David Field: January 2006 Archives

He was no monument, but Ken Mead cast a long shadow around the nation's Capitol, first as the head of transportation investigations for the major congressional watchdog and then, after 1997, as the watchdog for the US Transportation Department itself. And as the Department's inspector general, the post he resigned this week, Ken Mead became the airline industry's 'go-to' guy for separating partisan interests from policy issues and was a trusted arbiter of how an issue should be framed for legislators and what the facts were for policy makers.

His earlier post in the General Accounting Office, now known as the Government Accountability Office, let Mead tell congressional panels what the facts were as issues emerged. His approach was just the facts, as the television detectives used to say on the old "Dragnet" series, and he played a key role in the 1990s rewrite of safety and operating standards for regional airlines in response to the so-called "One Level of Safety" campaign launched by the Air Line Pilots Association to close the gap between major carriers and smaller airlines.

And as inspector general, Mead cut through both political rhetoric and media fog to lay out the facts of issues such the airline industry's precarious finances or the FAA's troubles in modernizing air traffic control. Mead's most recent investigations dealt with maintenance outsourcing, and he both raised red flags and quieted the sillier speculation.

Mead's resignation, after nearly 20 years in the congressional spotlight, surprised most of official Washington, and he offered no explanation and announced no new position. In an Airline Business interview in April 2003, Mead said that security issues had taken up much of his time since 2001, even though the Homeland Security Department was not in his portfolio. And increasingly such intractable issues as the fate of the national passenger railroad, Amtrak, or major highway projects such as Boston's 'Big Dig', were consuming much time.

Democrats and Republicans both praised his work and lamented his departure. Inspector generals were supposed to be "meaner than junkyard dogs", as the late President Reagan once said of them, but his fairness and equanimity meant Mead was no meanie.

Or at least the continent's airlines are. And that For Sale sign is in stark contrast to what's on offer in the States, says British Airways chairman Martin Broughton. Travelling to New York City to address the Wings Club, long-standing aviation organisation, Broughton said the US offer to liberalise ownership and control of US-flag airlines - the offer that is supposed to melt the freeze in transatlantic open skies talks - just doesn't go far enough.

The Transportation Department plan holds out to foreign investors the opportunity to participate in some of the commercial decisions of US airlines -  but the actual control of US airlines would remain in the hands of US citizens. Crucially, US airlines must remain 75% US-owned.
The EU, on the other hand, is offering full, 100% control of its airlines with no limits, exclusions, or caveats as the basis for a new agreement with the US for a transatlantic open aviation area. Broughton says, "The European aviation market currently has more attractive investment opportunities. It's growing and most of its airlines are financially sound without resort to state aid or Chapter 11."

Friends are good to have wherever you can get 'em, and Richard Branson's would-be US venture, Virgin America, has few so far. But one has emerged from the bayous and wetlands of Louisiana: Air Gumbo, which calls itself a "starting-up airline our self". Based in Lafayette, Louisiana, one of the centres of Cajun music, Air Gumbo tells the Transportation Department that Virgin America's plan is good for people, just as its own plan is. Calling itself "a one-frill airline," Air Gumbo has planned to begin flying since early 2003, basing its service strategy on Louisiana-style hospitality on aircraft painted to look like "a bowl of gumbo, including a giant red crawfish, onions, sausage and red peppers," in the words of its founder, named Ralston Champagnie.  As they say, 'You gotta take friends where ya' find 'em'.

When is a strike over? By one union's measure, it's not over until the last picket leaves. And by that measure, the mechanics strike against Northwest Airlines may never end, even though the airline has replaced many members of the Aircraft Mechanics Fraternal Association, which walked off the job in August, about a month before Northwest went into bankruptcy reorganisation. Northwest said it was prepared and would fly through and around a strike, and it was and did.

But the union continued to picket, even up until New Year's Eve, when its remaining 2,223 members voted 56% to reject a contract offer that would have meant the end of the strike. Strikers stood to get four weeks of severance pay and compensation for any vacation time they had on the books.

With a settlement, all strikers who had not taken other jobs would have been eligible for up to 26 weeks of unemployment benefits. Northwest said it would not contest their claims.

But Northwest offered strikers no jobs, only limited recall rights down the road. The airline has outsourced most of the strikers' work and hired permanent replacements to do the aircraft maintenance that it is keeping in-house. Of the 880 mechanics that Northwest is keeping in-house to maintain its planes, 280 are strikers who crossed union picket lines and 200 are Northwest mechanics who were laid off before the strike. They are working under a contract that slashed wages by 26% from pre-strike levels. Meanwhile, about 100 pickets continue to walk the line, because the strike is never over for them.

It's gone. Independence Air, an experiment in low-fares that either was brave or foolhardy, is no more. The carrier, once known as Atlantic Coast, makes its last flight Thursday night after less than two year as a regional jet discounter in the bargain-hungry Northeast.

Its sad story raises some familiar questions, most universally this: can I do the job better than my boss?

The concept of Independence grew for nearly five years, starting when the airline was operating as Atlantic Coast Airlines. For nearly 14 of its 15 years, Atlantic Coast had operated as a regional carrier for United Airlines and later Delta Air Lines, but by the summer of 2000, United was cancelling thousands of flights when United's pilots ran a slow down as part of a labour contract dispute.

Independence chief executive Kerry Skeen, angered that his airline's fortunes were tied so closely to United's, began looking for ways to break away. After United went into Chapter 11 reorganisation, it said it would lower the per-flight fees it paid its regional partners. So Skeen declared independence.

He saw his fleet type as his strength, while most observers saw a flaw in the fleet: 87 Canadair 50-seat RJs that it had used in its Express feeder days. Skeen told Airline Business that he could overcome the higher per seat costs of an RJ operation with lower distribution costs, and higher staff productivity. Maybe.

But fuel costs began their dizzying rise just as Independence launched - flying directly into a vicious competitive response. During the early planning stages, fuel was at about $30 a barrel, rising to the $40 range by the time the airline launched in June 2004. And by mid-2005, it was as high as $70 a barrel.

Meanwhile, United fought back, matching or undercutting the already low Independence fares and using its loyalty plans as a targeted weapon. So Skeen added Airbuses, but by mid-2005 it was too late. Skeen began looking for a buyer, but his deep commitment to being independent had already led him to rebuff a bid by Mesa and made bidders wary of his "For Sale" sign.

The inevitable bankruptcy in November was followed by an intensified search for buyers, and United actually expressed interest though it would not specify what it wanted. By New Year the shutdown talk was intense, and now is a reality.

It is expected that interest will emerge in the airline's Washington Dulles gate leases, especially in its newly completed terminal area there, and the question now is: will United take the gates or will JetBlue and/or AirTran use them to boost their limited Dulles operations?

If United moves to pick up the slack Independence leaves at Dulles, it still leaves a question: could it do a better job than the predecessor?

Listen to Americas Editor David Field comment on the demise of Independence on US National Public Radio and read our original Kerry Skeen interview of June 2004.