October 24, 2006
2006 Aviation Leadership Summit and News Roundup
2006 Aviation Leadership Summit
On Thursday, October 19th, more than sixty-five global aviation policymakers and executives gathered in Chicago for the 2006 Aviation Leadership Summit entitled "Sustainable Aviation Policies for America and the World." The Summit was hosted by the International Aviation Law Institute at DePaul University and The Chicago Council on Global Affairs.
The morning began with an opening address by Mr. Glenn Tilton, Chairman, President and Chief Executive Officer of United Airlines. Tilton noted that after years of post-9/11 restructuring, the U.S. network airline industry is "[s]tabilized, but not healthy" while low-cost carriers continue to provide a large amount of competitive pressure on the network carriers. U.S. regulatory policy towards the airlines has failed to keep up with changes in marketplace and is based on a policy of "fragmentation" that stems from the belief that "the big airlines are - or will become - too big." Regarding the domestic airline market, Tilton stated that it does not make sense for the U.S. government to "put a ‘thumb on the scale’ for new entrants." Instead, the U.S. government should encourage consolidation among U.S. airlines while making policy changes such as requiring low-cost carriers to buy their own slots. Tilton also believes that U.S. network airlines are falling behind their foreign competitors because "antiquated restrictions on foreign investment" are inhibiting their "rights to grow their business abroad." Similarly, unless the U.S. government finds a way to break out of the restrictive bilateral system of allocating air rights, U.S. airlines will not be able to "expand globally, out of our mature domestic market, to where the growth opportunities are (e.g. India, China, etc.)." Tilton concluded by hinting that the U.S. Department of Transportation (DOT)should conduct a new formal aviation policy review, as "[t]he world of aviation has changed beyond recognition" since the DOT’s last formal aviation policy review in 1995.
Glenn Tilton’s address was followed by a keynote address from Ms. Marion Blakey, Administrator of the Federal Aviation Administration (FAA). Blakey outlined some of the steps that the FAA is taking to build the "NextGen" air traffic control system that will, by 2025, handle "two to three times the amount of traffic" that it does now. She stressed the FAA’s desire to embrace private sector partnerships for developing aviation infrastructure, such as the privatization plan the City of Chicago is developing for Midway Airport. The FAA is also working cooperatively with the European Union as it develops its next-generation SESAR program for air traffic control modernization, as well as with China as it "prepare[s] for the demands of an air traffic system that will rival our own in the next 20 years." Finally, Blakey noted that work on all of these projects will be inhibited unless Congress creates a revenue stream for the FAA that is related to its operating costs.
The opening and keynote addresses were followed by three discussion sessions entitled: 1) "Building A National Policy To Restore American Competitiveness In Air Transport," 2) "The Challenge of Removing Global Regulatory Barriers: Lessons From The 2006 Multilateral Negotiations," and 3) "Megatrends For Emerging Aviation Markets." The discussions during these sessions will be part of upcoming blog postings.
1) Mesaba Strike Injunction
According to an AP story by Joshua Freed: "A bankruptcy judge on Monday blocked a strike by unions at Mesaba Aviation Inc., clearing the way for the feeder for Northwest Airlines Corp. to impose pay cuts later this week."
2) Ryanair Takeover Bid For Aer Lingus
According to an AP story by Shawn Pogatchnik: "Budget airline Ryanair disclosed details of its hostile takeover plan for Irish rival Aer Lingus on Monday and told the carrier’s shareholders they stood to lose money if they didn’t accept the offer."
3) Antitrust Lawsuits - Hawaiian and Aloha vs. Mesa Air Group
According to a story in the Honolulu Star-Bulletin by Dave Segal: "Hawaiian Airlines, encouraged by a judge’s ruling earlier this month involving its lawsuit against Mesa Air Group, is seeking to throw out the remainder of an antitrust countersuit that Mesa has filed against Hawaiian."