Government Considers Mandating Flight Reductions and Congestion Pricing at Airports

LCT Staff
Posted on October 10, 2007

WASHINGTON, D.C. — The White House late last month directed aviation officials and regulators to reduce air traffic congestion and delays by next summer in attempts to head off a repeat of what is widely considered the worst travel season in domestic airline history.

As air traffic modernization legislation winds through Washington, President George W. Bush enlisted Transportation Secretary Mary Peters to confer with the aviation industry and report by year-end with more immediate solutions.

Such proposals as government-mandated flight reductions, the establishment of new capacity caps, and congestion pricing all are under consideration, with the goal to curb delays. However, analysts and airlines said each comes with consequences, including service reductions and fare hikes.

"We're going to address customer concerns and address congestion," Peters said, adding that nothing is off the table in DOT's review. "Our preference is to get a bill and work with the industry, but if we can't do that, we'll follow the president's mandate."

Secretary Peters said the immediate focus is on the New York City airspace, where three-quarters of airline delays are rooted. The Federal Aviation Administration (FAA) plans to convene a meeting with carriers that serve New York JFK and other stakeholders to discuss reducing schedules and de-peaking flight times.

Calyon Securities analyst Ray Neidl last week said the likely quick fix is a government mandate that would "limit operations at the nation's busiest airports and in the entire Northeast region." Neidl said such action likely would result in higher ticket prices — a "blessing in disguise" for airlines, but not for corporate travel buyers.

Airlines, however, don't feel blessed by such proposals and are opposed to government-mandated flight reductions, the establishment of new capacity caps or congestion pricing, which would charge carriers more to operate at peak hours.

"Congress should resist calls to force airlines to reduce flights or impose economic measures to curb passenger demand simply because this approach is expedient," Air Transport Association president and CEO James May said during the House subcommittee hearing.

In a letter to Peters, May said congestion pricing would lead to higher fares, and "drive away average travelers in favor of just those who can pay top dollar and reduce service to smaller communities. That is not what the public wants."

Calyon's Neidl said "limitations or higher landing fees" would hit regional carriers hardest. "Higher pricing will make regional jets less economical and hamper future growth potential. Restrictions on flights would force airlines to move to larger aircraft, causing shrinkage of regional jet use. It would probably further reduce growth opportunities for these carriers."

Such moves are not unprecedented. In 2004, domestic airlines agreed to limit total scheduled peak-hour arrivals to 88 per hour at Chicago O'Hare International Airport (BTN, Sept. 6, 2004). However, Peters said the situation and solutions in New York differ from O'Hare, which was "a temporary solution."

Though they are opposed to new restrictions, airlines agreed that New York airspace is an apt focal point. American Airlines executive vice president of maintenance and operations Robert Reding, in testimony during a Senate subcommittee hearing last month, said the FAA's plan to "mitigate congestion in the New York airspace" is one of the most important initiatives moving forward, as "delays at the New York area airports frequently ripple throughout the country."

Most of Delta Air Lines' delays "either originate or are caused by congestion in the Northeast," said Delta executive vice president of operations Joe Kolshak.

President Bush's call to action followed the worst summer delay season on record and came amid several legislative reviews of airline delays, including a Senate subcommittee hearing, a House subcommittee hearing and a report by the DOT Inspector General examining causes and solutions for onboard delays.

While carriers are quick to point to an outmoded air traffic control system and the growing prevalence of business aircraft that further strains it, the consensus among those testifying shows the system rife with problems in all areas, including infrastructure and airline management problems, and no panacea for reducing delays.

Sen. Ted Stevens (R-Alaska) told airline representatives during a Senate subcommittee hearing, "The system is stressed, but your policies are stressing people." He noted airline-induced delays, including crew problems and other internal airline functions.

The Association of Corporate Travel Executives said the airlines have turned into scapegoats for what largely have been government failures to update infrastructure. Executive director Susan Gurley said, "It is highly fashionable right now to criticize the airlines and demand instant improved performance, but that only serves to conceal the real problem, which includes an antiquated air traffic control system, unrealistic demand of ground facilities that are already at capacity, and equally unrealistic public expectations. The potential remedies, charging more for flights at peak periods and limiting the number of flights into the New York metropolitan area, would barely put a dent in the problem."

Of the delays occurring in the first seven months of the year, the Bureau of Transportation Statistics reported airlines were responsible for 28%, and the national airspace system, which includes air traffic control and airport operators, was responsible for another 28%. However, those ripple further through the national transportation system, as late-arriving aircraft due to issues in other cities caused 38% of delays for the first half of the year. Weather only accounted for 6% of delays.

DOT Inspector General Calvin Scovel III, in a report issued last month, said 28% of the flights in the first seven months of this year were delayed, cancelled or diverted. If that pace is maintained, 2007 will be the worst year for delays and cancellations on record. "Not only are there more delays, but also longer delay durations. Of domestic flights arriving late in 2006, the average delay was a record-breaking 54 minutes," Scovel said.

The Bureau of Transportation Statistics last week said 71.7% of flights were on time in August, an improvement over July's 69.8%, but not on August 2006's 75.8% average.

Instead of immediate government interference, airlines favor such solutions as air traffic modernization plans. Domestic airlines last week applauded the FAA's proposed rulemaking to replace the radar-based air traffic control with a satellite system — the "cornerstone" of a next-generation system, ATA said. Airlines, however, remained concerned over the initiative's funding as FAA seeks to shift to a satellite system by 2020.

Longer-term fixes also are targeted for New York's airspace. FAA last month approved a new system of Northeast flight patterns that it said would cut delays by up to 20%. Full implementation would take five years.

SOURCE: Business Travel News (BTN)

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