Inside The Fence

March 8, 2005

As the jet-A turns; and, when it comes to air cargo, TSA has garnered a whole lot more friends ...

This year's Jet Fuel Conference in Orlando was especially notable for two reasons:

1) a host of sirens cautioning airports that they may be able to attract new air service to their communities, but may have to turn the new entrants away because of a jet fuel shortage;

2) the people with jet-A supply and distribution, both on the airline and oil industry sides, are going away through attrition and not being replaced. Says one observer, "A vibrant industry has whittled away"-- perhaps to the point of the conference itself going away.

Our report starts on page 34. These folks are serious about the pending infrastructure crisis, be it pipelines, fuel farms, or expertise. And, there's the potential for some suppliers and pipeline companies to get out of the jet-A business altogether. Just not worth the hassle or investment.

It all leads to a very serious question: "What happens when an airport runs out of fuel?"

* * *

Airline analyst Michael Boyd was a featured speaker in Orlando and, as always, did not disappoint. A few of the outtakes:

- "Much of the 2004 [airline] growth was due to irrational pricing."
- ATC is "incompetent; mismanaged; choking the system."
- "We think airports are going to become a huge battleground" over airline costs.
- Independence Air is "beyond help right now," charging fares that cover about half the carrier's costs.
- He projects the top-out market for the Airbus A380 at 400 units. "For air cargo, we think it's going to be a barn-burner."
- Boyd sees the coming microjets selling well, but not for Part 135 due to ATC considerations.
- "Bombardier will probably be out of the airline business."
- On the new Boeing 787: "Con-tinental has already ordered these; it's going to start a stampede."

* * *

Meanwhile, at ACI-NA's annual Air Cargo Symposium in New Orleans (page 24), industry was abuzz about TSA's Notice of Proposed Rulemaking released in November. The biggest issues, it seems, are cost estimates and what should be enveloped within the SIDA and/or AOA. Regarding costs, TSA says it will cost industry some $84 billion/year. Boeing says count on twice that, and don't expect the feds to pay for it.

Yet, this crowd likes TSA. Seems if you give them some time to write a reg, they become more reasonable.

Thanks for reading.