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Posts Tagged ‘consumer advocacy’

TEMPE — Echoing Doug Parker’s plea for the government to “do no harm” to the airline industry, C. A. Howlett, US Airways’ top government affairs officer, outlined the challenges the industry — and US Airways in particular — face in the policy environment. His primary focus was the pending FAA reauthorization bill. Put off since 2007, the bill has been passed by the House but no action has been taken in the Senate. “We will maybe get this in calendar year 2009 but no one is betting anything heavy on that particular forecast,” he quipped.

Howlett is in no rush to get the House bill passed, because it has several provisions that give US Airways and other airlines pause. The bill increases the Passenger Facility Charge (PFC) from $4.50 to $7.00. PFCs are used to fund airport improvements but are levied by airlines when passengers buy tickets. This, Howlett said, would add $2 billion to the airline industry’s costs. “Airports have the ability to raise revenues by raising our landing fees and charges,” he added. “Not all airports are the same. . . . [Raising landing fees is]a better way to finance projects.” Besides, he said, airports got $1.1 billion in the stimulus bill, plus $1 billion for security improvements.

Also of concern in the House’s FAA bill are labor issues regarding collective bargaining procedures, the passenger’s bill of rights provisions, and limitations on foreign repair stations. Howlett said that there is a provision inserted at the behest of the firefighters’ union that would cost US Airways alone $15 million per year at their hubs. (more…)

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TEMPE — US Airways chairman and CEO Doug Parker opened the airline’s annual media day with remarks on the state of the airline industry, pointing out financial, political, and labor-related challenges in the year ahead and calling on airline managers to change the way they think about industry competition.

Parker has long been an apostle of consolidation in the industry, leading America West to take over US Airways in 2005 and attempting to take over Delta in 2006-07. He pointed out today that no single airline has more than a 25 percent share of the U.S. airline market. “In a network business, that’s a lot of fragmentation. It’s a fragmentation that makes it hard to produce returns for shareholders,” he continued. “More [integration] will produce even more value.” He said that US’s hostile takeover of Delta attempt spurred the Delta-Northwest merger, and he added that whether US Airways is in mergers or not,  the airline will benefit: “Where the real value occurs is the reduction of fragmentation.”

As for government affairs, Parker said that “this is a business that is overtaxed, that is in many ways overregulated.” In what I interpreted as a veiled reference to House transportation chairman Jim Oberstar (D-Minn.), who has declared war on airline consolidation and networking, he said: “We have many in congress who view aviation as a public good.” Airlines have to focus on little issues like service to individual congressional districts. Congress, he said, wants to harness the industry to serve its own interests. [Not unlike most other industries, these days –ed.]  The regulatory picture looks bleak, he said. “This one is probably not going to get better. . . . The best we can do on this one is hold the line. . . . Our message through 2009 is ‘do no harm.’ Let us compete, leave us alone.” (more…)

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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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Tom Parsons, Randy Petersen, Terry Trippler, Peter Greenberg, and Rick Seaney

From left: Tom Parsons, Randy Petersen, Terry Trippler, Peter Greenberg, and Rick Seaney

DALLAS — Our lunchtime entertainment here at Southwest headquarters was provided by a panel of five airline industry thought leaders who offered their thoughts on the future of the industry. Rick Seaney of FareCompare.com kicked off the discussion. Some of the trends he noted include a “decline in human interaction” through the increasing utility of technology. He also expected “advertising in aircraft like in a subway car” and “a la carte aviation pricing” (the latter I think is a good thing, as regular readers will know). Seaney also announced that he expects to see an airline passengers’ bill of rights soon (PBOR), a theme echoed by other panelists.

Peter Greenberg, the travel editor for the Today show, said that most airlines are adopting an attitude of “we’re not happy till you’re not happy,” and added that it will be hard for airlines to improve customer service with so many unhappy employees. With respect to delays, he said that there will be no meaningful delay reductions until local airport authorities cap operations on their runways to what those runways can actually handle. And he cautioned U.S. airlines to prepare for foreign ownership and even cabotage: “it’s going to happen. Get ready for it.”

On the merits of a PBOR, Terry Trippler of Trippler and Associates said, “Once the government gets involved, they will not stop.” He recounted experience working with the Civil Aeronautics Board in regulation days and said it was not consumer-friendly. The reason airlines offered such extraordinary service (compared to today) is that they could compete only on service — not on fares. Instead of a PBOR, he said, “I want the free-enterprise system to work it out . . . and I think it will. . . . I want the Southwests of the world to be free to go where they want to go, be what they want to be, and charge what they want to charge.”

Frequent-flier-mile guru Randy Petersen of Inside Flyer and Boarding Area contested Trippler’s faith in the private sector to work out the issue: “Free enterprise hasn’t proven to work.” He discussed trends in frequent flier miles, arguing that some of the more negative pronouncements going around today are exaggerated. Finally, BestFares.com’s Tom Parsons talked about how with fares rising, “best fares” will be thought of as “reasonable fares,” and he commented that Southwest is leadeing fare increases, much to the delight of the legacy carriers.

During the Q&A period, friend of this blog and Jetwhine editor Rob Mark called attention to the issue of people being kept on planes for hours on the ramp. Greenberg suggested a renewed appreciation for the virtues of airstairs. Then, he said to my amusement, “Let’s talk about the history of denied boarding. It starts with Ralph Nader being thrown off an Allegheny flight.” More seriously, he said that if airlines don’t embrace common-sense measures like deplaning passengers on long delays, they will get a PBOR. Parsons said that we need a PBOR “with meat on it,” because to date the private sector hasn’t been successful.

Photo by Evan Sparks

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BREAKING NEWS: The Second Circuit Court of Appeals has reversed a lower court decision upholding New York state’s airline passenger’s bill of rights, ruling “that New York’s new state law interferes with federal law governing the price, route or service of an air carrier.” (Here’s my take from when the law was signed last summer, including this prediction: “This bill of rights will likely be found wanting in the court of law, but if not there, it will definitely be found deficient in the court of good business sense.”)

The decision applies the constitutional doctrine of federal preemption to overturn the state law, which clearly goes against the Airline Deregulation Act of 1978 (relevant section codified here): “Except as provided in this subsection, a State, political subdivision of a State, or political authority of at least 2 States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart.

What does the opinion say? “The exceptions to which this provision refers are not applicable in this case. Thus, the PBR is preempted if it is ‘related to a price, route, or service of an air carrier.’ We conclude that it is.” There is an issue of standing, but this is resolved by the plaintiff’s other claim: “Air Transport [Association, the plaintiff] therefore cannot sue for a violation of the statute. Nevertheless, Air Transport is entitled to pursue its preemption challenge through its Supremacy Clause claim.”

The court concludes:

We hold that requiring airlines to provide food, water, electricity, and restrooms to passengers during lengthy ground delays does relate to the service of an air carrier and therefore falls within the express terms of the ADA’s preemption provision. As a result, the substantive provisions of the PBR, codified at section 251-g(1) of the New York General Business Law, are preempted. . . .

Rowe accordingly forecloses New York’s argument and the district court’s conclusion, see Air Transp., 528 F. Supp. 2d at 67, that classifying the PBR as a health and safety regulation or a matter of basic human necessities somehow shields it from the preemptive force of § 41713(b)(1). Onboard amenities, regardless of whether they are luxuries or necessities, still relate to airline service and fall within the express terms of the preemption provision — a conclusion, we note, that even the drafters of the PBR appear to have been unable to escape. . . .

Although the goals of the PBR are laudable and the circumstances motivating its enactment deplorable, only the federal government has the authority to enact such a law.

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FAA administrator-designate (and current acting administrator) Robert “Bobby” Sturgell faced the Senate Commerce Committee for his confirmation hearing today, fielding harangues and questions from skeptical senators but offering little in the way of changes he would make at the FAA.

Sturgell is a former naval aviator (and Top Gun instructor), commercial airline pilot, aviation lawyer, and National Transportation Safety Board adviser. Prior to being named acting administrator in 2007, he served for four years as Marion Blakey’s deputy administrator. In his opening statement, Sturgell praised the FAA’s safety record as the best in the world, touted his financial management of the agency, discussed his plan to recruit new air traffic controllers, and implement the NextGen ATC modernization program. At the hearing, chaired by Senator Daniel Inouye (D-Hawaii), the senators queried him on a variety of topics, which I’ll break down one by one after the jump. (more…)

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bobby_sturgell_portrait.jpgToday I went to the confirmation hearing for Robert Sturgell, the acting administrator and administrator-designate of the Federal Aviation Administration. He received a tense reception by the committee, members of which berated him (rightly or wrongly) over air traffic controller morale and retirements, a passenger’s bill of rights, NextGen and air traffic control modernization, redesign of the New York/New Jersey airspace, small community air service, airline mergers, airline customer service, runway incursions and safety, and more.

I’ll have a full report, including the latest ramblings of Senator Ted “series of tubes” Stevens, later today.

UPDATE: Here’s my full report.

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