Fact Sheet released by the Bureau of Economic and Business Affairs, June 1996.
Air transport is among the most important and fundamental industries in any economy, playing a critical role in nearly all other economic activities. Air transport makes possible the circulation of people, products, and services through markets around the world; worldwide, it helps generate over $1 trillion in economic activity and more than 22 million jobs. It is also a significant sector in and of itself: U.S. Department of Commerce statistics show that the U.S. air transport industry constitutes approximately one percent of U.S. Gross Domestic Product (GDP), employs nearly one million people, and has a direct output of $54 billion. Statistics collected by the International Air Transport Association show that worldwide, scheduled airline revenues surpassed $247 billion in 1994, and the number of passengers topped one billion.
The globalization of the world economy has significantly expanded demand for worldwide networks of affordable, convenient, and reliable international air services. Unfortunately, the industry and its potential contribution to the world economy are hobbled by a 50-year-old system in which nations trade air services rights on a strictly bilateral basis. In this system, trades of air service rights are often still influenced more by countries' desire to protect inefficient national flag carriers from competition than by broader economic considerations -- such as the role of air service in facilitating trade, tourism, and investment in communities around the world.
One of the Administration's highest economic priorities is to facilitate the ability of our exceptionally competitive airline industry to meet the growing worldwide demand for better air service. The State Department plays a key role in this process: working with the Department of Transportation, the airline industry, U.S. cities, labor groups, and other interested parties, we seek to negotiate aviation agreements that let demand and marketplace competition -- not governments -- determine the variety, quality, quantity, and price of air service. We also work to maintain a fair and competitive environment by defending our air carriers' bilateral air service rights, and by helping them resolve the "doing-business" problems they encounter overseas.
In addition to benefiting our competitive air transport industry, liberal air services agreements provide new opportunities for service to even more U.S. cities -- including cities not large enough to support direct or nonstop international services. Studies indicate that there are numerous small- to medium-sized cities in the United States that may not have a local traffic base large enough for airlines to justify direct intercontinental service. Through the codeshare alliances and other cooperative marketing provisions in our new air services agreements, however, these cities gain access to the growing international air transportation network.
U.S. INTERNATIONAL AVIATION POLICY GOALS
Our overall goal is to foster safe, affordable, convenient, and efficient air service for consumers. We believe that the best way to achieve this goal is to rely on the marketplace and unrestricted, fair competition to determine the variety, quality, and price of air service. This approach will provide consumers and shippers with more and better service options at costs that reflect economically efficient operations and work best to:
- Expand the international aviation market;
- Increase airlines' opportunities to expand and modify their operations in response to marketplace demand;
- Increase productivity and high-quality job opportunities within the aviation industry;
- Address the nation's defense air transportation needs; and
- Promote aerospace exports and general economic growth.
INTERNATIONAL AVIATION ACHIEVEMENTS
Since the beginning of 1995, negotiating teams chaired by the State Department have achieved:
- A trans border open market agreement with Canada, our largest single aviation market.
- Open skies agreements with ten European countries: Austria, Belgium, Denmark, Finland, Iceland, Luxembourg, Norway, Sweden, Switzerland, and, most recently, Germany.
- A phased open skies agreement with the Czech Republic.
- Liberalized arrangements with Brazil, China, Fiji, India, Hong Kong, Macau, Peru, the Philippines, Thailand, and Ukraine.
- Significant new commercial opportunities for U.S. all-cargo carriers to Japan and other Asia-Pacific markets.