America Changes Once Again

If 2008 was the year of voters choosing ‘change we can believe in,’ then 2010 has already proved to be the year for ‘change without the make-believe liberal dreams.’ Angry citizens went to the polls in Massachusetts last week and produced more change than anyone imagined: they elected a conservative Republican to fill the seat of the Senate’s liberal lion, Ted Kennedy. Their message to Washington was simply: “Stop!”

It’s difficult to know how this all will play out over the balance of the year as we move toward pivotal congressional elections in November or how it will affect your business, your customers, and the aviation industry broadly, but I’m cautiously optimistic. Almost overnight, one election has changed the policy direction in Washington in three important areas: health care, taxes, and growth of the federal budget. Hopefully, this will translate into a more predictable economic policy that will encourage new investment and job creation, giving you and your customers an incentive, at last, to do what business does best: find opportunities, creative solutions, and profitable ways to meet the needs of Americans.

Obamacare, to say the least, is on life support. Something may eventually emerge that expands coverage, alters existing health insurance terms and conditions, and perhaps even attempts some modest malpractice reform, but it will almost certainly not be the draconian transformation of American health care that George Miller, Nancy Pelosi, and Henry Waxman once envisioned. Conservatives are hopeful that they have stopped this runaway train, but they still don’t have the votes to return federal health programs to a path of fiscal responsibility.

Tax policy has also done an about-face. A few weeks ago, Charlie Rangel was making plans to raise taxes and fees to replace the soon-to-expire Bush tax cuts. Now the White House is signaling that new so-called ‘middle-class tax cuts’ are under consideration, but I’m hopeful that broader cuts for higher-income taxpayers and small businesses will end up in the final legislative package.

The greater fiscal consequence of last week’s election will almost certainly be revealed when the President releases his new budget for Fiscal 2011. My guess is that hundreds of Office of Management and Budget accountants and economists are still making last minute changes to this monstrous budget document, slashing the spending and ‘stimulus’ requests that liberal politicians were expecting only a few weeks ago. The final result will hardly be a parsimonious product, but it will be more frugal than if the Massachusetts election had sent the traditional ‘spend us out of recession’ political message. No one knows at this point what this will mean for aviation spending and such costly projects as NextGen, or whether this will embolden the administration once again to propose user fees. But fiscal discipline is, in my book, not a bad thing.

Wednesday’s State of the Union address will reveal exactly how carefully President Obama was listening to the voters last week. Many liberal politicians have already gotten the word as they suddenly announce their retirement or withdraw their names from upcoming contests. Whether Obama sees change when it hits him in the face is still a question, but for the rest of America it’s here, it’s real, and it’s going to move the country, eventually, in a very different direction.

Carbon And Copenhagen, No Surprise, No Consensus

Watching the press reports out of Copenhagen today, one can only hope that someone has a plan to turn the International Climate Change Summit into a Cirque de Soleil show in Las Vegas sometime soon.  That way, at least, we can keep this circus going on, but in a less damaging format, so that we get all the entertainment without the risk of global financial disaster.

Like a good show, Copenhagen offers something for everyone.  The Marxists have Hugo Chávez from Venezuela ranting against capitalism, the orthodox believers have Al Gore presenting his latest revelations about climate doom, the global class warriors have the G77 demands for trillions in wealth redistribution, and even the computer geeks have a true cyber-scandal to enjoy.  Everyone has a role to play and follows a predictable script, and the conclusion is just as predictable: chaos, confusion, and very little consensus.

I suppose we can call that good news.  It is unfortunate, though, that so much confusion surrounds the scientific understanding of recent greenhouse gas augmentation in the atmosphere, its effect on our climate, the consequent impact of those theoretical climatic changes on our environment and human society, and the effectiveness and cost of various strategic responses.  But one thing is clear: the debate about climate has become primarily a debate about money.

That is a political truism, of course.  It’s always about money, and that surely comes as no surprise to the typical business leader in today’s global aviation industry.  Every political entity in the West, it seems, can’t afford to pay for all the political promises they’ve made over the past few decades, so they’re all looking for more money and more ways to tax those who still have some money left.  Anyone using aviation, especially business aviation, is assumed to have money, so the global strategy is to create new taxes, fees, and assessments to get at that money. 

Carbon taxes, cap and trade schemes, and CO2 offsets are all part of this game, only this time there’s a truly terrifying global dimension.  Copenhagen, therefore, isn’t so much about global warming as it is about global taxation, with or without representation!  If there is anywhere that political tea parties, a la Boston Harbor, ought to be occurring, it’s in Copenhagen.

Aviation is in the middle of this not because aircraft emit greenhouse gases, but because we commit capitalism and are closely regulated within a framework of multilateral tax agreements affecting our operations around the globe.  In Copenhagen, therefore, we look like an easy target – if only everyone could agree on who pays how much to whom.

For the time being, the circus has come and will soon move on, leaving the usual detritus behind.  Let us only hope that, after all the dust settles, we can get back to the job of connecting the world with safe, affordable, and efficient transportation.  Without us, after all, how could they ever get to Copenhagen in the first place? – JKC

Visit or return to NATA’s site: www.nata.aero

If Darwin Landed At Your Airport What Would He Think?

150 years ago today, Charles Darwin published “On the Origin of Species by Means of Natural Selection, or the Preservation of Favoured Races in the Struggle for Life,” but his thoughts about evolutionary biology are often compared to the ‘struggle for life’ in the 21^st century world of business.  It is commonplace in times of robust commercial competition to hear an economist, politician, or pundit remind us that “survival of the fittest” applies as much to financial entities as to finches.

If Darwin could turn his attention from finches to FBOs and other aviation businesses, what evidence of economic evolution might he find in 2009?  What new business ‘species’ are thriving?  Are there enterprises on the verge of extinction?  And where does your business stand?

A key concept of Darwin’s theory was that biological organisms, if their populations are to grow (i.e., have more offspring), must successfully compete in an environment that may favor some adaptations over others.  In other words, nature produces genetic variations that, over time, end up giving advantages to certain organisms and they become more numerous – eventually becoming distinct species.  In these times of unprecedented change, is there a Darwinian lesson for us as our industry evolves?

An important part of Darwin’s thinking was that organisms compete, and much depends on the different characteristics (or talents or skills or resources) of the various competitors; but much also depends on the environment in which the competition occurs.  The Galapagos Islands are very different from the mainland, just as your airport or market segment may be rather special, and your ability to adapt (through managerial rather than genetic variation, I suspect) in ways that are advantageous in your specific economic arena is the essential lesson of Darwin.  Change just for the sake of change may not produce any advantage.  It all depends on the environment in which you find yourself and your business.

That’s why Darwin, if he were to land at your airport, would first try to determine the key elements of your economic and regulatory environment before he’d start offering any management advice.  Think of all the aviation businesses that seemed sure to survive or likely to succeed (e.g. Eclipse VLJ, Beech Starship, DayJet, Avolar, or Pogo) but became economically extinct because the environment was wrong, the regulations were too costly, or the right market was somewhere else. 

Some environments, like the Fertile Crescent in Mesopotamia or the rift valley in Eastern Africa, were lush enough to allow many new species to thrive.  Others, like wastelands in Northern Africa or the tundra of Siberia, impose a much harsher test where only the very fittest have any chance of survival.  Some individual businesses, of course, are literally stuck where they are, because of leases or personal commitments, but many aviation businesses have succeeded by going where the opportunities were more promising, like migrating birds of prey.

Darwin might also consider the current political environment as a factor that can affect your business’s survivability.  Is the White House’s ‘War on Wealth’ just a temporary drought or is it a permanent change in the political climate toward private aviation?  If so, what adaptations are necessary to compete in an era of higher taxes, more fees, and punitive political rhetoric?

But although Darwin wrote of competing and struggling players in the biosphere, he also wondered at the incredible variations and adaptations that, in the end, were so phenomenally successful in advancing life across the planet.  I think he would also be impressed with the spread of successful aviation businesses across this country and beyond our borders – and optimistic that this new species of business, i.e. private aviation service companies, has found a permanent niche in the world’s economy and is, in fact, a survivor.

Hey FAA – Got any “change” for ATC?

It’s never easy running the FAA, but the accident over the Hudson River in August poses some really tough challenges for FAA Administrator Babbitt and even more so for the army of lawyers that work for him in the FAA’s Office of Chief Counsel. I testified before House and Senate Subcommittees last month in their respective hearings about the crash, and after listening to the NTSB and FAA testimony I was quickly convinced that this tragic accident will lead to very troubling revelations about how the FAA manages its own employees.

Timing, as always in aviation, is everything. The crash (between a tour helicopter and a VFR Piper Lance) was on August 8th, and the FAA finalized a new contract with the controllers’ union on August 13th. Since then, details of the controllers’ behavior in Teterboro tower were released after a Freedom-of-Information request (see http://www.newsday.com/news/recording-controller-bantered-as-crash-loomed-1.1511830), but details of the new NATCA contract have been much harder to uncover. One senior legislator told me that controllers will now be the highest paid group of government employees in history, getting a $40,000+ pay raise to over $200,000/year, but press and web searches offer few details about how generous the contract terms really are (see how indecipherable the contract is at http://nso.natca.org/NSO%20Docs/NSO_PDF/2009%20Contract%20Arbitration%20Decisions/Appendix_A-1.pdf).

These two events are obviously unrelated, but when the government rewards its employees generously, it is only natural to expect that they do their jobs in a professional manner. Among other things, this means that the controllers must follow the rules. In the Teterboro tower that morning, two fundamental rules were broken: the controller handling the Piper departing from TEB was talking on his cell phone (about a dead cat!) while he was directing the aircraft. This is a blatant violation of tower procedures (in my view cell phones shouldn’t be allowed in a control tower). Secondly, the supervisor on duty had left the tower to pick up dry cleaning, so he wasn’t even there to prevent the other controller from breaking the rules.

Nine people lost their lives that morning, and I can only imagine how much money their survivors will seek from the FAA in damages ($200 million the estimate of a lawyer friend), and since you and I will pay the ultimate bill, though I doubt the actual amount will ever be made public, it seems fair to ask if the FAA will seek enforcement actions in this case that are comparable to what they demand in cases involving private-sector rule violations.

I recall million-dollar-plus fines for operational control violations, failure to properly tie some wire bundles, and unintentional use of unapproved parts – all in situations where there were no injuries, let alone nine deaths. But now the FAA’s all-powerful counsel’s office will be asked to assess penalties against their own fellow employees in a situation where the actual violations are far more blatant and directly tied to a serious accident. What will they do? Do they also have the job of defending the FAA, if not the controllers themselves, from claims made in court about supervisory and training failures? Will anyone care about the cost to the taxpayers, who just gave the controllers a $600+ million raise!

And what will the Administrator do? As a former union chief, he’s in a very tough spot. Will he try to keep quiet and distract public attention from controller mistakes, as many of his union allies might hope? He did quickly appoint a task force to make reforms, but most of those shifted the focus of the investigation from controller error to airspace redesign. Is anyone in a position to truly hold the controllers accountable?

It’s too early to tell. At last month’s congressional hearings, no one dared challenge the representative from NATCA and I was amazed that most congressmen took the occasion to complain about air tours around New York City rather than examine the behavior of the federal government employees who supposedly work for them. Time will tell if any real “change” is possible.

If anything, this accident should remind us all that all humans make mistakes and the only way to significantly reduce aviation risks in the 21st century is to reduce human error – especially by using navigation and communication technologies that have better accuracy and performance standards than our current controller-centric system. That Saturday morning in early August, the skies were clear over New York and flight activity was low. The positions of the two aircraft were known by the ATC system, but not by the pilots, because we still use outmoded communication procedures – and in this case the controller was making unauthorized communications on a cell phone. We have the means to prevent this type of accident in the future. The question is, do we have the political will? The steps taken by the FAA, its administrator and its lawyers, in the next few months will give us the answer.

Visit or return to NATA’s site: www.nata.aero

Can’t We All Just Get Along?

This is my first BLOG, so cut me a little slack. 

It’s not that I haven’t always enjoyed writing, having written about 580 different pieces since I joined NATA in 1994, and it’s not that I’m uncomfortable with computers, having played with them since the days of punched tape way back in 1963.  It’s just that it seems a bit sloppy to me, and perhaps too anonymous.  I always preferred to craft a message with a lot of erasing (Remember that, even before Wite-Out®?), revising, and editing.  Blogging sounds like you’re just blabbing off the top of your head with little deliberation or fact-checking.  But I suppose it does have the added benefit of being spontaneous, though sometimes I’ve found that letting a piece sit for a day or two to let my anger subside is a very good idea.

In any case, here goes.

As you might imagine, my job at NATA is like going to the circus – something I might call the circus of aviation policy making.  After all, NATA’s most important function is to affect, steer, and change aviation policy so we can give our customers the fine aviation products and services they want and deserve, and help our businesses grow, provide jobs, and create value.  And believe me, it’s a true circus.

If only it had only three rings.  My modest count is closer to twenty, and some of them have their share of lions, tigers, and bears – not to mention hundreds of clowns.

One of the more important rings of the circus is the media, though in this new era of blogging, et al, the traditional media is undergoing a wrenching transformation.  Newspapers that once had knowledgeable aviation writers have been forced to cut their staffs, and the result is sad to see.

The latest example is USA Today’s attack on small airports and general aviation.  Last week’s piece, which also was the basis of a co-produced NBC Today Show segment, essentially asserted that GA airports get too much money and that the money comes from the ticket taxes that airline passengers pay, which should supposedly only pay for aviation improvements that benefit the airlines at the larger airports they traditionally use.

You’ve probably already read our response to the article and perhaps the comments of many others on various websites attacking the logic and premise of the article.  Suffice it to say, the piece was written solely from the viewpoint of the airlines.  Their position on GA airport funding was taken as gospel and the views of opponents were generally ignored.  Yesterday, in fact, I chatted with Jim Oberstar, Chairman of the U.S. House of Representatives Committee on Transportation and Infrastructure that directs federal funding to airports and, though he was interviewed for the article, he was shocked that none of his opinions or arguments was printed.

The more important fact to consider is whether this article represents a fundamental change of strategy on the part of the airlines.  Over the past three years, their argument for user fees has been that private aircraft operators cause delays and inconvenience airline passengers.  They even produced a costly, ludicrous animation showing private jets with golf bags butting in front of airliners at a crowded airport, taking off ahead of them, and at the same time not paying enough in taxes (never mind that all charter aircraft charge the same 7 ½ % ticket tax as the airlines do).  Of course, in the current recession this argument is even more preposterous.  Around New York, for example, GA traffic has fallen dramatically, but airline delays remain the same.  If a 30-40% drop in GA traffic didn’t reduce congestion, then that whole argument must have been bogus.

Now the argument is shifted to an attack of GA airports because they cost a lot to maintain, but have far less traffic than big airline hubs, so, their argument goes, they are unfairly being subsidized by airlines that never use those airports.

Well, if ever there was a hornets’ nest that the airlines should have avoided, this is it.  Every town in America with a small airport is up in arms.  Where do you think pilots learn to fly?  Shouldn’t we have access to medical flights?  Don’t we deserve package express carriers?  Don’t we need these airports for economic development, access to leadership (how will politicians ever get here), and emergencies?  And besides, these other segments of aviation pay taxes, and so do the citizens of rural America who don’t get the benefits that Congress lavishes on other transportation modes, like subways, that are heavily subsidized.  And by the way, airlines, all you really want is to strengthen your monopolistic hub-and-spoke strategy, and we know how you stick it to small communities when only one airline flies there.  Thank God for the competition from general aviation that at least keeps you partly competitive.

And if the airlines want to talk about wasteful spending at airports, how about costs they pass on to the taxpayer (think of all the security costs, or the extra-strong runways and taxiways required for super-heavy new airliners) whenever they put a gun to the head of an airport manager who wants more airline service.

The saddest thing about this new strategy is that it is based upon dividing America, rather than trying to bring us all together.  The airlines seem to think that rural America is unimportant and doesn’t deserve air transportation – especially the vastly more convenient and effective air transportation that general aviation can provide.  Do they really want to wage a rural vs. urban war in Congress?  Have they ever analyzed the political power of rural states and congressional districts in the House and Senate?  Or do they expect their huge PAC war chests to buy the votes they need? 

The airlines are creating new enemies at a time when they need more friends. 

Jim May (CEO of ATA):  Give me a call.  It’s a lot smarter to grow all of aviation, together, so we can improve air transportation for all Americans, no matter where they live, how rich or poor they are, how fast or conveniently they need to get somewhere, or how much service and comfort they require. 

Maybe that’s why there’s no “N” in the airlines’ trade association, ATA (the Air Transport Association).  They really don’t care about the rural part of America – and can therefore hardly be called “National.”