Flying: Is it the only way to go?

Last Friday, I took the opportunity to pay my respects to Comair by flying on their final round trip to GRR on their last day of service.  During my :26 minute flight, one of nine scheduled that day between DTW and GRR, I began working on this blog.  Is it realistic to run nine aircraft a day between these two cities?  I then looked at Chicago and Detroit.  There are 35 daily flights between the two cities.  A two-week advance round trip ticket runs a total of $181.  After taxes, just over $100 goes to the airline.  It is safe to say that at $50 each way, this route is not a major moneymaker for the competitors; American, Delta, Southwest, and United.  The route only makes sense when you consider that each competitor has a major hub at either end where they can sell DTW-ORD at a loss if they make enough money on the connecting flight.  It does not hurt that Detroit and Chicago are both major cities.  Also, the 4 hour drive takes closer to 6 with traffic and the scheduled train service is anything but convenient. 

Is nine flights a day between DTW and GRR too many?  How about 35 a day between DTW and ORD/MDW?  Prior to 1978, the U.S. government answered those questions.  The Civil Aeronautics Board (CAB) determined the number of flights allowed, at what times and price.  They decided what aircraft flew the route and at what level of service.  Airline competition consisted of buying the best aircraft and having the best lobbyists in Washington D.C.  The deregulation act of 1978 ended this by opening the gates and forcing the carriers in to the arena to fight it out.  Free of CAB control and subsidies, they slashed fares to fill the aircraft.  The fare sales caused entire aircraft to sell out at the sale price causing a losing situation.  The solution was yield management.  Yield management is basically the setting of ticket prices.  Essentially, the air carriers set a price based on historical data.  Supply and demand then determine the price you pay.  If the seats are not selling, the fare goes down.  As the airplane fills up, the price goes up.  This is why last minute tickets are so expensive.  The airlines have this down to an exact science.

Deregulation and yield management are the reasons there are nine flights a day to GRR and 35 a day to ORD/MDW.  The carriers have pumped so many seats onto the route because they are feeding their hubs and yield management ensures that every passenger doesn’t pay $50 each way.  Deregulation and yield management are also the reasons that carriers cannot just charge more, or just fly less.  For example, Delta decides that nine flights to GRR are too many and cuts back to five.  Assuming no change in aircraft size, the fewer number of seats through yield management would increase the ticket prices.    The higher prices at Delta would push passengers to other carriers and they would travel through their hubs.  Wholesale reduction in flights and higher prices could not happen without the industry working together.  Higher ticket prices would lead to higher profits, however, any hypothetical industry solidarity would break down as the temptation for more profits leads the airlines to add capacity.  A government solution has already demonstrated its failure to manage the market. 

Airplanes are not always the most efficient way to move passengers.  Energy wise trains and buses are more efficient over shorter distances.  However, the solution is not re-regulating the industry.  The answer is having a comprehensive transportation policy that includes planes, trains and automobiles.  This week’s Aviation Week has a commentary about the European carriers losing on regional routes to the high-speed rail.  The carriers are only able to maintain a limited schedule to feed their international flights.  Domestic and some domestic transferring to international flights go by rail to the major cities.  Instead of regulating, the government needs to invest in regional high speed rail and ground services.  Investments in these areas will allow the market to become more efficient.

A more practical, shorter term solution is to upguage from 50-seat RJ’s to larger RJ’s and narrow body aircraft.  Why run nine CRJ-200’s between a market when you could run three 737’s?  Delta is going to give this a shot.  However, the plan comes with risks.  What if the other carriers do not follow?  What if oil drops and the 50-seat RJ’s make financial sense.  Delta will be left without the correct fleet mix to compete effectively on schedules and capacity.  I feel that as long as oil remains stubbornly high, the industry and greater transportation industry will  have to find better ways to move passengers more efficiently.   

The Legacy of Colgan 3407

The Colgan flight 3407 families will be remembered for their exceptional hard work and dedication.  Most crash families form a support system to handle the tragedy.  Their typical result is making the air carrier pay and creating a memorial to the family members, they lost.  The response from the 3407 families has far surpassed anything we have seen before.  They turned their grief into action and took on the airlines and Washington to make sure the causes for their accident are not repeated.  Three years later they are still fighting for passage of the final rules.  It is important that when we discuss PL 111-216 / Airline Safety and FAA Extension Act of 2010, we remember that a tragic accident drove the need for this legislation.

The Airline Safety and FAA Extension Act of 2010 directs the FAA to make a number of changes.  These changes include strengthening flight and duty time, mandating safety management systems and improving flight training in addition to other safety enhancements.  The flight and duty time rules were finalized in December 2011 and lengthen pilot rest periods from 8 hours to 10 hours. Other parts of this legislation are awaiting rule finalization.  These parts include crewmember training and the ATP certificate requirement. 

Section 212 of this legislation covers pilot fatigue.  This ruling will affect my career because it will change the ways crews are scheduled.  During many schedules, the last crew in takes this first flight out.  The last flight comes in at 10:00pm and the crew heads to the hotel.  With the present 8 hour rest, they return for a 6:30am outbound.  By 2014, they will require a 10 hour rest with 8 hours dedicated to sleep.  They will no longer be available for the 6:30am outbound.  A second crew will be required to overnight in order to cover the first outbound.  If I am in operations, I will have to manage this additional scheduling burden.  The benefit to this section is that crew members should be better rested to fly.  This will make flying safer because the crew will be more awake and alert.  It will also drive some quality of life improvements that current regional airline contracts do not cover.  This section will increase the need for additional pilots.  These changes will not be free.  Less pilot productivity drives higher expenses for the air carriers.  Regional Costs. Regional carriers have very tight profit margins and their service agreements are not easily negotiated.  They will need to find a way to cover these added expenses while still providing their contracted levels of service.

Section 217 covers ATP Certification.  At a high level, it requires a minimum of 1,500 total flight hours and an ATP certificate.  Flight hour credits can be given for specific academic training courses.  EMU will need to be ready to meet these requirements in order to remain a viable flight school.  I feel this section is trying to answer the question: If the flight 3407 pilots had 1500 hours and an ATP before flying for Colgan would they be better prepared to handle the icing conditions they encountered?  It is impossible to know for sure.  The benefits of this section include better-qualified pilots, based on hours.  This looks good on paper but it has some significant downsides.  The first one is cost.  How does a student pilot pay for 1500 hours in terms of time and money?  The longer training will defiantly slow down the number of available pilots.  This could lead to a pilot shortage with pilot fatigue rules (section 212), pilot retirements, and regular attrition are driving the need for pilots. 

This legislation is necessary even through sections 212 and 217 increase the demand and reduce the supply of pilots.  The regional airline world is a race to the bottom in terms of costs.  The major air carriers are constantly playing one carrier against the other to reduce costs.  Here is an example where Delta is currently forcing Pinnacle to demand more concessions from their pilots.  Delta forces Pinnacle cuts.  Additionally, when the supply of pilots was limited during the RJ boom, carriers were taking pilots at 250 hours. RJ Boom 1999. My opinion is that 250 hours is not enough time for right seat regional operations. 

The Flight 3407 families fought hard for this legislation.  They recognized the problems with the regional airline industry in terms of pilot training and protections from the corporate race to the bottom.  This legislation is not perfect but it will help redefine the rules and provide for a safer regional industry.  

I thought cabotage was a vegetable ?

This weeks source article is How Can We Complete? by Molly Martin, Air Line Pilot, August 2012

Out of the seven recommendations to ALPA pilots, the author wants to prevent changes to foreign ownership control and foreign cabotage restrictions.

The main reason I can come up with is that American Airlines is in the process of reorganizing its business.  Oneworld partner British Airways is looking to invest in American to strengthen their alliance. Yahoo! News BA to invest in AA.  Other recent foreign ownership transactions include Lufthansa's purchase of 20% of Jetblue Lufthansa and JetBlue and the questions surrounding the Virgin America ownership.  Virgin America Second Approval.


Why is this an issue? Foreign ownership of US airlines is limited to 25%.  49 USC § 40102 Definitions.  The reason for this strict requirement can be traced back to beginning, with aviation being a source of national pride.  More practical explanations lay with the US air carrier fleet being available for military transport. Civil Reserve Fleet.  The hypothetical question is how would a US air carrier, controlled by a foreign corporation or holding company, transport troops in a conflict with that country?

There are numerous foreign ownership concerns for the air carriers and their unions.  Foreign companies play by the financial rules of their country.  The control of capital, taxes and insurance must remain in balance for a fair and competitive environment.  This control is cannot be maintained if carriers get to play by a different rule book because of their base country.

Foreign ownership controls dovetail with cabotage.  Cabotage is air traffic within a country being flown by an air carrier of another county.  US DOT definition.   In 1944 at the Chicago Convention, the international community set up the Freedoms of the Air to help define commerce rules.  There are nine freedoms that countries use.  Boeing put together an easy to understand description of the freedoms.  

Most nations accept First and Second Freedoms which are the right to overfly another's airspace and the ability to make a technical stop. An example of this was in June, 2005 a Northwest DC-10 diverted to Tehran, Iran after the crew was alerted to a possible cargo fire.  They were the first US carrier to land in Iran in 26 years. They landed, resolved the alarm and continued to Amsterdam.

Third and Fourth Freedoms are traditional international travel arrangement.  An example is Air Canada carrying revenue passengers between Toronto and New York.

The Freedoms get more liberal as they continue.  The main concerns for the air carriers and unions is with the Eighth and Ninth Freedoms.  This allows foreign air carriers to carry revenue passengers within the US.  This is presently not allowed because it could give foreign air carriers an unfair advantage.  

There is pressure from foreign air carriers for the US to liberalize both foreign ownership rules and Freedom rights.  As the world and its markets become more global expect this pressure to increase.


  

  



 

The day the airplanes stopped flying

September 11: FAA Closure of US Airspace Video

The day that the airplanes stopped flying I was based in Roanoke, VA.  It was about 45 minutes from the time the first tower was hit when the inbound diversions started.  In another 45 minutes, our ramp was converted into a parking lot.  The tails from UA (IAD), US (DCA/PHL/PIT) and DL (CVG/ATL) were stacked two to three deep.  None of the flights had ROA in the itinerary.  The passengers and crew members were notified of what happened by the CNN airport TV.  After seeing the news, there was no chaos and demands for accommodations.  The hundreds of passengers simply paired up, rented cars and headed home.  Some were hundreds of miles from their destination.  It did not matter, they came together and kept moving.

Introduction

I got into aviation through a part time job with Mesaba Airlines in Muskegon. It was January 1997, I was on the freezing cold ramp, loading bags, deicing and handling passengers.  My first airplanes were the Fairchild-Metro, Dash-8 and the factory fresh SAAB-340's. 

I spent 10 months in Muskegon before transferring to Aspen Co.  Following Aspen, I received a manager assignment in Ely, MN, Sault Sainte Marie, MI, Roanoke, VA and finally Detroit, MI.  I have been in Detroit for the past 10 years.  While in Detroit, I have worked in the above and below wing operations, hub control center and administration. In 2009, Delta merged the ground operation groups from Mesaba, Comair and Compass into Regional Elite Airline Services.  This changed my focus from working for an airline to working for a contract ground handler.  There is a definite change between working for an airline and working for a contract ground handler.  

I am at a point in my career where I need a degree to get to the next level.  I could move to a position at mainline Delta or possibly another carrier.  My career focus is in the areas of training and education as well as safety, security and compliance.

I am interested in NextGen and the changes it will make to the industry.  NextGen was a paper topic that I picked out the of the blue.  Through completing that paper, I found my interest in NextGen.

I am also interested in the state of the industry.  It is premature to say that the 50 seat RJ is dead but it's role is being diminished.  Delta is upguageing the 50 seaters with 76 seaters and 717's.  Will the other carriers follow?  What does this mean for the industry?