Another “blue ribbon” panel to fix the airline industry

by Tom Johansmeyer on

It’s been a tough month year decade for the airline industry. In the United States, it’s lost $58.5 billion and cut 158,000 jobs. There never seems to be an answer, and news of an industry in jeopardy has become routine. So, .

But, it will be different this time. Transportation Secretary Ray LaHood says it will not be “just another advisory committee.”

On his Department of Transportation blog, LaHood writes, “I am not commissioning some report to fill space on my bookshelf. This committee will make a difference.”

He continues:

“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.”

But, he has his work cut out for him, as does the advisory committee. The estimated price tag to fix the most vexing problems the industry faces is $20 billion. And, many of the recommendations from the last two panels were never implemented.

A new air traffic control system, based on GPS technology, is at the top of the list, but it’s years away. It could save us $40 billion a year in lower fuel and labor costs, not to mention trimming a lot a time from the 740 million people who take to the skies. But, the $20 billion price tag is frightening, especially for airlines that are perpetually behind the financial 8-ball. The other possible wallet belongs to the taxpayer. Anyone want to pay more?

Oh, taxes could go up again if new environmental legislation is passed, so buckle up for more.

On the subject of taxes, the airline industry gripes that it gets hit worse than liquor and tobacco companies (well, except maybe rollers of loose cigarette tobacco). This gives them even fewer financial options to improve equipment and service. For airline shareholders, Jim May, top dog of the Air Transport Association, puts the lost value at around $24.5 billion. Yeah, I spelled it because there’d be a lot of zeroes otherwise. Local and state taxes have gone up, applying even more pressure. But, the other side of this is that taxes are a fact of life for any company, and the airlines should suck it up and move on. Let’s face it: with the U.S. economy in its current state, nobody’s getting tax cuts anytime soon.

Foreign money, the airlines say, would make it easier. Right now, foreign investors’ abilities to invest in U.S. airlines are limited because of national defense considerations. But, this is probably a dated risk, according to Carlos Bonilla, who advised former President Bush (the recent one) on transportation matters. The airlines would still be subject to U.S. regulation, regardless of who owns them.

Flying for the rest of the year – fewer seats, higher fares

by Scott Carmichael on

As the financial brainiacs of the world slowly start to see some gradual improvement in the global economy, the worlds airlines are pushing through some far reaching changes to their Q4 2009 schedules.

Because the recession hit the airlines so suddenly, none of them were able to make any major cuts to their schedules (these schedules are set in stone in advance).

Overcapacity has meant that 2009 was actually a very good year for passengers, with some of the lowest airfare we’ve seen in years.

Of course, now the airlines are looking at their new schedules, they are making sure that the overcapacity is a thing of the past, and that means trimming the schedule.

Obviously, fewer seats means more people fighting for the cheapest seats, which will naturally result in higher prices. The schedule cuts will bring airlines back to the levels post 9/11.

According to an AP report, American Airlines will be hit the hardest, with a 10.5% drop in passenger miles on its domestic routes. United Airlines is hit equally hard, with a 9% drop. It isn’t all bad news though – JetBlue expects a modest increase in passenger miles for the rest of the year.

Bottom line is – don’t expect any more amazing fare deals any time soon and think about booking early, because flights are probably going to be filling up pretty quickly.

(Image from Flickr, stevelyon)

European Union proposes global airline black list after Yemen crash

by Scott Carmichael on

For several years, the European Union has been maintaining an airline black list. The list contains the bottom of the barrel in the aviation world. On it, you won’t find any of the big global carriers, but it is very well represented by countries like Kazakhstan, Angola and the Democratic republic of Congo.

As it turns out, the airline involved in the most recent crash had once been on the black list for incomplete reporting on its fleet inspections.

That crash has now prompted the E.U. transport commissioner, Antonio Tajani to propose turning the the European black list in to a global black list.

As much as I like the idea of sharing this kind of information and turning it into a global list, I’m not sure it will actually make any difference – for a global black list to work, every country in the world will have to participate. Thing is, the kind of country that does not take aviation safety that seriously, is not going to be the kind of country that signs up for the black list, only to ground its own national carrier(s).

A global black list of carriers won’t do anything to prevent any of the recent air disasters we’ve seen – Air France would certainly not deserve a spot on the list, nor would Continental/Air Colgan (involved in the Buffalo crash back in February).

Many of these rickety airlines fly within their own country, or to neighboring countries with similar lax oversight. For a global aviation black list to work, countries should help each other, not simply tell them that they are not welcome to land at their airports. I’m pretty sure that “Sky Gate International” from the Kyrgyz Republic won’t give a damn if the USA tells them to stay away from any of their airports.

The only other option is to increase passenger awareness and get the list promoted, to help people make an informed decision about whether or not to travel with an unsafe carrier. But if that airline is their only option, I’m guessing they’ll take the risk.
The top countries by number of their airlines included in the list:

  1. Democratic Republic of Congo (57 airlines!)
  2. Republic of Indonesia (51 airlines)
  3. Republic of Angola (18 airlines)
  4. Kyrgyz Republic (17 airlines)
  5. Equatorial Guinea (9 airlines)
  6. Sierra Leone (8 airlines)
  7. Republic of Benin (8 airlines)
  8. Swaziland (7 airlines)
  9. Republic of Gabon (7 airlines)
  10. Republic of Kazakhstan (7 airlines)

Some noteworthy airlines (mainly because of their silly sounding names):

  1. Helimalongo – Republic of Angola
  2. Alafia Jet – Republic of Benin
  3. Golden Rules Airlines – Kyrgyz Republic
  4. Motor Sikh – Ukraine
  5. Dames – Kyrgyz Republic

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Smaller planes are a growing trend. How safe is that for passengers?

by Jamie Rhein on

With the crash of Continental Connection Flight 3407 comes questions. Along with the question about whether the plane had gathered enough ice to make it crash is the question– how safe are smaller jets and turboprops? Because flight demand is down, airlines have switched out some of their larger jets for smaller ones. Those, along with turboprop planes, are often used to connect people to smaller regional airports.

In this New York Times article, the issues surrounding smaller jets and prop planes are examined. Because of the increase of their use–regional aircraft use is up 40% since 2003–looking at their safety records is important.

Here are the positives:

  • Pilots of smaller planes receive as rigorous training as those who pilot larger jets
  • Many smaller planes are new and have the latest equipment.
  • Regional airports and larger airlines have the same safety standards.

Here are the negatives:

  • Since 2000, there have been eight crashes at regional airports. (However, think about the number of traffic accidents you hear about where you live.)
  • Airplanes flying into regional airports often are flown by pilots with less experience.

Another negative about the smaller airplanes is one my mother experienced on her last flight from Columbus to LaGuardia. Because she was on a small plane, she had to carry her carry-on luggage up and down the stairs, and walk outside in order to get into and out of the airport, something that is hard for her to do when it’s cold. Luckily, one of the flight attendant’s helped her.

This photo by jsbarrie is of a prop plane going from Flores to Guatemala City. According to the description, there were boxes of baby chicks among the cargo.

Cathay Pacific Freezes Recruiting Because of Low Demand

by Josh Lew on

Hong Kong-based Cathay Pacific has always been one of the world’s top airlines. But the ever-lower demand for air travel has touched them as it has every other airline. An article in an internal publication distributed to Cathay’s employees two weeks ago announced that there will be a company-wide recruiting freeze. No layoffs yet, but the hiring stoppage will include Cathay’s subsidiary, Dragonair. The freeze was confirmed today.

That means no fresh faces in an airline that is famous for its top-notch service (and leggy, poised flight attendants). Exec Tony Tyler remains optimistic that the industry, and Cathay, will return to their old ways in short order. ”I remain unashamedly optimistic about the future of aviation in Asia – just think of the potential in China and India alone.”

Cathay, like the regions other major players, is straining on its leash, waiting to carve out its space in new, lucrative routes in China and on the subcontinent. They just have to make it through these slow times intact.

[Via The Standard HK]