Fuel Costs Demand Legislative Action, Sabre CEO Tells NBTA

Los Angeles—Sabre chairman and CEO Sam Gilliland urged National Business Travel Association International Convention & Exposition attendees to press lawmakers to address the current fuel crisis, and fast.

Speaking at lunch here yesterday, Gilliland said Sabre has been active in calling on lawmakers, the U.S. Department of Commerce and the Federal Reserve to take action. "I was in Washington, D.C., last week with Marriott and Carlson and several industry trade groups to pressure lawmakers to put aside partisanship and election-year politics to deliver solutions now."

He said those discussions have focused on three areas: employing a monetary policy that will strengthen the dollar, increasing oversight of commodity futures trading and using American ingenuity and incentives from government to develop new alternative sources of energy.

"The underlying issue in my opinion is the weakened dollar. The Federal Reserve put down interest rates very quickly last fall and early this year to ease the credit crunch. We saw the price of oil rise dramatically in tight correlation over that same period. We need interest rates to go back up just as quickly now to strengthen the dollar."

Noting that oil price globally is set in U.S. dollars, he said, "when the dollar is weak, oil prices are naturally going to be higher. My belief, based on conversations I have had with the chief economist at the Dallas Federal Reserve and others is that about $40 of the price of a barrel of oil today is attributable to the weak dollar."

Gilliland called the airlines' plans to cut capacity by 10 percent to 15 percent beginning in September "unprecedented. We have never seen that type of reduction across the U.S. airline system, not even after 9/11."

He cited estimates that show a 10 percent reduction in airline capacity would produce a 4 percent reduction in hotel bookings.