RISING FUEL AND ENERGY COSTS

  • From 1 Jan to 7 July, the price of oil rose 47.3% or $45.39

  • From 1 May to 7 July, the price of oil rose 25.6% or $28.85

volunteer

ACTE: YOUR VOICE AGAINST RISING FUEL AND ENERGY COSTS SINCE 2007

Dear Industry Colleagues,

ACTE is playing a pivotal role in a policy-making process that will have an impact on how the United States government, and governments throughout the world, should address the current energy crisis. The business travel industry is reeling under fuel costs that increase on a near-daily basis. Yet in a larger perspective, travel is competing with the price of everything – food, electricity, home heating, and personal transportation – in an already tight economy.

ACTE has joined forces with the Air Transport Association (ATA) and the Consumer Energy Alliance (CEA) in the U.S. to add our voice to the global dialogue on comprehensive energy policies. Both the ATA and CEA are recommending a variety of different policies before Congress. Any comprehensive energy policy must also include strong provisions for energy conservation and alternative biofuel development. ACTE’s collaboration with these entities provide the business travel industry with a seat at the table to ensure that our members are part of the decision-making process.

Sincerely,

Richard Crum
ACTE President

THINKING AHEAD TO KEEP CORPORATIONS FLYING...

ACTE, recognizing a growing economic crisis in October of 2007, advised the United States government of steps to take to help the airlines cut fuel costs. Since then, ACTE has joined inter-industry coalitions aimed at developing immediate and long-term strategies for a comprehensive energy policy. In addition, ACTE has developed educational programs that proactively address this issue to keep its member companies growing through business travel. These include:

  • ACTE among major travel industry stakeholders to reject congressional inaction and transmit a signatory letter to U.S. President George W. Bush urging him to call a special session of Congress for the purpose of enacting urgently.
  • ACTE joined the Coalition to Stop Oil Speculation Now in July 2008 to bring the business travel industry’s voice to Congress in support of legislation to limit rampant oil speculation.
  • At the ACTE Chicago Executive Forum in June 2008, Vaughn Cordle, Airline Forecasts LLC, presented "New Models in Airline Yield Management for A New Economic Environment." Cordle explained that to cover the oil cost of $130-$140 per barrel, the airlines must raise ticket prices $40-45, and lose 18-20 percent capacity. The speaker predicted higher fares and less service throughout 2009.
  • In May 2008, ACTE joined the Consumer Energy Alliance (CEA), leading the industry response for a more cohesive and streamlined U.S. energy policy.
  • At the association’s Global Education Conference in Washington, D.C. this spring, Will Ris, Senior Vice President for Government Affairs, American Airlines presented Running on Fumes: Challenges to Aviation, which outlined the effect of escalating fuel costs on an already beleaguered U.S. airline industry.
  • In response to growing concerns about the world economy, ACTE offered “recession insurance” guidelines at its global educational events, beginning in April 2008 in Zurich, Switzerland.
  • In October of 2007, ACTE issued a statement urging the U.S. Federal Government to address the aging Air Traffic Control System (ATC) as the number one contributor of airline congestion, and the cause of $45 billion lost to delays, much of which is fuel burned by planes circling to land.
  • In a New York Times article that appeared on October 2, 2007, ACTE said it appears that business travel will be slowing over the next year. “Some companies are putting in much tighter controls about flying.”

THE EFFECTS OF HIGH ENERGY COSTS ON THE GLOBAL BUSINESS TRAVEL INDUSTRY

With members in 82 countries, ACTE advises major corporations how to get the most out of their business travel assets, boost traveler productivity, and safeguard travelers including their electronic and intellectual property.

Through advocacy, ACTE has extended the cost-containment role to include industry developments and legislative issues that drive up the price of travel.

Rising fuel costs in the United States impact the cost of business travel more than any other factor. The portion of a passenger’s airline ticket needed to pay for fuel has now risen from 15 percent to almost 40 percent, according to the Air Transport Association.

The price of oil rose twice during ACTE’s global conference in Washington, D.C., 18-21 May, with one major carrier citing a loss of $10 million per day. The price of refined diesel fuel costs an airline $40 more than a barrel of unrefined crude.

Airlines may be severely challenged to recoup the substantial financial losses caused by the increased cost in jet fuel – not through capacity cuts or any other means.

Every time the price of fuel increases the cost of a ticket by a dollar, a percentage of travelers opt not to fly, and in addition to the impact on airlines, the trickle-down results are already being felt by hotels, resort destinations, business destinations, restaurants, and rental car firms.

These rising costs and their effects are more significant than a bad season for the travel industry. Vendors may cut back on supply which will impact travelers’ choices and the destinations they serve.

What steps does the government need to take?

  • Modernize the air traffic control systems and procedures - a potential 20% increase in fuel efficiency for airlines
  • Streamline the process to build new refineries, power plants, and exploration for new sources of oil.
  • Invest in alternative fuel sources and provide economic incentives to developers and users of alternative fuel sources
  • Repeal or suspend fuel taxes
  • Suspend growth of the strategic fuel reserve to allow more supply to be directed to consumers and businesses

ACTE SEEKS TO LOWER FUEL PRICES

The Coalition to Stop Oil Speculation Now (S.O.S. Now)

Recently, ACTE shared with its members a special report conducted by the Air Transport Association of America (ATA), called Coping with Sky-High Jet Fuel Prices, about the impact of oil prices on the airline industry – and the resulting effects on the business travel community and the travelling public at large.

In response to the drastic increase of oil prices, ACTE has joined the ATA, along with many U.S. airlines and other organizations including the Air Carrier Association of America, Airline Pilots Association, Agricultural Retailers Association, National School Transportation Association, Regional Airline Association, and the United Motorcoach Association to form The Coalition to Stop Oil Speculation Now (S.O.S. Now).

The mission of S.O.S. Now is to persuade the United States Congress to take the legislative actions necessary to reduce the price of oil through a number of changes.

LINKS

ACTE COMBATS RISING ENERGY COSTS

In May 2008, ACTE joined the Consumer Energy Alliance (CEA), an organization designed to support the development of new ways to utilize energy resources, to ensure domestic and global energy security, and to reduce prices for consumers by opening discussion between the different energy sectors, between energy suppliers and consumers, and between citizens and their governments.

LINKS

ADDITIONAL RESOURCES