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Archive for November, 2008

Thanks to my readers

Dear readers,

I hope all who are traveling for the Thanksgiving holiday — which seems to be to aviation commentators what the Super Bowl is to sports reporters — will arrive safe and on time. Happy Thanksgiving to everyone. It’s been my pleasure to write this blog for the past sixteen months, but I’m most grateful for your comments, feedback, corrections, and insights. I’m also thankful for the opportunity to have met so many people in the aviation community through this blog. Thanks to all of you, and have a lovely holiday.

Warmly,

Evan

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Since fuel consumption and greenhouse gas emissions correlate nearly exactly, U.S. airlines have a financial incentive to improve their environmental performance. According to officials at the Air Transport Association, the national trade group for commercial airlines, environmental performance continues to improve and other initiatives are on deck.

Speaking in a conference call with several aviation bloggers, ATA vice president for environmental affairs Nancy Young identified environmental performance, improving the nation’s air traffic control infrastructure, and energy policy as the airlines’ top policy priorities. The desire for fuel efficiency leads to greenhouse gas emissions reduction, she said: “We couldn’t be more motivated to do the right thing there.” Among these initiatives are alternative, environmentally and food-supply friendly fuels. Young said that it is much harder to develop this kind of fuel for air-based engine units. A 50/50 synthetic blend is currently being tested, she said, with the aim of having 50 percent of the jet fuel supply in alternatives by 2025.

ATA has also adopted an industry-wide goal of improving fuel efficiency by 30 percent by 2025. This can be done, she said, by upgrading fleets, investing in new aircraft (e.g., replacing American Airlines’ MD-80s with B-737s) and enhancing current aircraft (such as fitting them with winglets). John Heimlich, ATA’s chief economist, added that more efficient air traffic control navigation — such as optimal flight paths, continuous descent, and the like — would improve both operational and environmental performance. Heimlich also defended the recent spate of baggage fees as an environmental initative: “When the customer is imposing a fuel penalty on us, as with baggage, we pass that cost on to them.” The airlines are cutting down on fuel use by modifying passenger behavior. (more…)

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Britain is keeping in place — and raising — its Air Passenger Duty, a per-passenger charge levied on airline itineraries originating in Britain. The government had promised to design a new charge based on aircraft; the current charge does not correlate actual emissions to charges for them. Two aircraft of identical capacity but with different fuel efficiencies are assessed the same amount of APD. Even worse, private aircraft, cargo aircraft, and transfer passengers (mostly at Heathrow) are exempt from APD, meaning that commercial travelers to destinations in Britain are bearing the brunt of aviation’s climate impact there. If Britain is serious about taxing its own travelers and airlines to mitigate climate change, then it needs to align charges with actual impacts.

See also my earlier post on the challenges of green taxation in aviation.

UK flight taxes to rise as reform dropped [FT]

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I don’t know why the blogosphere has erupted over this just now (I saw several posts on the subject in my non-aviation-related categories on Google Reader), but I’ll mention it: the Canadian Transport Agency’s January ruling on obese travelers was challenged by Air Canada and WestJet, upheld by a lower court, and appealed to Canada’s high court, which declined to hear the case, meaning that the CTA’s rule stands. According to a blog post I wrote in January, the regulation requires airlines to give an extra seat to a person who needs it due to being “functionally disabled by obesity for purposes of air travel.” But as I wrote then, the rule is sneaky: it specifically excludes “persons who are obese but not disabled as a result of their obesity.” But then defines “functionally disabled by obesity” according to Southwest Airlines’ practice of “screen[ing] for entitlement to an additional seat by determining whether a person can lower the seat’s armrests.” Basically, anyone who spills over the armrest gets an extra seat. And there are plenty of functional folks who meet this criterion.

So . . . it looks like Derrie-Air won’t be flying to the Great North anytime soon. . . .

Top court backs free seat ruling for some disabled, obese travellers [CBC]
Canada rules obese get second seat free on flights in Canada [WalletPop]

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Shikha Dalmia, a policy analyst at the Reason Foundation, an L.A.-based think thank that sets itself apart in the right-of-center policy community by focusing on transportation, offers a libertarian perspective on the best and worst cabinet appointees that Barack Obama might choose at the Department of Transportation.

Mary Peters

Mary Peters

Dalmia writes that one of the top priorities of the next transportation secretary should be to speed up the NextGen transformation by “extricating air traffic control operations from the Federal Aviation Administration’s bureaucratic shackles and spinning them off as a separate ‘company’ with the authority to fund the $25 billion revamp through revenue bonds paid by user fees.”

The candidate who is best suited for this job is, in fact, the current Secretary of Transportation, Mary Peters. She began her term in 2006 and since then she has repeatedly drawn attention to the imminent bankruptcy of the National Highway Trust Fund and the need, therefore, to explore leasing arrangements with private companies to build new toll roads and to implement congestion pricing — an idea that Obama has praised — in our most-congested urban areas as well as airports. . . . Peters has proven herself to be an able administrator. More to the point, she would offer creative and sensible ways for Obama to deliver on his idea of using infrastructure projects to stimulate the economy without burdening taxpayers.

Dalmia’s “second-tier picks” include Pennsylvania governor Ed Rendell, Clinton-era deputy transportation secretary Mort Downey, and San Francisco Bay Area transportation commission director Steve Heminger. Unlike Peters, the latter two are thought to be on Obama’s shortlist. Dalmia also mentions some positives about former FAA administrator Jane Garvey, who has apparently made favorable noises on highway pricing. But Dalmia writes that “she starved the air traffic system of funding, partly because she didn’t have the gumption to standup to the demands for a sweetheart contract by the controllers’ union.”

And Dalmia’s worst options: Representatives Jim Oberstar (D-Minn.) and Earl Blumenauer (D-Ore.). “They routinely advocate spending gas tax revenues on everything but highways and are huge champions of mass transit, regardless of a project’s effectiveness. Oberstar, a bike enthusiast, is arguably the worse of the two because he also has a taste for larding highway pork on favored constituencies. . . . Oberstar would be a great friend of the decrepit transportation status-quo, something that America’s economy can ill afford.”

Obama’s Cabinet: Hoping for an Empirical Presidency [Reason Foundation]

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Duane Woerth

Duane Woerth

There’s a lot of virtual ink being spilled in the blogosphere about Obama’s shortlist for FAA administrator. Some of those rumored to be under consideration include Representative Jerry Costello (D-Ill.), the chairman of the House Aviation Subcommittee; Representative Peter DeFazio (D-Ore.); Clinton-era FAA chief Jane Garvey;  Robert Herbert, an aide to Senator Harry Reid (D-Nev.); Boeing executive Neil Planzer, and former Air Line Pilots Association president Duane Woerth. Regarding the latter, the Wall Street Journal‘s Middle Seat Terminal blog has this to say:

Woerth . . . has met with House Transportation and Infrastructure Committee Chairman James Oberstar and has his tentative support, according to people familiar with their discussions. Sen. Jay Rockefeller, who heads an aviation subcommittee, is slated to meet with Woerth in the next few days. . . .

Still, the Journal reports that Woerth has the strong backing of various unions seeking to cash in political capital for their aggressive support of Obama’s candidacy. But Woerth, who frequently prodded the agency to step up air-safety efforts, also has garnered bipartisan endorsements on Capitol Hill and enjoys the backing of some aircraft makers and airline-industry officials.

I called a airline pilot friend and ALPA member at one of the nation’s largest airlines to get his impressions. This pilot  thought Woerth did an “OK” job as head of ALPA. My source especially praised Woerth’s handling of the critical time surrounding the September 11 attacks: “He was head of ALPA during 9/11. He had a huge amount dumped on his plate with the tremendous challenges to the industry” — including persuading pilot groups to make wage and benefit concessions in attempts to save their airlines. (more…)

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I bet you’re thinking, how would a bailout of the “big three” U.S.-based automakers — General Motors, Ford, and Chrysler — affect a bailout of the airline industry? Tellingly, a few observers have compared the situation with the car-makers (Scene: Washington. Detroit: Give us big money money; our bankruptcy is your DOOM. Congress: Sure, always happy to help the UAW, but let’s install a car czar to apply industrial policy and oversee green car production.) with the airline bailout in 2001. A while back, I warned that as troubles persist in the airline industry, we should look out for a revival of the Air Transportation Stabilization Board. A recent Wall Street Journal article by Paul Ingrassia holds up the ATSB as a model for Detroit:

If public dollars are the only way to keep General Motors afloat, as the company contends, a complete restructuring under a government overseer or oversight board has to be the price.

That is essentially the role played by the federal Air Transportation Stabilization Board in doling out taxpayer dollars to the airlines in the wake of 9/11. The board consisted of senior government officials with a staff recruited largely from the private sector. It was no figurehead. When one airline brought in a lengthy, convoluted restructuring plan, a board official ordered it to come back with something simpler and sustainable. uniThe Stabilization Board did its job — selling government-guaranteed airline loans and warrants to private investors, monitoring airline bankruptcies to protect the interests of taxpayers — and even returned money to the government.

William Swelbar provides a little more background:

On multiple occasions, United applied for an ATSB-backed loan prior to its decision to file for bankruptcy protection in late 2002. The ATSB continually found that United had failed to file a business plan that was sustainable. Ultimately United filed for bankruptcy protection and continues its restructuring today. The ATSB simply was not prepared to provide United a bridge loan to nowhere. Today, United is in a much better place as a result. Not out of the woods completely, but the prospects for tomorrow are much brighter.

The travel industry disintegration after 9/11 was an unexpected external shock, but for airlines like United, it unmasked the unsustainable labor obligations and management decisions that were obscured in the heady boom time of 1999-2001. Some airlines, the ATSB determined, could do with a small loan guarantee in order to get through a rough time not of the airlines’ making. But for legacy carriers with legacy cost structures, a bailout would only postpone the reckoning to come, possibly making the pain worse later. United, Delta, and Northwest all needed a run through bankruptcy court. (I’ll say that United did not do enough to help itself in bankruptcy court. For example, management threw out silly ideas like Ted and didn’t simplify its fleet sufficiently.)

What does this have to do with Detroit? As I said back in June, the times today do not call for an airline bailout. Nor do they call for a bailout for Detroit. The big three’s special pleading notwithstanding, its problems are due entirely to bad management and extraordinary concessions to labor unions. As Swelbar adds, “It is my hope that we do nothing unless a radical transformation of the legacy issues that make the auto industry non-competitive are insisted upon.”

So where does that leave the big three? Exactly where legacy airlines were left: in bankruptcy court. Michael Levine — an aviation policy expert, natch — points out in today’s Wall Street Journal, “GM as it is cannot survive without long-term government life support. If it gets that support, it can’t change enough and won’t change fast enough. Contrary to [GM CEO Rick] Wagoner’s brave declaration, bankruptcy is an option. In fact, it’s the only option that merits public support and actually has a chance at succeeding.”

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