Ten Reasons Why Aviation is Taking Off Again – Soon

Business and general aviation have always been whipsawed by economic cycles, usually with a big lag for us at the end of a recession.  This time it’s been especially painful, but change is in the wind – and most of it suggests that things will be getting a lot better in the coming months.

I’m no Pollyanna and don’t deny that many domestic and international political issues make forecasting a risky business, but it’s almost impossible to ignore the positive signs that should make us all optimistic about the future.

1.         Great planes are for sale at great prices.   We all know that airplanes are expensive, but in terms of true aircraft value per dollar of purchase price, the market hasn’t been this good in decades.  Clean, low-time used aircraft are available with huge discounts and new planes with a whole new generation of technology give today’s buyers a lot more for a lot less.

2.         Buyers have the money to spend.   Business aircraft are, by definition, bought by businesses – and America’s largest companies have lots of cash.  But two things are needed to turn them into aircraft buyers:  Optimism about their company’s growth prospects and confidence that what they buy will give them a good return on the investment.  More and more companies are concluding that spending money now on airplanes is a smart thing to do – a decision that will look even smarter in the years ahead.

3.         Oil prices are lower.   High oil prices hit all of us in the pocketbook and aircraft operators are no exception.  It wasn’t long ago that crude was selling for nearly $150/barrel.  Since then, new supplies and a cooling of the global economy (not to mention a respite from runaway speculation) have brought prices down nearly 50% (and natural gas prices have fallen even further).  Even hard-core liberals are saluting the energy industry for developing new resources, new fields, new technologies, and new bio-blends that make American energy independence more likely now than it has been in years.

4.         Interest rates are at historic lows.  Immediately after the financial collapse in 2008, many lenders turned a cold shoulder to aircraft buyers.  Today, the tables are turning with low rates and more predictable aircraft values giving our financial partners good reasons to take a second look.  Buyers with strong credit will probably never see rates this low again in their lifetimes.   

5.         Airline travel is still airline travel – only worse.  The simple truth is that the airlines’ new business model makes business travel much more onerous, inconvenient, uncomfortable, unpredictable, uneconomic, and insulting than ever before.  Frequent flyer programs don’t work anymore.  Airplanes are more crowded.  Security lines can be a huge hassle.  Decent food is a distant dream.  There are fewer direct flights.  Hidden extra fees make flights more expensive.  If anyone wants to find a ‘friendly’ sky, they fly on their own airplane.

6.         The elections of 2012 can give the economy a huge boost.  The American business community is already feeling optimistic about positive political change in government at all levels.  The Wisconsin recall election results in June were a signal that the political pendulum is starting to change direction.  Many other states are pursuing business-friendly policies and even the Supreme Court is playing a role, helping restore balance between the public and private sectors.

7.         The pace of technological change is accelerating.   American business is no longer hunkering down.  Hundreds of sectors, from touch screen computers to smart credit cards, from insulin implants to 3D TV, from military drones to shale fracking, are experiencing unprecedented transformations.  The modern aircraft cockpit, as one example, is now filled with GPS guidance, Wi-Fi connectivity, iPad approach plates and more.  All this change means a whole new era of growth.

8.         America’s workforce is more productive than ever.  While Europe muddles and other parts of the world struggle with civil wars, corruption, or oppressive government controls on capital, private property, or speech, the American worker is becoming more and more productive.  Our mobile, tech-savvy, educated workforce, especially in right-to-work-states, is helping restore our nation’s manufacturing might.

9.         A new generation of smart kids is getting into business.  The oldest of the “baby boom” generation are soon to leave our nation’s economic and political stage.  In their footsteps are millions of smart men and women who are drawn to careers in business.  Thousands of them aspire to be the next Steve Jobs or Warren Buffett.  They will also be the most mobile generation in history and personal aviation should be an important part of their lives.

10.       America is poised to be the global economic leader.  Global leadership is, as always, a very competitive question.  China, India, and other rising Asian nations, with low cost labor and rapidly-growing middle classes, have seen their influence grow, but they are still uncertain business partners and many of their political leaders are fearful of true economic freedom.  The price of Europe’s costly promises to unions and pensioners and a fraying monetary system makes European political leadership less and less likely.  Other nations, from Brazil to Saudi Arabia to Russia, are important players, especially in specific sectors, but on the broad global stage their role is much smaller.  The fact remains, as politically incorrect as it may be, that America alone has a people, united by history, language, infrastructure, culture, education, and spirit, who are ready, willing, and able to lead the global economy. 

This is arguably the first century in world history where the economic actions of every individual are so closely tied together in an interconnected global economy.  For this new system to work, there must be a global system of business and personal air transportation.  There is only one place on the globe where such an air transportation system thrives.  It is here.  It is American.  And it is poised to fly!

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

Federal Regulation: The Sky’s the Limit

I was invited to the Supreme Court to watch the arguments concerning the constitutionality of the so-called ObamaCare healthcare regulations.  It was an historic morning as the justices confronted Solicitor General Verrilli with challenging questions about whether there were any limits to the metastasizing malevolence of the Constitution’s Commerce Clause.  A former congressional colleague of mine, as Florida’s attorney general, was part of the group of state officials that had brought the case to the court, and we were both encouraged by the tone of the justices’ queries.  I left the court with the hope that America may, at last, be reining in the heretofore unbridled regulatory power of the federal government.

The National Federation of Independent Business (NFIB), which brought the case to the Supreme Court (along with the challenge brought by several states), is a trade association similar to NATA that represents thousands of small businesses trying to survive in a sea of endless federal regulation.  For them, the ObamaCare mandates are the ultimate example of Commerce Clause overreach, stretching the founding fathers’ original intent so far that Justice Kennedy dared to offer a querulous challenge: “Can you [i.e. the federal government] create commerce in order to regulate it?”                                              

As I sat in the court listening to the arguments, I felt a certain pride that this decisive case was before our highest court, in part, because of the energy, initiative, and yes, even anger, of a fellow trade association.  NATA has joined forces with NFIB on various legislative issues over the years, and I was happy to lend a small measure of moral support as they went into battle on the hallowed ground of the Supreme Court chamber.  Although the role of a trade association in this legal matter was overlooked by most of the media, I recognized it as an illustration of the powerful part that trade associations play in contemporary governance, especially when a strong advocate is needed to protect our most vital economic and political rights.

The ‘Commerce Clause’ is simply Article 1, Section 8, Clause 3 of the United States Constitution, which says succinctly that Congress shall have the power to “regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.”  From these few words flow the myriad regulations that now encumber every aspect of our national economy.  We can only hope that the tide, at last, is changing.

Of course, the word “commerce” had a limited meaning to those who wrote these words in 1787.  A contemporary synonym would be “trade,” as they were clearly thinking about the flow of goods across national borders, state boundaries, and into the territories of Indian tribes.  The purpose of the Commerce Clause was to prevent the states, tribes, or representatives of foreign governments from establishing conflicting authority with regard to the duties, quotas, taxes, monopolies, and other burdens or limits on such commercial trade. As Benjamin Franklin might argue, a ship at anchor in the Delaware River should not contend with customs collectors from New Jersey and Pennsylvania before unloading its cargo, nor should a tradesman bringing his products from Princeton to sell in Philadelphia.  The founding fathers, like those creating the Common Market in Europe two centuries later, merely wanted to foster commerce across arbitrary political boundaries, recognizing that all citizens benefit from unfettered economic enterprise and trade.

This simple clause was created, ironically, to promote trade and economic growth.  Now it works, more often, to constrain such activity, imposing an unfathomable hodgepodge of rules and regulations (e.g., the 2700 pages of ObamaCare legislation) on virtually any enterprise, no matter how small in output, limited in scope, or personal in impact.  The founders knew that economic liberty was the cornerstone of the nation’s political foundation, and most of the Constitution was drafted precisely to preserve fundamental economic freedoms from the inevitable constraints that even a “government of, by, and for the people” would place on economic activity.  How cruel, then, has been the transformation of the Commerce Clause from a few words that hoped to shield the private sector from too much government interference into a phrase that has been used for most of the past century to give Congress more and more control over the private sector.

There is no better example of this than in aviation.  Just ask anyone who has started an airline, set up a new air charter operation, tried to certificate a new aircraft, or begun a career as a commercial pilot.  I wonder if our founding fathers could even imagine how much regulatory power their limited federal government would one day command.

            Ben Franklin:  “All I want is to get a job as a co-pilot in a small airline flying out of Philadelphia.  I know how to fly and the company wants to hire me.”

            FAA Official:  “I’m sorry, Mr. Franklin, but you must show me your logbook proving that you have 1500 hours of flight time and a type rating in the aircraft.”

            Franklin:  “Where do you get the authority to make such demands?”

            FAA:  “Read your constitution, Mr. Franklin.  It’s right there in Article 1.”

            Franklin:  “I was there when it was written.  We never intended to give you so much control.  Plus, we added the Bill of Rights to make sure that the states and the people could constrain the power of the federal government.”

            FAA:  “But you don’t understand.  We’re the only ones that can keep everyone safe.”

            Franklin:  “Safe from what?”

            FAA:  “From yourselves!”

            No wonder Ben took up flying kites.  No type certificate required.

Editorial first appeared in NATA’s Aviation Business Journal.  Click here to read the latest issue of ABJ.

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Change is in the wind!

To all NATA members….

As strong weather fronts sweep across the country this week, it is a good time to remember that in our business change is always just around the corner. Today, change is in the wind here at NATA.

The NATA Board of Directors and I have decided that 2012 will be my last year as president of NATA. Since 1994, it has been my honor to represent you here in Washington and in various public forums across the country. This job hasn’t always been easy, but together with an outstanding NATA staff we’ve been a consistent proponent for the interests of aviation businesses like yours.

I will continue to lead your association until January 1, 2013, when someone new will move into the NATA cockpit. Until then, I will support the board in the transition process and work to hand over to the new pilot of NATA an airworthy association, prepared for the challenges that our industry will face in 2013 and beyond. I’m sure that he or she will take NATA to new heights and continue our long tradition of being the voice of aviation business – strong, articulate, and undaunted.

As I told the NATA board and staff last week, pilots always have various waypoints in their flight plans and this upcoming waypoint is something that we all knew I would eventually reach. For Holly and me, it will mean a chance to refuel, change our heading a bit, and perhaps even move to a different flight level, but I sincerely hope that my association with you and thousands of other NATA members will continue, though in a different form or venue.

Long before I came to Washington as a freshman congressman in 1980, I was an aviation advocate. For nearly 40 years, I’ve been flying into FBOs, getting to know many NATA members even before I knew what NATA was. Now after visits to more than a thousand FBOs, repair stations, flight schools, charter operators, and airline services companies around the world, I continue to be amazed by the outstanding class of citizens who run businesses like yours. Meeting these men and women, whom I call the backbone of our national air transportation system, has been something that Holly and I will cherish forever.

When I was just a little tyke, my grandfather gave me the nickname “small change,” while tossing me a dime to remind me eponymously of our common surname. Looking back over these eighteen years, there are many changes at NATA and across the landscape of our industry, some small but some rather big, that give me great satisfaction, even if my role was only as a catalyst to help good ideas flourish. But it is your support of NATA and these various initiatives, from our Safety 1st training revolution to the good work of the Air Charter Safety Foundation to the continuing growth of our Workers’ Compensation Program to the scores of legislative and regulatory recommendations that became official policy or programs that insured that these ideas became a reality. Your continued support of NATA and our new leadership team means that our future flight plan will help us overcome the headwinds that lie ahead with the same energy, expertise, and enthusiasm that NATA has always had.

In closing, let me invite you to attend one of the many scheduled NATA events this year, if only to give Holly and me a chance to express personally our gratitude for your support and friendship over the past eighteen years. You have helped build the finest transportation system the world has ever known, and I know that NATA’s future will be even bigger and brighter. The winds are always changing – but for you, me, and every other NATA member, that change means opportunity.

Sincerely,

James K. Coyne

My 2012 Political Forecast: Mostly Foggy

Pilots like to have a good weather forecast, and if I were to offer one to my aviation colleagues about the political weather we face in the next twelve months, it wouldn’t be pretty.  America’s aviation industry hasn’t seen much sunshine in recent years and whenever our mood starts to brighten, along comes another wet blanket from the White House like their renewed campaign to vilify corporate aviation, impose user fees, overhaul aircraft depreciation schedules, and raise taxes on business owners or families earning over $250,000 a year.   If they keep this up, I may start to get really angry.

Perhaps we can be consoled with the thought that it is all mere politics – and lately we’ve come to expect this kind of populist class warfare as a supposedly harmless feature of presidential election campaigns.  But this time I’m more than a little worried.  The coming election cycle is not your ordinary struggle between two parties fighting for votes from undecided voters in the middle, each therefore trying to sound reasonable to centrist voters.  2012 is shaping up more like those bloody infantry battles of yore (think Waterloo or Gettysburg) where there aren’t many “undecideds” on the battlefield, and neither side sees a path to victory through compromise or conciliation.  

The Prussian military analyst Carl von Clausewitz lamented that the outcomes of great battles were much less predictable than military strategists might expect because of something he called “the fog of war” – an uncertainty that arises from the chaos, confusion, and strategic vagueness of intense military confrontation.  If current trends continue, the 2012 election will be a climactic political battle with enough chaos, confusion, and strategic vagueness to cover the electoral landscape with zero visibility and indefinite ceilings for months. 

The stakes couldn’t be higher.  After 33 months, the economic and political agenda of the Obama administration is much clearer than it was in the warm and fuzzy days of the 2008 election.  Their support for Keynesian spending and ‘stimulus’ programs continues unabated, despite dubious results.  Their fealty to the agenda of powerful unions is steadfast, whatever the cost to the public purse.  Their antipathy to private businesses is reflected in their rhetoric and their tax and regulatory proposals.  Their faith in government’s ability to choose winners in the private economy, from healthcare to solar energy to high-speed rail, is undiminished.  And their criticism of “the rich” is a never-ending torrent.

Republicans have a starkly different vision of cutting the size of the federal government: dramatically restructuring the tax code, defunding public unions, creating a national energy policy (God forbid), slashing spending, and establishing a predictable and stable regulatory, fiscal, and monetary environment so that businesses can reduce the government-induced uncertainties that confound them today.  On these issues there is consensus, but on a range of other issues, from immigration to globalization, they find lots to debate.  Still, on one thing they all agree: the curtain must fall next year on the Obama administration and all it stands for.   

Thus, the two sides are more polarized than I’ve seen in over 40 years of watching politics.  It is, as they say, a watershed year, and after a hurricane and an earthquake in Washington in recent months, I’m battening down the hatches for one heck of a storm next year.

Despite the fog, there are some apparent trends that are likely to continue and give rise to some cautious predictions.  First, republicans are, at this point, not only encouraged by polls but also by the evidence that their hard-core voters are more energized than they’ve been in decades.  The democratic base is diminished, somewhat disaffected, and deeply discouraged by the continuing high unemployment.  Also, important democratic constituencies, e.g. Hispanics, may drift away, especially if the republicans put someone like Senator Marco Rubio on the ticket.

In addition, the opening line-up for next year’s Senate races heavily favors the republicans (they are defending only 10 of the 33 seats at stake in 2012).  Although “none of the above” would win most Congressional elections if it were on the ballot, the “throw the bums out” mentality on Election Day should help republicans win control of the Senate, even if it slightly reduces their majority in the House. 

But many questions remain and the fog continues to roll in to cloud our view of the horizon:

Will republicans nominate a presidential candidate that won’t offend centrists (and will that matter as much this year)?

Will class warfare rhetoric and economic envy mobilize Obama’s base?

Are the millions of Americans (nearly 50%) who receive government checks automatically voting for big government, even if it’s bankrupt?

Do the unemployed blame government or Wall Street for our economic difficulties?

Will the various divisions within the republican party all support a single (perhaps imperfect) candidate?

Will seniors punish republicans because they dared to suggest that entitlements like Medicare need to be reformed?

Will democrats be able, in the weeks before the election, to create an issue that distracts the voters’ attention from the dismal economy?

If the election were held today, the democrats would suffer their worst electoral defeat in decades, and time is quickly running out for the administration and its allies in the Senate to persuade voters that they deserve another chance.  There’s always a possibility that some unforeseen event will give them a ray of sunshine to brighten their prospects, but at this point my weather forecast, even with all the fog, favors the GOP.   If they are victorious, the bigger question is: Can they govern according to their conservative principles or will they succumb once again to the pandering appeasement that marked their most recent period of political power?   This may be their best (or last) chance to shine.

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How to Fire Your Airport Manager

Let me begin with a cordial reminder to all my airport manager friends that this commentary is not about you.  You know who you are – and aviation businesses need more people like you helping us build a strong air transportation system.  But for the rest of you, this article’s headline reflects our collective concern that, frankly, we don’t seem to be on the same team.

Jack Welch, GE’s iconic chairman for over 20 years, was famous for a management philosophy that encouraged GE managers to fire one subordinate out of ten every year.   Donald Trump has taken his “You’re fired!” message and turned it into a virtual trademark.   Suffice it to say, the private sector is filled with managers who know how to use a pink slip.  The public sector is a different story.

Every airport is unique, but all  management problems fall under common headings – what I call the three perils of unprofessionalism: a Paucity of Purpose, Pretend Partnerships, and Procedural Pettiness.   Sometimes these management flaws stem from a confused political structure or an airport commission that has an agenda all its own.   In a few cases, the airport manager is as much a victim as the aviation businesses that are his tenants.  But most managers have the power and independence to set their own course — sometimes with disastrous results.

Their greatest mistake is to simply misunderstand what their job is and how it relates to the fundamental purpose of a public airport.  Airports exist (and justly get billions of dollars in federal grants) in order to promote the economic well-being of their community.  They generate jobs, create wealth, support the delivery of a wide variety of critical services, improve the economic efficiency of virtually every local enterprise, and bring direct and indirect benefits to the entire citizenry.  

They are not just a big piece of real estate with runways, hangars, tenants, and the occasional airplane taking off.  They are not merely places to board an airliner.  They are not just a ‘department’ of the sponsoring political unit.  They are not a clubhouse for a collection of aircraft owners.   They are not just a big interchange and parking lot that connects cars with highways in the sky. 

They are much more.  Airports are most communities’ largest and most valuable public investment – the one that can (or should) play the biggest role in promoting long-lasting economic development and growth in the surrounding region.   Your airport is your town’s most important connection to the world!

Many airport managers can’t see this big picture.  For them, it’s just a question of keeping the political higher-ups off their backs, keeping the grass mowed and the snow plowed, and learning to say “no” to anything that looks like a new idea.  They see their job as a caretaker – and the thought of taking any steps in a new direction is terrifying.  Others are just real estate managers, like superintendants of a big shopping mall, whose job is to collect rents, maintain security, and paint the lines in the parking lot.  These managers don’t understand the many facets of aviation and simply don’t belong at an airport.

Another critical test of a good airport manager is in the partnerships he or she creates.  Each manager, like the airport itself, sits at the center of scores of external relationships that collectively add value to the airport and its users.  Foremost among these potential partners are the aviation businesses at the airport.  The manager’s job is to work with these companies to foster economic activity at the airport – not to just send them a bill every month.

Other partnerships can be just as important – with the state and federal aviation funding entities, with Congress, ATC providers, aviation organizations, economic development officials, hospitals, universities, major corporations, local entrepreneurs, and many, many more.  Unfortunately, some airport managers only give lip service to these potential partners.  For them, it is all about their career, their compensation package, and their little empire.  An effective manager leverages his resources through the creation of true public-private partnerships.  More importantly, he knows that a successful airport needs successful and profitable aviation partners.  Without them, it’s hard to justify his salary.

Perhaps the greatest peril an airport faces is the threat of becoming a bureaucracy, and only a good manager can prevent this from happening.  It’s the curse of the public sector, of course, and aviation endures more than its share with the mind-numbing organizational inefficiencies at many of the federal agencies with whom we interact, but many great airports are run with the kind of customer-friendly policies and procedures that can cut through miles of red tape.   Sadly, however, many airport managers succumb to the temptations of bureaucracy and turn into petty tyrants.  The symptoms are familiar: lots of unproductive meetings, endless delays, piles of paperwork, and a dearth of decision-making.  These managers don’t really manage at all, they just shuffle.

So take out a report card and grade your airport manager.  Does he or she understand the true scope of the job and have a vision to match it?  Does the airport build partnerships that produce results – and are they working to increase economic activity and promote profitable enterprises in and around the airport?  Does the airport manager understand that bureaucracies stifle innovation, creativity, and growth?  If not, it’s time for an engine overhaul at your airport.

Firing an airport manager is an art unto itself, but if properly accomplished, it may be the best thing that ever happened at your airport.  A proactive manager who understands his mission and is willing to build effective, productive partnerships with those who want to help can transform any airport.  All it takes is finding the right man or woman and persuading the airport community that it’s time for a change.

Every airport, of course, has its own procedures and political paths that determine how and when a manager is replaced.   It’s usually best to present a convincing case for change, rather than attack the incumbent’s shortcomings.  Building an alliance of disaffected aviation interests and supportive business groups is a good first step, followed by an independent effort to identify some attractive new candidates for the position.  A broad review of the airports financial position and prospects can provide further arguments for a change of leadership.  Remember that you’re entitled to see all relevant airport documents.

After you’ve built your alliance, found some candidates, and created a plan of attack, move quickly to build public support for your campaign.  Emphasize how valuable the airport is and how much more it could bring to your community, if only it was well managed.  Show how the existing bureaucracy is limiting investment and innovation at the airport.  Present a new vision of your airport as an engine of growth for your region.

If you are successful and can replace a worn out manager with a new, energetic and visionary leader, your airport can achieve its real potential, giving the businesses and leaders of your home town new opportunities for expansion, innovation, and job development.  If that’s the kind of change your airport needs, grab the bull by the horns and go for it, before it’s too late.

(As seen in the 3rd Quarter ABJ. Click on the rotating ABJ image on the homepage of www.nata.aero to read the full issue.)

The Great California Airway Robbery

Is there something in the drinking water in California that causes their legal system to be polluted with dumb ideas?

Maybe it’s just too much chardonnay or perhaps all that ‘medical’ marijuana.  Whatever the reason, the latest legal salvo against aviation in Californiais rewriting the terms of “innocent until proven guilty.”  Suddenly, without so much as a committee hearing in Sacramento, 100LL avgas is alleged to be an illegal product to sell and those that sell it are being pursued by bounty hunters who smell millions of dollars of ‘rewards’ as part of this game.

Of course, everyone familiar with aviation knows that we are more heavily regulated than virtually any other commercial enterprise, with the federal government long ago declaring that it had the absolute authority to write the rules that affect the American air transportation system.  Just about anyone and anything that touches an airplane needs an OK from Uncle Sam.  Now a few lawyers inSan Francisco, fronted by some so-called health experts inOakland,California, think they have the power to shut down general aviation as we know it in California and, presumably, extend their unfettered authority across the other 49 states.

The particular legal action taken against avgas producers and dealers in California is based on Proposition 65, passed in 1986 to give citizens the ‘right to know’ what toxic substances were in their communities and to help protect them from chemicals that caused cancer, birth defects or other reproductive harm.  Proposition 65 also created a master ‘Prop 65 List’ of hazardous materials that require ‘Prop 65 warnings.’

Most Prop 65 litigation, in fact, deals with products (and often the retailers thereof) that are allegedly sold without the proper Prop 65 warning.  That’s why consumers across America check their GPS and wonder why “WARNING:  This product contains a chemical known to the State ofCaliforniato cause birth defects or other reproductive harm” is on almost everything in their local hardware or convenience store.

 

The Lexington Law Group, the lawyers behind the avgas ‘Notice of Violation,’ have built a prosperous legal practice in this murky legal arena, taking aim at a wide range of ordinary products that contain an ingredient from the Prop 65 list.  They tried, for example, a case against makers of smoking-cessation products, like Nicoderm and Nicorette, since these products contain small amounts of nicotine, which is on the Prop 65 list.  Even though the warnings on these products were required by the FDA, theLexingtonlawyers argued that they weren’t up to Prop 65 standards.  The bounty hunters lost the case (Dowhal v. SmithKline Beecham Consumer Healthcare, etc., et al.) at first but won a reversal on appeal.  SmithKline et al. then took the case all the way to the California Supreme Court where they were eventually successful.

I was impressed by a passage in the appeals court’s opinion describing when and if state laws like Prop 65 are pre-empted by federal authority.  While the entire opinion, especially as it involves specific congressional direction about the FDA’s authority, is complex and was subsequently reversed by the Supreme Court inSacramento, it is instructive when it defines three very different situations where federal law is pre-emptive.  The court’s opinion has, I suspect, special relevance in the case of avgas:

“The United States Supreme Court has explained that federal preemption arises in three circumstances. First, Congress can define explicitly the extent to which its enactments pre-empt state law.  Pre-emption fundamentally is a question of congressional intent, and when Congress has made its intent known through explicit statutory language, the courts’ task is easy.  Second, in the absence of explicit statutory language, state law is pre-empted where it regulates conduct in a field that Congress intended the Federal Government to occupy exclusively.  Such an intent may be inferred from a ‘scheme of federal regulation so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it,’ or where an Act of Congress ‘touch[es] a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject….’  Finally, state law is pre-empted to the extent that it actually conflicts with federal law.”

Thus, despite what appears to be clear federal pre-emptive authority in aviation, someone might argue thatCalifornia’s experience in the regulation of gasoline for automobile use justifies a claim that they should have similar control of avgas ingredients.  However, the power of individual states to regulate automobile use and ownership, along with their authority to license drivers, inspection stations, and the like, is totally absent in the field of aviation, where virtually all authority rests with the federal government.

It seems to me that, no matter how artfully they try to use the power of Prop 65 to extort avgas suppliers, the lawyers at the Lexington Group have a difficult case to win.  Hopefully, the ‘responsible parties’ named in the notice of violation, the defendants as it were, will seek summary judgment to have this case dismissed, but no one can predict how California’s courts will react.

The Dowhal v. SmithKline case is illustrative in two other important ways.  Its tortuous (forgive the pun) route through theCalifornia legal system demonstrates how tenacious lawyers can be within the strange world of Prop 65 litigation.  The payoffs are powerful incentives for plaintiffs to pursue even marginal cases.  Fortunately, the defendants in this case were equally tenacious and persistent. 

It is also interesting that the plaintiffs’ (temporary) victory at the appeals level was achieved because of the court’s consideration of utterances during the Senate floor debate on an authorization bill for the FDA. California’s Senator Barbara Boxer, a stalwart supporter of the plaintiffs bar if ever there was one, insisted thatCalifornia’s Prop 65 was not being pre-empted by congressional action authorizing new drug regulations.  Don’t be surprised if, during the debate over FAA Reauthorization in the weeks ahead, someone fromCaliforniasuddenly tries the same gambit and attempts to remove pre-emptive federal authority over avgas specifications in theGoldenState.  Hopefully, members of the General Aviation Caucus will be on the lookout for innocent-sounding colloquies that could undermine the case for FAA pre-emption.

Of course, there are many other arguments to make against this unwarranted legal action inCalifornia.  Presumably, aviation interests across the state will explain how impractical, not to mention potentially dangerous, unilateral state regulation will prove to be. 

Someone might also raise the simple question of benefit versus cost.  Taking thousands of planes out of the sky might be justified if scientific evidence proved that public health would be significantly improved, but no one has presented any real data directly connecting avgas use inCaliforniato any injury or illness.   

Someone could also point out that lead occurs naturally in our air, ground, and water, and that millions of products are legally sold every day in California containing lead or one of the myriad other substances on the Prop 65 list.  Even the Chinese herbs sold there need a Prop 65 lead warning (see http://www.drshen.com/proposition65.htm)!

Automobile gas in Californiaalso has a Prop 65 warning, in part because of the 50 million gallons of toluene in all the unleaded mogas sold in the state every year.  Apparently the legal eagles at the Lexington Group aren’t as picky about any unpopular ingredients in the transportation fuels that they want to buy.  

The simple truth is that Prop 65 has become a nightmare for thousands of California businesses.  A high-stakes California law firm now has our industry in its sights, but we’re only the latest in a long list of targets for these opportunistic extortionists (see http://www.drshen.com/Prop65-NYTimes-June11-2007.pdf for a few unbelievable examples).  One California appeals court judge, David G. Sills, calls the whole mess a system of “shakedown litigation.”  If ever there were a time for the aviation community to stand firm, this is it.

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The Truth about the Freedom from Government Competition Act

Reading and writing in the blogosphere can be confusing, in part because there’s no penalty for creating statements that are simply false.  I work hard, in my posts, to be as accurate as I can, and I generally find that our colleagues at other aviation associations make a similar effort to research the facts and be truthful.  But I also realize that there are millions of bloggers who simply blather without much concern for the accuracy of their statements.  There are others who rush to publish their spin on hot topics or react to controversial new issues without a lot of deliberation, and the result can be pretty ugly.  On issues and statements that get broad circulation on the Internet, you can easily check their validity with the help of sites like Snopes.com, but the aviation blogosphere has no one to check the facts except other bloggers, who hopefully can catch serious errors and restrain unbridled rhetoric before it gets too damaging.

Recently, a trade association that mostly represents large, air-carrier airports, ACI-NA, published on their Centerline Blog a piece by a staffer with the provocative title: Washington Doesn’t Know Best and Neither Does NATA.  Her argument is with our support of some proposed legislation called the Freedom from Government Competition Act of 2011 (H.R. 1474, introduced by Rep. John Duncan, and S. 785, introduced by Senator John Thune).  If you’d like to see what gives ACI-NA such heartburn, please read the bill and then read the ACI-NA blog.  When you’re done, you’ll have enough facts, I hope, to make up your own mind.

The ACI-NA blog begins in the first paragraph with a distortion of the language of the bill that is so brazen that they kindly put most of it in italics.  As an antidote, I ask you to read the bill and try to understand the intent of the authors rather than the hysterical imaginings of the ACI-NA blogger.  One wonders if she intentionally wants to mislead her readers in that opening paragraph.  The bill proposes that the government shall not compete with the private sector, but clearly spells out three obvious and necessary exceptions.  In her analysis, mysteriously, only two of these exceptions are identified.  The other one, rather significant in my mind, is in the case of “a good or service (that) is so inherently governmental in nature that it is in the public interest to require production or performance, respectively, by Government employees.”  Whether this includes running airports may be debatable, but I can’t imagine why ACI-NA wouldn’t tell their members about this part of the bill.

The next line of her blog manages to have three factual errors in one sentence!  This may be a record.

First, this legislation was not introduced “at the request of NATA.”  The legislative history of this bill goes back many years.  My research shows that the first “Freedom from Government Competition Act” (H.R. 716) was introduced on February 12, 1997, and that since then Rep. Duncan has offered a version in every congressional session.  I can say categorically that NATA played no part in introducing this bill, although I certainly would have been a supporter when I served in Congress.  In the years since, its justification as a brake on rampant government competition with private sector companies has only grown.  The fact is, however, that scores, if not hundreds, of trade associations and business groups support this legislation and requested that it be reintroduced regularly since 1997.  But to read the ACI-NA blog you’d think this bill was something created solely in the sinister mind of NATA to attack government-run aviation service monopolies at ACI-NA airports.

Second, it is totally inaccurate to imply that NATA represents only private FBOs.  Many NATA members are airports that manage their own FBOs rather than lease land for private companies to offer these services.  Hundreds of smaller airports are unable to attract private entrepreneurs to invest in and operate an FBO at their location, and many other airports have decided to be the exclusive provider of such services.  NATA welcomes such airports as members and works closely with them on many legislative, safety, and business management priorities.  The airport manager of one of these airports, in fact, serves as a member of the NATA Board of Directors.  Many large airports, I’m proud to say, work closely with NATA in partnership with the many FBOs that support aviation activities at their facilities.  The Port Authority of New York and New Jersey, as just one example, has been an extremely valuable NATA member and regularly joins with us to develop important programs with the enthusiastic cooperation of their private FBO tenants, all of which are also NATA members.

Third, there is no ongoing effort at NATA to prohibit airports from serving as FBOs.  There has always been, however, an ongoing effort to ensure that airports do not compete with private FBOs at the same airport.  It is hard to imagine a more troubling example of an unlevel playing field than those rare cases where an airport authority has its own FBO and leases land to a private FBO at the same time.  This is exactly the kind of competition that the Freedom from Government Competition Act should prohibit, if current law and congressional guidance doesn’t already instruct the FAA to do so.  Also, we are an unabashed advocate for the advantages that well-run private FBOs can provide – especially in terms of efficiency, safety, and customer service.  However, we also work to promote these same goals at airports without private aviation service providers.

My other complaint with the ACI-NA blog is the absurdity of its rhetoric.  How can NATA be considered an advocate of a “Washington-knows-best” or a “one-size-fits-all” philosophy?  This is precisely the opposite of what private sector entrepreneurs and their businesses bring to aviation – at any airport.  These businessmen and women know how to adapt to and meet local needs and customer concerns.  Please visit a few FBOs (I’ve been to over 1000 – how many has our hapless ACI-NA blogger seen?) and you’ll see how different they all are.  It’s their job, after all, to use those differences to compete effectively and expand their businesses.  Government telling them that they can’t compete is their worst nightmare.  

But perhaps the worst error in the ACI-NA diatribe is their claim that we seek a hostile takeover of public airports.  We feel no hostility toward airports.  They are respected as the landlords for most of our members, and we share a common mission to support and expand the nation’s air transportation system.  I serve, in fact, as a commissioner at an airport.  Yet, no one can deny that many public entities have to answer difficult questions from skeptical voters and taxpayers who worry about bloated public sector budgets, extravagant spending, unfunded retirement programs, and troubling deficits.  NATA and most of our sister trade associations stand up to defend airports from these attacks when they are based on erroneous public perceptions and political or technical ignorance.

If anyone can be accused of advocating the takeover of anything, it’s in those few cases where airports seem eager to force private FBOs off the field.  Usually they learn that running an FBO is a lot different from running an airport, and not the pot of gold that some naïve bureaucrat imagined.  Fortunately, most airport managers make intelligent decisions about how best to provide local FBO services and rarely abuse that authority.  They know that just because a public entity runs the airport, it doesn’t mean that the government should be the service provider of choice for activities at the airport that private entities can often deliver more effectively. 

Some countries, many years ago, went down that route, and there are many examples where governments owned virtually every part of aviation – the airlines, fuel distributors, and even aircraft manufacturers.  But throughout our country’s history, the private sector has had a very central role in almost all sectors of air transportation.  Americans understand that our public and private sectors have different duties, strengths, and political realities, and that, above all, the government must not misuse its power in American aviation.  Although the scope of the legislation proposed by Senator Thune and Congressman Duncan is quite broad, we agree with its purpose particularly as it applies to aviation.  Simply put, even as our government grows bigger and more pervasive in many parts of our lives, the important role of private companies at airports as providers of fuel and other services should be respected and supported as an integral part of our national aviation policy.

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