross, making Delta employees number two among corporate blood donors here in the U.S., and we’ve raised nearly $6 million for organizations such as the American Cancer Society, the American Heart Association, breast cancer research, and the United Way.
Put simply, Delta’s mission is to make the world a smaller place. Core to that mission is constant engagement with customers, with investors, with community leaders, and yes, with government agencies as well. But our most steadfast commitment is, in fact, to our employees. We know that if they have the tools they need to support our customers, our customers will reward us with their business as well as their loyalty. And that benefits both the shareholders, who will then invest back into Delta. It’s a virtuous circle that we believe will sustain our airline for decades to come.
Once again, I want to thank Fred and The Washington Post for the opportunity to promote this event series and for an opportunity to tell you a little bit about who Delta is as a company and what we truly care about. Thank you. [APPLAUSE]
Ryan: Thank you, Heather, and thank you again to Delta Airlines for being our presenting sponsor this morning. I hope you’ve been enjoying these terrific conversations. It’s now my pleasure to introduce the final segment of today’s program. My colleague, Robert Costa, with have a discussion with Transportation Secretary Elaine Chao. Having arrived in this country as an eight-year-old immigrant, our special guest has risen to the highest levels of government and non-profit service. Secretary Chao’s extensive career in government service has included top positions in each of the past three Republican administrations. She was President George W. Bush’s Secretary of Labor and served as Deputy Secretary of Transportation, as well as director of the Peace Corps under President George H.W. Bush. Her career has also spanned private and non-profit sector service, including four years as president and CEO of the United Way of America at a very crucial time. I had the pleasure of meeting Elaine during the Reagan Administration when she served in a distinguished role as White House fellow.
Since becoming the nation’s 18th Secretary of Transportation, Secretary Chao has been tackling a wide range of issues, including repairing and modernizing our nation’s infrastructure and working to improve the safety of America’s railways and highways. Today, we’ll hear about her department’s work in the aviation sector. It’s now my pleasure to welcome Washington Post’s national reporter Robert Costa and Secretary Elaine Chao. [APPLAUSE]
One-on-One with the U.S. Secretary of Transportation:
Costa: Good morning. I’m Robert Costa. I’m a national political reporter here at The Washington Post. Honored to have Secretary Elaine Chao, Secretary of the Department of Transportation, former Secretary of Labor, an extensive career in the federal government, as we all know, and in the private sector, president and CEO of the United Way. And I know we could go on for a long time about your backstory, but I thought—
Chao: I just said to Fred Ryan, I said, “What this really means is that I’m really old.”
Costa: [LAUGHTER] No, no, no. But I thought as a reporter who covers the White House, I thought, “What’s the best way to get through the biography section quickly and I saw President Trump was with you yesterday.
Costa: At a meeting, you were talking about FEMA. And here’s the quote he said about Secretary Chao. Quote, “All you do is produce. You do it in a quiet way and so effective and so incredible. What a job you’re doing with transportation. It was a great decision.” Typical of President Trump, high praise for his cabinet, and that really shows you are in an influential spot inside of the president’s cabinet right now and you’re also—
Chao: Well, yesterday was really interesting because, again, I think it shows how prescient and prepared this administration wants to be. So we are approaching hurricane season and the president and the vice president both appeared, as well as the first lady. They assembled the whole entire cabinet and we went over preparations for the hurricane season and we had a number of local and state officials involved, including quite a number of governors. So we did this last year as well. Last year was just uniquely different because of the three very, very strong hurricanes that took place one after the other. And so we learned from that and then we’re getting ready for this year as well. So I think this speaks well for the administration.
Costa: Looking at policy, when you look at the move last year—almost a year ago, June 2017, for privatization of air traffic control. Republicans in Congress have moved away from pushing for that on Capitol Hill. Do you think there’s any chance in the coming year that that push to move it from the FAA to a non-profit corporation could be revived?
Chao: I want to give Chairman Shuster a great deal of credit because if it were not for his single-handed determination in surfacing this issue, in carrying it through the committee process, getting the votes that he did, I don’t think this proposal would have as much momentum as it does. Having said that, I think the idea is timely because when I was deputy secretary of Transportation, I remember sitting around the conference room of then-secretary at that time, talking about, “How do we relieve congestion? How do we reduce delays in the air?” And for any traveler now who is traveling, they understand right away what it means to be stuck at the airport or to be circling in the skies for quite a while. And so delays and congestions in our airspace is something that almost every passenger understands. And the administration’s proposal to take the air traffic control system from FAA and liberate it from the government shackles of the procurement process, which so delays the acquisition of modern, up-to-date, the best technologically—equipment. This would enable the air traffic control to address some of the delays and the congestions which so many passengers face every single day.
And there’s always a bit of a conflict that some critics say, that the FAA is the government’s regulator, safety regulator of the skies. How can it regulate itself? Meaning run the air traffic control and also, regulate the safety. So this argument has been around for quite a while, as has again, the concerns with about how to alleviate delays and also congestions in our air. And I’ll give you just a very simple example. Our air traffic control system—first of all, let me just reassure everyone—is the safest in the world. We have the best air traffic controller control system in the world. But it’s radar-based. So the radar system basically sweeps 360 degrees in six seconds. So during those six seconds, we do not have a pinpoint accuracy as to where that airplane is. We know where it is, but we cannot pinpoint exactly where. And so because of that, the planes are spaced further apart for safety considerations.
Now, if we had a GPS system, which we all understand these days because we all have our own handheld device and if we had a GPS-based air traffic control system, we would be able to pinpoint the exact location of that plane and be able to stagger or line up the planes with shorter distances between them. Of course, still very safe, but that would give us greater opportunities to reduce the congestion. So that’s just one example as to how the air traffic control system. If it had the most up-to-date systems, technology can help to reduce delays, increase productivity, of course. Because delays mean lost productivity, and also, deterioration in our quality of life.
So again, this idea is going to come back because the need to address delays and congestions in our airspace will continue.
Costa: When it comes back, do you see that before or after the midterm elections as some kind of legislative proposal?
Chao: We are also a department that listens to the will of Congress and clearly, we have been unable to get enough votes in the House and the Senate. So until we do, this proposal will not gain greater currency. And so we need to work on that.
Costa: What do you think, secretary, about the pilot shortage in the industry and is there any action your department could take to loosen regulations on how airlines recruit pilots to try to help address that problem?
Chao: This is a very big problem because it’s kind of like the perfect storm. You have a generation of experienced pilots who are facing retirement. We are also seeing increased traffic, air traffic in our airspace. And then, of course, we have less people going into the military who used to be a tremendous provider of pilots and we have a tremendous shortage in pilots and so last year, we launched a program. It was actually the brainchild of a very good staffer, Bobby Fraser, at the Department of Transportation who saw this problem early and said, “We’ve got to do something about it.” And so we launched the Forces to Flyers program, in which we give scholarships to people who want to become pilots so that they can gain the pilot training. It’s very expensive to personally for anyone interested in being a pilot to lay out the money, to gain the experience, the requisite experience to be able to qualify. There is this 1,500-hour rule, which came about because of the tragic accident in Upstate New York and it was a tragedy of a commuter aircraft that resulted in fatalities. So our hearts go out to the families and the relatives of people who have been lost.
But it was because of that that it was thought that not enough hours were accumulated by these commuter aircraft airplane pilots. And so the requirement for the hours required to fly certain types of aircraft was increased. But that has actually made it so much harder for so many other experienced veterans in flying to enter this field. This is obviously a very sensitive subject and until the Congress advises us otherwise, it’s very hard for us to do anything on that, obviously. Because we have to comply with the rules and regulations and the law.
Costa: Just to be clear: would you be open to seeing that number drop below 1,500 at some point after discussions?
Chao: I think there needs to be a robust discussion because obviously, we hold the memories of those who are lost in our hearts and we do not ever want to see an accident like that or any accident ever occur. But there is this side effect, unanticipated corollary impact of reducing the number of pilots. Pilots who can very safely fly in our skies. So I think that Congress needs to have this discussion and we will abide by the wishes of Congress.
Costa: Looking at consumer protection, billions are spent every year, earned by the airlines every year on aircraft, baggage, and reservation change fees. Should the federal government have more oversight over those two issues?
Chao: Well, we already do. We, in fact, have a consumer protection office, bureau, which is headed up by a very caring and responsible woman. Her name is Blaine and she’s here in the back and she and others in the department, myself included, of course, are very concerned about consumer protection. So we have launched a renewed emphasis on know your rights as a passenger, and we have relaunched the Department of Transportation’s website on consumer protection. Because we want people to be able to know what their rights are and if they’re at a counter and they don’t know quite what to do, they can go on the website, draw it up right away, and know what their rights are. And so they can ask for what is rightly due theirs. And then also, we actually inspect airplanes, airports on an unannounced basis. So in 2017, we conducted well over 100 unannounced inspections of 34 airlines and over 3,000 airports just on this consumer reaction and treatment point of view.
So we, of course, are very concerned about it. Baggage claims, fortunately, are way down, but that doesn’t help if your luggage is lost. So we understand that. And also, we’re seeing unprecedented numbers of travelers because of the improved economy. So we want to empower and equip passengers to be able to know what their rights are so that they can fight for themselves and if that’s unsatisfactory, then we also can take up their cause. Because we Blaine does my casework. We have people who complain they can’t get satisfaction. We will go on their behalf and talk to the airlines or the airports or whoever and try to sort out the—
Costa: So you don’t see your department trying to regulate in a more bolstered way the fees?
Chao: We do already, number one. Number two, we should not be the first line. We want the airlines to do their job. And I think as organizations that want to be profitable, be responsive to the public, they need to respond to the complaints, and they do. But sometimes, that’s not enough and so we want the passengers to be empowered to know what their rights are and we have equipped them with this newly relaunched website that will enable them to draw up the information quickly. We do unannounced inspections and then if the passenger is still unsatisfied, we can intervene on their behalf.
Costa: As someone who travels a lot for The Post as a reporter—
Chao: You’re not the only one.
Costa: That’s true. [LAUGHTER] That is true. There’s a debate when you’re at an airport among passengers about service dogs versus emotional support animals. As the Secretary of Transportation, should there be more guidelines about what defines a service dog? We’ve seen Senator Burr, for example, a North Carolina Republican propose legislation to try to make sure only those who align with the Americans with Disabilities Act get that kind of classification of their animal. Should there be more regulation or more guidelines about how to understand what these animals’ role is in the airport and on an aircraft?
Chao: We want to be supportive of passengers, as do airlines, who need special assistance because of their disability. We also know that there have been instances in which there have been very disruptive animals who have actually frightened passengers, other passengers, or who have disrupted airline operations and so we have been asked to clarify those rules. The department has come out with, announced—it’s an advanced notice of proposed rulemaking on service animals and we are soliciting input from the public and we hope to respond very quickly on this. Concurrent with that, to address the issue of disruptions in the airplane, many times, while it’s up in the air—there are sometimes unconventional animals and so that needs to be addressed. So in the interim, while we work on this advanced notice of proposed rulemaking and seek public input, we are saying to the airlines and the public—and the airlines support this, of course, is that we need to go back to the traditional definitions to what a service—
Costa: So you’re saying, for example—
Chao: Service animals are.
Costa: If I wanted to bring a peacock onto an aircraft as an emotional support animal, there may be some federal guidelines or regulations coming up that would say, “No, Mr. Costa, you cannot bring a peacock onto this flight?”
Chao: We have actually had experiences with not only peacocks but many others as well and they can be disruptive. [LAUGHTER] And so want to make sure that passengers who really need the assistance because of their disability have access to them and we want to make sure that they’re being handled properly. But there are these other aspects that we want to make sure and in working with the airlines, we are having these guidelines and then awaiting the advanced notice of proposed rulemaking.
Costa: So that was kind of a lighter note, but I know you have to deal with a lot of tragedy. You think about in the Southwest Flight 1380 this year, it does bring up the question of aircraft repair stations. Should more be done? Is enough being done already?
Chao: Well, first of all, it is with a sigh that I say that we actually have been looking at that issue prior to my arrival. I’ve been told that this issue was being looked at by the FAA for the last 18 months. And at that time, the evidence did not suggest that this was going to be a catastrophic event. So this took its usual process—not slow, but usual process of examination, of due diligence, and unfortunately, we’ve had that accident. So we have sped up the examination of this issue and also, put in new regulations immediately, telling the airlines that this event has occurred, that they need to take a look at this kind of engine throughout their whole fleet within a discrete period of time, one month. So we are following up on that and I think airlines don’t need that urging because obviously, accidents are something that they don’t want, either. So we have definitely sped up the process for rulemaking on this and then also took immediate—kind of like a call to action by the airlines that they need to examine immediately all of their aircraft and report back.
Costa: Already, this administration has been supportive through your department on unmanned drone aircraft exploration and innovation. What else should we expect on that front?
Chao: The government is not the fountain of all wisdom and we don’t know which technology would be best. But the promise of drone technology, automated driving systems, self-driving cars are so promising, not the least of which they would give people who hitherto have been immobile due to age or disability, the freedom once again to regain their mobility. So there are so many great things that can happen with new technology. 94% of accidents occur because of human error. So somehow, if we can introduce safer technology, we can actually make the driver safer as well. But as we have also seen recently in a number of these accidents, the technology is not fail-safe.
And so how do we regulate as regulators in a way that would be tech-neutral, not that will ensure—that will promote safety without hampering innovation and we’ve also got to do this in conjunction with the patchwork of state and local regulations that are arising as well. So we want innovation to occur because innovation is part of America’s great competitive advantage and competitiveness. But we want to promote safety without hampering innovation.
Costa: In the final four minutes, I just want to ask you a question about—a personal question that your name came up in the news recently, and then about President Trump. Your brother-in-law, an investment manager, was recently nominated to lead the Pension Benefit Guaranty Corporation, which is part of the Labor Department. Did you play a role in recommending his nomination?
Chao: First of all, I think our country is very lucky to have him because we need accomplished individuals who have a track record of success, and yet, to have a patriotic fervor to want to serve our country. So it is true that he is my brother-in-law, but Secretary Acosta made the selection and hired him and I think he’s an excellent choice. And I don’t think anybody’s relations through our relatives should be held against them. Certainly not me. [LAUGHTER]
Costa: Final question—maybe we can take the whole three minutes to answer this one. President Trump—
Chao: I’ll say a little bit more. I can just imagine my media people saying, “Don’t answer that question.” But Gordon is very accomplished and also, he’s not beholden to the industry. He didn’t rely upon his past livelihood on the industry that he will be regulating. He, going forward, will not rely upon this industry for his future employment, either. So he’s independent, unbeholden to any interest group, and therefore, will do what is best for the 44 million retirees in our retirement system.
Costa: Yeah, but you mentioned he’s independent. The only reason I ask that question is sometimes, American people wonder, “Did someone get a job because of their family connection or the recommendation?” That’s all.
Chao: Well, he’s quite accomplished. He’s quite an entrepreneur. He went to Stanford, was valedictorian of his high school class, and he retired before the age of 29 because of his great success. So his is a great American story, where he came from a middle-class background and then became very successful in the high-tech area and wants to give back to the country.
Costa: Looking at President Trump—
Chao: I’m saying this because I want there to be harmony at the Thanksgiving dinner table. [LAUGHTER]
Costa: That’s a long time from now, so hopefully. You’ve seen presidents up close for years. We’re now more than a year into this presidency. Has he changed at all from the man who was on that lectern in January of 2017?
Chao: The president is very passionate about a number of topics. He’s very concerned about the infrastructure proposal. We’ve sent the proposal up to the Congress on February 12th of this year and we want to work with Congress on a bipartisan basis. The president is also concerned about the state of our economy and the number of jobs that there are created. He does not go very far without always bringing up the subject of jobs and for the last jobs report that just came out in May, to show the unemployment rate to be 3.8%, and the labor participation rate to be as robust as it is and to have the number of jobs vacant be less than the number of people looking for jobs. It used to be that the JOLT study in the Department of Labor showed that there were more vacancies than job seekers.
And now, we’re finding, of course, that more people are coming back into the workforce and so there are more job seekers because the environment is better, they think they can get a better job, they can get a job. So that’s all coming back.
Costa: Thank you very much, Secretary Chao, for your time. I appreciate it—
Chao: And of course, the stock market is doing great, GDP growth is probably going to hit 3% pretty soon, so—
Costa: That’s all the time we have.
Chao: And the president is very concerned about that. He’s very concerned about the economy.
Costa: Well, we’ll keep an eye on all of that and we appreciate your time very much and if you want to see highlights from today’s program, please visit WashingtonPostlive.com. Thanks to everyone for joining us and especially Secretary Chao, thank you very much. [APPLAUSE]
Chao: Thank you. Thanks a lot.