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Ancillaries, passenger rights, safety, Next Gen under review in Senate reauthorization

18-Mar-2010

Washington is lustily eyeing airline ancillary revenues with the House and Senate addressing it in different ways. The Senate is taking a consumer affairs approach in its Federal Aviation Administration reauthorization bills which may actually be enacted this spring….maybe, we hope, there’s a chance….oh, and cross your fingers.

At a time when declining passenger loads means fewer revenues for the Aviation Trust Fund, the House already wants a cut of the ancillary revenues and has asked the General Accountability Office to study the subject with a report due out in April. The top five airlines are expected to make USD1.76 billion this year.

Meanwhile, the Senate wants to ensure that consumers know the bottom line of an airline ticket before they buy. That means that the airlines must ensure that all fees – bags, seating assignments food, blankets, pets, unaccompanied minors – for each itinerary are clearly outlined before a consumer has to make a decision.

A magnet for a host of non-aviation amendments, the Senate version of the reauthorization legislation is now being considered. Now, New Jersey Democrat Robert Menendez wants to require the new consumer protection be part of the two-year reauthorization. The bill already holds various consumer passages, codifying the new delay rules that are about to take effect at the end of April requiring airlines to not only release passengers after a three-hour tarmac delay, but to post their delay rates on their web site.

Finally, finally, the Senate has turned its attention to the USD35 billion Federal Aviation Administration reauthorization legislation that has lain fallow for so, so long – since the expiration of the last reauthorization legislation in 2007. Planning of every kind fell victim to the series of no less than 11 continuing resolutions (CR) since then that funded the agency and its work on NextGen.

After taking up its version of the bill last week, the Senate was to resume deliberations this week against a deadline of the expiration of the latest CR at the end of this month. What is so interesting is Senate leadership – including Marjoity Leader Harry Reid – has called the measure a high priority.

Safety, pax rights, NextGen

A lot of hopes are riding on this bill which will not only address the FAA budget and funding NextGen but all the safety concerns that have been roiling on the surface of the last year. Included in this is pilot training and hiring requirements resulting from the crash of Colgan Flight 3407. Also expected to be part of the bill is a host of passenger consumer measures despite the fact that the Department of Transportation is in the midst of gathering comments on its new tarmac rule now set to become effective on June 4. Legislators want to ensure the permanence of passenger rights rules as do passenger advocates.

Among the safety measures is extending the disclosure requirements first passed in the Pilot Records Improvement Act (PRIA) to include all pilot records held by the FAA. The measure also calls for annual, surprise inspections at regionals and would double FAA inspections of foreign repair stations working on US aircraft to twice annually. New York Democrat Charles Schumer will include his amendment calling for increasing the minimum flight experience for a first officer to 1,500 hours, up from 250.

You want it, you pay for it

If passed, airlines would be on their own – once again – to equip their aircraft to take advantage of the advances of NextGen. This sticks in their craw because they have done so in the past only to see the avionics retired, unused, as the jets age out or are retired during economic downturns. The dire economic state of the industry could delay investment in avionics, once again putting NextGen into a chicken-and-egg situation that has dogged it for 30 years. FAA prefers to reward those who invest by giving them priority in the system. But industry counters that the benefits won’t come for years. Legislators are loath to set a precedent in paying for the equipment since that has previously been borne by the industry.

The bill provides USD500 million annually to fund the development of NextGen through 2025, well short of the USD20 billion the FAA wants to development the heart of the system. Last week, FAA said its cost/benefit analysis shows the reduction in delays, estimated at 20% and the 1.4 billion gallons of fuel airlines would save would have the investment paying for itself by 2018.

At the same FAA Forecast Conference AMR CEO Gerard Arpey expressed dismay that airline equipage was not included in the stimulus bill. The industry has estimated the contribution to the economy would equal tens of thousands of jobs. It sees a need for USD7 billion (USD1.5 billion annually) through 2015 for equipage. He complained that billions are being spent for high-speed rail out of the general fund. “Why not pay for high-speed aviation,” he asked, only to receive a political lesson from DOT Secretary Ray LaHood, warning the industry not to dis high-speed rail. In fact, they are not. They just want to know why such programs that are not “shovel ready” are being funded when equipage could lead to so many jobs in the near term.

An amendment advanced by Democratic Senator Jay Rockefeller would extend fuel taxes through 2013, two years beyond the life of the bill itself, increasing jet fuel tax to 35.9 cents per gallon. Industry is backing the measure, despite the fact it increases the general aviation tax. 

Should the full Senate final pass the bill, the next stop is reconciliation with the bill passed by the House last year. The bill overcame a hold last week when Tennessee Republican Senator Bob Corker placed a hold on it protesting against the House version which would make it easier for Fed Ex employees to unionize. [Wall Street Journal]


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