By MICHAEL J. SNIFFEN | Associated Press Writer 7:23 PM CST, November 15, 2007
WASHINGTON - In a year of record delays, President Bush stepped forward Thursday to try to speed American air travelers to their Thanksgiving gatherings and back home on time.
Declaring that "business as usual is not good enough for American travelers," Bush announced at the White House a series of detailed technical steps to reduce air traffic congestion and long delays that have left passengers stranded and turned holiday travel into "a season of dread for too many Americans."
In the most innovative move, the Pentagon will allow commercial airliners to use two air corridors off the eastern seaboard that are normally restricted to military flights. Supplementing the dozen air routes regularly used from Florida to New England, they will create "a Thanksgiving express lane" for commercial airliners from 4 p.m. EST Wednesday through Sunday -- the busiest days of Thanksgiving travel.
For the second time since September when he ordered the Transportation Department and the Federal Aviation Administration to come up with solutions, Bush personally intervened in the intractable problem of air congestion that previous presidents avoided and many aviation experts believe has only long-term solutions.
Crowded airports, stranded passengers and delayed flights "carry some real costs for the country," Bush said, "not just in the inconvenience they cause, but in the business they obstruct and family gatherings they cause people to miss."
Bush's moves were applauded by trade groups representing the airlines and airports but derided as ineffective by air traffic controllers who said their ranks have been thinned too much to handle the holiday crush efficiently. The pilots union called some long-term steps too drastic.
Democrats in Congress characterized Bush's actions as "better late than never," in the words of Rep. Jerry Costello, D-Ill., House aviation subcommittee chairman, and not nearly enough in the view of Sen. Charles Schumer, D-N.Y.
Even Transportation Secretary Mary Peters acknowledged, "If we get an ice storm on the eastern seaboard, it probably won't be pretty."
Americans traveling through one of the main chokepoints, New Jersey's Newark Liberty International Airport, remained skeptical Thursday afternoon.
"It's probably a good idea, but are the airlines going to be able to handle it?" asked Dawn East, 52, as she waited for her flight to Miami, which had been delayed for two hours. "It's not a problem of the lanes up there. It's an industry problem. There's no efficiency."
Mike Young, 60, who plans to travel to Arkansas over Thanksgiving to see his daughter, doesn't expect Bush's plan to help. "In theory, it sounds nice, but given his record, I don't trust it to work," said Young, a consultant, headed home to Seattle.
Garth Ehrlich, 51, a molecular biologist waiting for a delayed flight to Pittsburgh, also expects to travel over Thanksgiving to Los Angeles, and hopes the "Thanksgiving express lane" will ease delays and that "it doesn't in any way jeopardize national security."
On Capitol Hill, airline executives told the House aviation subcommittee they will reduce overbooking during the holidays and add ticketing staff. Airport association executives said they are finding places to sleep, including cots, and food and water for people who are stranded.
The chief benefit of using the military air routes would be to "get people out of the New York area quicker, especially if we have (bad) weather up and down the East Coast," said Nancy Kalinowski, systems operations vice president at the FAA. This could have a wider impact because 75 percent of the nation's air traffic delays are traced to congestion problems in the New York area.
Through September, more than 24 percent of U.S. flights arrived late, the worst on-time performance since comparable data began being collected in 1995. In these Transportation Department figures, on-time means less than 15 minutes late.
Many of the new moves also will be in effect for Christmas but even some of the short-term steps Bush announced -- like doubling the penalties airlines have to pay passengers bumped from overbooked flights -- won't take place until next summer at the earliest.
Bush acknowledged these short-term steps "do not cure the underlying problem: In certain parts of our country, the demand for air service exceeds the available supply. As a result, airlines are scheduling more arrivals and departures than airports can possibly handle."
He called on Congress to pass his FAA reauthorization bill, which would finance a multibillion-dollar modernizing of air traffic control by replacing radars with global positioning satellites. The House has passed a reauthorization, but Bush objects to some provisions. The Senate has yet to act.
Among the short-term steps:
* The FAA is imposing a holiday moratorium on nonessential maintenance projects, so all its personnel and equipment will be focused on keeping flights on time.
* New runway use patterns have been instituted at New York's Kennedy International that allow four to six more planes to arrive each hour, and Newark is about to add new takeoff routes.
* An FAA Web site, http://www.Fly.FAA.Gov, will provide up-to-date information about airport delays. Passengers can sign up to have delay notices sent to their mobile phones.
The Transportation Department proposed new rules to double the bump fee that airlines must pay to travelers with tickets but no seat from $200 for those delayed less than two hours and $400 for those who wait more than two hours to $400 and $800. It also proposed that airlines devise legally enforceable plans to provide food, water, lavatories and medical care to passengers stranded in planes on airport taxiways.
Long-term, Bush expressed support for so-called "congestion pricing" proposals that would charge airlines higher fees to take off and land at peak hours in overcrowded airports to encourage them to spread flights throughout the day
Transportation Secretary Peters acknowledged airlines would pass along to passengers some of the costs of the higher fees and penalties. But she said, "Travelers already pay now for the lack of reliability, the lack of knowing they'll get there on time." She said her former private sector employer paid the extra cost of having employees travel a day early to be sure to be on time.
* __
Associated Press writers Janet Frankston Loring in Newark, N.J., and Jim Abrams in Washington contributed to this story
Political nosense. The warning areas are normally not active during the holiday weekend anyway so it's just grandstanding. My guess is they'll announce what a great success it was and repeat if for Christmas and Christmas and New Year's day. Then they'll announce it for all major holidays.
Funny, but I've been getting routings through these restricted areas since 1992 during holiday periods and late at night.
Chickens flown the coop, let's take credit for it.
Airline industry destined for more mergers Buzz about Delta reflects growing pressure as fuel prices soar ANALYSIS By Karen West MSNBC contributor updated 1:07 p.m. CT, Sun., Nov. 18, 2007 So much for a smooth ride to recovery for the nation’s fragile airline industry.
Just when airlines are emerging from bankruptcy and starting to post the best profits since 2001, the industry’s future is shakier than ever. But it doesn’t take a crystal ball to see that consolidation is on the horizon. It’s just a matter of when and how.
Crude oil prices are climbing dangerously toward $100 a barrel. The U.S. economy is slowing. Airline stocks are sinking. And labor costs are soaring.
“That’s a recipe for restructuring in the industry,’’ said Vaughn Cordle, CEO of Airline Forecasts in Washington. “There are just too many airlines right now. If the jet-fuel prices hold, something else will have to give.”
That “something else” will most likely come in the form of mergers and higher air fares.
Published reports last week that centered on a possible marriage of No. 2 United and No. 3 Delta were just a hint of what the future may hold, even if that particular alliance never comes to fruition.
Despite some talk airlines might try to rush into merger talks before a new administration takes over, some industry experts say nothing is likely to happen anytime soon.
Publicly, major carriers appear unwilling to take on the headache of risky mergers. To do so would mean months of strategic planning and consultation over labor issues, operating structures and regulatory approvals. And that’s before the Justice Department’s review process, which can take another 18 months to two years.
“I find it unlikely that a merger could be approved" before a new administration takes over in 2009, Cordle said.
While many airline executives are publicly denying they are in merger talks, some are conceding that consolidation is in their future.
Goldman Sachs analyst Robert Barry wrote Thursday that “all airline management teams and boards have been discussing consolidation ad nauseam, for months if not longer.” United Airlines has made no secret that it would entertain a partnership. And Northwest has been open to talks as well. But so far, airlines have been all talk and no action.
“Everybody’s filling up their dance cards but nobody’s dancing yet,’’ said airline analyst Ray Neidl with Calyon Securities.
Eager institutional investors want to reverse that trend. Last week’s less-than-subtle advice for Delta to merge with United was the latest example of the pressure airlines are under today to boost profitability.
Pardus Capital Management LP, a hedge fund that owns 7 million Delta shares, publicly disclosed that it had written a letter to Delta, calling on the airline to consider a merger with United. Pardus also owned 5.6 million shares of UAL as of Sept. 30.
Pardus came across like a chaperone pushing a reluctant suitor onto the dance floor. And such investor demands will become more aggressive if fuel costs continue to chip away at airline profitability.
Delta CEO Richard Anderson issued a statement flatly denying that his airline was in merger talks with United but acknowledged that the airline is studying its strategic options.
He said Delta “believes that the right consolidation transaction could generate significant value for our shareholders and employees and that strategic options should be evaluated. With oil at over $90 a barrel, this analysis takes on a heightened importance as we factor those prices into our long-term planning process.”
Anderson told members of the Georgia congressional delegation Thursday that he wants Delta to remain headquartered in Atlanta should any merger take place down the road.
Delta is not the only airline under pressure from investors. American Airlines has been under increasing pressure to bolster share prices since September when FL Group, an Icelandic private equity group that owns 9.1 percent of parent company AMR, urged it to consider spinning off its frequent flyer program. The action, the group said, would be a “strategic alternative that would significantly increase shareholder value.”
The reignited talk of mergers, spinoffs and consolidation comes at a time when the U.S. airline industry is bouncing back from years of bankruptcy and plummeting profits. The post-9/11 downturn saw the bankruptcies of United parent UAL, Delta, Northwest and the former US Airways Group, which has merged with America West.
But in 2006, the industry posted its first profitable year since 2000, and analysts predict profits this year of $4 billion to $5 billion. That's compared with the cumulative $40 billion airlines lost in the previous six years.
The biggest problem facing airlines today is soaring oil costs, which boost the price of jet fuel — one of the top airline expenses. Oil prices rose above $95 a barrel Friday amid expectations that global crude supplies will remain tight.
Cordle, of Airline Forecasts, said every $10 increase in a barrel of crude oil translates to $3.4 billion in additional costs for the airline industry. The industry — which burned nearly 20 billion gallons of fuel last year — has offset some impact of higher fuel costs through better efficiency and fare increases. But analysts predict those actions might not be enough in the long run.
“We do not believe that consolidation is imminent, but when it comes, it will be fast and furious,” Neidl said last week in a Calyon Securities report. “Absent some major airlines terminating operations, which would take capacity out of the system, we believe the industry is ripe for consolidation. We do not need six nationwide, full-service airlines with all their overlapping expensive hub operations.”
Neidl said he remains leery about mergers, however, especially because they can be difficult, expensive and disruptive to complete.
Nevertheless, he said: “Once the starter gun goes off, there will probably be a mad rush to pair up.’’
They had a fascinating interview on WTTW in Chicago tonight, with two local air traffic controllers. They both said the same thing, that those military routes are used all the time and the President's announcement is essentially the same as his "mission accomplished" banner. They spoke of the severe understaffing at the Chicago Tracon, mentioning how it is common to have one controller staffing two positions simultaneously - and saying how they had a guy on duty for almost 4 hours in a position where the maximum is two hours.
December 6, 2007 Airport congestion and gaps at the US Federal Aviation Administration were blamed on Wednesday by a congressional watchdog for runway safety shortcomings that could lead to a serious airline accident.
The Government Accountability Office, the investigative arm of Congress, concluded that overall runway safety gains have eroded in recent years, and serious incidents, where collisions were barely avoided, continue and suggest a "high risk" for a catastrophe.
About a third of the most serious runway near-misses between fiscal year 2002 and 2007, which ended October 30, involved at least one airliner, researchers said.
The worst incident this year involved two big commercial planes that missed each other by less than 100 feet on a Florida runway, according to government safety records.
There have been other close calls in Los Angeles, Chicago, Philadelphia and Dallas-Fort Worth.
"The GAO findings are distressing," said Rep. James Oberstar, a Minnesota Democrat and chairman of the Transportation Committee in the House of Representatives.
The number of runway near-collisions, most of which involve small private planes, peaked in fiscal 2001, then declined a bit and leveled off for five years. Preliminary data show incidents heading back up to 370 in fiscal 2007. There were more than 400 in 2001.
In a statement, the FAA noted the most serious incidents have fallen by half since 2001, and dropped from 31 in fiscal 2006 to 24 in fiscal 2007. Eight involved commercial aircraft, the latest figures show.
There were 61 million takeoffs and landings last year.
"Reducing the risk of runway incursions is one of the FAA's top priorities. The agency has aggressively addressed the issue," the FAA said.
Investigators noted FAA action since 2001, but said the most effective steps were "lower cost ones," including updated airport markings, new lighting and signs.
GAO investigators said the main problems are airport congestion and shortcomings at the FAA.
Criticism included gaps in agency leadership, inaction and poor coordination on key safety goals, and schedule delays and cost overruns for technology designed to alert air traffic controllers to potential collisions.
The GAO also cited air traffic controller fatigue, a complaint amplified by the air traffic controllers union in its fight with the FAA over staffing levels.
December 6, 2007 Delta Air Lines could trigger a much-needed wave of airline consolidation, the chief executive of rival US Airways said on Wednesday.
Speaking at the Reuters Aerospace and Defense Summit in Washington, Doug Parker, who tried and failed to merge his airline with Delta, reiterated his view that the overcrowded industry is in desperate need of consolidation.
He added, however, that Delta, despite earlier resistance to consolidation, is uniquely positioned to be the catalyst for what could be a wave of airline mergers.
"Delta will be the trigger if they want to be," said Parker, who engineered the 2005 merger of America West and US Airways. "When they decide to do something, that will be the trigger."
Parker and other airline leaders see industry consolidation as a way to cut costs and capacity and stabilize the volatile industry. A common view is that if two of the big airlines merge, others will scramble to find partners of their own.
US Airways made a hostile takeover bid in 2006 for then-bankrupt Delta. Delta rejected that bid in January, saying it was more valuable as a stand-alone company.
Since then, there have been no public merger proposals by major airlines, although speculation swirled last month that UAL, parent of United Airlines, and Delta were in talks. Delta denied it but said it had hired advisers to help it explore strategic options that could include mergers.
The US airline industry is recovering from a years-long downturn triggered in part by low-fare competition and exacerbated by soaring fuel prices. In 2006, the industry began cutting the number of seats for sale and raising fares.
But trouble is on the horizon for the industry as the US economy softens and high oil prices, which hit record levels in recent weeks, drive up the cost of jet fuel. Some industry leaders also believe travel demand -- mainly business travel -- could buckle under the weight of a softening US economy.
Mergers could be a way out of the industry's looming troubles, but so far, it's just talk.
But Parker believes that will change. He said Delta's the likely trigger because US Airways and Northwest Airline are too small to kick start the process, while United is willing but has been unable to pull off a deal.
Meanwhile, American Airlines parent AMR and Continental Airlines appear unwilling to initiate the process.
While Parker believes consolidation will come, he said that if airlines do not make merger proposals by early 2008, they likely will have to wait.
A new presidential administration in early 2009 will need time to fill positions at the US Department of Justice, which could result in costly delays in the approval process.
"There is a bit of a timing issue in that there is going to be a change," Parker said. "If there is not something announced very early in '08, I think you will see everything put on hiatus."
US Airways said on Wednesday that its passenger revenue per available seat mile increased between 2 percent and 4 percent in November, which was seen as weak by Wall Street and US Airways and could be an early sign of demand weakness.
"We believe this is a disappointing result relative to street expectations," said Kevin Crissey, UBS airline analyst.
Parker agreed the November results were "lower than we would have liked." He warned that a weaker US economy may dampen travel demand and that fuel costs are likely to remain a major burden for airlines.
"I do think 2008 is going to be a difficult year," Parker said, adding that airlines are better prepared to survive an economic downturn today than they were in years past.
"I think the definition of a difficult year in our business has gotten more manageable," he said.
December 5, 2007 Southwest Airlines expects soaring fuel costs to lead to higher fares and may push rivals into mergers, its chief executive said on Wednesday.
"It feels like fares will need to continue to rise on an annual basis because costs are escalating rapidly," Gary Kelly said at the Reuters Aerospace and Defense Summit in Washington.
Oil prices, which hit record levels in recent weeks, are driving up the cost of jet fuel. Combined with a darkening outlook for the US economy, the US airline industry, which emerged from a five-year slump in 2006, may be heading for another rough patch.
"There is a lot of peril that remains," Kelly said.
The recent run-up in oil "isn't a spike. We're at a new level. The industry hasn't adjusted to it yet. We haven't adjusted to it yet."
Higher fuel costs could help cripple the industry's hard-won turnaround, which has come through deep wage cuts and reduced fleets. But airlines remain vulnerable and may look to merge to survive.
"You will have a recession some time, and the impact on the airline industry will be dramatic," said Kelly. "All of that leads to consolidation, I think."
Southwest, one of the few US carriers to consistently post profits, is adjusting to rising fuel, labor, and airport costs by looking to boost revenue, with new products such as its Business Select fares, which come with faster boarding and a cocktail on board.
The new initiatives are expected to boost revenue by more than USD$1 billion by 2010, but they may not be enough on their own to keep from boosting fares, Kelly said.
Southwest is better positioned than its rivals because of its aggressive fuel hedges, which locked in prices well below the current level.
Those hedges are likely to generate a gain of "a couple hundred million dollars" in the fourth quarter, Kelly said.
Still, even with this protection, Southwest expects its costs per available seat mile, or unit costs, to rise by 4 percent in the fourth quarter and by "mid-single digits" in 2008.
Despite plans to rein in growth in 2008, Southwest may expand capacity faster than the currently planned 4 percent to 5 percent rate.
"If our competitors start retreating, that may cause us to accelerate our growth plan," Kelly said.
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