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Archive for September, 2008

Dallas-bound

I’m leaving for Dallas shortly to attend Southwest Airlines’ media day. Look forward to a dispatch or two from Dallas in this space tomorrow. Is there a policy issue you’d like me to ask Southwest about? Let me know in the comments.

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Is "Straight Talk Express" now the regional affiliate of Straight Talk Air?

Is "Straight Talk Express" now the regional affiliate of Air McCain?

I haven’t had any luck getting the McCain campaign to fill me in on the details of his aviation plan (if he has one). His website has one mention of aviation, and it’s a throwaway press release on the air traffic control communications outage in August with a boilerplate call for reform in Washington. However, his twenty-six years in Washington and his chairmanship of the Senate committee that oversees aviation mean he has a pretty wide paper trail. Two of the most important issues on which he’s weighed in are air traffic control modernization (and how to fund it) and international aviation agreements.

John McCain has a track record of supporting market-based air traffic control reforms. In a 2001 interview with General Aviation News, which is full of revealing nuggets, he discussed a Reason Foundation report proposing a commercialized, nonprofit government corporation to provide air traffic control services (much like NAV CANADA). The interviewer was especially concerned about McCain’s support for user fees, the bete noire of the general-aviation community, and asked: “You have advocated ATC user fees in the past. Do you continue to support that approach?” McCain replied:

While there are a number of ideas about how to fund the aviation system, I have not yet come to a final conclusion about the best solution. The Commerce Committee will continue to examine different proposals and ideas, including a user-fee system. As I have often stated publicly, I am always open to new and fresh ideas on how to provide the proper funding to ensure a safe and efficient air-transportation system. The issue of user fees is closely linked to funding for the FAA, which is absolutely critical to the future of aviation in our country. The national air transportation system needs a predictable and reliable funding stream that is not subject to unnecessary budget pressures and gimmicks. A positive step in the right direction was the funding provided through the most recent FAA reauthorization bill, commonly known as AIR-21. But AIR-21 is not a permanent solution, and ensuring adequate funding for the long-term future of aviation remains a challenge.

While avoiding an endorsement of the Reason proposal, McCain did promise to include commercialization in the Commerce Committee deliberations on ATC: “However, the issue of ATC modernization is certainly an issue that the Commerce Committee will be looking into this year, and I expect ATC privatization will be included in the overall scope of the debate.”

User fees seem to appeal to McCain’s populist political persona and rhetoric. While acknowledging that user fees should not be structured to harm recreational users, he assails business jets’ use of the system: (more…)

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Alitalia, the feline airline with nine lives, may yet live, according to AP and Financial Times stories. (The FT lede says that the lack of a “Plan B” may keep Alitalia flying. In the real world, the lack of a Plan B means liquidation.) No one wants to buy this basket case of an airline, but Italian prime minister Silvio Berlusconi made keeping Alitalia Italian (and operating) a central item on his agenda. So, since all else seems to have failed, why doesn’t Berlusconi just buy the government stake in Alitalia himself? He’s Italy’s richest man, with a net worth of $12 billion — enough hardly to notice an investment of $600 million, which is what the last consortium was bidding.

Furthermore, aviation is an industry that attracts eccentric businessmen: Richard Branson, Donald Trump, Howard Hughes. Why not Silvio? Of course, it might be that he’s a shrewd enough businessman to recognize that Alitalia as currently constituted is a gaping money pit. Like most politicians, he’s happy to invest other people’s money in unprofitable but “patriotic” ventures. (See also: Henry Paulson, Barney Frank.)

All the same, I hereby call on Silvio Berlusconi either to pony up the cash for Alitalia or let this airline die a dignified death.

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An item of interest from the Guardian:

According to the researchers, people who regularly recycle rubbish and save energy at home are also the most likely to take frequent long-haul flights abroad. The carbon emissions from such flights can swamp the green savings made at home, the researchers claim.

Stewart Barr, of Exeter University, who led the research, said: “Green living is largely something of a myth. There is this middle class environmentalism where being green is part of the desired image. But another part of the desired image is to fly off skiing twice a year. And the carbon savings they make by not driving their kids to school will be obliterated by the pollution from their flights.”

Some people even said they deserved such flights as a reward for their green efforts, he added.

Only a very small number of citizens matched their eco-friendly behaviour at home by refusing to fly abroad, Barr told a climate change conference at Exeter University yesterday.

The research team questioned 200 people on their environmental attitudes and split them into three groups, based on a commitment to green living.

They found the longest and the most frequent flights were taken by those who were most aware of environmental issues, including the threat posed by climate change.

Questioned on their heavy use of flying, one respondent said: “I recycle 100% of what I can, there’s not one piece of paper goes in my bin, so that makes me feel less guilty about flying as much as I do.”

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I missed this news item a week ago from AAAE:

AAAE expressed concern that of the $10 million that Congress appropriated for Small Community Air Service Development Program, only $6.8 million is slated to go to small communities that need assistance. According to DOT’s order, the other $3.2 million will be used to cover “current and future administrative support costs.”

The real story here, according to aviation consultant Mike Boyd, is that SCASD is dead (scroll down to September 15):

The DOT last week announced what will be the final awards of the Small Community Development Grant program.

They clutched, and failed to award about a third of the funds appropriated to the program. They noted that they needed to hold back the money for “administrative” expenses. Reason: there will be no 2009 SCASD appropriation from congress.

Stick a fork in it. After seven years, the SCASD program now sleeps with the fishes.

Past grants, including those made this year, will be administered, but it’s a political reality that there won’t be any more congressional gelt showered on this program. The award docket made that point very clear, and our sources in Washington tell us the same thing. It may not be announced as being “cancelled,” but take it to the bank. This boat has sailed.

That’s a real shame. SCASD wasn’t perfect, but it was miles ahead of Essential Air Service in responding to actual service needs and priorities in small communities. Even so, Boyd notes that the program had achieved as much success as could be expected, especially with a rapidly changing economic environment for regional jets. “SCASD was a noble experiment that’s run its course,” he says. “But the people at the DOT who administered the program should roundly congratulate themselves for a job very well done.”

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Benet points us to a new initiative by Lufthansa to get into the student travel market by running a social networking site. It provides forums, games, and access to special fares. It’s nice that Lufthansa is reaching out to this demographic, but I don’t know how useful it will prove. I’m no longer a student, so I’m not eligible to sign up, but I don’t think I would if I could. The proliferation of social networks is actually a pain for me. Who wants to have so many log-ins and passwords? I try to limit my exposure, and for this reason, I love Google, through which I follow blogs via RSS, use email, maintain my calendar, comment on Blogger-based blogs, and participate in groups. Facebook, a real social network, has the same sort of thing going on — instead of letting people run all over the web, people can bring everything under one roof. I like OpenID, which allows me to use a log-in for one site at others. That’s what I’d prefer, and if Lufthansa wants to reach folks like me who want to enjoy some simplicity in our frenetic online lives, they’d be of a mind to introduce useful applications for existing social networks and aggregation sites, not necessarily to create ones of their own.

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No sooner do I say that the BAA case will be a hot topic this fall on yesterday’s Things with Wings Radio Show (thanks, Benet!) than BAA beats the Competition Commission to the punch and puts London’s Gatwick Airport up for sale. According to BAA’s chief, quoted in the Financial Times, “We have decided to begin the process of selling Gatwick Airport immediately. . . . Gatwick has long been an important and valuable part of BAA and the decision to sell was not taken lightly. We believe the airport’s customers, staff and business will benefit from the earliest possible resolution of current uncertainty.” This comes after the Competition Commission’s provisional findings indicated that it would order BAA to sell off two London airports and either Edinburgh or Glasgow in early 2009. (See my posts on the provisional findings here and here.)

According to the International Herald Tribune, BAA will continue to contend for keeping Stansted Airport — “At Stansted, we believe that a change of ownership would interfere with the process of securing planning approval for a second runway, which remains a key feature of government air transport policy” — and its three Scotland airports.

The Competition Commission released a statement today indicating that between now and its 2009 final report, it will “take account of any action by BAA in the meantime which may impact the competition problems we have provisionally identified.” Will the Gatwick sale delay the commission’s final recommendations, or will it come quickly enough to send signals about competition in the new London airport market?

And now comes the fun part: airport operators have been circling Gatwick for weeks now, planning their bids for whenever BAA was forced to relinquish the airport. Potential buyers include the Australian infrasturcture giant Macquarie Group, Manchester Airport Group (which owns Manchester Airport in England), Hochtief (which operates and owns shares in several European airports), Singapore’s Changi Airports International, and Fraport (which runs Frankfurt International Airport). The most interesting entry in the mix is Richard Branson, involved through either Virgin Atlantic or the umbrella Virgin Group (news reports are unclear). Virgin has expressed interest in joining a consortium to bid on Gatwick. With this cast involved, the sale of Gatwick may be one of the highest-profile airport deals ever.

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Interesting op-ed by Andy Kessler on Forbes.com yesterday:

Not to sound harsh, but Lehman Brothers reminds me of Pan Am Airlines. No one (well, beyond their employees) is going to miss them. There are plenty of others to take their place.

In the ’70s and ’80s, a deregulated airline industry grew beyond its means, was stuck with bad assets, prices dropped and consolidation became inevitable. Pan Am was an early innovator, flying seaplanes into previously unreachable Caribbean Islands. They eventually flew everywhere, competed with everyone, stretched their balance sheet so it was as inedible as the mystery meat they served on flights and then one day went . . . Poof!

Analogies only go so far, but Wall Street got caught in the same wringer. Deregulated since 1975, balance sheets grew and grew as money got thrown at the profitable business of trading stocks and bonds, investment banking and money management. In the cheap-money period of 2002 to 2007, Wall Street’s thirst for capital saw no limits.

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. . . but they apparently have advocates in high places.

(H/T: Things with Wings)

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I previously wrote about Barack Obama’s aviation plan; today’s post is about the one aviation-related bill he’s introduced in Congress, the FAA Fair Labor Management Dispute Resolution Act of 2006 (S 2201). The bill, which never made it out of committee, would have amended the FAA’s personnel management procedures so that the FAA administrator would be unable to impose work rules in stalled labor negotiations without congressional assent. If Congress were not to act on the FAA administrator’s proposed work rules within sixty days, any contract-negotiation impasse would instead have to be submitted to binding arbitration.

Air traffic controllers have been working under these imposed work rules for two years this month. According to the Wall Street Journal, “[T]he FAA imposed contract terms on the union after negotiators failed to reach a deal on pay and working conditions. The FAA ended up imposing significant pay cuts for new controllers and froze salaries of others, along with setting new work rules.” (For more on this, see the controllers’ union and ATC blogs like Get the Flick and The FAA Follies.) Obama’s legislation would have required the FAA to give in and submit to neutral, binding arbitration in its negotiations with the controllers, as the work rules would never have made it past a Democratic Congress (or even perhaps a Republican one — remember, aviation issues don’t break down evenly along party lines).

Labor organizations, including NATCA and AFSCME, supported S 2201. NATCA endorsed Obama for president largely on the strength of this legislation: (more…)

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