Chairman and CEO
The Boeing Company
"Forever New Frontiers"
Economic Club of Detroit
November 12, 2001
Thank you, Mayor Archer. First of all, my game face isn't on today because of what has happened this morning. I work in an industry that any air accident gets our attention, and now we need to go on and find out what caused the accident.
As we celebrate Veterans Day today, I want to start with a quote from Winston Churchill, who said, "Courage is the first of human qualities because it is the quality which guarantees all the others." After the tragic events of today and September 11, it seems particularly important that we pause and salute the courage and the sacrifice that so many have made, are making, and will make. Boeing is currently running a 60-second television ad, called "Salute," which I would like to play as a thank-you to all veterans in the audience. Thank you to those who protect our freedom.
Today I want to talk about the need for an integrated, productive, safe global air transportation system and some ideas that might take us down that path.
The aerospace industry provides a critical infrastructure for the world and has much in common with the automobile industry. We were born around the same time. Our founders were people who dared to dream. People who could imagine the impossible, and then did it. Basically these were curious people who invented and experimented, tinkered and discovered in garages from Detroit to Dayton to Kitty Hawk. People that some of you know, with last names of Ford, Fisher, Chrysler, Durant, and Benz. And people with last names of Wright, Boeing, Douglas, Martin, McDonnell, Hughes, and Jeppesen. The automobile opened up the frontier of our countryside in many, many ways, which allowed us to travel wherever we wanted to go -- from I-90 and I-5 -- to Route 66. The airplane opened up travel in the sky, first from city to city, then coast to coast, and finally trans-Atlantic and trans-Pacific.
Today, aviation provides a critical infrastructure for civil society and provides the core of much of our global defense and security. Boeing plays a key role in both. We are a company that we like to say both connects and protects. We connect people. We bring families, business, and national leaders together. And we protect people. We bring air superiority, troops, humanitarian aid, and help when duty and disaster call.
About ten years ago, we saw radical changes coming in our business and in the rest of the world. We began to see that the information revolution was providing opportunities to change how we did our business. Technology and the globalization of commerce were making us a mobile, global society. Let me give you some numbers that put this in perspective. In the 40 years from 1960 to the year 2000, passenger traffic grew more than tenfold, from 58 million paying passengers to 665 million passengers in the United States. The geopolitical world was changing at the same time. Communism collapsed with fall of the Berlin Wall, and the Cold War ended. We now are moving to a global economy that is connected by the Internet, telecommunication, and air transportation.
Today I believe we are at a critical point. I believe that we are moving from a regulated, patchwork, national system to a deregulated, mature, and, hopefully, open integrated system. I believe we have a real opportunity -- a new frontier to open. And if we can work together successfully, we can build an air transportation system that will serve international commerce and contribute substantially to global prosperity. For many of us, the events of September 11 have given even more urgency to this effort. To be very candid with you, this fundamental air transportation infrastructure has not kept up with the radical changes produced by advances in technology and a more connected society.
So what issues do we need to address if we are to achieve an integrated, productive global aviation system?
I think there are three. First is a basic global aviation policy that allows us to move from a highly regulated, bilateral system to an open, multilateral system. Second is an airport and air traffic management system that can accommodate the future growth of air transportation. Third is the safety and security that is required if all of us are to be confident in that system. I would like to take a few minutes and touch on each of these.
First is a basic global aviation policy.
Our aviation infrastructure has not kept up with the world that has emerged over the last 54 years, and especially over the last decade of development of a global market economy.
Let me give you some more data. In 1946, the United Kingdom and the United States negotiated Bermuda 1, the first bilateral air-service agreement. A year later, that system of commercial aviation was formalized at the Geneva Convention. Bermuda 2 came along and reduced the restrictions between the United States and the United Kingdom in 1977, and since then many nations have negotiated "open skies" aviation agreements. In fact, today there are more than 3,000 agreements. Basically, these agreements allow airlines from one country to fly to any airport in another country. But this is far from ideal. Restrictions exist on the ability to carry passengers from a third country, which has to be negotiated separately or within another country. We need to build to an open market.
Air transportation has been built around these bilateral agreements. I believe it's time to move to an open rules-based system for much greater efficiency, with better passenger choice. This is, in my opinion, a huge task. We have seen the result of deregulation -- too many airlines. The move to a market-based system means that the efficient carriers will survive, while the inefficient carriers in turmoil will disappear.
Since the goal is a rules-based system with level playing field competition, development of the rules must occur in an international arena. This will not be an easy task because there will be debates about the advantages, the disadvantages, and how you get to a level playing field. Jobs will be created in one area and lost in another because of the change. But if we want commerce to grow, I think it's necessary.
Second is an airport and air traffic management (ATM) system that can accommodate future growth of air transportation.
About a year ago, we started a new Air Traffic Management business at Boeing to make dramatic changes. We believe a future satellite-based airspace management system can be used to improve air transport system safety, capacity, and efficiency on a global scale. If we don't make changes, significant changes, soon, there will be gridlock. We don't have that problem now, but we do for the long-term. Our airports and the air traffic management system must contend with significant fleet and passenger growth in the years ahead.
Now let's look at that system. We have a lot of work to do on our air traffic management system. It literally grew from fires on hilltops to radio beacons to VOR/DME with radar coverage and transponders. It is a system with controllers who watch and respond in tactical ways; it is essentially a system of one-lane roads with a police officer directing traffic on every corner.
A satellite-based future airspace management system can dramatically improve our air transport system on a global scale. It can provide an integrated, global system without the gaps of the current system. The technology is available, but the political issues are significant because in a global system how do we protect national sovereignty and who handles coverage over oceans.
We need to build this kind of system to provide new routes, new terminal approaches, new precision approaches, and free flight with an absolute requirement to always maintain and improve aviation safety and security. This system needs to be seamless with global interoperability so you can fly from Madrid to Detroit to China with one set of avionics and one set of procedures.
The good news: It can be done. I think it needs to be done.
Third is the safety and security that is required if all of us are to be confident in that system.
And clearly there is an urgency to this too. If we double operations, we have to deal with this issue. September 11 has created an unprecedented urgency to provide security for us as a people, as a country, as a world. Growth of the global economy -- whether from the perspective of a developing nation or an industrialized country -- demands safe and secure access to the skies. We must work together immediately to build the safest, securest air transport system possible. We can screen, but that will be slow and difficult, but we can find ways.
While we must be vigilant and alert, we also must reduce the flow time or idle time of passengers traveling through airports. As everyone in this room knows, "time is money." If you have to wait two or three hours prior to a one-hour flight, it's not worth it, and travelers will find another way. To help us with this immediate challenge, we had our chief technology officer at Boeing put out a call to our employees for suggestions, and he has so far received more than 3,000 ideas.
Now let me give you one: smart card technology. Smart cards and biometrics can put you into the fast lane at the airport check-in line because we know who you are and know that you are reliable. You don't want everyone to have the card, but it gives some travelers a choice to move quickly and easily. This would allow us to move about 90 percent of passengers through the fast lane, and the slow lane -- with fewer people -- will go faster also. I refer to this as the "opt-in" system because travelers would have to make the choice between rapid processing and giving up some privacy.
We are looking at Connexion by Boeing for broadband connectivity to increase security, as well as functionality, on airplanes. We are asking, "Can we use such technology and make use of real-time data to know what is going on in the airplane, with the military, and the tower? The same technology can make the airplane an extension of daily life, a place where a traveler can stay in constant contact with family and the office while airborne. In fact, the aviation system of the future can address and provide relief for congestion and also provide significant security benefits.
Let me wrap this up. Basically, I am deeply optimistic about the long-term future of global air transportation. I do not see limits on significant change that cannot be addressed if we work together. I do not pretend that this will be easy. Moving to a rules-based, global aviation system will cause dislocations, but the resulting system can be dramatically safe and secure. A global air traffic management system offers more capacity and dramatically increases safety. I believe it is worth the effort.
On July 15, 1960, when he accepted the Democratic presidential nomination in Los Angeles, John F. Kennedy talked about a new frontier for America. He said as part of that speech, "The New Frontier of which I speak is not a set of promises -- it is a set of challenges." I think that is where we find ourselves today; that we have significant challenges, too. I also believe that we can solve our challenges through some old and tried ways by using imagination, invention, discovery, and creativity. Where does our inspiration come from? It comes from many places...from work in garages from Detroit to Dayton to Kitty Hawk. It comes from people who did the impossible, to make the world a better place, people such as Boeing, Douglas, and McDonnell.
Together we must insist on safe and secure travel and commerce worldwide. Together we must ensure healthy, critical infrastructures that build a great future and that allow us to conquer challenges with inspiration and courage. That's how we will open up new frontiers -- forever.