H.R. 5900, known as the 1,500 hour and ATP rule, will significantly hinder the road to my ultimate career aspirations, as it will for many young pilots. Although I have trouble finding any hard facts about this law, it appears that there will be no grandfathering into the system. If you don't have 1,500 hours and an ATP by August 2013, then you can no longer be hired by a 121 carrier and must be let go if you already are working for one. This creates an especially large problem for me because I will not be turning 23, a requirement for an ATP certificate, until October of 2013, making it impossible for me to stay with a 121 carrier. With that being said, in recent days I have been rethinking my career plan, exploring new ideas of how to log 1,500 hours to make me eligible by the time I turn 23.
Once completing my CFI and graduating, I think searching for a position as a flight instructor somewhere is the most probable option right out of school. It will allow me to log time and actually start making a little bit of money doing it instead of spending huge amounts for my time. While logging these hours I will become more hireable for a 135 operation or something of the sort. Since I do not look forward to flight instructing at all, charter flying preferably in piston twins, would be a nice way to continue my journey toward 1,500 hours. I say multi-engine aircraft because multi-engine time is obviously what makes you more hireable to any airline and what is the most expensive to pay for on your own. After reaching the age of 23 (and hopefully having 1,500 hours by then) I would unfortunately be on my own to pay for an ATP course and take the checkride. On a side note, the full 1,500 hours is a worst-case scenario. If rumors are at all true, then because I was a graduate of a collegiate aviation program and a 141 school, hopefully the requirement would be lowered to around 1,000, although I still have to wait until October 2013 for the ATP.
The next step is applying and hopefully getting hired with a regional airline, if they still exist at that time (only kidding, well kind of). I will upgrade to captain when eligible in order to get the pay raise and start logging the turbine PIC time. The next move, thousands of hours down the road, is trying to get hired with a mainline carrier, preferably Delta. Being a captain at a "real" airline is still something I really want to do even though the industry is so vulnerable. Later down the road, depending on how I am enjoying my time mainline and how the industry looks, I would still consider applying at FedEx. They appear to be the best paying airline out there and the most profitable, and good to work for. Exploring a different part of the industry may be a nice change of pace.
With all this being said, the stars would have aligned and everything would have to go as planned and stay the same for all of my goals to come true. Especially since it is the aviation industry, I expect my plans to change over time along with the constant changing of the industry, so I will remain flexible with my plans and expect the unexpected.
Saturday, April 14, 2012
Saturday, April 7, 2012
Merger Mania Update
In this week's blog entry, I will be updating the past topic of airline mergers. I will update some of the most pressing issues and previously talked about topics from the last entry on this subject, discussing United Continental and American Airlines.
A hugely important day for the new United Airlines turned out to be a massive disaster on March 3rd. Prior to this day, United was still operating with two completely different reservations systems and frequent flier databases. The months of training and preparation that United's 15,000 agents received for the switch-over turned out to be a failure of epic proportions. Hundreds of flights across United's network were delayed, kiosks stopped working causing huge lines to speak to agents, and reservation lines were jammed. By the end of the week the flaws had been worked out of the system and operations were mostly back to normal. One could almost expect something like this to happen when two of the largest airlines in the world unite to form the world's largest airline, and millions of reservations must be combined.- The Daily Beast
In more recent times, the product of the merger between one of the best airlines in customer service and satisfaction- Continental, and perhaps the worst- United, has unfortunately begun to take on the characteristics of the latter of the two. Despite the former Continental CEO taking the reigns of the new airline, there seems to be a lack of emphasis on customer service. Only two airlines in the industry received lower ratings in customer satisfaction last year, American and Continental. The surprising one here obviously is Continental. But perhaps it actually is not so surprising, considering the reputation of the airline they merged with. Between changes to pet transportation procedures which make it very expensive to transport them, older aircraft being used on long haul flights, poor treatment of valued customers, and seemingly endless instances of employees "telling off" passengers, the new United has customers angry and disappointed.
With the nightmare of the reservations switchover being completed, the only thing left barring these two airlines seamlessly becoming one is pilot seniority integration. To date, the seniority lists are completely separate. United pilots only fly with United pilots and only fly United aircraft on United routes, and the same goes for Continental pilots. A member of ALPA says that negotiations between the two groups have picked up greatly since Capt. James Heppner, took office at the ALPA branch at United at the beginning of 2012. The negotiations haven't yet focused on the most important issues: wages, retirement and "scope"- the contract rules that govern how much outsourcing of pilot jobs United Continental can achieve through contracts with regional airline affiliates and code-sharing with other carriers -The Wall Street Journal. The two branches of ALPA have agreed to a six-month process for seniority integration and will resolve any differences by submitting to binding arbitration. At the earliest, seniority integration is not expected until the first quarter of next year.
In recent news, American Airlines can't seem to catch a break. Last week's hail storms in Dallas took out 55 of its mainline aircraft and caused 1,600 flights to be cancelled between American and American Eagle in the 3 days following the storm. This ads more cost to the airline already struggling to make it through bankruptcy.
U.S. Airways has reportedly become more aggressive in pursuing a merger with American Airlines, according to The Wall Street Journal. U.S. Airways has told some AA creditors that a merger could add $1.5 billion in annual revenues and cost savings. On the other hand, U.S. Airways interest could draw out the bankruptcy court proceedings, particularly because an anti-trust review would need to be completed prior to a merger. This could hurt creditors' recoveries because of the resulting lingering in bankruptcy court which would decrease the company's value. AMR Corp recently won ability to retain exclusive control over proposing a reorganization plan for another six months, but creditors could seek to end that exclusive period if they felt there were better options.
A hugely important day for the new United Airlines turned out to be a massive disaster on March 3rd. Prior to this day, United was still operating with two completely different reservations systems and frequent flier databases. The months of training and preparation that United's 15,000 agents received for the switch-over turned out to be a failure of epic proportions. Hundreds of flights across United's network were delayed, kiosks stopped working causing huge lines to speak to agents, and reservation lines were jammed. By the end of the week the flaws had been worked out of the system and operations were mostly back to normal. One could almost expect something like this to happen when two of the largest airlines in the world unite to form the world's largest airline, and millions of reservations must be combined.- The Daily Beast
In more recent times, the product of the merger between one of the best airlines in customer service and satisfaction- Continental, and perhaps the worst- United, has unfortunately begun to take on the characteristics of the latter of the two. Despite the former Continental CEO taking the reigns of the new airline, there seems to be a lack of emphasis on customer service. Only two airlines in the industry received lower ratings in customer satisfaction last year, American and Continental. The surprising one here obviously is Continental. But perhaps it actually is not so surprising, considering the reputation of the airline they merged with. Between changes to pet transportation procedures which make it very expensive to transport them, older aircraft being used on long haul flights, poor treatment of valued customers, and seemingly endless instances of employees "telling off" passengers, the new United has customers angry and disappointed.
With the nightmare of the reservations switchover being completed, the only thing left barring these two airlines seamlessly becoming one is pilot seniority integration. To date, the seniority lists are completely separate. United pilots only fly with United pilots and only fly United aircraft on United routes, and the same goes for Continental pilots. A member of ALPA says that negotiations between the two groups have picked up greatly since Capt. James Heppner, took office at the ALPA branch at United at the beginning of 2012. The negotiations haven't yet focused on the most important issues: wages, retirement and "scope"- the contract rules that govern how much outsourcing of pilot jobs United Continental can achieve through contracts with regional airline affiliates and code-sharing with other carriers -The Wall Street Journal. The two branches of ALPA have agreed to a six-month process for seniority integration and will resolve any differences by submitting to binding arbitration. At the earliest, seniority integration is not expected until the first quarter of next year.
In recent news, American Airlines can't seem to catch a break. Last week's hail storms in Dallas took out 55 of its mainline aircraft and caused 1,600 flights to be cancelled between American and American Eagle in the 3 days following the storm. This ads more cost to the airline already struggling to make it through bankruptcy.
U.S. Airways has reportedly become more aggressive in pursuing a merger with American Airlines, according to The Wall Street Journal. U.S. Airways has told some AA creditors that a merger could add $1.5 billion in annual revenues and cost savings. On the other hand, U.S. Airways interest could draw out the bankruptcy court proceedings, particularly because an anti-trust review would need to be completed prior to a merger. This could hurt creditors' recoveries because of the resulting lingering in bankruptcy court which would decrease the company's value. AMR Corp recently won ability to retain exclusive control over proposing a reorganization plan for another six months, but creditors could seek to end that exclusive period if they felt there were better options.
Sunday, April 1, 2012
The UAV Sector
1) What is the current status of this sector of the industry?
The total worldwide expenditure on Unmanned Aerial Vehicles currently amounts to $4.4-billion per year. This is mostly spent on worldwide military programs, used for surveillance on dangerous missions in dangerous areas. Currently 59 companies are manufacturing UAVs worldwide. 45 countries are building and buying UAVs and the US and UK are both working on tailless stealth designed UAVs. Traditionally, the leaders in UAV operations have been the US, UK, Israel, and South Africa, although South Africa has been losing its footing in recent years. In 2005, percentage of military aircraft deployed was only 5% UAVs, but that number had risen to 31% in the beginning of 2012, according to Defense Update. A recent entry into the UAV industry is Iran. They have begun to produce UAVs that among several other functions, are able to carry bombs. Their UAV program caught a lucky break when they captured a CIA Lockheed RQ-170 Sentinel and were able to see both the design and top secret surveillance information. Outside of the military realm, UAVs are used extensively in Japan for agricultural purposes. Since the rice farming industry has seen a large reduction of new farmers in recent times, UAVs are beginning to perform the work that as many as six individual farmers could previously accomplish. Also, UAVs are used by Border Patrol to patrol along the US-Mexico border for illegal aliens and drug trafficking.
2) What are the issues in these sectors that must be evaluated while moving towards the future?
The biggest issue in the United States as well as throughout much of the rest of the world is integrating UAVs into the civilian airspace system. The FAA has issued 285 special flight permits for UAV testing in the National Airspace System. With the FAA Reauthorization Act of 2012, the FAA is now mandated to integrate UAVs into the NAS. Some concerns that the FAA has with this integration are what the aircraft will do in the event of a loss of signal from its controller, controller distractions, the lack of ability to spot and avoid traffic, and further congestion of the airspace.
3) What is the 5-10 year outlook for this sector?
As mentioned above, the FAA is required to integrate UAV operations into the NAS by 2015. This will include performance and operational requirements to increase safety. Several test zones for UAVs in the airspace systems are supposed to be up and running by 2013. Currently for testing, the FAA requires that the operator of the UAV be able to keep the aircraft in sight at all times, which severely limits the testing capabilities. The integration will allow for much greater use of UAVs domestically for civillian use. They are expected to be used for things such as whale and fish spotting and tracking, agriculture, spotting wildfires, assessing disasters, and police work. UAVs are forecasted to be an $80 billion dollar industry worldwide in another 10 years. Furthermore, worldwide spending on UAV payloads is expected to rise from $2 billion in 2009 to $5 billion in the 2018 fiscal year, as stated by Engineering News. The military is developing stealth UAV technology and has plans to retire its Predator fleet.
4) What is/will the government's involvement be in this sector?
Also previously mentioned is the Congressional mandate that the FAA integrate UAVs into the NAS by 2015. Additionally the military is deploying a much greater percentage of UAV flights than ever before because of budget cuts as well as the increased safety by not having to send a manned aircraft into dangerous war zones.
5) What are possible career opportunities in this sector (be specific, which may require you to find actual job descriptions)?
With a simple search on Google, I was able to find jobs as a UAV operator (pilot), payload specialist, avionics specialist, and maintenance technician. It seems like there are an ample amount of jobs out there in the sector, especially as pilots. With the new testing program for the NAS, UAV pilots are needed in the FAA designated testing zones. As I have heard in the news and viewed while searching for jobs online, the most jobs in the UAV sector are for pilots, which is good for me. Employers included the National Guard, Textron, and several other private companies.
The total worldwide expenditure on Unmanned Aerial Vehicles currently amounts to $4.4-billion per year. This is mostly spent on worldwide military programs, used for surveillance on dangerous missions in dangerous areas. Currently 59 companies are manufacturing UAVs worldwide. 45 countries are building and buying UAVs and the US and UK are both working on tailless stealth designed UAVs. Traditionally, the leaders in UAV operations have been the US, UK, Israel, and South Africa, although South Africa has been losing its footing in recent years. In 2005, percentage of military aircraft deployed was only 5% UAVs, but that number had risen to 31% in the beginning of 2012, according to Defense Update. A recent entry into the UAV industry is Iran. They have begun to produce UAVs that among several other functions, are able to carry bombs. Their UAV program caught a lucky break when they captured a CIA Lockheed RQ-170 Sentinel and were able to see both the design and top secret surveillance information. Outside of the military realm, UAVs are used extensively in Japan for agricultural purposes. Since the rice farming industry has seen a large reduction of new farmers in recent times, UAVs are beginning to perform the work that as many as six individual farmers could previously accomplish. Also, UAVs are used by Border Patrol to patrol along the US-Mexico border for illegal aliens and drug trafficking.
2) What are the issues in these sectors that must be evaluated while moving towards the future?
The biggest issue in the United States as well as throughout much of the rest of the world is integrating UAVs into the civilian airspace system. The FAA has issued 285 special flight permits for UAV testing in the National Airspace System. With the FAA Reauthorization Act of 2012, the FAA is now mandated to integrate UAVs into the NAS. Some concerns that the FAA has with this integration are what the aircraft will do in the event of a loss of signal from its controller, controller distractions, the lack of ability to spot and avoid traffic, and further congestion of the airspace.
3) What is the 5-10 year outlook for this sector?
As mentioned above, the FAA is required to integrate UAV operations into the NAS by 2015. This will include performance and operational requirements to increase safety. Several test zones for UAVs in the airspace systems are supposed to be up and running by 2013. Currently for testing, the FAA requires that the operator of the UAV be able to keep the aircraft in sight at all times, which severely limits the testing capabilities. The integration will allow for much greater use of UAVs domestically for civillian use. They are expected to be used for things such as whale and fish spotting and tracking, agriculture, spotting wildfires, assessing disasters, and police work. UAVs are forecasted to be an $80 billion dollar industry worldwide in another 10 years. Furthermore, worldwide spending on UAV payloads is expected to rise from $2 billion in 2009 to $5 billion in the 2018 fiscal year, as stated by Engineering News. The military is developing stealth UAV technology and has plans to retire its Predator fleet.
4) What is/will the government's involvement be in this sector?
Also previously mentioned is the Congressional mandate that the FAA integrate UAVs into the NAS by 2015. Additionally the military is deploying a much greater percentage of UAV flights than ever before because of budget cuts as well as the increased safety by not having to send a manned aircraft into dangerous war zones.
5) What are possible career opportunities in this sector (be specific, which may require you to find actual job descriptions)?
With a simple search on Google, I was able to find jobs as a UAV operator (pilot), payload specialist, avionics specialist, and maintenance technician. It seems like there are an ample amount of jobs out there in the sector, especially as pilots. With the new testing program for the NAS, UAV pilots are needed in the FAA designated testing zones. As I have heard in the news and viewed while searching for jobs online, the most jobs in the UAV sector are for pilots, which is good for me. Employers included the National Guard, Textron, and several other private companies.
Saturday, March 24, 2012
The Export-Import Bank
The Export-Import Bank is a government-chartered U.S.export credit agency that provides financing for foreign buyers purchasing American-made goods. They also insure the sales for American companies should the foreign buyer default on the payments. The Ex-Im Bank is willing to accept the risk in financing international deals that most private creditors are not willing to take. The Export-Import Bank does not compete directly with the private sector creditors, its goal is to boost the U.S. economy and create and support American jobs. Credit is available for any American company with a more recent concentration on small businesses. The bank has made $3.4 billion in profits since 1934, and only 2% of its loans have failed in that same amount of time.
The Export-Import Bank is often referred to as "Boeing's Bank", because Boeing creates the largest number of transactions for the bank. Being that Boeing manufactures airliners to be sold and flown in a global market, of course the majority of customers are going to be foreign airlines. The Export-Import bank allows several developing foreign airlines, which otherwise wouldn't be able to, the ability to purchase Boeing aircraft, ultimately supporting U.S. jobs.
The bank has been in the news lately because for the first time in its nearly 78 years of existence, the Senate has voted against re-chartering the bank before its current charter expires on May 31st. The bank is close to reaching its current $100 billion lending limit, and lawmakers are seeking an increase to $140 billion on the new charter. According to Reuters, the bank supports about 290,000 jobs annually in the export industry, and a loss of the bank would be a big blow to Boeing and other exporters. Unfortunately, this normally uneventful reauthorization has become yet another case of politics. In another attempt to tarnish the Obama Administration before the upcoming elections, conservative Congressional Republicans have decided to vote 'no' on the bill unless they get it written their way, citing the bank as being "corporate welfare" and disagreeing with the general idea of the bank. They also cite the bank as giving huge cost breaks to foreign businesses while U.S. businesses end up having to pay much more for the same product. A Delta Air Lines executive was quoted in the Seattle Times saying that if they could use the bank like foreign carriers then "it could have saved approximately $100 million a year in financing costs and we could have used that money to hire more workers or even purchase additional aircraft from Boeing". Other Republicans are working to create a bipartisan extension for the Import-Export Bank which includes reforms and accountability measures.
The ATA stands against the Ex-Im Bank, filing a lawsuit against them in November of 2011. The lawsuit is over a $3.4 billion loan guarantee to Air India to finance 27 B787s for the airline. The ATA is trying to halt the deal, citing that the bank "fails to meet statutory requirements, including consideration of the impact on the US airline industry and US airline jobs”-CAPA. The ATA claims that the Ex-Im Bank is offering financing to a poorly run airline with very risky credit. They say that the company's poor financial status should disqualify them from the financial assistance.
Boeing has paid two of Washington's top lobbying firms to persuade lawmakers to reauthorize and expand the bank's charter. This lobbying is an attempt to overpower U.S. airlines' objections to the bank, who say they are hurt when our government helps foreign rivals buy airplanes-Bloomberg, as well as Tea Party lawmaker opposition. Anyone can see why Boeing would have an obvious interest in reauthorizing the bank. It helps them to sell a lot of airplanes all around the world, and may end up enabling a huge Air India 787 deal.
The Export-Import Bank is often referred to as "Boeing's Bank", because Boeing creates the largest number of transactions for the bank. Being that Boeing manufactures airliners to be sold and flown in a global market, of course the majority of customers are going to be foreign airlines. The Export-Import bank allows several developing foreign airlines, which otherwise wouldn't be able to, the ability to purchase Boeing aircraft, ultimately supporting U.S. jobs.
The bank has been in the news lately because for the first time in its nearly 78 years of existence, the Senate has voted against re-chartering the bank before its current charter expires on May 31st. The bank is close to reaching its current $100 billion lending limit, and lawmakers are seeking an increase to $140 billion on the new charter. According to Reuters, the bank supports about 290,000 jobs annually in the export industry, and a loss of the bank would be a big blow to Boeing and other exporters. Unfortunately, this normally uneventful reauthorization has become yet another case of politics. In another attempt to tarnish the Obama Administration before the upcoming elections, conservative Congressional Republicans have decided to vote 'no' on the bill unless they get it written their way, citing the bank as being "corporate welfare" and disagreeing with the general idea of the bank. They also cite the bank as giving huge cost breaks to foreign businesses while U.S. businesses end up having to pay much more for the same product. A Delta Air Lines executive was quoted in the Seattle Times saying that if they could use the bank like foreign carriers then "it could have saved approximately $100 million a year in financing costs and we could have used that money to hire more workers or even purchase additional aircraft from Boeing". Other Republicans are working to create a bipartisan extension for the Import-Export Bank which includes reforms and accountability measures.
The ATA stands against the Ex-Im Bank, filing a lawsuit against them in November of 2011. The lawsuit is over a $3.4 billion loan guarantee to Air India to finance 27 B787s for the airline. The ATA is trying to halt the deal, citing that the bank "fails to meet statutory requirements, including consideration of the impact on the US airline industry and US airline jobs”-CAPA. The ATA claims that the Ex-Im Bank is offering financing to a poorly run airline with very risky credit. They say that the company's poor financial status should disqualify them from the financial assistance.
Boeing has paid two of Washington's top lobbying firms to persuade lawmakers to reauthorize and expand the bank's charter. This lobbying is an attempt to overpower U.S. airlines' objections to the bank, who say they are hurt when our government helps foreign rivals buy airplanes-Bloomberg, as well as Tea Party lawmaker opposition. Anyone can see why Boeing would have an obvious interest in reauthorizing the bank. It helps them to sell a lot of airplanes all around the world, and may end up enabling a huge Air India 787 deal.
Friday, March 16, 2012
The Corporate Aviation Boom in China
Business Aviation is expected to boom in China over the next decade and onward. In January 2011 there were 116 business aircraft registered in China, including Hong Kong and Macau. Of that 116 aircraft, 86 were manufactured within the last ten years according to Flightglobal. The number of total corporate aircraft is expected to grow by about 600 by 2019. Aviation businesses in China are seemingly popping up overnight. Fifty new aviation companies were started in China in 2011, and Chinese companies have purchased Cirrus Design and Teledyne-Continental, with more acquisitions expected to come in the future.
Even until recent years, China has suffered from a lack of business aviation infrastructure, strict airspace regulations, and a lack of knowledge about business aviation, all of which prevented growth in the sector until recently. Even until current times the Chinese low altitude airspace (below 13,000 feet) has been very restricted to privately owned aircraft. Flights over China must have prior approval by the military and flight plans must be filed well in advance. The Chinese government is reportedly committed to opening up that low altitude airspace to general aviation aircraft within the next five years, however. Business flights above that altitude will still require prior government approval, though. They also are committed to creating a network of general aviation infrastructure by the year 2020.
China is a country that has had a growing economy for some time. As the communist country's industrial economy has continued to grow and its GDP rises, the wealth has began to trickle downward. China now has more emerging millionaires and billionaires than ever before. Like it used to be in the United States, a corporate aircraft is a great way to show off your wealth, not to mention an important business tool. Over time as the economy grows, more infrastructure emerges, and regulations continue to loosen up, China's corporate aircraft fleet will only continue to grow.
All business aircraft manufacturers are turning their attention to China, whose economy continues to grow while the rest of the world's struggles. Jason Liao left Bombardier Aerospace to found the Asian Business Aviation Association, which helps potential business jet owners in China choose the right business aircraft for them to purchase. His company has been very successful to this day. His jump is a sign of the strength and confidence people should have in the nation's corporate aviation industry. Bombardier planned to open a regional support office and parts depot in Hong Kong in the first quarter of 2011, and Deer Jet opened the first fixed-base operation in southern China in the past year and a half. With all of the growth of the industry, there will be countless people needed to run FBOs, market aircraft, and of course fly the airplanes. China had a total of 8,800 civilian pilots several years ago, but now has over 10,000 ATP certified pilots alone, according to the NBAA. The job opportunities appear limitless in China.
More information on Chinese corporate aviation can be found in these articles:
Unlocking Opportunities in China, The Industry's New Frontier
Even until recent years, China has suffered from a lack of business aviation infrastructure, strict airspace regulations, and a lack of knowledge about business aviation, all of which prevented growth in the sector until recently. Even until current times the Chinese low altitude airspace (below 13,000 feet) has been very restricted to privately owned aircraft. Flights over China must have prior approval by the military and flight plans must be filed well in advance. The Chinese government is reportedly committed to opening up that low altitude airspace to general aviation aircraft within the next five years, however. Business flights above that altitude will still require prior government approval, though. They also are committed to creating a network of general aviation infrastructure by the year 2020.
China is a country that has had a growing economy for some time. As the communist country's industrial economy has continued to grow and its GDP rises, the wealth has began to trickle downward. China now has more emerging millionaires and billionaires than ever before. Like it used to be in the United States, a corporate aircraft is a great way to show off your wealth, not to mention an important business tool. Over time as the economy grows, more infrastructure emerges, and regulations continue to loosen up, China's corporate aircraft fleet will only continue to grow.
All business aircraft manufacturers are turning their attention to China, whose economy continues to grow while the rest of the world's struggles. Jason Liao left Bombardier Aerospace to found the Asian Business Aviation Association, which helps potential business jet owners in China choose the right business aircraft for them to purchase. His company has been very successful to this day. His jump is a sign of the strength and confidence people should have in the nation's corporate aviation industry. Bombardier planned to open a regional support office and parts depot in Hong Kong in the first quarter of 2011, and Deer Jet opened the first fixed-base operation in southern China in the past year and a half. With all of the growth of the industry, there will be countless people needed to run FBOs, market aircraft, and of course fly the airplanes. China had a total of 8,800 civilian pilots several years ago, but now has over 10,000 ATP certified pilots alone, according to the NBAA. The job opportunities appear limitless in China.
More information on Chinese corporate aviation can be found in these articles:
Unlocking Opportunities in China, The Industry's New Frontier
Thursday, March 8, 2012
The FAA Modernization and Reform Act of 2012
The FAA Modernization and Reform Act of 2012, or FAA Reauthorization Bill as it is commonly known by, was signed into law by President Obama on February 14, 2012. This bill provides the FAA with $63.4 billion in funding through 2015. It also sets forth new requirements on the industry and the FAA. The Bill creates several changes and FAA projects that I believe are important in the industry such as more stringent standards for carrying lithium batteries on aircraft, short-term runway incursion reduction goals, researching installation of cockpit doors on cargo aircraft, authorizating transpacific alternate airports to stay open, data protection for safety reporting programs, weather and aircraft spacing research, the researching of alternative fuels, and rules for inspecting Part 145 repair stations and foreign repair stations. I believe that the three changes brought by the bill that will have the most impact are the increased funding and establishment of standards for the Next Generation Air Transport System (NextGen), the stance taken against the European Union Emissions Trading Scheme (EU ETS), and the renewing of the Essential Air Service (EAS) program.
First and foremost, the Reauthorization Bill gives a huge boost to the development of NextGen. Prior to this bill, the FAA's NextGen program was becoming critically underfunded, far behind schedule, and lacking of any sort of project master schedule or definitive project leadership. Until the Reauthorization Bill, a 5-10% decrease in government funding for NextGen was expected, which would have delayed the project even farther than its present 5 years behind schedule. One of the main components of NextGen, En Route Automation Modernization, or ERAM, has been found to be seriously flawed during live traffic testing. ERAM is the new ATC computer system that will replace the aging HOST computer system and will be the first step in implementing NextGen. Now having adequate funding from the federal government, the FAA should be able to get the bugs worked out of ERAM faster and more thoroughly, giving a huge boost to the program. The bill also mandates that the position of 'Chief NextGen Officer' be appointed by the Administrator, and will serve 5 year terms. The responsibilities of the Chief NextGen Officer include creating an annual NextGen plan, creating a budget for the program, and general coordination and oversight of the program. More about the Chief NextGen Officer's duties can be found in the FAA Modernization and Reform Act of 2012, page 28. This position means an overall more clear mission and timeline, and greater efficiency of the project. Additionally, the act states that the ADS-B technology to be required for NextGen be identified by the FAA.
Beginning this year the European Union began tracking the carbon emissions of aircraft flying to or from Europe, causing aviation to become a part of the ETS. If the EU gets their way, they will be collecting a bill from all applicable airlines for a large percentage of their total carbon emissions, plus fines for any emissions over their allotted amount. This has caused outrage around the world including in the United States, particularly because the EU will be taxing for the entire duration of a flight to or from Europe, even that portion outside of EU airspace. I believe that the government's stance on this topic in the Reauthorization Bill will be monumental in the outcome of the ETS controversy. It states that the EU should not implement their carbon trading scheme on the aviation community without going through the ICAO. It also states that the "US should use all political and diplomatic tools available to prevent ETS from being applied to US aircraft operators."- arentfox.com . This portion of the Act further strengthens the US's opposition to airline ETS implementation. I believe the inclusion of this subject in the Act is so important because this would be such a huge financial burden to US airlines, and the outcome of the arguments may well determine the future financial health of US airlines, impact ticket prices, and impact future international relations including a possible trade war.
As I mentioned above, the final element of the three most impactful sections of the Reauthorization Bill is the changes to the Essential Air Service program. EAS is a program that grants government subsidies to airlines that operate to select smaller communities that are not necessarily profitable for the airline to operate to on its own. The program greatly enhances air transportation opportunities for those populations not located near a major US airport (not to mention probably provides a few more jobs for us pilots). It is a very successful program, but it has been under some scrutiny by lawmakers. There was an attempt made to completely eliminate EAS, but the Reauthorization Bill has preserved it. In compromise for keeping the program, it will see as much as $50 million less in funding, with reductions every year- $143 million total funding in 2012, $118 in 2013, $107 in 2014, and $93 million in 2015, as seen in a summary of the Act. The legislation also limits the EAS program to airports with 10 or more operations per day and must be located within 175 miles of a large or medium hub airport (except in Alaska or Hawaii), and prohibits any more airports from applying to the EAS program. I do believe it is important that many communities located far from hub airports maintain the availability of commercial air transportation. It is a service that I do believe should be easily available to all Americans. I believe that this program does raise the standard of living of America as a whole. With the reduction in funding for EAS, airline service to some small airports will inevitably be cut, leaving many travelers with a much longer journey. The cut in funding and stricter requirements may reduce the profitability of some regional airlines being that they were receiving basically free money to sell seats on their aircraft. This will also leave some people without the jobs that the airlines previously created in their towns, and tax revenues will decrease. It is however better than the alternative of this program ending altogether.
First and foremost, the Reauthorization Bill gives a huge boost to the development of NextGen. Prior to this bill, the FAA's NextGen program was becoming critically underfunded, far behind schedule, and lacking of any sort of project master schedule or definitive project leadership. Until the Reauthorization Bill, a 5-10% decrease in government funding for NextGen was expected, which would have delayed the project even farther than its present 5 years behind schedule. One of the main components of NextGen, En Route Automation Modernization, or ERAM, has been found to be seriously flawed during live traffic testing. ERAM is the new ATC computer system that will replace the aging HOST computer system and will be the first step in implementing NextGen. Now having adequate funding from the federal government, the FAA should be able to get the bugs worked out of ERAM faster and more thoroughly, giving a huge boost to the program. The bill also mandates that the position of 'Chief NextGen Officer' be appointed by the Administrator, and will serve 5 year terms. The responsibilities of the Chief NextGen Officer include creating an annual NextGen plan, creating a budget for the program, and general coordination and oversight of the program. More about the Chief NextGen Officer's duties can be found in the FAA Modernization and Reform Act of 2012, page 28. This position means an overall more clear mission and timeline, and greater efficiency of the project. Additionally, the act states that the ADS-B technology to be required for NextGen be identified by the FAA.
Beginning this year the European Union began tracking the carbon emissions of aircraft flying to or from Europe, causing aviation to become a part of the ETS. If the EU gets their way, they will be collecting a bill from all applicable airlines for a large percentage of their total carbon emissions, plus fines for any emissions over their allotted amount. This has caused outrage around the world including in the United States, particularly because the EU will be taxing for the entire duration of a flight to or from Europe, even that portion outside of EU airspace. I believe that the government's stance on this topic in the Reauthorization Bill will be monumental in the outcome of the ETS controversy. It states that the EU should not implement their carbon trading scheme on the aviation community without going through the ICAO. It also states that the "US should use all political and diplomatic tools available to prevent ETS from being applied to US aircraft operators."- arentfox.com . This portion of the Act further strengthens the US's opposition to airline ETS implementation. I believe the inclusion of this subject in the Act is so important because this would be such a huge financial burden to US airlines, and the outcome of the arguments may well determine the future financial health of US airlines, impact ticket prices, and impact future international relations including a possible trade war.
As I mentioned above, the final element of the three most impactful sections of the Reauthorization Bill is the changes to the Essential Air Service program. EAS is a program that grants government subsidies to airlines that operate to select smaller communities that are not necessarily profitable for the airline to operate to on its own. The program greatly enhances air transportation opportunities for those populations not located near a major US airport (not to mention probably provides a few more jobs for us pilots). It is a very successful program, but it has been under some scrutiny by lawmakers. There was an attempt made to completely eliminate EAS, but the Reauthorization Bill has preserved it. In compromise for keeping the program, it will see as much as $50 million less in funding, with reductions every year- $143 million total funding in 2012, $118 in 2013, $107 in 2014, and $93 million in 2015, as seen in a summary of the Act. The legislation also limits the EAS program to airports with 10 or more operations per day and must be located within 175 miles of a large or medium hub airport (except in Alaska or Hawaii), and prohibits any more airports from applying to the EAS program. I do believe it is important that many communities located far from hub airports maintain the availability of commercial air transportation. It is a service that I do believe should be easily available to all Americans. I believe that this program does raise the standard of living of America as a whole. With the reduction in funding for EAS, airline service to some small airports will inevitably be cut, leaving many travelers with a much longer journey. The cut in funding and stricter requirements may reduce the profitability of some regional airlines being that they were receiving basically free money to sell seats on their aircraft. This will also leave some people without the jobs that the airlines previously created in their towns, and tax revenues will decrease. It is however better than the alternative of this program ending altogether.
Saturday, February 18, 2012
EU Emissions Trading Scheme Tensions
1) The European Union Emissions Trading Scheme is the European Union's plan to cap and reduce greenhouse gas emissions over time. The concept of the scheme is that each member country submits a total yearly analysis of greenhouse gas emissions to the EU. Each member country is then assigned a limit for total yearly emissions. Factories producing greenhouse gasses must apply for permits which cap the yearly amount of carbon emissions that the specific plant can produce. At the end of the year if a company is under their yearly limit, they can sell off their surplus emissions allowances to another company which has gone over its limit, making a profit for themselves. If a company which has gone over its limit cannot find another company to trade with, they face heavy fines. The EU profits from the initial sale of the permits, and no additional allowances are sold, allowing the "currency" to hold its value and keep emissions rates at a constant. Over time, emissions caps are lowered, in an attempt to cause a shift to greener alternatives.
ETS was first implemented in 2005, but is just now being applied to aviation (it started January 1). If the EU gets their way, airlines will be allowed 82% of their carbon emissions, based on 2010 data, for free according to Forbes. They must purchase the remaining 15% at rates anywhere from 8.56-12 Euro per tonne. The total amount of emissions allowed, however, is a 3% decrease from the 2010 measurements, explaining the missing 3%. In 2013, caps will fall to 95% of their 2010 numbers, and free allowances will fall to 80%. I would like to note that the emissions are calculated from the point of origin, not within the European Union. This has caused outrage from governments and airlines worldwide. The regulation will cost the industry an estimated $23.8 billion up to 2020.
2) The US is upset about ETS because lawmakers claim that it violates the Chicago convention, as well as the Open Skies Agreement between the US and EU. EU courts have determined, however, that it is perfectly legal under both of these agreements. The US government is upset at this added expense to an already fragile and struggling industry. Secretary of State Hillary Clinton has urged the European Union to cooperate with the industry and foreign governments instead of working against them. Senator John Thune of South Dakota proposed a bill which would prohibit US airlines from complying with the ETS, if the DOT deems it to be in the best public interest. The government says that they are addressing the carbon emissions problems themselves in a different manner from that of the EU, like NextGen or financial incentives. Outside of the US, China has banned its carriers from complying with the regulation unless granted permission.
3) According to Air Transport World, the ICAO has agreed to adopt a working paper encouraging the European Union to exclude non-European carriers operating flights to or from Europe from ETS. This is perhaps a result of increasing pressure from ICAO non-European member states. Like the US, the ICAO has also encouraged the EU to work with the international aviation community in addressing the emissions problem. They also stated the ICAO's dedication and its role in reducing aircraft emissions. This document shows that significant global opposition to EU ETS is growing.
4) I believe that EU ETS is ridiculous. Applying such an expensive program to an industry already operating with such tight profit margins and that is struggling so much is mind boggling. This regulation will halt any airline expansion to or within Europe entirely and effect the European and global economy negatively. I do not agree with the EU ETS in the first place, let alone when it is applied to aviation. I believe that the airlines have already been doing a great job of reducing their emissions on their own by upgrading their fleets, running flights tighter, and taking other measures. The fuel prices and economy alone are already a great incentive for them to reduce fuel burn, ETS is just a burden. In addition, I think there are better ways to reduce emissions, such as financial incentives and more direct and efficient routing, as the US Government and the ICAO also believe. The added cost will leave the airlines without the cash to upgrade their fleet and actually reduce emissions, and trouble them further in meeting the even further reduction in emissions standards coming in the future. I also believe that the European Union is greatly stepping outside of their jurisdiction by charging airlines for carbon emissions based on the entire duration of their flight outside of European Airspace. And ultimately, this will hurt the consumer, raising ticket prices even further.
5) I think that the ICAO should promote new air traffic systems worldwide like NextGen to provide more direct routing, reduce taxi times, reduce holding, and allow a more optimal cruising altitude for each flight. The ICAO could require member countries to meet certain carbon emissions certification standards when certifying new aircraft. I think that the ICAO could also provide some sort of a special airline rating for airlines that make extra efforts to reduce emissions. The ICAO could allow a participating airline to put a special decal on their airplane to advertise the rating. This would benefit the airline simply by enhancing their public image, causing more consumers to book with the more environmentally friendly airline. Voluntary safety programs based on this premises have already proven to work in the industry.
ETS was first implemented in 2005, but is just now being applied to aviation (it started January 1). If the EU gets their way, airlines will be allowed 82% of their carbon emissions, based on 2010 data, for free according to Forbes. They must purchase the remaining 15% at rates anywhere from 8.56-12 Euro per tonne. The total amount of emissions allowed, however, is a 3% decrease from the 2010 measurements, explaining the missing 3%. In 2013, caps will fall to 95% of their 2010 numbers, and free allowances will fall to 80%. I would like to note that the emissions are calculated from the point of origin, not within the European Union. This has caused outrage from governments and airlines worldwide. The regulation will cost the industry an estimated $23.8 billion up to 2020.
2) The US is upset about ETS because lawmakers claim that it violates the Chicago convention, as well as the Open Skies Agreement between the US and EU. EU courts have determined, however, that it is perfectly legal under both of these agreements. The US government is upset at this added expense to an already fragile and struggling industry. Secretary of State Hillary Clinton has urged the European Union to cooperate with the industry and foreign governments instead of working against them. Senator John Thune of South Dakota proposed a bill which would prohibit US airlines from complying with the ETS, if the DOT deems it to be in the best public interest. The government says that they are addressing the carbon emissions problems themselves in a different manner from that of the EU, like NextGen or financial incentives. Outside of the US, China has banned its carriers from complying with the regulation unless granted permission.
3) According to Air Transport World, the ICAO has agreed to adopt a working paper encouraging the European Union to exclude non-European carriers operating flights to or from Europe from ETS. This is perhaps a result of increasing pressure from ICAO non-European member states. Like the US, the ICAO has also encouraged the EU to work with the international aviation community in addressing the emissions problem. They also stated the ICAO's dedication and its role in reducing aircraft emissions. This document shows that significant global opposition to EU ETS is growing.
4) I believe that EU ETS is ridiculous. Applying such an expensive program to an industry already operating with such tight profit margins and that is struggling so much is mind boggling. This regulation will halt any airline expansion to or within Europe entirely and effect the European and global economy negatively. I do not agree with the EU ETS in the first place, let alone when it is applied to aviation. I believe that the airlines have already been doing a great job of reducing their emissions on their own by upgrading their fleets, running flights tighter, and taking other measures. The fuel prices and economy alone are already a great incentive for them to reduce fuel burn, ETS is just a burden. In addition, I think there are better ways to reduce emissions, such as financial incentives and more direct and efficient routing, as the US Government and the ICAO also believe. The added cost will leave the airlines without the cash to upgrade their fleet and actually reduce emissions, and trouble them further in meeting the even further reduction in emissions standards coming in the future. I also believe that the European Union is greatly stepping outside of their jurisdiction by charging airlines for carbon emissions based on the entire duration of their flight outside of European Airspace. And ultimately, this will hurt the consumer, raising ticket prices even further.
5) I think that the ICAO should promote new air traffic systems worldwide like NextGen to provide more direct routing, reduce taxi times, reduce holding, and allow a more optimal cruising altitude for each flight. The ICAO could require member countries to meet certain carbon emissions certification standards when certifying new aircraft. I think that the ICAO could also provide some sort of a special airline rating for airlines that make extra efforts to reduce emissions. The ICAO could allow a participating airline to put a special decal on their airplane to advertise the rating. This would benefit the airline simply by enhancing their public image, causing more consumers to book with the more environmentally friendly airline. Voluntary safety programs based on this premises have already proven to work in the industry.
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