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Archive for February, 2009

Transportation Secretary Ray LaHood, one of Obama’s token cabinet Republicans, isn’t going to rock the policy boat. According to National Journal, he’ll take his cues from the White House on emissions:

Addressing the role that the department will play as Congress and the administration move forward on climate change legislation this year, LaHood said he would take his cues from Obama and White House energy and climate adviser Carol Browner. “We’re going to be in the room,” LaHood said, adding, “I’m going to take my leads from Carol Browner. I’ll be a good, faithful soldier on this.”

Lisa Caruso also reports that Clinton-era FAA chief Jane Garvey is about to be nominated for deputy secretary of transportation. She also reports that Randy Babbitt, a former Eastern Airlines pilot and Air Line Pilots Association president and current consultant, is the most likely choice for a five-year term as FAA administrator.

What should we expect from Babbitt? Well, he’ll have to thread the needle of being a union guy moved into management. According to a pilot source, Babbitt was very political as head of ALPA from 1991 to 1998. ALPA is in the tricky position of being a union — a solid Democratic bloc — made up more of Republicans than Democrats, especially in the past when the commercial pilot workforce was composed of greater shares of ex-military guys. “Babbitt had the union endorse Bill Clinton, and there were a lot of individual union members who quit the union [over that],” my source said. “Prior to Clinton, the union had never endorsed a political candidate for president.”

Looks like Babbitt is about to reap his political rewards.

LaHood Predicts More High-Speed Rail Funds [National Journal]

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News reports indicate that a fifty-seat Dash 8 operated by Colgan Air for Continental Airlines, traveling from Newark to Buffalo, crashed shortly before landing a little after ten, killing all forty-four passengers, four five crew members, and a person on the ground.

This is the first fatal commercial aviation accident in the United States since Comair flight 191 in Lexington, Kentucky, in August 2006.

[Updated 2/13, 8:30 am]

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A new paper from the Center for International Private Enterprise at the U.S. Chamber of Commerce examines the development of the aviation sector in the Middle East and North Africa. (Thanks to colleague Mitch Boersma for passing this along.) Jawad Rachami points out that the region’s “share of global passenger traffic is expected to hover at less than 6 percent in the next 20 years, and the region’s share of the world’s total number of flights is expected to remain at about 3.5 percent during the same period,” arguing that “[t]his is reflective of MENA’s poor integration into the global economy and the weakness of its market and governance institutions.” Moreover, the leading node of aviation growth in the region is Dubai, which accounts for nearly three times as much traffic as Cairo, the region’s second-largest airport.

Rachami identifies four “trajectories” for aviation growth in the region. The first are “leaders” like Dubai and the other Gulf states, which have invested oil money and sovereign investment revenues into strategic infrastructure investments. (more…)

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I saw this item earlier today, but it was linked on Drudge tonight, so I figure it’s going viral and thus worth a notice. Gordon Brown’s top climate change adviser, Adair Turner, testified to the Environmental Audit Select Committee that “We will have to constrain demand in an absolute sense with people not allowed to make as many journeys as they could in an unconstrained manner” — that is, according to writer Perry Flint, “the possibility of rationing air travel, limiting UK citizens to just a few vacation trips abroad by air per year in order to reduce the impact of carbon dioxide emissions.”

Of course, superior to rationing air travel (not that there won’t be a thousand exemptions and caveats that would either render the system useless or inequitable) is simple pricing. If you decide that air travel imposes significant negative externalities that justify restricting its growth, then why not just raise the price to the appropriate level? It’s a lot more sensible to implement than a rationing scheme.

UK environment czar looking at limiting holiday trips to save CO2 [ATW Daily News]

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There’s a new GAO report out today that’s very, very meta: it’s an evaluation of the Transportation Security Administration’s own report on a study of the effectiveness of the Screening Partnership Program (SPP), which allows airports to contract airport security out to TSA-approved security firms.

The TSA study examined security at Greater Rochester International Airport in New York, Jackson Hole Airport in Wyoming, Sioux Falls’ airport in South Dakota, Kansas City International Airport, San Francisco International Airport, and Tupelo Regional Airport in Mississippi. TSA found (unsurprisingly) that “screening at SPP airports currently costs approximately 17.4 percent more to operate than at airports with federal screeners, and that SPP airports fell within the ‘average performer’ category for the performance measures included in its analysis. . . . the contractor concluded that passenger screening at the SPP airports has historically cost from 9 to 17 percent more than at non-SPP airports, and private screeners performed at a level that was equal to or greater than that of federal TSOs.” (This is unsurprising because the law requires that “private screening companies selected by TSA must provide its screening personnel compensation and other benefits at a level not less than the compensation and other benefits provided to federal government personnel.” When you add in another layer of management because of the contractor, you get — surprise — higher costs.)

The GAO determined that TSA’s study employed flawed methodology because it failed to “include the impact of potential overlapping administrative staff on the costs of SPP airports,” “account for workers compensation, general liability insurance, and some retirement costs paid by the federal government, as well as the lost corporate income tax revenue from private screening contractors, when replacing private with federal screening,” “call for statistical analyses to determine the level of confidence in observed differences in performance between SPP and non-SPP airports,” among others. Conclusion: “[W]e believe that TSA should not use the study as sole support for major policy decisions regarding the SPP.”

So, why is this study of a study of a study important?

(more…)

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By now, you’ve probably read about House Transportation Committee chairman Jim Oberstar’s bill calling into question granting antitrust immunity to international airline alliances. The text of the legislation (HR 831, introduced on February 3) is pretty straightforward, but its intent is masked by a more innocuous prescription.

First, it calls for the Government Accountability Office (GAO) to issue a report on these exemptions addressing these questions: What public benefits do the antitrust exemptions offer, and could they be achieved without offering the exemptions? Has granting exemptions “resulted in reduced competition, increased prices in markets, or other adverse effects”? Have there been increased fares for consumers at hub airports for international alliances? What is the minimum number of worldwide alliances to ensure competition on busy international routes? Should antitrust immunity applications be treated like proposals to merge — and thus be given stricter regulatory scrutiny? Finally, the GAO should recommend whether any existing or proposed antitrust exemptions should be revoked.

Second are the actual teeth in the measure. The bill automatically terminates antitrust exemptions after three years; they must be renewed by the secretary of transportation under new rules that are to be based on the GAO’s own recommendations. This is the most onerous section of the bill, and this is where Oberstar has placed his intentions. Three years is an awfully short time for business planning. If you’re an executive at at U S of Airlines, and you’re staking revenues and future growth on a potential agreement with Air Europe, you need confidence that the agreeement won’t be voided just a couple years down the line because of changing political winds. Political influence and uncertainty in business decisions hamper investment. (Just look at the finance sector — investors are confused because they don’t know how or when the government will next make a major intervention.)

So, if Oberstar’s aim is to hinder these sorts of deals, then even though he’s not banning them outright, he’s on the right track. And make no mistake: Oberstar is trying to crack down on international alliances. He says as much in his remarks upon the bill’s introduction.

(more…)

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Let’s take a look at the “American Recovery and Reinvestment Act of 2009,” passed by the House on January 28 and now under review (with some amendments) by the Senate. In these line items, aviation is currently set to get somewhere in the area of $2.5 billion.

For the TSA:

For an additional amount for ‘Aviation Security’, $1,200,000,000, to remain available until September 30, 2010, for procurement and installation of checked baggage explosives detection systems and checkpoint explosives detection equipment: Provided, That no later than 45 days after the date of enactment of this Act, the Secretary of Homeland Security shall submit to the Committees on Appropriations of the Senate and the House of Representatives a plan for the expenditure of these funds.

For the FAA:

For an additional amount for necessary investments in Federal Aviation Administration infrastructure, $200,000,000: Provided, That funding provided under this heading shall be used to make improvements to power systems, air route traffic control centers, air traffic control towers, terminal radar approach control facilities, and navigation and landing equipment: Provided further, That priority be given to such projects or activities that will be completed within 2 years of enactment of this Act: Provided further, That amounts made available under this heading may be provided through grants in addition to the other instruments authorized under section 106(l)(6) of title 49, United States Code: Provided further, That the Federal share of the costs for which an expenditure is made under this heading shall be 100 percent: Provided further, That amounts provided under this heading may be used for expenses the agency incurs in administering this program: Provided further, That not more than 60 days after enactment of this Act, the Administrator shall establish a process for applying, reviewing and awarding grants and cooperative and other transaction agreements, including the form and content of an application, and requirements for the maintenance of records that are necessary to facilitate an effective audit of the use of the funding provided: Provided further, That section 50101 of title 49, United States Code, shall apply to funds provided under this heading.

For airports:

For an additional amount for capital expenditures authorized under sections 47102(3) and 47504(c) of title 49, United States Code, and for the procurement, installation and commissioning of runway incursion prevention devices and systems at airports of such title, $1,100,000,000: Provided, That the Secretary of Transportation shall distribute funds provided under this heading as discretionary grants to airports, with priority given to those projects that demonstrate to his or her satisfaction their ability to be completed within 2 years of enactment of this Act, and serve to supplement and not supplant planned expenditures from airport-generated revenues or from other State and local sources on such activities: Provided further, That the Federal share payable of the costs for which a grant is made under this heading shall be 100 percent: Provided further, That the amount made available under this heading shall not be subject to any limitation on obligations for the Grants-in-Aid for Airports program set forth in any Act: Provided further, That section 50101 of title 49, United States Code, shall apply to funds provided under this heading: Provided further, That projects conducted using funds provided under this heading must comply with the requirements of subchapter IV of chapter 31 of title 40, United States Code: Provided further, That the Administrator of the Federal Aviation Administration may retain and transfer to ‘Federal Aviation Administration, Operations’ up to one-quarter of 1 percent of the funds provided under this heading to fund the award and oversight by the Administrator of grants made under this heading.

More soon on this. The legislation includes language to make sure that these funds to go immediately ready projects, but although that might have some stimulative effect, it’s hardly the optimal use of infrastructure improvement dollars.

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