“There’s no part of our operation that government can’t find a way to improve.”

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.

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What Ray LaHood has in common with Rod Blagojevich

. . . besides being an Illinoisan. From John Kass at the Chicago Tribune comes this dispiriting item about Obama’s DOT nominee Ray LaHood:

Obama selected outgoing Illinois U.S. Rep. Ray LaHood (R-Combine) for the post of secretary of transportation, putting LaHood in charge of Obama’s planned trillion-dollar public works bonanza being sold as a jobs bill.

“Every dollar that we spend, we want it spent on projects that are there, not because of politics, but because they’re good for the American people,” Obama said. “If we’re building a road, it better not be a road to nowhere.”

Not because of politics? What does the great reformer take us for, a bunch of chumbolones?

What Obama forgot to mention is that with LaHood in charge of the roads, they’ll lead to one place:

Bill Cellini.

Cellini, the Republican boss of Springfield who has been indicted in the Blagojevich scandal for allegedly shaking down the producer of the movie “Million Dollar Baby,” is a strong LaHood ally. Cellini runs Sangamon County, and LaHood has enjoyed Cellini’s political support.

They also joined to help oust the last true reformer in Illinois politics, former Sen. Peter Fitzgerald, the Republican who was denied an endorsement from his own state party after he brought federal prosecutors to Illinois with no connection to the bipartisan Combine that runs things here.

Republican money man Cellini is not only the Chicago political connection to machine Democrats and Mayor Richard Daley‘s City Hall—and a Blagojevich fundraiser—he’s also the boss of the Illinois Asphalt Pavement Association.

H/T: Frum

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LaHood’s legislative record on aviation

One of the surprises about the rumored Ray LaHood nomination for secretary of transportation — set to be announced tomorrow — is that he has so little transportation experience. He is on the powerful House Appropriations Committee, and would thus be well positioned to oversee Barack Obama’s planned burst of infrastructure spending. LaHood did serve on the Aviation Subcommittee back in the late 1990s, and during that time, he cosponsored — which, in Congress, usually means you slapped your name on the bill for some political reason — several aviation-related pieces of legislation:

• Federal Aviation Administration Revitalization Act of 1995 (HR 2276, 104th Cong.). This legislation would have made the FAA an independent agency no longer under the authority of the DOT, although DOT approval would have been required for FAA rulemaking. Also gutted the aviation staffers at DOT who report to the secretary. This legislation passed the house in 1996 before stalling in a Senate committee.
• Airline Passenger Safety Act of 1996 (HR 3618, 104th Cong.). Prohibits chemical oxygen generators from being transported by aircraft. Went nowhere in the House.
• Aviation Disaster Family Assistance Act of 1996 (HR 3923, 104th Cong.). Requires the National Transportation Safety Board, which investigates airplane crashes, to appoint a liaison for families of plane-crash victims and name a national nonprofit to handle post-crash care for victims’ families. Also requires airlines to submit plans for their dealings with victims’ families and urges state bar associations to forbid their ambulance-chasing members from contacting victims’ families for thirty days. Passed by House; not taken up in the Senate.
• HR 2252, 105th Cong., directs the transportation secretary to retaliate against foreign countries that violate air service agreements with the U.S. with respect to cargo carriers. Hearings were held.
• Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (HR 1000, 106th Cong.). The FAA reauthorization bill.
• HR 4529, 106th Cong., which amends federal aviation law to prevent people with criminal convictions that “indicate a propensity for placing contraband aboard an aircraft in return for money” from holding aviation-security jobs. No action.
• Small Airport Safety, Security, and Air Service Improvement Act of 2002 (HR 1979, 107th Cong.). This bill, which never made it past the Senate, would have provided funding for construction of control towers and installation of equipment.

Interestingly, LaHood voted “no” on the 2007 FAA Reauthorization Act — the as yet incomplete FAA legislation. The House’s version, spearheaded by Rep. James Oberstart (D-Minn.) did not include a provision for user fees for air traffic control services, unlike the Senate version that saw the two houses at loggerheads. Why did LaHood join most Republicans in voting no? I’ll try to find out.

LaHood is an Arab-American (of Lebanese and Jordanian descent). In 1998, he vociferously opposed the use of profiling in rooting out potential terrorists or hijackers. He insisted that screening systems be entirely non-discriminatory.

Adrian Schofield offers a couple of notes over at Things with Wings. One may be related to one of the bills above and involves a vigorous response on international air services agreements. The other places him in opposition to FAA commercialization or restructuring in 1995.

Now, the secretary of transportation works on more than aviation. But the FAA is the largest subagency within DOT, and LaHood’s aviation record is pretty thin on the ground.

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Ray LaHood nomination would mean short shrift for DOT

I’ve got a busy morning, so more on Ray LaHood’s transportation (and especially aviation) record soon, but I’ll just say that the likely appointment of retiring Republican congressman Ray LaHood as secretary of transportation seems to indicate that Barack Obama does not plan to devote a great deal of attention to transportation issues — much like our current president, whose cabinet’s token Democrat was also at DOT.

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Getting our “infrastructure” priorities straight

It’s pretty common knowledge that the United States has for years underinvested in “infrastructure” — from the power grid to physical plants to transportation — and thus one of the first priorities of the next administration should be to devote massive resources to repairing infrastructure. And I’m sure the commuter inching forward on a Dallas interstate on his way home from work or a passenger on a regional jet at LaGuardia groaning as yet another thirty-minute delay is announced would agree. And Barack Obama has endorsed a massive infrastructure spending program in hopes of stimulating the economy. So then — let’s get busy! Where to start?

As Bob Poole writes in yesterday’s WSJ, the mayors of 427 cities have helpfully identified more than 11,000 “ready-to-go” infrastructure projects worth $73 billion. Okay, there’s a start. And what kind of projects are these? Poole lays out several of them: a “waterfront duck pond park,” community centers, tennis centers, “life style centers,” a “Grand Central Station” in San Francisco for a rail line that doesn’t exist, and the like. (More “infrastructure priorities are listed here.) That is, the mayors have, in a recession and what is widely acknowledged as a crisis in infrastructure, presented the taxpayers with a gold-plated wish list. No doubt Congress would be happy to pony up the money in exchange for naming rights.

Why are these projects even on the list? For several reasons. First, they’re discrete and local. Highway, airport, and major transit projects often require consultation with and the involvement of multiple authorities, making it harder for the spending to have a quick impact — even if its long-term effect would outweigh that of a duck pond by a factor of, oh, infinity. Another reason might be the “spaghetti” approach: throw it at the wall to see if it sticks. No harm in trying, right? ask the mayors. (No harm, indeed, except perhaps the derision of a few lowly bloggers.)

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Reason: keep Mary Peters at DOT

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

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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A pilot’s take on Duane Woerth rumors

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.

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Bankruptcy, not bailouts

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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A memo to the next president

If you’re a regular reader of the Aviation Policy Blog (and I hope you are; the best way to keep up to date is to subscribe to my feed), you’re well aware of how aviation is playing out in the 2008 election (or the extent to which it isn’t). In today’s Wall Street Journal, “Middle Seat” columnist Scott McCartney takes on what the next president will need to do. I commend this read to you. First, the stakes of inaction on aviation issues:

Last year, nearly one-quarter of all U.S. airline flights were delayed, and the average delay was 55 minutes, according to the Federal Aviation Administration. Passengers lost 112 million hours of time spent waiting. . . . And that doesn’t count the delay already baked into airline schedules. On average, U.S. airline flights were scheduled 15 minutes longer in 2006 than in 1997, based on the same distances. . . . Delays cost airlines $8.1 billion in direct operating costs in 2007, mostly burning extra fuel and paying crews for the extra time. That’s more than the U.S. industry has ever earned in a year. . . . More than 1,600 flights last year sat for longer than three hours waiting to take off, according to the Bureau of Transportation Statistics. More than 4.4 million bags were mishandled. Complaints about airline service were up 65% last year.

McCartney outlines several steps that the next president can take. He also underscores the urgency of making these changes now: “The time to fix it is now, when the economic downturn has given the system some slack. This is when it’s easiest to replace, repair and expand.” We didn’t do this during our last downturn, after 9/11, and it hurt badly in 2006-2007. So, what does he recommend?

• Air traffic control modernization. “The current time-table for modernizing air-traffic control covers 20 years, and the history of the effort is filled with delays. What’s needed is a full-court press. He then quotes Marion Blakey on how viable ATC transformation is, but her five years at the helm of the FAA and in charge of NextGen are conveniently glossed over.
• Split the FAA into two agencies. “Many industry watchers would like to see the FAA split into two parts: a safety regulator for airlines, airports and air-traffic controllers, and a separate air-traffic-control system run in a business-like manner by a not-for-profit entity, not government.” That includes this industry-watcher. “One major reason to split the FAA is that the agency today is both the safety regulator and the operator,” McCartney continues. “In air-traffic control, the FAA regulates itself, leading to potential conflicts of interest.” He cites Dorothy Robyn’s excellent paper this summer for the Brookings Institution’s excellent Hamilton Project. He also quotes former Continental chairman Gordon Bethune, who carries the flag for ATC privatization/commercialization: “Bethune . . . hopes the new president will push for ‘a quasi-government agency to build and operate a modern air-traffic-control system.’ Bond financing could be used for new equipment instead of asking Congress to pay for it year by year.”
• Other issues. McCartney urges measures to make TSA screening less invasive and troublesome; passenger-bill-of-rights-type measures, a “better plan” to ease congestion at New York-area airports, “a Transportation Secretary with muscle to fix the problem, not prolong it,” and incentives for greener, cleaner aerospace R&D.

To McCartney’s memo, I would add the following items:

• A new FAA administrator, hired from outside the agency, with respect from industry and labor. Labor-management relations at the agency are beyond toxic, and promoting current management (as Bush did when he nominated Robert Sturgell) is only going to inflame the situation. To the extent that Barack Obama has engaged in aviation issues, he has been entirely aligned with the air traffic controllers; he needs to demonstrate his independence by picking someone who will command the controllers’ respect and negotiate with them while still defending the prerogatives of the FAA’s “customers”–system users–and taxpayers.
• A commitment to an alternative funding structure for the FAA. Ticket and fuel taxes are not enough. The FAA needs a user fee system. This will align use of the system with the cost of providing ATC services. The current administration has admirably pushed for user fees; perhaps, in an environment less rabidly partisan than that existing between Congress and the White House, we can see rapprochement on this crucial priority.

Commentators rightly say that thirty years out, we’re not going backward on airline deregulation. But will the next president take crucial steps in pursuing “Deregulation 2.0,” the critical public-sector overhaul that will make our aviation system more competitive, productive, and efficient for decades into the future? If the next president takes on established interests and pursues these reforms, future generations of fliers will thank him.

A Flier’s Plea to the New President [WSJ]

See also the LA Times and FlightBlogger guides to the politics of air travel.

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Obama, McCain advisers on transportation issues

Top policy advisers to Barack Obama and John McCain differed on key transportation issues at a forum in Washington this morning, but they agreed, in the words of McCain adviser Douglas Holtz-Eakin, when it comes to transportation, “the ratio of importance to discussion on the campaign trail is high.”

Downey

Mortimer Downey, Obama’s senior transportation adviser and Bill Clinton’s deputy secretary of transportation, emphasized Obama’s detailed transportation plan, which I blogged about here. “I can’t recall a candidate who’s put together such a full-fledged transportation plan,” he said. Among the infrastructure problems the next president will tackle will be to “have an air traffic control system that works.”

Downey identified three “vehicles” through which Obama would improve transportation: First, a short-term boost in spending to create jobs and provide economic stimulus. Second, a ten-year, $60 billion “National Infrastructure Reinvestment Bank.” Third, a federal highway spending bill (due next year) with fewer earmarks and a systemic approach.

Holtz-Eakin

Holtz-Eakin, a former director of the Congressional Budget Office, spoke of McCain’s agenda (or lack thereof) in two categories: process and the federal role. On process, he noted McCain’s opposition to all earmarks and his support for economic review, return-on-investment analysis of transportation projects, and “performance and accountability measures.” Holtz-Eakin emphasized the need to identify properly the federal role in transportation planning and spending in relation to local and state agencies and “the important role of the private sector.”

As for Obama’s National Infrastructure Reinvestment Bank, Holtz-Eakin said “it isn’t something [McCain] supports . . . very reminiscent of Fannie Mae and Freddie Mac.”

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