Thursday, September 28, 2006

News Roundup

Virgin Atlantic Press Release on Aviation and Climate Change

On September 27, Virgin Atlantic put out a press release giving specific ideas about how aviation carbon emissions could be reduced.  This follows an announcement last week of Virgin Group’s plans to invest $3 billion in renewable energy initiatives over the next ten years (by using the profits from its transportation related businesses).  Virgin’s ideas include: (1) creating "starting grids" at airports (that would be close to runways) where aircraft could be towed to before starting their engines; (2) "continuous descent approach" procedures for aircraft where they would begin their descent from altitude earlier (thus reducing fuel burn); (3) reducing aircraft weight; and (4) reducing air traffic control delays (through projects such as the "Single European Sky").

The debate surrounding the best way to encourage aviation to reduce its carbon emissions is just beginning to heat up.  The EU is pushing to include aviation in its Emissions Trading Scheme and the European Commission is expected to publish a legislative proposal in this area by the end of 2006.  The US has objected to the EU's proposal to include aviation in its Emissions Trading Scheme as the proposal might impact US carrier flights operating in Europe as well.  The US believes that the International Civil Aviation Organization is the best forum to coordinate any efforts to reduce carbon emissions from aviation.  This issue is also on the radar of groups like the World Economic Forum, who are interested in promoting awareness of the complex technological, jurisdictional and regulatory issues posed by the wide range of policy solutions that have been suggested.

Northwest Airlines/Flight Attendants Right to Strike

Stymied by the court ruling on September 15 blocking their union from striking Northwest after concessionary contract terms were imposed on them during the bankruptcy process, the airline’s flight attendants (who are represented by the Association of Flight Attendants) have decided to appeal to the National Mediation Board (NMB) to have an impasse declared in their talks with the airline. While the NMB declined to release the parties from mediation at this time, it is expected that they will eventually do so, enabling the union to legally strike.

United Merger Plans?

Crain’s Chicago Business reported this week that United Airlines has hired advisors from Goldman Sachs to look at possible merger targets.  While many in the press have speculated that Continental would be a possible merger target for United, any deal with United would be complicated by the "golden share" that Northwest has in Continental that would allow them to effectively veto any merger deal.  If a large-scale merger proposal (Continental, Northwest, etc.) is made by United, it would likely be the first merger with any significant route overlap (the America West - US Airways deal created a barbell shaped route network with little overlap) since the United-US Airways deal that collapsed in 2001.  It will be interesting to see if the DOJ takes a less rigorous approach to antitrust clearance of a merger than it took during the earlier round of merger proposals six years ago.  Finally, United is effectively precluded from merging with what might be the best partner of all, Lufthansa, as the NPRM that would liberalize foreign ownership of U.S. air carriers has been held up from becoming final until at least the end of the year.

China Route Case

On September 25, each of the combination carriers (American, Continental, Northwest and United) participating in the 2007 China Combination and All-Cargo Frequency Allocation Proceeding were required to have filed their direct exhibits supporting their proposed service.  We will have a full analysis in an upcoming blog posting of the most powerful arguments that each of the carriers made to support their service.

Additionally, there was an interesting article on the China route case by Laura Meckler, on page A4 of the September 25 Wall Street Journal, entitled "Airlines Lobby Full Throttle for China: U.S. Carriers Enlist Supporters to Sway Decision on Awarding the Lucrative Route."  Given the economic success of US-China routes in the past, airlines are enlisting as much civic support as they can to bolster their applications.  According to the article, "As of late Friday, more than 1,600 letters had been submitted to the Department of Transportation supporting one or another application.  Airlines also plan to submit names of tens of thousands of people who have added their names to online petitions on the carriers’ web sites."

Further Resources:

1) American direct exhibits

2) Continental direct exhibits

3) Northwest direct exhibits - Vol 1, Vol 2

4) United direct exhibits

September 28, 2006 | Permalink | Comments (1) | TrackBack (0)

Monday, September 18, 2006

Northwest Airlines/Flight Attendants Right to Strike Ruling and Midway Privatization

Northwest Airlines/Flight Attendants Right to Strike Ruling

According to Ted Reed of the Street.com, a U.S. District Court Judge ruled last Friday in favor of a move by Northwest Airlines to impose contract terms on its flight attendants and issued a temporary injunction to keep them from striking.  Judge Victor Marrero concluded that a strike would hurt the traveling public and could seriously harm the fifth-largest airline, which is reorganizing in bankruptcy court.

Marrero said that the Association of Flight Attendants hadn't completed the procedure that labor law requires before a strike can occur because it wasn't formally released from mediation.

He referred the case back to U.S. Bankruptcy Court Judge Allan Gropper, who ruled last month that flight attendants had the right to strike.  However, at the time, Gropper said he lacked the jurisdiction to issue an injunction preventing a work stoppage, and he encouraged an appeal.  Marrero said Gropper does in fact have jurisdiction.

Judge Marrero also said that Northwest has "demonstrated at least fair ground for further litigation of its claim, if not a likelihood of success on the merits."  Marrero said that in light of Northwest's "prospects for reorganization and the impact on the traveling public, the hardships tip decidedly in favor of Northwest."

The Association of Flight Attendants has indicated that it will appeal the decision.

Further Resources:

1) Full Street.com article

2) Northwest Airlines press release responding to the decision

Midway Privatization

A preliminary application was filed with the FAA by the City of Chicago last Friday indicating that the City would like to participate in an FAA pilot program for the leasing or selling of airports.  If the City of Chicago follows through with the process, Midway would be the first major U.S. commercial hub airport to be privatized under this program.

No timetable has been set by the City for the completion of the process as the airlines and FAA must give a series of approvals.  The FAA indicates that it will make a preliminary decision regarding whether or not it "accepts" the application within thirty days.

The City of Chicago envisions that it would use the privatization proceeds for "construction and maintenance of critical infrastructure within the City as well as to address other critical city financial obligations and requirements."

Although five other airports have filed applications to participate in the FAA’s Airport Privatization Pilot Program since the program began in September 1997, only one airport with commercial service (Stewart International Airport in New York) has received final approval from the FAA.

Further Resources:

1) August 2004 FAA report on the Status of the Airport Privatization Pilot Program

September 18, 2006 | Permalink | Comments (0) | TrackBack (0)

Thursday, September 7, 2006

WSJ Article on KLM and 2006 Aviation Leadership Summit

In Tuesday’s Wall St. Journal, there was an excellent front page article by Daniel Michaels entitled "Behind Easing of Airline Rules, KLM’s 20-Year Urge to Merge."

According to the article: "KLM’s long and winding search [for a merger partner] shows how the international airline industry, unlike so many other global businesses, has been resistant to consolidation, despite its inefficiencies.  At the same time, KLM has also demonstrated what the future might look like.  With each foiled merger attempt, KLM helped rewrite aviation laws, sparked the creation of global alliances and began breaking down national barriers.  Many innovations in air travel stem from its experiments."

The International Aviation Law Institute and the Chicago Council on Global Affairs (formerly the Chicago Council on Foreign Relations) will host an invitation-only conference on Thursday, October 19, 2006 that will address this important objective of removing global regulatory barriers to consolidation.  The 2006 Aviation Leadership Summit, chaired by United Airlines’ CEO Glenn Tilton, will provide industry leaders and senior policy makers with an opportunity to engage in a dialogue on consolidation and other critical issues transforming the industry.

The conference, entitled "Sustainable Aviation Policies for America and the World," will build on the success of the inaugural Aviation Summit in April 2005 by delving further into a discussion of regulatory and market innovations that may give new life to the industry and propel economies forward in developed and emerging regions.  With air transport issues gaining traction in multilateral and bilateral trade negotiations around the world, we hope that the industry’s decision makers can come together and set forth recommendations for the revitalization of global aviation.

September 7, 2006 | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 5, 2006

Guest Blog - Are We Really Safer in the Skies Today?

We would like to thank Prof. Jon A. Krosnick for providing us with our first guest blog.  Prof. Krosnick is Professor of Communication, Political Science, and Psychology and Director of the Methods of Analysis Program in the Social Sciences at Stanford University.  He was a consultant to the National Aviation Operations Monitoring Service project.

Among the many challenges that face air travelers these days (long lines, weather delays, cancelled flights, and crowded planes), there is something good to think about: passenger deaths in crashes of U.S. commercial jet aiplanes have been much more rare during the last 5 years than at any prior time in modern aviation history, suggesting a dramatic increase in the safety of domestic air travel.

Wonderful news, if it’s true.

But we can’t tell simply by inspecting the number of aircraft accidents per year.

Doing that is like watching coin flips come up heads four times in a row and saying, "The next one’s got to be heads."

Or saying that because Aunt Gertrude has been smoking 2 packs a day for 30 years and hasn’t gotten cancer yet, cigarettes won’t cause her to die prematurely.

The horrific passenger deaths that occur when a plane crashes are only the tip of an iceberg that peeks through the surface of the water extremely rarely.  To know whether the risk of a disaster has in fact decreased, we need to know the size and shape of the hidden part of the iceberg.

That hidden part is made up of lots of little incidents that happen every day in the course of air travel and that very, very slightly increase the risk of an airplane accident, just as small changes in Aunt Gertrude’s lung cells increase the likelihood that a cancerous tumor will begin growing sometime later.

Amazingly, detailed information about the frequency of little risk-increasing incidents in commercial air travel exists today, but it has been collected by a federal government program that is quietly being shut down.

After the 1997 White House Commission on Aviation Safety and Security set a goal of reducing the risk of air travel accidents by 80% over the next ten years, federal agencies realized that they had no way to monitor whether progress toward this goal was being achieved.

Airplanes’ "black boxes" and other computers track what planes do physically, but they yield a colossally huge amount of data that can’t be analyzed quickly and inexpensively.  And on-board computers can’t see lots of incidents that increase risks, especially incidents involving human behavior in the cockpit and air traffic control tower.

So NASA inaugurated an ambitious program called The National Aviation Operations Monitoring Service.  This new monitoring system used the science of survey research to collect reliable data quickly, efficiently, and inexpensively.  Every day of every month for years, large random samples of commercial airline pilots have been interviewed in depth and have reported the frequency with which they witnessed many different sorts of risk-increasing incidents.

Nearly 100 types of incidents have been measured: A pilot attempting to talk to an air traffic controller but being unable to reach anyone.  A near miss with another plane in the air or on the ground.  A pilot failing to follow instructions about where to fly when.  A plane failing to avoid dangerous weather while cruising.  A piece of on-board equipment failing to work properly. Perceptual confusion by pilots.  Passenger disturbances.  And many more.

Just as an interview with Aunt Gertrude can tell doctors more useful information than will be revealed by medical tests alone, talking with pilots about what they have witnessed deepens our understanding of what’s been happening in the skies.

More than 24,000 interviews have been conducted.  80% of the contacted commercial pilots agreed to be interviewed, an impressively high rate, because these pilots trust NASA to do high quality work and to protect their confidentiality.

The interviewing method was fine-tuned through years of careful design work and was vetted in public and private meetings with management personnel from airlines, labor unions, and aircraft manufacturers, with the staffs of federal agencies, with airplane and helicopter pilots, and with air traffic controllers.

A few of the numbers generated by this new monitoring system can be compared with measurements of the same incidents made in other, more costly ways (e.g., some equipment failures recorded by on-board computers and near misses tracked by federally mandated reporting systems).  The correspondence is very close, reinforcing confidence in the rest of the survey data about incidents that are not tracked in other ways.

Examining the air travel system through the eyes of pilots in this way helps to deepen understanding of what’s been happening in the skies.  If NASA had pursued its original plan to develop similar reporting systems for air traffic controllers, flight attendants, and airplane mechanics, we’d have even more insight.

The surveys’ results can be used to determine whether progress is indeed being made toward the White House Commission’s goal of an 80% reduction in risk.  But more importantly, the surveys are like canaries in a mine, documenting increases in particular types of risk and allowing air travel professionals to take preventive steps before catastrophes happen.  Expanding the program’s mission to collect data on aircraft security might even help reduce the threat of terrorism.

But instead of allowing the program to run as planned through 2009, NASA prematurely shut down interviewing of pilots last January and called off all plans to continue and expand the project, as they shift their priority to putting a man on Mars.  The shutdown was coincident with the arrival of a new NASA administrator whose preferences for research seem not to include projects like NAOMS.

No evidence I know of indicates that the NAOMS surveys were somehow a failure or produced misleading or inaccurate data.  From all indications, they could not have been more successful.

So from my perspective, the premature shutdown is a big mistake.  Many experts who want to increase the safety of everyone boarding an airplane built a great tool that costs relatively little and could help to prevent disasters.

But their work was terminated, and you can’t find out what they learned, even though you paid for it.

Now is the time to bring NAOMS back to life.  The only way I can see to do that would be for many Americans to express their support by contacting NASA and Congressional representatives who work on aviation issues.  If enough voices speak loudly and in unison, maybe some progress can be made.

September 5, 2006 | Permalink | Comments (0) | TrackBack (0)