Advisory committee to seek a brighter future for US aviation

Yesterday we hosted the Administration’s first forum on the future of the U.S. aviation industry. We told participants--airports, air carriers, management, labor, air carriers, manufacturers, general aviation and consumer groups-–we wanted a frank and open discussion about our challenges and the way forward.

In a one-day session, we could only begin to scratch the surface of the changes we need to address.

That’s why we're forming an advisory committee to examine the industry, its competitiveness, and its ability to address evolving transportation needs, challenges, and opportunities of the global economy. The committee will be composed of stakeholders from across the industry.

This is not going to be just another advisory committee, and I am not commissioning some report to fill space on my bookshelf. This committee will make a difference.

As a measure of how important the future of the aviation is to us, this is the first committee established under the Obama Administration's DOT that will report directly to me.

Look, without a financially strong aviation industry, we will be unable to compete in domestic and international commerce. We could also fall behind in addressing our own infrastructure needs. So we must begin this important conversation in order to ensure a viable, competitive U.S. aviation industry.

Of course, safety must remain our absolute top priority going forward. That is why we need the NextGen air traffic control system. Sticking with a piecemeal system designed in World War II makes no sense from a safety point of view or an economic point of view.

But let's be clear about this: I have not heard one word in this Administration about re-regulating the industry.

This country has an aviation system that is losing billions of dollars, shedding jobs, and using an aging infrastructure. It's time to get to work fixing it.

Comments

[James]

Let's make every stakeholder accountable for their part in the system. Excuses don't help and cannot--MUST not--be an acceptable response.

[www.facebook.com/profile.php?id=596595546]

Mr. Secretary,

My name is Andrew Jacobs and I am an Expeditor for Aero Inventory (USA), Inc. Needless to say, I was EXTREMELY grateful to read this blog entry. This news couldn't have come at a better time for myself and my fellow co-workers and I thank you from the bottom of my heart, sir.

Respectfully Yours,

Andrew Jacobs

__________________________________

Andrew Jacobs
Expeditor
Aero Inventory (USA), Inc.

Direct Line: (562)758-6229
Fax: (562)758-6201
email: andrew.jacobs@aero-inventory.com

12257 Florence Ave.
Santa Fe Springs, CA 90670
http://www.aero-inventory.com

[Robert Herbst]

Dear Secretary Hood:

Summarized below are some of the major issues I recommend being addressed by this special panel.

Financial-

In the past 7 years, nearly every major US airline has filed bankruptcy or has been forced to restructure.

• The 9 largest airlines went into year 2001 with a market cap of $37 billion and $24 billion in long-term debt. Today, those same airlines only have $21 billion in market cab while long-term debt increased to a staggering $53 billion (accounts for mergers; American/TWA, US Airways/America West & Delta/Northwest).These losses do not include several billion that was lost through bankruptcy by investors who ended up holding (worthless) stock in once great airlines: TWA, United, Delta, Northwest and US Airways.

• In the last 8 years, the US airline industry has had approximately $40 billion in cumulative net losses.

• Over the past 2 years, while the 9 largest airlines experienced record load factors, they also had over $8 billion in cumulative net losses. During this same time period, Southwest was the only major airline that did not lose money, and their minimal profit is attributable to fuel hedging.

Operational-

While most airlines have been in continuous financial turmoil since 9/11, those of us personally involved in the industry see today’s air travel experience as a disgrace.

• Today’s aircraft fleet is older than ever before. Because airlines try to operate as productively and with the lowest costs possible, aircraft are frequently dirty and less maintained than ever before.

• Bankruptcy judgments forced airline employees to lose pensions and take wage cuts up to 40%. With so little hope in sight for the industry, employee morale is at an all time low.

• Since 9/11, the 5 remaining legacy carriers have eliminated over 160,000 employees. As these jobs disappeared, remaining employees became responsible for more and more passengers. The average airline employee now provides customer service for 30% more passengers than they did 8 years ago.

The airline industry is absolutely broken. In order to simply survive recent liquidity issues, airlines have increased debt to historical highs. At the same time, a fuel inefficient aircraft fleet is getting older than ever before. There are no credible economic models that project the required capital to replace hundreds of aging and fuel inefficient aircraft currently being operated by US airlines.

With the current debt loads, jet fuel price volatility, lack of pricing control, etc. it is very likely the next economic down cycle will force every major airline into bankruptcy.

Employees are frequently stressed and fatigued because they are expected to do more and more with compensation/benefits that have been reduced to what they had nearly 20 years ago. In demanding positions like pilots and mechanics, there are no long-term incentives to attract the -best- individuals into the profession.

Many facets of the -industry- are being stretched to the limits. Drastic long-term changes will be required to allow airlines to become financially solvent.

Political pressure is attempting to turn the airline industry into a low-cost mass transit system with each carrier being forced to compete for nothing beyond cash flow.

Maintaining airline safety with reasonable customer service comes at a price. Accounting for inflation, current air fares are at a 25 year low.

In order to have the world’s safest airline transportation system with responsible customer service, politicians and airline management will need to put more effort into making the airline industry better and not just cheaper.

Sincerely,

Robert Herbst
AirlineFinancials.com

[Bill Deignan]

Hi-

Will the airline advisory committee discuss ways for the airline industry to further reduce the noise impacts of planes both in the air and on the ground? Advances in plane technology and navigation must be prioritized to help reduce noise and vibration for communities nearby and in the flight path of airports. Changes to flight paths, like those that have severely affected our community of Cambridge, Mass. over the last two years, need to be made with much more analysis and discussion with communities, and in the context of reducing total noise, not just pushing it from one place to another.

[Brien A. Seeley M.D.]

NASA visionaries formulated aviation's future solution in 2003 and have now funded it: The Green Flight Challenge. It is high time to resurrect SATS, regional air taxi service, and STOL personal air vehicles (PAVs). DOT and DOE both should join with NASA in this effort.
Ironically, it is the ever-worsening surface gridlock that's killing aviation. See Sperling's book, "Two Billion Cars". The ground travel to the hub airport (and security delays) wipe out the speed advantage of flying. The answer is to access many small airports that are close to destination doorstep. Please visit: http://cafefoundation.org/v2/main_home.php
Brien Seeley M.D.

[Eli Bensky]

No need for advisory panels. That's like asking the people who created the problems to fix them. Instead, go with success.

Let southwest Air run the airlines. At least they don't consider passengers as cargo and they're successful. They know how to run an airline, e.g. Houston to San Francisco, SWA $150. Continental $500+ and SWA has a better schedule

[Frances Thompson]

Please include representation from the public, particularly the flying public, on the advisory committee. I understand that you need to "fix" the industry, but that fix must include requiring the airlines to extend basic human rights to their customers.

[Steve Filson]

Dear Secretary LaHood,

While it is clear that the administration is not speaking of any re-regulation, the industry's woes can all be traced to the deep collapse in ticket prices after 9/11.

We cannot talk carbon emmissions, NextGen, or employee pay and benefits before the pricing mechanisms are addressed.
Call it by another name if we wish but without relatively predictable revenue, the industry and the public will continue to suffer.

In all seriousness I suggest inviting a person who knew all too well about airline industry financial health. The letters, hearings testimony, and speeches of Edgar S. Gorell are in the public archives. He was the principal person advocating the stabilization of the airline industry in 1938. All of that testimony before Congress is worth adding to the input because the industry prior to 1938 had all the structual pathologies we see today with the exception of the technological advances that have happened since. And the technology advanced only because the airlines had the money to pay for them.

I am not advocating a return to the pre-1978 extreme regulated structure but the public and industry in the 1930's faced the very same issues then as it finds itself today. There were some important wheels that were invented then to stabilize the industry. I suggest we revisit them.

Without addressing the deep price deflation that has taken hold and remained since 2001, all of the other vital issues become moot.

What has not been mentioned so far is that the industry today has not only lost 60 billion dollars since 2001, it has since 1938, the year of regulation, wiped out all of the profits since then and is, over 60 years, 30 billion dollars in the red. That is the marker of a failed industry and failed industrial policy.

If the airlines can once again become reliably profitable, many of the above issues will solve themselves. But pricing must be addressed in high priority. All the costs of the industry have long been wrenched out of the system and there's no where to turn.

Sincerely, Steve Filson

[Steve Hess]

Two recommendations, as follows:
1. Develop and utilize a "risk assessment" software for use at check-in at airports. Factors for weighting & inclusion in the database would most likely include (but maintained as secure) checked baggage, method of payment, country of origin, age, etc. Folks exceeding some threshold would be subject to additional screening.

2. Task Google's originators with developing a search engine to aggregate all available information about people on various governmental "caution", VISA, and "Do Not Fly" lists. If those folks can do it for trivial topics of interest, they can do it to serve the public interest.

[Joe Madd]

As a airline professional, I am sick of passing through security checkpoints seeing to people doing work and 20 STANDING AROUND doing ABOLUTELY NOTHING!! I recently saw a blog of a TSA officer sleeping on the job. This is a major misuse of my tax dollars. And these MCdonald's dropouts want to unionize? Whatever... This animal is out of control and needs tamed. As a traveling professional I couldn't feel less secure.

[kat]

This industry is a cutthroat, a fiscal stimulus is important, but the most important in my opinion is the services provided by the airlines.
A policy and higher standard procedure will be needed

[Joe Madd]

As an airline professional, I pass through security in more than 50 airports a month. TSA requirements are not consistent. In many cases TSA "officers" have fun hassling airline crews in many occasions. This creates a negative impact between agencies. Many of these TSA workers look like they were plucked right off the floor from the nearest Walmart. It is my opinion that the background verification and requirements should at least equal that of flight crews. For every 5 screeners there are 20 standing around which is very infuriating. What a gross misuse of my tax dollars!! I would rather use the money to save a oil drenched bird!! TSA needs is out of control and needs to be tamed!!!

[aquaracer]

fixing the system is important but forming an advisory committee with old men in suits talking to each other to gain ground for their own agendas will likely see this good initiative fall off to the side.

Get young people with more radical ideas, who does not have any baggage(forgive the pun) about offending people in the industry, to come into the committee and then change the industry..

[Ohio]

The move was an important one for Bright's future.

[Brian Kiambati]

I come from Kenya and our aviation systems are lagging behind.There is a lot of talk about visisonary leadership back here and what takes the country forward.

Our politicians could stand to learn alot from such kind of leadership.

[Jose Parroha]

Hopefully we'll see some well needed improvements regarding oversight of the cost cutting measures that airlines have been forced to implement to survive.

[Norma Duenas]

This committee promises to be much more than just a discussion. I hope that it actually lives up to its expectations as many committees end up providing a lot of information but without real direction as to how to realistically resolve the issue. The airline industry is in dire need of changes to ensure that it can compete in the future in a global economy. The fact that many airlines have been on the brink of bankruptcy points to needed changes both in how the industry is regulated and its infrastructure.

[MicroConsole]

As an airline professional, I pass through security in more than 50 airports a month. TSA requirements are not consistent. In many cases TSA "officers" have fun hassling airline crews in many occasions. This creates a negative impact between agencies. Many of these TSA workers look like they were plucked right off the floor from the nearest Walmart. It is my opinion that the background verification and requirements should at least equal that of flight crews. For every 5 screeners there are 20 standing around which is very infuriating. What a gross misuse of my tax dollars!! I would rather use the money to save a oil drenched bird!! TSA needs is out of control and needs to be tamed!!!

[Tom Ashby]

There are some very good points here however, let us remember there are lots of ways for airlines to same money, even if it does mean that survice included decreases, for instance American Airlines saved $40,000 in 1987 by eliminating one olive from each salad served in first class.

[Owen Skyton]

Good post with some great points, but taking the example of low budget airlines who's policy is that a airplane on the ground costs a lot more then the one in the air makes you wonder. If it takes for low budget airplanes to leave the airport less then 45 minutes and I've read somewhere that RaynAir is planing on eliminating the seats in short flights so they can have more passangers on board. There are a lot of solutions it's just finding the one that fits best.
Best regards,
Owen Skyton

[Mike Geary]

As a measure of how important the future of the aviation is to us, this is the first committee established under the Obama Administration's DOT that will report directly to me.

Look, without a financially strong aviation industry, we will be unable to compete in domestic and international commerce. We could also fall behind in addressing our own infrastructure needs. So we must begin this important conversation in order to ensure a viable, competitive U.S. aviation industry.

Of course, safety must remain our absolute top priority going forward. That is why we need the NextGen

[Raphael]

Very good discussion. I have heard it said that most terror threats are averted due to observant citizens reporting a tip and not from all these expenditures.

[Kit Adams]

Lately in the news we've been hearing so much about the TSA and security issues, and not so much about the age of the fleet and airport congestion. I guess congestion is being helped by cuts in the number of flights, but I wonder if maintenance won't come back as a subject covered in the media until there is another tragedy that is not a security event.

[Renny Nichols]

Lets hope we avoid tragedy, tho statistically speaking it may be just a matter of time. I guess we ought to not just look out for human threats, but also for rusty bolts and such...

[Josh Kurtis]

Think it's definitely time to start fixing our infrastructure before it all falls apart, it seems like we should have never let it get so bad.