A Time for Aviation Policy Reform

For everything thing there is a season, and in the aviation industry the season for change has arrived. The time is now for aviation industry reforms addressing policy, funding and governance

Once again the aviation industry faces disruptions to the National Aviation System (NAS) because of public policy failure. This time it is sequestration, the indiscriminate cuts to discretionary spending that are resulting in furloughs of key federal personnel and contributing to service reductions in air traffic control, security, and customs and border protection services. It is merely the latest unfortunate chapter in a decade-long story of policy instability. What is new, however, is until now there have not been any tangible industry-wide efforts to address the issues generating these crises.

The place to start is to acknowledge that these types of disruptions are embarrassing, destructive and threaten the future of aviation, an industry that is a leading driver of U.S. economic growth, exports and job creation. It was just under two years ago when the July 2011 partial shutdown of the FAA delayed vital services and cost the Airport and Airway Trust Fund (AATF) $400 million. If the current sequestration process remains in effect through April it will:

  • Close more than 200 air traffic control towers;
  • Reduce air traffic services at the largest gateway airports such as New York and Chicago;
  • Cause longer lines for domestic and international travelers; and
  • Place a financial burden on the government and private-sector men and women who serve and depend on the industry.

The fallout from sequestration proves our industry has become too susceptible to day-to-day politics. The members of the FAA Management Advisory Council (MAC)—a group appointed by the Secretary of Transportation and representing all segments of aviation—examined these issues over the last two years and concluded that fixing the problem requires the industry to work with the FAA to establish a firm policy, funding and governance foundation. The industry members of the MAC unanimously agree that all entities involved must work together to strike a better balance between our parochial issues and system needs.

MAC finds reforms should accomplish the following goals:

  • Update and simplify aviation policies,
  • Provide long-term financial stability to the FAA and aviation programs, and
  • Reform the governance structure so the FAA can both meet its public goals and deliver its services in a more efficient and effective manner.

Promote Policy Changes

Aviation policy—not significantly changed for more than 15 years—is dramatically out-of-touch with an industry that just survived its most tumultuous period since its inception. The tumult included the terrorist acts of 9/11, SARS, the financial crash, wildly volatile and increasing fuel prices (now the largest expense category of a low-margin industry), and the resulting cycle of bankruptcies and consolidation.

What has emerged is an industry that has become more global, with three alliances now controlling a dominant share of international and connecting traffic. In the United States, this consolidation comes at a price—its three largest carriers are no longer the leading players in these alliances, and it is the only region of the world that has experienced an absolute reduction of capacity since the new century. The fallout has been considerable for many U.S. airports. The largest airports have seen an 11 percent reduction in seat capacity since 2000, while smaller classes of airports have lost at least 25 percent of their air service on average. While U.S. airlines have followed the RyanAir model and “unbundled” their tickets in order to increase profitability, that same practice tilts the competitive playing field among airlines with different business models and, by reducing the taxable base of tickets, costs the FAA valuable revenues. And in general aviation, record fuel prices have reduced flight hours and parked planes. Added to this challenging mix are the higher costs and lack of the accountability for security and customs services.

Focus on Funding

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