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 advocated 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, delta 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. 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 competitive 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 ash plowed 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. so we have instances that are a 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 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 nextgen but it's got to be real.

so we've been down the road with fans. well, that's too strong. but we're joint. we're purple. but what the confederate high command all comes from the same institution, west point. that's one of the reason it's off the table for them. that's not the way they fight. gallagher has a fight. it's the same quote i use at the beginning of my book, and i'll repeat the story to you. alexander, after the confederate army -- yes? >> -- it was not the way the south wanted to fight because part of them were from west point. but wouldn't there have been an advantage since the northern generals were also from west point? they had to make the decision to

split between state loyalties. so i don't see where the argument comes. it's not the way they wanted to fight if they have basically inside knowledge of how the north would be fighting strategically as well. >> the west point's significance is 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 visa 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 pistole 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 imposing an economic 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. i'm just telling you the ceo of delta air lines is telling you it really hurts and the reason why it really 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 do at delta, i've said let's not be a victim of fuel. you can't just say it's not in your control. then you've given up on free will at that point, right? we've really been about changing our model to be better at buying fuel. last published quarter, we were at $2.96 a gallon and most of our competitors were 20 to 30 cents higher, which was a lot of money when talking about jet fuel. a lot of investment in wing lets and more efficient flying. we just about 100 737 900s. we aren't relying on any

governments to finance those. 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, weather determined that there are three important constituencies that will make our airlines 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 check last year. and we don't think the solution is to always seek concessions from your employees, but to make

them partners in what we're doing together. we've got to take care of our customers and third thing, we've got to take care of the people that give us the $26 billion in capita that we have at work in our airline. and if we can take care of those and build a business model where fuel isn't the independent variable, but it's a dependaent variable, we will be a more successful enterprise over the long run for those constituen constituencies that matter. so that brings me to the conclusion, which we'll leave five minutes for questioning, i thought i would read you the stat torre objectives of the united states department of transportation. encourage efficient and well carrying air -- and attract capital. promote, encourage and develop a

viable privately owned united states air transport industry. at least insure quality with foreign air carriers or u.s. carriers. eliminate discrimination and unfair competitive practices faced by united states airlines in air transportation. so the law is on the books. and i would just hope that we would august bring to bear given the importance of this industry to our communities, the manufacturers here, to all the constituencie constituencies, that we would all get behind nick in making shern a national airline policy becomes our priority. because if you look back over the history, we have two great examples in our country of similar transportation industries. the shipping industry, which we don't have one anymore. we don't make ships. except military ships in this country. we sort of made a decision that

we weren't going to really be in the maritime industry, so we have few u.s. flagged vessels and we really don't have shipyards anymore and it's had a significant impact because oil rigs are shipped, right? the oil rigs end up made in korea and a lot of other places. and then on the positive side, we have a railroad industry. the railroad industry was facing a key situation 25 years ago. actually have one of the pioneers of that here on my board, whose chairman and ceo offor norfolk southern for years and years and the congress decided to pass the staggers act and another act, two important acts. that established railroad policy in this country. we normally have, it allowed consolidation. so there's two railroads east of the mississippi, two west of the

mississippi, but we have the lowest rail rates and highest reliability of any of the rail systems in the world. i think we had that opportunity. it's not about grants or aid or any of that. it's just about setting up the right policy structure. we did a fair shot, we win. we win. so with that, carol, few questions or am i done? >> no, you have time for questions and actually, i'm going to take advantage of the opportunity and ask the first one. very interesting panel on unmanned space flight,

nonmilitary. for which we will not be apprentice and i would like your thoughts on whether or not we're going to see unmanned space flight on airplanes that would obviously need fewer pilots. >> not in my lifetime, i don't think. when i heard the other folks talking about that on the panel right before, it brought to mind something. this past week, a week and a half ago. you get all these e-mails and pages when you run an airline, so you're sort of in this constant 24/7 loop of what's going on around the world. there were really high cross winds in norita and of course, we fly a lot of 747 400s in to norita. they were right at the minimum cross winds, right near gale force, but it kept dropping

below and one of our crews was coming from detroit and missed two approaches and shot an alternate approach into another airport in tokyo. i was pretty glad there were two delta captains on that flight. i was actually proud of how they handle ed it. that made me, for some of these young people who are video players, i kind of like a couple of delta captains up there. >> i know lee would say the same thing. >> i don't know, i should get points from lee for that. where is he? >> he better still be here. all right. how about questions from the floor? does that mean richard answered all of your questions? we thank you so much.

it's been nearly ten years of the release of robert caro's years of liyndon johnson and ina few weeks, the fourth volume will be published. and 2003's master of the senate. here he is on q and a in 2008 with an update on how volume four was taking shape. >> this is really a book not just about liyndon johnson, but about robert kennedy and jack kennedy and the interplay of their personalities, particularly robert, i guess, and it's a very complicated story. that i don't think people know, of two very complicated people and robert kennedy and lyndon johnson and i had to really go into that and try to explain it it's part of the story all the way through the end of johnson's presidency. that's done.

and i suppose con logically at the moment, johnson is passing the 1965 voting rights act. that's sort where haof where i' now. >> watch the rest of this interview online at the cspan video library and watch for our upcoming interview on sunday, may 6th. the george w. bush institute held a -- in new york city. this panel on taxing the energy industry in capital mafrkt markets includinging former commerce secretary, don evans, a former white house associate budget director and moderator, rich carlgard. this is an hour.