For Immediate Release                                                                              CONTACT:  Press Office
June 26, 2008                                                                                                               (202) 226-3636

Committee Examines Air Travel Crisis and How It’s Hurting Entrepreneurs and the Economy

Click here to view witness testimony.
Click here to view video of the hearing.

WASHINGTON, D.C.— Rising ticket prices and longer delays dissuaded 41 million travelers from flying last year. Most chose to stay home. Their decision brought harsh consequences for entrepreneurs across the nation and cost the U.S. economy $26.5 billion. Today, the House Committee on Small Business heard from commercial travelers, the tourism industry and representatives of small firms. Witnesses shared their insights on the air travel crisis, and offered recommendations to mitigate its negative effects.

“These air travel problems are having a devastating impact on both business travelers and the tourism industry.  Increasing the cost and time of business or leisure travel is a sure way to make the economic downturn worse,” said Chairwoman Nydia M.Velázquez. “It’s time large airlines recognize what their continued price hikes and diminished service mean for the nation.”

A drop in foreign travel to the United States is compounding the impact of this crisis. A weak dollar should be spurring international tourism to cities across the nation, and boosting the economy. But tourists—foreign and domestic—are opting against the high fees and long delays that have become part of America’s travel system. Experts expect the situation to get worse as large carriers shut down local and trans-oceanic routes to small- and mid-sized cities—increasing congestion at most airports. Witnesses pointed to the Federal Aviation Administration’s (FAA) lack of action as a driving factor. They also said large airlines are pushing smaller competitors out of key markets through unfair business practices that further limit affordable travel options for consumers.

“The FAA has known about a looming infrastructure problem for years, but they have failed to ensure the system can handle today’s volume of aircrafts—let alone tomorrow’s,” said Chairwoman Velázquez. “For their part, the major airlines claim they are bearing the burden. But it’s clear they’re more interested in protecting their monopoly than engaging in the sort of market competition that improves service for customers.”

Entrepreneurs—including restaurant owners, retailers and travel agents—make up 97 percent of the travel and tourism industry. Along with passengers, they are the ones who feel the impact of price hikes and delays most. Last year alone, they saw a marked decrease in air transport related business, and most expect the summer travel season to be among the lowest in the past 20 years. Such trends threaten to erode local economies and are likely to bring further job losses in a wide range of industries.

“Massive delays and rising ticket prices are well beyond the point of inconvenience. Oversimplifying this complex problem would be a mistake,” said Chairwoman Velázquez. “The American air travel system is broken, and the resulting crisis is having a serious impact on our economy.”

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