Inside the Fence

April 3, 2006

Out-takes from FAA’s 31st annual Aviation Forecast Conference, held in March in Washington ...

FAA sees U.S. aviation again reaching for the stars, with airlines expected to surpass the one billion passengers level over the ten-year forecast period. In line with that projection, DOT Secretary Norm Mineta opened his brief speech by saying, “We better be prepared to expand capacity...”

Only problem is, FAA is crying poor, as is the Administration, which wants to cut more than $700 million from the Airport Improvement Program — a leading mechanism for expanding capacity at airports. FAA talks the talk, using terms like “cost-based” and “managing like a business;” yet, the walk remains the question.

ATA president James May continues the cry that the airlines are tired of paying for everything, though of course it’s really the passengers who pay. In fact, airlines frequently have problems paying for many things — bankruptcy court apparently isn’t as ominous as it sounds to the rest of us.

ATA, too, likes the term “cost-based,” and subsequently came out with a proposal to fund the system via departure and time-in-system fees. A well-publicized goal is to get more money from business aviation users. A key item that deserves to be read more than once calls for a “new administrative structure, providing for a direct role in governance proportional to the extent of each user’s financial contribution...” Spelled another way, it reads ‘control.’

Few will argue with May, however, when he asserts, “Nothing is more important than modernizing the air traffic control system.”

Comments NBAA’s Ed Bolen, “The reality is, all movements are not the same.” He maintains that general and business aviation are tertiary users of a system set up for the air carriers.

On the subject of airline profits, William Warlick of Fitch Ratings cautions that the industry as a whole has an unsupportable level of long-term debt — $100 billion. That debt will need to be reduced, he says, before fleets can be renewed by the legacy carriers, which have few aircraft on order through 2007.

Finally, Pete Bunce of GAMA says that while his group of manufacturers is excited about the entry of very light jets into the system this year, he doesn’t see them darkening the skies. He points out that should the air taxi concept prove successful with VLJs, it is likely the aircraft will be replacing others currently being used by air taxi operations. Success with the VLJs, though, could have OEMs reaching for the stars: “Supersonic business jets can become a reality,” says Bunce.

Thanks for reading.