November 19, 2009 - The U.S. Department of Transportation last week in Washington hosted a closed-door forum on the future of U.S. commercial aviation. At that meeting, DOT Secretary Ray LaHood said he will convene an advisory committee of various stakeholders "to examine the industry, its competitiveness and its ability to address evolving transportation needs, challenges and opportunities of the global economy," according to a statement.
"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," LaHood wrote on his official blog site on Nov. 13. Because aviation policy always is a charged topic, LaHood sought to clarify DOT's intention, writing: "Let's be clear about this: I have not heard one word in this administration about re-regulating the industry."
Representing corporate travel departments, the Business Travel Coalition was one of many industry constituents invited by LaHood to discuss a host of issues, ranging from labor relations and oil speculation to a new air traffic control system and airport infrastructure. "We do not have a coherent air transportation policy but rather a patchwork of prescriptions as a consequence of lurching from crisis to crisis," said BTC chairman Kevin Mitchell. "The theme was that we know the problems. We need to get people in a room, roll up the sleeves and go forward with solutions."
Noting a 12-month process for the Federal Advisory Committee on the Future of Aviation to form, examine the issues and report back to LaHood, Mitchell said that "there seemed to be a sense of urgency." In suggestions he sent to DOT after the meeting, Mitchell advocated that the committee include representatives from corporate travel management, travel agencies, global distribution systems, consumer groups and several other stakeholders.
Discussing The Challenges
The forum last week included leaders from large and small airlines, manufacturers, academia, general aviation, consumer groups, industry analysts and others. Federal Aviation Administration leader Randy Babbitt and other officials also joined LaHood.
The Transportation Trades Department, an umbrella group of the AFL-CIO that represents millions of transportation workers, had recommended to DOT that LaHood conduct such a meeting. TTD president Edward Wytkind told
Management.travel that it was "a candid discussion" on a wide range of issues, including labor unions' positions that the "entire business model is broken." As a result, he said, the industry "is not in a very good position to absorb the downturns," and is plagued by "deterioration in the workforce from inadequate wages and training, which makes people think twice about pursuing the airline industry as a career."
Wytkind argued that "one of the worst offsprings of deregulation was the relative ease in which you can offer up airline service in this country." By certifying new entrants with unsustainable business models that "introduce pricing and cost distortion that further undermines the ability of the industry to weather bad storms," he said, "the system is failing us."
Wytkind also took issue with U.S. carriers' practice of sending aircraft to foreign countries for maintenance. He described it as "an epidemic of outsourcing. There is a maze of contractors and subcontractors around the globe, and an FAA apparatus that frankly is not suited to provide surveillance of those facilities."
Regarding the "NextGen" air traffic control system, airlines called for the federal government--not carriers or their customers--to fund development. "If the cost of deploying NextGen has to be covered by even higher taxes or fees imposed on the airlines, we prefer to live without it at the current time," according to a letter to LaHood from US Airways CEO Doug Parker, who could not attend the forum due to a scheduling conflict. "This is not just because we believe the public benefits of NextGen justify funding it with general tax revenues (although they do). It is more because our industry currently lacks the financial wherewithal to finance costly projects like this."
Parker appealed to LaHood to not impose any new taxes or "unfunded mandates" on airlines or air consumers. "If the American consumer were willing to accept higher-cost air travel, our industry would not have lost $60 billion since 2001," he wrote. "Any taxes or fees that increase the cost of air travel--irrespective of how they are collected--directly and negatively impact the U.S. airlines' ability to generate adequate returns."
Rather than "looking for a government bailout or the kind of assistance that was provided to the banking, insurance and automobile industries," Parker advocated self-help for the airlines, including a free hand in "trading or selling assets to allow more productive use [and] the formation of alliances or joint ventures and mergers."
The Bigger Picture
According to BTC's Mitchell, there was "a recognition in the room that because the industry is so fragmented, and because it cannot go to the Hill as a unified force, the industry--those people sitting in the room, not Congress--bear the majority of responsibility" for some of the problems plaguing the nation's transportation infrastructure. For example, he said some participants "slammed Amtrak. They were hostile. It completely underscored the idea that people are not looking at this as one integrated transportation system."
Holly Hegeman, founder and editor of
Plane Business Banter, last week wrote that DOT should "include high-speed rail, airport upgrades, NextGen, better highways and better mass transit. Everything needs to be on the table. This isn't about labor unions complaining about lost jobs. It's about how the industry fits into a much larger blueprint."
According to LaHood's blog post, "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. This is the first committee established under the Obama administration's DOT that will report directly to me." Calls to DOT seeking further information on the formation of the committee and its timetable were not returned.
In his submitted suggestions to DOT, BTC's Mitchell said the committee should be limited to 25 participants. The top five problems he identified for the committee to address were: "no national air transportation policy, airline over-scheduling, broken industry workforce model, obsolete air traffic control technology and airline industry financial failure."
A letter drafted by BTC and sent today to LaHood restated those problems and was signed by dozens of companies and organizations, including various travel management companies, advocacy groups and other industry constituents.
Association of Corporate Travel Executives executive director Susan Gurley, in a letter sent to LaHood responding to the announcement of the committee, wrote that "any discussion of the future of aviation must include a comprehensive policy spanning the accelerated replacement of the air traffic control system, a complete evaluation of security procedures on the part of the Department of Homeland Security and an enhanced role of the Federal Aviation Administration in maintaining standards." An ACTE spokesman reiterated the association's position that the NextGen ATC system be funded from the general tax fund.
TTD's Wytkind sounded optimistic about the work to be done. "I have watched this administration over the first few months in office take serious problems and deal with them with great vigor and focus," he said. "DOT so far is reflecting that level of tenacity in the issues they are dealing with. I have no reason to believe that for the gut-wrenching questions we face regarding the future viability of our industry that this president and this Transportation secretary are going to step up and do what it takes to stabilize this industry."
