Plane Conversations

In a May 12 USDOT press release DOT Secretary Ray LaHood announced the members of the  Future of Aviation Advisors Committee.

Quoting from the press release: The Future of Aviation Advisory Committee was formally established in March to provide information, advice, and recommendations to the Secretary on ensuring the competitiveness of the U.S. aviation industry and its capability to address the evolving transportation needs, challenges and opportunities of the U.S. and global economy.

“Aviation is essential to our nation’s economy and our ability to compete in international commerce,” Secretary LaHood said.  “This committee, which represents a broad cross-section of the aviation community, will begin the important conversation about how to ensure the industry remains vital and competitive.”

The committee will focus principally on five issue areas:  ensuring aviation safety, ensuring a world-class aviation workforce, balancing the industry’s competitiveness and viability, securing stable funding for aviation systems, and addressing environmental challenges and solutions.

The advisory committee grew out of a forum last November hosted by Secretary LaHood on the future of the U.S. aviation industry, during which he urged attendees to nominate potential committee members. The members selected represent airlines, airports, labor, manufacturers, environment, finance, academia, consumer interests, and general aviation stakeholders.  The committee will meet at least four times over the next year, after which it will issue its recommendations to the Secretary.

You can go to the link above to see the rest of the press release and get the full list of the names of the members to the committee. Here is the basic rundown of the committee members by who they represent:

• Academia: 2
• Airport Management: 3
• Government: 1
• Airlines: 4
• Airline Unions: 3
• Airline Manufacturers: 2
• Investment Banking / Analyst: 2
• Consultant Consumers Union: 1
• General Aviation Manufacturers: 1
• General Aviation Operators and Small Business: 0
• General Aviation Associations: 0

In the press release, they mention that general aviation stakeholders are represented. The only General Aviation Stakeholder I can find in this group is Jack Pelton, CEO of Cessna.

What about the rest of GA including any of the associations like AOPA with 500,000 members or NATA or NBAA, or any air charter company, or small aircaft maintenance company?

Airlines and their Unions get 7 committee members and if you add up the rest most are tied to or affiliated to the airlines. General Aviation which represents 1.3 million jobs in this country doesn’t seem to have much of a voice in this administration and their committee.

Rob Mark in his May 17 Jetwhine Blog post says it better than I could ever say it. We ought to be Mad as Hell and we should not take it anymore. Thanks, Rob, for bringing this to our attention.

What do you say about it?

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The Battle of a Thousand David’s against the one Goliath.

The title could be both looking back in retrospect, looking at the situaiton in the present tense, and looking at the future.  How did we beat back the powerful lobbyists when General Aviation took on the Airline Transport Association that represents the mainline airlines?  Did we really beat them or is it an ongoing battle with a brief respite?

The battle I speak of was over proposals to put in place European style aviation user fees that would eventually cripple general aviation as they have in other parts of the world.  The old style of slugging it out on “the hill” in D.C. would have left General Aviation (GA) in the dust licking it wounds.  ATA had the money and the mainstream media (via advertising dollars) on its side.  GA, with several less powerful organizations fighting the battle itself and the big media perception problem, appeared to be outgunned.  

What these organizations did have was numbers.  1.3 million aircraft owners, pilots, and aviation workers who make their living flying, maintaining and fueling general aviation aircraft every day, as well as small and medium sized businesses who use small aircraft to grow their businesses.  Big media portrayed our industry as one that serves what they called the “fat cats” who ride around in big corporate jets wallowing in corporate excess while asking for government bailouts.

For a while, we let them get away with it. Then the voices started speaking up.   

The fight looked pretty dismal two years ago when we were up on the hill going around to different congressional offices asking for support.  We had some friendly receptions but we also had some chilling ones.  You could tell who had been visited by the ATA lobby and their PACS.  It was not a partisan issue we experienced.  In fact, the most chilling reception we had from the Tennessee congressional delegation came from an East Tennessee Republican congressman who we wrongly assumed to be a supporter of small business (GA).

Most of us thought it to be a losing battle but, still, none of us would go down without a fight.  I can’t speak for the organizations that represent us, but at the time I think they probably saw the battle as an uphill fight.   The organizations that supported our interests seemed to be behind the power curve and lacked the money to work the hill the old fashioned way.  What we did not understand at that time was the power of the grass roots organizations like AOPA (www.gaservesamerica.com) that mobilized their 500,000 plus membership to inundate congress with calls and letters.  Alliance for Aviation Across America formed in 2007 to take on the cause and now has over 4,400 members, including all of the major associations that represent GA.  www.aviationacrossamerica.org  The formation of this alliance was probably the most brilliant strategy of this game.  Politicians can’t ignore the sheer numbers and the broad cross section of this alliance.  They realized they were taking on mainstream America – famers, small business, factory workers, pilots, maintenance technicians….. Not good politics in the middle of a recession!

We also did not understand the power of social media and the technology surrounding it.

All of this tells us that the power should no longer be allowed to rest in the hands of the paid for lobbyists and politicians in DC.  The power rests in the consumer, the individual voice willing to comment on the articles and blogs, the activists who send emails, write letters and make visits to the hill in DC.  Alliances whether informal or formal take on a new power that money can’t silence.  Whether you agree with the Tea Party movement or not, you have to agree that it represents a shift in power that comes from the bottom up and it is only the beginning.  More ground swell movements will follow and emulate.   

 The politicians are scared of this new shift in power. It is not business as usual.  As a good friend says, “it is business as unusual”.

 For the first time in the history of our great country, since its founding 225 years ago, the term “We the People” may have new meaning and significance.

 So looking forward, how do we keep winning the battle?

 First we have to be right.  And if we are right, then we have to win the hearts and minds of the consumers (the people), because the real power moving forward rests in the pocketbooks of the consumers who have gained a voice in the market place.

Do not expect them to relinquish that voice. In fact, expect it to grow louder and stronger as social technology allows the voice to be heard loud and clear.

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Our company sells refurbished turboprop regional airlines all over the world. In the last 18 months, in the middle of the worst aviation recession in memory, we have sold and delivered aircraft to Nepal, Canada, Columbia, Venezuela, Haiti, Dominican Republic, Australia,and Zambia to name a few.  All of this in a time when used aircraft sales in the United States came to a screeching halt and have yet to recover.  And the sales could have been higher.  Had small airlines who are looking to expand their fleets been able to get financing, we would have sold twice again what we were able to sell around the world. Albeit there is risk associated in financing aircraft for small airlines in other countries, most of the businesses we deal with are well run and not as highly leveraged as the big airlines in Europe and the United States. These small businesses have not had the luxury of obtaining financing for new aircraft and so they typically pay cash,after saving for years, or finance a very small portion of the purchase.

A December 10 article in The Wall Street Journaldiscusses ExIm bank’s effect on Boeing Commercial Airliner sales. The number quoted is that one in four of Boeing’s sales are funded though the ExIm Bank guaranties. Without this government-backed financing Boeing would not be where they are today.

Recently our company was introduced to the process of working through the  ExIm program as an opportunity to get backing on the sale of aircraft to a small airline in Central America.  ExIm works much like other US programs that guarantee loans for loan underwriters to induce the underwriter to make a loan they might not otherwise make.

In a theoretical sense I believe in the free market economy, but a free market economy needs a level playing field, with rule sets that apply to everyone in the market. In the case of most international trade, and especially in aviation, governments across the world intervene to the benefit of their national industries. So if Airbus gets help from the European Union and its home country of France, but Boeing gets no help in any form from the United States is that fair trade in a freemarket economy?

Let me take this back down to the small business level where most of the jobs in this country are created. In the case of our company a big percentage of the payroll is tied to buying, refurbishing and reselling these used regional airline turboprop aircraft. We have yet to receive any handouts from the government for anything. We haven’t asked for any handouts. We pay our taxes (hard to count how many different ones) like everyone else. So, is it wrong to go to ExIm and ask them to back loans to sell small aircraft to airlines in developing countries who will use these aircraft to develop their own transportation infrastructure?

I don’t know the default rate of the ExIm program’s backed loans. I am not sure it is published and I’m certainly not suggesting a  process that encourages bad loans. I am simply suggesting a process that provides capital for transactions that are sound in business principle but outside the realm of traditional banking sources.   

Without capital it is hard to grow the economy, both here in the US and abroad. For the case of our small business, when other small airlines around the world can obtain the capital to grow, jobs and profits are created here in the US.

Not a  bad proposition?

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A February 1 press release issued by the National Business Aviation Association says: “When it comes to the long-standing battle over user fees, it appears that today, we have reached an important and welcome milestone,” said NBAA President and CEO Ed Bolen. “The fact that user fees are not part of the President’s 2011 budget proposal shows the tremendous progress we have made over the past year.”

It looks like we won the battle! But, have we won the war? Can we go home now?

The press release goes on to say: 

Despite the removal of user fees from the Administration’s FY2011 budget, Bolen said that ongoing vigilance and grassroots mobilization by NBAA’s Members would be needed to ensure that Washington policymakers continue to understand the industry’s support for helping to fund aviation modernization through fuel taxes. “Whether or not this is an indication of a permanent policy shift on user fees, or a one-time development remains to be determined,” Bolen said. “What we do know for certain is that our industry must continue to make its voice heard on this and other issues.”

Knowing how Washington, D.C. works and understanding the power of lobbyists, I would say that we can breathe a sigh of relief but we cannot let up. Mr. Bolen says that we must continue to make our voices heard and I agree. In some ways, the fight will never be over because we as an industry must communicate our value to the politicians and media, but more importantly, to those people who write our paychecks every week – the travelers.

How do we do make our voices heard?  The power of social media, where millions can speak for themselves, can drown out the voice of the lobbyist and the campaign contributions that buy that voice. It is a new day and the message is no longer bought, sold or owned by any one person or organization.

I commend the NBAA, AOPA, NATA, and EAA, who represent over a million aviators in this country, for mobilizing their constituents to speak out and be heard by both their representatives in Congress and by the media.

This quote recently posted on AOPA’s site really captures the essence of the battle:

So often we think we have got to make a difference and be a big dog. Let us just try to be little fleas biting. Enough fleas biting strategically can make a big dog very uncomfortable.
– Marian Wright Edelman, founder of the Children’s Defense Fund

As USA Today and other mainstream media covered the issues of aviation with a serious bias in favor of the Airline Industry and the Air Transport Association, the voices of individuals who disagreed with the bias were raised and heard.  As I viewed the comments on these articles, they were most always overwhelmingly in favor of general aviation. Mainstream media has come to the realization that they must allow the people to speak or be rendered irrelevant.

The airlines need to go back to the sidelines and figure out how they are going to create value in this economy versus trying to blame their problems on everyone else, including General Aviation.

General Aviation, as a way of travel, is part of what makes this country great. The freedom to go by air to meet for business, see family, or just have fun is social and creates value in this economy by connecting people in a time-saving and stress free manner.

So, if the “Big Dogs” in D.C. start acting up again, let’s be prepared to bite strategically again.

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I love the decisions the big airlines are making these days.  Everything they do keeps creating more opportunities for those of us on the other side of air travel – the private aircraft side.  Maybe their decisions make sense for them in light of the need to increase profitability and drive shareholder value; but, their decisions keep emphasizing the ever increasing differences between mass transportation and private transportation. 

Delays at overcrowded hubs result in long lines and short tempers.

In an article in the NY Times, Joe Sharkey reveals that American Airlines is shifting their route structure to consolidate more flying at their hub operations at bigger airports.  At Chicago O’Hare alone, they are adding 57 daily flights to the present schedule of 430 daily flights.  All of these additions at the big airports are added at the expense of small- and medium-size markets that have already seen reductions in airline service and capacity over the past year.  Mr. Sharkey states, “Even though most airlines are shrinking capacity - American’s domestic capacity is down by about 11 percent in two years – the biggest airports are shaping up as intense battlegrounds for large carriers.” 

This sounds like it could mean lower ticket prices for the business traveler – if you live in Chicago or Dallas, that is. As they have since de-regulation of the industry in the 80’s, airlines continue to beat each other up by fighting over the same turf in the big markets while ignoring the rest of the traveling public out here in the hinterlands.  Is it really good news for the business traveler?  More flights into the already over-crowded hub airports will only add to the congestion and delays.  Have you ever been at one of the major airports when a winter storm or summer thunderstorm arrives?  The additional delays add not only to the big airport chaos, but also to delays in down-line schedules at airports that are not over-crowded.  How many times have we all sat at a smaller airport terminal on a nice, sunny day waiting for our departure aircraft to arrive on its inbound leg?  Finally, we hear that the flight can’t get out of New York or Dallas or Denver due to weather delays but will be here in three hours.  After three hours, the announcement comes that the flight is cancelled because it is now so late it can’t make the schedule.  Chaos ensues…  

So what about the business travelers out there in every other market besides DC or LA or Miami?  Where does this leave them with the airlines who so covet their business?  Less service, fewer non-stop destinations, more routing through those ever so lovely hub cities with more delays and cancellations.  Makes “water boarding” almost sound like humane treatment, doesn’t it?  

The alternative for the rest of us outside the big markets is to find more efficient ways to get there.  Many have given up hope and are driving.  Travelers have told me a thousand times, “I can drive and get there just as fast as the airlines.  I’ll get there tired, but at least I know I’ll get there”.  

The only reason more people don’t use private aviation is price; so, the challenge for those of us in private aviation from the manufacturers of private jets to the service providers is to continue to innovate to drive down price.   Not once have I ever heard someone say, after flying in a private jet, “I can hardly wait to get back on the airline.”  The big airlines keep making those decisions to make life miserable on the customers whom they say make them the real profits they need.  It is time for the rest of us in aviation to step up and meet the needs of the customers.

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Recently a lot of conversation has revolved around the legitimacy of using private jet aircraft for business.  When the CEOs of the US automakers went to DC in their large corporate jets asking for government bailout money, the conversation hit the front pages of the news.  How dare these guys show up in their corporate chariots asking for our money?!  Airlines jumped into the fray, poking at the private jet industry in an effort to gain back the lucrative business traveler they have so adeptly run off over the past few years and to shift attention away from their own shaky business models.  Regardless, the question of the legitimacy of using private aircraft is really not that complicated.

Britannica’s definition of mass transit: “Transportation systems, usually publicly but sometimes privately owned and operated, designed to move large numbers of people in various types of vehicles in cities, suburbs, and large metropolitan areas.”  Wikipedia goes further in its definition to compare Mass transit against its alternative to give you a clearer picture: “Public transport (or public transportation, public transit or mass transit) comprises passenger transportation services which are available for use by the general public, as opposed to modes for private use such as automobiles or vehicles for hire. …”  Just like subways, buses and family cars in the US, both public air transportation (airlines) and private air transportation (all other means of air transportation) have their places in this country and in most other countries in the world.

As I have traveled all over the world and all throughout the US, I have found efficient mass transit in the large metropolitan areas London, Paris, New York, Washington DC, where I use the systems like millions of other people each year. However, my travels often include some of the less populated areas in the US.  On a recent trip out west to Wyoming and Montana, I did not find mass transit; but, I did find wide open spaces and two lane highways that seem to go into infinity.

Small municipal airport

Wyoming is a big state with not that many people - fewer people in the whole state than in the city of Nashville – my hometown.  Cheyenne, the largest city in the state with a population of about 56,000, has an airport featuring scheduled air service – from a single airline.  As I drove further through the state, I saw airports in most every city, but no scheduled airline service to the majority of them.  However, at those small airports, there was everything from small-single engine prop aircraft to corporate jets parked on the tarmac just like at hundreds of other airports in hundreds of other cities I have been to in my life.  Those aircraft and small airports represent many people, businesses and uses, but primarily they represent the most efficient way for people in those small cites to connect to and interact with the rest of the world.

Case and point – the City of Pinedale, Wyoming, has a population of about 1400 and is in the middle of a boom. I wondered, “Why the boom in Pinedale?”  My brother, who runs a Wyoming-based airline, answered,”Oil.”  Further research tells me this is a hot area for natural gas and oil production.  As I drove into this town, I counted five, new, branded hotels on the main drag.  On the other side of town,  I passed the airport where I saw a tarmac and hangars with aircraft but no small airline terminal.  It is a 8900 foot strip of pavement on the side of the highway with small buildings off to the side that keep aircraft out of the weather.  So exactly how does a person get to Pinedale, Wyoming, in a reasonable amount of time to sell his product or service to that community, or to make an investment in that community?  Not by mass transit, that’s for sure. You see, there is no airline service to Pinedale and, certainly in our lifetime, we won’t see a high speed rail system passing though town.  However, that almost unnoticeable strip of runway pavement makes Pinedale, Wyoming, accessible to me from Nashville, Tennessee, by way of a private aircraft in a short 2 hours and 54 minute flight – about the same amount of time it takes to drive across a major metropolitan area in rush hour traffic.  It connects the citizens of Pinedale to the rest of the world in a way nothing else does.

So if you are one of those big-city people who don’t see the need for private air transportation, drop into Pinedale, Wyoming, and ask the city officials, business leaders and chamber of commerce folks responsible for job creation and economic development if they will let you dig up their strip of asphalt called Wenz Field, Pinedale Airport.  Tell me what response you get.  But before you approach, just remember you are in the gun-toting Wild West!

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