With United, American, the Air Line Pilots Association & Air Transport Association on Board Durbin Meets With FAA Nominee to Discuss Legislation to Lower Fuel Prices

Press Release

With United, American, the Air Line Pilots Association & Air Transport Association on Board Durbin Meets With FAA Nominee to Discuss Legislation to Lower Fuel Prices

United States Senator Dick Durbin (D-IL) today met with the Acting Administrator of the Federal Aviation Administration (FAA), Robert Sturgell, to discuss legislation he introduced yesterday to address rising fuel prices for airlines.

"The spike in jet fuel costs is alarming," Durbin said. "At yesterday's hearing with the Commodity Futures Trading Commission it became very clear that speculation is most definitely playing a role in price escalations and that the CFTC needs more resources and information to regulate the futures market. We now have a bill that would give CFTC the tools they need to get the job done."

Shortly after the bill's introduction United Airlines released the following statement:

"The Air Transport Association estimates that U.S. airlines will spend nearly $60 billion on fuel in 2008 - an astounding $20 billion more than the cost of fuel last year. Members of Congress are working to reduce speculative trading - one variable driving the escalating price of oil. Senator Durbin and many other members of Congress are calling for increased regulatory oversight and greater transparency in commodity futures trading."

American Airlines noted the following in a press release:

"American Airlines today applauded Sen. Durbin for introducing the Transparency and Accountability in Oil Markets Act (S. 3130), which would provide much needed resources to the Commodities Future Trading Commission (CFTC) to oversee oil futures trading. Sen. Durbin's legislation would aid transparency by requiring all U.S. traders on oil futures markets to report transactions in a detailed manner to the CFTC. The bill also directs the CFTC to investigate the impact of these trades on the price of oil."

United Air Line Pilots Association released the following statement:

"The skyrocketing and seemingly uncontrollable price of oil is hamstringing Americans and the business community. Speculative trading in the oil markets is inflating the price of oil. Our nation's airline industry is feeling the brunt of these prices. It is my hope -- and the hope of the 7,400 United Airlines pilots I represent -- that Sen. Durbin and his colleagues will succeed in increasing the abilities of the Commodity Futures Trading Commission to regulate oil futures trading and laying the groundwork for reining in escalating oil prices."

Testifying at yesterday's hearing, James May, President of the Air Transport Association said:

"This country's airlines expect to lose in the range of $10 billion this year - a loss equal to or greater than the worst year in this industry's history. High fuel prices are the sole reason… If Congress does not act soon, this country will not have a viable airline industry."

The increase in the spread between the cost of crude oil and the price airlines pay for refined jet fuel is at its widest gap ever. Last month, United Airlines announced it lost nearly $540 million in the first quarter of this year due to soaring fuel costs. Yesterday's hearing, chaired by Senators Durbin and Tom Harkin (D-IA) investigated how excessive speculation in the oil market could be contributing to the historic run on oil and gas prices. The hearing, held jointly before the Senate Appropriations Subcommittee on Financial Services and General Government and the Senate Committee on Agriculture, Nutrition, and Forestry, probed the Commodity Futures Trading Commission's (CFTC) role in regulating the market and what tools and resources the agency needs to ensure it's able to be a robust market watchdog.

Durbin's Increasing Transparency and Accountability in Oil Markets Act:

* Authorizes new resources for the CFTC - CFTC needs more cops on the beat and better information technology. These 100 new employees would immediately address the staffing shortfalls at the agency, and the technology funding would help the agency update woefully antiquated monitoring and analysis systems. Just two weeks ago, Walter Lukken, Chairman of CFTC said "we could hire 100 people and put them to work tomorrow given the inflow of trading volume. We are doing the best we can in difficult circumstances."
* Improves Transparency in Market - CFTC currently has limited visibility of trades that take place on NYMEX and very little visibility of over-the-counter trades, such as trades from one hedge fund to another, or those that take place on the International Commodities Exchange (ICE) in London. Durbin's legislation would close the so-called "London Loophole" by requiring all U.S. traders on oil futures markets to report transactions in a detailed manner to the CFTC. The bill also directs the CFTC to investigate the impact of these trades on the price of oil. Finally, the legislation would move the CFTC's Inspector General's office out from under the office of the agency's chairman, giving it clear independence.

In today's meeting, Durbin also commended Sturgell for working with him to lift the flight caps that had been imposed on O'Hare. In November 2007, news reports quoted an FAA official as saying that the hourly flight cap at O'Hare would not be lifted for the scheduled November 2008 opening of the new runway. Immediately following the reports, Durbin lead a bipartisan group of Illinois Congressional Delegation members in sending a letter to the FAA asking that no decision be made on flight caps without Congressional input. Senator Durbin also wrote to Sturgell in January asking for him to work diligently to make sure the caps could be lifted.

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