Plane Conversations

After the justice department approved the merger of Continental Airlines and United Airlines last Friday, Congressman James Oberstar (D-Minn) voiced his displeasure again  with the merger and suggested that Congress might just need to reconsider the deregulation of airlines that happened in 1978.

The airlines have been stuck between a rock and a hard place for years. Combined profits of the industry are non-existent and customer satisfaction with airline service is somewhere down there in the range of our approval ratings of congress’s performance.

What we have received from deregulation are cheap air fares. Most people don’t remember what it cost to fly on the airlines prior to 1978 because they were either not old enough or did not fly on the airlines back then due to the costs. Real costs for flying via commercial airlines have come down over the past 30 years but the by-product of lower fares has been a reduction in what we consider to be service and the amenities of air travel. In some ways, airline travel has become just another form of mass transit much like rail service.

What we want we can’t have, and the government stepping in will not solve the problem.

We want our cheap $99 return fares, anywhere, anytime, and we want great service and convenient on-time departure schedules to go with the low price.

Deregulation brought on the competition with low cost carriers, which brought down the fares that we all enjoy.

Low fares combined with volatile fuel prices, worldwide competition with lower labor costs and airlines irrationally putting too much inventory of seats in the market took the profits out of the airline industry.

So now we have to adjust to some new fare structure and service level that the free market should work out. Mergers of air carriers are a part of this evolutionary process.

The airlines and their shareholders deserve to make a profit, or at least attempt to do so, while providing air transportation to the consumer. Unlike a utility where we have no choice, we don’t have to fly if we don’t like the combination of price, service and time efficiency of air travel.

As my Southwest flight pulled into the gate Sunday afternoon at Nashville, the flight attendant reminded us that we have many choices about who we fly with and he thanked us for choosing Southwest Airlines. In reality, we have choices beyond whom we fly with because we can drive and, in some cases, take the train. We can also choose not to go at all.  

Regulation of air travel from the federal government should be limited to matters of safety. Congress should not venture anymore than they already have into the regulation of customer service, pricing and competition. 

Government intervention has not brought much value to anything lately and I can’t imagine a scenario where reregulation of the airline industry will ultimately benefit the US economy and the consumer of air travel.

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Darren Goode reports on Government Executive.com that House Transportation and Infrastructure Committee Chairman Rep. James Oberstar, D-Minn., predicted last  Wednesday that a multiyear FAA authorization bill will be signed into law by July 4.

Quoting Rep. Oberstar “I think we’ve made enough progress and we ought to be able to get it done by then,” he said. “We are working toward that goal. We’ll get there, we’ll do it.”

For the complete article:

http://www.govexec.com/dailyfed/0510/052010cdam2.htm

In its present form all of the associations that represent the various general aviation constituencies, including NBAA and NATA are for the authorization bill.

There is a provision in the bill on the house side that makes it easier for FedEx workers to Unionize. Obviously FedEx management opposes this provision and has fought it all along the way. It was taken out of the Senate version thanks to the help of our Tennessee Senators.

I have said this before, and will say it again. I do not understand why the provision dealing with FedEx has to be in a bill that funds the FAA and should be dealing with the entire aviation system. It seems to me that lawmakers like loading up these bills with provisions that take care of their key constituencies, which in this case for House Dems would be the Unions. There doesn’t seem to be any rational correlation between funding the FAA and FedEx unionizing?  

OK, Back to the FAA Bill:

It will be good for the FAA to finally have a funding authorization that is more than 3 months or a year. They have been on the short string for three years now. Hopefully the FAA can take this and do something positive with the NextGen Air Traffic Control System.

On the GA side, we will pay more fuel taxes but most people think that is not a bad price to pay in return for no user fees. I tend to agree. Once a new type of tax sneaks in it never seems to go away and the old tax never goes away either. At least we in the FBO and charter business understand how to collect and pay the fuel tax. It is an efficient way of funding our aviation infrastructure system. User fees in other countries around the world have proven to be a nightmare for operators to handle from an administrative and accounting standpoint.

We should expect some inefficiency in how the money is spent, because after all it is big government and there is no disincentive for inefficient spending. Hopefully if the FAA throws enough money at it we will eventually get a NextGen system that can effectively increase the flow of traffic through our airways and make the system more time efficient and save fuel.

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