AirportBusiness Blogs

Joel Widzer—who has accumulated almost 3,000,000 lifetime flight miles as a passenger—writes for Forbes.com that the much-touted Passenger Bill of Rights should be given up as a bad idea. He makes a most compelling argument by asking the simple question, “When has government bureaucracy been the answer to anything?” When indeed?

Widzer also points out that if the cost of guvmint (my word, not his) intervention is passed on to the airlines, ticket prices will rise and passenger rules and restrictions will become more onerous. I agree with the man. The American public is mad as hell at airlines, however, and Congress must always appear to be “doing something” about all problems. More’s the pity.  

Change of subject…

There is much talk of the airlines selling their frequent flyer programs. When first hearing of that I was shocked. Aren’t the programs a cost stream, rather than an income stream? How the heck do you sell a cost? That’s kinda like my selling you the right to mow my lawn, isn’t it?

As it turns out, no it isn’t. Those programs are valuable to other service industries such as hotels. The names alone are worth a fortune. Where else can you get millions of names–and other contact info—of frequent travelers? What else can you sell to those people?

But what about the costs of providing those free tickets? No problem. Potential buyers say they can buy those from the carriers at whopping discounts. In fact, they have been buying them already for their own frequent customer programs.

The report is that some of these programs could sell for billions. That’s enough to greatly increase the value of the airline itself, and that’s important in these days of expensive oil. Sounds good to me.

… is back in the airport news, with an eye on New York’s airports. Last Friday’s Wall Street Journal, in an editorial entitled “Airport Solutions”, suggests that “economics offers a better way to manage scarcity: Use prices to ration capacity at peak times.”

We’ve been here before. Back in the 1980s we called it “peak period pricing” and the poster airports in that era were Boston and Denver (Stapleton). Those initiatives, however, were more focused on pushing general aviation out of the commercial airport to open up ground capacity for the airlines. Back then, GA groups fought vehemently to thwart the initiatives, with the support of DOT/FAA.

This time, however, it’s DOT/FAA leading the charge. The groundwork for the change was laid several years back when the Transportation Department changed its argument and opened the door for congestion pricing, with the caveat that it be revenue-neutral. Subsequently, Boston Logan received support from FAA for a new runway that in time could be allowed to incorporate congestion pricing once certain activity levels were reached. The door was now cracked open.

But the delays, customer complaints, and significant media focus on New York’s airports, and their ripple effect through the system, are accelerating change. The WSJ cites a Reason Foundation simulation that indicates the implementation of congestion pricing at New York’s airports would result in the carriers rescheduling some 15 percent of peak period flights. Of note is the fact that both the airlines and the Port Authority of New York & New Jersey, which operates the New York airports, oppose the move.

The belief in this corner is that ultimately the answer lies in technology and investment – reinventing the air traffic control system and ongoing dollars pumped into airport infrastructure. Larger airports would add that they would like to have more control on the management of their airport systems – but one can of worms at a time.

The Wall Street Journal concludes: “The price mechanism allocates supply in all kinds of crazy markets. Why not at airports?” In the short term, maybe. Long term, it’s not that simple.

Thanks for reading. jfi

… amidst an aviation industry swelling at the seams.

We live in an era when aviation is thriving, for which many, particularly the airlines, are thankful. Yet the turkey at the table is a system that has not kept pace. New York’s JFK has become the poster airport for delays. Ironically, it is a domestic carrier, JetBlue, that has had a dramatic impact on JFK, which is one of the nation’s key international gateways. The feds want to regulate use to reduce the delays; the airlines and the Port Authority of New York & New Jersey are balking. The head of Delta squawks that at a time when the carrier is having particular success growing internationally, the feds want to restrict its ability to expand at JFK. At the same time, they are not asking international carriers to do the same.

Another element of the system that has grown into a major turkey for which there is no thanks is the inability of U.S. Customs & Border Protection to process international arrivals and departures. For many airports, this is the turkey at the head of the table. It ties directly to the security regimen we have put in place in this country since 9/11, which many consider another turkey. The system is safer to be sure, but it remains questionable whether or not we had to create another instant bureaucracy to achieve the goal. That said, the biggest turkey at the security table remains the U.S. Congress, which in six years has failed to fund the initiatives it called for in legislation in November, 2001.

Perhaps the aviation segment that has the most to be thankful for is business aviation, which remains robust. Despite a slowing economy, it has yet to experience even a hiccup. It is also a dramatically changing segment with the massive influx of offshore money into the business. Australian and British firms now own the largest chains of fixed base operations, and a Dubai enterprise has become a dominant player in the maintenance arena literally overnight. As one looks at the bizav table, it’s hard to see a turkey this Thanksgiving. But there’s a rumor that Mr. Recession has been invited to the dinner …

Thanks for reading.
jfi

Seems to me I have explained this to the point of tedium, but maybe not. This week someone asked me, “Ralph, how come you don’t trust the government? Do you really think the U. S. Government would lie to you?”

No, I don’t think any such thing. I know it will.

Why? Let me count the ways—or at least a few of the ways. There are too many to list here…

When I was about 15 years old I got a Social Security card. I was told that when I became 65 they would pay me an income. Instead, they made me wait seven months past age 65. In other words, they cheated me out of seven months’ income. That’s more than $12,000 gone forever.

They told me I wouldn’t have to pay income tax on the income Social Security paid to me after 65. They changed their mind on that, so now I do have to pay income tax on it.They told me that they would set aside Social Security funds so that the money would be there for future retirees. Then Lyndon Johnson changed all of that in the 1960s, so that now the guvmint spends the money and promises that future payments will be met.

Now, my question is how could anybody trust a guvmint like that?

Let me also restate that the guvmint collected our money for an Aviation Trust Fund, promising to spend the money on aviation—then for years they flat refused to spend it. They were keeping it to make the national debt look smaller, and I have a letter from a Congressman confirming that. If you or I did that, they would call it larceny after trust—or something like that—and lock us up, as we would deserve. Then there is…But, I could run on forever. The point is, hell no I don’t trust the guvmint.We’d love to post your comments. Please click the comment tab at the top. 

When was it I first heard about cataract eye surgery? The late fifties? The early sixties? I can’t remember.

I do remember being horrified at the very idea. They cut the lens out of your eyeball then put an artificial lens into that same eyeball. I could not in my wildest dreams imagine letting someone cut on my eyeballs. And I heard that you had to stay awake for the entire operation. How could anyone possibly watch a scalpel coming toward the eye with intent to cut? Egads!

That was over 40 years ago. This week I had not one, but two cataract surgeries. They were the least troublesome surgeries I ever had. There was no pain at all and there’s none today. Yes, I was awake, but I could not see a scalpel. All I could see was a light show somewhat like looking through a kaleidoscope at photos taken by the Hubble Telescope. Nothing to it.

I do wonder how often first ideas horrify us, then later turn out to be routine? Jet airplanes, certainly. I remember my father telling me in the fifties that he would never ride on one of those new-fangled jets. They were okay for fighter pilots, maybe, but he wasn’t gonna ride one. Now we all ride them so routinely that we are tired of them and forget their many real benefits. In the sixties, no less a magazine than Fortune opined that business would not go for the new Lear. Now every airframe manufacturer that doesn’t produce a business jet has plans to do so in the very near future.

In his later years, my father flew jet airliners all over the world, but refused to ride piston aircraft. I teased him about his fear of them in the fifties. He laughed and then made a great point. “Boy.” he said, “I just didn’t want to be a guinea pig! Those jets weren’t yet as safe as they are today.” The same is true of cataract surgery.

The present always seems to be the norm. Anything truly new is way out in left field. Yet I am convinced that some day our grandchildren will sit around talking about the fact that we—you and I—used to ride around in airplanes that carried fuel tanks full of gasoline and/or jet fuel. I won’t be around for it. If you are, just remember you read it here way back in the early part of this century.

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… truly marks the onset of the era of the very light jets. The official start-up in October of DayJet’s on-demand Part 135 certificated charter service links five Florida cities and their airports. Based in Boca Raton, DayJet is owned by software entrepreneur Ed Iacobucci, who plans to expand the service regionally (Southeast first) and in time could have a fleet of more than 1,000 VLJs.

DayJet bills its service as “per seat, on-demand”. Essentially, it charges the customer based on his or her flexibility. If you absolutely need to depart Tallahassee by 9 a.m. for a trip to Boca, it will be one price; be more flexible and depart “by” noon, and it could be much less. It’s all about time, says Iacobucci.

The November/December issue of AIRPORT BUSINESS magazine features a Business Profile on DayJet via an interview with Iacobucci. Here a few of the outtakes from that session …

On what some might see as a complex pricing scheme …
“Well, that’s what this is all about. It’s an education expense, which is something the [market] leader has to deal with. Thus far, we’re seeing a pretty good response. A pretty high percentage of people who get activated actually try it and when they try it they negotiate; they don’t just take the first price that comes. Basically what they’ve done is determine what level of service they want based on what their value of time is. We call it time-value pricing. It’s a new dimension.”

On what’s in it for a fixed base operation that might become a DayPort …
“We’ve had a lot of different proposals. I can tell you that nothing is off the table.

“At some locations we’re renting space and buying fuel; at others we have a day base operation, we have hangars and more people. I’m not exactly sure there’s a magic formula that fits all yet.”

On the fact that its on-demand service borders on being classified as scheduled service, which is regulated differently …
“It’s been questioned by a lot of people but not by FAA or DOT. We could cross the line if we did things that we don’t do. The request comes from the user. We don’t publish availability; in fact, we don’t know what our availability is. It’s very fluid and dynamic.”

On the response from the pilot community …
“That’s one of the things we were concerned about initially, but it’s turned out to not be as big an issue. The pilots want the same thing our customers want – quality of life.

“Right now we’re hiring all captains; our salary is a flat $50,000 per year.

“The interesting thing is the pilots aren’t really pilots; they’re salaried employees who work eight hours a day. They come in every day whether they fly or not, and they have different assignments. What we want to emphasize is the pilots are serving customers.

“We’ve got about 3,000 resumes for a few hundred jobs. We’re looking for people who have the right personality and desire to engage with customers.”

Finally, Iacobucci cautions those airports or communities which may be looking at building a terminal facility anticipating VLJ service that such a move may be premature at this point. As he notes, his concept is a model that still needs to be proven.

Thanks for reading. jfi

Brigadier General Paul Tibbetts died last week, at the age of 92. He was known to many as the pilot of the Enola Gay, the airplane that dropped the very first atomic bomb in 1945. Actually, he was much more than that. In 1944—when he was not yet 30 years old—Tibbetts was given the job of building, preparing, and commanding the team of pilots and aircraft that could drop such bombs.

More than 20 years ago, I had the pleasure and honor of introducing General Tibbetts to an aviation audience. His speech that day fortified me to handle a question put to me by daughter Melanie years later.

As a young adult, Melanie called one night from Germany with an interesting question. “Why,” she asked, “did America drop the bomb on Japan after the war was already over?” I came back with the obvious question, “Who told you that?” “Some German students,” she answered.

“Melanie,” said I, “you tell them the war was not over. The Germans had surrendered, but the Japanese had not. They fought fanatically on and many Americans were killed by the Japanese after Germany surrendered.” It was expected that another million Americans would be killed if we had to invade Japan. Also, Melanie, remind them that we had the bomb and nobody else did. It was maybe the only time in history that one country really could have taken over the world. We didn’t. We used the bomb to end a war and never used it since.

Well, Melanie went on, they say it was a racist thing. That we wouldn’t have dropped it on Caucasians. The fact is, I told her, that Paul Tibbetts was instructed to prepare a team to drop the bomb on Japan and on Berlin. Then Germany surrendered before the bomb was ready.

Melanie was highly excited to get this information and eager to tell it to the German students. Before she hung up, though, she asked one more question. “Where’d you get all this information?” “Melanie,” I said, “I got it first hand from General Paul Tibbetts, the man who built the team and flew the Enola Gay.”

Her response was gratifying. “You did not!” Yes, I did.

I really believe that conversation impressed Melanie more than anything else I ever did.

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