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January Aviation Summary- January 2018
IATA: Strong Airline Profitability to Continue in 2018.
Global industry net profit will rise to $38.4 billion in 2018, forecasts the International Air Transport Association (IATA), compared to $34.5 billion expected in 2017 (revised from $31.4 billion forecast in June). Highlights of expected 2018 performance include a rise in overall revenues to $824 billion (+9.4% on 2017 revenues of $754 billion), in passenger numbers to 4.3 billion (+6% on the 4.1 billion passengers in 2017), and cargo carried to 62.5 million tons (+4.5% on the 59.9 million tons in 2017). All regions are expected to report improved profitability in 2018 and to see demand growth outpace capacity expansion. “These are good times for the global air transport industry,” said Alexandre de Juniac, IATA Director General and CEO, but the industry also faces challenges. He urged governments “to raise their game— implementing global standards on security, finding a reasonable level of taxation, delivering smarter regulation and building the cost-efficient infrastructure to accommodate growing demand.” IATA noted that fuel is expected to be 20.5% of total costs in 2018 (up from 18.8% in 2017); and labor costs are now a larger expense item than fuel (30.9% in 2018).
December Aviation Summary – December 2017
Huerta Hails “Next Great Age in Aviation.”
“We stand on the cusp of the next great age in aviation—when the skies will be home to multitudes of new users, flying in ways we can only imagine,” Michael Huerta, Administrator of the Federal Aviation Administration (FAA), told the Aero Club of Washington, D.C. The commercial space effort could evolve into rocket ships taking passengers to Asia, Europe, or the Middle East in minutes, said Huerta, and NASA is developing traffic management systems that could enable safe, efficient low-altitude operations. “The industry has a new ‘need for speed’ [and] FAA can’t afford to move at the traditional pace of government. We’ll get left behind at the launch pad, wondering what just happened.” Incorporating new stakeholders into the FAA’s decision-making processes will be essential to continue making progress in the future, said Huerta, who departs FAA in early 2018.
November Aviation Summary – November 2017
IATA: 7.8 Billion Air Passengers by 2036.
A near doubling of air travelers to 7.8 billion is expected by 2036, reports the International Air Transport Association (IATA). The prediction is based on a 3.6% average Compound Annual Growth Rate noted in an update to IATA’s 20- Year Air Passenger Forecast. The Asia-Pacific region will be the source of more than half the new passengers. China will displace the United States as the world’s largest aviation market by 2022; the UK will fall to fifth place, surpassed by India in 2025 and Indonesia in 2030. Thailand and Turkey will enter the top ten largest markets, while France and Italy will fall to 11th and 12th place respectively. “Maximizing the potential benefits of aviation growth will depend on current levels of trade liberalization and visa facilitation being maintained,” said IATA Director General and CEO Alexandre de Juniac. “If trade protectionism and travel restrictions are put in place, the benefits of air connectivity will decline as growth could slow to 2.7%, meaning 1.1 billion fewer passenger journeys annually in 2036. Conversely, if moves towards liberalization increase, annual growth could be more than two percentage points faster, leading to a tripling in passengers over the next 20 years.”
In 2016, airlines carried 3.8 billion passengers on scheduled services systemwide, an increase of 7% over 2015, representing an additional 242 million air trips, according to the 2017 edition of the IATA World Air Transport Statistics (WATS). Regionally, Asia-Pacific ranked first, with a 35% market share (1.3 billion, 11.3% over 2015); followed by Europe, 26% market share (992.4 million, up 6.1%); North America, 24% market share (911.5 million, up 3%); Latin America, 7% market share (275.1 million, up 1.8%); Middle East, 5% market share (206.1 million, up 9.1%); and Africa, 2% market share (84 million, up 6%). The top five airlines ranked by total scheduled passengers (domestic and international) were: Southwest (151.8 million); American (144.2 million); Delta (143.3 million); China Southern (114.5 million); and Ryanair (112 million). U.S. citizens are the world’s most prevalent travelers; 810 million passengers traveled on U.S. passports in 2016 comprising 21% of all passengers worldwide. New Model Airlines (NMAs), such as Low Cost Carriers (LCCs), accounted for 28.3% of all passengers in 2016, up from 27.1% of passengers in 2015.
October Aviation Summary – October 2017
FAA, Airlines Offer Aid in Natural Disasters.
The U.S. Federal Aviation Administration (FAA) is working with federal and local partners to rebuild aviation systems in the Caribbean and help the area recover from Hurricanes Irma and Maria. Commercial service has resumed at Luis Munoz Marin International Airport in San Juan, Puerto Rico, and Cyril E. King International Airport on St. Thomas. Flights at Princess Juliana International Airport, on St. Maarten, and other airports remain suspended due to extensive damage from Irma’s 185 mph winds. Commercial aircraft carried more than 80% of tourists who visited Caribbean Small Island States in 2016, said the International Civil Aviation Organization (ICAO). . . . On the U.S. mainland, FAA brought a mobile ATC tower to Key West International Airport to service aircraft supporting relief and recovery of the Florida Keys, and airlines canceled thousands of flights as Hurricane Irma barreled through Florida and the Southeast, including Atlanta. . . . Mexico City International Airport suspended operations for several hours after a 7.1-magnitude earthquake struck about 75 miles south of the capital, less than two weeks after an 8.2-magnitude tremor shook the southern coast. Tourist destinations were unaffected, said Latin American Travel Association (LATA), adding, “tourism is crucial to the country’s economy and, with an estimated $2 billion in repairs on the horizon, Mexico can’t afford to lose this huge source of income.”. . . After viral reports of excessive airfares in disaster areas, Congress warned U.S. airlines to cap ticket prices and promptly issue refunds for canceled flights; airlines complied, waived fees, and attributed the high fares to computer programs that automatically raise prices for last-minute bookings. Many airlines are matching funds raised for relief and helping with recovery efforts. The UPS Foundation and FedEx each announced multiple $1 million commitments. United flew a Boeing 777 to San Juan to transport customers and humanitarian resources. And Delta famously operated the last scheduled flights in and out of San Juan, just before ATC operations ceased, safely carrying 173 passengers to New York as Hurricane Irma neared. American reduced third quarter earnings expectations and Southwest estimates a $100 million loss “from the devastating hurricanes and earthquakes.”
September Aviation Summary – September 2017
Thousands of Flights Canceled Amid Houston Deluge.
Airlines canceled thousands of flights, as torrential rain and flooding due to Hurricane Harvey prevented passengers, crews and ground service personnel from reaching Houston airports for several days. Houston Airport System reopened George Bush Intercontinental for limited domestic passenger service at 4 p.m. on August 30, with international service to be added in coming days. Service at William P. Hobby was expected to resume on September 2. Priority was given to passengers ticketed prior to the hurricane. Airlines emphasized it could take more than a week to restore their full schedules, and flooding on roads impeded access. . . . The U.S. Department of Transportation (DOT) directed the Federal Highway Administration to make $25 million in Emergency Relief funds immediately available for repairs to roads and bridges. . . . The Federal Aviation Administration (FAA) warned that flying unauthorized drones in areas covered by a Temporary Flight Restriction could interfere with rescue and recovery missions and incur significant fines for users. . . . Bush, Hobby and Ellington airports remained open for the duration of emergency operations, providing, said Houston Mayor Sylvester Turner, “a critical link to humanitarian efforts, to the military and to a world willing to support the tough task of getting back to normal.”
August Aviation Summary – August 2017
Global Air Freight Demand Increases 13% in May.
Global air freight demand grew 12.7% in May, compared to year -earlier period, reports the International Air Transport Association (IATA) ; five -year average growth rate is 3.8%. All regions except Latin America reported year -on- year double- digit increases. . . . P ercentage of air cargo items purchased online grew from 16 % to 74 % from 2010 to 2015, and is projected to grow to 91% by 2025, said Olumuyiwa Benard Aliu, President of t he Internatio nal Civ il Aviation Organization (ICAO), in his k eynote address to the 6th World Civil Aviation Chief Executives Forum in Singapore. “Expectations being fostered today in modern consumers —whether for access to global products and services or ‘next -day’ deli very—are wholly dependent on international air transport to move their online purchases, rapidly and reliably ,” he said, stressing “the critical need for increasing levels of investments earmarked for air transport infrastructure expansion and modernization.” Dr. Aliu said less than 5 % of official development assistance globally is earmarked for air transport projects, although aviation generated 67.3 million jobs and contributed 2.7 trillion dollars to global GDP in 2016 alone.
July Aviation Summary – July 2017
IATA: Industry Faces Threat of Protectionist Measures.
“To deliver aviation’s many benefits we need borders that are open to people and trade,” said Alexandre de Juniac, Director General of the International Air Transport Association (IATA), at the 73rd IATA Annual General Meeting (AGM) and World Air Transport Summit in Cancun. “Today we face headwinds from those who would deny the benefits of globalization and point us in the direction of protectionism. This is a threat to our industry. We must bear witness to the achievements of our connected world. And we must ensure the benefits of aviation for future generations.” . . . Among other remarks, de Juniac urged governments to enhance collaboration with the industry to meet rising security challenges, avert a looming infrastructure crisis and build smarter regulation. The ban on large portable electronic devices in the cabin by the U.S. and UK on some flights from the Middle East and North Africa “tests the confidence of the industry and the public,” he said, suggesting alternatives, such as more intense screening at the gate and skills training in the short-term, and faster and more advanced explosive detection technology in the medium-term, adding that “painfully slow certification processes must be accelerated.” Citing a looming infrastructure crisis in many parts of the world, de Juniac urged full implementation of IATA Worldwide Slot Guidelines and building capacity where demand exists, but urged caution and economic regulation when privatizing aviation infrastructure assets. “Privatization has failed to deliver promised benefits in many countries,” he said, and “airlines pay the bill—usually a big one.” Amid “the potency of social media to hold individual companies and entire industries instantly accountable, Smarter Regulation principles are absolutely critical”, de Juniac said; “hastily-built regulation almost always brings unintended consequences.” . . . Singapore Airlines CEO Goh Choon Phong assumed his duties as Chairman of the IATA Board of Governors for a one-year term, succeeding Willie Walsh, CEO of International Airlines Group. Qantas will host the 2018 AGM in Sydney.
June Aviation Summary – June 2017
Administration FY18 Budget Separates ATC from FAA.
The President’s proposed budget for fiscal year 2018, beginning October 1, would reduce Department of Transportation (DOT) funding by $2.4 billion (down 13% from FY17). It proposes a multi-year reauthorization to move air traffic control (ATC) from the Federal Aviation Administration (FAA) to a nongovernmental organization, which “would reduce spending caps by $70 billion, more than $10 billion a year starting in 2021 through 2027.” FAA’s safety and regulatory functions would remain governmental, with funding estimated at $2.4 billion in 2021. The budget funds the Airport Improvement Program at the current $3.35 billion, cuts Essential Air Service Program by $175 million and eliminates funding for Brand USA, the public-private partnership created by Congress to promote the U.S. as a tourist destination, which U.S. Travel Association said “was responsible for adding $8.9 billion to the U.S. economy in 2016 alone.” . . . $44.1 billion in discretionary budget authority was requested for the Department of Homeland Security (DHS), a $2.8 billion (6.7%) increase over FY17, with $2.7 billion for border security, including construction of a wall along areas of the Mexican border; $354 million for biometric and $971 million for cybersecurity initiatives; and “key investments in explosives detection research and developments to enhance aviation security.” The Transportation Security Administration (TSA) request includes $5.1 million for aviation passenger screening covering 43,190 TSA Officers and 1,047 canine teams; and $680.5 million for procurement, installation and maintenance of checkpoint and checked baggage technology. The passenger security fee would increase from $5.60 to $6.60 per one-way trip.
May Aviation Summary – May 2017
IATA: Industry Painted with Hue of a Very Regrettable Incident.
Videos went viral of a passenger being violently dragged from a United flight at O’Hare by Chicago Aviation Department police, because he refused to give up his seat. And, said Alexandre de Juniac, Director General and CEO of the International Air Transport Association (IATA), headlines began painting “an entire industry with the hue of a single and very regrettable incident.” Questions have been raised about passenger rights, denied boarding procedures, actions of local law enforcement, and overbooking practices, noted de Juniac, but “the best results will not come out of angry, knee-jerk responses that seek resolution in 140 characters, or a newspaper comment piece written before the entire incident has revealed itself. If there is something in this incident that requires changes at an industry level the next step is a robust dialogue.” . . . The Department of Transportation (DOT) said it is reviewing the United Express Flight 3411 event, and launched a microsite for consumers, “Got Flights? Know Your Rights.” . . . In initial apologies, United CEO Oscar Munoz said fares would be refunded to all passengers on the flight and enumerated immediate actions to follow “this truly horrific event.” The airline later issued a formal “Review and Action Report” (see Section X). . . . United Continental Holdings said Munoz will not become Chairman as planned, and compensation for senior executives will be tied to progress in improving the customer experience. . . . Members of Congress ordered Munoz and DOT to provide detailed reports of the incident, scheduled hearings and introduced new passenger protection bills (see Section VI). . . . The Chicago Aviation Department officers who were called in by the airline to forcibly remove the passenger were placed on administrative leave. . . . And the passenger, who suffered a concussion, a broken nose and the loss of two teeth, settled out of court with the airline for an undisclosed sum.
April Aviation Summary – April 2017
IATA Supports Creation of Non-Profit Entity to Manage U.S. Skies.
The International Air Transport Association (IATA) “supports the creation of an independent, corporatized non-profit entity to manage U.S. skies,” CEO and Director General Alexandre de Juniac told the U.S. Chamber of Commerce Aviation Summit in Washington. Among other remarks, the former head of Air France urged the U.S. to “dramatically” reduce the tax burden on travel, and applauded the “intention to invest $1 trillion dollars to improve transportation infrastructure.” de Juniac urged the Administration to support successful implementation of the Carbon Offset and Reduction Scheme for International Aviation (CORSIA), agreed to by governments, including the U.S., at the 39th Assembly of the International Civil Aviation Organization (ICAO). He expressed concern about recent U.S. developments “that point to a future of restricted borders and protectionism” and said “IATA will be a strong voice in favor of the power of connectivity and trade.” He called for airlines and governments “to innovate together” on issues of safety and security. On the subject of airport privatization, he noted, “With the possible exception of San Juan airport in Puerto Rico, we have not seen a privatized airport fully deliver on expectations anywhere in the world. Airports are monopolies. When they are in private hands, the pressure to maximize shareholder returns too often outweighs the core objective of delivering user/consumer benefits. Private sector involvement in funding infrastructure improvements needs to be balanced by regulatory innovation to protect national and consumer interests.”
March Aviation Summary – March 2017
Administration Travel Ban Blocked; Revised EO Expected in March.
A January 27 Executive Order (EO) temporarily halting entry to the United States of all refugees and of citizens from Iraq, Iran, Syria, Yemen, Sudan, Libya and Somalia was deemed to be unconstitutional and blocked by federal judges on February 3, and was suspended on February 4 by the Department of Homeland Security (DHS). The EO, entitled “Protecting the Nation from Foreign Terrorist Entry into the United States,” was issued “without prior coordination or warning, causing confusion among both airlines and travelers,” said the International Air Transport Association (IATA), which urged governments “to provide sufficient advance coordination of changes in entry requirements so that travelers can clearly understand them and airlines can efficiently implement them.” The Administration said a revised EO will be issued in early March. . . . An internal report prepared by DHS intelligence analysts and leaked to the press found that “country of citizenship is unlikely to be a reliable indicator of potential terrorist activity”; in the past six years, individuals from 26 countries have been “inspired” to carry out attacks in the United States, said The New York Times, and few citizens from the seven countries affected by the ban have been granted visas by the U.S. State Department. (See also Section III.)
February Aviation Summary – February 2017
IATA: Sudden U.S. Travel Ban Creates Chaos for Airlines, Travelers.
An Executive Order (EO) issued by President Trump on January 27 blocked entry to the United States of all refugees for 120 days, and of citizens from Iraq, Iran, Syria, Yemen, Sudan, Libya and Somalia for 90 days. The ban initially included U.S. legal residents from those nations (green card holders) traveling abroad, but a stay was later placed on that provision by a federal judge.. “The EO was issued without prior coordination or warning, causing confusion among both airlines and travelers,” said the International Air Transport Association (IATA). “It also placed additional burdens on airlines to comply with unclear requirements, to bear implementation costs and to face potential penalties for non-compliance.” IATA asked for clarity from the Trump Administration and urged all governments “to provide sufficient advance coordination of changes in entry requirements so that travelers can clearly understand them and airlines can efficiently implement them.” Global systems and procedures exist to support this activity. IATA’s Timatic online solution, for example, is a global database for travel document requirements that is updated constantly and used by airlines and travel agents around the world. “These systems can only support the efficient implementation of any government’s directives by the global air transport industry with advance coordination as well as with detailed and consistent operational information,” said IATA. (See also Section III.)
January Aviation Summary – January 2017
IATA Predicts Continuing Strong Profits.
The International Air Transport Association (IATA) has reported a 2016 global airline net profit of $35.6 billion, with a net profit margin of 5.1%, making it the highest ever generated profit by the industry. In 2017 a net profit of $29.8 billion is expected, along with a forecast of total revenues of $736 billion, a 4.1% net profit margin; airlines will retain an average of $7.54 for every passenger carried. Higher oil prices will have the biggest impact on 2017. “We expect nearly 4 billion travelers and 55.7 million tons of cargo in the coming year,” said IATA Director General and CEO Alexandre de Juniac. “Governments, however, do not make aviation’s work easy. The global tax bill has ballooned to $123 billion. Over 60% of countries put visa barriers in the way of travel. And the total number of ticket taxes wasted in direct costs and lost productivity as a result of inefficient infrastructure exceeds $230 billion. These are only some of the hurdles which confront airlines. Our aim is to work in partnership to help governments better understand and fully maximize the social and economic benefits of efficient global air links.”
December Aviation Summary – December 2016
Elaine Chao Nominated to Serve as DOT Secretary.
President-Elect Donald Trump nominated Elaine Chao to serve as the next Secretary of Transportation. She was Labor Secretary from 2001 to 2009 (the first Asian-American female Cabinet member in U.S. history) and also served as Deputy Secretary of Transportation, Federal Maritime Commission Chairman and Deputy Maritime Administrator. Other positions included CEO of United Way of America, Director of the Peace Corps, and Vice President of Syndications at Bank America Capital Markets Group. She is married to Senate Majority Leader Mitch McConnell (R-Ky.). “We look forward to working with her,” said Nicholas Calio, President and CEO of Airlines for America (A4A), “to usher in a new era of innovation, smarter regulation, and transformational reforms to modernize our nation’s antiquated ATC system.”
November Aviation Summary – November 2016
IATA: Passenger Demand to Double Over 20 Years.
The International Air Transport Association (IATA) expects 7.2 billion air travelers in 2035, compared to 3.8 billion in 2016. The Asia-Pacific region is expected to be the source of more than half the new passengers, according to IATA’s 20-Year Air Passenger Forecast. China will displace the U.S. as the world’s largest aviation market (defined by traffic to, from and within the country) in around 2029. India will displace the UK for third place in 2026, while Indonesia enters the top ten, bumping Italy. Growth will also increasingly be driven within developing markets, where over the past decade share of total passenger traffic has risen from 24% to nearly 40%.
October Aviation Summary – October 2016
Alexandre de Juniac Takes Reins at IATA.
Alexandre de Juniac has officially taken on the role of Director General and CEO of the International Air Transport Association (IATA). The former CEO of Air France-KLM succeeds Tony Tyler, who led IATA from 2011 and had announced his retirement. In his keynote speech at the IATA World Financial Symposium, in Singapore, de Juniac said the airline industry is forecast to deliver a record net profit of $39.4 billion this year, with significant variations among regions. Among potential risks are: a sudden rise in oil prices; an increase in terrorism aimed at aviation and air travel; a sharp economic downturn; and a retreat from principles of free trade by one or more major economies. “Uncertainty is ahead of us. I am a big believer in speed and innovation. We cannot know the future. But we need to be prepared to react quickly when the environment changes. That’s not easy for any business—and it is a real struggle for process-driven industries like air transport.” A High Performance Organizations (HIPO) initiative was adopted to help industry financial departments.
September Aviation Summary – September 2016
DOT Issues Final Order for Havana Service; Cuba Scheduled Flights Begin.
The U.S. Department of Transportation (DOT) finalized a July 7 tentative decision in the Havana carrier selection proceeding; the order allocates 20 daily frequencies to U.S. carriers for scheduled passenger services between the United States and Havana. They include: Alaska Airlines from Los Angeles, once daily. American from Miami, 4 times daily and Charlotte, once daily. Delta from New York (JFK), once daily; Atlanta, once daily; and Miami, once daily. Frontier from Miami, once daily. JetBlue from Fort Lauderdale, twice daily (except once on Saturdays); New York Kennedy, once daily; and Orlando, once daily. Southwest from Fort Lauderdale, twice daily and Tampa, once daily. Spirit from Fort Lauderdale, twice daily. United from Newark, once daily and Houston, once weekly (Saturdays). The decision requires that carriers begin Havana services within 90 days of issue date of final order. . . . JetBlue began service from Fort Lauderdale to Santa Clara de Cuba on August 31, the first scheduled flight to the island in over 50 years; DOT Secretary Anthony Foxx and other officials were on the historic flight. American will begin service from Miami to five Cuban airports on September 7. Under the U.S.-Cuba arrangement signed in February, six U.S. passenger airlines and FedEx have the opportunity to operate up to 10 daily roundtrips between the U.S. and each of Cuba’s nine international airports, other than Havana, for a total of 90 daily roundtrips. . . . U.S. travelers must adhere to one of 12 categories authorized by the U.S. Department of the Treasury’s Office of Foreign Assets Control.
August Aviation Summary – August 2016
The world’s airlines are expected to report a $39.4 billion net profit in 2016, according to the International Air Transport Association (IATA), generated on revenues of $709 billion for aggregate net profit margin of 5.6%. On average, airlines will make $10.42 for each passenger carried. For the second year in a row and the second time in industry history, return on invested capital (9.8%) will exceed cost of capital (est. 6.8%). Results are attributed to lower oil prices, record load factor levels, ancillary revenues, and joint ventures and other forms of cooperation. Net profit of $22.9 billion is forecast for North American carriers; $7.5 billion for European airlines, $7.8 billion for airlines in Asia- Pacific, $1.6 billion for Middle East carriers, and $100 million for airlines in Latin America; a $500 million loss is forecast for African airlines.
July Aviation Summary – July 2016
A July 28 attack at Istanbul Ataturk Airport killed at least 43 people and injured more than 230. The attackers were identified as Russian, Uzbek and Kyrgyz nationals. U.S. President Barak Obama and other world leaders expressed condolences to and solidarity with Turkish President Recep Tayyip Erdogan, who issued a statement saying, “the bombs that exploded in Istanbul today could have gone off at any airport in any city around the world. Make no mistake: For terrorist organizations, there is no difference between Istanbul and London, Ankara and Berlin, Izmir and Chicago or Antalya and Rome.” The International Air Transport Association (IATA) said the tragedy “was a broad attack on our shared humanity,” and, following the March 22 Brussels Airport incident, another reminder of the “growing challenge for governments to keep people safe in the landside parts of the airport.” The International Civil Aviation Organization (ICAO) noted that security provisions for airside and landside terminal areas are currently undergoing review, and will be subject to final approval and adoption by ICAO’s 36-State Governing Council. The U.S. Federal Aviation Administration (FAA) suspended flights to and from Istanbul, but lifted the ground stop when the airport reopened. Port Authority of New York and New Jersey, which operates Kennedy, LaGuardia and Newark Liberty airports, said it added “high visibility patrols equipped with tactical weapons and equipment” and “is collaborating with federal, state and local law enforcement partners, including the FBI Joint Terrorism Task Force.” A day before the attack, the U.S. Department of State updated a March warning to U.S. citizens of increased threats from terrorist groups throughout Turkey.
June Aviation Summary – June 2016
As extremely long security lines at major U.S. airports caused thousands of passengers to miss flights in May, the Department of Homeland Security reallocated resources, and Congress, airlines, and airports stepped up to help solve the problem. An unexplained Egypt air crash over the Mediterranean on May 19 and the March bombing of an unsecured area of Brussels Airport, intensified pressure to act quickly, and by Memorial Day travelers were moving through airports quickly .
May Aviation Summary – May 2016
International Air Transport Association (IATA) named Alexandre de Juniac to succeed retiring Director General and CEO Tony Tyler. De Juniac has been Chairman and CEO of Air France-KLM since 2013 and earlier held leadership positions in Thales (previously Thomson-CSF) and the French government.
April Aviation Summary – April 2016
The International Civil Aviation Organization (ICAO) expressed strong condemnation of the March 22 bombings in Brussels, in the departures hall at Zaventem Airport and at Maelbeek metro station near European Union headquarters. “While the devices at Zaventem airport were detonated in public, landside airport areas which are not protected by civil aviation screening standards and related procedures, threats to international passengers at any stage in their journey are of tremendous concern to ICAO and the entire air transport community,” said ICAO Secretary General Fang Liu. ICAO maintains security provisions for airside and landside terminal areas, which are undergoing review through the Aviation Security Panel and Committee on Unlawful Interference, and will be subject to final review and adoption by ICAO’s 36-State Governing Council.
March Aviation Summary – March 2016
Global passenger traffic rose 6.5% in 2015, compared to 2014, reports the International Air Transport Association (IATA), the strongest result since the economic rebound in 2010 and above the 10-year average annual growth rate of 5.5%. Demand was boosted by fares that were 5% lower than in 2014. Annual capacity rose 5.6%, with the result that load factor climbed 0.6% to a record annual high of 80.3%. All regions experienced positive traffic growth in 2015. Asia-Pacific carriers accounted for one-third of total annual increase in traffic. . . . The 2015 global jet accident rate was one major accident for every 3.1 million flights, reports IATA, a 30% improvement compared to the previous five-year rate of one major accident for every 2.2 million flights. There were no jet hull loss accidents that resulted in passenger fatalities. The 2015 losses of Germanwings 9525 (pilot suicide) and Metrojet 9268 (suspected terrorism) that resulted in 374 deaths are not included in the accident statistics, as they are classified as deliberate acts of unlawful interference.
February Aviation Summary – February 2016
As the Centers for Disease Control and Prevention issues travel alerts for numerous countries where transmission of the Zika virus is ongoing, airlines allowed concerned customers to cancel or postpone trip to those areas. Transmitted by Aedes mosquitoes, Zika is linked to birth defects; no vaccine or medicine is currently available. The World Health Organization warned that Zika is “spreading explosively” in the Americas and that four million people could be infected by year’s end.
January Aviation Summary – January 2016
Total number of passengers carried on scheduled services rose 6.4% to 3.5 billion in 2015, according to preliminary figures released by the International Civil Aviation Organization (ICAO). International scheduled passenger traffic grew by 6.7%: European by 5.5%, Asia/Pacific by 8.2%, Middle East by 12.1%, North America by 3.3%, Latin America/Caribbean by 7.9% and Africa by 0.6%. Domestic scheduled services grew by 6.9%. Low-cost carriers (LCCs) boarded 950 million passengers, 28% of total. “The increasing presence of LCCs in emerging economies is considered to have been an important contributing factor to overall growth in passenger traffic,” said ICAO. World scheduled freight (air cargo) traffic grew by 2.2%, compared to 4.9% growth rate in 2014, “a reflection of the stagnating general economic situation worldwide.” International freight traffic, nearly 87% of total air freight, grew by 2.9%, compared to 5.2% growth in 2014; load factor declined from 50% in 2014 to 47% in 2015. More carriers improved cargo capacity utilization by moving higher volumes via passenger aircraft rather than dedicated freighters.
December Aviation Summary – December 2015
IATA: “Terror Attacks Unacceptable by Any Measure,”Following the downing of a charter flight in Egypt and terror attacks on theground in Paris, Beirut, Mali and elsewhere, nations increased surveillanceand took steps to protect against further terrorism. . . “Civil aviation and theinternational tourism that it enables are instruments of peace. Their violationby terror attacks in recent weeks-including the claimed downing of anairliner-is unacceptable by any measure,” said the International Air TransportAssociation (IATA), with the Global Travel Association Coalition. “We areconfident in government resources and intelligence to combat emergingthreats. And we are resolute in our commitment to work together under theleadership of governments to keep our passengers and crew safe.”. . . TheU.S. Department of Homeland Security enhanced security at foreign last-point of-departure airports, amid emerging evidence that a bomb destroyed aRussian carrier Metrojet (Kogalymavia ) operated Airbus A321 on October 31;a branch of the Islamic State in the Sinai Peninsula took responsibility for thecalamity. Flight 7K9268 went down shortly after departing Sharm el-Sheikh for Saint Petersburg, killing all 224 on board, mostly Russian tourists. The UKadvised against all but essential travel by air to the Red Sea resort, and worldauthorities sent experts to Egypt to ensure that airport security standards arein place. The International Civil Aviation Organization (ICAO) said a panelscheduled to meet in March 2016 will emphasize airport security. . . .Following terror attacks in Paris on November 13 that killed 130 people,European Union governments tightened checks at Schengen Area externalborders for all travelers. Ministers also agreed to hasten Passenger NameRecord (PNR) sharing and reduce firearms trafficking. The passport-freeSchengen area comprises 22 EU countries plus non-EU Norway, Switzerland,Iceland and Lichtenstein. . . . Six employees of Russian carrier Volga-Dneprwere among 19 people killed in a terror attack on a Mali hotel on November20. Air France and Turkish Airlines employees were among freed guests whohad been trapped or held hostage in the building. . . . The U.S. StateDepartment issued a worldwide travel alert for U.S. citizens, stating that “ISIL (aka Da’esh), al-Qa’ida, Boko Haram, and other terrorist groups continue to plan terrorist attacks in multiple regions.” The alert, which expires on February 24, 2016, also cites “a continuing threat from unaffiliated persons planning attacks inspired by major terrorist organizations but conducted on an individual basis.” And, the White House said it is “aggressively strengthening” the U.S. Visa Waiver Program (see Section III).
November Aviation Summary – November 2015
IATA: 2015 Industry Net Profit of $29.3 Billion Expected. The International Air Transport Association (IATA) expects a 2015 industry net profit of $29.3 billion on revenues of $727 billion, for a net profit margin of 4%, generating a return on capital of 7.5%. “For the first time, the industry on average will be creating value for its equity investors,” said IATA Director General Tony Tyler, at the World Passenger Symposium in Hamburg. This year airlines will carry 3.5 billion passengers and, said Tyler, with that figure expected to more than double in 20 years “the task before us is how to work together to accommodate that growth, while upholding customers’ expectations for their air travel experience.”
October Aviation Summary – October 2015
IATA: 42% of International Traffic Touched Asia-Pacific in 2014. The 59th Edition of the World Air Transport Statistics, published by the International Air Transport Association (IATA), reported that in 2014 airlines operated 100,000 flights per day and transported 51.3 million tons of cargo – about 35% of total value of all goods traded internationally. System-wide, airlines carried 3.3 billion passengers on scheduled services, up 5.8% over 2013. International traffic to, from and within the Asia-Pacific region represented 42% of total international revenue passenger kilometers and carriers registered in the Asia-Pacific region carried 33% of total passengers (1.1 billion, up 8% compared to 2013). The top five international/regional passenger airport-pairs were Hong Kong-Taipei (5.1 million, up 4% from 2013) Jakarta-Singapore (3.5 million, up 1.4%) Hong Kong-Singapore (2.8 million, up 7.8%) Hong Kong-Shanghai (2.7 million, up 5.9%) Hong Kong-Seoul (2.5 million, up 25.8% from 2013). Airlines in Europe held a 26.3% market share (873.4 million passengers, up 5.6%); North America, 25.3% (841.8 million, up 2.6%); Latin America and the Caribbean, 7.7% (255.9 million, up 7%); Middle East, 5.2% (173 million, up 10%); and Africa, 2.3% (76.7 million, up 2.4%). The top five airlines ranked by total scheduled domestic and international passengers were Delta (129.4 million), Southwest (129.1 million), China Southern (100.7 million), United (90.4 million), and American (87.8 million; does not include US Airways’ 54.4 million). Similarly, the top five airlines ranked by total freight tons carried on scheduled services were: Federal Express (7.1 million), UPS (4.2 million), Emirates (2.3 million), Korean Air (1.5 million), and Cathay Pacific (1.5 million).
September Aviation Summary – September 2015
Tyler to Retire as IATA Chief in June 2016.Tony Tyler will retire in June 2016 after serving five years as Director Generaland CEO of the International Air Transport Association (IATA). Tylerpreviously was CEO of Cathay Pacific and chaired the IATA Board of Governors. . . . Global airlines are expected to earn a net profit margin of 4%this year, which equates to $29.3 billion net profit, said IATA.
August Aviation Summary – August 2015
MH370 Wreckage Believed Found on Indian Ocean Island. A wing component believed to be part of missing Malaysia Airlines Flight 370was found on the French island of La Reunion, located in the Indian Oceannear Madagascar, and sent to Toulouse for analysis. The Boeing 777-200ERdisappeared from air traffic control radar on March 8, 2014, after taking offfrom Kuala Lumpur for Beijing with 227 passengers and 12 crew on board.The Australian Transport Safety Bureau (ATSB), which is leading amultinational underwater search for MH370 in the southern Indian Ocean offWestern Australia, said the La Reunion location “would be consistent withother analysis and modeling that the resting place of the aircraft is in thesouthern Indian Ocean.” Malaysia is responsible for the accident investigationand will manage analysis of the part, a flaperon, in collaboration with Boeing,French BEA, U.S. National Transportation Safety Board and ATSB.
July Aviation Summary – July 2015
IATA: 2015 Outlook Revised to $29.3 Billion Net Profit. The International Air Transport Association (IATA) revised its 2015 outlook to $29.3 billion net profit, compared to $16.4 billion in 2014 (re-stated from $19.9 billion), reflecting stronger global economic prospects, record load factors, lower fuel prices and major appreciation of the U.S. dollar. A record high passenger load factor of 80.2% will result in a 4% average net profit margin. On average, airlines will retain $8.27 for every passenger carried. But “the industry’s fortunes are far from uniform,” said Tony Tyler, IATA DirectorGeneral and CEO. North American based airlines will generate over half the global profit ($15.7 billion), with pre-tax and interest earnings exceeding 12%. Asia-Pacific carriers are expected to generate a $5.1 billion profit for a 2.5% net margin ($4.24/passenger); European airlines a profit of $5.8 billion, net margin 2.8% ($6.30/per passenger); Middle East airlines a $1.8 billion netreturn, net margin 3.1% ($9.61/passenger); Latin America airlines a $600million net profit, net margin 1.8% ($2.27/passenger); and Africa airlines a net profit of $100 million, net margin 0.8% ($1.59/passenger).
June Aviation Summary – June 2015
DOT Issues Interim Policy on Mistaken Fares. The U.S. Department of Transportation (DOT) issued an interim notice of Enforcement Policy Regarding Mistaken Fares, stating it would not enforce post-purchase pricing rules if the airline or seller of air transportation demonstrates the fare was mistaken and reimburses consumers for certain expenses. In an earlier Notice of Proposed Rulemaking on transparency of airline ancillary fees and other consumer protections, DOT had said it was contemplating revising the post-purchase price provision to better address the issue of mistaken fares, and expressed concern regarding how quickly mistaken fares are spread though internet postings. This enforcement policy will remain in effect until DOT issues a final rule that specifically addresses mistaken fares.
May Aviation Summary – May 2015
Delta and Grupo Aeromexico are seeking antitrust immunity for a $1.5 billion joint venture, in which “Aeromexico’s hubs in Mexico City, Monterrey, Guadalajara and Hermosillo will give Delta customers greater access to cities throughout Mexico [and] Delta will provide Aeromexico with a broad North American network via Delta’s key hubs, including Atlanta, Detroit, Los Angeles, Minneapolis, New York, Salt Lake City and Seattle.” Upon receipt of regulatory approvals, Delta and Aeromexico will seek opportunities to co-locate and invest in airports, and increase joint sales and marketing initiatives. The SkyTeam partners launched their first code share in 1994 and currently offer 4,000 weekly code share flights. They entered into an enhanced commercial agreement in 2011, and in 2012 Delta invested $65 million in shares of Grupo Aeromexico.
April Aviation Summary – April 2015
New Cockpit Procedures Defined After Germanwings Crash. A Germanwings Airbus A320 crashed in the French Alps en route from Barcelona to Düsseldorf, killing all 144 passengers and six crew members. Early conclusions disclosed by a French prosecutor indicate the co-pilot deliberately crashed the plane while the pilot was locked out of the flight deck; the cockpit voice recorder reveals violent knocking on the door as the pilot tried to gain entry. “It is imperative, however, that the accident investigation is fully completed in order to determine outcomes that can help prevent a tragedy like this from happening again,” warned Tony Tyler, Director General and CEO of the International Air Transport Association (IATA). French agency Bureau of Enquiry and Analysis for Civil Aviation Safety is conducting the technical investigation. The European Aviation Safety Agency (EASA) and other government entities immediately called for a second crew member in the cockpit at all times during flight, a requirement already in place in the United States. EASA also said “airlines should re-assess the safety and security risks associated with a flight crew leaving the cockpit due to operational or physiological needs.” Germanwings parent Lufthansa Group created the position of Group Safety Pilot, which will have “overarching groupwide responsibility for examining and further refining all flight safety-relevant procedures [and] report directly to the Group CEO.”
March Aviation Summary – March 2015
Flight Tracking Performance Standard Recommended. The International Civil Aviation Organization (ICAO) High Level Safety Conference recommended adopting a new tracking standard, in which aircraft would report their position every 15 minutes during normal operations in remote areas that air traffic surveillance services do not cover. Global airlines could use available and planned technologies and procedures that they deem suitable. ICAO Council President Olumuyiwa Benard Aliu said the standard will provide a foundation to implement the more comprehensive Global Aeronautical Distress and Safety System (GADSS) in the future and would be expedited for formal comment, with adoption anticipated as early as this fall. The GADSS concept, developed after Malaysia Airlines Flight MH370 disappeared last March, calls for a three-tiered approach for global aircraft tracking over the long-term, covering normal, abnormal and distress conditions.
February Aviation Summary – February 2015
FAA Proposes $1.3 Million Fine for Alleged Hazmat Violations by United. The Federal Aviation Administration (FAA) proposed a $1.3 million civil penalty against United Airlines, for allegedly violating Hazardous Materials Regulations on domestic and international flights. During inspections in Boston, San Francisco, Denver, and Chicago, FAA discovered at least 120 instances in which the carrier failed to comply with the regulations; almost all involved failing to provide the pilot in command with accurate information about hazardous materials aboard the aircraft. FAA also alleges that United improperly accepted hazardous materials for air transportation twice, and failed to retain copies of shipping papers.The hazardous materials included lithium metal batteries, dry ice, corrosive liquids, radioactive materials, detonating fuses, compressed oxygen, engines, isopropanol, non-flammable aersols, phosphoric acid, sodium hydroxide and ethanol solutions, air bag modules and printing ink. . . . FAA proposed a $450,000 civil penalty against SkyWest, for allegedly operating 15 flights when they were not in an airworthy condition. SkyWest failed to perform proper maintenance on air conditioning units in three Bombardier CL-600s and on the auxiliary generator in an Embraer EMB-120 following pilot reports of problems with those systems. . . . A $390,000 civil penalty against Horizon was proposed for alleged operation of six Bombardier DHC-8s, on more than 2,600 flights in 2012 and 2013, with transponders that Horizon had not tested and inspected every 24 months.
January Aviation Summary – January 2015
Airlines are expected to post a collective global net profit in 2014 of $19.9 billion ($18 billion projected in June), largely due to lower oil prices and stronger worldwide GDP growth, reports the International Air Transport Association (IATA). Profits could rise to $25 billion in 2015, when jet fuel prices are expected to average $99.9/barrel Passenger traffic is expected to grow by 7% in 2015 compared to 5.5% growth trend of the past two decades. Capacity growth at 7.3% will push passenger load factor to 79.6% (79.9% in 2014). Due to lower fuel prices, average return air fares (excluding surcharges and taxes) are expected to fall by 5.1% on 2014 levels, and cargo rates by 5.8%. Total passenger numbers are expected to reach 3.5 billion and passenger revenues $623 billion. “The industry story is largely positive,” said Tony Tyler, IATA Director General and CEO, but risks include political unrest, conflicts, and some weak regional economies. . . . Airlines in all regions are expected to report improved net profitability in 2015: North America- $13.2 billion ($11.9 billion/2014), net profit of $15.54 per enplaned passenger; Europe- $4 billion ($2.7 billion/2014), $4.27 per passenger, 1.8% net profit margin; Asia-Pacific- $5 billion ($3.5 billion/2014), 2.2% net profit margin, $4.30 per passenger; Middle East- $1.6 billion ($1.1 billion/2014), passenger capacity to expand by 15.6% (11.4%/2014), $7.98 per passenger, 2.5% net profit margin; Latin America- $1 billion ($700 million/2014), $3.53 per passenger, 2.6% net profit margin; Africa- $200 million, $2.51 per passenger.
December Aviation Summary – December 2014
Following an internal review of the September fire set by a contractor’s employee at the Chicago Air Route Traffic Control Center, the Federal Aviation Administration (FAA) announced it will modify its risk assessment approach for facility and personnel security. It will revise strategy and policies to support recovery in such situations within hours, instead of days, by creating more air traffic technology flexibility. A three-stage plan, with rate of execution dependent upon available resources, includes making radar, voice radios, flight planning data, and weather and aeronautical information more rapidly available to support operations in a new configuration; reducing or eliminating the manual nature of operations; and enhancing NextGen capabilities to make services available more quickly if a facility has a catastrophic loss.
November Aviation Summary – November 2014
The first person to die of Ebola Virus Disease (EVD) in the United States was a Liberian, Thomas Eric Duncan, who had traveled on United Airlines flights from Brussels to Dallas via Washington Dulles. As health authorities maintained, he was not contagious during that period. . . . Upon learning that a nurse who had treated Duncan flew on Frontier and later tested positive for EVD, the airline placed crew on paid leave for 21 days “out of an abundance of caution” and alerted passengers; that nurse and a co-worker have since recovered. . . . The Department of Homeland Security designated New York Kennedy, Newark, Washington Dulles, Chicago O’Hare and Atlanta as the only gateways for travelers from West African countries of Liberia, Sierra Leone and Guinea, and initiated EVD screening. Travelers from those countries with flights to other airports must rebook flights to make entry through a listed airport. There are no direct commercial flights to any U.S. airport from those countries, but travelers arrive via forgein hubs. . . . A healthcare worker returned to the U.S. from Guinea through Kennedy and received enhanced screening, but did not have fever or other symptoms; he later tested positive for EVD. The Centers for Disease Control and Prevention (CDC) then designated six states (New York, Pennsylvania, Maryland, Virginia, New Jersey and Georgia) where travelers “without febrile illness or symptoms consistent with Ebola will be followed up daily by state and local health departments for 21 days from date of departure from West Africa.” . . . CDC provided guidance to airlines and others for evaluating risk of exposure of persons coming from countries affected by EVD. CDC also issued guidance for airline crews, cleaners and cargo personnel regarding protective clothing, cleaning and disinfectant products and other precautions. CDC said “packages or luggage should not pose a risk. Ebola virus is spread through direct contact with blood or body fluids from an infected person. Don’t handle packages visibly dirty from blood or bodily fluids.” . . . As of October 29, CDC reported 7,606 laboratory-confirmed EVD cases in Liberia, Sierra Leone and Guinea with 4,910 deaths, and four in the U.S. with one death.
Washington Aviation Summary – October 2014
A fire in a telecommunications room at the Chicago En Route Center in Aurora, IL resulted in thousands of flight cancellations and delays across the nation. An employee was charged with arson, and the Federal Bureau of Investigation and Bureau of Alcohol, Tobacco, Firearms and Explosives are investigating. The Federal Aviation Administration (FAA) said its Command Center in Warrenton, VA worked with airlines that serve Chicago-area airports to minimize disruptions. Chicago Center controllers assisted at Chicago Terminal Radar Approach Control (TRACON) in Elgin, IL and at high-altitude air traffic centers near Minneapolis, Kansas City, Indianapolis and Cleveland to manage Chicago air traffic flows. The Center is replacing fire-damaged equipment, and full service is expected by October 13. FAA is conducting a 30-day review of contingency plans and security protocols for its major facilities. Members of Congress from Illinois asked the Department of Transportation Inspector General to conduct an immediate investigation into FAA emergency protocol and mitigation measures at Chicago air traffic control facilities.
Washington Aviation Summary – September 2014
A centralized system for prompt sharing of conflict-zone risk information will be established, reported the Task Force on Risks to Civil Aviation arising from Conflict Zones (TF RCZ). The International Civil Aviation Organization (ICAO) convened the task force after the downing of Malaysia Airlines Flight MH17 in July over eastern Ukraine, which killed all 298 aboard. States, regional organizations, and industry groups comprising the TF RCZ also will explore how the Notice to Airmen (NOTAM) system already in place between States and operators could better be used to share urgent and critical conflict zone risk information. “We saw some very strong consensus around the two specific projects we’ll now be pursuing and I am very confident that we’ll be submitting a very mature and practical set of proposals to the ICAO Council” said TF RCZ Chairman David McMillan, who is Chairman of Flight Safety Foundation and a former Director General of EUROCONTROL. ICAO will deliver the group’s preliminary findings to the ICAO Council in October. The TF RCZ will hold its next round of talks in December.
Washington Aviation Summary – August 2014
A Malaysian Airlines Boeing 777-200 (MH17) was shot down over eastern Ukraine on July 17 by what was believed to be a surface-to-air missile operated by Russian-hacked separatists Ukraine had closed airspace in the area at 32,000 feet, after the July 14 downing of a Ukrainian military aircraft. MH17 was flying above the prohibited zone, at 33,000 feet from Amsterdam to Kuala Lumpur. It did not make a distress call. The crash killed all 298 people aboard, including 193 Dutch citizens…. The U.S. Federal Aviation Administration (FAA) immediately prohibited U.S. flight operations in airspace over eastern Ukraine, expanding an April prohibition for flights over Crimea and adjacent areas EUROCONTROL and other entities issued similar prohibitions…. An international investigative team, led by the Dutch safety Board at the request of its Ukrainian counterpart (NBAAI), includes Boeing and the U.S. National Transportation Safety Board (NTSB) The on-site probe is hindered by unsafe battle conditions. Evidence and traces have been damaged or lost, but victims’ remains are being shipped to the Netherlands. Investigators have retrieved the flight data and cockpit voice recorders from separatists and they have sent them to the UK for analysis… Dutch prosecutors have opened criminal proceedings and the UN Security council called for an international investigation; the UN High Commissioner for Human Rights said the event may amount to a war crime…. Airlines need clear and accurate information to base operational decisions on where and when it is safe to fly, said a spokesman for the International Air Transport Association (IATA), at a meeting convened by the International Civil Aviation Organization (ICAO). ICAO reminded states of their responsibility to address risks to civil aviation in their airspace, and, with IATA, Airports Council International and Civil Air Navigation Services Organization, planned to establish a task force to address how essential threat information can be collected and disseminated. Industry urged ICAO to also address “the need to incorporate into international law, through appropriate UN frameworks, measures to govern design, manufacture and deployment of modern anti-craft weaponry”; and “to find ways through international law that will oblige governments better to control weapons which have the capability to pose a danger to civil aviation.”
Washington Aviation Summary – July 2014
The global industry expects a net profit of $18 billion this year, following earnings of $6.1 billion in 2012 and $10.6 billion in 2013, reports the International Air Transport Association (IATA). But airlines will see a net profit margin of only 2.4% and retain just $5.42 per passenger carried, noted Tony Tyler, IATA Director General and CEO, due to taxes and other burdens. “There is a mismatch between the value that the industry contributes to economies and the rewards that generate for those who risk their capital to finance the industry,” said Tyler. Global spending on air transport could reach $746 billion in 2014, 1% of world GDP, according to the “Economic Performance of the Airline Industry” report, released at IATA’s Annual General Meeting (AGM) in Doha. The airline industry will facilitate the $621 billion in tourism spending and the $6.8 trillion worth of goods delivered by air, and some 58 million jobs worldwide are supported by aviation.
Washington Aviation Summary – June 2014
The Australian Transport Safety Bureau said the search area in the southern Indian Ocean where acoustic signals were detected in early April “can now be discounted as the final resting place” of Malaysia Airlines Flight 370. Data now will be analyzed to define a search zone of up to 60,000 square kilometers; a bathymetric survey will be conducted to map the sea floor in the defined area; and a contractor will begin a new underwater search in August. . . . Meanwhile, the International Civil Aviation Organization (ICAO) and International Air Transport Association (IATA) agreed to move quickly to establish technology and standards for global-flight tracking. An Aircraft Tracking Task Force, coordinated by IATA, will address near-term needs, while ICAO studies how the new tracking data gets shared, with whom and under what circumstances, and develops standards to ensure broad adoption throughout the aviation system. . . . European Aviation Safety Agency announced new proposals for flight recorders and underwater locating devices (ULDs) to facilitate aircraft recovery in an accident. Requirements include extending transmission time of ULDs fitted on flight recorders from 30 days to 90 days. . . . India’s Directorate General of Civil Aviation ordered its airlines to track aircraft on a real-time basis, using the Aircraft Communications Addressing and Reporting System (ACARS) or Automatic Dependent Surveillance-Broadcast (ADS-B).
Washington Aviation Summary – May 2014
The fate of Malaysia Airlines Flight 370 remained unknown after a multinational search of 4.5 million square kilometers in the southern Indian Ocean near Perth. Australian Prime Minister Tony Abbott said a widened search will use specialized sonar equipment towed behind ships to scan a probable impact zone of 700 by 80 kilometers. Australia, in consultation with Malaysia, is considering commercial contractors to undertake this work. Meanwhile, a team of vessels from Australia, Malaysia, and China as well as a Bluefin-21 submersible sent by the United States continue “to maintain continuity and momentum.” . . . “MH370 has highlighted the need to improve our tracking of aircraft in flight,” said the International Air Transport Association (IATA). “In a world where our every move seems to be tracked, there is disbelief both that an aircraft could simply disappear and that the flight data and cockpit voice recorders are so difficult to recover. Air France 447 brought similar issues to light a few years ago and some progress was made. But that must be accelerated. We cannot let another aircraft simply vanish.” . . . The International Civil Aviation Organization (ICAO) will convene a special meeting in May on aircraft and satellite-based capabilities needed for global implementation of worldwide flight tracking.
Washington Aviation Summary – April 2014
A Malaysia Airlines Boeing 777 vanished en route from Kuala Lumpur to Beijing on March 8 and is believed to have crashed in the southern Indian Ocean, west of Perth. There were no transmissions of distress from pilots. Radar indicated the plane turned from its course and flew west toward the Strait of Malacca. Satellite data suggest it then turned south. An international investigation team, including the National Transportation Safety Board (NTSB), and Federal Aviation Administration (FAA) from the U.S., with Boeing,is providing technical assistance to Malaysia. A multinational air and sea search for debris is being led by the Australian Maritime Safety Authority. Flight MH370 was carrying 227 passengers and 12 crew. Relatives of the 154 Chinese passengers accused the carrier and the Malaysian government of actions that “misled and delayed search efforts, wasted manpower and material resources and led to the loss of precious rescue time.” At least one lawsuit has been filed. Germany’s Allianz is the lead insurer.
Washington Aviation Summary – March 2014
Global passenger demand increased by 5.2% in 2013, aligning with average annual growth rates of the past 30 years, reports the International Air Transport Association (IATA). Capacity rose 4.8% and load factor averaged 79.5%. Demand in international markets (5.4%) expanded slightly more than in domestic (4.9%). Strongest domestic and international growth combined was recorded by carriers in the Middle East (11.4%) followed by Asia-Pacific (7.1%), Latin America (6.3%) and Africa (5.2%). Slowest growth was in developed markets of North America (2.3%) and Europe (3.8%). Addressing the Singapore Airshow Aviation Leadership Summit, IATA Director General Tony Tyler expressed concern about “the negative impact of growing regulatory divergence and the proliferation of ‘unique approaches’ to regulating the industry,” he said. “While they were created with the best of intentions, they often come with the unintended consequences of complexity and bureaucracy.” Tyler suggested five guiding principles for governments when developing regulations: (1) consult broadly, including industry and consumers; (2) ensure a rigorous process for analyzing costs and benefits of new regulation; (3) ensure regulations do not conflict with global standards where they exist; (4) harmonize so that regulations are not at cross-purposes with a global industry; and (5) think of what will deliver value to the passenger.
Washington Aviation Summary February 2014
Nearly 35,000 flights were cancelled or delayed at U.S. airports in January, as record cold temperatures, snow and ice affected airline operations and equipment. From January 4-7, the three major New York-area airports accounted for over 5,300 delays and 2,100 cancellations; Chicago’s two major hubs showed 3,100 delays and 4,600 cancellations; and Huston, Philadelphia, Detroit, Boston and Cleveland combined reported 7,000 delays and 3,000 cancellations, reported New York area’s Global Gateway Alliance, using data from FlightAware.com. JetBlue shut down operations at New York Kennedy, LaGuardia and Newark and Boston Logan for 17 hours during the period to protect aircraft and personnel from freezing temperatures and icy ground conditions. Disruptions continued throughout the month, with frigid temperatures spreading to the Gulf of Mexico.
Washington Aviation Summary – January 2014
The International Air Transport Association (IATA) was set to celebrate the 100th anniversary of the birth of commercial aviation (January 1, 1914) with a re-enactment of the first scheduled airline flight across Tampa Bay in Florida. The Centennial will be noted over the course of 2014, with a focus on the value that aviation creates: “Every 60 seconds, 52 aircraft take off, $12.1 million worth of cargo is delivered, 5,700 passengers will board aircraft somewhere in the world, and the global fleet will cross over 70,000 kilometers,” said IATA. “Aviation supports some 57 million jobs and over $2.2 trillion in economic activity. And this industry delivers about 50 million tons of cargo that accounts for $6.4 trillion—or about 35%—of the value of goods traded internationally.”
Washington Aviation Summary – December 2013
American Airlines parent AMR Corp. and US Airways settled litigation to block their proposed merger brought by the Department of Justice (DOJ) and attorneys general of Arizona, Florida, Pennsylvania, Michigan, Tennessee, Virginia and the District of Columbia. The settlement requires slot and gate divestitures, including 104 slots not reserved for use by commuter planes at Washington Reagan National; 34 slots and associated ground facilities at New York LaGuardia; and rights and interests to two gates and associated ground facilities at each of Boston Logan, Chicago O’Hare, Dallas Love Field, Los Angeles International and Miami International. JetBlue at National and Southwest at LaGuardia may acquire slots they currently lease from American which are included in the total slots to be divested. Acquirers of the divestitures require DOJ approval, with preference given to airlines at each airport that do not currently operate a large share of slots or gates. The settlement prohibits the merged company from reacquiring the divested slots or gates during the 10 year term of the settlement, and requires advance notice of any future slot acquisition at National. . . . . American and US Airways entered into a separate agreement with the Department of Transportation (DOT), under which the merged airline will use all of its Reagan National commuter slots for service to small- and medium-sized markets. In an agreement with the six state attorneys general, they agreed to maintain numerous hubs “consistent with historical operations for a period of three years.” . . . The judge overseeing AMR bankruptcy proceedings ruled in favor of the settlement with DOJ and said the merger could proceed; AMR’s emergence from Chapter 11 and the merger with US Airways are expected to close on December 9. (See also Section X, item 1.)
Washington Aviation Summary – November 2013
The U. S. Department of Transportation (DOT) fined United Airlines $1.1 million for 13 lengthy tarmac delays that took place on July 13, 2012, when severe thunderstorms and lightning caused ramp closures and disrupted the movement of aircraft at Chicago-O’Hare International Airport. Delays by United and its United Express code-share affiliates exceeded the three-hour limit for tarmac delays by as little as two minutes and as much as 77 minutes. United did not implement its contingency plan for tarmac delays, said DOT, and the plan was inadequate to cover foreseeable weather emergencies in which there were more planes on the ground than space at gates. United also did not contact airport personnel or other airlines for assistance during the tarmac delays. Additionally, on two United Express flights, the lavatories were inoperable during part of the delays. This is the largest fine assessed for a tarmac-delay violation since the rule took effect in April 2010. Of the $1.1 million, United will pay the United States $475,000; the remainder covers mitigation measures for affected passengers and significant corrective actions to enhance future compliance with tarmac delay requirements.
Washington Aviation Summary – October 2013
As a Congressional budget stalemate threatened to shut down the U.S. government on October 1, the start of the 2014 fiscal year, agencies prepared for widespread furloughs. Of 46,070 positions within the Federal Aviation Administration (FAA), 15,514 would be furloughed. Continuing operations include air traffic control services; flight standards field inspections; and on-call accident investigations; activities that will not be affected include national aviation research, engineering, and development funded by multi-year appropriations; airport inspections; existing airport development grants; Passenger Facility Charge approvals; and airport planning and environmental services funded by Airport Improvement Plan contract authority. . . . Of 59,282 Transportation Security Administration (TSA) employees, 55,211 are exempt during a federal funding hiatus. This number does not include law enforcement officers serving in the Federal Air Marshal Service, who are exempt.
Washington Aviation Summary – September 2013
The U.S. Department of Justice (DOJ) filed a civil antitrust lawsuit challenging the proposed merger of US Airways Group and American Airlines’ parent AMR, charging it would create the world’s largest airline, substantially lessen competition in U.S. markets and result in higher fares and less service. Among its findings, DOJ said US Airways and American compete directly on more than 1,000 one-stop routes, representing tens of billions of dollars in annual revenues. At slot-controlled Washington Reagan National Airport, the combined airline would control 69% of take-off and landing slots and have a monopoly on 63% of nonstop routes. The merger would result in four airlines controlling more than 80% of the U.S. domestic commercial air travel market, said DOJ in its complaint, and likely would result in higher ancillary fees. “Both airlines have stated they can succeed on a standalone basis,” said DOJ, predicting that, “absent the merger, American is likely to exit bankruptcy as a vigorous competitor, with strong incentives to grow to better compete with Delta and United.” Participating in the lawsuit are attorneys general from Texas, Arizona, Florida, the District of Columbia, Pennsylvania, Tennessee and Virginia. . . . The airlines and DOJ said they were open to a settlement. In the meantime, the airlines intend “to mount a vigorous and strong defense and pursue all legal options in order to achieve this merger.” They requested a November 12 trial date, and were backed by pilot, flight attendant and other labor groups. DOJ proposed starting a trial on March 3, 2014, a date the airlines called “entirely unreasonable.” A federal judge then set a tentative November 25 date and will try the case without a jury. . . . The merger has been approved by the European Commission, conditional upon the carriers releasing one daily slot pair at London Heathrow and “committing to induce entry on the London-Philadelphia route”; and by the airlines’ shareholders and unions.
Washington Aviation Summary – August 2013
World air traffic is expected to increase by 4.8%, 5.9% and 6.3% in 2013, 2014 and 2015, respectively, according to the International Civil Aviation Organization (ICAO). . . . In a snapshot of 2012 scheduled service performance, International Air Transport Association (IATA) reported that systemwide, airlines carried 2.977 billion passengers, led by Asia-Pacific airlines (947.9million), followed by carriers in North America (808.1 million), Europe (780.6 million), Latin America (226.5 million), Middle East (144.1 million) and Africa (69.8 million). Premium travel slipped to 7% of total international, but accounted for 27% of international passenger revenues. Top countries by region based on passengers carried were Africa: South Africa (20.4 million), Asia-Pacific: People’s Republic of China (361.4 million), Europe: United Kingdom (171.5 million), Latin America and Caribbean: Brazil (88.9 million), Middle East: United Arab Emirates (40.6 million), North America: United States (598.2 million). Top five airlines ranked by total scheduled passengers were Delta (116.7 million), Southwest (112.2 million), United (92.6 million), American (86.3 million) and China Southern (86.3 million). Top three city-pairs based on passengers on international routes were Hong Kong-Taipei (5.5 million), Seoul-Tokyo (3.6 million) and Kuala Lumpur-Singapore (3.4 million). Top three city-pairs based on passengers on domestic routes were Jeju-Seoul (9.5 million), Sapporo-Tokyo (8.8 million) and Fukuoka-Tokyo (7.6 million). Star remained the largest airline alliance in 2012 with 25.2% of total IATA scheduled traffic (revenue passenger kilometers), followed by SkyTeam (19.8%) and oneworld (14.1%).
Washington Aviation Summary – July 2013
The Senate confirmed Anthony Foxx as Secretary of Transportation in a unanimous vote. The Charlott, N.C. Mayor replaces Ray LaHood, who held the position for four years. The Senate also confirmed Obama nominee Penny Pritzker as Commerce Secretary.
Washington Aviation Summary – June 2013
The Federal Aviation Administration(FAA) transferred funds to end employee furloughs and keep the 149 low activity contract towers originally slated for closure in June open for the remainder of fiscal year 2013, following enactment of the Reducing Flight Delays Act of 2013 (H.R. 1765). The reductions had been planned to help meet federal sequester demands. FAA also will allocate $10 million toward reducing cuts and delays in core NextGen programs and $11 million to partially restore support of infrastructure in the national airspace system. H.R. 1765, signed by the President on May 1, authorizes the Secretary of Transportation to transfer for FY2013 to any FAA appropriations accounts (such as air traffic control operations) funds otherwise made available for discretionary grants – in – aid under the airport improvement or other FAA program. The legislation makes any transferred amount available immediately for obligation and expenditure as directly appropriated budget authority, and prohibits such transfer of funds unless the Secretary notifies Congress at least five days in advance . . . . The furlough of air traffic controllers between April 21 and 28 caused delays for large numbers of flights, said Airlines for America and Regional Airline Association in a petition to the Department of Transportation (DOT) requesting that April delays be excluded from airline arrival performance accounting.
Washington Aviation Summary – May 2013
President Obama nominated Anthony Foxx to replace Ray LaHood as Secretary of Transportation. LaHood announced his retirement earlier this year. Foxx has been Mayor of Charlotte, North Carolina, since 2009, and earlier chaired the Transportation Committee of that city; he also worked as a trial attorney for the Civil Rights Division of the U.S. Department of Justice and staff counsel to the House Judiciary Committee. The nomination must be confirmed by the Senate.
Washington Aviation Summary – April 2013
The International Air Transport Association (IATA) announced improvement in its 2013 financial performance outlook, as GDP growth forecasts have been upgraded to 2.4%, compared to 2.1% in 2012. The global airline industry this year will produce a net post-tax profit of $10.6 billion profit, instead of the previously projected $8.4 billion. “We are seeing a $12 billion improvement in revenue, and a $9-10 billion increase in costs-most of which is related to fuel,” said Tony Tyler, IATA Director General and CEO. For the regional outlook, Asian-Pacific airlines will see average demand growth of 4.9%, North American 1.3%, European 2.6%, Middle Eastern 13.7%, Latin American 8.1% and African 6.5%.
Washington Aviation Summary – March 2013
The Boards of Directors of American Airlines parent AMR Corp. and US Airways Group agreed to a merger conditioned on approval by the U.S. Bankruptcy Court for the Southern District of New York, regulatory approvals, approval by US Airways shareholders, other customary closing conditions, and confirmation and consummation of the bankruptcy plan. The combination is expected to be completed in third quarter 2013. (For merger details, see Section X, item 1.)
Washington Aviation Summary – February 2013
Michael Huerta was sworn in for a five-year term as Administrator of the Federal Aviation Administration (FAA), after serving as Acting Administrator; he earlier served as Deputy Administrator. Ray LaHood announced that he will not serve a second term as Secretary of the U.S. Department of Transportation (DOT); he will remain until a successor is confirmed. Janet Napolitano, Secretary of the U.S. Department of Homeland Security (DHS), will continue in her post.
Washington Aviation Summary – January 2013
With the European Union Emissions Trading Scheme (EU ETS) set to take effect on January 1, 2012, U.S. Secretary of State Hillary Rodham Clinton and Department of Transportation (DOT) Secretary Ray LaHood urged the EU “to reconsider this current course; halt or, at a minimum, delay or suspend application of this directive,” and said the U.S. would respond with “appropriate action.” Their letter to the European Commission noted that at least 43 countries have publicly objected to Europe’s plans. . . . DOT ordered nine European carriers that serve the United States-Aer Lingus, Air France, Alitalia, British Airways, Iberia, KLM, Lufthansa, SAS and Virgin Atlantic-to submit traffic and carbon allowance data to DOT. The order, which was also served on the State Department Office of Transportation Affairs and the Federal Aviation Administration (FAA), requires details of free 2012 allowances allocated and 2010 revenue ton kilometers reported to the administering state and operated on flights between the U.S. and points in the EU and Norway, Iceland and Liechtenstein. Seven U.S. airlines-American, Continental, Delta, Federal Express, United, United Parcel Service and US Airways-were ordered to report carbon allowance data, as well as monetary amount paid to administering states in ETS allowance auctions and spent or received in ETS allowance markets. The DOT orders are “intended to assist in countering the illegal application of the EU ETS to U.S. airlines,” said Airlines for America (A4A, formerly Air Transport Association), as the European Court of Justice dismissed arguments by A4A and others that EU ETS infringes on national sovereignty or violates international treaties (see Section V, item 2). . . . The U.S. House of Representatives has passed a measure directing the DOT Secretary to prohibit U.S. carriers from participating in a unilaterally-imposed EU ETS; a similar measure has been introduced in the Senate.
Washington Aviation Summary – December 2012
With the European Union Emissions Trading Scheme (EU ETS) set to take effect on January 1, 2012, U.S. Secretary of State Hillary Rodham Clinton and Department of Transportation (DOT) Secretary Ray LaHood urged the EU “to reconsider this current course; halt or, at a minimum, delay or suspend application of this directive,” and said the U.S. would respond with “appropriate action.” Their letter to the European Commission noted that at least 43 countries have publicly objected to Europe’s plans. . . . DOT ordered nine European carriers that serve the United States-Aer Lingus, Air France, Alitalia, British Airways, Iberia, KLM, Lufthansa, SAS and Virgin Atlantic-to submit traffic and carbon allowance data to DOT. The order, which was also served on the State Department Office of Transportation Affairs and the Federal Aviation Administration (FAA), requires details of free 2012 allowances allocated and 2010 revenue ton kilometers reported to the administering state and operated on flights between the U.S. and points in the EU and Norway, Iceland and Liechtenstein. Seven U.S. airlines-American, Continental, Delta, Federal Express, United, United Parcel Service and US Airways-were ordered to report carbon allowance data, as well as monetary amount paid to administering states in ETS allowance auctions and spent or received in ETS allowance markets. The DOT orders are “intended to assist in countering the illegal application of the EU ETS to U.S. airlines,” said Airlines for America (A4A, formerly Air Transport Association), as the European Court of Justice dismissed arguments by A4A and others that EU ETS infringes on national sovereignty or violates international treaties (see Section V, item 2). . . . The U.S. House of Representatives has passed a measure directing the DOT Secretary to prohibit U.S. carriers from participating in a unilaterally-imposed EU ETS; a similar measure has been introduced in the Senate.
Washington Aviation Summary – November 2012
Federal offices in Washington closed for two days and airlines canceled some 20,000 flights at month’s end, as a devastating storm struck the U.S. East Coast. In the New York area, flooding and high winds forced closure of Kennedy, Newark and LaGuardia airports, which account for one-quarter of U.S. daily air traffic. Air traffic control towers shut down at many regional airports. Financial impact due to disruptions and damage to equipment and infrastructure was unknown at press time. The event affected passenger and cargo flights around the globe.
Washington Aviation Summary – October 2012
The largest U.S. scheduled passenger airlines reported a 6% profit margin in second quarter 2012, up from 5.3% in Q2 2011, said the U.S. Department of Transportation (DOT). They collected $931 million in baggage fees and $661 million from reservation change fees; other ancillary fees are combined in different categories and cannot be identified separately.
Washington Aviation Summary – September 2012
A new study offers scenarios of how a $1 billion annual cut over nine years would impact Federal Aviation Administration (FAA) funding if federal sequestration is implemented beginning in January 2013, as mandated by the Budget Control Act. Released by Aerospace Industries Association and Econsult Corporation at a meeting of aviation leaders in Washington, the study says the cuts could cost 132,000 aviation jobs, an annual decrease of 37 million passenger enplanements and annual reductions of two billion pounds of transported air freight. Sequestration could result in closure of 246 airport control towers, and the loss of 1,500 air traffic controllers, 9,000 security screeners and 1,600 customs officers, said Norm Mineta, former Secretary of the Department of Transportation (DOT), citing an October 2011 letter to the Joint Select Committee on Deficit Reduction from ranking minority member of the House Appropriations Committee Norm Dicks (D-Wash.). “The inability of the two parties in Congress to get together and figure this matter out is baffling,” said Mineta. “Sequestration is a fancy word for abdication,” said Todd Hauptli of American Association of Airport Executives; “Congress needs to act to avoid these devastating and indiscriminate cuts. This study confirms that the entire aviation industry should be on high-alert in the weeks and months ahead as this process unfolds.”
Washington Aviation Summary – August 2012
The Federal Aviation Administration (FAA) proposed a fine of $13.5 million against Boeing for failing to meet a deadline to submit service instructions for preventing fuel tank explosions on 383 U.S.-registered B-747s and -757s. The Fuel Tank Flammability Rule requires airlines to retrofit half of its fleet by 2014, and complete the retrofit by 2017. FAA said it will consider a proposal by airlines to extend the 2014 deadline, based on specific circumstances per operator, but will not consider extensions to the 2017 deadline. FAA has issued hundreds of directives to eliminate fuel ignition sources since the 1996 TWA 800 accident.
Washington Aviation Summary – July 2012
A new partnership agenda with governments was proposed by Tony Tyler, Director General and CEO of International Air Transport Association (IATA), at IATA’s Annual General Meeting (AGM). We need “tax regimes that do not kill growth, regulation that facilitates growth, and infrastructure that can efficiently accommodate growth,” said Tyler. “Aviation is expected to grow about 5% annually to 2030. If that growth is held back by even one percentage point, the global economy will forfeit over a trillion dollars and 14 million jobs.” Among decisions announced at the AGM: IATA is revising corporate governance to reflect demands for greater transparency and a shift in membership representation. One Board of Governors seat from North America will be filled by a representative of the Asia-Pacific region. Middle East/Africa will get a newly created seat. Board membership will be limited to three terms. IATA will consolidate operations to reduce costs. The IATA settlement system will consolidate into five hubs-Miami, Amman, Beijing, Madrid and Singapore. A stronger focus will be placed on longer term goals and strategies, said Tyler. Qantas CEO Alan Joyce was named Chairman of the IATA Board of Governors; he succeeds KLM CEO Peter Hartman, whose one-year term has expired. Delta CEO Richard Anderson will serve as Chairman from June 2013. Air China Chairman Wang Changshun presided over the AGM, which was held in Beijing and had record attendance of 750 delegates.
Washington Aviation Summary – June 2012
A judge dismissed drunken driving charges against J. Randolph Babbitt, former head of the Federal Aviation Administration (FAA), determining that a police officer erred in charging him with driving on the wrong side of the road. Babbitt resigned after the incident.
Washington Aviation Summary – May 2012
The International Air Transport Association (IATA) reports that industry confidence improved slightly in the first quarter. About 23% of respondents to an April survey of Chief Financial Officers and heads of cargo saw increased profitability in Q1, and the view for next 12 months was less pessimistic than in the January survey. Passenger traffic improved in Q1, with growth expected in the year ahead as economic conditions improve in the U.S. and emerging market economies remain robust. Improved business confidence and trade are generating a more optimistic outlook for cargo traffic. Yield expectations in passenger markets strengthened, with the 12-month outlook improving, and downward pressure is expected to ease on cargo yields. Input costs stayedhigh in Q1, with 64% of respondents indicating they experienced increased cost pressures. Given high oil prices and continued uncertainty about the situation in Iran, a significant increase in input costs is expected over the next 12 months. Employment levels are not as weak as in Q4 2011, but little improvement is seen for the year ahead.
Washington Aviation Summary – April 2012
Michael Huerta was nominated to the post of Federal Aviation Administration (FAA) Administrator by President Barack Obama. Currently FAA Deputy Administrator, Huerta has been Acting Administrator since December, when Randy Babbitt resigned. He has held positions with the Department of Transportation (DOT) since 1992, after earlier serving as Commissioner of the New York City Department of Ports and Executive Director at the Port of San Francisco. The five-year appointment requires Senate confirmation.
Washington Aviation Summary – March 2012
President Obama signed into law a bill that provides $63.4 billion for the Federal Aviation Administration (FAA) through the end of fiscal year 2015, including $13.4 billion for the Airport Improvement Program, $38.3 billion for FAA Operations, $672 million for Research, Engineering & Development, and $10.9 billion for Facilities & Equipment. The bill includes provisions to modernize the nation’s air transportation system and ensure that FAA implements the Next Generation Air Transportation System (NextGen) in a timely and effective manner. It mandates development of precision navigation procedures at the largest 35 airports by 2015. The bill preserves the Essential Air Service program and authorizes eight additional round-trip flights from Washington National Airport to beyond-perimeter locations. It rejects an effort to repeal the National Mediation Board rule that ensures that only votes cast in a union election are counted. The bill reaffirms the U.S. position that the European Union (EU) should not extend its emission trading scheme (ETS) to non-EU airlines, and calls for the U.S. government to ensure the scheme is not applied to U.S. carriers. . . . Airlines for America (A4A) commended Congress for passing a responsible bill that holds the line on federal aviation taxes and fees paid by airlines and their customers, promotes the sharing of safety data by airlines with FAA and establishes a risk-based inspection system for overseas repair stations. . . . “After a five-year delay and 23 temporary extensions, this measure is key to advancing the nearly 8% of our nation’s economy impacted by the aviation industry,” said House Transportation and Infrastructure Committee Chairman John Mica (R-FL).
Washington Aviation Summary – February 2012
U.S. President Barack Obama announced visa process improvements and expansion of the Global Entry program for expedited travel, “in order to create jobs and spur economic growth in the United States, while continuing to protect our national security.” The executive order calls for an interagency process for coordinating implementation of regulatory improvements and evaluation of legislative proposals to enhance and expedite travel to and arrival in the United States by foreign nationals. It also calls for a plan to increase non-immigrant visa processing capacity in China and Brazil by 40% this year, ensure that 80% of non-immigrant visa applicants are interviewed within three weeks of receipt of application, expand the Visa Waiver Program and travel by nationals of program participants, and expand reciprocal recognition programs for expedited travel, such as Global Entry. An interagency Task Force on Travel and Competitiveness was established to develop the National Travel and Tourism Strategy, which will recommend new policies and initiatives to promote travel opportunities throughout the United States, with the goal of increasing U.S. market share of worldwide travel, including obtaining a greater share of long-haul travel from Brazil, China, and India. Airlines for America (A4A) welcomed the effort, saying “An improved visa process is a key component of a much-needed national airline policy [and] will help to expand U.S. access to rapidly growing global markets.” But Republican Senator Chuck Grassley, ranking Republican on the Judiciary Committee, said the proposal “flies in the face of the law we’ve had on the books because of 9/11; only two of the 19 hijackers were interviewed by consular officers, so Congress mandated that all visa applicants be interviewed, with very few exceptions.”
Washington Aviation Summary – January 2012
With the European Union Emissions Trading Scheme (EU ETS) set to take effect on January 1, 2012, U.S. Secretary of State Hillary Rodham Clinton and Department of Transportation (DOT) Secretary Ray LaHood urged the EU “to reconsider this current course; halt or, at a minimum, delay or suspend application of this directive,” and said the U.S. would respond with “appropriate action.” Their letter to the European Commission noted that at least 43 countries have publicly objected to Europe’s plans…. DOT ordered nine European carriers that serve the United States—Aer Lingus, Air France, Alitalia, British Airways, Iberia, KLM, Lufthansa, SAS and Virgin Atlantic—to submit traffic and carbon allowance data to DOT. The order, which was also served on the State Department Office of Transportation Affairs and the Federal Aviation Administration (FAA) requires details of free 2012 allowances allocated and 2010 revenue ton kilometers reported to the administering state and operated on flights between the U.S. and points in the EU and Norway, Iceland and Liechtenstein. Seven U.S. Airlines—American, Continental, Delta, Federal Express, United, United Parcel Service and US Airways—were ordered to report carbon allowance data, as well as monetary amount paid to administering states in ETS allowance auctions and spent or received in ETS allowance markets. The DOT orders are “intended to assist in countering the illegal application of the EU ETS to U.S. airlines,” said Airlines for America (A4A, formerly Air Transport Association), as the European Court of Justice dismissed arguments by A4A and others that EU ETS infringes on national sovereignty or violates international treaties (see Section V, item 2)…. The U.S. House of Representatives has passed a measure directing the DOT Secretary to prohibit U.S. carriers from participating in a unilaterally-imposed EU ETS; a similar measure has been introduced in the Senate.
Washington Aviation Summary – December 2011
AMR and subsidiaries American Airlines and American Eagle filed voluntary petitions for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York, and plan “to continue conducting normal business operations while they restructure their debt, costs and other obligations.” The filings have no direct legal impact on American’s operations outside the United States. American filed motions seeking interim relief to ensure continuing normal operations, including the ability to provide employee wages and benefits; pay for fuel under existing contracts and honor existing fuel supply, distribution and storage agreements; and assume and honor contracts relating to interline agreements. The company said $4.1 billion in unrestricted cash, short-term investments and cash generated from operations will “be more than sufficient to assure that its vendors, suppliers and other business partners will be paid timely and in full for goods and services provided during the Chapter 11 process.” Debtor-in-possession financing is not anticipated….Chairman/CEO Gerard Arpey stepped downand was replaced by Thomas Horton, who will also continue to serve as President of AMR and American. “We must address our cost structure, including labor costs,” said Horton. “Our very substantial cost disadvantage compared to our larger competitors, all of which restructured their costs and debt through Chapter 11, has become increasingly untenable given the accelerating impact of global economic uncertainty and resulting revenue instability, volatile and rising fuel prices, and intensifying competitive challenges. We plan to initiate further negotiations with all of our unions to reduce our labor costs to competitive levels.” Arpey, who was with American for 30 years, has joined Emerald Creek Group as a Partner; the Houston-based private equity firm was founded by former Continental Chairman/CEO Larry Kellner….The bankruptcy filing came after Allied Pilots Association rejected the airlines’ latest contract proposals. A tentative agreement was reached with Transport Workers Union for the dispatcher workgroup, after negotiations that began in May 2006….The Pension Benefit Guaranty Corporation (PBGC) said American sponsors four traditional pension plans with $8.3 billion in assets to cover $18.5 billion in benefits for 130,000 participants. If American were to end the plans, PBGC would be responsible for paying $17 billion in benefits; about $1 billion in benefits would be lost. PBGC has a record $26 billion deficit as a result of failed plans already assumed; its operations are financed by insurance premiums and with assets and recoveries from failed plans.
Washington Aviation Summary – November 2011
A coalition of airlines, general aviation, manufacturers, consumer organizations and labor groups is opposing two initiatives in the debt-reduction plan proposed by the White House, one of which would add a new $100 departure fee to all flights, and another that would double the existing passenger security tax from $2.50 per enplanement to $5 per one-way trip in 2012, and triple the tax to $7.50 by 2017. “Policymakers should focus on increasing U.S. international competitiveness rather than viewing the industry as a collection agency,” said Nicholas Calio, President and CEO of the Air Transport Association (ATA). “If we are to maintain global leadership and increase jobs in this country, we need to ensure that tax policy is focused on strengthening U.S. aviation leadership and furthering the safety and modernization of the aviation system.” Members of the House of Representatives said the $100 departure fee, which could cost airlines $1 billion annually, would have a “devastating impact on the aviation industry and fails to achieve our shared goal of improving the economy and creating jobs.”
Washington Aviation Summary – October 2011
The Obama Administration included new aviation fees in its long-term deficit reduction plan. The proposals would impose a $100-per- departure fee on commercial airlines and corporate jets; and raise the passenger security fee from the current $2.50 per flight segment capped at $10 per round trip, to an initial $5 per flight segment, with an increase to $7.50 by 2017.
The industry roundly opposes the proposals. “Airlines and passengers are being asked to pay for national security, although it clearly is a responsibility of government,” said the International Air Transport Association (IATA). The Regional Airline Association (RAA) said the $100 departure fee “would cost more than regional airlines earned last year, threatening service to smaller cities.” The Transport Association of America (ATA) urged legislators to oppose the proposals. In remarks to the International Aviation Club in Washington, ATA President/CEO Nicholas Calio said they are “nothing less than an all-out assault” on the industry, which is seen by some members of Congress as “low-hanging fruit” and “a cash cow.” Government should view airlines as a growth enabler and strategic asset, said Calio. Citing state support for aviation in other countries, he proposed a National Airline Policy that would reduce the industry tax burden, expedite implementation of a satellite-based air traffic management system, expand access to rapidly growing global markets, and enable the industry to attract investment.
Washington Aviation Summary – September 2011
Congress restored funding to the Federal Aviation Administration (FAA), ending a two-week partial shutdown of the agency (see also Section VI). Flights were not affected since air traffic control operated out of other funding, but 4,000 FAA workers were furloughed and some 70,000 construction workers were laid off as airport projects halted. FAA authority to collect ticket taxes ceased, but most airlines raised base fares to match the tax; two exceptions were Spirit Airlines and Alaska Airlines. IRS issued guidance to consumers regarding ticket tax refunds for the period. The White House said loss of the taxes cost the federal government $200 million a week. “This is a lose-lose-lose situation,” said President Obama during the congressional stalemate; Congress should “take care of this [and] do what they’ve done 20 times since 2007.” The 21st short-term funding bill expires September 16.
Washington Aviation Summary – August 2011
The U.S. Federal Aviation Administration (FAA) was forced to furlough nearly 4,000 employees, issue stop-work orders on more than 150 airport projects and stop processing $2.5 billion in airport construction grants, after Congress failed to agree on an authorization extension. (See Section VI.) Employees paid from the FAA Operations account were not affected, thus air traffic controllers and others essential to air safety remained on the job….Laws authorizing airline ticket taxes expired with FAA’s operating authority. All the major airlines increased fares to take advantage of the tax lapse and were chastised by Senate Democrats. Spirit, Alaska and Hawaiian passed the savings on to customers. The American Association of Airport Executives, was critical of the airlines and noted, “every week without the federal taxes in place costs the Airport and Airway Trust Fund approximately $200 million in foregone revenue.” The Internal Revenue Service was working with airlines on issues relating to collection and payment of the taxes….Transportation Secretary Ray LaHood and FAA Administrator Randy Babbitt released numerous reports of airport programs affected by the impasse and said the suspension of aviation projects could lead to more than 80,000 job losses.
Washington Aviation Summary – July 2011
Natural disasters in Japan, unrest in the Middle East and North Africa, and the sharp rise in oil prices have slashed industry profit expectations to $4 billion this year, said the International Air Transport Association (IATA), compared to $8.6 billion forecast in March, and an $18 billion net profit recorded in 2010. On expected revenues of $598 billion, a $4 billion profit equates to a 0.7% margin, IATA said. Asia-Pacific carriers are expected to earn $2.1 billion this year ($10 billion in 2010); North American, $1.2 billion ($4.1 billion/2010); European, $500 million ($1.9 billion/2010); Middle East, $100 million ($900 million/2010); Latin American, $100 million ($900 million/2010). African carriers will post a $100 million loss in 2011….In other news, IATA Director General Giovanni Bisignani steps down July 1 and former Cathay Pacific CEO Tony Tyler takes over.
Washington Aviation Summary – June 2011
The U.S. Department of Transportation (DOT)proposed to approve an application for antitrust immunity made by Delta and affiliates of Virgin Blue Group, now known as Virgin Australia, for joint U.S.-Australia services. The carriers revised their application after DOT tentatively denied an earlier request last September, addressing concerns that immunity would provide only limited benefit to consumers. In the new application, Virgin Australia would serve more passengers and upgrade its reservation system to ensure compatibility with Delta’s system. In addition, the carriers would serve more cities and offer more capacity at the start of their alliance than originally proposed. The joint venture must begin within 18 months of a final order. Delta and Virgin Australia said they will collaborate through code sharing, coordinating route and product planning, and reciprocal frequent flyer and lounge benefits. Virgin Australia has alliances with Etihad, Air New Zealand and Australian carrier Skywest.
Washington Aviation Summary – May 2011
The U.S. Department of Transportation (DOT) finalized an expanded passenger protection rule that will take effect in August. Airlines will be required to: reimburse passengers for bag fees if bags are lost; prominently disclose all potential fees on their websites; include all government taxes and fees in every advertised price; allow reservations, made at least seven days prior to the flight, to be held at quoted fare without payment or cancelled without penalty for at least 24 hours after reservation is made; promptly notify consumers of delays of over 30 minutes, as well as cancellations and diversions; and provide consumers involuntarily bumped from flights with up to $1,300 in compensation, with inflation adjustments every two years. The rule bans post-purchase fare increases unless due to government-imposed taxes or fees. The current ban on lengthy tarmac delays will cover foreign airlines’ operations at U.S. airports; there will be a four-hour hard time limit on tarmac delays for international flights of U.S. and foreign airlines. DOT will issue a supplemental notice of proposed rulemaking later this year requiring, among other things, that ancillary fees be displayed at all points of sale. Airline groups say the new rule will lead to increased cancellations, higher ticket prices and passenger inconvenience.
Washington Aviation Summary – April 2011
Political unrest in the Middle East and North Africa is estimated to have cut international traffic by about 1% in February, reports the International Air Transport Association (IATA). Middle East airlines saw demand growth fall from 12% in January to 8.4%. A capacity increase of 11% resulted in a load factor of 72.2%. Political unrest in Bahrain, Yemen and Syria is expected to have an impact on the region’s markets in March; these three countries represent about 6% of Middle Eastern traffic and 0.3% of global capacity. Africa saw traffic fall by 1.3%, from February 2010. Against capacity expansion of 6.9%, load factors fell to 60.4%. Egypt and Tunisia account for 18% of the African market and 0.6% of worldwide capacity. Libya is a further 3% of the African market and 0.1% of global capacity. The impact of political unrest has been severe with traffic falling by 13.1% compared to January levels. The earthquake and its aftermath in Japan will mean a further dampening of demand from March, said Giovanni Bisignani, IATA Director General and CEO. “Industry fundamentals are good. But extraordinary circumstances have made the first quarter of 2011 very difficult.”
Washington Aviation Summary – March 2011
FAA Predicts One Billion Passengers by 2021. U.S. airlines will reach the one billion passengers-per-year mark by 2021, according to the FAA Aerospace Forecast Fiscal Years 2011-2031, two years earlier than the Federal Aviation Administration (FAA) predicted last year. Revenue passenger miles will rise from 787 billion in 2010 to 1.7 trillion in 2031. The number of passengers traveling on U.S. airlines will increase by 3.5% from last year to 737.4 million in 2011, with projected growth of 2.8% each year to 1.3 billion by 2031. Total landings and takeoffs at FAA towered airports will decrease slightly in 2011, then grow at an average annual rate of 1.6% each year, reaching 69.4 million in 2031. . . . Worldwide, there will be 3.3 billion air travelers by 2014, up from 2.5 billion in 2009, said the International Air Transport Association (IATA), and 38 million tons of air cargo will be carried, up from 26 million in 2009. Of the 800 million new travelers expected in 2014, 360 million (45%) will travel on Asia Pacific routes; of those, 214 million will be associated with China (181 million domestic, 33 million international). The U.S. will remain the largest single country market for domestic and international passengers.
Washington Aviation Summary – February 2011
International tourist arrivals were up by almost 7% last year, following a 4% decline in 2009, reports the World Tourism Organization, an agency of the United Nations. Worldwide, the number reached 935 million, up 58 million from 2009 and 22 million more than pre-crisis peak levels of 2008 (913 million). International tourist arrivals into Asia reached a new record at 204 million last year, up from 181 million in 2009. Africa (+6% to 49 million), the only region to show positive figures in 2009, maintained growth during 2010. In the Middle East (+14% to 60 million) almost all destinations grew by 10% or more. In Europe (+3% to 471 million) recovery was slower due to air traffic disruption caused by the volcanic eruption in Iceland and economic uncertainty. The Americas (+8% to 151 million) rebounded from the decline in 2009, with strongest growth in South America (+10%). In terms of expenditure abroad, emerging economies continued to drive growth: China (+17%), the Russian Federation (+26%), Saudi Arabia (+28%) and Brazil (+52%). Of traditional source markets, Australia (+9%), Canada (+8%), Japan (+7%) and France (+4%) rebounded, while more modest growth at 2% came from the U.S., Germany and Italy; expenditure abroad from the UK was down by 4%. UNWTO forecasts global tourism to grow 4% to 5% in 2011.
Washington Aviation Summary- January 2011
The world’s airlines will see a net profit of $15.1 billion in 2010, and $9.1 billion in 2011, said the International Air Transport Association (IATA), revised from September forecasts of $8.9 billion and $5.3 billion, respectively. Net margins remain weak at 2.7% for 2010 and falling to 1.5% in 2011. Air cargo demand deteriorated from previously forecast growth of 19.8%, to 18.5%, limiting yield growth to 7% (below previously forecast 7.9%); since May, overall volumes fell by 5%. The world’s five largest airlines, by market capitalization, are now in Asia (Air China, Singapore, Cathay Pacific, China Southern) and Latin America (LATAM). Exceptionally adverse weather conditions in Europe and the U.S. at year-end resulted in travel chaos, as did the Icelandic volcano last spring, said Giovanni Bisignani, IATA Director General and CEO. “It’s time to evaluate a long list of government imposed industry handicaps, including excessive taxation, out-dated ownership restrictions, over-regulation where market forces could do better, under-investment in infrastructure and generally poor regulation of monopoly suppliers.” IATA is launching Vision 2050 in February with a mission to build a vision for a successful and sustainable industry in four decades.
Washington Aviation Summary- December 2010
On October 29, UK police found a printer cartridge containing explosive materials on a UPS aircraft that had landed at East Midlands Airport en route from Cologne to Chicago. A similar device located and identified in Dubai was being transported by FedEx to Chicago. Both explosive devices originated in Yemen and are believed to have been made and dispatched by Yemen-based Al Qaeda in the Arabian Peninsula, the group responsible for the attempted downing of an aircraft bound for Detroit last Christmas. Authorities said the devices were intended to detonate in mid-air. The International Air Transport Association (IATA) commended involved governments for swift, coordinated and targeted response and called on regulators worldwide to coordinate security responses, reinforcing efforts by the U.S. Department of Homeland Security (DHS) and the International Civil Aviation Organization (ICAO).
Washington Aviation Summary- November 2010
U.S. and Japanese authorities granted antitrust immunity (ATI) to two alliances, oneworld members American Airlines and Japan Airlines (JAL), and Star members United, Continental and All Nippon Airways (ANA), enabling each to establish joint ventures and combine their transpacific networks. The U.S. Department of Transportation (DOT) granted preliminary immunity, subject to final approval after a comment period. In related news, the U.S. and Japan signed an open skies accord that was initialed last December (see also Section VII).
Washington Aviation Summary- October 2010
The global airline industry will see a profit of $8.9 billion in 2010, reports the International Air Transport Association (IATA), in a revision of its June forecast of $2.5 billion. The improved outlook is being driven by a combination of factors: increasing demand and disciplined capacity management are leading to sharply stronger yields pushing revenues higher, and costs remain relatively stable. All regions except Africa are showing improved prospects. IATA estimates that profitability will drop to $5.3 billion next year, as the impact of the post-recession bounce from re-stocked inventories will dissipate. Consumer spending is not expected to pick up the slack as joblessness remains high and consumer confidence falls in Europe and North America. Travel and freight markets will remain stronger in Asia, the Middle East and South America. Slower growth is expected to keep costs in check and oil prices are expected to remain constant at $79/barrel. Industry growth is expected to fall back to 5%, in line with the historical trend. But a surge of aircraft deliveries (1,400) will fuel capacity expansion of 6%, in excess of expected demand improvements. Falling load factors will remove the possibility for further yield improvement leading to a more challenging revenue environment.
Washington Aviation Summary- September 2010
International scheduled passenger traffic in July rose 9.2% on year, freight by 22.7%, reports the International Air Transport Association (IATA), but slowed compared to June’s increases of 11.6% (passenger) and 26.6% (cargo). Global passenger traffic in July was 3% higher than pre-crisis levels of early 2008, cargo 4%. Improving demand is an important component of the recovery, but anticipated 2010 profit of $2.5 billion is only a 0.5% return on revenues, said IATA Director General and CEO Giovanni Bisignani. “The financial situation of the industry remains fragile”; a change in industry structure is needed “to secure sustainable profitability at levels exceeding the 7-8% cost of capital,” and all partners in the value chain must work together to find solutions to reduce costs. The pace of recovery will likely slow, said Bisignani, as the jobless economic recovery is keeping consumer confidence fragile, particularly in North America and Europe. He noted the need for a regulatory structure “free of outdated ownership restrictions and able to facilitate opportunities for consolidation globally-something that other industries take for granted.”
Washington Aviation Summary- August 2010
The U.S. Department of Transportation granted antitrust immunity to American Airlines and its oneworld partners-British Airways, Iberia, Finnair and Royal Jordanian-for an integrated global alliance, finalizing a February 13 tentative decision. The venture, which also won European Union (EU) clearance, “will be able to compete more vigorously with similar immunized alliances Star and SkyTeam,” said DOT. The applicants were required to make four Heathrow slot-pairs available to competitors for new U.S.-London service-two pairs for Boston-London service and two for service from any other U.S. cities. DOT required changes to the alliance to ensure capacity growth. The carriers also must submit traffic data, implement the alliance within 18 months and resubmit the alliance agreements for review within five years. Under the joint business agreement, the carriers will cooperate commercially on flights between the United States, Mexico and Canada, and the EU, Switzerland and Norway while continuing to operate as separate legal entities. They will expand their code share arrangements on flights within and beyond the U.S. and EU.
Washington Aviation Summary- July 2010
Airlines are expected to post a profit of $2.5 billion in 2010, reported the International Air Transport Association (IATA), the industry’s first profit since 2007 after a decade in which they lost a cumulative $47 billion and a major improvement over the March forecast of a $2.8 billion loss. However, warned Giovanni Bisignani, IATA Director General and CEO, the profit represents a net margin of just 0.5% and a major part of the global industry is still posting big losses. IATA forecasts world passenger traffic will grow by 7.1%, cargo by 18.5%, yields by 4.5% for both cargo and passenger, revenues by 13%. Some 500 of 1,340 aircraft scheduled to join the fleet in 2010 are replacements, the rest new capacity; average demand improvement of 10.2% (passenger and cargo) will be met with a 5.4% increase in capacity, supporting load factors which remained near record levels for most of the first quarter. Premium travel was rebounding at an annualized growth rate of 20% over the first quarter and economy travel is now back to pre-recession levels.
Washington Aviation Summary- June 2010
Global passenger demand slumped by 2.4% in April, reports the International Air Transport Association (IATA), as a result of massive cancellations due to ash cloud from an Icelandic volcano. European carriers posted an 11.7% demand drop in April (compared to 6.2% increase in March). North American carriers posted a 1.9% decline (7.8% increase in March), primarily due to impact of ash crisis on North Atlantic routes. Asia-Pacific carriers saw strong growth slow to 3.5% (12.9% growth in March). Middle Eastern airlines recorded the strongest traffic growth at 13% (25.9% increase in March). African carriers saw recovery slow to 8.6% growth (16.9% growth in March). Latin American carriers posted a 1.2% increase (4.6% growth in March). The recovery pace of international scheduled cargo traffic slowed to 25.2% growth (down from 28.1% improvement in March). Looking ahead, IATA challenged Europe to reform its air traffic management. “The ash crisis was an embarrassing wake-up call for European governments. We need leadership to deliver the Single European Sky, fair passenger rights legislation and continent-wide coordination,” said Giovanni Bisignani, IATA Director General and CEO. “Unfortunately, we are trading ash for two additional uncertainties-strikes and a growing currency crisis-both of which are also focused on Europe. . . It’s a tough competitive world. Airlines need to reduce costs to be competitive. Labor must realize that their pay checks are supported by the performance of the company. The middle of a very fragile recovery is not the time for striking. This mentality is divorced from reality,” said Bisignani.
Washington Aviation Summary- May 2010
More than 100,000 flights were cancelled and some 10 million passengers were stranded, when airspace was shut down across Northern and Central Europe for six days due to a cloud of ash from an Icelandic volcano. The International Air Transport Association (IATA) estimated the event cost airlines $1.7 billion in revenue, and the European Union (EU) estimated total industry losses could reach $3 billion.
Washington Aviation Summary- April 2010
Global passenger demand was up 9.5% in February, compared to February 2009, and cargo demand grew 26.5%, reports the International Air Transport Association (IATA), which also noted that February 2009 marked the bottom of the cycle for passenger traffic during the global economic recession. Passenger demand must recover a further 1.4% to return to pre-crisis levels.
Washington Aviation Summary- March 2010
The U.S. Department of Transportation proposed to grant antitrust immunity (ATI) to American Airlines and oneworld partners British Airways, Iberia, Finnair and Royal Jordanian to form a global alliance. The alliance would include a “metal neutral” joint venture among American, British Airways and Iberia, enabling those carriers to operate the most efficient schedules without regard to which carrier they select to operate the flight. As a condition of approval, DOT proposed that the applicants make four pairs of slots available to competitors for new U.S.-London Heathrow service. DOT also would require changes to the agreement to ensure capacity growth, and require that carriers submit traffic data and implement the proposed alliance within 18 months of a final decision. In its show-cause order, DOT tentatively found that granting ATI to oneworld would provide travelers and shippers with lower fares on more routes, increased services, better schedules and reduced travel and connection times; and the alliance would create competition with the Star and SkyTeam alliances, which already have been granted immunity. The February 13 notice provides 45 days for objections. ATI approval is still under review by the European Union (EU), which said it has received commitments from British Airways, American and Iberia to alleviate competition concerns. Sir Richard Branson, Virgin Atlantic Chairman and tenacious foe of the oneworld request for ATI, called the DOT decision a “kick in the teeth” for consumers.
Washington Aviation Summary- February 2010
President Obama said security reviews he ordered from intelligence, homeland security and law enforcement agencies after the failed Christmas Day attack reveal “human and systemic failures . . . This was not a failure to collect intelligence; it was a failure to integrate and understand the intelligence that we already had.” A failure of our intelligence community to connect the dots fed into shortcomings in the watch-listing system, said the President, which resulted in the suspect not being placed on the ‘No Fly’ list, thereby allowing him to board the plane. President Obama directed the intelligence community to immediately begin assigning specific responsibility for investigating all leads on high-priority threats. Intelligence reports, especially those involving potential threats to the United States, must be distributed more rapidly and more widely, and the analytical process must be strengthened. He ordered an immediate effort to strengthen criteria used to add names to terrorist watch lists, especially the ‘No Fly’ list. He directed agency heads to establish internal accountability reviews and national security staff to monitor their efforts.
Washington Aviation Summary- January 2010
White House Reviews Security Procedures After Failed Terror Attempt. Following a failed explosion onboard Northwest Flight 253, en route from Amsterdam to Detroit on Christmas Day, the White House ordered immediate reviews of the U.S. watch list system and all screening policies, technologies and procedures related to air travel. The father of the alleged terrorist earlier had warned U.S. officials in Africa about his son’s extremist views, confirmed President Obama. “A systemic failure has occurred,” he said. “This information was passed to a component of our intelligence community, but was not effectively distributed so as to get the suspect’s name on a no-fly list.” The suspect, a Nigerian national, was said to be trained and supplied by an al-Qaeda group in Yemen. The group claimed responsibility for the attempted attack, saying it was in retaliation for U.S. air strikes against them.
Washington Aviation Summary- December 2009
DOT Convenes “Future of U.S. Aviation” Forum. Ray LaHood, Secretary of the U.S. Department of Transportation (DOT), invited aviation stakeholders to a closed-door “Future of U.S. Aviation” forum, where the Air Transport Association (ATA) called for: no new taxes and fees; fully funded and accelerated modernization of the air traffic control system; enhanced oversight of energy markets to curb excessive speculation and volatility of oil prices; elimination of restrictions on airlines’ ability to operate efficiently in the global marketplace; and a global sectoral approach to climate change developed through the International Civil Aviation Organization (ICAO). In a letter to LaHood, US Airways Chairman Doug Parker, who could not attend the forum, wrote, “Our request [is] ‘Do No Harm’ . . . do not impose any additional taxes, fees or unfunded mandates on this already over-taxed industry [and] allow us the ability to fix our industry through rational business decisions and actions and self-help mechanisms.” Union officials said they are not seeking re-regulation, but want tighter barriers to entry for low-cost startups, which sometimes drive air fares below cost, causing economic chaos for mainline carriers. LaHood will create a federal advisory committee of government and industry stakeholders to seek solutions to challenges facing U.S. airlines. Kevin Mitchell, Business Travel Coalition Chairman, and Bob Crandall, former American Airlines Chairman, urged LaHood to allocate the first two months of the committee’s efforts to “develop public-policy objectives and a framework for effective analysis and oversight such that it does not take a tragedy outside Buffalo to recognize a flawed regional airline business model; or to identify that there is significant safety and security risk when U.S. aircraft are sent to third-world countries to be overhauled by workers whose backgrounds cannot be verified, who are not tested for drugs and alcohol, who rely on pictures in manufacturers’ manuals to perform repairs because they cannot read detailed English instructions and whose oversight by FAA and TSA [Transportation Security Administration] is uneven, or non-existent.”
Washington Aviation Summary – November 2009
International travel to the United States will “regain its footing” in 2010, predicts the U.S. Department of Commerce. Reflective of the current global economic environment, international travel is expected to decline by 8% this year, with a 3% rebound projected for the U.S. by the end of 2010, followed by 5% annual increases through 2013. This year, 22 of the top 25 arrival markets will post declines, with the largest from Taiwan (-17%), Ireland (-14%), Sweden (-13%), Mexico (-12%), United Kingdom (-12 %), and Netherlands (-10%). The U.S. hosted a record 58 million international visitors in 2008. International arrivals are predicted to reach 64 million by 2013.
Washington Aviation Summary – October 2009
International scheduled passenger demand declined by 1.1% in August, an improvement on the 2.9% decline in July, reports the International Air Transport Association (IATA). Compared to the low point of March 2009, seasonally adjusted passenger demand improved by 6%, but traffic levels remain 5% below May 2008 when the fall in demand began. Freight demand fell by 9.6% in August, an improvement over the 11.3% drop in July. Compared to the December 2008 low point, seasonally adjusted freight demand improved by 12%, but remains exceptionally weak at 16% below April 2008 levels when the fall in demand began. Average fares continue to be depressed (-22% for premium seats and -18% for economy). To match capacity with demand, airlines have reduced daily aircraft utilization, said IATA. Average daily hours for the global Boeing 777 fleet dropped by 2.7% to 11.1 hours per day through the first eight months of the year. Lower utilization helps load factors, but spreading fixed asset costs over fewer hours in the air pushes up unit costs. IATA predicts airline losses will reach $11 billion in 2009, after earlier loss projections of -$9 billion. Revenues for the year are expected to fall by $80 billion (15%) to $455 billion, compared with 2008 levels. IATA also revised 2008 estimates from a loss of $10.4 billion to a loss of $16.8 billion. For 2010, IATA anticipates average international passenger growth of just over 4%, compared to an expected full-year decline in 2009 of almost 5%.
Washington Aviation Summary – September 2009
The Federal Aviation Administration (FAA) and National Air Traffic Controllers Association (NATCA) reached a collective bargaining agreement after three years of negotiations. A mediation process produced an agreement that is subject to ratification by union members. An independent arbitration team released a decision on five issues, including compensation, which are not subject to ratification. The agreement provides employees with greater flexibility in work schedules, childcare support and a new grievance review process. It gives FAA “flexibility to more effectively redeploy labor to congested airports using Controller Incentive Pay,” said FAA, and “restores a more equitable pay standard to benefit new hires as well as veterans nearing retirement.” Associated costs will be phased in over the three years of the contract.
Washington Aviation Summary – August 2009
The U.S. Department of Transportation (DOT) granted final approval for antitrust immunity (ATI) to Continental for its participation in the Star Alliance, and allowed Air Canada, Lufthansa, United and Continental to place a portion of their international air services within a new joint venture, to be called Atlantic Plus-Plus. Under the venture, the carriers will jointly arrange capacity, sales and marketing, and share revenues in international markets. DOT concluded the joint venture would support increased levels of service in international markets served by the carriers, give consumers more travel options and shorter travel times and reduce fares. The United States has open skies aviation agreements with the home countries of the carriers involved in the decision. Following comments from the Department of Justice and other parties on its April 7 tentative decision, DOT placed new limitations (carve outs) on the immunity in several markets to preserve competition: four transatlantic markets, four U.S.-Canada markets and all U.S.-Beijing markets. Star carriers may continue to serve these routes, but will not be covered by ATI. The carriers are required to implement the new joint venture within 18 months, and provide annual reports to DOT about implementation of their alliance agreements. They remain subject to antitrust laws with respect to domestic service. DOT first granted immunity to Star partners in 1996, when it approved a United-Lufthansa alliance. Other Star members are Austrian, British Midland, LOT Polish Airlines, SAS, Swiss and TAP Air Portugal.
Washington Aviation Summary – July 2009
The global airline industry is expected to lose $9 billion this year, reports the International Air Transport Association (IATA), nearly double the March estimate of a $4.7 billion loss. IATA also revised its 2008 loss estimate of $8.5 billion to -$10.4 billion. Revenues are forecast to decline an unprecedented 15% ($80 billion), from $528 billion in 2008 to $448 billion in 2009. Air cargo demand is expected to decline by 17%. In 2009, airlines are forecast to carry 33.3 million freight tons, compared to 40.1 million tons in 2008. Passenger demand is expected to contract by 8% to 2.06 billion, compared to 2.24 billion in 2008. Revenue impact of falling demand will be further exaggerated by large falls in yields-11% for cargo and 7% for passenger. Losses forecast for carriers worldwide: North American, -$1 billion; European, -$1.8 billion; Asia-Pacific, -$3.3 billion; Middle East, -$1.5 billion; Latin American, -$900 million; and African, -$500 million.
Washington Aviation Summary – June 2009
President Obama’s choice to lead the Federal Aviation Administration (FAA), Randolph Babbitt, was confirmed by the Senate. A former Air Line Pilots Association President, Babbitt said his priorities as FAA Administrator would include funding the Next Generation Air Transportation System (NextGen); resolving air traffic controller labor disputes; and improving landing techniques that would reduce fuel consumption, noise and congestion. The Senate also approved John Porcari as Deputy Secretary of the Department of Transportation (DOT); he has served as Secretary of Maryland DOT.
Washington Aviation Summary – May 2009
In a rapidly evolving situation, at least nine countries officially reported cases of influenza A/H1N1, said the World Health Organization (WHO), and the death rate climbed. Most of the cases were in Mexico, followed by the U.S. WHO raised the level of influenza pandemic alert to Phase 5, with 6 being a full pandemic, and advised countries to activate pandemic preparedness plans. WHO advised no restriction of regular travel or border closures, but advised sick people who are ill to delay international travel. Several nations suspended flights to Mexico. Some nations also urged avoidance of travel to the U.S., which Atlanta-based Centers for Disease Control (CDC) said was unwarranted.
Washington Aviation Summary – April 2009
The global air transport industry can expect losses of $4.7 billion in 2009, reports the International Air Transport Association (IATA), revised from a December forecast of a $2.5 billion loss. Industry revenues are expected to fall by 12.0% ($62 billion) to $467 billion. In the post-9/11 decline, revenues fell by 7% ($23 billion) over the 2000-2002 period. Passenger traffic is expected to contract by 5.7% this year, cargo by 13% and yields by 4.3%. In January, passenger traffic was down 5.6%, with premium off 16.7%; cargo traffic fell 23.2%. IATA also revised its forecast losses for 2008 from $5 billion to $8.5 billion. “This is a resilient industry capable of catalyzing economic growth. But we are structurally sick.
Washington Aviation Summary – March 2009
The $787 billion American Recovery and Reinvestment Act of 2009 provides for $1.1 billion in Airport Improvement Program (AIP) funding to be made available by the Federal Aviation Administration (FAA) for “shovel-ready” projects this year, and provides federal income tax breaks to those who buy airport revenue bonds. The stimulus plan also includes $1 billion for the Transportation Security Administration (TSA) for procurement and installation of airport baggage screening and checkpoint security equipment.
Washington Aviation Summary – February 2009
The International Air Transport Association (IATA) released scheduled traffic results for December and full-year 2008. In December global cargo traffic plummeted by 22.6% compared to December 2007, while passenger traffic fell 4.6% with load factor at 73.8%. For full-year 2008, international cargo traffic was down 4%, passenger traffic increased 1.6% and international load factor was at 75.9%.
Washington Aviation Summary – January 2009
Ray LaHood was selected by President-Elect Barack Obama to be the next Secretary of Transportation. The seven-term Congressman (R-Ill.) served on the House Appropriations Committee and is expected to play a key role in obtaining bipartisan support for infrastructure revitalization programs planned by the new Administration.
Washington Aviation Summary – December 2008
Global passenger traffic declined 2.9% and cargo traffic dropped 7.7% in September, compared to the same month in 2007, reports the International Air Transport Association (IATA), due to the economic recession. Load factors tumbled by 4.4% from 79.2% in August to 74.8% in September.
Washington Aviation Summary – November 2008
Saying the merger of Delta and Northwest “is likely to produce substantial and credible efficiencies that will benefit U.S. consumers and is not likely to substantially lessen competition,” the U.S. Department of Justice Antitrust Division closed its six-month investigation and approved the arrangement.
Washington Aviation Summary – October 2008
The global airline industry is expected to post losses of $5.2 billion in 2008. The revised forecast, issued by the International Air Transport Association (IATA), is based on an average crude oil price of $113 per barrel ($140 for jet fuel).
Washington Aviation Summary – September 2008
Cargo and passenger traffic continued to slow in June, reports the International Air Transport Association (IATA). Cargo contracted by 0.8% compared to June 2007 and passenger demand growth fell to 3.8%, compared to 7.4%. Capacity growth of 5.5% outstripped demand, pushing the passenger load factor down to 77.6%, compared to 78.8% last June.
Washington Aviation Summary – August 2008
Amid the current environment of high oil prices and falling demand, airlines have introduced capacity cuts that have a severe impact on employees, passengers, airports and communities. Industry leaders are debating whether a return to some form of regulation is needed.
Washington Aviation Summary – July 2008
The International Air Transport Association (IATA) called on governments, industry partners and labor to address the fuel crisis, forecasting a potential loss of $6.1 billion for 2008 based on an average oil price of $135 per barrel.
Washington Aviation Summary – June 2008
Year-on-year international passenger demand grew by 3% in April, reports the International Air Transport Association (IATA), or 4% with seasonal and other adjustments, compared to 6.7% growth for the first four months of 2007.
Washington Aviation Summary – May 2008
Aloha, ATA, Skybus and Eos ceased operations in April, charter operator Champion Air announced it will end operations on May 31 and Frontier filed for bankruptcy protection but continued operating.
Washington Aviation Summary – April 2008
The U.S. Department of Transportation (DOT) and the European Commission (EC) announced a joint research project to determine how alliances have affected competition in transatlantic markets and the potential impact of the open skies agreement between the United States and the European Union (EU), set to take effect March 30, 2008.
Washington Aviation Summary – March 2008
For full-year 2007, worldwide passenger traffic rose 7.4% and cargo traffic was up 4.3%. This year, demand rose 4.3% in January, year-on-year, but was down sharply from the 6.7% growth of December.
Washington Aviation Summary – February 2008
The U.S. Department of Transportation (DOT) proposed a new landing fee structure that would permit airports to impose a per movement charge, in addition to current weight-based runway charges, and increase fees during congested periods to encourage airlines to operate at other times, use secondary or reliever airports or “up-gauge” aircraft.
Washington Aviation Summary – January 2008
The U.S. Department of Transportation (DOT) selected US Airways to inaugurate U.S.-China service (Philadelphia-Beijing) and awarded additional U.S.-China passenger flights to American (Chicago-Beijing), Continental (Newark-Shanghai) and Northwest (Detroit-Shanghai), all to begin on or about March 25, 2009.