TAMPA — This year's F. Russell Hoyt National Airports Conference, hosted by the American Association of Airport Executives, was highlighted by serious discussions about the future funding of the U.S. aviation system and a reiteration by Rep. John Mica (R-FL) of his goal to make the Transportation Security Administration more accountable and to get the feds to pay for passenger screening systems at airports. Other key presentations looked at the future of the airline industry in the U.S. and the potential impact of the oncoming entry level jets.
Rep. Mica, who serves as the chairman of the House Aviation Subcommittee, has been a long-time critic of the agency he helped to create in 2001, the TSA, with the enactment of the Aviation and Transportation Security Act. Mica told attendees that he is putting TSA “on notice” that he wants changed the current status of how security is implemented at U.S. airports. Toward that end, several days following his remarks Mica helped get language into federal legislation that will ease liability concerns for airports that may have an interest in opting out of TSA-implemented security at their facilities. As Mica told the nearly 300 airport managers in attendance, “I would like to get you to opt out” — particularly the largest 29 U.S. airports.
“What’s going to work is to have the operation airport-based,” says Mica, with federal management and airport/private operation of the screening process.
Rep. Mica says that part of the problem with the security situation today is that Congress mandated a “one size fits all” solution, what he terms a centralized, Soviet model. He says that classified reports that have compared TSA’s efforts with the private screening pilot program clearly show that the private efforts with TSA oversight are more efficient. Mica also maintains that attracting more technology companies into the security arena will lead to more rapid implementation of new technologies and increased efficiency.
On the subject of the financial health of the air carriers, Rep. Mica says that it should not be the role of the federal government to “bail out” private businesses. “The answer,” he suggests, “is for them to have viable businesses, to increase fares.”
Health of the Air Carriers
Ray Neidl, an airline analyst with the investment firm Calyon Securities, says that the wind of change now befalling the air carrier segment will bring with it an era of consolidation. This will occur either via mergers or partnerships, he says. “I’m not a big fan of mergers, from an analyst’s standpoint,” says Neidl, calling them “messy.” Partnerships, on the other hand, are cleaner, he says.
Neidl expects that Delta and Northwest, which both filed for bankruptcy protection in September, will come out of the process “lean and mean.” Of the much publicized prospect of the two carriers merging, Neidl says that would most likely only occur after each has gotten its own economic house in order.
Airline management, says Neidl, still thinks in terms of market share and maintains capacity in the system that shouldn’t be there. “Demand is so strong, the airlines should have been more aggressive with prices,” he comments. “We’re getting a free ride as customers.”
Robert Fornarco, president/COO of AirTran Airways, a keynote speaker here, reiterated Neidl’s observation regarding the legacy carrier’s focus on market share rather than reacting to market forces. He says the mindset is, “Harm the competitor ... and go bankrupt.
“Probably the most important thing we do at AirTran is we act quickly,” he says.
AirTran currently has 99 aircraft in its fleet, according to Fornarco, and will have 127 by year-end 2006. Since 9/11, he says, the airline has added 18 cities to its route structure.