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Babbitt attacks over-scheduling, Parker fights back. Everyone whines, nothing changes

20-May-2010

While Congress and FAA have done their part in contributing to delays by not funding and developing NextGen, airlines also carry blame, said Federal Aviation Administrator Randy Babbitt in speaking before the American Association of Airport Executives (AAAE) this week. He also said the agency would not stand by and let airline pilots blame the antiquated air traffic control system for every delay they may encounter.

Indeed, Babbitt set a new tone, becoming more public in criticising airlines.

But it didn’t take long for industry to respond. US Airways CEO Doug Parker, blamed the industry’s problems on government meddling, calling it the biggest threat to the airline business.

“The FAA will not sit back and be the scapegoat in the future,” said Mr Babbitt. “We truly need additional transparency to the facts behind many of our delays. Too often I hear a Captain announce; ‘Well, we’re going to be delayed another 20 minutes until we get a departure slot from the FAA,’ when in reality, they’re waiting because their carrier scheduled 26 departures during a 5-minute window.”

But he also said something that should raise airline hackles even more. Airports will not have to worry about NextGen equipage, he said, since that is all covered under FAA funding of ground-based systems to make NextGen happen. He added that the tipping point for airline equipage for NextGen will be about 50% of all aircraft – a point when upgrading for NextGen will be required in order to compete since FAA will prioritize on those aircraft that are already equipped. The current fleet is about 30% equipped, he said. In addition to the priority for equipped aircraft, FAA is also looking at other methods – such as loans to encourage equipment upgrades.

It is little wonder that the funding mechanism sticks in airline craws, since, as they point out, it is their passengers, among other aviation users, who pay into the Aviation Trust Fund, the source for the FAA funding for NextGen. Yet, Congress refuses to tap the trust fund for the estimated USD4 billion that the industry requires for airborne equipage of ATA members, according to the industry’s failed request for stimulus funds. A heavy irony indeed, especially as airlines have equipped on their own dime before, only to find their aircraft retired before NextGen or the next big technology jump was ready.

Randy Babbitt estimates total industry equipage at about USD7 billion. “We need to find a way for industry and government to cooperate in efficient and creative financing to equip for NextGen, which will provide real benefits for all stakeholders and enable us to better manage capacity and improve performance,” ATA said yesterday.

While the FAA cannot be let off the hook for delays in both modernisation and in current operations, Babbitt is right about airline scheduling and it is for this reason that it is fairly easy to predict NextGen will not solve delays related to overcrowding in the air traffic control system.

NextGen not the holy grail - 40 years on

NextGen is not the holy grail in solving operational problems. The fact is, if there were really the political will to make it happen, we would have it by now. After all it has been 40 years since we embarked on this effort.

Even if NextGen actually managed to become a reality, increasing efficiency, the fact is delay problems lay in over-scheduling and there is nothing to stop airlines, which have always scheduled to the max, from reverting to type just because there are some new bells and whistles.

Mr Babbitt however, promised that his efforts to accelerate NextGen will see most of the benefits being deployed between 2016 and 2018. "Our aircraft use 19 billion pounds of kerosene annually," he told reporters later. "NextGen can save 5% – that's a billion gallons of fuel, and at $2 a gallon, it's $2 billion worth of savings a year."

In the meantime, that is a lot of fuel not to be saving though.

"Commit to more sensible scheduling practices"

“Runways and modernizing the system won’t get us where we need to unless we commit to more sensible scheduling practices,” Mr Babbitt told the airport executives. “We’re seeing scheduling practices in Atlanta, Chicago and San Francisco that are exhibits A, B and C of what not to do. If you don’t do your part to keep the system moving, the gridlock and delays will lie squarely at your feet, which is where they belong.”

In fact, Mr Babbitt seemed to indicate that any investments to improve the air traffic control system will only be wasted without rationalizing airline schedules. “We shouldn’t invest time, energy and dollars for efficiency gains and delay reductions so that a schedule can be packed beyond what the system can handle,” he said of the long and frustrating battle between airlines and agency in managing the system. “That’s two steps forward and three steps back. If you have 20 flights scheduled to take off in a single 5-minute window, you’ve just created a bow wave of delays that’s likely going to last all morning, maybe all day. It’s bad for the passenger, and it’s just plain bad for business; everyone’s business.

“When the airport can handle 120 in an hour, and you try to have 80 go in the first 20 minutes.” he continued. “It’s not going to work. There will be delays. We really need to give some thought and work with our carriers; they’re entitled to use every bit of the airspace, but we all need to use it responsibly. We will have to work better together. De-peaking is the answer here. Check the departure boards at our busiest airports, and you’ll see what I’m talking about. This is a cooperative effort, and all the parties involved need to take responsibility.”

But "demand drives carrier scheduling decisions"

“Demand drives carrier scheduling decisions,” said ATA Spokesperson David Castelveter, in response. “Our members have in the past, and continue to focus on de-peaking their schedules, but they also must schedule flights to meet the expectations of consumers who want to fly at convenient times. The FAA needs to focus on providing the air traffic management support that will enable carriers to meet periods of high demand. We remain firmly committed to working collaboratively to solve these issues.”

Consequently, the airlines are right, too. They are just scheduling to demand and, for their part, they are trying to de-peak at critical airports. Even so, one of the major problems with the current industry is spoiling passengers who have the unrealistic expectation that they should have the cheapest fare, and be able to fly anytime, anywhere to boot.

The executive rhetoric over capacity discipline, optimised scheduling and earning a return on invested capital gives a modicum of hope that we are entering a new airline era - which would be a refreshing break from the long history of losses. But, rationalising schedules at congested airports has to be a part of the equation and despite small de-peaking efforts by airlines, more needs to be done. Mergers and consolidation may be a step in that direction, but they will not solve the problem.

Airline delays are estimated to cost the economy USD40 billion. It is impossible that NextGen will reap the entire USD40 billion, which means that Mr Babbitt is ultimately right. The right approach is for a cooperative effort, wiht all parties taking their fair share of responsibility.

Speeding up NextGen critical for industry success: Doug Parker

As if in counterpoint, Mr Parker’s comments almost seemed to respond to Babbitt's, in detailing how government actions hamper industry success.

Speaking before the Washington, DC Aero Club, Parker cited proposed increases in the passenger facility charges that are part of the House FAA reauthorisation legislation as well as its provision calling for the sunset of antitrust immunity for international airline alliances after three years. As the industry and United Chair Glenn Tilton have been saying all along, Mr Parker said that speeding up NextGen was critical for industry success. He also cited the concessions required by the FAA to win approval for the US Airways-Delta slot swap deal at LaGuardia and Washington National.

Finally, he called last week’s ruling by the National Mediation Board changing the rules making it easier for employees to gain union representation “a disturbing state of affairs.” See related report:
Delta merger challenged by union rule change. ATA files suit

AAAE President Chip Barclay attacks critics of PFC increases

It is not without irony that so many travel reporters have noticed that the industry complaints about increased passenger facility charges, stand in marked contrast to the ever increasing airline-imposed ancillary revenues fees. Certainly, that was not lost on AAAE President Chip Barclay, who refuted airline claims against passenger facility charges.

“Airlines are opposing a modest PFC increase even though they collected $7.8 billion in ancillary fees last year,” he said in a letter to Congress, in response to a similar letter by airline CEOs urging opposition to the increase which would bring the PFC from USD4.50 to USD7. He implied that, having only just discovered the passenger automatic teller machine, airlines are now objecting to others making withdrawals.

"Our airline partners argue that raising the PFC cap would 'raise travel costs, thereby harming both consumers and the travel/tourism industry,'" Mr Barclay wrote. "However, the airlines apparently do not have similar concerns about the dramatic increase in travel costs from baggage fees and other ancillary fees." He pointed out ancillary fees have risen from USD5.5 billion in 2008 to USD7.8 billion in 2009, adding that PFCs, on the other hand, have remained unchanged since the original USD4.50 was set while revenue has declined more than USD300 million between 2007 and 2009 to USD2.5 million. Airports maintain that inflation and the reduced revenues resulting from the economic implosion has reduced their purchasing power and their ability to “make improvements that would benefit air carriers and their passengers.”

"Airport infrastructure needs are well documented as are the serious hurdles that airports face in trying to meet those needs," Barclay added. "In the face of growing federal budget constraints, PFCs offer critical, local self-help to build the infrastructure that is necessary to serve the airlines and the traveling public now and into the future. Unfortunately, some of our airline partners are so focused on the next quarterly financial report that they have lost sight of the long-term needs of the system - needs that may not be met in some locations absent a modest increase in the PFC."

Still too much whining from airlines - or from their detractors?

Airlines were definitely on the defensive yesterday, with Mr Babbitt attacking over-scheduling and airports challenging ancillary revenue increases.

The game of blame tag is an old one for the airline industry, which has often attracted the criticism that every problem is someone else's fault - mostly the government's. In the case of the US' pitiful airways infrastructure it is hard to find fault with the airlines' constant complaints.

They don't seem to have been particularly effective, as the pace of change would make a snail contemptuous, yet at least there is some pressure to act, where otherwise Congress appears content to procrastinate whenever budgetary expenditure is needed.

The PFC is largely a peripheral issue and, if the airlines really want to move things along, they might be well advised to focus attention on the big picture items - thereby making themselves smaller targets when it comes to deflecting blame.

As for unrealistic scheduling, well there surely a little blame must be shared. No, Mr Babbitt, it is not all the airlines' fault that the public wants more slots at peak times. In the absence of more disciplined allocation procedures, it is quite unrealistic to suggest that any airline should place itself at a competitive disadvantage, where others would take advantage of their deference. But then again, could not the ATA perhaps take a leadership role here...


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