aviation. and it's a way for us to engage that future talent pipeline. and i think we need that same inspired mindset if we're to take on some of the challenges that i talked about earlier. and if we're going to retain america's leadership in aviation as we should, we need that same inspired mindset to have that commitment and that investment as a country. and i think that's fundamentally important to our future. it's an area that we all have a combined interest in and it's one that we have a collective responsibility for and i think that responsibility starts with each one of us. so with that, thank you and i'm happy to take any questions you might have. [ applause ] all right. any questions out there? we have time for a couple? right there.

>> yes. in terms of maintaining u.s. leadership in the aviation field, how concerned should we be about the many u.s. companies that due to pressure from the chinese government have had to enter into joint ventures with chinese companies, state-owned enterprises, including sharing their technology and intellectual property? and what as a practical matter do you think the united states could be doing about that? >> that's a very good question and frankly a balanced approach is required here. you mentioned intellectual property. in the aviation industry as in many other high-tech industries, our capacity to succeed is built on our intellectual property and retaining that as an advantage. and so agreements that are made

and joint ventures that are struck need to be done in a mindful way. and we also know today that in the cyber security realm that in some cases intellectual property is being threatened in that venue. so i think we need to be reflective of that and consider that. on the other hand, it's important to recognize that our aviation industry is a global industry. i can tell you our boeing supply chain is a global supply chain, as is the case with many of our industry counterparts. so we need to be able to compete globally. that includes partnering in china. that includes our ability to bring the best capabilities to our customers because that's what they demand. so striking agreements, building global partnerships is part of the success criteria, i believe. and in some cases that gets interpreted as building jobs outside of the united states. i would argue that those global partnerships are good for jobs

everywhere and they're good for jobs in the united states. so we need to drive that, we need to be leaders on building global partnerships but it needs to be done in a mindful way for the reasons you mentioned. one in the back there. >> since we're facing an engineering shortage, are you prepared to import engineers, say, from asia to help meet the engineering deficiencies at bowing? >> ye -- boeing? >> yes, we are. as you know, many of our u.s. universities are graduating engineering students from other countries. as part of our global partnership networks, we need to access and build talent around the world. and companies like boeing, our talent is not only in the u.s. we do have major operations around the globe and in many cases engineers from other countries that support those operations. so i think that's important for the future. but, again, let's not interpret that as a win-lose situation.

we build the right kind of partnerships and build the right works and right talent pipeline, we're going to build more work and u.s. in the u.s. while we're also building talent around the globe. that is very doable, as long as we set our mind to it. one more question. another one in the back there. >> there's one right down there. >> right here. okay. >> you mentioned the importance of buy yof fuels a of biofuels and the commitment of that. we have this concern that now a number of strong defenders of defense readiness up on the hill don't believe in the aviation biofuel story. i won't name names right now but you probably know them, too. what can we do to turn that

around and reconvince them that it's important for u.s. energy security, military security and certainly for the environment and other issues? >> certainly this is a coalition building process. i would offer that while there are still some opponents on the hill, there are also some very vocal and strong supporters. i believe the supporters are growing over time and the detractors are shrinking overtime. i need we need to succeed by example, by showing that it's doable, we can do it in a drop-in manner, it's economically feasible that, if we can build the distribution channels we know we need, this is good for all of us, good economically, good for technology and good from a green standpoint. it's like the four areas that i talked about. we can't be successful on any of these four areas without building the broad industrial government partnerships that are required to make it a reality.

and i think biofuels is one of those examples. i do think the vector is moving in the right direction. we as a collective community need to continue to push forward with force. thank you. all right. wi with that i'll wrap up. thank you very much. and now more from the annual summit looking at the future of the aviation industry. with remarks from the ceo of delta airline. he spoke about competitiveness within the industry and offered ways on how we could create more jobs in the future. this is a half hour. >> thank you, carol. it's my great pleasure to introduce richard anderson, who in addition to being the chief executive officer of delta airlines is also my boss as chairman of the board of airlines for america. over the 23 years that richard has been in the airline

industry, he's earned the reputation as a results-driven leader, not easily intimidated and willing to take on big opportunities as well as tough challenges that impact his company or the airline industry as a whole. opportunities, like the delta-northwest airlines merger in 2010, which created the platform for the management under richard's leadership toex business to the benefit of its employees, customers and communities that it serves. at the time of the merger, the airline industry was not conducive for mergers. he paved the way for further consolidation in the industry, which was much needed. as for tough challenges, richard has repeatedly taken them on. if you know richard, usually

with great relish. he's long voshted for a level playing field and more normalized business environment in the airline industry in the united states. that commitment and business focus has served airlines for america well during richard's tenure as our chairman. he has led with great vision and commitment and dogged determination, the effort to transform and rebrand the old -- he's also led our effort to lay out a clear path to create a more competitive global aviation industry in this country through the adoption of a national airline policy. this is a major issue not just for airlines but for the economic connectivity of this country. richard is going to talk about that in his remark. richard's stemming up to

business challenges is well documented. what is less well documented perhaps is his commitment to social issues that impact all of our personal lives. this was recognized last year when he was given the sandra taub humanitarian award for the breast cancer association. it's my great personal and professional privilege to introduce richard anderson. [ applause ] carol, thanks for having me here today and nick for that very kind introduction. we're fortunate to have nick's leadership because we are going through a very significant change there in modernizing the organization. that's really what i want to talk about today and this is a great opportunity do that because everyone here has a significant interest and all of you here are significant thought leaders in the airline business.

and i'm going to make a distinction about a national aviation policy. i'm not here to talk about that. i'm here to talk about a national airline policy. that's different than a national aviation policy. and i'll explain to you why. over the course of the last 20-some years, how many of you remember the belyles commission? some of the people here were on it. how about the gore commission? the mineta commission? how about free flight? how many people here remember free flight? i can keep going. air 21. they were all going to be policy changes that helped this industry and they all failed. so we have the opportunity now under ray la hood's leadership to really adopt not an aviation policy but an airline policy for

america. and it's important because if you look over the last ten years and you look at airline profitability by region of the world, pick asia, latin america, europe, middle east, in those regions they've had sustained profitability. in the u.s. we haven't. now a number of carriers, dealtia we're into our third year of significant profitability but we still have an industry that is not in a stable situation given the tumultuousness of what airlines are going through right now. i think we have the responsibility to be serious about what is it going to take to have real national airline policy in this country? i can tell you china does. i spend a lot of time there. we have two of the three partners -- our partners are china eastern and china

southern. i've spent dozens of trips there. they view aviation as a national asset, one of the most important strategic assets of china. are their airlines. but we don't seem to have that same sort of vigor here in the united states that i see traveling around the world, whether it be mexico and the revitalization of air mexico, which is now one of the most profitable airlines in the world or latin america, central america. so the past 9/11 -- since 9/11 it has been a difficult decade but without government aid, we've made enormous strides in this industry. if you look at where delta is, where united is, consolidation has really helped but we've helped ourselves. soap we have among the most competitive cost structures and most efficient operations in the world. but we have to have policy that

supports the growth of the industry. and this is an important industry. it generates more jobs than manufacturing, okay. if you look at the faa data and i've got a deck here, i'll give you my e-mail address and nick's e-mail address after this, if you send me your e-mail address, i'm send you the presentation because we've done a lot of research on competitiveness around the world. if you look, only the agricultural and oil history industry have a greater contribution to gdp versus the u.s. airline industry. the economy is important. it represents 5% of our gdp, 10 million jobs. this is the airline industry. so what are the issues that we face? one, you always hear nick and you will always hear all of us talk about the tax burden. so we pay a greater sales tax on tickets than you pay for gun, alcohol or cigarettes. so the tax burden is 20%.

and now we have a lot of talk in this country that we're going to increase that. and that disproportionate burden, all it does is cause -- that has to be paid for. we don't run -- it's going to be put in the ticket price. the ticket prices will go up, demand will go down, capacity will come out. so there's a cause and effect between those two things that's very important. the most remarkable thing is airfares today are probably the best bargain that consumers have had over the last 30 or 40 years. adjusted for inflation fares, including ancillary fees are down 30% to 40% from where they were at regulation. so it continues to be a phenomenal value and the hub and spoke system has brought a level of convenience to travel in this country that i think we all take for granted.

competition policy. we've only recently been able to get a merger approved, but boeing gets to buy douglas and go from two manufacturers to one? the gds systems go from three to two? we end up with two catering companies? and then when the engine manufacturers get together on a new piece of equipment, they do a joint venture so we only have one engine choice. so there's consolidation all around the industry and all these people that supply to the airlines who have 8%, 10% margins. so our competition policy at delta, it took us two years to get our u.s. sayer slot swat between laguardia and the epa. if you look back over the years that opposed different mergers and you look at the data today,

the data today will tell you this is a super competitive industry and will remain a super competitive industry for a number of reasons. one, we have ease of entry. number two, nonstops compete perfectly and one-stops compete perfectly with nonstops but we still use anti-trust analysis from the cib days. so it the same methodology, the same work, even though we have very different networks, very different forms of distribution, open skies across the world. it's a very different world than where we're 30s are 40 years ago at the time of deregulation. we ought to have iota worldwide scheduling guidelines rule all of our slot controlled airports and kpe policy to allow consolidation. our competitors certainly are around the world. so china has three major airlines. europe has three major airlines.

latin america is quickly going down to two major airlines or south america is going to two major airlines. mexico has one. and the point is as you look around the world, what governments are realizing is they've got to take care of their flag carriers in order to participate in one of the most important sectors in our economy. we got a good look at that summer before last with the ashplowed in commerce and europe shut down because delta couldn't operate its 65 flights a day between the u.s. and europe. it's an incredibly important part of commerce so we should have policies that support it. our open skies policies need to be modified to be fair skies spoch we have instances that are rean reflection of how the

chicago convention works that really don't work for us because we don't have a fair trade mechanism in our open skies agreements. so let's take an example. if the european governments gave airbus $9 billion, what do you think would happen? do you think we'd have a trade war? perhaps have a wto case filed? we've had that happen in the airline industry. japan airlines was given $8 billion by its government. we don't even think about that. instead we're have an open skies negotiation and the u.s. gets four flights for all of its carriers in the middle of the night and we have to route the case to distribute those four flights that are going to land in the middle of the night. weep need a component in here that has our government

understand the importance of aviation trade because it is a massive positive in the balance of trade. but when we negotiate aviation treaties, we don't have a fairness mechanism in it. we are not advocates on behalf of our industry when we meet other countries to have trade negotiations over aviation. not the way we do under the wto and its predecessor, the gatt. nextgen. delta's block time in 1956 flying between atlanta and washington national in dc-6s is the same as it is today on the 75 757-200. so our block times hasn't changed -- i was 1 year old.

so our block time hasn't changed between atlanta since i was 1-year-old. we talk about nextgen. we need to make the investment in to be real. so we've been down the road with fans, how many of you remember fans? future area navigation systems? you could have spent $5 million an airplane. and some carriers did. carrier i worked at, i said no until they demonstrate that the equipage is going to be actually used and produce value. but we need to get it done. and we need to get it done in a prompt way because that's really our answer to the emissions problem that we face in aviation over time. and the way to do that is we could save 10 to 15% fuel burn in emissions by using the technologies that many of you have done such a great job in this room of developing for us. but we need the commitment both

from the manufacturer and from the faa that in fact, it's going to be implemented and used. if you think about just this whole other panoply, there's a whole other panopoly of what i'll call general regulation. it's extremely difficult to get visas in many areas to travel to our country and secretary locke, before he became an ambassador, did a phenomenal job on a travel and tourism committee that a number of us participated on with a whole series of recommendations about how -- more visa waiver programs, much shorter wait times, many more vis sals offices overseas and let's make our lines short when we come into customs. let's make this a welcoming country. that, tsa i must say that john

pistol has done a good job and we're down the road on tsa precheck so we make flying easy, we make flying easy for people in this country and people that want to come into this country and visit this country. i think there's going to be a natural, as the industry evolves the way all consumer industries evolve, when was the last time you looked at all the options to buy a personal computer or an automobile? more and more merchandising as this industry evolves into a typical consumer-like industrial, there's going to be this propensity to regulate more. and we should avoid that. let customers decide whether they like to travel on an airline that charges for overhead space. it's just another product in the market. there's plenty of choice in the market. consumers have more perfect information about buying air

transportation than any other industry in the world because the internet and our internet sites and the search engines they have give every consumer virtual shelf space on every single price, option, availability for any ticket virtually anywhere in the world anytime. let the consumer decide. they're smart. everybody's got an app. app tells you what to do, right? so let's avoid the propensity to go in and say that the display has to be a certain way or that we're going to regulate this or we're going to prohibit certain kinds of activities. and i just think overall in the industry, and i could give you a lot of examples, we've got to evolve to where we understand whether the regulation is really adding, is the regulation that we're impose ageconomic regulation or an operating regulation? is it really improving an advancing safety or transparency

or a policy that we really like? we still file a lot of the same forms that we filed at the cab in '78. so we ought to always be thinking about, are we adding regulation that works or that matters, or is it just more paperwork? i would be remiss given the controversy around xm bank to just kind of plainly state the case. you know, our purpose there is really narrow, and we wouldn't be raising the issue if xm didn't really hurt us, and it does. and if you don't believe me, i can't convince you oisz. i'm just telling you the ceo of delta air lines is telling you it really hurts and the reason why it hrl hurts is when you buy an airplane you try to build a model of a 30-year financial. and in. that model, you've got to put the capital cost. and when you buy $150 million wide body airplane, that's about what they cost, $150 million to

$175 million, if you put in your 30-year cash flow $4 million a year for interest every year over 30 years or 1 million a year for interest every year over a 30-year period, think that mpv is going to change? and it's just as fundamental as that. our focus is narrow. very narrow. we don't object to that kind of financing for manufacturers outside of airplanes. we don't object to that the financing on narrow body airplanes but i've just got to the have the an answer to the fact that how do i compete against people that have a $4 million advantage on january 1 of every year when i start to fly that airplane against them? and that's what happened to us with air india, bought two triple sevens, hard to finance when we bought them because our credit wasn't that good.

it's a lot better now because weigh paid down $4 billion in debt since then, but so you buy the airplane, you put it in service. everything's going well. you spent $300 million to buy the two airplanes. two wide body airplanes to serve india. and a carrier comes in with xm bank, a government-sponsored airline and basically takes you out of the market because they're pricing 300, $400 a ticket below you. what would you do, those of you in private business, how would you -- i'd love for somebody to give me a good answer to that. i'm not just trying to be obstreperous about this. but it's very difficult for me to see my foreign flag competitors, most of whom that will receive that financing are investment grade and among the most profitable airlines in the world on a consistent basis, and many of them are my alliance partners so i'm not going to mention them but they tell me

what it's like. they love it. and i just -- we just need a narrow answer to how do we make up that gap, and what we've proposed is transparent sit, do analysis on what the impact is, and help us figure out, you know, i understand what the challenge is, but please don't dismiss the challenge that i'm telling you we have as the ceo of the largest international airline in the united states. fuel discussion, i'm not talking about refineries. just to put everybody on notice. but fuel. let me talk a little bit about fuel. you know, we don't think the right way at -- in the airline industry about fuel because if you're at fedex or u.p.s. or atlas or your local utility company or norfolk southern railroad, they have a really big

fuel component in their business, too. but their business model covers their input costs. and so what -- part of what we've done at delta is i've just said let's not be a victim of fuel. if it's 40% of your cost structure, you can't just say it's not in your control because then you've -- i mean, you've given up on free will that the point, right? so we've really been about changing our model to be much better at hedging and buying fuel, so last quarter, our last published quarter we were at 2.96 a gallon and most of our competitors were 20 to 30% -- 20 to 30 cents higher which is a lot of money when you're talking about yet fuel. a lot of investment in winglets and much more efficient flying and we just bought 100 73237-900s. we aren't relying on any

governments to finance those for us. we're going to finance those as a private business normally would and try to pay cash for most of them. but we do have to make sure at delta that our pricing, our scheduling, our capacity planning, and our distribution cover the cost of fuel. because at delta, we've determined that there are three important constituencies that will make our airline successful, and that's what we're thinking about. we're thinking about how is delta successful, 10, 20, 40, 50 years from now and if we take care of our employees and we do a really good job of that. last year we distributed over $300 million of profit sharing and shared rewards to our rank and file employees. so every employee got an extra paycheck last year and we don't think that the solution in this industry is to always seek concessions from your employees but to make them partners in whate'