As the price of oil escalated to unprecedented levels earlier this year, the travel and tourism industry mobilized to urge Washington policymakers to enact an "emergency energy policy that will bring down fuel costs to economically sustainable levels and keep Americans productively traveling by air." A broad-based coalition, called 100DollarOil.us, was formed this summer to urge policymakers to act now as it enlists industry support to lobby elected representatives.
Organizers Bruce Charendoff, Sabre Holdings Corp. senior vice president of government affairs and deputy general counsel, and Business Travel Coalition founder Kevin Mitchell last week told the Society of Government Travel Professionals here that the consequences of inaction would be "devastating" to the economy and travel industry.
In coming weeks before Congress adjourns for the fall elections, Charendoff and Mitchell are hopeful that a recently formed, bipartisan group of senators who call themselves the G16 can introduce and pass legislation aimed at reducing oil prices. At the SGTP meeting, the duo explained the origin of the new Web site and group, and talked about the "dire" consequences for the travel industry and broader economy of record oil prices.
Such prices have forced airlines to fight for survival as the airline industry is predicted to lose $7 billion this year and $5 billion in 2009, Mitchell said. But even at $100 a barrel, "the industry continues to shrink," he said, citing job losses and reduced "benefits to the country and to communities." Nearly a dozen airlines have ceased operation in recent months; more than 100 airports by year-end will lose all transportation services; and, according to the Air Transport Association, another 100 could lose service next year, Mitchell said. But he said the industry also has lost more than 50,000 jobs, airlines can't decide which planes to replace and hotels are struggling to decide when and where to build.
Echoing the impact of higher fuel costs on airlines, Air Transport Association chief economist and vice president John Heimlich said the airline industry will spend $20 billion more this year than last year on fuel. That money could have funded more than 267,000 jobs or 286 new narrow-body aircraft. "Relative to 2000, jet fuel prices are overwhelming fares" as the average jet fuel price for U.S. carriers skyrocketed 275 percent from 2000 to July 2008, while the average fare for a 1,000-mile trip rose just 1.3 percent, to $154 in July 2008. The percentage of ticket revenues needed to pay for fuel has risen from less than 15 percent in 2000 to more than 40 percent this year, he added.
Higher fuel prices also have forced the contraction in the industry. By the second quarter of 2009, Heimlich said, the airline industry is predicted to lose 10.3 percent of flights, 10.5 percent of seats and 12.7 percent of available seat miles, all from the second quarter of 2007. By year-end 2008, ATA expects the number of airline jobs to fall below 400,000, the lowest level in more than five years.
In addition to the 100 smaller airports across the country expected to lose all scheduled flights, Heimlich said all 30 large hub airports are expected to experience some reductions in scheduled domestic service in Q408. Reductions are deepest at Cincinnati, with a 24 percent decrease, followed by Honolulu, Los Angeles, Orlando, Fla., Las Vegas, San Diego and Chicago Midway.
Solutions to the energy crisis are complex and include drilling, alternative fuel research, as well as more oversight on the oil market and speculators, Charendoff said. The Senate group has devised a plan that includes a "number of elements, but has a particular emphasis on alternative and renewable fuels." One concept is that 85 percent of all passenger vehicles would be powered by nonpetroleum-based fuels within 20 years. "They believe that the time to act is now."
Partisanship in Washington has prevented consensus on an energy policy. "This isn't a Democratic issue or a Republican issue, it's an American issue," Charendoff said.
Each Thursday, members of 100Dollaroil.us meet via conference call to "share information on what's happening on the political scene," Charendoff said. When necessary, members are asked to mobilize their members or employees to phone and e-mail elected officials to support legislative initiatives. The Web site includes news, position papers, blog postings by Marriott International Inc. CEO Bill Marriott and Sabre CEO Sam Gilliland, as well as templates to create and send letters to elected officials.
While the initiative launched with membership of various industry associations and corporations, membership remains open to all, Charendoff said. Among existing members are the American Hotel and Lodging Association, American Society of Travel Agents, Association of Corporate Travel Executives, Business Travel Coalition, Carlson Wagonlit Travel, the Interactive Travel Services Association, International Franchise Association, Marriott International, National Business Travel Association, National Restaurant Association, Sabre Holdings, Society of Government Travel Professionals, Travel Business Roundtable, Travelocity and U.S. Tour Operators Association.
In July, 100Dollaroil sent a letter signed by 175 "travel industry stakeholders" to President George Bush that urged him to convene a special session of Congress to enact energy policy legislation.
"Even if very important legislation is passed in September," Mitchell said, "there is still going to be the need to go deeper and further with a national energy policy. No matter who is president, we hope the first 100 days will produce a real, long-term strategic policy in this area."
ATA also launched its own campaign, StopOilSpeculationNow.com, to urge Congress to stop the oil price speculators that the airlines argue are responsible for boosting the cost of oil.