A breathtaking week for the airline industry as Skybus Airlines ceases its operations, the week's third carrier -- alongside Aloha and ATA -- to fold in the face of soaring fuel costs and a tanking U.S. economy.
A fourth carrier, Champion Air, will shut down as of May 31.
The latest shuttering has created turmoil at airports dealing with stranded passengers. It's also left cities like Columbus, Ohio, holding the bag after investing millions in airport improvements following the fledgling carrier's arrival just last year.
A pall hung over Pease International Airport Saturday morning as stranded passengers, airport workers and vendors grappled with the news that Skybus Airlines had suddenly stopped flying.
Some passengers frantically booked flights on other airlines, making their way to Logan and Manchester. Others rented cars to drive home or to their destinations. Local workers said they were shocked by the news and concerned about the future. Thirty one employees of Port City Air, the local company that handled all Skybus’s customer service at Pease, had to wonder if they’d keep their jobs.
“We were all shocked to hear the news of the Skybus’ sudden closing last night,” Port City Air president Bob Jesurum wrote in a memo to his employees. “As recently as this past week, we had been reassured by senior officials at Skybus that everything was ‘fine and that they were looking at Portsmouth for future growth as a focus city.’ ”
In educational interest, article(s) quoted from extensively.
From the Associated Press:
WXII-Channel 12 [Greensboro-Winston-Salem] also has a full report up on YouTube, but has disabled embedding. View it here. Paul Makishima for the Boston Globe:
Dearly departed Skybus launched just last year and made a splash by offering 10 seats, each for $10, on every flight. They saved money by charging for EVERYTHING: water, checked bags, pillows. They also shaved costs by flying into places that don't get used much--or at all...
One of those off-the-beaten-path cities was Gary, Ind., with Skybus service (to Greensboro, N.C.) launched only a few short weeks ago. The Chicago Tribune's Jon Hilkevitch recently gave an inside look at the unique service the carrier offered its passengers via words and video:
Although I was not lucky enough to snag a $10 airfare that Skybus offers on 10 seats aboard every flight, my round-trip ticket was $142, including taxes and fees. On the day I booked the airfare on the Internet, the same non-stop itinerary to Greensboro from O'Hare International Airport was $756.48 on United Airlines and $1,118.97 on US Airways. ...
It took little time for the 17 passengers on my flight to go through screening conducted by the Transportation Security Administration and board the 154-seat Airbus A319 aircraft that Skybus operates on all its routes. ...
Shortly after takeoff, flight attendant Inna Djaniants was working the cabin's captive audience over the intercom system, asking for a show of hands on how many people paid less than $200, less than $100 or just $10 for their tickets. She explained that Skybus keeps fares low by hawking food, beverages and other items on each flight. Passengers are prohibited from bringing their own drinks or food onboard.
Passenger Kimberly Nelson, 31, a supervisor for a financial company in Charlotte, said: "I always wanted to go to Chicago over St. Patrick's Day. Thirty-two bucks round-trip, including taxes, you can't beat it. Skybus reminds me of Southwest Airlines when I flew it 15 years ago. It has the same kind of energy."
Unfortunately, things have changed quite rapidly for Skybus passengers in the new economy. From WBBH-Channel 2 [Florida]:
Confused and frustrated customers flooded into the Charlotte County Airport Saturday. The abrupt Skybus bankruptcy left many people stranded, wondering how this could happen and how they will get home.
Normally when you walk into the Skybus terminal at the Charlotte County Airport, either you go to the kiosks or to the help desk. But Saturday, the first thing people saw was a set of notices from Skybus letting people know they will not be offering any more flights. Right now, all flights are grounded and people like Ashley Fowlkes are trying to figure out how to get their loved ones home.
"Anything they can, I guess. They may have to rent a car and drive home. They may have to buy another late notice plane ticket which could be like $800," said Fowlkes.
Brandon Swartzlander and his family also had their dream vacation turn into a nightmare. He thought Skybus' $10 tickets seemed like a pretty good deal - until they found out they had no way to get home.
"It was a good deal," said Swartzlander. "And then you get blindsided at midnight last night. There's no way home." Perhaps what is worse is how he and his family found out. "I was flipping through the channels and I caught a glimpse of a Skybus plane and I heard them say, 'We'll tell you how it affected stranded passengers' and I thought to myself, that's odd," said Swartzlander.
But moments later it all made sense. He realized he'd lost the money he'd already paid for the tickets back to Ohio. Plus, he had to start searching and scouring the internet for an alternative way home - not an easy task for a family of eight. "Just for the eight of us to fly Southwest, it's going to cost us an additional $1,500," said Swartzlander's wife Jeanne.
Passengers aren't the only ones affected. From AP:
Skybus Airlines' $57 million in government incentives weren't enough to sustain its discount flights that ended today. The Columbus-based company plans to file for bankruptcy protection in the coming days.
The company's collapse will leave Port Columbus International Airport with fewer flights and about 350 Ohio residents without jobs. It will also leave the state and Columbus with a heavy investment that yielded just 10 months of air service. Port Columbus invested millions in terminal improvements tailored to the Columbus-based airline. It now has five open gates, a ticket counter and some soon-to-be-emptied offices.
The decision, made after a board meeting yesterday, left hundreds of Skybus ticketholders stranded and its 450 employees out of work. The company has lost millions of dollars and plans to file for Chapter 11 bankruptcy protection on Monday. Its chief executive, Bill Diffenderffer, resigned nearly two weeks ago. Skybus workers were stunned by the news yesterday. About a dozen employees gathered at the Skybus ticket counter, some taking pictures. Some were upset and crying, asking each other what they plan to do. Workers from other airlines came up to wish them well and tell them they will be missed. ...
Mike Boyd of the Colorado-based Boyd Group also has been a critic of the Skybus model, but he expressed surprise at the swiftness of the airline's demise.
"They had a dumb model. The original plan never had a chance, at $50-a-barrel oil or $100-a-barrel oil," he said. "But I really thought someone could come in and turn it around. The pressures on airlines today are very different than they have been in the past. They're shutting down suddenly now to preserve whatever assets they have for the creditors." ...
Skybus got off to a strong start last summer, bringing tens of thousands more passengers through Port Columbus. In turn, the airport added parking spaces and raked in millions in additional parking revenue as it reached an all-time record passenger count of more than 7.7 million for 2007.
But Skybus hit a rough patch during the winter. With a very short window between flights and a crush of flights all leaving within an hour of each other first thing in the morning, dealing with ice and snow took its toll on on-time performance. The airline had to cancel more than a dozen flights Christmas Day and the day after, when two of its seven planes went out of commission as a result of mechanical problems.
Poor performance coupled with a lack of customer service took its toll. Passenger numbers dropped in the slow months of January and February, as the airline struggled to build up its new base in Greensboro, N.C. Route cuts last month were quickly followed by the replacement of the CEO by former Chief Financial Officer Hodge, who was charged with improving performance and stemming losses.
But it was apparently too little, too late to turn the airline around.
The airline made 74 daily flight to 15 U.S. cities. It has about 350 employees in Columbus and 100 at a second hub at Piedmont Triad International Airport. On Mar. 19, the airline held interviews for flight attendant positions at PTI. Nearly two weeks ago, the carrier named Mike Hodge as the company's new chief executive officer. Hodge replaced Bill Diffenderffer, and had previously served as chief financial officer for Skybus.
Increasing customer service problems were cited, one being its interesting form of passenger communication as noted by Tom Barlow at WalletPop:
Intially, Skybus was best known for its policy of reserving at least ten spots on each flight to sell for $10 each. Later, it gained notoriety as the airline that could not be contacted by telephone, refusing to deal with customer service problems except by e-mail. When it ran into maintenance problems with a couple of jets on the same day recently and had to cancel a number of flights, its customer non-service brought a great deal of negative press.
As for Skybus labor, they also had email communication to contend with -- of a more worrying kind -- as Marla Matzer Rose of the Columbus Dispatch pointed out last month. The pilots were also quickly moving to become Teamsters:
The pilots for Skybus Airlines are attempting to unionize, with more than 80 percent favoring a vote by next month to join the Teamsters. ... "If the Teamsters are certified, the way this airline is run is going to change," said aviation consultant Michael Boyd of Colorado-based Boyd Group, who has been a critic of the Skybus business model. "The next group will be the flight attendants. I think the employees are saying, 'We just can't work at these rates.' "
Skybus, which was notified late last week of the action, said in a statement that the company is surprised to be facing a "union organizing effort when the airline industry is dealing with a slowing economy and oil prices" that are nearly $108 a barrel.
"We believe that a majority of our pilots will understand that we are better served focusing on building a start-up airline in a very competitive environment than we are going down a path that for other airlines has led to contentious labor-management issues," the statement said.
The starting salary for a Skybus captain is $65,000, while a less-senior first officer makes $30,000 to start. Pilots say those amounts are as much as 50 percent below industry standards, and Skybus pilots say the airline is not offering second-year pay increases. Still, Skybus has been able to attract experienced pilots with stock options and the opportunity to be home every night, because all planes return to either Columbus or the second base of Greensboro, N.C. ...
Victoria Gray, a spokeswoman for the airline division of the Teamsters, confirmed that the union has collected more than the required number of cards from Skybus pilots to proceed. The Teamsters asks for 65 percent of eligible employees to "submit cards" indicating they want to join the union; the organization then notifies the National Mediation Board of the vote and asks the airline for its employee list. The mediation board requires a simple majority for passage of a vote to join a union. Gray said that by this timeline, she would expect Skybus pilots to join the Teamsters Local 747 out of Houston by April.
Skybus has about 140 pilots, nearly 120 of whom are eligible to vote. In a phone interview yesterday, a Skybus pilot speaking on condition of anonymity said he was one of the more than 100 pilots who submitted cards favoring union membership.
The pilot said he still thinks the basic Skybus model is a sound one, and that the company can succeed. But he said pilots have become angered by having their work rules changed via e-mail with no direct communication and by being told that pay raises would come only in the form of profit sharing after the airline has a full year of profitability. ...
Extreme penny-pinching also has gotten on the pilots' nerves. In the pilots' lounge, "They took away the bottled water recently because they said it cost too much," the pilot said. "They got us these cheap plastic containers to fill up and take on the plane, but they leaked. They admitted they made a mistake and gave us bottled water again. But to save the delivery cost, they have pilots on their off-hours go to Costco and pick up cases of water and deliver them to the airport."
This week will go down as one of the worst ever for US airlines, as no fewer than four carriers -- Aloha Airlines, Champion Air, ATA Airlines, and now Skybus -- folded up shop this week, or announced imminent plans to do so. A fifth airline, Sun Country Airlines, announced it will place nearly 30 percent of its pilots on furlough over the summer, though company officials says it plans to rehire them in late October.
United Airlines mechanics overwhelmingly chose the Teamsters Union as their collective bargaining representative by a vote of 4,113-2,631, the National Mediation Board announced Monday. The 9,300 active and furloughed mechanics who comprise the bargaining unit will become Teamsters as soon as the NMB vote is certified. The board is expected to certify the vote by close of business Tuesday.
The Teamsters victory culminates a two-year effort by United mechanics and related personnel to gain strong representation. A key issue was the failure of their former bargaining representative, the Aircraft Mechanics Fraternal Association, to hold United to its contractual obligation to limit outsourcing.
“We’re thrilled that United mechanics voted to join our union by such a large margin,” said Teamsters General President Jim Hoffa. “United mechanics will now have the Teamsters strength behind them in their fight against outsourcing to foreign repair stations.”
In educational interest, article(s) quoted from extensively.
Continuing:
“United has cut more maintenance positions than any other U.S. airline,” Hoffa said, noting that United outsourced 45 percent of its aircraft maintenance expenses in 2006, three times the amount it outsourced in 1998. Hoffa also said the Teamsters would support the mechanics in their efforts to curb excessive executive compensation and restore their own retirement security.
“We’ll stand shoulder to shoulder with United mechanics as they try to rein in management greed and hold them accountable for foisting their pension obligations on U.S. taxpayers,” Hoffa said. “After two years of hard work, we now have the opportunity to work with the strength of a true union behind us to secure our futures,” said Rich Petrovsky, chairman of the Committee for Change, which spearheaded the organizing campaign.
The United victory is the latest in a series of organizing triumphs for the Teamsters. In the past three months, the Teamsters organized nearly 10,000 workers at UPS Freight since Jan. 16. ...There are 40,000 Teamsters airline employees, including more than 9,000 mechanics and related at 11 airlines.
The outsourcing issue as it pertains to aircraft maintenance reared its head earlier in the month as United was forced to ground seven of its Boeing 747 aircraft. Hoffa released a statement at the time, saying:
Teamsters General President Jim Hoffa said he is disturbed by reports that six United Airlines Boeing 747s were grounded on Thursday because of errors by a foreign repair station. The jumbo jets were grounded after it was discovered that improper pitot static testers—equipment used to test gauges that provide air data, such as the altimeter—were used by the facility to which United outsources its heavy maintenance in Busan, S. Korea.
“This just shows how risky it is to send airplanes offshore to be repaired,” said Teamsters General President Jim Hoffa. “Overseas repair stations simply don’t meet the same standards as U.S. repair stations. The FAA should no longer allow U.S. airlines to send their repairs overseas.”
Supervisors and inspectors who sign off on maintenance work at foreign repair stations are not required to hold either a Federal Aviation Administration repairman certificate or an Airframe and/or Powerplant certificate, nor are the mechanics working on the aircraft at these facilities. According to the FAA’s database, the South Korea repair station has only one certificated mechanic out of 38 employees.
The Transportation Department’s inspector general has reported that the Federal Aviation Administration’s oversight of foreign repair stations is uneven. Only 103 FAA inspectors (including management staff) are responsible for inspecting 692 foreign repair stations. Limited staff and travel budgets, and passport and visa controls, make unannounced inspections of these facilities virtually impossible.
“This incident is especially alarming, given that United has cut more maintenance positions than any other U.S. airline,” Hoffa said. ... United CEO Glenn Tilton proposed in August 2007 the sale of UAL’s maintenance division, including its heavy maintenance base in San Francisco, which employs more than 4,000 mechanics.
Even more bad news arrived for United today, as Andy Pasztor reports for the Wall Street Journal:
United Airlines has found wiring improperly connected to the main landing gear of three of its Airbus A320s, which company and government officials believe caused a pair of nonfatal runway accidents. ...
U.S. accident investigators and airline officials are focusing on test procedures developed years ago by the plane's manufacturer, the Airbus unit of European Aeronautic Defence & Space Co., to determine whether the landing gear is wired correctly. They are trying to determine whether the crossed wiring was missed because of mistakes by mechanics or because the test procedures are inadequate.
The debate also has raised questions about whether using outside mechanics contributed to United's troubles. United said it is cooperating with safety regulators. An Airbus spokesman said the company has no plans to change the test procedures.
The issue heated up after a United A320 skidded off the runway while landing at the Jackson Hole, Wyoming, airport in late February, smashing into a snow bank but causing no injuries. United had a similar landing accident four months earlier, with two minor injuries, when one of its A320s briefly veered off a runway at Chicago's O'Hare International Airport and destroyed some runway lights. The third miswired plane wasn't involved in an accident, company officials said.
The February accident sparked industry interest once investigators for the National Transportation Safety Board said that improperly connected wiring most likely caused the jetliner's antiskid system to malfunction, although no formal finding has been made. The plane slid off the runway the same month maintenance had been performed on its landing gear by outside mechanics, according to company officials. The airline has since done multiple inspections of its A320 landing-gear wiring, using methods that are more extensive than those developed previously by Airbus, according to people familiar with the details.
The incidents have prompted an industry debate over how the miswiring took place and whether tests to verify the wiring are sufficient.
[D]uring 2005 and 2006 the carrier exceeded by nearly $480 million its agreement to keep such work in-house. The UAL Corp. subsidiary's contract with the Aircraft Mechanics Fraternal Association contains a clause that establishes a cap on how much work UAL can outsource. The union said it had retained an auditor to review whether United has been complying with its limit.
A review by the auditor found that United during 2005 exceeded the agreed-to limit by nearly $200 million, the union contended, and in 2006 the airline spent $280 million more than the contract allowed on outsourced maintenance.
"UAL's continued insistence on ignoring their excessive outsourcing damages the already strained relationship with UAL maintenance employees," AMFA Local 9 President Joseph Prisco said in a statement.Prisco, whose union represents more than half of United's mechanics, said that since 2001 the number of "mechanics and related staff" at United has dropped to 5,600 from 15,000.
The first plane has landed under the "Open Skies" agreement [pdf] between the United States and Europe, heralding what many hope will be a new era in air travel. The Continental Airways flight from Newark to Heathrow touched down under rainy London skies at dawn on Sunday morning. Jeff Smisek, president of Continental, was onboard the flight. He told CNN that Heathrow landing rights had cost the airline $200 million -- but that it had been "money well invested."
"The business traveler wants to come to Heathrow," Smisek told CNN's Richard Quest, who was also on the flight. "We have been locked out of Heathrow for decades and it is the most important business market in the world. We are delighted to be here." Quest said other airlines were already landing at Heathrow, including a US Airways flight from Philadelphia and Northwest Airlines from Minneapolis.
The new deal means that passengers on both sides of the Atlantic will now have more options when it comes to nonstop flights. ..."National boundaries will no longer determined where planes can fly," Quest said before today's flight.
In educational interest, article(s) quoted from extensively.
From AP:
As briefly mentioned in the close of the AP report, in January British Airways announced the creation of a spin-off airline -- called OpenSkies -- that would capitalize on the new aviation agreement. Via AFP:
British Airways on Wednesday unveiled plans for a new airline with daily flights from New York to Europe, taking advantage of last year's EU-US "open skies" deal to free up the key transatlantic market. The subsidiary airline, to be called OpenSkies, will be launched in June and initially use one Boeing 757 passenger aircraft that will operate from New York to either Brussels or Paris Charles de Gaulle airports, BA said in a statement.
The single-aisle plane will cater for up to 82 passengers shared between business, premium economy and economy cabins. The Boeing 757 is normally configured for some 200 seats. BA did not reveal likely ticket prices nor whether OpenSkies would be based on Maxjet, the low-fare business class airline which declared bankruptcy on Christmas Day.
"This is an exciting new venture for us and we're confident that it will be a great success as we build on the strength of British Airways' brand in the US and Europe," BA chief executive Willie Walsh said in a statement. "By naming the airline OpenSkies, we're celebrating the first major step in 60 years towards a liberalised US/EU aviation market which means we can fly between any US and EU destination," he added.
The problem with this exciting announcement, as far as it concerns the employees of British Airways, is that the growth would be outsourced (at a cheaper cost, of course). The issues, as explained by BA's pilot's union, BALPA:
British Airways is launching a new airline called OpenSkies. A very exciting new venture, one that will exploit the upside of ‘deregulation’ (routes being opened to non-national carriers) by flying out of European hubs across to the United States.
It should be a good news story, but it is not turning out that way. British Airways don’t want these British Airways planes to be flown by British Airways Pilots. They want to outsource these jobs.
We understand that ‘Openskies’ can only be successful if the employees initially have salaries and contracts commensurate with a ‘start up’ airline. That is not our issue.
Our issue is the fact that British Airways won’t allow the two pilot groups to be as one. This leads us to believe that the BA management has a different objective. That objective is to divide the pilot workforce and push any further new jobs generated by ‘deregulation’ through this ‘cheaper’ pilot cost base. This has happened in other airlines around the world.
This dispute is about job security. It is about protecting the jobs we train so hard for, the jobs that provide for our families.
BALPA has been working to resolve this issue for almost a year but it seems that British Airways is determined to proceed regardless. The only way in which we can secure the respect of BA’s management – a respect that is in very short supply, despite the job we perform, is to stand firm against such a direct attack. We sincerely hope that this does not lead to strike action, and we will exhaust every alternative means of influence before taking this course of action.
In February, British Airways pilots voted to strike over OpenSkies, and BA management quickly agreed to enter into mediation over the issue. Earlier this month 1,000 picketed at London Heathrow. Via Bloomberg:
About 1,000 pilots and their family members marched toward British Airways' offices near London Heathrow airport, in a protest that lasted two and a half hours, spokesman Keith Bill said today in a telephone interview. Police closed the A4 road to allow access to the pilots.
The British Air Line Pilots Association, or Balpa, has voted to strike in protest of BA's OpenSkies unit, which will fly between Paris and New York starting in June. British Airways wants to recruit pilots for the new business from outside its current pool, and the union says BA will use the subsidiary to force changes to pay and working conditions for all of the airline's flight crews.
"We want the pilots flying to be BA pilots," Jim McAuslan, Balpa's general secretary, said today in a telephone interview as the protest came to an end. "It's about job security, careers and respect."
British Airways Chief Executive Officer Willie Walsh has said the new carrier needs a lower cost base if it's to compete with larger network airlines. OpenSkies is part of the airline's response to a European Union-U.S. agreement that will liberalize trans-Atlantic air travel starting March 31. The airline has given assurances that OpenSkies will not affect the salaries and terms of mainline pilots. OpenSkies will use a single Boeing Co. 757 plane to operate the first Paris-New York service, growing to six planes by the end of 2009.
"British Airways wants to preserve their flexibility -- it wants business passengers for OpenSkies, they're going to be hard won and they need to do it economically," said John Strickland, director of London-based aviation specialist JLS Consulting Ltd. "They seem to have done their best to calm the fears of Balpa, but the union has been influenced by what they've seen in the States."
Indeed, British Airways' OneWorld Alliance partner pilots at American Airlines had an ominous warning of the consequences that may flow from the loss of protective SCOPE clause provisions for BA's pilots if they lose this fight:
Again from Bloomberg:
British Airways is trying to use EU competition law to prevent a strike, according to Balpa. The law gives EU nationals the right to establish businesses in another of the bloc's countries.
Balpa represents about 3,000 of the airline's 3,200 pilots. The Air Line Pilots Association, said it will support Balpa's demonstration this weekend by picketing at U.S. airports including New York's John F. Kennedy International, Washington Dulles, Los Angeles International, San Francisco International and Seattle Tacoma International.
American Airlines Inc. pilots were picketing at the British Airways terminal at John F. Kennedy airport at the same time as the protest march in London took place, McAuslan said.
Dallas Morning News' Terry Maxon offered some insight into a related issue concerning American Airlines and British Airways, both of which have been trying for the past decade to tighten up their relationship through lobbying for antitrust immunity for their OneWorld Alliance codeshare agreement:
As long as American and British Airways lack antitrust immunity for their alliance, I don't think we'll see American offering Executive Club miles on its U.S.-London flights or British Airways offering AAdvantage miles on its U.S.-London flights.
Their application for antitrust immunity would have allowed the two carriers to pool revenues across the North Atlantic, so that they'd get a share of the airfares regardless of which airline carried the passenger. But without immunity, they are competitors on the U.S.-London flights and have no reason to give potential customers an incentive to fly the other carrier.
Having said that, let me point out that the alliance may have a better chance with Open Skies in effect. The big drawback to allowing American and British Airways to cooperate is that BA dominated Heathrow Airport, American was a big player and most other carriers were shut out of the U.S.-Heathrow market.
Antitrust regulators in a 2002 decision said BA and AA could have limited antitrust immunity only if they would agree to surrender enough slots to let competitors operate 16 roundtrip flights a day into Heathrow. Thanks, but no thanks, the two airlines said at the time.
Maxon concludes that BA and AA may eventually revisit an application for antitrust immunity in light of today's opening up of the market to additional competitors. But what will the Open Skies agreement itself mean to passengers? Will it improve service, reduce prices and increase choice for the average consumer? No, says AP:
[A]irlines already struggling with sky-high fuel prices and an economic slowdown see open skies' relaxed route restrictions primarily as a way to attract more of the high-end business and affluent leisure travelers they covet and see as necessary to their financial survival.
British Airways, for instance, is launching a new trans-Atlantic airline to take advantage of the agreement -- aptly named OpenSkies -- but will offer only 30 economy-class seats on each 82-seat plane, with the rest evenly split between first and business class. "There is a move afoot ... to use smaller (airplanes) flown nonstop to push leisure customers by the wayside ... except for those willing to pay far higher prices," said Robert Mann, an independent airline consultant in Port Washington, New York.
As oil has pushed past $100 a barrel, propelling jet fuel prices to record levels, many carriers have cut domestic capacity and moved planes to international routes, where ticket prices -- and profits -- are higher. The open skies agreement appears likely to hasten the shift. While the number of overall flights may increase and some cities will get new service and routes, the vast majority of the new flights will be on the same well-trafficked routes. ...
Open skies may offer travelers more in the way of convenience than savings, but it is likely to help the airlines' bottom lines. Carriers say open skies' biggest benefit is giving them the freedom to quickly make changes to their flight schedules. Many airlines will also launch new code-sharing agreements -- which let them book passengers on one another's planes.
"Liberalization of the trans-Atlantic market allows us to pursue growth opportunities where and when they make commercial sense with less government interference," said John Tague, United's chief revenue officer.
Reporters Christopher Conkey and Andy Pasztor over at the Wall Street Journal set the scene as we take the pulse of today's FAA and the airline industry it's charged with overseeing:
As it addresses concerns over airline inspections, the Federal Aviation Administration faces pressure from Congress and industry to change how it ensures the safety of air travel and how it overhauls the aging air-traffic-control system.
The agency was already dealing with a protracted labor battle, resistance to its congestion-relief initiatives and Democratic opposition to President Bush's nominee to head the FAA. Then, revelations surfaced this month that an FAA supervisor had let Southwest Airlines Co. keep flying older jets even though they had missed required inspections.
The FAA and airlines immediately afterward suggested the issue was a rare oversight. The FAA inspectors' union and the House Transportation and Infrastructure Committee said a wider problem existed.
The agency changed course this week, initiating industry-wide maintenance audits at every airline.
In addition to Southwest, the article goes on to say that US Airways has since underperformed during an FAA spot check of its maintenance records. And, in related news, United announced the grounding of several of its 747s due to maintenance issues yesterday. Soaring fuel costs. Higher ticket prices. Cuts in service. Maintenance issues.
The difficulties mount for the airline industry -- and the FAA.
In educational interest, article(s) quoted from extensively.
First, a look back at the scandal over improper FAA maintenance inspections at Southwest. Associated Press:
...[T]he FAA has fined Southwest $10.2 million for safety violations that include failing to conduct mandatory inspections and continuing to fly planes that the airline knew hadn't been inspected for fuselage cracks and fatigue. (After Southwest finally inspected the planes it discovered cracks in some of them, yet continued to fly them.) Investigators at the Federal Aviation Administration have also been accused by internal whistleblowers of being too cozy with the airline and failing to provide proper oversight of Southwest.
After the FAA announced its fine, Southwest grounded more than three dozen planes last week to conduct additional inspections -- these involved skin around the plane's windows that Boeing had suggested be inspected in a bulletin released back in 2002. ...
According to the FAA's findings, the airline had flown nearly four dozen jets on more than 59,000 flights before it realized that it hadn't conducted required safety inspections on the planes. Then, even after the airline became aware that it hadn't conducted inspections, it continued to fly 38 Boeing jets on a total of 1,451 flights without checking the planes.
When the airline finally got around to inspecting the planes, it found cracks in half a dozen of them -- including one crack that was nearly four inches long. ...[A] similar fracture caused an Aloha Airlines jet to rip apart in 1988.
United Airlines pulled aside seven Boeing 747s for reinspection on Thursday after discovering onboard technology that steers the giant aircraft clear of other planes in the air hadn't been maintained according to the Chicago-based airline's standards. ...
United acted after FAA inspectors discovered the Korean firm that handles heavy maintenance on United's jumbo jets had used improperly inspected equipment to test the systems that help the jets avoid midair collisions. The systems are critical given the recent push by regulators to reduce the amount of space between aircraft to help reduce overcrowding in the skies.
The test equipment at a facility operated by Korean Air in Busan, Korea, is used to calibrate the United 747s' altitude and air data computers to the precise level needed to let the planes fly within 1,000 feet vertically of other aircraft, instead of the 2,000-foot vertical separation that used to be the industry standard. ...
Airline maintenance is drawing fresh scrutiny from Congress and organized labor as carriers increasingly shift work to outside vendors, including maintenance shops based overseas. Critics contend that the quality of work is slipping because overtaxed FAA inspectors can't monitor work scattered across many repair stations as effectively as maintenance done in-house by airline workers.
The two unions vying to represent United's mechanics in a special election were quick to criticize the airline and federal inspectors for Wednesday's actions. "The issue is the FAA does not have the ability to monitor these facilities," said Joseph Prisco, president of Aircraft Mechanics Fraternal Association Local 9 in San Francisco.
Attention now is focusing on the agency's process for conducting inspections, the Air Transportation Oversight System, which relies on data submitted by the airlines. The system calls for the agency's roughly 3,000 inspectors to spend more time analyzing industry-provided data than conducting physical inspections. The inspectors' union, passenger groups and some lawmakers say that has essentially abdicated a regulatory role to the industry.
They take information from the carriers, put them into formulas and do very focused inspections," said Linda Goodrich, a vice president of the union that represents most FAA inspectors. "The carrier knows when we're showing up and exactly what we're going after."
Dave Michaels and Terry Maxon of the Dallas Morning News offer a revealing look at the genesis of the Air Transport Oversight System. In the interest of education, I'll quote a healthy passage, but recommend your reading the entire detail-heavy piece:
The FAA began moving away from its confrontational, cop-on-the-beat approach to policing the airlines after the 1996 ValuJet crash in Florida that killed 110 people. Even then, the FAA took blame for going easy on airlines in order to promote commercial aviation.
The FAA was faulted for poor oversight of ValuJet, an airline that grew quickly and farmed out almost all of its maintenance. The agency admitted that it didn't have enough inspectors to monitor the airline. It later prohibited the shipment of oxygen generators in cargo holds, where a fire started that brought down the plane.
"In a system as large as ours, you can't inspect every individual part or flight or airplane," said Andrew Steinberg, a former U.S. assistant secretary of transportation who left the agency this year. "Clearly you need some spot-checking, like there are traffic cops on the highways," he said. "But the basic framework for safety is to make sure the airlines' programs are in place to ensure safety."
The post-ValuJet era introduced big changes.
FAA inspectors now file fewer "enforcements," as investigations bearing sanctions are known. Instead, they're supposed to focus on the most serious risks – ones that cause accidents – by analyzing data provided by the airlines. The airlines are encouraged to self-report regulatory violations. By doing so, the companies can avoid fines. But they also learn lessons that prevent accidents, FAA officials said.
Peggy Gilligan, the FAA's deputy associate administrator for aviation safety, said the approach strikes a balance between enforcement and information sharing, because "we have learned over the years that you can't enforce perfect safety." The equilibrium allows the FAA to "learn lessons before we see risk manifest itself as incidents or accidents," Ms. Gilligan said this week.
Even critics say that new approach, known as the Air Transportation Oversight System, makes sense. With ValuJet, a start-up airline that grew quickly, "it was impossible to get a handle on the enormous amount of stuff going on," Ms. Goodrich said. "We had no way to prioritize the risk."
[UPDATE Mar 26, 2008] Another airline, this time American, finds itself grounding its MD-80's for inspections today:
American Airlines canceled approximately 200 flights this morning to reinspect wiring on its fleet of MD-80 aircraft. Inspections take a few hours, and the company is rotating its MD-80 aircraft back into service as soon as they are cleared.
The need for the unscheduled inspections emerged during a Federal Aviation Administration audit of the Fort Worth, Texas-based airline's maintenance records. ... The FAA said today this was not a safety issue and explained that the inspection concerns a wiring bundle in the airplanes' wheel well. The airline is required to secure every one inch, and the aircraft in question may have had the bundles secured every 1 1/4 or 1 1/2 inches.
The FAA is taking extra precautions on the heels of accusations that Southwest Airlines missed, or failed to document, airplane inspections. That prompted the FAA to announce it was proposing a $10.2 million fine against the carrier -- the largest fine ever imposed against a passenger airline.
Last week, the FAA announced a more far-reaching audit to ensure all airlines — more than 100 of them — are complying with maintenance requirements. ... American Airlines said "many inspections have already been completed and the aircraft are currently in service," according to its statement. "We are in the process of completing the inspections on the remaining airplanes and will return them to service on a rolling basis throughout the day."
The company operates 300 MD-80 aircraft, all of which are part of this reinspection. Congress plans to further examine airline inspection issues next month.
For an industry with razor-thin margins, rising fuel costs can and do further pressurize current airline-labor negotiations.
Labor took large wage and benefit cuts during the state-of-emergency days following 9/11; many labor groups undoubtedly feel they deserve richer contracts this time around to make up for those difficult, but necessary, "pull together for the team" losses.
But air travelers are feeling their own pump pinch.
While airline employees can expect to see a more forceful pushback from management as the cost of fuel soars, customers will have to make peace with more expensive ticket prices and fewer air service options.
Northwest Airlines hiked its fares as much as $50 on Sunday, matching last week's hikes at five other U.S. carriers, Bloomberg News reports.
The cause, of course, is high jet fuel prices.
United Airlines hiked its fares Friday, followed by American, Delta, US Airways and Continental. Now, Northwest joins the crowd.
Sadly, the hike is just more pressure on Americans to vacation near home this summer. With high-season airfares between the U.S. and Europe running about $1,200 to $1,500 round trip this year, the dollar in free-fall against world currencies and gasoline headed for $4 a gallon, the backyard is looking better all the time.
And I'm the travel writer.
Bleak news. Witty messenger.
Priceless...
[UPDATE Mar 21, 2008]: More bad news on the upcoming travel season from Adrian Schofield at Aviation Week:
The latest FAA Aerospace Forecast proves once again how quickly fortunes can change in the U.S. airline industry. A year ago, the FAA's prognosticators foresaw healthy growth in airline demand in Fiscal 2008. Now they believe domestic traffic growth will sputter almost to a standstill as weakening market conditions hit home.
"We're seeing a definite pause in growth," FAA Acting Administrator Robert Sturgell says. "We didn't see [the pause] in last year's forecast, . . . but this year it's pretty clear - we're talking flat growth in operations and slow growth in passengers." Sturgell does stress, however, that while the near term looks bleaker, the longer-term outlook remains "vibrant."
The headline numbers from the FAA's annual forecast - which extends to 2025 - support Sturgell's comments. Overall traffic on U.S. carriers is expected to rise by 2.9% in Fiscal 2008, down markedly from earlier projections of a 4.2% increase. Domestic traffic will be hurt particularly badly: Last year's forecast predicted growth of 3.4% for 2008, but the new forecast sees growth slowing to just 0.6%.
Sturgell points to a "series of cascading events" as the cause of the forecast downgrade. Chief among these are oil prices continuing their climb past $100 a barrel, coupled with the U.S. economy's apparent slide into recession.
The FAA is hardly alone in revising its projections. The International Air Transport Assn. in December slashed its global airline profit forecast due to the expected economic slowdown, and another downward revision is anticipated in the next few months. U.S. airlines - even traditional growth engines like Southwest Airlines - have also begun scaling back their capacity plans for this year.
Ah, the days of breezy $200 fares to Europe. AA ad from '87:
Ilona Meagher is an independent Illinois-based online writer, new media developer and former 15-year employee of a major U.S. airline.
Currently completing a Journalism degree at Northern Illinois University, she's begun her next project: Airline 911: The Business and Psychology of Aviation, Labor, and Travel in Times of Change.
The information presented on this web site is based on news reports, government documents, medical studies and personal interviews, reflections and analysis.
Psychological explorations do NOT represent therapeutic prescription or recommendation.
Comments at Airline 911 do not necessarily represent the editor's views. Illegal or inappropriate material will be removed when brought to our attention. The existence of such does not reflect an endorsement by Airline 911.
For an industry with razor-thin margins, rising fuel costs can and do further pressurize current airline-labor negotiations.
