On Congestion Pricing, Etc.

The New York system of airports has become the symbol of gridlock in the U.S. air transportation system. The feds want to try congestion pricing while they buy time putting into place a modern air traffic control system. Just about everybody opposes the move, even the Port Authority of New York & New Jersey. The situation has become symbolic of the capacity challenge in the air and on the ground. Ron Kuhlmannn, vice president of Unisys Transportation, says we already have congestion pricing, driven by the market, and the onset of federal regulation may be a dubious move at best. Rather, Kuhlmannn says industry and the nation need to come to an agreement on what we need to sustain this economic engine that is aviation, then figure out how to pay for it.

Kuhlmann, based in San Francisco, spent some 30 years working for airlines in various positions around the U.S. At Unisys, his focus is on the structural changes in aviation and the effects on stakeholders and, particularly, passengers. He holds a BA in Economics and Asian Studies from St. Olaf College and served in the U.S. Peace Corps teaching mathematics and economics.

AIRPORT BUSINESS recently discussed the nation’s capacity issues via telephone. Following are edited excerpts ...

AIRPORT BUSINESS: In your view, what is the status of the system today?

Kuhlmannn: The cause of the mess is pretty clear — the number of airplanes in the sky versus the systems that are in place to handle them.This is not a U.S. problem alone. Air traffic control and management is a worldwide problem at this point. Unfortunately, it’s not being addressed very well.
Since the creation of the EU [European Union], there has been a single-sky initiative, which means that each of the members of the EU would surrender control of their airspace to a central unit in order to simplify the European airspace. It is no closer to completion today than it was 20 years ago, when it was first suggested.

Then we have China and India, which are looking at astonishing increases in traffic and just don’t have the infrastructure for it.

Eventually it (EU) probably will come together, simply out of necessity. The environmental issue will play big in that; the estimation is that tons of carbon can be cut simply by streamlining the airways. But it’s going to come out of necessity, not out of agreement.

In the U.S., while we have seen a decline in available seats, we have not seen a decline in movement. The larger aircraft that used to operate on smaller routes have been replaced by RJs. So, while an airport like JFK has reduced capacity from many of its constituent airlines, it has had no fewer flights.

AB: Some suggested this was the end game at LaGuardia when they loosened up the slots.

Kuhlmann: It’s pretty clear, especially with an airport like LaGuardia where you know what capacity is; it is a fixed asset with no possibility of expansion. It’s not like San Francisco where you have two runways too close together, causing delays in bad weather, which possibly can be fixed with technology.

At LaGuardia, what you run into is the economics of operating a small aircraft versus a larger aircraft against the capacity.

AB: Which leads to a discrimination charge by some users ...

Kuhlmann: Given the fact that the airways are theoretically publicly owned, if you are operating within the guidelines that are set, you should have access.

AB: Is the answer NextGen, the FAA’s modernization plan?

Kuhlmann: It has to come. FAA is the only game in town right now, so if they can learn from past experiences, then three cheers. It is not impossible to get it right. I don’t think there has been a strong mandate.

FAA and its management under a number of administrations has not taken the focus it should, given the influence of aviation on the gross national product. Look at the whole ownership of airlines, the archaic stuff, that is debated like it’s the end of the world, while the day to day operation is not getting the scrutiny for funding that it should.

AB: The U.S. House and Senate each has its version of what needs to be done. What’s yours?

Kuhlmann: We need to begin thinking about modernizing and creating efficiencies for everybody; if that takes a little skin off somebody’s hide, it needs to be equitably shared. But we need to move ahead; there needs to be a decision. It’s the fiddling while Rome burns thing.

The first thing I would do is put money into research into what system will be the optimal operating plan for the long-term. People need to understand that we are throwing a lot of money into the system already, and all that’s doing is perpetuating a system that’s not working very well.
The biggest thing that needs to happen is we need to focus not on who will pay and who’s going to be hurt, but what can we do to make it all work.

Now, that won’t solve the problem at LaGuardia. But that’s a separate discussion.

AB: And what about the proposed congestion pricing?

Kuhlmann: We already have it. If you go to American.com or Southwest.com and you want to fly at 5 p.m., chances are that, if you search by price, that flight is not going to be available. It will cost more. The airlines, through revenue management, already congestion price. They don’t let the five o’clock into New York seats into the cheapest bucket of fares. The consumer is already paying for access to those flights that are prime time.

AB: What about our investment in infrastructure on the ground?

Kuhlmann: I think we’re about at 1948; and not just in the U.S. The only places that you see substantial infrastructure change being made is in the Middle East and in Asia. The case to the public of the benefit of having a functioning air travel network has not been made. When you consider that the airlines are directly responsible for 8 percent of the global GDP — people don’t know that.

AB: What about funding from AIP and PFCs?

Kuhlmann: You can’t put together a long-term plan to create a viable infrastructure when Congress has the right to say, this year you get $10 million, next year something else. What needs to be undertaken is a realistic view of what’s necessary and what the cost and benefits are in either expanding the infrastructure or not.

It’s a clear equation. You don’t want another runway? OK, you’re going to run into the LaGuardia situation where eventually there is nothing left for new entrants or expansion. It’s a stark decision.

AB: Any specific thoughts on the specific bills now in Congress?

Kuhlmann: My perception is that they are fighting over the interests of various groups rather than saying the system needs to be fixed. We need to agree on that. We’re doing it in reverse — we’re talking about who gets hurt and who gets help, and then maybe something new will happen. I don’t see that as a helpful approach. We have a system that’s slipping into all sorts of chaos; that needs to be the focus.

When you have aircraft taking delays of an hour or so simply because there’s not enough airspace, to say nothing about the runways at the other end, that should be a warning sign. Then if we get more airspace and they have no place to land, there’s another warning.

If all of these very light jets come into play, that will add enormous number of operations for a very small passenger increase. If we look at the proposal of RyanAir, if it decides to fly the North Atlantic under Open Skies, it’s adding aircraft to a very congested area, even if they use outlying airports -— Providence and Baltimore, smack into the mess of the East Coast corridor.