Sometimes it’s difficult not to weigh-in on aviation issues, even when taking time away.
This week, intrepid WSJ aviation reporter, Scott McCartney, reported on methods commercial air carriers can use to mitigate passenger angst over tarmac delays. V1 posted several replys to reader responses in the on-line comments accompanying the article. Readers of this blog are invited to review and comment also.
Illustration: Jason Schneider, WSJ.
Until the end of November, I will be focused on completing my pending qualification for Captain with the world’s largest air carrier. I’ll be looking forward to picking up my blogger’s pen again in early December. I’m very sure there will be no shortage of topics to discuss regarding the design of economically efficient air travel for the 21st century.
Safe flying all.
Today, Wall Street Journal reporters Andy Pasztor and Mike Esterl revealed that Southwest Airlines is (once again) under investigation by the FAA for maintenance practice abnormalities. The inference which seems to be made apparent by the report is that Southwest has been using an inexpensive replacement part on the wing flaps of its 737 aircraft which was never approved for such use. The report does not point to any evidence of knowing culpability on Southwest’s part.
It is not the mission of V1 to routinely weigh-in on aviation safety-related matters. This blog is about re-creating aviation infrastructure as a free-market utility. However, the latest Southwest incident provides a base for how the cost pressures of modern air carrier operations result in undesirable consequences. Indeed, it seems to be made clear again and again that ‘cheap’ airfares are economically unsustainable in the long run, and that the costs of providing such fares are merely subsidized in many and various ways. This is addressed in the first part of the entry below. Further along, this post addresses the core point; that there is one cost which is borne by all air carriers, which remains completely outside the bounds of the normal conversation surrounding the domestic provision of air transportation.
The life cycle of the typical low-cost carrier.
It seems that countless ’low-cost’ operators have appeared and disappeared since deregulation in 1978. In many cases, each of their life cycles has traced a common path. Start-up capital is invested by various stakeholders. The new low-cost air carrier focuses on a particular set of city-pairs where it believes it can provide value above cost. A race against time ensues in which the new enterprise attempts to build market share before running out of start-up capital and peaking its debt leverage. The race is lost, often due to an unforeseen circumstance which is financially insurmountable. The enterprise fails. For a time, however, lower fares in the market in which the new carrier operated did persevere. But they were not economically sustainable. They were merely subsidized by burning through the capital and debt load of the start-up enterprise. With the unsustainable competition gone, prices returned to a sustainable market equilibrium.
Of course, not all low-cost carriers fit the life cycle suggested above. A noteworthy contender is Southwest. Books and MBA case studies have been written about how this small intra-state Texas carrier managed to grow into a major intra-continental carrier. Although its achievements are commendable, even Southwest will admit that its business model isn’t the black ink generator that some believe. Without researching precisely, it’s fair to say that over the past decade or so, there have been perhaps ten fiscal quarters when the company returned profits only due to its aggressive fuel hedging program, or ‘energy speculation’, as some accounts have referred to it. In other words, Southwest’s core business model lost money, but investors were presented a profit due to an effective energy trading enterprise. Some will say; ‘So what? A profit is a profit.’ The point is that, even in the case of Southwest Airlines, the low fare model requires subsidies. Some are clearly obvious. Others are discovered after-the-fact through FAA inspections.
This is the THIRD incident involving maintenance or structural abnormalities with Southwest aircraft in the past 18-months or so. Recall how it was revealed in March, 2008, that the airline willingly and knowingly flew thousands of passengers on dozens of aircraft requiring completion of inspections for fuselage cracks. And in July, 2009, a Southwest 737 developed a ‘football size’ hole in the fuselage, causing a depressurization event while at cruise altitude. It seems there is something systemic going on here. But while it is easy to fault one carrier, this is not in the best interest of aviation safety. V1 proposes there is a much larger issue to be addressed here. – Cost is everything. And low fares don’t cover the costs of a sustainable national air transportation system.
This leads to the second and main point of this post.
It is necessary to consider that, for the past too-many years, too-many carriers have done just about everything imaginable to control costs. For many intercontinental carriers with the high fixed-cost structure which that business model necessitates, cost shedding has necessitated a trip (or two) through bankruptcy court. This has resulted in creditors and employees respectively subsidizing the air travel industry with their investments and their pensions. Yet, through all this, there has been one cost which has remained wholly unaddressed and removed from the conversation; the unsustainable and ineffective tax burden of federally provided and operated aviation infrastructure.
V1 challenges readers to consider what could be made possible if the feds were limited to only regulating this infrastructure for safety and operational integrity, like they do just about every other ubiquitous national utility, such as electricity, telecommunications, internet communications, and RF spectrum. (Not even nuclear power plants are built and operated by the federal government, like aviation infrastructure is.) The cost savings could be highly significant for an industry which serves as a key enabler of U.S. GDP growth. And perhaps, air carriers wouldn’t find it pervasively necessary to engage in financial shortcuts in order to maintain a ‘low-cost’ business model.
V1 continues to challenge national leadership to begin the honest conversation which will set the United States on a course for re-creating aviation infrastructure as an enabler of a sustainable 21st Century economy.
Copyright © 2009 by Scott R. Davies. All Rights Reserved.
In a monumental example of hypocrisy, our congressional leaders managed to step into a self-made dung heap of controversy today when the Wall Street Journal reported on congressional plans to purchase $550 million worth of replacement business jets for its VIP fleet operated by the Department of Defense.
Of course this issue clearly demonstrates a lawmaking body with too little regard for how taxpayer funds are used. And that’s just for starters. An additional issue, and the one that rises most prominently to the surface of popular awareness, is the sublime timing of appropriating over a half a billion bucks to purchase shiny new G5’s and executive 737’s a mere six months after congressional leaders made political hay at the expense of several Detroit auto execs for using such transportation.
Still, V1 suggests that congress is being hypocritical here in more ways than how this issue relates to taxpayer funds or the Detroit auto execs. It is the U.S. congress which ensures the continued mediocrity of our national air transportation system by continuing to saddle the U.S. with a federally supplied and operated air traffic control system. Then, in a twist of self-made irony, it is these same folks who insist that commercial air transportation can’t accommodate their congressional travel needs. (See Minnesota Congressman Jim Oberstar’s work as Chairman of the House Transportation and Infrastructure Committee.)
Congress needs only to look in the mirror to see the cause of this perpetually self-generating waste of economic potential. There are sound economic reasons why America does not indulge in a federally provided telephone system, electrical power system, RF spectrum, or internet system. Until air traffic control is recognized as an equally critical free-market utility for generating economic prosperity within the U.S. economy, our national air travel system will not reach its potential as a critical enabler of GDP expansion.
Copyright © 2009 by Scott R. Davies. All Rights Reserved.
… It is past time for another bold national committment. An ‘Apollo 21′ project for domestic transportation infrastructure development will provide an efficient economic base for securing the growth of the U.S. economy into the 21st century.
“That goal will serve to organize and measure the best of our energies and skills.” – JFK
NOTE – On this 40th anniversary of the first lunar landing, one of the greatest acheivements demonstrating the tremendous power of free world ingenuity and productivity, V1 is re-posting its open letter to Transportation Secretary Ray LaHood. This letter was originally sent to Mr. LaHood on February 9, when the U.S. Congress was cobbling together the foundations of the stimulus spending bill. The letter was intended to draw attention to the tremendous opportunity which exists for stimulus money to be directed into growth-oriented 21st century transportation projects, instead of toward one-time maintenance of 20th century infrastructure. The re-creation of aviation infrastructure as a collection of ubiquitous utilities and tradable commodities is a key component of the proposal.
Mr. Secretary,
I am requesting your support for investigating a national transportation concept which I believe has great potential for expanding the American economy into the 21st century.
Our nation needs a bold national challenge which will alter the course of current events. When President John Kennedy issued his famous challenge to our nation in 1961, ‘(to land) a man on the moon’ before 1970, the U.S. economy was in a year- long recession. More importantly, the primary reason for embarking on that course was to establish national technological superiority over our most threatening ideological adversary at the time; the former Soviet Union. At the time of President Kennedy’s challenge, the technology for ensuring the successful achievement of that goal did not even exist.
Things are not so very different now. Instead of facing a near-term threat from a sovereign super power, our nation faces pervasive threats from a global borderless ideology, a mounting national debt held by foreign governments, and a scarcity of resources in a shrinking global economic environment. While it has been established that technological superiority is, at times, limited against these threats, our disproportionate consumption of global resources has emerged as perhaps our newest and most exploitable vulnerability.
V1 believes America has been presented with a compelling opportunity to begin mitigating the unfavorable dynamics of these issues through the commitment to a single Apollo-like program. This program would employ already emerging technology in a new paradigm of economic structure to vastly reduce our consumption of global resources. Engaging in this endeavor now would provide near-term stimulus to our nation’s economy, as well as an enduring transportation infrastructure for efficiently expanding our economy into the 21st century.
Download the entire letter here.
Followers of V1 Tweets, and a large portion of air travelers in general, are well aware of the chronic travel delays which originate at JFK International Airport. This week it was announced by USA Today, and other media outlets, that the Port Authority of New York and New Jersey will be re-constructing a ‘main runway’ at JFK between March 1 and June 30, 2010. (The author is unfamiliar with any runway at JFK which isn’t a ’main runway’.) In light of this, it’s quite fair to assert that travelers can anticipate many challenges to JFK operations. For a peek at how this may affect the number of arrivals and departures per hour, readers are invited to visit the FAA’s ATC System Command Center website, which illustrates standard departure and arrival rates, depending on prevailing weather and wind conditions.
V1 posted the following comments in the USA Today forum linked to the announcement:
It’s important to note this passage:
“William DeCota, who is the director of aviation for the Port Authority of New York and New Jersey, says airlines have been asked to revise their schedules. The Port Authority operates the airport, which ranks near the top nationwide in flight delays.”
This is the same Mr. DeCota who was quite vocal in his opposition eleven months ago to the Bush administration’s attempts to reduce New York aviation delays by capping infrastructure consumption at sustainable levels and proceeding with free market mechanisms. Now, Mr. DeCota is calling on the airlines to voluntarily reduce their consumption of New York aviation infrastructure capacity. This is laughable. Best of luck to all air travelers who will be transiting JFK next spring.
It’s also important to note that Mr. DeCota is not alone on his side of this fight. New York Senator Chuck Schumer, as well as the Air Transport Association (ATA), also fought to maintain the dysfunctional status quo of aviation resource allocation in New York, resulting in continued and extremely wasteful delays at JFK. In the end, the air traveler pays the price for these decisions through forfeited (i.e. confiscated) time and productivity.
As delays at JFK continue to be sustained, consumers of air transportation may wish to consider the wisdom of allowing individuals such as Mr. DeCota, Senator Schumer, and James May, president of the ATA, to prevent real progress in moving forward with free market accountability in the supply of aviation infrastructure. To date, their solution has been merely to press the DOT to hurry up with the development of ‘NextGen’, the Next Generation Air Transportation System. It seems their hope is simply to increase aviation infrastructure capacity as soon as possible. But ‘NextGen’ will only increase capacity by 2 to 3 times, and may take until 2025 to reach that level. Even then, their solution will be tantamount to merely turning a 2 lane road into a 4 to 6 lane road. Sooner, rather than later, that new capacity will be used up by the increased consumption it will invite. Demand for air travel is already projected to grow very quickly over the next 20 years.
The more sustainable solution rests with the dynamics of the free market; where demand can be naturally governed by price, and the revenue generated by specific demand pays for increased capacity. This would also require the federal government to relinquish its monopolistic hold on ATC operation and hand it over to free enterprise. In other words, ATC needs to deregulate, just like the airlines were forced to do 31 years ago.
Yesterday, in Does Obama Want to Own the Airlines? WSJ columnist Holman Jenkins discussed the recent antitrust efforts by the Obama administration to disrupt the use of cost reducing alliances by the airlines. V1 responded to Mr. Jenkins’ column with the following post in the WSJ forum.
Mr. Jenkins demonstrates the simple hypocrisy of the Obama administration. On the one hand, the administration is prepared to charge into the free market melee of the air transportation industry barking hindering cries of ‘Antitrust!’. On the other hand, the administration has abandoned the fight, initiated by the previous administration, for allowing market-based allocation of the federal monopoly in aviation infrastructure. In short, the Obama administration wants ultimate competition in the seat and freight capacity sector, but ultimate centralized control in the aviation infrastructure sector (ATC).
If the administration desires to truly serve the people by ensuring an air transportation market which can produce low cost air fares, it might ponder the inescapable notion that the federal government has never been the low-cost provider of anything. So why should it continue to burden the air carrier industry, and travelers, with the high cost of a federal monopoly in the supply of air traffic control? It requires no great vision to see that it is way past time to treat ATC as just another free-market resource which is consumed in the fabrication of air transportation.
NOTE - On Good Friday, April 10, a Delta Air Lines MD-88 returning to Atlanta from the Caribbean island of Caicos diverted to Columbia, S.C., due to thunderstorms over Atlanta’s Hartsfield-Jackson Int’l Airport. The protracted delay which unfolded while on the ground at Columbia has been noted on several ‘passengers rights’ blogs over the past several weeks as well as in an April 28 Middle Seat article by Wall Street Journal reporter Scott McCartney. In the post below, V1 comments on taking a larger view of this incident beyond the expediant demand for ‘passenger rights’ and the seeming lack of concern by isolated air carriers.
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In the big-sky endeavor of solving air travel delays, the focus on a particular airline’s passenger handling capabilities during irregular operations seems shortsighted and counterproductive.
To begin, V1 would like to offer a consideration of some basic economics.
It’s largely true that most carriers do not maintain a personnel force which is robust enough for handling the real-time contingencies required for nullifying events such as those which occurred onboard Delta flight 510. If they did, this level of readiness would be reflected in the cost of a ticket. In turn, this would cause potential passengers to look elsewhere for air travel. So in effect, passengers actually turn away from paying up front for the higher level of service which they demand, after the fact, when normal operations begin to deteriorate. In a sense, they are looking for an entitlement.
This line of reasoning, based on the reality of economics, most often leads to the counter argument that air carriers should be forced to just ‘do the right thing’ once normal operations go awry. And it seems that this is what a proposed Passenger Bill of Rights would be intended to coerce through federal intervention. But it must be understood that there is a real cost to ‘doing the right thing’. Having extra ground crew personnel standing by to service stranded aircraft, renting or owning extra terminal gates at which to park unexpected aircraft, having extra flight crew members standing by at the airport to cover operational contingencies, carrying extra food and fuel on board aircraft; all of these things cost real money – the real money passengers don’t pay when they focus their fare search on the lowest fare. So when the air carrier is left holding the bill for the passengers’ after-the-fact demands, this coerced entitlement will have to be paid for somehow. Expect higher fares.
Now let’s get to the core problem here.
For the most part, the carrier, their employees, and their passengers are simply the collective victims of a dysfunctional ATC system. The meltdown which is illustrated by DL510 points to three systemic consequences of government operated ATC.
- No single person at the federal level is ever held accountable for breakdowns such as the series of breakdowns which are documented by this incident.
- The centralized control of aviation infrastructure is incapable of handling situations such as this in a time-efficient manner.
- All of the best stand-alone practices and all of the hard working individuals at the FAA can not fix the problem, because unfortunately, federal bureaucracy IS the problem.
Take a tour of the FAA command center outside Washington D.C. and you will be shown the state of the art facility which ‘maintains’ the operational integrity of the national air space. How did that work out for the folks onboard DL510? Ask the FAA about the Attila program which manages timed arrivals into Atlanta’s Hartsfield-Jackson Int’l and you’ll be told how efficient it is. You’ll even be shown the numbers to prove it. Obviously, this is only true in optimal weather conditions.
And so it seems apparent that no centralized federal program, or federal facility, can act effectively on the sheer enormity of fractured incidents which occur during irregular aviation operations; and neither can they execute the minutia of each single contingency. For that to occur systemically, V1 proposes that ATC must be de-centralized. In fact, it must be privatized. This would provide accountability AND a market incentive to act efficiently and effectively during irregular operations.
NOTE: The following recent conversation in the Economics forum in LinkedIn exceeded response limits. Accordingly, it has been moved to The V1 Blog to accomodate its length.
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4/23/09
Scott Davies asked:
How do you view the idea of airspace as a commoditized resource?
In free markets, the supply of a commodity and the demand for its consumption both determine a corresponding market equillibrium price. This price serves to balance the forces of supply and demand. If a market price is too low, over-consumption and scarcity generally result. The more scare a commodity, the higher the price the market will bear for its consumption, which in turn induces free-market providers to deliver greater quantity.
The commodity of fabricated safe-separation airspace is generally over-consumed to the point of scarcity in many major metropolitan terminal areas. This continues to occur despite the slack state of the U.S. economy and the airline industry. The price which is exchanged for this centrally-supplied commodity is in the form taxation. Since this fails to govern demand, the extra price which consumers pay takes the form of their personal time; as they suffer the delays which are caused by over-consumption.
If safe-separation airspace were defined as a fabricated commodity, and its price were to be determined by free market suppply and demand, then over-consumption would be self-regulating. And very possibly, the monetary cost of safe-separation airspace consumption would be LESS than the federal taxes which are paid today, since private utilities would be natually incentivized to be low-cost providers – and the federal government is not.
4/25/09
EP replied:
Ok, how does someone become a safe-separation airspace provider? There is only so much airspace around airports. You can’t just define airspace to be a fabricated commodity and have industrious free market capitalists fabricate more of it. The taxes are not high enough to force people out of the airports, so there are as many flights as possible scheduled (actually, I’ve heard airlines were cutting flights) and delays back up the whole system. Someone could provide new airports to take the overflow, but locations are important for time, you don’t want an airport 50 miles from where you are going. Or people could provide alternate forms of travel, people might choose the train if the time cost and uncertainty of delays at the airport bothered them. But the current cost in time is not high enough to make people look hard at those options. Saying free markets will naturally incentivize people to fix the problem and may make the price even lower is an economist’s dream, especially when the price already seems to be too low to limit demand, and the commodity seems to have a seriously fixed supply in a given area.
4/26/09
Scott Davies responded:
Thank very much your for your reply.
Without a doubt, a discussion on this topic can become a can of worms in a very short span of time. A standard set of terms and distinctions for discussing commoditized aviation infrastructure and ensuring an efficient and productive conversation makes it a challenge. But in the interest of growing that conversation, I’d like to exchange some thoughts in response.
EP: Ok, how does someone become a safe-separation airspace provider?
SD: Although the privatized provision of aviation navigational infrastructure exists in Canada and Europe, there is currently no economic structure or public policy in place which accommodates this proposition in the U.S. However, Velocity 1 LLC proposes that the ATC operation of the FAA must be transferred out of the government realm if the U.S. hopes to keep pace with the projected growth of air travel in the 21st century. In this regard, safe-separation airspace (possibly in the form of 4-dimensional trajectories from takeoff to landing) must become a ubiquitous utility and a tradable commodity, which would be provided by privatized aviation utilities; just like the generation of electrical power and the RF spectrum.
EP: There is only so much airspace around airports. You can’t just define airspace to be a fabricated commodity and have industrious free market capitalists fabricate more of it.
SD: Here, I think it is important to make the distinction between the natural volume of atmospheric airspace and the subset quantity which is transiently consumed by aircraft for the utility of safe-separation. I agree that the volume of natural atmospheric airspace cannot be impacted. However, the volume and capacity of safe-separation airspace can be impacted by technology and an efficient cost structure. The federal government is a slow adapter of emerging technology and it is almost never the low cost provider of anything. I believe it’s apparent that private industry can easily do a better job in both criteria.
EP: The taxes are not high enough to force people out of the airports, so there are as many flights as possible scheduled (actually, I’ve heard airlines were cutting flights) and delays back up the whole system.
SD: Agreed. In fact, V1’s research proposal, The V1 Concept of Air Transportation Management, proposes that federal taxation for the consumption of aviation infrastructure is a poor governor of infrastructure demand and an inefficient enabler of infrastructure capacity. (i.e. too much demand and too little supply.) This leads to the over-consumption of centralized infrastructure resources by the free-market provision of air carrier seat and freight capacity. The resulting delays rob the U.S. economy of vital productivity.
EP: Someone could provide new airports to take the overflow, but locations are important for time, you don’t want an airport 50 miles from where you are going. Or people could provide alternate forms of travel, people might choose the train if the time cost and uncertainty of delays at the airport bothered them.
SD: I’d like to take the liberty of making some clarifying distinctions here. The research proposal which was previously mentioned defines air transportation throughput as the product of three independent and interdependent resources:
- air carrier seat and freight capacity
- safe-separation airspace capacity
- runway environment capacity
One reason for defining these three resources as independent from each other is that they possess distinctive economic behavioral characteristics. That is, each has a set of supply and demand curves which respond to a different group of influences than the other two.
Specific to the geographic placement of airports, land space which is to be potentially consumed for runway operations has different economic influences in favor of or against its use than, say, land space which is to be consumed for a local amusement park. And as you indicate, the distance between an airport and its intended metropolitan service area affects its perceived value by air transportation consumers. Nullifying the ‘time cost’ of this distance leads to a discussion of intermodal forms of high-speed transportation. And as with the three resources which provide air transportation throughput, each of these modes of transportation would also be composed of independent and interdependent resources comprising its capacity.
EP: But the current cost in time is not high enough to make people look hard at those options.
SD: I have to differ with you in the extreme on this one. Weather you are referring to the time cost of outlier airports or the time cost of delays, either boils down to unproductive time spent by the consumer. Research which was recently completed by the Partnership for New York City (co-chaired by Lloyd Blankfein and Rupert Murdoch) uncovered a wealth of data describing the high cost of this time. And so indeed, important people, or at least powerful people, are looking hard at the numbers in an effort to find alternative options. Here are a few take-aways from the report:
Grounded. The High Cost of Air Traffic Congestion.
The Partnership for New York City
February, 2009
Flight delays caused by air traffic congestion at the three (NYC) airports were responsible for more than $2.6 billion in losses to the regional economy in 2008. If no action is taken, losses attributable to congestion will total a staggering $79 billion over the eighteen-year span from 2008 to 2025.
Breaking the numbers from above into three segments; defined as the traveling public, the airline industry, and shipping companies:
- The total value of lost time to the traveling public was $1.669 billion in 2008 and is projected to total over $50 billion from 2008-2025.
- The airline industry incurred significant losses in fuel and staffing costs due to congestion, estimated at $834 million in 2008, and a total of $25 billion from 2008-2025.
- Shipping companies that utilize both passenger and freight aircraft also suffer losses from excessive delays. These losses were about $136 million in 2008, and would be about $4 billion between 2008 and 2025.
The report also identifies costs to the regional economy as a whole that result from productivity losses that are directly attributable to air traffic congestion. These losses include 5,600 full-time jobs that will not be created, over $16 billion in lost output and $5.5 billion in lost labor income over the next 18 years.
Through 2025, the (NYC) region will incur an aggregate loss of $23 billion in output, earnings and environmental costs simply as a result of flight delays at three airports. This does not include the significant economic consequences of delays within the rest of the national system that are attributable to problems stemming from congestion at JFK, LaGuardia and Newark Liberty.
EP: Saying free markets will naturally incentivize people to fix the problem and may make the price even lower is an economist’s dream, especially when the price already seems to be too low to limit demand, and the commodity seems to have a seriously fixed supply in a given area.
SD: I think I’ve already addressed most of this part. But I’d like to make two more points to clarify:
- The price for the consumption of federal aviation resources is too low because it is not held accountable to free-market dynamics. In fact, it’s possible that taxation assists in this over-consumption because it precipitates an entitlement to centralized resources. (Economists refer to this as ‘The Tragedy of the Commons’.) And that is why it is over-consumed by the free-market provision of seat and freight capacity.
- The supply of safe-separation airspace is not fixed. It can expand both outwardly to the limits of natural atmospheric airspace and inwardly through increasingly smaller sub-division. But since the natural atmosphere extends to over 400 miles above sea level, its commercial consumption is limited to the current state of engine and airfoil technology, which is about 8 miles above sea level. So, within that 8-mile altitude band, the safe separation of aircraft could conceivably become very close; something akin to bumper-to-bumper traffic. Not that it will ever get that close, but it is only a matter of technology and keeping the mathematical risk factor to within ICAO standards.
V1’s purpose in asking the original question is to grow an expansive conversation about this topic. Accordingly, V1 welcomes any further responses.
Thank you and best regards.
Scott Davies
Earlier this week, V1 was in New York City to attend the MIT Enterprise Forum on Investing in Aerospace Entrepreneurship. At one point during the evening, I asked the panel members if perhaps the sole reliance on technology for fitting greater quantities of aircraft into the finite resource of airspace would bump up against physical constraints which would still be less than the market demand for air transportation. As a parallel alternative to the sole focus on technology, I proposed that perhaps there should also be some level of honest research into implementing free-market dynamics to control airspace consumption.
The answers which were offered in response ran the full spectrum of possibilities. A senior executive with an aerospace capital investment firm indicated that many things are possible, stating that there may be “many winners for applications toward the smart use of airspace. Innovation is critical.” In the audience, a senior executive with a commercial air carrier stated that perhaps there would not be any further serious debate in Washington about the commoditization of airspace until “certain senior legislators retire”. Back to the panel, and at the far end of possibilities, a senior executive with a defense and aerospace contractor flatly stated that the free-market provision and consumption of safe-separation airspace “is not going to happen in our lifetime”.
V1’s position remains as previously stated in our independent research proposal, The V1 Concept of Air Transportation Management, various blog entries, and letters to Washington bureaucrats –
The only constant is change. And in an increasingly flat and wired world, which places ever-greater demands on its finite resources, this change occurs at an increasingly rapid rate. A few points to consider, than, the summary point:
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The ATA reports that the air transportation industry alone accounts for over 5% of U.S. GDP, but this number does not represent the industry’s economic potential as a multiplier of productivity.
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Last summer, the GAO reported that in 2007 the U.S. air transportation industry wasted $41 billion in economic productivity and caused 320 million passenger delay hours. (See GAO-08-934T.) That figure equates to 36,500 person-years.
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As a critical enabler of U.S. economic development in a shrinking world, this level of leaked potential is unsustainable.
In light of this waste and the increasing demand which will continue to be placed on global resources, it is incumbent upon us to ask; will the reliance on NextGen technology to simply ‘increase’ aviation efficiency be enough? Or should we be more focused on putting in place an aviation infrastructure which will provide optimal efficiency? That is what the free-market provision of aviation infrastructure can do; and as time and consumption march on, it will become ever more important to do so.
