Air Transport Association Calls on CFTC to Strengthen Proposed Rule to Curb Excessive Speculation

Proposed Position Limits Are Too Weak; Will Not Protect Consumers and Economy as Congress Intended

WASHINGTON, Jan. 14, 2011 /PRNewswire-USNewswire/ -- The Air Transport Association of America (ATA), the industry trade organization representing the leading U.S. airlines, today urged the Commodity Futures Trading Commission (CFTC) to further reduce speculative position limits for energy to protect consumers and prevent the negative impact of unwarranted price spikes on the country's economic recovery.

ATA believes that limits in the Notice of Proposed Rulemaking (NPRM) are too high and do not meet the clearly stated requirements in the Dodd-Frank Wall Street Reform Act to address excessive speculation, which drives fuel costs and, as the single largest expense for airlines, detrimentally impacts profitability, employment and our customers.

"Excessive speculation, unrelated to the fundamentals of supply and demand, creates volatility in prices that simply cannot be effectively managed by the airlines or, for that matter, any other industry where fuel is a key cost item, and it damages the economy," said ATA Vice President and General Counsel David Berg. "The extraordinary price fluctuations that harmed consumers, industry and the economy in recent years will not be prevented by the proposed limits, and with predictions that prices will once again exceed $100 a barrel, the CFTC must do more to address this problem by delivering on the intent of Congress as clearly outlined by Dodd-Frank. The market easily can function efficiently and effectively with more stringent limits."

Bona fide hedgers, such as airlines and truckers, used to represent 60 percent of the oil futures market; today, speculative interests control 60 percent of the market. Restoring historical levels of speculative interest in the oil futures market will do much to prevent unfounded volatility in energy prices, maintaining adequate liquidity for bona fide hedgers and ensuring that efficient market function and price discovery are not compromised.

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