Category AVIATION &ТНЕ ROLE OF GOVERNMENT

t would be easy to excuse a person’s confusion today when told that airline labor matters are governed by the Railway Labor Act (RLA).1 But in 1936, when the RLA was made applicable to the neophyte airline industry, the differences between the two transportation systems were not at all clear. Both systems carried passenger and freight traffic in interstate commerce, across state lines, and from coast to coast. Both were consid­ered quasi-public utilities obligated to conduct their operations in a manner consistent with the “public interest.” And both were capable of caus­ing severe disruption to the nation’s commerce by labor-management disagreements and work stoppages.

We have already considered the temper of the times. The United States was deep into the Great Depression, distrust of the corporate world and capitalism was in vogue, unemployment was widespread, labor protective legislation was being cranked out of Congress, and membership in unions was high and on the rise. The airline industry seemed poised to take over from the railroads, which were on the wane, and it was assumed that the confrontational model of labor relations fashioned out of the experience of the railroads would serve the interests of labor and the nation in aviation as well.

But experience has shown that the airlines were not very much like the railroads after all; they were, in fact, very different. Aside from the fact that railroad labor relations arose out of the violent confrontations of the late 19th century, airlines were much more technologically oriented, the product of inventions and develop­ments that had largely first come into being after the labor pattern of the railroads had already been established.

The job classifications (the “crafts” in the words of the RLA) were very different. The railroads had their train crews composed of engineers, firemen, brakemen, and conductors, which ranged from semi-skilled to laboring work, and owing to coal used for fuel, they were mostly soot-covered jobs. Job names like hos­tlers, boilermakers, car repair workers, main­tenance of way laborers (gandy dancers), and blacksmiths filled the railroad roster. The air­lines’ occupational groups were pilots, power – plant mechanics, and clerical employees. Only baggage handlers, ground crew, and cleaners came close to matching the personnel types common on the railroads. The knowledge and skill requirements of the pilots and mechanics were federally mandated and tested. As time went on, many pilots came from the ranks of
the college educated, and because of the fed­eral limitations on hours flown, many of those would have second careers, some even profes­sional careers based on advanced university degrees.

Railroad style unionism was promoted by the policies of the National Mediation Board (NMB), the federal body established under the RLA to mediate the relative positions of the two sides, which assumes a power-based equality of collective bargaining and promotes a “digging in” of the heels, rather than a cooperative effort based on a “mutuality of interests” approach. This has produced a history of labor strife marked by work stoppages and severe disrup­tions in the national transportation system over much of the life of the airline industry. Contrib­uting to the encouragement of militant union activity has been a competition between the different unions’ leadership to produce the best “package” in the industry, to set the standard for union gains. Resistance from management to such union activity was, during regulation, lessened due to the practice of the CAB of increasing rates and fares to cover the increase in employee wages and benefits. Management also appeared to be willing to trade off increased income from productivity gains due to techno­logical advances, such as increased efficiencies
associated with jet aircraft, to achieve peace with the labor unions.

Ш Major Airline Unions

The major certified bargaining units (unions) in the airline industry are:

• The Air Line Pilots Association (ALPA), rep­resenting the majority of pilots

• The Allied Pilots Association (representing American Airlines pilots since 1960)

3 The Southwest Airlines Pilots Association (Southwest pilots)

• Frontier Pilots Association (Frontier pilots)

• The International Association of Machinists and Aerospace Workers (IAM)

• The Association of Professional Flight Atten­dants (APFA)

• The Association of Flight Attendants (AFA)

• The Transport Workers Union (TWU), rep­resenting a range of employees from main­tenance employees to flight attendants and dispatchers

• The Brotherhood of Railway, Airline, and Steamship Clerks (BRAC), represent­ing mostly clerical and passenger service employees

• The Aircraft Mechanics Fraternal Association

• The Communications Workers of America

• The International Brotherhood of Teamsters

• The Professional Airline Flight Control Association

Most of the crafts of the largest 19 airlines in the country, accounting for 95 percent of industry revenues, were unionized in 1977. Only Delta, which had a nonunion work force with the exception of its pilots (who are represented by ALP A), and Southern Airways deviated from the norm. As of 2012, Airlines for America stated that about half of all airline workers belong
to professional unions and are governed by collective bargaining agreements.

Southwest Airlines was a wholly intrastate car­rier before deregulation, having been founded in 1971. It had developed a no-frills approach to air carrier service that it brought to the interstate market after deregulation, gradually expanding in a deliberate and cautious way. It used just one type of aircraft, the Boeing 737, thereby greatly reducing its parts inventory requirements and the training of its airframe and powerplant people, as well as its pilots. Southwest chose secondary airports, like Uove Field in Dallas and Midway Airport in Chicago, where the turn-around time for its aircraft would be mini­mized. This practice avoided the congestion, the АТС delays, and the airport confusion that were becoming symptomatic of the hubs. South­west’s success moved it into the top 10 airlines in the United States during the 1990s, and it continued to expand its service into the east­ern United States market, opening up service to underserved or unserved airports. By 2012, Southwest had grown to be the third largest air carrier in the country as measured by passen­gers carried.6

As Southwest has grown, it has developed a “rolling hub” system instead of strictly point-to – point service. In practice, an appreciable number of Southwest passengers are being flown by way of connections (via LAS, LUV, and BWI, for example).

The success of Southwest caused new entrant airlines (increasingly known as “low cost carriers,” or LCCs) to imitate its model of low cost and no frills, thereby creating even more service to even more destinations. The legacy airlines also began, in self-defense, to imitate the model of Southwest by creating subsidiar­ies that provided the same kind of no-frills ser­vice and that used lower-paid crews operating a single type of airplane, just like Southwest. These subsidiaries have not met with any substantial success.

In Chapter 31, we discussed barriers to entry and how slot and gate ownership can have the effect of limiting competition. In Chapter 33, Airports and Deregulation, we will talk about how the operation of airports can also have anticompeti­tive results. The DOT has been concerned with all of these activities to the extent to which air­lines participate in them. But the DOT is also concerned with anticompetitive practices by the airport owners and operators themselves.

As we will see in Chapter 33, DOT over­sight of anticompetitive practices by airport owners was practically nonexistent until 2001. With the passage of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR-21), the DOT was given an important tool to use in monitoring and preventing these prac­tices. In order to participate in federal monies, airport owners and operators must now submit for DOT approval “Competition Plans” designed to insure that gate availability is equitably pro­vided. Under this program, the DOT can also monitor and, to some extent, control other anti­competitive and unfair practices associated with gate use, such as subleases, equipment leases, ground aircraft maintenance, and aircraft service agreements.

Endnotes

1. 49 USC sec. 1378.

2. 49 USC sec. 1384.

3. 371 U. S. 296 (1963).

4. Dempsey, Antitrust Law and Policy in Transportation: Monopoly Is the Name of the Game, 21 Ga. L. Rev. 505 (1987).

5. See Pan American World Airways v. United States, 371 U. S. 296, 306-308 (1963), and United States v. CAB.

766 F.2d 1107 (7th Cir. 1985).

6. See 49 U. S.C. sections 41308-41309.

7. GAO, Airline Competition: Higher Fares and Reduced Com­petition at Concentrated Airports, GA0/RECD-90-102; July 1990.

8. U. S. Department of Transportation, Statement of Enforce­ment Policy Regarding Unfair Exclusionary Conduct (Docket No. 0ST-98-3713, Notice 98-16) April 1998.

9. Ibid.

10. Ibid. This study was followed up by DOT in 2001, see:

U. S. Department of Transportation, Enforcement Policy Regarding Unfair Exclusionary Conduct in the Air Transpor­tation Industry (Docket ST-98-3713) January 17, 2001.

While air pollution considerations have become increasingly important in the years since jet trans­port aircraft were introduced into the civil aviation fleet in 1958, noise levels associated with the oper­ation of jet transport aircraft at the nation’s airports were an immediate concern to anyone within audi­ble range. Jet noise had previously been limited to military operations, and most people were familiar with jet operations only as they were usually con­ducted at higher altitudes.

Citizens’ groups became quite vocal about this intrusion into what had theretofore been a relatively peaceful coexistence with airport operations. Jet noise brought a new challenge to this attempt at coexistence. It took regulators until 1968 to accumulate enough anecdotal and

Source: GAO.

Notes: Landing and takeoff data for U. S. aircraft in 2001 obtained from AvSoft. Emissions were calculated using FAA’s Emissions and Dispersion Modeling System, version 4.01. The following variables were assumed to be the same for all aircraft: (1) taxi-time: 15 minutes, (2) auxiliary power unit time: 26 minutes, and (3) ceiling height for emissions mixing with local air: 3,000 feet. The model’s default was used for takeoff weight.

Source: GAO.

Notes: Landing and takeoff data for U. S. aircraft in 2001 obtained from AvSoft. Emissions were calculated using FAA’s Emissions and Dispersion Modeling System, version 4.01. The following variables were assumed to be the same for all aircraft: (1) taxi-time: 15 minutes, (2) auxiliary power unit time: 26 minutes, and (3) ceiling height for emissions mixing with local air: 3,000 feet. The model’s default was used for takeoff weight. The Boeing B77-200ER data is the weighted average (based on 2001 landings and takeoffs) for three different engines. The nitrogen oxides and other emission characteristics of these engines vary significantly.

The 58 Boeing 747-400s in the 2001 U. S. fleet have PW4056 engines and average 361 seats per aircraft. The 101 Boeing 777-200ERS in the 2001 U. S. fleet have the following engines: PW4090 (37 aircraft averaging 302 seats), GE90-90B (16 aircraft averaging 283 seats), and TRENT 892B-17 (48 aircraft averaging 249 seats). The three engine types for the Boeing 777-200ERs emit 138.6,123.6, and 112.3 pounds of nitrogen oxide emissions per landing/takeoff, respectively.

TABLE 34-4 Additional information on comparison of Boeing 747 and 777 emissions on a per aircraft basis.

empirical evidence to bring the matter success­fully before the Congress. In that year, the first aircraft noise legislation was passed.

Aircraft Noise Abatement Act of 1968

That year the initial step was taken to confront what was coming to be recognized as not only an environmental issue, but also a health issue. The Aircraft Noise Abatement Act of 1968 required the FAA, in consultation with the new Environ­mental Protection Agency, to establish noise standards for aircraft and to apply them through issuance of civil aircraft certificates.

Noise Control Act of 1972 and Aviation Safety and Noise Abatement Act of 1979

In 1972, Congress passed the Noise Control Act, which amended the Federal Aviation Act of 1958 to specifically involve the EPA in the regulation of airport noise. This was followed in 1979 by the Aviation Safety and Noise Abatement Act, which authorized the Secretary of Transportation to formulate a national aviation noise policy and authorized the FAA to promulgate regulations pursuant thereto, including “air noise compatibil­ity planning.” These regulations are contained in 14 Code of Federal Regulations, Part 150.

FIGURE 34-6 Populations expected to benefit from noise funding.

The FA A established a program under the 1979 statute to help airport operators develop comprehensive noise reduction programs. Known as the Part 150 program (derived from CFR Part 150), this voluntary program encour­ages airport operators to develop Noise Exposure Maps (NEM) and Noise Compatibility Programs (NCP). NEMs identify noise contours and land use incompatibilities. NEMS are used to evaluate
existing noise impacts and to discourage future development not compatible with the airport plan. If the FAA approves the NEM, the airport opera­tor can submit an NCP, which describes measures that will improve noise and land use compatibility.

In 2005, 266 airports were participating in the Part 150 program and 226 airports had NCPs approved by the FAA. An FAA-approved NCP allows an airport to obtain federal aid for noise
mitigation projects. Since 1982, 247 airports have received a total of $4.3 billion for this pur­pose in addition to AIP noise grants (discussed below).

A fleeting two years of profitability in the nation’s airlines during 2006 and 2007 ended in 2008 with an industry operating loss of $3.6 billion.13 In that year began a global reces­sion of large dimensions, precipitated by a burst housing bubble caused by defaults on subprime mortgages (which began in 2007), largely due to loose credit policies of government backed mortgages. Stated differently, many people were encouraged by government policy to buy houses that they could not afford. As defaults increased due to homeowners’ failure to make mortgage payments, banks and hedge funds that had bought these worthless mortgages packaged up as tradable securities bearing high credit ratings by Moody’s and Standard and Poor’s, began to face huge losses. Bankruptcies and government intervention in such institutions as Bear Stearns, AIG, Fannie Mae, Freddie Mac, IndyMac Bank, and Washington Mutual caused a drying up of credit that precipitated a widespread decline in employment. Unemployment rates nation­ally exceeded 10 percent. Unemployment rates for years 2003 to 2007 were between 6.3 and 4.4 percent.

At the same time, in 2008, the price of a bar­rel of crude oil oscillated wildly between $145 and $33 within a few months, causing the price of jet fuel to range between a low of $1.26 to a high of $4.26 a gallon. Fuel was now not only the highest cost factor in airline operations; it was also the most volatile. Revenues plunged 17 percent in 2009, which caused the largest two – year contraction in the history of aviation, and which resulted in a loss of $2.5 billion for the year. Over the nine-year period ending in 2009, the air transport industry lost $58 billion dollars.

Between 2002 and 2007, Chapter 11 bank­ruptcy reorganization had helped slim down four of the largest legacy airlines (US Airways, twice—in 2002 and again in 2004; Northwest and Delta, which filed on the same day in 2005; and United, which filed in 2002). These airlines had used Chapter 11 to renegotiate their union contracts for lower wages and more flexible union work rules, eliminate jobs, reduce capacity, and increase fares. These airlines were in a much better position to weather the economic turbulence of the late 2000s because of restructuring in Chapter 11.

During the first decade of this century, merger was also employed by all airlines in addi­tion to bankruptcy as a corporate tool to consoli­date resources and to try to advance profits. TWA was absorbed into American Airlines in 2001, before 9/11. America West Airlines was merged into US Airways in 2005, as a part of the Chapter 11 process of US Airways. Northwest merged with Delta in 2008, and the airline continued operation under the name of Delta. In 2010, Continental became a part of United. Southwest acquired AirTran in March 2011. All of these mergers were approved by the Department of Justice and were deemed not to violate any of the constraints of the antitrust laws.

During the first part of the 21st century, the legacy airlines were reinventing themselves from a historical perspective through the use of bankruptcy and merger. Although there were no bankruptcies of any airline during the days of economic regulation, there were a few mergers. These mergers were facilitated by the CAB, in order to maintain service and rates as prescribed, by requiring successful airlines to absorb the less successful ones. That is the reason that the 16 airlines grandfathered under the Civil Aeronautics Act of 1938 had contracted to 10 airlines by 1978.

All of the legacy airlines, except American, had slimmed down through bankruptcy, and all had combined through merger with another car­rier during the first decade of the 21st century. In 2011, not having been “cleansed” through bank­ruptcy, American had lost $11 billion since 2001. American Airlines faced labor costs that were significantly higher than any of its competitors and pensions that were the richest in the industry. Its labor and operating costs in 2011 were about 10 percent higher than Delta’s. In fact, in 2011 Amer­ican was the only major airline to lose money.

To further complicate the picture, American owns and operates American Eagle, a regional carrier that uses small, 50-seat aircraft that other airlines have been shedding (most other major carriers contract out their regional connections to independent regional airlines and have moved a bigger risk share to them). It is the only major airline that still performs most maintenance in­house. It also flies obsolete MD-80s, which are not fuel efficient, and are a big liability in these times of spiraling fuel prices.

In spite of years of negotiations with its unions, there was little progress in moving the issue forward, so in November 2011 the last holdout of the legacy airlines, American, capitu­lated and filed for Chapter 11 protection.14 At that time, there had been 178 bankruptcy pro­ceedings filed by domestic airlines since 1978, 46 of which had been in Chapter 11.15

The FAA defines UAS as an unmanned aircraft (UA) and all of the associated support equipment, control stations, data links, telemetry, communi­cations, and navigation equipment, etc., neces­sary to operate the unmanned aircraft. The UA is the flying portion of the system, flown by a pilot

via a ground-control system, or autonomously through use of an on board computer with asso­ciated equipment necessary for the UA to oper­ate safely. UAS are also referred to variously as drones or unmanned aerial vehicles (UAVs).

We saw in Chapter 22 how UAS in the United States National Airspace System (NAS) has been certificated and controlled by the FAA during its short and recent history of author­ity over these aircraft. The first priority of the FAA being safety, the agency has moved slowly and cautiously in granting certificates for UAS operations within the NAS. While the FAA does not disclose the exact nature of UAS cer­tifications within the NAS (which policy has prompted lawsuits under the Freedom of Infor­mation Act), certain UAS authorizations are known.6 For example, the Department of Home­land Security uses UAS for surveillance of bor­ders and port facilities. NASA and NOAA are engaged in research and environmental moni­toring using UAVs. Local and state law enforce­ment agencies also have been certified to use drones. The FAA issued 313 certificates in 2011.

While UAS have been primarily used by the U. S. military overseas in war zones for both surveillance and offensive military strikes, there has been a steady growth of interest in their use here at home. Civil uses include aerial mapping, crop monitoring, forest fire detection, and res­cue operations. Development of UAS is ongoing worldwide, but in the United States alone some 50 different groups ranging from universities, private companies, and government organizations are developing and producing numerous and var­ied unmanned aircraft designs. This has created a powerful lobby for the proliferation of UAS uses in the NAS.

In February 2012, Congress mandated the FAA, in the FAA Reauthorization Act of 2012, to develop regulations and procedures to permit, by 2015, widespread use of UAS in the National Airspace System by both government and

commercial operators. The purpose of this man­date is to expedite and streamline the certification process and to develop means whereby they may be safely integrated into the NAS. The present cer­tification of drones precludes their use in airspace occupied by civil aircraft due to the inability of UAVs to “sense and avoid” other aircraft.

The fact that UAS are of varying degrees of size and sophistication adds to the problem of integrating them into the NAS where they will be required to mix and assimilate with manned aircraft. Some UAVs have the wing span of a Boeing 737 and are powered by turbojets. At the other extreme, there are very small UAVs weighing less than one pound with wing spans (or rotors) of six inches or less and powered by a lithium-ion battery (micro aerial vehicle). Some are even designed in the form of hummingbirds with flapping wings.

Two years after the end of World War II, the situation in Europe was not much improved—in fact, whole segments of populations faced star­vation. An economic depression loomed for the entire continent. Serious concerns were voiced in the United States over the deteriorating economic condition of Europe, and ideas were debated in foreign policy circles as to the best way to meet these concerns. By early 1947, preparations were complete for the initiation of a European eco­nomic recovery, a program that would come to be known as the Marshall Plan.

George C. Marshall was the Secretary of State in the Truman Administration in 1947. Dur­ing the war he had been Army chief of staff and central to the military planning that had led to the defeat of the Axis Powers, particularly in Europe. He was considered indispensable in European affairs and he enjoyed considerable prestige with the United States Congress. In a speech to the graduating class at Harvard University on June 5, 1947, he proposed a solution for the European economic situation that was centered on the con­cept that the European countries would them­selves set up a program for reconstruction, with the assurance of American assistance. The prob­lem, he said, was:

The truth of the matter is that Europe’s requirements for the next three or four years for foreign food and other essential prod­ucts—principally from America—are so much greater than her present ability to pay that she must have substantial additional help or face economic, social, and political deterio­ration of a very grave character.

The remedy lies in breaking the vicious circle and restoring the confidence of the European people in the economic future of their own countries and of Europe as a whole.1

European response to this U. S. proposal of assistance was immediate and positive. A confer­ence of 16 European countries arranged to meet in Paris in 1947. Twenty-two countries were invited to participate and all of those invited, except the Soviet Union and those countries under its control, attended. The Soviet Union, in fact, vigorously opposed the plan. The Paris conference led to the establishment of the Com­mittee for European Economic Cooperation, and it was the forerunner of successive organizations that ultimately led to the existence of the Euro­pean Union today.

In the United States, Congress passed the Economic Assistance Act of 1948, which became known as “The Marshall Plan.” Congress appro­priated in excess of $13.3 billion over the next four years and applied it to the European recovery plan. The plan has become known as the costliest, most successful, and arguably the most vision­ary international cooperative plan ever conceived in peacetime. It averted a postwar European depression and led to the economic recovery of the Western European countries, allowing an eco­nomic independence along with political stability that has endured. In addition to leading to the cre­ation of the European Union, in due course it led to the creation of the Organization for Economic Development and Cooperation and to the North Atlantic Treaty Organization (NATO).

The Plan was amended in 1949 to include West Germany, the western part of the former German National Socialist State that had been the former foe of the United States and the other countries in Europe, which was a marked change from the victors’ treatment of Germany after World War I. The inclusion of West Germany was not only a benevolent and humanitarian act, it was a far-sighted move that quickly contrasted the free West German economy with that of the communist Soviet-controlled East Germany, and led to the establishment of a lasting progres­sive, free, and dynamic German economy. The Plan did not include Spain, which in 1948 was a dictatorship under Franco, and Spain was not invited to participate. At the same time, Spain had not been a combatant against Germany, and its economy and commercial infrastructure were relatively intact. (See Figure 38-1.)

To say that the Marshall Plan was a success would understate the facts. Europe gradually rebuilt, and its countries set about consolidating their common interests and strengths. The eco­nomic cooperation that spawned the European Community has gradually evolved into a legal, political, commercial, and social phenomenon.

In 1971, President Richard M. Nixon pro­phetically said of the American relationship with Europe:

The program which Secretary Marshall announced in 1947 served as a catalyst in helping the peoples of Western Europe release their boundless energies and express their abundant creativity. The Marshall Plan also created an environment in which the

growth of strong ties within the Atlantic Community could be continually nourished.

The relationship between the United States and Europe is a dynamic one, sus­ceptible, as we have seen, to constant, con­structive change and thus touches on almost all aspects of our national well-being. This relationship is too critical to be taken for granted, too complex to be easily under­stood. We believe there is a great need for continuing study to enhance understanding of the relationship among all of our peoples.2

Ш The Evolution of the European Community

In 1948, the major free nations of Europe cre­ated the Organization for European Economic Cooperation for the purpose of coordinating and
administering the Marshall Plan for the economic recovery of Europe as a result of the devastat­ing effects of World War II. Two years later, in 1950, the first significant step toward economic unification occurred with the agreement to pool coal and steel resources, which was entered into by those countries thereafter known as the “Six,” and who were the original members of the Euro­pean Community.3 This was followed in 1951 with formalization in the Treaty of Paris, which established the European Coal and Steel Commu­nity. In 1953, the Six agreed to remove customs duties and quantitative restrictions on these raw materials, thus establishing for the first time a Common Market for coal and steel among those six countries.

In 1957, the Six signed the Treaty of Rome (amended in the Treaty of Lisbon, signed in 2007 and entered into force on December 1, 2009), establishing the European Economic

Community (EEC). This agreement was to become the cornerstone of the present European Union, and is sometimes referred to as its “con­stitution.” The Treaty of Rome is a comprehen­sive undertaking, articulating monetary policy, broad economic policy, and common commer­cial policy. It set goals for research and devel­opment, and for dealing with the environment, employment, discrimination, competition, and transportation. The Treaty also established the four governing bodies of the EEC: the Council, the Commission, the Parliament, and the Euro­pean Court of Justice.

In addition to Open Skies bilateral and multilateral agreements between countries, the United States advocates and approves strategic sharing alliances between U. S. carriers and foreign carriers under “antitrust immunity” agreements with those carri­ers. Under this arrangement, the alliance partners
are free to set prices and to otherwise combine their resources in order to maximize marketing strategies that inure to the benefit of the interna­tional traveling public and to themselves. These alliances have produced significant results.

According to an early report of the DOT,12 implementation of alliances under Open Skies agreements resulted in increases in passenger traf­fic numbers, decreases in prices, and the tapping of entirely new segments of populations that are now availing themselves of international air travel for the first time. Travelers from “behind European gateways” who had never before been serviced in the transatlantic market were of particular note.

The three largest airline alliances are Star Alliance, Sky Team, and One World.13 These Alli­ances combine to carry over 82 percent of transat­lantic traffic. Alliances have extended to the world of cargo airlines as well, including ANA/UPS Alliance, Sky Team Cargo, and WOW Alliance.

Similar to code-sharing arrangements, these alliances provide on the international level many of the benefits of standard code sharing but go a step beyond because of international complications:

1. Joint booking systems. Airlines are able to sell seats through to the passenger’s destina­tion with all the passenger advantages of a seamless journey with ticketing, baggage
handling, connection timing and gate loca­tion, and with the advantage to the airlines of increasing the chance of keeping passen­gers within their network.

2, International flow. The complexities of negotiating bilateral or multilateral agree­ments are avoided or reduced by these com­binations. Airlines are able to use existing national networks on an end-to-end basis.

3. Hub systems. Creation of interlocking hub systems is possible with local feeder routes being provided by existing regional airlines.

The United States Department of Transpor­tation has the statutory authority to approve and immunize from the U. S. antitrust laws agreements relating to international air transportation.14 The DOT has granted over 20 international alliance agreements since the early 1990s, which allows those airlines to collude on prices, schedules, and marketing. Exemptions are granted provided that “the exemption is required by the public interest.”15 Exemptions granted by the DOT, therefore, are based on considerations other than fare or price.

The DOT states the U. S. foreign policy goals are a key element of these public benefits. Rec­ognized as a primary policy goal of the country is the “Open Skies” initiative announced in the early 1990s to complement and extend the effects of the economic deregulation of domestic airlines. In approving immunizations of airlines within alliances, the DOT highlights the importance of strong competition between the alliances, which can better discipline the fares and services offered to consumers. The correlation between the “Open Skies” announcement and the immunization of airline alliances can be easily seen.

Yet, the DOT has found from recent evidence that alliances do, in fact, decrease competition over the North Atlantic, resulting in higher fares for consumers. As airline practices are modified and as new data reveal the results of regulatory practices, the regulators at the DOT will be called upon, in spite of Open Skies agreements, to determine how much competition will need to be preserved in international aviation. The DOT is telegraphing that additional calls by airlines to decrease compe­tition will be harder to sell in the future.

Endnotes

1. The Economic Benefits of Air Transport, 2000 edition, The Air Transport Action Group, 33 Route de I’Aeroport, P.0. Box 49, 1215 Geneva 15, Switzerland.

2. In 2007, foreign ownership of U. S. airline companies is permitted to be in excess of 50 percent of voting and non­voting stock, but only 25 percent of voting shares.

3. The first proposal for an Open Skies agreement with the European Union, which contained liberalization of for­eign ownership rules, was voted down in the Congress even though it was supported by the Administration.

4. The countries sued were Austria, Belgium, Denmark, Fin­land, Luxembourg, and Sweden. Bruce Barnard, Kinnock Perseveres in Fight for EU-Wide Air Talks with U. S., J. Com., June 20, 1995, at 2B.

5. Dempsey, Paul, Competition in the Air: European Union Regulation of Commercial Aviation, Journal of Air Law and Commerce, Summer 2001.

6. The original Bermuda Agreement was signed in 1946.

7. Slater, Rodney, Testimony before the Aviation Subcommit­tee, U. S. House of Representatives, February 15, 2000.

8. United’s transatlantic routes to Heathrow dated back to the days when Pan American was the only international U. S. carrier. These routes were sold by Pan American to United in 1989, just before Pan Am’s liquidation.

9. Ownership of U. S. airlines is limited to 25 percent of voting stock in the airline. Cabotage, the prohibition for foreign airlines to carry revenue traffic between two U. S. cities, was also preserved.

10. 49 U. S.C. section 40118.

11. The Economic Impact of Air Service Liberalization, see the IATA website.

12. U. S. Department of Transportation, International Avia­tion Developments—Global Deregulation Takes Off (First Report) December 1999; U. S. Department of Transpor­tation, International Aviation Developments, Second Report—Transatlantic Deregulation—The Alliance Network Effect, October 2000.

13. Members of these three Alliances are as follows: Star Alliance—Adria Airways, Air Canada, Air New Zealand, All Nippon Airlines, Asiana, Austrian, Bluel, British Midland International, Croatia Airlines, LOT Polish, Lufthansa, SAS Scandinavian, Singapore, South African, Thai Airways, Swiss, ТА Portugal, Spanair, United, US Airways, Varig; OneWorld Alliance—Aer Lingus, American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, LAN Airlines, Qantas; SkyTeam Alliance—Air France-KLM, Delta Airlines, Northwest, Conti­nental, Korean Air, Alitalia, Aeroflot, Aeromexico, CSA Czech.

14. 49 U. S.C. sections 41308-41309.

15. 49 U. S.C. section 41308 (b).

«The Earth is the cradle of humanity, but mankind cannot stay in the cradle forever, w

Konstantin Tsiolkovsky

hirty-eight years before the Wright brothers’ first flight, and two years before even the transcontinental railroad was completed, wild fantasies of space exploits, a genre later to be known as “science fiction,” hit the presses. In Jules Verne’s From Earth to the Moon, published in 1865, three members of an American gun club travel to the moon aboard a spaceship launched from a columbiad1 located in Florida. The story bears an uncanny parallel to the U. S. Apollo program that operated from Cape Canaveral, Florida, to the moon 100 years later.

Between Jules Verne and Apollo, however, there was much work to be done.

For many years after the launch of Explorer I in 1958, conventional wisdom and generally held per­ception was that space activities were, and should be, the exclusive domain of national govern­ments. Only NASA, the military services, and the National Reconnaissance Agency29 were permit­ted or able to engage in launch activity. Although some commercial payloads were placed in orbit as early as the 1960s, the launching of them was strictly a government business. This view prevailed in spite of the fact that the United States has long based its successful economic system on private enterprise, with the role of government being lim­ited and supportive of the private engines of com­merce. This government-private sector symbiosis was the dynamic partnership that we described at the beginning of this book, and it has been the norm in every industrial, technical, and a scientific advance seen in the United States. We will first look at the development of the law that is making this transition possible.

The Communications Satellite Act of 1962

When Sputnik was launched on October 4, 1957, telephone communications across the oceans were sent through large undersea copper cables. Televi­sion transmissions were sight limited and unavail­able for overseas transmissions (or other long distances) due to the curvature of the earth’s sur­face. In the United States, American Telephone and Telegraph (AT&T) advanced the idea in the early 1960s of its funding a communications satellite that could be used to relay television sig­nals across great distances, including the Atlantic Ocean to Europe.

While the promise of this great technological advancement was intriguing, the anticompetitive aspects of such an arrangement were daunting and, under American law, possibly illegal. There was also the matter of private enterprise now being inserted into space operations that had always been reserved for government function worldwide (the United States and the U. S.S. R.).

The solution was to create a quasi-public corporation to own the satellite under government regulation. This was accomplished by passage of the Communications Satellite Act of 1962, and it created Comsat Corporation as the owning and operating entity. The Telstar satellite, built by AT&T and launched by NASA on July 10, 1962, became the first direct-relay communications sat­ellite. While AT&T owned 29 percent of the cor­poration, the majority of shares were distributed so as to insure independence. AT&T controlled six directors, the other shareholders an additional six, and three were appointed by the president of the United States.

One of the problems with Telstar was that it had been placed in low earth orbit, which required movable receptor dishes to track the satellite in order to pick up its signals as it tra­versed the sky. Hughes Aircraft was a competitor of AT&T and suggested placing one of its satel­lites in geostationary orbit (GSO), which would eliminate tracking requirements of the satellite by receivers. NASA approved and the first Syncom satellite reached high orbit in 1963.

The geostationary orbit is a unique, circular orbit plane directly above the earth’s equator. By “unique” is meant that there is only one GSO, which is the orbital plane at zero degrees inclina­tion. A satellite placed in this orbit will appear to hover directly over the same point on earth above the equator at all times.30 A GSO satellite orbits at an altitude of about 22,236 miles above earth.

Since GSO is unique, the number of satellites that can be placed in it is limited. A system of slots is being monitored by the United Nations to insure fairness in allocation of GSO participation among nations.

In August 1964, a second organization was formed for the propagation of international sat­ellite telecommunications. The International Telecommunications Satellite Organization, or Intelsat, was created by 11 separate nations with control in its board of directors weighted to reflect the member nation’s volume of communi­cations. Comsat controlled over half the board of directors. Its first satellite, known as Early Bird, was purchased from Hughes Aircraft and was launched into GSO orbit in 1965.

By 1969, global coverage had been achieved by Intelsat by the placing of three satellites over the Atlantic and three over the Pacific. A sev­enth, in GSO over the Indian Ocean, linked Lon­don and Tokyo and completed the system.

Before the Europeans developed their own satellite launching systems, NASA launched foreign telecommunications satellites known as Symphonie in 1974 and 1975, owned by France and West Germany. Intelsat was by now serving some hundred different countries, some of whom had never even had local television service or had ever laid any significant telephone lines within their own borders, such as Bangladesh and large portions of Africa.

omen had been involved in aviation, I I in one way or another, since Elisabeth Thible of Lyons, France, went aloft in a hot air balloon in 1784. By 1834, some twenty-two women had piloted their own balloons on the continent of Europe. In 1886, Mary H. Myers set an altitude record of over 20,000 feet (without oxygen) in a balloon above the fields of rural Pennsylvania, and in 1903, Cuban born Aida de Acosta became the first woman to pilot a pow­ered machine in flight in a dirigible over Paris, France.

The first woman to earn a pilot’s certifi­cate anywhere in the world was Raymonde de Laroche, a French adventuress who also raced early motorcars. Granted a license by the Fed­eration Aeronautique Internacionale (F. A.I.) on March 8, 1910, she was seriously injured four months later when she crashed during an air race competing against the likes of Louis Bleriot. Both legs were broken, as was one arm, and she sustained head and internal injuries. Two years later she was again back to racing the primitive airplanes of the day. She was killed in an airplane crash in 1919 in which she was riding as a pas­senger.

Helene Dutrieu was licensed shortly after. She flew nonstop over the 28 mile stretch from Ostend to Brugges, in Belgium, only five months after her first flight. She entered an air race in

Florence, Italy, in May 1911 and, as the only woman in the field, triumphed over her 15 male competitors to win the Italian King’s Cup. She was also known for her avant-garde ways: she flew airplanes without wearing a corset.

The first American woman to make a solo flight was Blanche Stuart Scott on September 6, 1910, although without official observers to confirm, she would not receive official acknowledgment. She had previously gained some measure of notoriety by driving an Over­land motorcar from San Francisco to New York in 1910 as a publicity stunt for the Willys – Overland Company, the automobile manufac­turer. Driving through the country was so sim­ple and uncomplicated, she showed, even a woman could do it. At the time, Glenn Curtiss had founded an exhibition-flying troupe that performed around the country. Miss Scott was taught to fly at Hammondsport, N. Y. by Glenn Curtiss himself, and she became a daring and successful member of the troupe, making up to $5,000 a week at a time when the average weekly salary for men was $300 and for women was $1444

Official recognition for the first woman to solo an airplane in the United States was given to Bessica Raiche, who had earned a doctor of medicine degree at Tufts Medi­cal School in 1903. Along with her husband,
a New York City attorney, they built their own biplane in the living room of their Mine – ola, N. Y. summer home. When it was ready, they removed the front wall of the house and rolled it out into the street. Mineola Field was a center for early aviation activity and it was there in 1907 that they first tested their machine. Their airplanes went through several iterations, but by 1910 they had completed a Curtiss-type pusher biplane that was propelled by a 40 horsepower engine. Lateral control was achieved by a sort of wing flap connected to a harness worn by the pilot, which operated the wing flaps when the pilot leaned one way or the other. First trials on September 15, 1910, resulted in a crash with Bessica at the controls, but by September 26, repairs had been made and she completed the first official solo of the air­craft by an American woman. The Aeronautical Society of New York presented her with a medal in commemoration of the event with the words “the nation’s first intentional solo by a woman.”

Although the husband and wife airplane con­struction team built additional aircraft, and sold them, they each in time returned to their profes­sions of medicine and law, apparently content with their adventure.

Harriett Quimby is easily the most acknowl­edged of the early women aviators. (See Figure App 5-1.) She was a newspaper and periodical reporter in the early 1900s, living first in San Francisco and then in New York City. She was the first American woman to earn her license (number 37) from the F. A.I. on August 2, 1911. She gained international recognition as the first woman to fly the English Channel when she crossed from Dover to Hardelot, France, 25 miles south of Calais, in a borrowed Bleriot monoplane on April 16, 1912. Her brief but illustrious flying career came to an end on July 1, 1912, when she fell from her new Bleriot monoplane over Boston Harbor before 5,000 spectators. Seatbelts were not worn in those days.

It is not generally appreciated that early women aviators taught men to fly. A German, Melli Beese, started a flying school in 1912 in Berlin, and the Englishwoman Hilda Hewlett taught World War I British pilots in fighter air­craft. In the United States, Marjorie Stinson instructed Canadian airmen slated for service in Britain, having taught over 100 before she had reached the age of 22. Marjorie Stinson was the youngest licensed female pilot in the United States at age 20, and her sister, Katherine, was the fourth woman in this country to be licensed by F. A.I. Katherine also became the first woman to fly the U. S. Mail (in Montana), and became known as one of the most daring aerobatic, or stunt pilots as they were then known, in the coun­try. She made a flying tour of Japan and China in 1916, performing aerobatic maneuvers previ­ously unseen in those countries, for crowds that numbered in excess of 25,000 people. In the process she became an icon for the women of those countries, whose prevailing customs were even more restrictive for women than those in the West.

Victor Carlstrom set the American non­stop distance record on November 2, 1916 by flying 452 miles on a course between Chicago and New York. Less than three weeks later, Ruth Law, who had earned her license in 1912, broke that record over the same course by flying 590 miles from Chicago to Hornell, New York. It should be remembered that this was the route over the Allegheny Mountains that would claim the lives of many airmail pilots in the years to come. Upon reaching New York City the next day, she was acclaimed in newspapers the country over, and was feted in a series of ban­quets attended by President Woodrow Wilson, Admiral Robert E. Peary, the first man to set foot at the North Pole (April 6, 1909), and Cap­tain Roald Amundsen, first to the South Pole (December 14, 1911).

During the 1920s, women continued to enter the field of aviation, and to continue to expand the limits of their participation. Adri­enne Bolland, a Frenchwoman who was licensed in 1920, set an aerobatic record by performing 212 consecutive loops that year. She then had her airplane shipped to Argentina and flew it from Mendoza to Chile, becoming the first woman to cross the Andes by airplane on April 1, 1921.

Facing both gender and race barriers to her aspirations, Bessie Coleman became the first black female pilot licensed by F. A.I. on June 15, 1921. She was taught to fly at Ecole d’Aviation des Freres in Le Crotoy, France, and was the only woman in her 62-person class. Bessie Coleman had arrived in France by way of Atlanta, Texas, her birthplace, and from Chi­cago, where she had lived after leaving Texas. Her two older brothers had been in the U. S. Army in France during World War I, and had returned with stories of life there, and especially about women aviators. Bessie was befriended by the publisher of The Chicago Defender, Robert Abbott, who assisted her in her aspira­tions to travel to France for flying lessons. On her return to the United States, he sponsored flying exhibitions, which featured her as “the world’s greatest woman flyer.” She attained countrywide recognition on her own merit, and became an advocate for equal rights for all people. She was killed when she fell from the open cockpit of her biplane on April 30, 1926 while preparing for an exhibition in Jackson­ville, Florida.

Sophie Mary Pierce (later Lady Mary Heath), was an Irishwoman who emigrated to England and became known for her athletic prowess as a member of the Great Britain Ath­letics Olympic Team in the early 1920s. She wrote Athletics for Women and Girls: How to Be an Athlete and Why in 1925, which followed her presentations to the International Olympic Committee that same year. She shared the world record for the women’s high jump and became British javelin champion. In 1926 she was granted a commercial airplane license by the International Commission for Air Naviga­tion after successfully contesting the Commis­sion’s ban on awarding commercial licenses to women. She held several altitude records for light planes. In 1927-28, less than a year after Lindbergh’s solo flight over the Atlantic, she made the first solo flight from Capetown, South Africa to Cairo in an Avro Avian monoplane, and then extended that with a flight on to Lon­don. She then began a tour of England and the United States, being received by President and Mrs. Coolidge in 1928. The Jacksonville Jour­nal recorded her visit to that Florida city on January 4, 1929:

She made the wings fast in flying posi­tion, climbing around the plane like a great cat. . . She was clad in a colorful cre­tonne smock and wore high, soft leather boots . . . She spun the propeller and started the engine herself while a score of men and boys stood open-mouthed in a semi-circle.

These were some of the women who pre­ceded Amelia Earhart.

Endnote

1. <Camps, Enriqueta, Universitat Pompeu Fabra, April 2001, http://www. clarku. edu/faculty/brown/papers/campl. pdf>.