American air transport system getting close to meltdown

probe

Overbooked planes - cancelled flights - record baggage claims

A failure of leadership led to a summer from hell

Source: BusinessWeek Europe (cover story) 10.9.2007

Fear & Loathing At The Airport

Long lines, late flights, near collisions—everyone is unhappy with the state of the U.S. air travel system. Unfortunately, no one, especially not the FAA, seems able to do anything about it

When Marion C. Blakey took over at the Federal Aviation Administration in 2002, she was determined to fix an air travel system battered by terrorism, antiquated technology, and the ever-turbulent finances of the airline industry. Five years later, as she prepares to step down on Sept. 13, it's clear she failed. Almost everything about flying is worse than when she arrived. Greater are the risks, the passenger headaches, and the costs in lost productivity. Almost everyone has a horror story about missed connections, lost baggage, and wasted hours on the tarmac.. More than 909,000 flights were late through June of this year, twice the level of 2002.


And if you think the Summer from Hell is over, fasten your seat belt. The FAA predicts 1 billion passengers a year will take to the skies by 2015, a 36% increase from the current level. FAA officials say this year's Labor Day crunch could become an everyday flying fiasco within eight years, costing America's economy $22 billion annually.

There was a time not long ago when the head of the FAA would be the last person you'd expect to express public doubts about potential catastrophe. Today, Blakey is unabashed about the rising risk of flying. There have been 339 incidents so far this year where planes got too close to each other or to objects on the ground, up from 297 in the same period last year. On Aug. 16 a passenger jet on the runway at Los Angeles International Airport came within just 37 feet of another airliner—the eighth such incident this year at LAX alone. "While it is the safest form of transportation," Blakey says, "deep in your heart you still know that [when you're] flying at 30,000 feet with no safety net you're counting on the system—a system that is at the breaking point."

So why is it that we can put a man on the moon but can't fly him from Atlanta to Charlotte, N.C., without at least a two-hour delay? While Blakey bears some responsibility for the abysmal state of air travel, she follows a long line of FAA chiefs who failed to put much of a dent in the agency's to-do list. It's not a lack of money. Last year the FAA did not spend all of the money it was allocated. Nor is it a lack of knowhow. Existing technology could easily meet the demands created by the exploding number of fliers. Nor, for that matter, is it security concerns. Instead, it's a fundamental organizational failure: Nobody is in charge. The various players in the system, including big airlines, small aircraft owners, labor unions, politicians, airplane manufacturers, and executives with their corporate jets, are locked in permanent warfare as they fight to protect their own interests. And the FAA, a weak agency that needs congressional approval for how it raises and spends money, seems incapable of breaking the gridlock. "The FAA as currently structured is impossible to run efficiently," says Langhorne M. Bond, administrator of the agency from 1977 to 1981.

When no one's in charge, no one can be held accountable. Small aircraft operators blame the big airlines for scheduling too many flights out of the major airports. The big carriers say the smaller operators aren't paying their share of what it takes to maintain the air traffic control system. The controllers complain they are understaffed and underpaid, and that their facilities need repair. The FAA says it needs new revenue sources to invest in new technologies. Congress says the FAA needs to manage the money it has better. And passengers blame everybody in sight, but aren't willing to spend a dime more on tickets.

Often when Blakey meets with interest groups—the airline pilots' lobby, say, or an aircraft manufacturer—they give her a metallic airplane pin. Not the cheap kind friendly stewardesses once handed children, but a classier-looking piece of jewelry. Rather than risk offending anyone by seeming to take sides, she wears more than one at a time. As she made the rounds in Washington last week, Blakey sported no fewer than three passenger jets and a pilotless drone on her crowded lapel. Each, fittingly enough, was flying in a different direction. "It's a holding pattern," she says, only half-joking. In a couple of weeks she is going to hand out her own pins when she becomes the new chief of the Aerospace Industries Assn., yet another of the big lobbying groups with a stake in FAA decision-making.

To see how these groups paralyze the FAA, consider the fate of some far-reaching reform proposals that would help solve the congestion problem. One of the big reasons flying is so miserable is because airlines schedule more flights at desirable times than airports can handle—much as they sell seats to more passengers than their planes can hold. On a typical Tuesday morning in August at New York's John F. Kennedy International, the airport has enough capacity for around 44 departures between 8 and 9 a.m. But airlines schedule 57, guaranteeing delays, even under perfect conditions.

The carriers are well aware that their commitments to travelers are often impossible to keep, but they make them anyway because they like to give passengers what they want. And everyone prefers to fly in the morning or early evening so they can get in a day of work or play on the day they fly. "We don't schedule flights at one o'clock in the morning because people don't want to travel at that time," says Peter McDonald, chief operating officer of UAL Corp (UAUA ). (UAUA )

But the consequence of giving customers an unrealistically high number of flight options is that a weather delay at a key airport such as New York's LaGuardia, Chicago's O'Hare International, or Dallas-Fort Worth International can have a cascading effect on the entire system. "You can't physically get these airplanes out," says Barrett Byrnes, a controller at JFK, who says there was a 4 1/2 -mile long taxi line at the airport on the night of Aug. 22. "It just backs up into the next hour and gets worse and worse until you have a dysfunctional parking lot."

One victim of this type of congestion is Richard P. Coorsh, vice-president for communications at the Federation of American Hospitals. His 8 p.m. flight from LaGuardia back home to Washington in early August stood on the tarmac for nearly four hours before departure. "My next trip to New York will be on Amtrak," says Coorsh, who used to be a regular on the air shuttle between the two cities.

In the short term, the most effective way to solve the congestion problem would be for Congress to authorize auctioning off the right to fly into overburdened airports—a move that would allow the FAA to limit the number of takeoffs. The rights could expire every few years, opening up the market to competitors, while the money raised could pay for airport improvements. Underbidders could schedule more flights at smaller, less crowded airports or at off hours. "If we auctioned off the space at the 10 worst airports, it would go a long way towards fixing the national problem," says George Donohue, a former FAA official who now teaches engineering at George Mason University.

But the airline industry, which is just now getting back on its feet after a horrible few years of losses, layoffs, bankruptcies, and restructurings, opposes the idea. Auctions would raise costs for the carriers, who have fought their way back to solvency by economizing on customer service. It is now considered unlikely that Congress, which took away the federal bureaucratic authority over routes and pricing when it deregulated the airline industry in 1978, will consider the auction proposal this year. "If you can't deal with scheduling," observes former Transportation Dept. inspector general Ken Mead, "you don't have as much authority as people think."

The best way to relieve congestion over the long-term—and to improve safety—is to rebuild the nation's air traffic control infrastructure. Pretty much everybody agrees that today's system would be more at home in the Smithsonian Institution than running the world's largest and busiest air traffic network. Indeed, the system is based on decades-old technology and relies on radar beacons and squawking flight controllers. Pilots fly FAA-determined routes that are based largely on where bonfires and electric beacons were built in the early days of aviation, the better to guide the air mail pilots of the 1920s as they crisscrossed the country, navigating by sight.

Digitization? The entire network runs on software known as Jovial, so old there are only six programmers in the country who know how to write it. And incredible as it seems, family minivans with NavStar have more sophisticated location guidance than some aircraft.

The FAA has been trying to shift to a satellite-based system, as well as better computer and automated communications networks, since the 1980s. But this rational, not particularly controversial goal has been difficult to achieve because the agency has to please so many constituencies. Ask Charles Leader, a former McKinsey & Co. consultant and aircraft industry executive who heads the Joint Planning & Development Office, a consortium of seven government offices, which is charged with designing what the FAA calls its Next Generation Air Transportation System (NextGen). The new system would allow planes to fly straighter paths, closer together, even in bad weather, freeing up space in the air and reducing work for the controllers. It's expected to cost upward of $44 billion—half paid by the government for facilities, half by airplane owners for gear in the planes. The catch: The current completion date is now estimated to be 2025. As a result, Leader talks not in years but in "epochs." The parties involved include the FAA, NASA, and the Transportation, Defense, Homeland Security, and Commerce Depts., along with the White House. "It's very challenging," Leader says. "Not because anyone is against it. There are just so many agencies."

These agencies are battling over many key details. The new system would require a common source for weather information, for example. The FAA is interested in national weather for the skies, of course. The U.S. Air Force has a similar interest but is thinking globally. The U.S. Navy is interested in oceanic weather. The National Weather Service must take into consideration all modes of transportation and people on the ground. The FAA wants to share the information the system generates, but for the military it becomes a strategic advantage, and so the armed services don't want some data made public. "We're not talking about moon shots and breakthrough science," Leader says. But "different users want different functions,"

The FAA can point to some tentative progress. By the end of August it was expected to announce a $1 billion contract to build one of the first stages of this new air traffic system, a series of ground facilities. Until the FAA can achieve consensus on other parts of the system, however, carriers are largely holding back on investing up to $600,000 per aircraft. It is not hard to understand their reluctance to pay up for the new technology. After losing more than $43 billion between 2002 and 2005, the U.S. airline industry swung to a profit only last year, earning $3 billion.

Paying for NextGen has proven so incendiary and difficult to manage, in fact, that it is likely to become one of the hottest topics when Congress returns in September. Much of the FAA's money now comes from the 7.5% tax on airline tickets. When airfares fell in the wake of the September 11 traffic slump, so did the system's revenues. Cyclical swings in the airline industry have often buffeted agency finances, and rather than subject the agency to major turns in the marketplace, Blakey wanted a stable source of income for her long-term vision.

The FAA administrator still views her solution—a formula that would charge every aircraft operator a variety of user fees—as a rational proposition. A small plane, after all, can require as much time from a controller as a jumbo jet; costs to users should be aligned with individual costs of using the service. And small craft account for 16% of the system's operating cost, while only paying 3%, so it seemed only fair. Without user fees, she argues, the agency simply can't afford the new air traffic system. "This is not a free utility," she says.

Airlines cheered. After all, they consider their 97% burden unfair. But private aircraft owners revolted. The Aircraft Owners & Pilots Assn. (AOPA) barnstormed newspaper offices and radio stations to drum up opposition to the FAA plan. The National Business Aviation Assn., meanwhile, enlisted a wide range of players who depend on smaller planes, from rural airport authorities and air ambulance charities to hobbyists and corn growers. The average citizen, after all, might sympathize more with a farmer than a corporate flier. The result was an Alliance for Aviation Across America, which soon had enough money for its own ads. They popped up on CNN's screens at gates in airports all summer, the better to catch passengers at their most distressed. The ads accused the big airlines of being "hungry for another billion-dollar handout," and warned that user fees "would ground general aviation and cut off rural America." From Kansas to Kentucky, letters and e-mail messages flooded offices on Capitol Hill.

Congress heard the message. Blakey now wishes she'd at least called the user fees by some other name. "I really underestimated how difficult it would be to change the financial system of this agency," she tells BusinessWeek.

Time is running out to resolve this dogfight. By law, the current method of taxing passenger tickets, which must be renewed every four years, expires on Sept. 30. If Congress fails to renew it, agree to user fees, or arrive at a compromise method of steering money to the FAA, the agency will be faced with a shortfall. Some members of Congress say they are unwilling to give Blakey the user fees she wants, especially when it isn't clear to them what the FAA intends to deliver in return. "The Administration says we need to implement the next generation system, but they haven't laid it out," says Representative Jerry F. Costello (D-Ill.), chairman of the House aviation subcommittee. "They haven't even designed it. The FAA should show us exactly what we're going to get for our money."

Of course, it's easier to criticize mistakes than to agree to remedies. In response to major service meltdowns such as the ones that afflicted American Airlines (AMR ) last December and JetBlue Airways (JBLU ) over Valentine's Day weekend, Congress has debated a passenger bill of rights that would, for example, require airlines to let passengers exit the plane if they're likely to be stuck for more than three hours on the ground. But the airlines are opposed to it, and the proposal is unlikely to go anywhere.

While congressional representatives like to win points with constituents by bashing the air travel system, they sometimes block the FAA's reform efforts because of old-fashioned local-interest politics. Resistance can be so intense that Blakey—who has come to the conclusion that the FAA needs to close more than one-third of its 500 air traffic facilities around the country—now views a special commission, like the one that decided which military bases to shutter, as the only way to overcome parochial politics and achieve efficiencies.

Similar pressures complicate efforts to build new runways, another problem that contributes to congestion. Only one major U.S. airport, Denver International, has been built in the last 20 years. Existing airports do indeed sprout new runways, with help from some $3 billion in airport improvement funds doled out by the FAA each year. But many experts say there aren't enough, and the pace of construction isn't even keeping pace with the acceleration in traffic. "It's all about the runways," says Phil Boyer, president of the AOPA. "We've got plenty of sky." Building new runways typically involves a contentious battle between community groups over noise and air quality concerns—yet another example of government's paralysis in the face of countervailing pressures.

If she could, Blakey says she'd redesign more than runways or air traffic control. She'd also redesign the FAA, giving it power to borrow money, to assess airlines fees for flights at peak hours, and to hold auctions on schedules. She'd have an independent commission to close unneeded facilities. All of this is hard to do, of course, in the real world.

In one of her final trips as administrator, Blakey jetted to Los Angeles on Aug. 22, just five days after the airport's most recent collision. Posing in front of a school near an LAX flight path, Blakey announced a new round of federal dollars for soundproofing homes in the neighborhood and lobbied local authorities to redesign the runways at the airport. But rather than agreeing to a long-debated runway redesign, the local airport authority bowed to pressure from community activists and voted to fund a study—the sixth—on remodeling existing runways. Yet again, a step toward a more efficient and safe air traffic system seemed stuck at the gate.


http://www.businessweek.com/magazine/content/07_37/b4049001.htm?chan=top+news_top+news+index_best+of+bw

.probe