|Testimony of Roger Dow, President and CEO of the Travel Industry Association,
Before the House Committee on Small Business Hearing on "Grounded: How
the Air Transportation Crisis is Affecting Entrepreneurs and the Travel
JUNE 26, 2008
Chairwoman Velazquez, Ranking Member Chabot, and other distinguished
Members of the Committee: It is a privilege and honor to appear before
you today on behalf of the Travel Industry Association (TIA) and our strategic
partner the Travel Business Roundtable (TBR) to discuss the impact a troubled
air travel system is having on travel and tourism in America and to share
with you the results of the air travel survey TIA released last month.
TIA is the national, non-profit organization representing 1,700 travel
and tourism public and private entities across the country. TIA members
encompass every sector of the diverse, $740 billion travel community and
our mission is to promote and facilitate increased travel to and within
the United States.
Businesses all across the United States depend on reliable, efficient
air travel to conduct business and stay connected to customers and suppliers.
Economic studies show that easy access to a major airport is one of the
most important factors in creating an environment where innovative small
businesses can flourish. Entrepreneurs depend on reliable air service to
raise capital, develop supply chains and make sales. It is no accident
that a significant technology corridor grew up around Dulles International
airport. Obviously, Chairwoman Velazquez and Ranking Member Chabot, you
understand how important the airports of greater New York and Cincinnati
are to the economies of your districts. The bottom line is that businesses
of all types depend on air travel.
Businesses within the travel sector are particularly dependent on reliable
and efficient air travel. Over 95 percent of travel and tourism businesses
are small businesses: 98 percent have 100 or fewer employees and 99.5 percent
have 500 or fewer employees. Anything that affects air travel in the United
States hits these small businesses harder.
The problem America faces today is that our air travel system is in
steep decline. This is not a problem solely for the aviation community,
but for business across America. TIA’s members feel the impact directly.
TIA represents the breadth of the travel community, including travelers,
hotels, restaurants, theme parks, destinations and many others. Less than
one percent of our membership is in the aviation community, but all of
our members are feeling the pinch of a deteriorating air travel system.
That is why TIA recently partnered with two of the nation’s premier political
polling firms to garner a better understanding of travelers’ concerns with
the air travel process and what effect, if any, those concerns have on
their decision to fly.
While much of the attention is on high fuel prices and new fees, we
believe the air travel problems are more fundamental and longstanding.
The survey we commissioned was not focused on the price of fuel or recent
air travel cost increases. We chose to look at the systemic issues that
have only been amplified by rising costs and cuts in airline capacity.
Between May 6 and May 13, Peter D. Hart Research Associates and The
Winston Group interviewed a random sample of more than one thousand air
travelers – Americans who had taken at least one round trip by air during
the preceding 12 months. The results were surprising.
The survey revealed that deep frustration among air travelers led them
to avoid an estimated 41 million trips during the 12 months preceding the
survey. TIA estimates that represents a $26 billion loss in consumer spending
to the U.S. economy, including $9.4 billion in lost airline revenues, $5.6
billion in lost hotel receipts, $3.1 billion in lost restaurant income
and $4.21 billion in lost federal, state and local taxes. As you know,
Senator Charles Schumer and Congresswoman Carolyn Maloney of the Joint
Economic Committee recently released a report which estimated that the
indirect costs of wasted time, wasted fuel and lost productivity caused
by flight delays is more than $40 billion per year. Taken together, the
direct and indirect costs of a broken air travel system approach $70 billion
per year. A U.S. economy that may be tipping into recession simply cannot
afford this level of disruption.
The survey further revealed that businesses suffer most from an unreliable
and inefficient air travel process. The most frequent travelers, typically
business travelers, are the most dissatisfied with the air travel system
and the most likely to avoid trips. The opportunity costs of the sales
call forgone, the meeting cancelled and the site visit avoided are incalculable.
A frustrating and unreliable air travel system is sand in the gears of
American entrepreneurship. This is a very real and growing problem.
The traveling public recognizes that the problem is growing. Nearly
50 percent of air travelers surveyed think it is unlikely that the air
travel system will improve anytime soon, while nearly 60 percent of frequent
travelers – travelers who take five or more trips a year – express that
level of pessimism about the future.
One of the more surprising findings from the survey is that travelers’
frustration is not primarily directed at the airlines. In fact, despite
all the bad publicity airlines have received, the survey results show that
air travelers are most frustrated with the air travel process, including
inefficient security screening and flight delays and cancellations, which
we believe are largely caused by an outdated air traffic control system.
This is important because airport security screening and air traffic control
are both government functions. The traveling public is deeply dissatisfied
with these two areas and we hope Congress will act to make improvements
The other interesting result is that travelers vote. More than 90 percent
of the survey respondents identified themselves as likely voters. What
that says to me is that there is an opportunity for political leadership
here. Voters are looking for a champion to stand up for the traveling public.
We at TIA heard this message loud and clear. While we don’t have all
of the answers, we know that America needs a fresh approach to the problem.
That’s why TIA is working to bring the entire travel community together
to seek a path forward to constructive solutions. We want to work with
you, your colleagues on this Committee and Congress as a whole to reform
America’s air travel system, shore up American small business and get the
U.S. economy growing again.
This is not about helping any single industry, it is about fundamental
improvements to the heart of the American economy.
Attached to this testimony, I have included a one-page overview of the
survey results along with more detailed survey toplines.
Thank you Chairwoman Velazquez, Ranking Member Chabot and other distinguished
Members of the Committee for inviting me to testify today. I would be pleased
to answer any questions you may have.