Air Transport Association of America Says Oil Pipeline Rate Index Increase Disadvantages Jet-Fuel Shippers and Consumers

Asks FERC to Reconsider Decision to Raise Five-Year Index

WASHINGTON, Jan. 19, 2011 /PRNewswire-USNewswire/ -- The Air Transport Association of America (ATA), the industry trade organization representing the leading U.S. airlines, yesterday asked the Federal Energy Regulatory Commission (FERC) to reconsider its decision to raise the index, or automatic rate of adjustment, that pipeline operators can charge jet-fuel shippers annually without going through a formal rate-setting process.

On Dec. 16, 2010, FERC established a new price index to calculate annual changes to ceiling levels for oil pipeline rates. FERC set the new index level at Producer Price Index for Finished Goods (PPI-FG) plus 2.65 percent for the five-year period beginning July 1, which constitutes an increase from the current price index level of PPI-FG plus 1.3 percent.

In requesting a rehearing, ATA noted that the 2010 Index Order perpetuates a lack of balance and transparency in the Commission's approach to pipeline regulation, consequently placing jet-fuel shippers and consumers at a disadvantage.

"Airlines are overwhelmingly dependent on pipelines to transport jet fuel to U.S. airports; any increase in the cost of shipping by pipeline exacerbates the rising costs associated with fueling aircraft," said ATA Vice President and Chief Economist John Heimlich. "The 2010 Index Order appears to have been written in a vacuum – detached from today's fragile economy and marketplace, and with no sense of background or history of the Commission's actions regarding oil pipelines over the last two decades."

ABOUT ATA

Annually, commercial aviation helps drive more than $1 trillion in U.S. economic activity and nearly 11 million U.S. jobs. ATA airline members and their affiliates transport more than 90 percent of all U.S. airline passenger and cargo traffic. For more information about the airline industry, visit www.airlines.org and follow us on Twitter @airlinesassn.

SOURCE Air Transport Association