David Field: May 2006 Archives

Never exactly straightforward, union-management relations sometimes produce curious alliances, and an odd pairing has emerged as the pilots union at Delta joins with the airline's management to fend off a longtime labour ally. Unions after all would seem a natural ally of the government's pensions watchdog, the federally backed Pension Benefit Guarantee Corporation, but Delta's union, the Air Line Pilots Association, has urged the retirement monitor to back off from protecting its retirement funds. Yes. The Air Line Pilots Association has told the federal government to go away and let its members give up those golden-year guarantees.

The pension agency says that the $285-million concessions deal that the unions agreed on with the airline to help it through bankruptcy reorgansation is not legal. The agreement, which was formally ratified on 31 May, will let Delta terminate their pension plan, and that even a promise of notes worth $650 million to compensate pilots for the termination violates employment and bankruptcy laws.

The pilots' position is that they weren't exactly eager to give Delta the power to end the pensions, knowing that the airline would in all likelihood have to do so to wipe some of its massive debt off the books, but its agreement to get something in return is a better deal than outright losing the funds. In this, Delta pilots are in a similar position to pilots at other troubled and bankrupt airlines such as united, where ALPA members in effect bargained away their retirements to keep their jobs and careers - and where PBGC objected. At Delta, ALPA leader Lee Moak, says, "It is unfortunate that this threat to our careers and our airline now comes from a government corporation created solely to protect the hard-earned benefits of American workers".

Delta chief executive Gerald Grinstein expressed similar sentiments. In a letter to pilots seeking to reassure them, Grinstein said, "Without this deal, Delta Air Lines is at grave risk and the PBGC - and potentially, the US taxpayer and all our employees - will lose out in the long run if this company is put in jeopardy as a result of their objection". But the PBGC, beyond its noble calling to protect pensions, has issues of its own:  thanks to a rash of bankruptcies by airlines, steel companies and others, it is under-funded by more than $20 billion. It could use its Delta opposition as leverage to recoup a greater recovery from Delta in its reorganisation. So, as in many other disputes in bankruptcy, maybe it's about the money.

Yogi Berra, the malapropos-prone baseball player, once declined an invitation to a popular New York restaurant because "it's so crowded, no one goes there any more." With airports, could that be the case? Not in Phoenix, where the main airport's getting crowded. But 'Don't build a new runway. Buy another airport,' was the idea city fathers and mothers at Phoenix had when they saw that Sky Harbor, the number seven US airport, was getting jammed up despite massive expansion plans that added terminals and taxiways. Surrounded on three sides by highways and railroads, the airport is instead going to rely on an airport about 30 miles way on the other side of town, the Williams Gateway Airport. Phoenix pledged to spend as much as $11.5 million on promoting and building up Williams through the government groups that own it. Phoenix Mayor Phil Gordon says the investment will "allow us to help make Gateway a successful reliever airport".

There's plenty of room at Williams Gateway, a converted former Air Force base that now has commercial flights only on tiny Vision, which flies Dornier turboprops to the Las Vegas area four days a week. It's a little unclear through just how the plan will work. How would Phoenix persuade a carrier to split its flights between the two airports? Or how would Phoenix persuade a carrier to fly only to Williams rather than to the larger and far better known Sky Harbor? The city fathers are hoping that the explosive population growth in the Phoenix area, supported by a recently opened highway adjacent to Williams, will eventually make it a logical choice and that niche carriers larger than Vision will choose it.

They point to the development of alternative airports in snarled Southern California, where a once under-used place like Ontario airport grew rapidly after its affiliation with the larger Los Angeles International (LAX). A cargo carrier's choice to operate there helped spur Ontario, and as Southern California's population multiplies, it eventually had enough of a catchments area to support its own flights, and add 'international' to its title. Along the way it's been using the hassles of LAX as a marketing tool, with slogans such as 'Fly Ontario. We won't gridlock you.' Perhaps eventually Phoenix could be paying for ads urging people not to use its airport ("Don't come here. It's nicer at our other airport").

Out in Southern California, where a historical site is anything older than the latest drive-through, they were getting nostalgic the other day. But this passage is noteworthy: production of commercial airliners in Long Beach, birthplace of the DC-3, has ended with the delivery of the last Boeing 717s from the old Douglas Aircraft Co. factory to Midwest Airlines and to AirTran. Douglas, which begat McDonnell Douglas, which begat the MD-95 a decade ago, had become Boeing territory in 1997. The then-recently launched little twin was the last model assembled in the same place that put together the entire DC jetliner series. Douglas opened the plant in 1941, delivering more than 10,000 aircraft for the war effort and another 5,000 for civil use, from the DC-8 on through the -10 series. Boeing did leave in place the big red fluorescent sign on the factory roof urging folks to FLY DC JETS.

The 717, a thoroughly modern version of the DC-9 that helped usher in the era of widespread domestic jet airline service in 1965, never enjoyed the success of its forbears, with only 156 examples in service.  But, said Alan Mulally, the head of Boeing Commercial Airplanes, "The 717 has forever redefined how we build airplanes". Mulally said in a statement. "Our production system is an industry benchmark because of the lean manufacturing and employee involvement practices we pioneered on the 717 in Long Beach", he said. Boeing now uses up in Renton, Wash., on the 737 family. Boeing is transforming its 777 production line in Everett to use a moving line. Conspiracy theories abound to explain how the 717 fell short of estimates that the market for 100-seaters like the 717 would reach 2,000 aircraft. It's worth noting that it was, in the economic and labour sense, a little big airplane competing with bigger and bigger little airplanes, from the 50-seat regional jets that were transforming the industry just as the 717 came to market, to the larger and larger little airplanes, the regional jets that are economically big little airplanes. Still, for a city and a region associated with aviation since 1912, when Glenn Martin started an 'aeroplane and hydro-aeroplane' factory south of Los Angeles, it is a passage.

They call it the Newspaper of Record, or the Grey Lady, but they read it. The New York Times is in fact one of the most trusted papers in the world. So people paid attention when it ran a front-page story on a plan by airframers to get more revenue out of a large airliner by designing in 'seats' that were in fact nearly vertical boards, with the headline 'One Day that Economy Ticket May Buy You a Place to Stand'. An artist's conception or drawing of backboards or vertical seats in a sardine or herringbone pattern illustrated the story. Airbus had been "quietly pitching" the concept to Asian-Pacific airlines for an all-economy A380 configuration for use on shorter routes, wrote the newspaper that helped bring down the Nixon administration and more recently broke a story about secret US facilities for detainees in the depths of Europe.

This is a great story, and woe on the reporters who 'missed' it. They had only one defence: the story wasn't actually true. Within hours of the NYT publication, Airbus was denying the story to anyone who'd listen. Problem was, few were listening, much less asking. Papers across the country and world ran stories about how the greedy price-gouging airlines were laughing all the way to the bank with this plan to keep people 'standing for hours on end with no food or drink.' (This line was from another Times that also has a great name, the one in London); other papers noted that it was just part of a trend such as charging for meals or in some cases charging for seat selection. 'Sardines get a Better Ride', bemoaned the Boston Herald.

It took about a week for The New York Times to run a note saying that Airbus had denied the report and that the paper was investigating. And a few days after that, an editors' note said the paper didn't know that the concept, if it had ever moved to the concept stage, had been abandoned several years back. And this week, the Times' in-house critic ran a critical piece, saying that the paper's "imprecise questions to Airbus elicited mushy responses," but that it should not have run the story with the standing-room only angle. It could have rune a solid story on new technology for seats, said the ombudsman or readers' editor. (http://www.nyt.com)    

We offer this not as schadenfreude, for clearly things like this can happen to the best of publications. We offer this as evidence that the public image of airlines is so low that almost any charge ('they're cheating on maintenance'; 'they're turning off the engines and coasting') can carry credibility. A few of the screed-writers acknowledged that airline profits are perhaps measurably less than those in the gasoline and refinery industry ('For money-losing airlines, no space is the final frontier,' chided the Seattle Post-Intelligencer), but most, as the same P-I scribe, stayed on the road to journalism through resentment. ("Airlines will always have the plush seats for the fat cats..." said Seattle's number-two daily). Yes, but when will airlines stop beating their wives?

Getting off the ground has never been easy for startup airlines, but a high-profile effort by friends of high-flying Virgin chief Richard Branson has been stalled at the regulatory gate. Now, Hamlet, Prince of Denmark, and Arnold Schwarzenegger, the 'Terminator' of Hollywood fame, are involved in the long-running bid by Virgin America to get clearance to start a new low-fares airline.

It's been a decade since one of the worst airline disasters in modern US aviation, but in the 10 years since a ValuJet DC-9 plunged into the Florida Everglades just minutes after taking off from Miami's airport with flammable matter in its hold - oxygen canisters that burst into superheated flame that brought down the used planes, killing all 110 on board Flight 592 to Atlanta - much has changed. Since then, the FAA and the DoT authorities have changed the ways they review a new carrier's start-up application, the way they inspect all airlines, their rules for hazardous cargoes;  fewer new carriers are being proposed but those that are tend to be well capitalised, as was JetBlue and is Virgin America, they tend to have new fleets, as is the case with both JetBlue and Virgin, a and they tend to have highly focused business plans as its the case with the two transatlantic luxury Startups, Eos and Maxjet.

As for AirTran, the airline itself has survived and of course changed. After surviving an FAA-ordered grounding for three months, ValuJet flew again, by summer of 1997 changing its name to AirTran and attracting an entirely new management team. Today AirTran is usually profitable, always filled and attractive to investors and travellers. It has one of the youngest fleets in the industry, a transformation that it planned before the crash with a major order for the MD-95, later Boeing the 717, adding Boeing 737-700s in a later order. But the crash, which was laid chiefly to the fault of the now-defunct contractors who loaded the oxygen canisters, forced the FAA to transform its inspection procedures as public suspicion of low-fare carriers grew. 'They make money by cutting costs on maintenance and inspection,' was the popular belief, one that the media of the day enforced. The truth was different and certainly is now. One enterprising reporter at the Sun-Sentinel in Fort Lauderdale did some work and found that low-fare carriers "are less prone to mishandle baggage, have slightly better on-time records and have about the same accident rates as major airlines". As importantly, he notes that "low-cost carriers serving South Florida have a .021 fatal accident rate - a rate that's lower than but "statistically insignificant" from the .025 rate of the six major carriers".

However, this truth remains unquestionable over the decade: the FAA inspector workforce was stretched thin 10 years ago. The FAA's continuing problems with safety inspectors were highlighted as recently as late March when the acting inspector general of the DoT, Todd J. Zinser, told the Senate that the FAA was not hiring enough inspectors to make up for attrition. Zinser also repeated an IG finding from June 2005 that the inspectors "could not effectively use the (inspection) systems to monitor the rapidly occurring changes" in the airline industry. One change for the better: in the wake of the crash, Congress moved to forbid lawyers from soliciting relatives of crash victims in places like hospitals, morgues, and at crash sites themselves. The legislators also ordered the National Transportation Safety Board to set up a process for notifying kin of victims and ordered airlines to have disaster plans in place.

As for the airline itself, AirTran passengers flying the week of the tenth anniversary were mostly too young to have remembered that 1996 day, but a few who has time to talk at Atlanta's Hartsfield-Jackson International Airport, the AirTran's hub, made it clear that to them, it is just another airline. Considering the media, congressional, and public outrage of 1996, that may not be such a bad thing.

Boston dignitaries are taking a second look at two airports in New England that aren't in Boston but want to use the name. First off was the airport in Manchester, New Hampshire, about 55 miles northwest of Boston's Logan International Airport, and the site of one of the first forays more than a decade ago into the region by Southwest Airlines.

Manchester earlier this year became the Manchester Boston regional airport. At first, officials at the Massport agency in Boston (AKA the "Hub of the Universe") objected then took it as flattery, but now a smaller airport in Worcester, Mass, about 50 miles west of Boston, wants to become the Worcester-MetroWest-Boston airport.

Just what the Massport masters will say is unclear because they operate Worcester on behalf of the city of Worcester, the former factory town where the name idea started. Massport also owns and runs Logan, or more properly the General Edward Lawrence Logan International Airport, presumably the loser in such a name game.

Despite the name, Logan is not a general aviation airport; Logan was a general in the Spanish-American War and WWI who went to Harvard but was still smart enough not to have gotten shot. The Massporters may make note of the fact that Worcester (pronounced somewhere between 'Wuster' and 'Wister') has but one scheduled service these days, and that's to another slightly optimistically named airport, Orlando-Sanford, which is about 20 miles from Florida's Orlando International Airport.

Perhaps the moral is that some name changes are more informative than others: back in the 1970s, Dulles airport added the word 'Washington' after too many travellers landed instead at the Dallas airport, perplexed that men in cowboy boots and hats were at an airport they supposed to be near the capital.

It won the seal of approval from the Air Transport Association the other week as key to replace the FAA's ageing infrastructure of ground-based radars and other vacuum-tube era terrestrial technology. Now this new navigation and surveillance system, dubbed ADS-B, which relies on GPS satellites, has a firm commitment from the FAA itself. With ADS-B (or Automatic Dependent Surveillance-Broadcast), planes use Global Positioning Satellites to determine their exact position and then broadcast their position every second.  The position reports are broadcast to ground stations that cost about $500,000 a piece, a fraction of the cost of a full-scale radar installation, keeping controllers aware of the locations of planes. Pilots also receive the location information if their planes have the relatively inexpensive ADS-B equipment, so pilots can avoid or follow other planes.

The technology has been part of the FAA's suite of modernisation tools for years, but FAA Administrator Marion Blakey's endorsement of ADS-B as "the future of air traffic control" marks the agency's strongest commitment yet to the satellite system as "the backbone of a more automated" system. Without it, she said, "there is no next-generation system."

The FAA wants $80 million in its next budget for ADS-B but in this age of limited resources, the technology has a great advantage in competing for congressional funding: it will allow the FAA to set an aggressive schedule to tear down, remove or replace the ageing radar installations and other crumbling elements of its Air Traffic Organisation infrastructure while adding capacity to an already-burdened system. That was key in the Air Transport Association's recent endorsement of ADS-B as a cost-savings technology that proposed user fees could easily support.

"It's the way we're going to be addressing the horrific congestion we expect to see," Blakey told reporters, calling it "the FAA's moon shot". Blakey said the controller workforce - which was not represented at the announcement - strongly supported ADS-B because the new technology lightened their workload and would not infringe on their separation authority. FAA and its controllers are deadlocked in negotiations toward a new work contract, and the agency says it cannot afford their salary and benefit demands.

FAA official Vincent Capezzuto, the ADS-B programme manager, said the FAA plans a limited installation of the system in a few spots around the country by 2010 at a cost of $600 million to the FAA and airlines, but estimated that savings from lower fuel burn, more efficient routings, and terminal area capacity gains will save them $1.3 billion. She said that by 2014, the new system will cover all areas currently served by radar by 2014. UPS pilot and Director of Operations Karen Lee said the cargo hauler could save $2 million a year in fuel solely in its Louisville terminal area by using ads-b to help make more efficient landing approaches. UPS already uses the technology on 107 of its airplanes, and plans to equip 116 more of its fleet with ADS-B sets. The technology has also produced positive results in the Capstone tests in Alaska, and Australia's aviation authority plans to install it.

Manoeuvring to avoid a collapse in US/EU Open Skies efforts, Bush administration officials 'revised' their proposal to encourage foreign investment in US carriers - a change that the Europeans have insisted on before agreeing to any larger liberalisation of the regime for transatlantic flights. Saying it was "mindful of the strong interest in the proposal expressed by members of Congress," the Transportation Department said it was "clarifying" the ways in which it would determine the actual control of a US carrier - the nub of the issue and the focus of congressional and industry opposition. Opponents, both Republicans and Democrats, and some carriers, most notably Continental Airlines, argued strenuously that encouraging foreign investment in US-flag carriers would threaten national security. Most US-flag carriers can be nationalised or drafted into airlift duties in event of a national emergency.

The new rule, explained a DoT official, would "specifically prevent international investors from having the ability to hire, fire, or control the budgets of senior airline managers with direct responsibility for safety, security, and national-defense airlift commitments" and make clear that US citizens who are members of a domestic airline's "board or the voting shareholders must retain the authority to revoke decision-making authority that international investors may acquire". The official offered this as an example: "The domestic board members might decide to revoke international investors' decision-making authority over scheduling and fleet composition if they felt that those decisions were not in their airlines' best interests." You can find the text of docket here.

The Transportation Department relied on a relatively little-used regulatory process called a supplemental notice of proposed rulemaking, which gives the agency a 60-day window in which to solicit public comments; the agency can act after that or can draw out its consultations further. In any event, the DoT action, or inaction, likely makes it impossible for the EC's Council of Ministers to consider and approve the larger issue of open skies in time for the airlines' winter schedules of 2006-2007, as was originally envisioned. But the move certainly gives the DoT time to assuage continued congressional opposition and to seek to placate Continental and other opponents.

Although an EC official in Washington said he remained "hopeful" that an agreement could be reached this year, Continental attacked the DoT revisions and clarifications within minutes, saying the supplemental proposed rule "is a bad rule designed to clench a bad deal between the European Union and the US". The Houston-based carrier said: "The DOT has abdicated its responsibility to ensure actual control by US citizens, relying instead on the unreasonable hope that US shareholders and directors might reassert the very control DOT is unwilling to require."

Continental and other opponents insist that a change of this magnitude can only be made by Congress, where members of the powerful appropriations committees have already moved to block any such changes. And that is not likely, to judge by continued congressional scepticism about foreign investment in the US, as evidenced by the xenophobia that erupted during the Dubai ports attempt to buy a UK based firm that owned parts of several US ports stevedoring firms and continued suspicion of the motives of investors in high-profile US properties and companies. Or, as one Republican congressman from the Houston area put it, "we can't have a US airline being bought by some people from Nigeria".