No one wants health care to be like the airlines!

“How was the hospital?
“Not great. My surgery was three hours late, my bed was double-booked so they dragged me out of the OR, and then they sent my appendix to Albuquerque!”

This is where aviation is headed, under the ATC privatization that Trump supports. A few will be enriched; most people will see things worsen. Substantially.

Click here to view the source article, or here to view an archived PDF copy of the article. The article title is harsh but, hey, take the time to see what is in the article and think about your own experiences. This industry is out of control – as is the faux-regulator FAA. The author makes some great points.

Newsday’s Editorial Board is All Wrong on Privatizing ATC

In an editorial opinion, Newsday‘s Editorial Board is helping to push the illusion that privatizing ATC will help. They are all wrong.

Newsday is a daily paper on Long Island. They have been at the epicenter of impacts from two major U.S. airports: Kennedy [KJFK] and LaGuardia [KLGA]. Newsday has published plenty of citizen letters to the editor, expressing concerns about how FAA and NextGen are impacting their neighborhoods. Newsday reporters have also done a lot of groundwork, talking to people and writing up articles.

But, apparently, the top people who run the daily news show at Newsday are aligned with the money that buys ad space, so they tweak the news to help steer readers toward supporting bad ideas, like ATC privatization.

How far do they go to manipulate us? Well, here’s a screencap of two comments to a Facebook Post about this latest Newsday article:

(click on image to view source at Facebook)

Here’s an airchived copy of the Editorial Board opinion, with aiREFORM rebuttal footnotes:

Click on the image below for a scrollable view; the PDF file may be downloaded.

Our Collective ADD, and Some History on US Airways

The general public lacks awareness of major trends in U.S. aviation, not just in the past hundred years, but even in the past decade. Indeed, the current set of popular communications technologies (internet, twitter, etc.) bombard us with so much rapid information that Public memory has arguably been all but destroyed . Many of us fail to process events from mere weeks ago. So, it is not surprising that people have no idea how contentious U.S. aviation history has been, getting to where we are today, with just four remaining major U.S. airlines: American, Delta, Southwest, and United.

It does not help that all of our aviation professionals do nothing to nurture a citizenry that is vastly informed and technically savvy, empowered by knowledge. Instead, FAA, NATCA, A4A and other members of the Av-Gov Complex seem to want to keep us ignorant. So, they always tend to hand us off to technical experts, and shout off infinite acronyms as effective weapons of mass confusion. They religiously avoid talking about safety deficiencies, wasteful spending, controller errors, etc. And all this they do while speaking cheerfully, as if from a Koolaid Bowl, to promote air travel (and thus their personal paychecks and pensions).

In total, we have been collectively dumbed down; nearly all of us now suffer a substantial culturally-based Attention Deficit Disorder. This ensures that meaningful decisions by governmental agencies, such as FAA’s NextGen implementations, will continue to happen in a vacuum. It also means that most impacted people will be too flustered (or too distracted onto other life matters or by trivialities – hey, did you see the great catch by what’s his name?) to focus through repairing FAA’s damages.

US Airways: An Airline Dysfunction Case Study?

While researching a recent aiREFORM Post about FAA’s NextGen Hydra at Charlotte, NC, it became clear that a closer look at Charlotte, and the airline at the heart of the airport’s history, might help educate us all. There is much that needs to be learned….

…So, take a look at the Wikipedia page on US Airways. Especially, be sure to read their history, with bankruptcies in both 2002 AND 2004. This was one of the first major U.S. airlines to liquidate the pensions of its pilots, as they did in 2003. This is also an airline that built up a huge hub at Pittsburgh [KPIT], got the airport authority to spend billions in new facilities, then abruptly up and left when the airport authority refused their ultimatum to lower airline operating fees.

By the way, Pittsburgh is one a growing number of U.S. airports that have seen enormous federal investment, only to be abandoned by their main airline (see also Delta at Cincinnati [KCVG], American at St. Louis [KSTL], Northwest (now Delta) at Detroit [KDTW], and Continental (now United) at Cleveland [KCLE].

And on the subject of airline dysfunction, it seems notable that the newest merger – American-US Airways – is deeply at the heart of nearly all of the biggest NextGen rollout debacles: at Boston, Charlotte, Chicago, New York’s JFK, and Phoenix. This one airline, if they shook their head and said ‘NO’ to FAA’s NextGen routes, could make a hugely positive quality of life difference for hundreds of thousands of airport neighbors.

We need to know history…

…and we need to apply what we know. Otherwise, we will keep doing the same stupid things, over and over again. Money will be wasted. Neighborhoods will be ruined. And a slim few will get rich.

FAA’s NextGen Hydra: Breathing Hellish Noise-Fire Upon Charlotte, NC

Source: tabletophell.com

Source: tabletophell.com

When the noise seems to never go away, in areas where only months before there just wasn’t any airport noise, people tend to get worn out. The noise becomes an occupying force, a controlling presence. Perhaps it was after nights of enduring NextGen sleep deprivation that a retiree near Charlotte, NC began to see FAA’s NextGen as a mythical, multi-headed hydra, breathing noise-fire from Hell.

The heads of this monster are the many newly designed routes, wherein FAA is effectively mandating pilots to let the autopilot fly the airplane as soon as they lift off. In FAA’s current NextGen implementation, these automated routes are being focused by the navigational precision of new GPS technologies. The result, being ignored by FAA, is the creation of intense noise impact areas. People are speaking up, but FAA won’t listen; instead, agency spokespersons just try to drown out the popular concerns by repeating their mantra, “NextGen is needed for ‘safety and efficiency’.”

The Charlotte NextGen Hydra Looks Like This

Here’s a map showing actual flight tracks during a North Flow at Charlotte. Green lines are departures, red lines are arrivals. The pink ellipses mark the areas heavily impacted by crossing compressed routes. The airport runways are identifiable in the small area where the green lines butt into the ends of the red lines, midway between the bottom edges of the two upper pink ellipses.[KCLT] N Flow, route compilation map with pink markups

20150531cpy.. portion of Munch's 'The Scream'

(click on image to view painting in a larger window)

It is uncanny, how much this plot of FAA’s NextGen impact on Charlotte resembles the tormented subject in Munch’s priceless painting, ‘The Scream’. Priceless.

Actually, not just Priceless. Pointless too, because FAA doesn’t need NextGen to continue to manage what FAA has been telling Congress for decades is the safest and most efficient aviation system ever. So, the only valid justification for spending tens of billions to ‘upgrade’ would be to handle higher traffic levels.

Which brings us to exactly what is wrong with FAA’s NextGen (other than the wasted money): there is no capacity demand justifying NextGen.

In fact, air traffic has declined sharply in the past two decades, and FAA has produced no evidence that traffic levels will be going up any time soon. The Av-Gov Complex (FAA and their ‘collaborators’) knows this, but they remain careful not to talk about it. So, while people are upset, losing sleep, and speaking up more, FAA just continues with their mantra that NextGen is ‘critically needed for safety and efficiency’.

How Far Has U.S. Air Traffic Declined?

The key metric for assessing both airport noise impact and ATC workload is the number of airport operations (i.e., how many airport takeoffs and landings in a year). FAA’s ATADS database is maintained specifically to track this metric. According to FAA’s ATADS data for all towered airports, total U.S. airport operations peaked way back in 1999; since then, there has been a steady decline, and in 2014 total operations at ALL TOWERS were DOWN 28% from the 1999 peak.

Another way to assess growth or decline to try to justify a need for NextGen is to look at commercial operations at a subset of the largest commercial airports. FAA says that 70% of all passengers enplane at the ‘OEP-35 airports’. At these 35 major airports, ANNUAL OPERATIONS PEAKED IN 2000, AND BY 2014 HAD DECLINED 19%. [see: OEP-35 Airports (list & links) which shows trends for each OEP-35 airport]

During the 2000 to 2014 timeframe, nearly half (16) of the U.S. OEP-35 airports, declined by 21% or more. During this same time period, the U.S. population grew by 13%. Seemingly, any healthy service industry should at least keep pace with population growth. Well, of the 35 marker airports on the OEP list, only TWO beat population growth: operations at New York JFK was one (up 20%), and Charlotte was the other (up 18%).

All other of FAA’s busiest airports declined versus population, most of them substantially. The five worst case declines (and these numbers would be still lower if population growth was factored in!) happened at:

  • Cincinnati Northern Kentucky [KCVG]: down 72%
  • Pittsburgh [KPIT]: down 70%
  • St Louis [KSTL]: down 62%
  • Cleveland [KCLE]: down 61%
  • Memphis [KMEM]: down 43%

The Significance of KCLT

As noted, between 2000 and 2014 the hub airport in Charlotte, NC was one of only two major U.S. airports to grow faster than population (though it did peak in 2013, and showed a 2% decline in 2014). How did Charlotte do this? By becoming a larger hub airport, and with lots of federal subsidy. Charlotte is now a Super-Hub for US Airways, which is just now finishing its merger with American Airlines.

The [KCLT] super-hub is to American/USAirways as the Atlanta [KATL] super-hub is to Delta. Both are positioned with multiple parallel runways, and between two key major passenger markets: the north/northeastern U.S. market, and the Florida market. Their business model is simple: bring passengers in from both markets, have them ‘self-sort’ in the KCLT terminal, and send them out to their destinations. Interestingly, both the KATL and the KCLT model rely on extreme monopoly. The merged American/US Airways (and it’s subordinate feeder airlines) handled 96% of the KCLT commercial passenger operations in December 2013; that same reference month, Delta dominated KATL with 91% of all operations. [see: A Table Showing the ASPM-77 Airports (Peak Years, Traffic Declines, and Trends Toward Airline Monopolies)]

A huge environmental problem with this type of ‘Passenger Sort Facility’ is the out-scaled impact on airport neighbors. In particular, these airports have many more flights per local resident, simply because most of the flights are not scheduled to serve locals, they are scheduled to serve non-residents ‘just-passing-through’.

The impacts are intensified by airline practices. When an airline like American ‘banks’ its KCLT schedule with heavy inflows and outflows, it is going to create congestion. ATC will manage that congestion by designing routes, to proceduralize the flow, and these route designs will include holding departures to lower altitudes to avoid arrivals at higher altitudes. In some critical locations, especially where focused routes cross, neighbors have to endure nearly continuous noise for hours – or even days – at a time.

Overflights. Over and over and over again. Near constant noise. After a while, residents may start to see a Hydra.

So, Charlotte is Just One More Example, showing NextGen is Really all About CAPACITY

(Foxx, Huerta, and Calio: the program is even more off balance than the photo)

(Foxx, Huerta, and Calio: the program is even more off balance than the photo)

What it all distills down to is a reality many have recognized for a very long time. FAA is a politicized beast that extracts billions every year and has to spend that money. Furthermore, our Presidents have nearly always demonstrated a bipartisan appetite for encouraging FAA spending, often seeking to prop up local economies. Both agencies and Presidents are inclined to spend for political advantage. In these times, political advantage rests with money. So, the role of Administrator Huerta and Secretary Foxx is reduced down to being just a pair of very well-paid cheerleaders, a Congressionally-appointed lobbyist duo.

In other words, FAA is working FOR the airlines, with false cover from the RTCA committees who make ‘NextGen recommendations (and who are dominated by the airlines) to essentially eliminate all environmental restrictions that we (the people) have needed to impose on the airlines.

In Charlotte and elsewhere, NextGen is a workaround to environmental regulation. It is a wholesale discarding of decades worth of environmental balance, implemented to protect neighborhoods from commercial aviation noise. With NextGen, FAA is essentially allowing departures to immediately turn, no longer requiring straight-out climbs to altitude before turning toward their destination. And the local residents, who never had a voice in the change process, are forced to endure the NextGen Noise-Hell.

Despite Big Profits, U.S. Airlines Are Whining about New Competition

Scott Hamilton, at Leeham News and Comment, has been a top news investigator in the commercial aircraft manufacturing industry for nearly three decades. His articles go deep, and they commonly go a bit further, even covering the airlines. His blog, LeehamNews.com, always informs.

Scott just posted ‘Pontifications: Qatar Air adds US service, US airlines ramp up whining’. He offers a relatively detailed summary of the 1978 deregulation of U.S. airlines, and the slow evolution away from competition and toward narrow consolidation, over the decades since. He also looks at US3 versus ME3, referring to today’s top three U.S. airlines (American, Delta and United), versus the new and fast-growing Middle East airlines (Emirates, Etihad and Qatar).

The Post is an interesting read. And, as always, LeehamNews’ quality base of readers offer some excellent comments. Here is one comment, looking at the hypocrisy of the US3 complaining about new competition from foreign airlines:

These same morons running the Airlines are perfectly fine with deregulation and free trade as long as it means _they_ can outsource labor and manufacturing to Myanmar at $0.50 and hour, but god forbid any “damn furriners” use it to compete against them.
The US3 airlines (and their regional sweatshop affiliates) need to be taken down by unrestricted competition.The “foreign ownership” restrictions are BS protectionism.
Government subsidies to fly into unprofitable markets need to be eliminated (if you want to talk about subsidies, US3, what about these pork barrel constructs?)
The so called “free market capitalists” running America/ American businesses are only interested in their own freedom to profit, while constructing a system that guarantees their cartel’s market control in perpetuity.

 

The aiREPORT: [2013Q3, week-8]

aiREPORT is a weekly collection of notes and links to news items relevant to aviation impacts and FAA reform. It is provided as a research tool…

Third Quarter, Week #8: August 18 — August 24, 2013

summary:

…just a slow week, as if everyone is away on their late Summer vacations…

QUICKlooks:

  • 8/20/13: AOPA announced that the new AOPA President is Mark Baker. He replaces Craig Fuller, who announced his decision to leave earlier this year.
  • Years of noise complaints are prompting San Francisco’s Supervisors to consider an ordinance to ban aerial advertising. The article mentions AWP Counsel Naomi Tsuda, and note FAA’s chronic opposition to such local control.
  • NBAA complained that FAA’s required ‘disclaimers’ are discouraging pilots from wanting to use data contained in Safety NOTAM’s; FAA assures they are repairing the excessive disclaimers.
  • 8/22/13: American Petroleum Institute (API) reports that 18.9 million barrels per day of petroleum products were delivered in the U.S. in July, up 1.7 percent from last year, and the highest level for July in three years. Jet fuel was up 2.3%, to 1.5 million barrels/day.

Airports in the News:

  • Casa Grande, AZ ([KCGZ]) has said no to paying FAA money for controllers at their annual Fly-In, on October 24-26. Just as they did for other large GA events this year, FAA is demanding funds to cover overtime, lodging, etc.
  • Columbus, OH (Port Columbus International Airport [KCMH]) will inaugurate a new south runway this week and FAA Administrator Huerta will visit. The article also notes an $80M project to overhaul the terminal building.
  • Le Mars, IA (Le Mars Municipal Airport [KLRJ]) is home to 19 single-props, one jet,  and five ultralights, using a single 4,650′ runway. The community must cease construction of a 140′ tall water tower, because FAA says it is too high and creates an airport hazard. The airport averages 15 takeoffs per day, and is 27-miles north of the Sioux City airport.

Links to Articles:

8-23-2013AMR, US Airways Seeking Trial in U.S. Antitrust Lawsuit
The Department of Justice is challenging the proposed airline merger, and is pushing for a February hearing. The airlines and their unions want to move that up to November, as the merger is considered a critical element of American’s strategy for exiting their current bankruptcy.
8-22-2013Proposed AD could have devastating effect on GA
The Airworthiness Directive relates to cylinders installed on more than 6,000 Continental engines. Sometimes it looks like FAA imposes strong regulations against GA, to look effective overall, while ignoring larger, real problems in commercial aviation (e.g., the cargo pilot fatigue issue). EXCERPT: Officials with all of GA’s alphabet groups want more information before filing their formal comments. The FAA needs to be more forthcoming with information, says Hackman. EAA and AOPA are exploring avenues for getting more information, including asking for public hearings. Another is to ask for an extension on the date comments are due to the FAA. Currently, Oct. 11, 2013, is the deadline for comments.
8-21-2013Consultancy ‘Won’t Interfere’ With New President’s Job: AOPA
AOPA assures that their newly appointed President, Mark Baker, will serve AOPA fulltime, and not be distracted by some occasional consulting work related to his previous job. He was CEO at Orchard Hardware Supply, with 79 stores in California. The company is wrapping up a $205 Million bankruptcy and simultaneous sale to Lowes, and the package before a Bankruptcy Judge includes bonuses paid to the top five executives. Forty percent of the bonuses went to Baker, who “…pocketed more than $800,000 in bonuses for his part in steering the bankruptcy sale to a successful conclusion.” (Hmmm; is there really such a thing  as a successful bankruptcy, and should the management be rewarded? this seems very much like the too-big-to-fail banks and finance debacles of recent years). According to the Federal attorney opposed to the bonuses, all Baker and others had to do to collect was show up for work.
8-20-2013FAA Grants Restrictive Young Eagles Exemption
In response to a petition filed by EAA in the spring of 2012, the FAA recently granted a partial exemption from sections of 14 CFR 61.113, allowing pilots to receive compensation for flights under the EAA Eagle Flight and Young Eagles programs. While the petition included sport and recreational pilots, the FAA exemption applies only to pilots holding private pilot certificates or higher. Allowable compensation will include the cost of fuel during documented quasi-commercial flights, including the fuel used for transportation to such events.
8-19-2013No one injured in small plane crash on Marion Lake
A Cessna C172 flying over the Oregon Cascade Mountains loses power. The 28-yr-old pilot makes a forced landing onto shallow Marion Lake. He and a 47-yr-old male, plus two children ages 12 and 13, swim to shore as the aircraft sinks below the water surface.

The aiReport …a link to the full report…

The aiREPORT: [2013Q3, week-7]

aiREPORT is a weekly collection of notes and links to news items relevant to aviation impacts and FAA reform. It is provided as a research tool…

Third Quarter, Week #7: August 11 — August 17, 2013

summary:

Top AvNews story: the fatal UPS crash at KBHM. Almost as big was the filing by DoJ, seeking to stop the American – US Airways merger … which led the Judge for the American bankruptcy to say ‘whoa!’.  Background noise from the ‘aviation-equals-jobs’ contingent, perhaps timed to coincide with congressional officials back home on recess (great time to shake hands with constituents at late summer fairs).

QUICKlooks:

  • The Governor of Arkansas declared that August is ‘General Aviation Appreciation Month’. This is the latest in a series of state proclamations being generated by an NBAA.org PR campaign that provides pre-fab text used to generate photo-opportunities for elected officials.
  • GAMA organized a ‘rally’ in Albuquerque, in which aviation manufacturers are touting their contributions to the economy.
  • 8/13/13: The U.S. DoJ filed a lawsuit seeking to stop the proposed merger of American and US Airways.
  • 8/14/13: On the same day the world news was reporting hundreds killed when Egyptian officials cracked down on protesters, a commercial accident in Birmingham, AL: UPS Flight 1354 crashed at 4:49AM, one mile before the start of the runway, and two pilots died.
  • 8/16/13: a financial analyst critical of DoJ’s lawsuit against the American-USAirways merger notes that Southwest controls 93% or more of passenger flights at Chicago-Midway, Dallas-Love, and Houston-Hobby airports.
  • 8/17/13: Harris Corp. announced FAA has awarded it $150M for an ATC communications contract. The larger half of the $481M contract was issued a year ago.

Airports in the News:

  • Belmont, MS (Tishomingo County Airport, [01M]) has been awarded a $468K FAA grant to buy four parcels of land, needed to eventually extend the runway to 5,000′. The airport averages 13 takeoffs/day and is home to eleven airplanes.
  • Rogers, AR (Rogers Municipal Airport, [KROG]) is the home base for twenty corporate aircraft used by Wal-Mart. A Bloomberg article assesses the extent of public subsidy at this airport.
  • Scotts Bluff, NE (Western Nebraska Regional Airport, [KBFF]) announces FAA AIP funds will cover 90% of $1.6M in terminal and airport improvements.
  • Hudson, NY (Columbia County Airport, [1B1]) received an 8/6/13 letter from FAA advising they need to condemn part of a golf course and cut down six acres of trees adjacent to the airport. The rural airport 25-miles southeast of Albany has 29 based aircraft and a single runway that averages 27 takeoffs/day.
  • Connellsville, PA (Connellsville Airport, [KVVS]) also received a letter from FAA airport officials for non-compliance. The airport authority is working to clean up a problem of tenants using airport facilities to store trailers, rolls of artificial lawn, and other non-aviation items … which violates FAA’s rules. Non-compliant airport authorities fear legal action by FAA.

Links to Articles:

8-15-2013Aviation Experts Question Whether Culture Had Role in Asiana Crash
The problem of subservience within airline flight crews came up with the deadly KAL accident in Guam. This article analyzes that angle, and includes comments by former NTSB Chair Jim Hall.
8-15-2013Judge postpones decision on American Airlines bankruptcy exit plan
The American Airlines bankruptcy proceedings may be on hold. Judge Sean Lane listened to five hours of hearings on Thursday, but based on the DoJ lawsuit challenging the propoed merger with US Airways, he is postponing any decisions. All parties have until the end of next week to produce pleadings as to why he should not postpone. One of the isues discussed today was the propriety of giving $19.65M to American CEO Tom Horton as a golden parachute when the merger is closed. Other creditors feel this is not fair, in view of their losses.
8-13-2013American’s Horton: Court battle ‘will likely take a few months’
The American Airlines CEO is due to receive a $20M golden parachute as part of the merger with USAirways. Problem is, the airline is going through bankruptcy, and some believe this $20M payment is improper. Also, the merger is being challenged, including a DoJ lawsuit. This blog includes a copy of Mr. Horton’s ‘jetwire’ message sent to the ‘American Team’.
8-12-2013Cylinder-removal AD would increase costs, decrease safety
AOPA news article expressing opposition to FAA’s proposed AD; includes links to the proposal as listed in the Federal Register, and to the NTSB recommendations behind the AD.
ARCHIVES: 11-3-2012Lab releases global aviation emissions dataset
A global emissions dataset for civil aviation emissions is now available. The dataset contains three-dimensional gridded emissions for (scheduled) civil aviation for 2005. This dataset represents the most current estimate of global aviation emissions that is publicly available. It is intended to be of use to researchers in areas including atmospheric modeling and aviation and the environment. For example, it is currently being incorporated into the standard release of the community atmospheric chemistry-transport model GEOS-Chem. Includes a color global map showing routes, impacts. (Seed for an article?)
ARCHIVES: 3-1-2012Study released on the costs and benefits of desulfurizing jet fuel
MIT led the study, funded by FAA. Includes a world map projecting the amount of aviation impact.

The aiReport …a link to the full report…

ATO’s COO David Grizzle Announces he plans to Leave in December

This is a MULTI-PAGE post — click on the page numbers at the bottom of each page

Part One: The Announcement

Dave Grizzle pic, speaking at podium
The number one person in charge of air traffic control at FAA is the COO, Mr. David Grizzle. Within FAA he is also known as ATO-1.

On Tuesday, August 13th, it was announced that Mr. Grizzle will be retiring his position in December, and returning to work in the private sector. Here is the email announcement by his boss, FAA Administrator Michael Huerta: (highlights added)

From: Michael Huerta
Sent: 08/13/2013 10:24 AM EDT

Subject: Personnel Announcement

Dear Colleagues –

I wanted to let you know that David Grizzle has announced he will leave his position as Chief Operating Officer of the Air Traffic Organization this December. This is a loss not only for the ATO but for the agency as a whole. David’s bold and innovative leadership style has helped lead the ATO through a number of very challenging situations. His deep commitment to changing our agency’s culture and fostering collaboration has created real change here at the FAA – change that will last for years to come.

David has served the FAA and this Administration in a number of capacities. Before he took on the role of COO he was our Chief Counsel and also wore the Acting Deputy Administrator hat for a time.

We are grateful for David’s service and wish him the best as he returns to the private sector next year. He will also finally have more time with his family and his farm down in Virginia which I know he loves and has missed over the last several years. On a personal note, I will miss working with David on a daily basis. I have come to rely on his counsel and I truly value his unique approach to issues.

Over the next several months we will be working to find David’s successor and as we do, I know the ATO’s strong team will continue to operate our nation’s airspace system safely and efficiently.

Please join me in thanking David for his service and commitment to our shared safety mission.

…and here is a copy of the News Release by NATCA: (highlights added)

NATCA Statement on News That FAA ATO COO David Grizzle Will Leave Position
Tuesday, August 13, 2013
Contact: Doug Church, 301-346-8245

WASHINGTON – NATCA President Paul Rinaldi released the following statement, responding to the announcement today that David Grizzle will leave his position as Chief Operating Officer of the FAA’s Air Traffic Organization this December.

“Throughout David Grizzle’s tenure at the ATO, we worked together to strengthen the NATCA-FAA collaborative relationship. That has resulted in many successes, from modernization to labor relations, which have helped continue to make our National Airspace System the world’s safest and most efficient. Our relationship has also established a model in the federal government for labor-management partnership, and improved the workplaces where the safety professionals that NATCA represents can do the jobs they love while having their input and expertise valued in a shared NATCA-FAA mission of ensuring aviation safety.

“NextGen is happening now and that’s a credit to the progress made by NATCA and the FAA in working with David. We’ve also grown our safety reporting systems, including the Air Traffic Safety Action Program, to move toward a true safety culture at the FAA. We thank David for his contributions.”

There is more to the story. Much more.

First, there is an interesting person at the heart of this story. And, second, this person has an opportunity to greatly serve aviation AND the larger Public, by responsibly acting with resolve and intention … during his final months as ATO-1.

MULTI-PAGE: …Part Two begins on the next page (click below)…

The Failure of the 1978 Airline Deregulation Act

It has been 35-years since the Airline Deregulation Act. was signed. Those with a vested interest in its success (mostly, officials in government or with the airlines) either loudly assert that it is a ‘great success’, or meekly avoid talking about it. A few have spoken up about the failure; here are links…
6-4-2012
6-4-2012
6-16-2010
4-19-1996
1-1-1989

Below are copies of two outstanding news articles (with added links and mark-ups) from Forbes.com,. The original articles were both written by Houston-based investment adviser Richard Fingers. They were published in August 2012, but have become even more relevant with recent developments. Yes, the latest in a long series of bankrupt-airline mega-mergers: the marriage of American and US Airways.

Federal authorities (at DoJ and FAA) appear to be ignoring again the ‘antitrust’ implications. It seems that the regulatory fervor that ripped apart AT&T to protect consumers has, well, … maybe it just crashed and burned, but neither officials nor the media cares to report the fatalities.

Mr. Fingers paints a detailed and complete picture of how the U.S. airline industry has effectively devolved since passage of the Airline Deregulation Act in 1978. I have taken some liberty to mark up both articles with highlighting, sidenotes, links, and other minor edits. Readers are strongly encouraged to read the original articles and the many quality comments at Forbes.com (article links are at the bottom of each article below).

<<    <<>   <>   <>>    >>
(Forbes.com, 8/20/12)

Airlines: Who Can Tolerate Them

The “big bang” in the airline world was October 24, 1978. On that momentous day, the Airline Deregulation Act (the “Act”) was signed into law.

Prior to the new law, airlines were governed by the Civil Aeronautics Board (CAB). It set fares and granted (or not) licenses to airlines for new routes. The system had functioned for over four decades when, in the early 1970’s, the Arab oil embargo drastically increased fuel prices and the economy suffered from stagflation. The rate system often subsidized inefficient routes. As air fares were escalating rapidly, congressional pressure mounted  to scrap this antiquated bureaucracy. The theory was that the industry, once untethered from government shackles, would surely thrive under unfettered capitalism. Let’s see how we’ve done….

Initial Enthusiasm

Post-1978, the stampede to compete was fast and furious. The “Act” basically allowed, perhaps encouraged, any sentient being who satisfied adequate pecuniary requirements and experience to join the fray. And ,in the intervening twenty five year period, 129 enterprising souls did exactly that.

By the end of 2003 only 15 of these start-ups remained (with that number much less today). Some of the great entrepreneurial success stories were Southwest, Jet Blue, and America West (now merged into US Airways). Of the twenty-three major and regional carriers licensed before the mass ‘airline rush’, only seven survive today, and three of those are small regional airlines in Alaska and Hawaii. Bankrupt are old great names Eastern Airlines, Braniff and Pan American. Most of the others have been merged out of existence so that only United, Delta, US Airways and, with fate hanging, American remain extant. Of these remaining majors it should be noted that all have been through at least one bankruptcy.

As far as Wall Street is concerned, the airline industry is an afterthought at best. Always an enterprise mired in debt, in constant turmoil with employees, and indefinitely exposed to the vagaries of oil prices – in short, it’s a bad business to be in. The entire stock market capitalization of the top five airlines is only about $22 billion … and this represents over 70% of the industry. To put a little perspective on this, Apple (AAPL) closed on Friday with a stock market value of over $607 billion, or over twenty seven times as much as the big five combined.

These paltry market valuations rest on the industry’s stellar consistency in losing money.  During the ten years up until 2010, airlines racked up over $50 billion in cumulative losses. 9/11 (reduced demand), high fuel prices, the LCC’s … there is always some excuse. So it’s a cutthroat business. Big deal; so are computers and appliances and television manufacturing. But, we’re not talking about computers or TV’s, so we will revisit this thought shortly.

It should be noted that there were many years in the red under the regulatory regime as well. Then, miraculously, there was profitability of $2.7 billion in 2010, a smaller $396 million in 2011 and billions projected overall profitability for 2012.  Why? What changed, or was it just coincidence?

Here Is What I Think

Structural change has been inexorably shaping the airline business, most radically over the past four years. Swallow this statistic. According to Innovata, and measured by available seat kilometers (ASK’s) from August 2010 to August 2012, United, Delta, American, and US Airways reduced, that means shrunk, domestic capacity by 16.3%, 16.6%, 8.4% and 14.3% respectively.**…further evidence of the decline in commercial air traffic levels, which should reduce the demand for ATC services. See the related aiR POST 4-23-2013  OAG reports that August 2012 has the lowest level of scheduled domestic commercial airline capacity in over ten years, despite steady increase in domestic travel over this period. While international capacity continues to expand, this trend of shrinking numbers of domestic seats is expected to continue. Domestic arteries are increasingly used as connection vehicles to major hubs, to transfer to more lucrative overseas routes.

Now, to the the law of unintended consequence. The spawn of Airline Deregulation Act of 1978 has been oligopoly.**…in other words, Airline Deregulation failed entirely. Actual competition was reduced, and now the airlines have virtual monopoly pricing powers, which they are starting to use. The industry is now so entrenched and concentrated that the top five airlines have substantially more market power than in the Jurassic period before deregulation.

Consider a few basics.

Thirty-five years ago, the top five airlines controlled under 70% domestic market share but now, with recent mergers of United/Continental and Delta/Northwest, the biggest five (UAL, DAL, LCC, LUV and American) represent over 72%. .  When you add in their international routes it can rocket up way over 80%.  And ,with American Airlines muddling through bankruptcy proceedings, US Airways (LCC) circles like a frenzied great white shark to consolidate yet another competitor.

But the landscape is actually worse, a whole lot worse. When you drill down to specific markets you see that in many large airports, just a single airline controls 75% to over 85% of all domestic flights* – UAL dominates Houston Intercontinental Airport, Dallas/Fort Worth International Airport is controlled by American Airlines, and Hartsfied-Jackson Atlanta International Airport and Delta are just an old married couple. So much for the intended increased competition.*…a few other examples: UAL at Newark, O’Hare, Denver & SFO; DAL at Minneapolis & Salt Lake City; LLC at Boston, Charlotte & St. Louis; LUV at Baltimore, Midway and Dallas-Love. In fact, nearly every major U.S. airport is strongly dominated by either one or two major airlines; the potential for price-collusion is outstanding.

The Result

When you stir in the ingredients of continued shrinking domestic capacity with near monopoly at many airports, the stew yields pricing power, lots of it and much more to come.

Price of the average US domestic itinerary’s rose combined over 15% in 2009 and 2010 and an additional 8.3% in 2011. Three more successful price hikes were pushed through in the first quarter of 2012, the latest data I could find. And all those bag charges and cancellation fees you’ve been hit up for, … well, the jargon for those is “ancillary charges”. As of last September, they now comprise a whopping 29% of airline revenue and climbing. So taking those into consideration fares have headed into the stratosphere. Next: look for having to pay for assigned seating and expedited airport check-in.

By whatever measure, airline travel, adjusted for inflation, is significantly cheaper today than in 1978. A couple of statistical groups suggest what cost $2.22 back in the regulated world would have cost $1.00 in 2009. Add in recent price hikes (and adjust for the now ubiquitous “ancillaries”) and you are probably getting close to $1.50 in 2012. Even using this higher figure, prices are down by about a third on apples to apples comparison.

Has it been worth it? Planes don’t go any faster today than in 1978. There is a lot less legroom today, but for an extra fifty bucks or so you can fix that issue. There’s a bunch more gadgets on today’s planes, but I don’t use them, so I don’t know what their price tag is. All the food you want is for sale. Conveniently, you can avail yourself of the luxury of phone service for two dollars a minute. Creature comforts are of tertiary concern, if they are a bother at all.

One of the clearly stated goals of the “Act” is “the avoidance of unreasonable industry concentration which would tend to allow one or more air carriers to unreasonably increase prices, reduce services, or exclude competition….”  So, it’s as if we never left the starting blocks.

There are fewer major airlines today than pre-deregulation, and through the elaborate hub and spoke systems, a single airline may exercise near absolute control of many airports. It’s as if the industry has subdivided the country into certain fiefs and there are tacit boundaries that must not be crossed. The system we contend with today is the result of dozens of bankruptcies, reorganizations, liquidations, and mergers distilled down to a remaining few powerhouse airlines that now have more pricing power than ever before, which they exercise by rapidly reducing system wide capacity.

For me and you (the passenger), it’s one thing for fares to increase, it’s quite another to suffer higher prices with less and less choice and ever greater inconvenience. Airplane travel has devolved into a truly undignified affair.

So, at the end of the day, has deregulation been a net positive or negative, and what does the future hold? I will explore in my next post.

Original article by Richard Finger; aiREFORM has added
highlighting, side-notes, links and other minor edits.
Here is a link to the original article at Forbes.com: 8-20-2012
(Forbes.com, 8/23/12)

Protect Your Wallet: Regulate The Airlines

It has taken nearly thirty five years, but finally the airlines are in such a dominant market position that the consumer is rendered helpless. After multiple trips through bankruptcy court, abrogation and renegotiating for favorable labor contracts, and subsequent mergers, the major airlines are in their strongest position in history.  And it’s the government that is largely responsible for the situation we find ourselves in today.

The Justice Department evaluates all airline mergers and acquisitions on competitive grounds, with the Transportation Department and FAA chirping in background advice. Congress, which has the discretion to intervene, has opted out of the major recent mergers between United/Continental (UAL) and Delta/Northwest (DAL). Each mega-merger effectively grants near monopoly at many airports and for many routes. Justice denies ATT the right to merge with T-Mobile, yet blesses a United/Continental union that has limited or no competition on many routes. Either doing proper diligence is neglected or it is fair game to call Justice Department competence into question.

With American Airlines (LLC) still angling to exit bankruptcy, the issue becomes will they merge with US Airways? Will Justice do their usual wink and nod and allow this combination that will create the world’s largest airline? If they do, than airline consolidation with full government blessing will be complete. Four airlines (UAL, LLC, LUV, DAL) will control the domestic skies.2-20-2013  Intra-market monopolies will predominate to the detriment of the traveler.

If an aberration occurs and the marriage is denied, pundits question whether either US Airways or American can compete solo against the giant tentacles of United, Delta, and Southwest (LUV). So we’re damned if they do and damned if they don’t.

Competition is a good thing … and many more times than not, fewer regulations allow for a fierce competitive landscape that reduces costs, encourages innovation, lowers barriers to entry, and thus ultimately benefits the consumer. It is Darwinism, and only the best survive.

From what we have seen, airlines don’t behave the same as a normal commercial enterprise. Their path to profitability – or at least sustainability – is to reduce the numbers of flights, curtail customer services, and cram more passengers into tighter and tighter spaces. The avenue to prosperity for Apple (AAPL) is to build a better product and to keep improving it and selling each subsequent generation for less and less. If a corporation doesn’t continue to innovate they perish. Research in Motion (RIMM) and Nokia (NOK) are both dying a slow death. Can they innovate in time to resuscitate themselves? Who knows? I only know that these two enterprises in some way alienated consumers who exercised their right of choice and voted AAPL or Samsung.

A fundamental difference between smart phones and airlines is that the customer has far less choice when selecting an airline. She or he is often forced to choose by default. The airline then has little incentive to make your ride pleasurable because they know you have little choice.

Does airline insolvency equate to a RIMM or NOK going out of business? Hardly. More often than not an airline bankruptcy is a result of inequality of labor costs between one carrier and another. So bankruptcy declaration is a way to either renegotiate with pilot, mechanic, and flight attendant unions or force even harsher wage reductions through a court approved reorganization plan. Since just about every airline has been through some sort of bankruptcy proceeding, industry labor wages are probably as close to parity with each other than ever before.

When American emerges either as a standalone or part of US Airways, its labor costs will be much reduced. If RIMM is liquidated it will be an issue of an inferior product or a lack of productivity vis a vis a competitor. So I don’t think it too much of a stretch to say that bankruptcy for the airline industry is analogous to a hammer in a toolbox to beat labor into submission.* Shareholders*these heavy-handed airline tactics eventually undermine safety. Pilots and other employees are demoralized; they become fatigued, indifferent, and easily distracted. Accidents happen, and lives are lost. get punished and usually lose everything or close to it. Airline investing for the long term is near the very worst investment a person can make.

My Answer To The Problem

Here is my solution. As anathema as bureaucracy is to me, maybe in the case of airlines it is the exception that proves the rule. The airlines are a public necessity that is vital to both the national security and commercial success of our country. Their relevance makes them tantamount to a utility and that is how they should be designated.

Airline insolvency can become a distant relic. Even with the heavy industry concentration, recent waves of fare increases, baggage fees, food fees, legroom fees, their still seems to always be a question of profitability. Fuel costs are roughly one third of expenses and West Texas Intermediate Crude (WTI) has climbed back up to the mid-nineties per barrel, so the spiral of fare increases and capacity reductions will continue making travel even less tolerable than it already is.

In my previous article I wrote that, adjusted for inflation, airline travel is cheaper in 2012 than in 1978.  A couple of people questioned me on this and one astute observer pointed out that certainly, when you take into account the inferior service and overall quality of the travel experience, perhaps it is more expensive today – under the theory, you may pay less but you get a lot less, too. There is no question that business travel is far more expensive today than ever before…..often five or six times or more than what a discount ticket costs. Searching for cheap flights is a national pastime and a whole subculture unto itself. There are often 10 or 12 different fare structures on the same flight. And interestingly, they all arrive at the destination at the same time.

Under a regulated utility-like structure, fares would be rationalized and capacity would be increased by mandate. Fares would be calculated to allow the airlines a return on their invested capital. Perhaps ticket prices would rise and fall with the cost of jet fuel. Yes, it would be a little more expensive than the cheapest fares today, but certainly much less onerous than what a last minute purchase costs. No longer would it be an imperative to book vacations months and months ahead. Getting a flight would be much less of an ordeal and, with a return of capital almost guaranteed, service would improve.

I will leave you with these words:

“Our airlines, once world leaders, are now laggards in every category, including fleet age, service quality and international reputation. … Airport congestion has become a staple of late-night comedy shows. … Passenger complaints have skyrocketed. … Chapter 11 bankruptcy protection filing(s) show airline deregulation was a mistake.”

Those were the words of Robert Crandall, longtime former CEO of American Airlines. I couldn’t have said it better myself.

Original article by Richard Finger; aiREFORM has added
highlighting, side-notes, links and other minor edits.
Here is a link to the original article at Forbes.com: 8-23-2012

USAir, American and other Airline Mergers

American Airlines CEO Tom Horton (left) and US Airways CEO Doug Parker

The announcement that US Airways and American have agreed to merge means they will become the largest U.S. domestic airline, with 19.0% of total passengers. Through a series of bankruptcies empowering airline management to soften employee unions, there has been a clear concentration to just a few airlines. Many fear this change will reduce services and increase fares charged to passengers.

The major domestic U.S. airlines now include:

  • American Airlines: with 19.0% of total passengers, after the recent US Airways merger. Earlier mergers included AmericaWest (’05), TWA (’01), Piedmont (’89), Pacific Southwest (’88), AirCal (’87), and Ozark (’86)
  • Southwest Airlines: with 18.2% of total passengers, after the recent AirTran merger. Earlier mergers included Valujet (’97, via AirTran), Morris (’85) and Muse (’83).
  • Delta Airlines: with 15.9% of total passengers, after the recent Northwest merger. Earlier mergers included: Western (’87), Republic (’86), Hughes AirWest (’80), North Central (’79), and Southern(’79). The FAA operating certificates merged 12/31/09.
  • United Airlines: with 12.6% of total passengers, after the recent Continental merger. Earlier mergers included: People Express (’87), New York Air (’87), Frontier (’87), Eastern (’86),  and Texas International (’82). The FAA operating certificates merged 11/30/11.
  • JetBlue Airlines: with 3.9% of total passengers. No mergers.
  • Alaska Airlines: with 2.5% of total passengers. Acquired Jet America (’87); acquired Horizon (’86).
CVG_0013

the abandoned terminals, and the fate of CVG (click on image to view original blog post and photo essay)

One consequence of this series of  mergers has been the drastic downsizing of former airline hubs at Cincinnati,  Pittsburgh and St. Louis. Large communities are experiencing severe economic impacts as FAA and airline corporate decisions put them through boom-bust cycles. The phenomenon seems oddly similar to the impact professional sports franchises have when they threaten to relocate to a different city if they cannot have sweet tax subsidies.

A few links…

WIKI

2-15-2013

2-14-2013

2-13-2013

August 2012