Category AVIATION &ТНЕ ROLE OF GOVERNMENT

Computer Reservation Systems

Lorenzo was by no means through acquiring airlines. In 1985, just prior to Continental’s com­ing out of reorganization, Lorenzo made a play for TWA. Some said this was because he needed its computer reservation system to manage the traffic in his growing conglomerate of airline companies. Nobody had yet heard of the Internet. Computer reservation systems were proprietary with each of the Big Four, and it was realized that these systems gave huge advantages to those airlines by increasing their passenger market share, to the detriment of the smaller lines.

Travel reservations, the process of match­ing an available seat with a named passenger to occupy it, had always been a complex undertak­ing. Even with the railroads, where it was largely a matter of recognizing where passengers on the line of road were getting on and getting off, keeping up with the availability of seats was a daunting task. In the early airlines, as with the railroads, reservations were tracked manually, usually at a central location. Entries represent­ing reservations were made in pencil so that they could be erased if the reservation was cancelled.

When traffic picked up in the 1930s, ledgers became even more impractical, and the system was expanded to chalkboard displays in large rooms, also at a central location, on which entries and cancellations were noted. Clerks who took the reservation request from passengers handed off the information to runners who relayed the details to writers at the chalkboards. In time chalkboards were replaced by electric light displays, also in large rooms, and despite the advanced technology of electricity, the process was still manual, cumbersome, and inaccurate. Increased service to multiple cities in random directions, even on one airline, exponentially increased the difficulties of keeping track of res­ervations manually. Booking seats on multiple airlines made the job even harder.

By the 1940s, efforts were being made to automate the process. Makers of computational equipment, like adding machines, were the logi­cal choice to assist in solving these mathemati­cal complexities, but in turn these companies advised that they could not handle the number of variables presented in the problem.

C. R. Smith of American Airlines, himself an accountant and numbers man, was preoc­cupied with the reservations dilemma. Unable to secure assistance outside of the company, he authorized American’s technical people to come up with a solution. The result was a mas­sive mechanical monstrosity consisting of verti­cal cylinders, each one representing a different flight on a given day, which was filled with marbles representing available seats. When a seat was booked, an agent activated a switch that released one marble from the cylinder. A reciprocal arrangement at the top of the cylinder released a marble back into the cylinder for each reservation that was cancelled.

This arrangement was an improvement, but it was no match for the growing problem of reservations as traffic increased. With the beginning of the jet age in commercial air traffic, once again the problem was made exponentially more difficult. The process was not only marginally inaccurate, but also very costly for the company as personnel and terminals had to be added to the system.

IBM, through its primitive computer technol­ogy, during the 1950s was out front in developing solutions for the federal government related to the problems of monitoring the potential for incoming ballistic missiles. The acronym for the IBM pro­gram was SAGE, Semi-Automatic Ground Envi­ronment. SAGE was the first computer game in real time as strategic and tactical planners engaged each other in simulations of nuclear warfare.

Under contract with American, IBM began applying its SAGE technology to the reserva­tions problem, and for almost 10 years its best minds labored away. The project was originally known as SABER, Semi-Automatic Business Environment Research, and later as SABRE, and the first commercial activation of the system did not occur until 1962. At that time computer technology was truly rudimentary, and almost all commercial computers were engaged in solv­ing mathematical equations, or in streamlining the problems of accounting in corporate Amer­ica, like payrolls. And these applications were applied to dealing with numbers in a historical context, not real-time. With SABRE, real-time computing in business applications was born.

With this development American Airlines had a real commercial advantage over its compet­itors. In the 1960s, the Civil Aeronautics Board was still in control of all meaningful decisions related to the running of an airline, so SABRE’s function was expanded to not only solve Ameri­can’s reservations problems, and to assure con­sistent and accurate reservations for the very first time, but also to track every passenger’s name, address, personal information, and most details of that passenger’s travel preferences, such as hotel usage. Not only could SABRE track cus­tomer information, but the technology was soon expanded to begin to solve the company’s day – to-day operational problems. But management at American was slow to realize the full potential of the advantage given them by the computer sys­tem they had developed.

The other airlines began their own experi­mentations with computers, particularly as applied to the reservations system. The technol­ogy was still relatively primitive, and the cost was enormous. In 1966, TWA committed $75 million to solving the problem, hiring Burroughs Corporation to come up with a proprietary com­puter reservations system (CRS). By 1970, no workable system had been achieved, although in time TWA would perfect a system known as PARS. United began its own program, called APOLLO, and made reasonable progress. At the same time at American, SABRE was losing its advantage as management failed to upgrade equipment, and as uninstalled computers sat in storage, allowing its competitors to catch up. Still, all computer reservation systems at the time were considered works in progress.

In 1970, in spite of their individual efforts up to that time, the major airlines realized that, from a cost-effectiveness standpoint, it made a lot more sense to pool their resources to develop the ultimate computer reservations system than for each to go it alone, thereby duplicating effort and wasting untold sums of money. When pre­sented with the airlines’ plan, the Justice Depart­ment announced that it would consider such a combination between the major carriers to be a violation of the Sherman Antitrust Act, and would prosecute the airlines criminally if they proceeded. Many considered this an extreme example of government abuse of power, but there was little the airlines could do. The opportunity was thus lost to have a single, unbiased reserva­tions program developed for the benefit of all of the airlines and the public at large. The only course left for the airlines was for each of them to develop their own, proprietary system. Few in 1970 realized the commercial potential of the computer, or the great benefits that would inure to the owners of these proprietary systems. The joint plan proposed by the airlines would have allowed the unbiased computer reservations sys­tem to be used by all travel agents in servicing the flying public. Now the public would have to wait, as would the travel agents.

Around 1975, the travel agents got together to announce that they were planning to develop their own CRS. United had its APOLLO up and running, and by 1974 it was generally considered to be the best in the industry, having surpassed SABRE. It was, however, still in development. No one at the major airlines believed that it was in their interest to lose control of CRS, and be faced with a giant travel agent computer network where all flights of all airlines would be available to all travel agents everywhere. It was feared that such a system would require the airlines to pay a transaction fee for every reservation, in addition to the commission that they paid.

Another effort was made by the airlines to convince the government of the desirability of the joint approach. The CAB this time gave the airlines antitrust immunity, but only to permit the airlines to explore the possibilities of such a system—to talk, but not to proceed, with build­ing the program. It was at this stage, in July 1975, that United unilaterally declared that it would no longer participate in seeking government approval for the joint effort, and that it would go it alone. United, as the biggest bear in the woods, believed that it had a competitive advantage over the other airlines in its CRS, and it began to appreciate what favorable nuances could be incorporated into the program to heighten that advantage. United’s plan was to gain control of the travel agent business by supplying travel agents with its APOLLO program which would, of course, have built into it biases in favor of United.

The world of travel agents at the time was one of telephones and paper transactions. The Official Airline Guide (OAG) was a periodical publication containing all the world’s airline departures and arrivals, displayed in a city pair format. The procedure was for the travel agent, upon receiving a request from a traveler for flight information preparatory to booking a reservation, to go to the OAG, discern the flight information and the airline that most closely matched the traveler’s request, and then secure authority from the traveler to book the flight. The travel agent would then telephone the airline, confirm the res­ervation, secure the airline’s authority, and then telephone the traveler back with the confirmation. The agent would then write the ticket and ulti­mately transmit it to the traveler, usually by mail. The travel agent was paid a commission by the airline.

The United plan would simplify this proce­dure greatly. The plan was to install computer terminals in the travel agents’ offices for a fee, and then provide the agents with all of the flight information available in the OAG on an inter­active, real-time basis so that the travel agent would be able to confirm the reservation while the traveler was still on the phone, then the com­puter would issue the ticket. Unstated, but appre­ciated by some of United’s competitors like Bob Crandall at American, was the fact that APOLLO would contain preferences for United through outright biased presentations that would likely cause the travel agent to favor a United flight over any other.

Typical of the types of bias that the com­puter could generate was the positioning of the flight information on the computer screen. Amer­ican had conducted research that showed that 50 percent of the time, travel agents selected the flight that appeared on the first line of the computer screen. Ninety percent of the time, the travel agent picked a flight that appeared on the first page of a multi-page computer display. If the proprietary CRS program were configured to offer its own flights on the first line, or at least in a favorable position on the first page, there was an advantage to that airline. Various algorithms were developed to accomplish these ends.

Dick Ferris of United and Bob Crandall of American, with their companies in a nip and tuck race to lead the industry in the middle 1970s, were head-to-head competitors. Crandall resolved to bring SABRE back up to a com­petitive level, and to pitch SABRE to the travel agents as the best system for them. Crandall did his homework, made presentations at national travel agent conventions, conducted mail-out campaigns, and before long, American was out in front again.

The agents who signed up with American were provided with terminals, computers, moni­tors, and the essentials for using the system in their business, and they were charged a fee. Only the largest “commercial” agencies could afford to par­ticipate, but the hardware was getting cheaper by
the month. Then United struck back by providing some of the agencies with the equipment without a fee, and allegedly gave rebates (kickbacks) to the agencies for using United’s CRS.

By 1983, the proprietary computer reserva­tion systems included American’s SABRE, Unit­ed’s APOLLO, TWA’s PARS, Delta’s DATAS II, and Eastern’s SODA. All of these systems began as in-house reservation systems, but their databases were expanded and their access sys­tems were configured to allow distribution to travel agents under either lease or outright sale. The airlines’ mainframe computers were oper­ated by the airlines, telecommunications equip­ment connected the airlines’ computers with the travel agents, and the travel agents equipped their offices with computer terminals and printers.

Eastern was losing money in 1983, so much so that insolvency appeared to Frank Borman, the first American astronaut to orbit the earth and Eastern’s CEO, to be a distinct possibility. The rigors of deregulation, along with the serious eco­nomic situation that existed in the early 1980s, were taking a toll. Borman, like others in the industry, went to the rank and file with pleas for help in the form of “givebacks,” or voluntary wage cuts, in order to meet the emergency. Reluctantly, the pilots and the flight attendants cooperated, but the machinists did not. In fact, they demanded and got a 32 percent wage increase on threats of a strike, which created a rather incongruous situation among the respective crafts. The pilots were not happy, nor were the flight attendants, and morale plummeted. And Eastern continued to lose money.

In 1985, Eastern’s debt approached $2.5 billion and income was dwindling. But East­ern had a computer reservations system. Texas Air was still flush with cash but Lorenzo still did not have his own CRS. Lorenzo offered to supply the needed cash to Eastern through a straight buyout. Because of Lorenzo’s reputa­tion, neither management nor the employees favored this idea. Borman desperately sought ways to right the ship, appealing to the work­ing crafts for even more concessions, but it was clear that without the support of Charlie Bryan and the machinists, there was little hope. With all options exhausted, Borman and the Eastern board of directors, at a midnight meeting, reluctantly agreed to the sale to Texas Air. While awaiting government approval for the Eastern purchase, Lorenzo turned his attention to People Express.

The Civil Rights Act of 1964-Title VII

Title VII of the Civil Rights Act barred employ­ers from discriminating against both employ­ees and job applicants on the basis of sex, race, national origin, or religion.3 The statute contained an exception known as the “bona fide occupa­tion qualification” (BFOQ), which recognized that there are “certain instances where religion, sex, or national origin is a bona fide occupational qualification reasonably necessary to the normal operation of that particular business or enter­prise.” This exception provided a “gray area” that allowed an argument for the airlines to continue current employment policies, but it also provided a “wedge” issue to the unions to seek the com­plete elimination of discrimination against stew­ardesses in employment.

The agency charged with administering Title VII of the Civil Rights Act is the Equal Employment Opportunity Commission (EEOC). Stewardesses wasted no time in filing charges of sex discrimination against the airlines, citing age ceilings and marriage bans. The “no-mar­riage” rule was the first to fall when a grievance filed against Braniff, alleging discrimination under its work rules, resulted in September 1965 in a ruling favorable to the union, citing Title VII. This was followed later the same month by the EEOC issuing its general guidelines on sex discrimination, finding that the firing of

female employees for marriage was discrimina­tory when the policy was not also applied to male employees.

Agency rulings are often only way stations to the ultimate resolution of the issue(s) under consideration. And so it was with the major issues being contested by stewardesses, which included limitations on marriage, age, weight, height, and appearance. The contest between the airlines and female cabin employees or their unions gyrated around the filing of grievance procedures under the Railway Labor Act, filing civil actions in the federal courts based on federal statutes and the BFOQ exception, providing testi­mony in hearings before Congressional commit­tees, and appearances in hearings before various state agencies.

These efforts continued with mixed results as to the particular limitation at issue, until the case of Diaz v. Pan Am4 was brought in the fed­eral court in Florida in 1971. The sole issue in this case was whether or not sex was a bona fide occupational qualification for the flight attendant occupation. Efforts by men to enter this class of airline employment had been resisted by the air­lines ever since the advent of Title VII, and in the Diaz case the plaintiff was a man.

The federal trial judge ruled with the airline, basically saying that the BFOQ exception requir­ing females as cabin attendants was valid in the airlines for cabin service. You will recall that, in these pre-deregulation days, most air travel was by businessmen, and as long as the airline could show that having females in the cabin for service was better for business than having men, then the BFOQ exception was deemed valid. The trial court specifically found that the performance of female attendants was better in that they were superior to men in “providing reassurance to anx­ious passengers, giving courteous personalized service and, in general, making fights as pleasur­able as possible within the limitations imposed by aircraft operations.”

This case was reversed on appeal5 by the Fifth Circuit Court of Appeals in 1971. The court noted that the preference of passengers was not sufficient to justify the exclusion of males in cabin service, given the statutory language requir­ing “necessity” in order to support exclusion. The court also noted that Pan Am, at the time this case was brought against it, already had 283 male stewards employed on some of its foreign flights.

Stewardesses would become flight atten­dants as a result of this case.

Still to come were the battles over weight and appearance limitations of female cabin atten­dants, and on the further polarizing limitation regarding pregnancy. In 1978, Congress passed the Pregnancy Discrimination Act as an amend­ment to Title VII. Henceforth, pregnancy had to be treated on the same basis as other temporary worker disabilities.

The Sherman Antitrust Act-Price Fixing and Trusts

Shortly after the appearance of large corporations in the late 19th century, particularly the railroads, it was deemed to be in the public interest to pre­vent concentrations of power that interfered with trade or reduced levels of economic competition. The Sherman Antitrust Act (1890) essentially prohibits any activity that:

1. Fixes prices

2. Limits industrial output

3. Allocates or shares markets

4. Excludes competition

This activity can be in the form of combina­tions of cartels, or agreements between corpora­tions or individuals to accomplish any of these purposes. These combinations are often referred to as trusts. The second essential prohibition of the Act is to make illegal any attempt to monopo­lize any part of trade or commerce by any indi­vidual or corporation.

There is no “bright line” test as to what activity constitutes a violation of the Act, and it generally requires a court test and a judicial decision to settle the question of whether or not a specific activity is a violation of the Act. Per­ceived violations of the Act are enforceable by the Department of Justice through litigation in the federal courts.

■ The Clayton Antitrust Act-Mergers, Acquisitions, and Predation

In 1914, Congress supplemented the Sherman Act by passing the Clayton Antitrust Act, which prohibits:

1. Companies within the same field from hav­ing interlocking boards of directors (thus, essentially the same management)

2. Forms of price cutting (predatory pricing) or other pricing discrimination

3. Acquisition of stock or assets of one com­pany by another if the acquisition tends to lessen competition or to create a monopoly

Enforcement is carried out jointly by the Department of Justice, Antitrust Division, and the Federal Trade Commission.

fll The Civil Aeronautics Act and the Department of Justice

When the airline companies first appeared during the 1920s and 1930s, it was rightly presumed that they were subject to the same antitrust laws as everybody else. The Department of Commerce had jurisdiction over the railroads and regulated that industry through its agency known as the Interstate Commerce Commission (ICC). When commercial aviation began, what little regulation there was of the airlines was also administered in the Department of Commerce, first by the Aero­nautics Branch and then by the Bureau of Com­merce and finally by the ICC.

In 1938, as commercial aviation expanded and became more important to the nation, the airlines came under the special legislation of the Civil Aeronautics Act, applicable only to the air­lines, and that law was administered by the Civil Aeronautics Board (CAB). Although the Sherman and Clayton Acts did not specifically address the antitrust aspects of airline operation, the Federal Aviation Act of 1958 gave the CAB authority to approve all airline mergers and consolidations1 and granted certain exceptions from the Sherman Act and other antitrust laws.2 The broader question of whether, or to what extent, the airlines were sub­ject to the Sherman and Clayton Acts was an open one until finally settled in 1963.

The Justice Department had long maintained that it had antitrust enforcement authority over the airlines, and the DOJ brought suit against Pan American and W. R. Grace & Co., as well as their jointly owned subsidiary, Pan American – Grace Airways (Panagra). In defense, the airlines contended that the Civil Aeronautics Board had exclusive authority over airlines, including anti­trust matters, and that the Justice Department had no authority to bring the action. The lower federal court sided with the Justice Department, holding that Pan Am had violated the Sherman Act by combining with its subsidiary, Panagra, in agree­ing not to parallel each other’s South American routes, effectively agreeing not to compete. In Pan American World Airways, Inc. v. United States,3 the Supreme Court reversed the lower court holding and established that the CAB had primary jurisdiction over the airlines in matters of “unfair practices” and “unfair methods of compe­tition,” as well as to consolidations, mergers, and acquisitions. This became established law and remained so until the CAB was legislated out of existence effective January 1, 1985, by the provi­sions of the Airline Deregulation Act of 1978.

Before deregulation, mergers of airlines were rare. The largest was United Airlines and Capital Airlines in 1961. The norm was repre­sented by Delta’s acquisition of Northeast in 1972 based on the “failing airlines” doctrine of the CAB. Simply stated, the “failing airlines” doctrine described the CAB practice that pre­vented any airline bankruptcies during regulation by “allowing, encouraging, and arranging” for stronger carriers to absorb weaker ones.

Air Traffic Control

The commercialization of air traffic control is a much more difficult subject to broach than is the privatization of airports. The world leader in private aviation is the United States, and the

United States remains the chief training venue in the world for both U. S. and foreign civilian pilots, with its training facilities, cheaper avia­tion fuel, good weather, and vast territory. The very large civilian private pilot population of the United States and its chief lobbying representa­tive, the Aircraft Owners and Pilots Associa­tion, along with general aviation business aircraft operators and their organization, the National Business Aircraft Association, are dedicated to keeping the skies over America basically free from government-based user charges (other than aviation fuel taxes and landing fees at some air­ports). The airlines are on the other side of this issue, advocating the inclusion of general avia­tion aircraft in a regimen based on usage. A sys­tem of user charges has historically been utilized in any commercialization of АТС services. The question of commercialization of АТС services, therefore, becomes a very real political issue.

The fact remains that in the United States the FAA, like airports, is a governmental-funded undertaking. The FAA budget in the United States for the fiscal year 2011 was somewhere around $16.4 billion. Of that total, $9.7 million went to “operations,” which includes $7.6 billion for air traffic control operations, $1.3 billion for safety regulation and certification, $3.3 billion for capital investments in АТС facilities, equip­ment, and research (which presumably includes NextGen expenditures) and the rest for grants to state and local governments for airport investments.

According to the Government Accounting Office consistently over the years, the FAA has also been criticized as not being set up to effec­tively manage the development of large projects, resulting in delays and cost overruns on major technology developments and their implementa­tion. The Advanced Automation System project, for instance, was begun in the early 1980s at a projected cost of $2.5 million to be completed in 1996. By 1994, project costs were estimated to be $7.6 billion and the project was seven years behind schedule. A study by the DOT’S Office of Inspector General in 2005 reviewed 16 other major АТС projects and found that the combined costs had gone from $8.9 billion to $14.5 billion.9 Many of the same concerns are heard about FAA management acumen and pro­cedures as the NextGen overhaul proceeds. The question occurs whether private enterprise could do the job better.

While there is no doubt that commercializa­tion of АТС services is a global trend, the ques­tion remains whether it is the right answer for the United States. The commercialization of АТС services has been an expanding phenomenon elsewhere in the world since 1972. By 2005, at least 40 countries had fundamentally restructured their АТС systems. All of these countries have shifted from a tax-funded base to direct user fees. In a 2009 article based on a study compar­ing 10 commercialized АТС systems with the FAA АТС system,10 the author concludes that the commercialized systems improved service qual­ity, modernized workplace technologies, main­tained or improved safety, and reduced costs. The study also concludes that other risks of com­mercialization, such as erosion of accountability to government, deterioration of labor relations, or worsened relationships between civil and mili­tary air traffic controllers, did not materialize.

The study includes analyses of air navigation systems of Australia, Canada, France, Germany, Ireland, the Netherlands, New Zealand, South Africa, Switzerland, and the United Kingdom, contrasting those with the FAA system in the United States. Among the advantages of reform­ing their air navigation systems as compared to the FAA system were the still lingering problems in the FAA of failing to take advantage of off-the – shelf solutions to problems, overdevelopment, duplicate procurement systems, political interfer­ence that resulted in building unneeded facili­ties, inability to apply business principles, overly bureaucratic and inefficient approval processes, and little client input to help establish priorities.

The labor record at the FAA has also been a problem impacting costs. From the period of the 1960s, some degree of labor unrest has been seen. In 1969, members of the controllers’ PATCO union began the strategy of isolated “sick ins,” and in 1970 some 3000 controllers took part in an organized “sick in” causing extensive disruption in the nation’s air traffic system. These strategies con­tinued through the 1970s, and culminated with the PATCO strike in 1981, discussed in Chapter 29.

Today, FAA employees involved in opera­tions number some 43,000, who are paid a total of $6.5 billion in wages and benefits, or about $151,000 per employee. Controllers, as a group, have compensation packages of about $166,000 each, per year. Labor accounts for two-thirds of the cost of FAA operations.11

Fleet

Airlines reduced the number of aircraft in their fleets by retirement, sale, or simply parking the airplanes. Especially targeted were less fuel – efficient and maintenance-intensive aircraft. The overall U. S. fleet was over 5,600 airplanes in 2000, but by 2003 there were only 4,479, a 20 percent reduction. Orders on new aircraft were reduced, down by over 100 airplanes at the end of 2002 as compared with the end of the second quarter of 2001. (See Figures 35-15 through 35-16 and Table 35-2.) At the end of 2006, the fleet still comprised only 4,339 aircraft.

Restructuring

At the end of 2002, only two major airlines ended up in the black. Southwest reported
profits of $241 million, and JetBlue reported $55 million. The remainder of all major U. S. air­lines reported substantial losses: American, $3.5 billion; United, $3.33 billion; Delta, $1.3 billion; Northwest, $766 million; Continental, $451 mil­lion; U. S. Airways, $1.66 billion. The combined losses of the industry exceeded $10 billion. It was no coincidence that the profitable airlines were the “no frills” low-cost carriers, and the unprofitable ones were the legacy airlines.

Traditionally, the legacy airlines’ largest cost of doing business has been wages and benefits of the rank and file employee, almost all of whom are represented by labor unions. The terms of union contracts control both wages and work rules, nei­ther of which can be unilaterally changed by air­line management. Yet, these were exactly what the airlines needed to change before any significant or long-lasting recovery could be expected. This was especially true since the cost of fuel, which has traditionally been the airlines’ second highest cost of doing business, continued to spiral upward.10

Beginning in 2002, the legacy airlines again resorted to the Bankruptcy Code as their last hope of survival. As the decade progressed, some critics said that Chapter 11 was becoming a man­agement tool, but the fact is that restructuring

Fleet

6/30/01

12/31/01

6/30/02

12/31/02

Change

B727

480

333

259

224

(256)

MD80

631

573

561

554

(77)

DC10

133

111

96

72

(61)

DC9

311

274

272

268

(43)

DC8

118

80

78

77

(41)

F100

114

96

74

74

(40)

B717

28

43

13

13

(15)

L1011

20

15

13

13

(7)

B747

174

174

170

168

(6)

B737

1,296

1,277

1,303

1,294

(2)

A330

9

9

9

9

MD90

16

16

16

16

A310

41

43

46

45

4

A321

19

23

28

28

9

MD10

12

12

16

22

10

MD11

51

53

56

62

11

A300

89

94

101

104

15

B777

110

119

129

129

19

B767

333

344

359

363

30

B757

579

600

615

623

44

A319

158

177

196

210

52

A320

228

251

267

284

56

TOTAL

4,950

4,717

4,677

4,652

(298)

FIGURE 35-15 Airline fleet by type.

of the type that had to be done could only be accomplished in reorganization in a bankruptcy court. Before it was over, every legacy airline would enter Chapter 11 bankruptcy.

The air carrier industry briefly returned to profitability in 2006. By then airline employment

had declined to 544,540, down from a high of

680,0 in the year 2000. Airline capacity, mea­sured in available seat miles, had been reduced by more than 25 percent by aircraft retirements. But profitability since then has been elusive. Next we will take a look at the airlines in bankruptcy,

etc

and how mergers have shaped the industry. But to put things in perspective, we need to briefly review how the airlines got to this point.

TIS-B and FIS-B

The FAA ground station receiving the airborne data rebroadcasts back to the sky once every second. This data broadcast is called TIS-B. The ground station also broadcasts additional flight information such a graphical weather display and NOTAMS. This data is called FIS-B.

There are three distinct benefits of ADS-B over radar:

1, GPS reported positions are more accurate than radar and more frequently reported. Unlike radar, ADS-B accuracy does not seriously degrade with range, atmospheric conditions, or target altitude. Update inter­vals do not depend on the rotation speed or reliability of mechanical antennas. This means that closer spacing can be used than presently, and this provides much needed capacity improvements in congested airspace.

2, ADS-B is less expensive to deploy than ground radars. ADS-B can also be deployed in areas where there was previously no cov­erage by radar, for instance, ocean routes and the Gulf of Mexico, where only proce­dural separation could be employed. These areas can now receive air traffic control separation and free up needed airspace.

3, Other aircraft with ADS-B In equipage can receive the ADS-B broadcast to facilitate aircraft avoidance.

The totality of NextGen benefits will depend on the successful development of FAA ground – based systems, space-based systems, alterna­tive fuels, engine and airframe improvements, advanced avionics capabilities, and airport infrastructure.

Implementation Process

The FAA published its Roadmap for Perfor­mance-Based-Navigation in order to detail three periods of implementation: Near Term (2005­2010); Mid Term (2011-2015); and Far Term (2016-2025).

By 2012, most of the Near Term objec­tives for implementation had been achieved. The ADS-B ground-based infrastructure had more than 400 ground stations operational. These sta­tions were providing satellite-based surveillance coverage for the east, west, and Gulf Coasts and most of the area near the U. S.-Canadian border (see Figure 36-1). АТС is already using this foundation NextGen technology to sepa­rate equipped aircraft at several areas, including Uouisville, Kentucky; Juneau, Alaska; Flouston; and Philadelphia. The total complement of 700 ground-based stations is expected to be opera­tional by 2014 and will allow controllers to use the airspace more efficiently.

A significant volume of PBN arrival and departure procedures for commercial airports, as well as high and low altitude en route charts, have been published. Access to general aviation airports has been improved through the publica­tion of PBN approach procedures using Area Navigation Wide Area Augmentation System (WAAS) Uocalizer Performance with Vertical Guidance (LPV) charts. LPVs are operationally equivalent to Instrument Uanding System (ILS) approaches but require no costly infrastructure or maintenance. As of February 2011, there were 2,772 LPVs at 1,400 airports nationwide.

Additional Conventions

International Recognition of Rights in Aircraft (Geneva Convention-1948)

Ninety-four countries had ratified this Con­vention as of 2002. The purpose of the treaty is to protect the rights of aircraft owners and others holding legal rights to the aircraft (such as security interests) when the aircraft crosses the borders of a signatory nation. One of the intended effects of the Convention was to encour­age investors or financial institutions to more freely provide financing in the purchase of air­craft. Although a signatory to the Convention, Mexico filed a reservation to the effect that pri­ority would be given by Mexican laws to “fiscal claims and claims made for work contracts” over claims asserted under the Convention. Sad stories are legend concerning the recovery of aircraft from Mexico.

Damage to Third Parties on the Surface Caused by Foreign Aircraft (Rome Convention-1952)

This Convention provides for the imposition of strict liability of the aircraft operator for dam­age caused to third parties on the ground, but places a limitation on the amount of compensa­tory damages. It also provides for the compul­sory recognition of foreign judgments against the aircraft operator, so that a judgment secured in the injured parties’ home jurisdiction may be enforced against the aircraft operator in the same manner as a domestic judgment.

Air Offenses Convention (Tokyo Convention of 1963)

This Convention is designed to insure that offenses committed on board an aircraft may be punished by authorities in the jurisdiction of the registration of the aircraft, no matter where the location of the aircraft may be when the offense is committed. The aircraft com­mander or his designees are empowered to pre­vent the commission of such acts and to take the offender into custody, and authorized to remove the offender from the aircraft. Signatories to the Convention are obligated to take all appropri­ate measures to prevent unlawful and forcible seizures of aircraft by persons on board and to restore control of the aircraft to the lawful com­mander of the aircraft.

Hijacking Convention (Hague Convention for the Suppression of Unlawful Seizure of Aircraft-1970)

As has been described, the rash of hijackings that occurred in the 1960s caused international concern. Representatives met at The Hague to consider the problem and underscored interna­tional determination to do everything possible to prevent such actions and to ensure the severe punishment of perpetrators. Detailed provisions are set forth in the Convention concerning the establishment of jurisdiction by signatory nations in order to prosecute such offenses, including rights of nations to take offenders into custody and to prosecute or extradite them according to its provisions.

The European Joint Aviation Authorities (JAA)

JAA was organized in 1970 as a group of civil aviation authorities from separate European states, formed to cooperate in producing “Joint Airworthiness Requirements” (JARs) for cer­tification of aircraft and other products jointly produced in Europe and to facilitate the export and import of such products between European States. Beginning in 1989, JAA as an organiza­tion was cohesively associated as a body with ECAC and was charged with taking care of the regulatory activities in aviation safety under the oversight of ECAC. The ECAC itself concen­trates on policy issues, security, and the environ­ment as they relate to civil aviation.

JAA’s primary function was to ensure that JAA Member States achieved a consistent level of aviation safety through the cooperation of its members. There has been a transition of these activities from JAA to the permanent European Union agency responsible for all civil aviation safety known as the European Aviation Safety

Agency (EASA). EASA became operational in 2003 and is now responsible for rule-making, certification, and standardization of rules to be applied by the national aviation authorities.

JAA developed and adopted JARs in the areas of aircraft design and manufacture, aircraft operations and maintenance, and the licensing of aviation personnel. It also developed administra­tive and technical procedures for the implemen­tation of JARs once they were adopted. Since 1996, for instance, JAA had the responsibility of running the Safety Assessment for Foreign Air­craft (SAFA) program for ECAC. While ICAO has undertaken the overall role of developing and implementing safety standards worldwide, SAFA is an ECAC program that complements ICAO based on a “bottom up” approach. Under this program, JAA conducted ramp inspections of air­craft throughout its Member States utilizing Stan­dards of ICAO Annexes 1 (Personnel Licensing), 2 (Operations of Aircraft), and 3 (Airworthiness of Aircraft).

Beginning in 2000, JAA had developed a fully operational database, completely comput­erized, which is the repository for all reports completed as a result of the ramp inspections Europe-wide. In 2001, 25 states performed 2,706 inspections, up from 75 inspections in 1996. JAA action taken as a result of these inspections ranged from simple discussions with aircraft commanders concerning minor items to ground­ing of the aircraft until corrective action is taken for serious violations. Notification of the respon­sible Civil Aviation Authority of the aircraft’s home country usually followed the notation of a violation. In repeated or egregious cases, entry permits of the aircraft operator were revoked.

JAA has sought to maintain a high level of cooperation and coordination with the FAA in the United States and, more recently, with the appropriate safety regulatory authorities of Russia and other former communist countries that joined the JAA, as well as with Canada, Japan, Australia, and others. With respect to the FAA, JAA sought to harmonize the relationship between FARs and JARs as they relate, particu­larly, to:

1. Design and manufacture, operation, and maintenance of civil aircraft and related products and parts

2. Noise and emissions from aircraft and air­craft engines

3. Flight crew licensing

JAA was widely regarded as the European equivalent of the FAA, and, in many respects, that is an accurate comparison.5 The JAA was criti­cized by the United States, however, as having a protectionist agenda, that is, it adopted regulations for the express purpose of promoting European aviation to the detriment of competitors from outside of the EU, particularly the United States. In June 1997, for instance, the JAA attempted to adopt rules that would have required flight training for European pilots to be conducted at flight schools that are 51 percent owned by Euro­peans. Although this requirement was dropped after objection by United States interests, the new regulation still severely restricts flight training at facilities outside of the EU countries, and makes it difficult to convert a license issued by the FAA into one acceptable under the JAA regulation. This regulation was justified by the JAA on the basis of safety, although even a cursory analysis of the rationale will disclose that basis to be a sham. It is a unilateral trade restriction designed to promote European flight schools to the detri­ment of similar schools located in the United States.

As to the function of JAA coordinating with foreign safety regulatory authorities, like the FAA, on the certification of products and services, JAA made the process of securing its approval of U. S. manufactured products very difficult. Approval by JAA was a requirement before any such American product could be exported to Europe. The approval was designed to be a validation of FAA or other certification, not a new and complete recertification regimen imposed by the JAA. Allegations were lodged that JAA abused this validation process to delay or prevent sales of U. S. aviation products in Europe. One example cited is the difficulty the Gulfstream V has had in securing JAA approval for sale in Europe, difficulty that resulted in years of delay and the expenditure of millions of dollars. Another example is the Cessna X, which required in excess of four years and the expen­diture of $3 million to secure JAA approval. In order for a new aircraft type manufactured in the United States, and certified by the FAA, to be approved for export to Europe, JAA review required as much as an additional 52 percent of the time it took the FAA to certify the new type in the first place. This compares with 15 to 17 percent of the time the FAA takes to certify for­eign aircraft for sale in the United States.6

These European practices may create trade issues that transcend anything previously expe­rienced in world aviation commerce, and may have ramifications that affect the overall global aviation market. At a minimum, these practices violate the spirit of international trade agree­ments and impair the promise of the global mar­ketplace. These practices by the EU, termed “Regulatory Nationalism,” are receiving increas­ing scrutiny by United States government authorities.7

On January 1, 2007, the JAA entered an official “transition” phase designed to mark the absorption of JAA functions into EASA. Combining the offices of JAA with EASA in Cologne, Germany, began on March 1, 2007. The JAA system was disbanded effective June 30,2009.

The Liability Treaty of 1972

This treaty is fully titled as “The Convention on International Liability for Damage Caused by Space Objects.” It recognizes one of the tru­isms of human existence, that there can and will be unintended consequences attached to human endeavors, and when those consequences result in damage to others, there should be a defined process to address those consequences by the payment of money damages.

The Liability Treaty sets out a complex regi­men designed to cover essentially every possible scenario in which damage results from the launch of any space object. It incorporates principles of tort law, contract law, strict liability, indemnity, and other legal concepts that are beyond the scope of our discussion. The basic operation of the treaty, however, follows.

The treaty makes the launching state (or any state that procures a launch by another state) absolutely liable for any damage caused by the launched object that occurs either on the surface of the earth or to aircraft in flight. The liability is on the contracting party (the country that signs the treaty) even though the launch may be made by a private company. The liability attaches to the state even though there is no fault, or neg­ligence, connected with the launch in any way. This is known as “strict liability.”

By way of example, assume that the country of Malaysia contracts with Boeing Launch Ser­vices to launch a satellite from Cape Kennedy. The launch results in a collision with an Airbus 300 operated by Air France, killing all foreign passengers and crew and destroying the aircraft. The debris falls in the ocean on the high seas and damages a Russian warship and members of its crew. Who is liable?

The short answer is that the United States, as the signatory country to the treaty, would bear the liability in the first instance. The lia­bility would be to Air France for the value of the Airbus, for damages to the families of the passengers and crew for loss of life, for dam­ages for the value of onboard baggage and cargo, for damages to the warship to the state of Russia, and for damages to sailors aboard the Russian ship.

If neither the United States nor Malaysia (which procured the launch) is guilty of any fault or negligence, then the United States would have an action under the treaty to recover half of its payout from the state of Malaysia, assuming it was also a signatory to the treaty. The United States (and Malaysia) would have a possible right of indemnity against Boeing Launch Ser­vices, under the laws of the United States, for which the United States would be made whole for all payments made.

The treaty separately addresses the sit­uation where a space object belonging to a launching state (State A) is damaged by a space object belonging to a second launching state (State B). If the space object that is damaged is on the surface of the earth, the rules are the same as stated above, that is, strict liability. But if the damaged space object is anywhere else (in the atmosphere or in outer space), then the state that launched the damaging space object (State B) is liable to State A only if State В is somehow at fault, or negligent, which causes the damage. This distinction recognizes, for example, that a collision of satellites or launch vehicles in motion may be the fault of either one or the other launching states, or both, and that proof of that fault should be a precondition to liability.

Liability may be avoided by the launching state, even under strict liability, if the launching state can prove that the damage was caused by the claimant’s gross negligence or intentional act.

The treaty also does not apply to claims made by citizens of the launching state against the launching state (for example, an American against the United States), since that would be a matter of national, not international, law.

Claims for compensation are presented through diplomatic channels, or through the United Nations.

The Role of Government

At the beginning of the space age, while it assumed complete control of space activities, the govern­ment partnered with private industry to provide for the nation the best and safest space program in the world. As space technology and experi­ence evolved, the government once again stepped aside as the commercial opportunities mani­fested themselves, and during the Reagan years it invited the great American enterprise system to take over. American business and technology

have responded in a resounding fashion, as the launch industry has promoted the evolution of new markets. At first these markets were com­munications, requiring communication satellites, then came direct television, bringing satellite television into homes, then came data services, and then satellite radio. The commercial remote sensing industry was born, and with all of these came the need for more satellites and ground – support equipment.

The federal government has now shifted from providing the only launch capability in the country to becoming a customer for private com­mercial launch providers. The current heavy-lift evolved expendable launch vehicles, the Delta IV and Atlas V rockets, were developed hand in glove with government space programs. Now government has provided a program of funding for the private development of reusable launch and spacecraft systems of different kinds. The enabling statutes and programs discussed above have set the private enterprise system on course to provide the future of American space flight. The primary missing link at the beginning of 2013 is a definitive national space policy. The orderly progression of exploration for the nation of the “fourth environment” of space.37 [26] [27]

7. It is known that several score of the 1,750 copies of God­dard’s 1920 Smithsonian Report did reach Europe.

8. The F. A.I. awarded Amelia Earhart a “flying certificate" before the U. S. began licensing pilots. See Chapter 13.

9. The Van Allen radiation belts are bands of trapped plasma (charged particles) radiation that surround the earth along the magnetic field. The belts are closely related to the aurora borealis and are capable of damaging earth satellites.

10. Formed in 1915, we first encountered NACA back in Chapter 9.

11. For instance, the International Civil Aviation Organization (ICAO) is a specialized agency of the U. N. Refer to Chap­ter 37 for the discussion on the creation of ICAO as a result of the Chicago Convention of 1944.

12. The three-mile limit was established by custom and acceptance because that was the distance that a nation could defend its territory from shore by the use of can­non in the 18th century. By the middle of the 20th cen­tury, most maritime nations claimed a 12-mile limit in order to extract mineral resources, to protect fish stocks, and as a means to enforce pollution controls.

13. The Soviets shot down the U. S. U-2 reconnaissance air­craft flown by Francis Gary Powers over Soviet territory on May 1, 1960.

14. Grotius was a Dutch philosopher and legal theorist who became known as the “father of international law.”

15. At various times, a few nations have attempted to lay claim to the high seas. The Romans claimed the waters of the Mediterranean Sea, the English claimed the North Sea and the English Channel, and Denmark claimed the Baltic Sea. None of these claims could be sustained.

16. COPUOS has never adopted a legal or a scientific defini­tion for “outer space.” The scientific evidence is that the maximum altitude of stable aerodynamic flight is considerably lower than the minimum altitude for stable orbital flight. This band of “no man’s land” is so wide that a specific altitude denoting the boundary between the atmosphere and outer space would necessarily have to be arbitrary.

17. Refer to Chapter 37 for a review of the Chicago Convention.

18. The South American country of Colombia, on behalf of equatorial states, in 1975 claimed sovereignty over a 5.5 degree segment of the geostationary orbit (GSO).

The GSO is the circular orbit in which a spacecraft has an orbital period exactly equal to the period of rotation of the earth. This period, 23 hours, 56 minutes, allows the spacecraft to remain in the same place relative to the earth at all times. The claims of the equatorial countries have been rejected by COPUOS.

19. Uranium 235 and Plutonium 239 are the most practical fuels for space reactors. U-235 is much less harmful than Plutonium 239.

20. The U. S., Canada, Japan, the Russian Federation, and 11 Member States of the European Union (Belgium, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom).

21. ESA, the European Space Agency; CSA, the Canadian Space Agency; RKA, the Russian Federal Space Agency; and JAXA, the Japanese Aerospace Exploration Agency

22. NASA contracted with the Brazilian space agency, AEB, for the use of Brazilian equipment on board ISS.

23. For more complete information on all NASA manned space missions see http://history. nasa. gov/humansp. html.

24. Much of the information and text used in this synopsis of the Apollo Program comes from the Apollo Program Sum­mary Report, NASA History Program Office, Part 1 and Part 2, pages і to 2-28 and 2-29 to 3-32, available from the NASA website.

25. Report of the Columbia Accident Investigation Board, from which much of the information of the Shuttle Story is taken.

26. Quoted, John M. Logsdon, “Return to Flight: Richard H. Truly and the Recovery from the Challenger Accident.”

27. Columbia Accident Investigation Board, V. 1, Chapter 9, p. 211, CAIB_medres_full[l].pdf.

28. Nature, Volume 472, Issue 7341, April 2011.

29. The NRO is an agency of the Department of Defense and builds and operates the nation’s reconnaissance satellites.

30. A geostationary orbit must first be geosynchronous, that is, equal to the earth’s rotational period. The difference is that a geosynchronous orbit may or may not be in the equatorial plane. If it is not, it will appear to move above and below the equator (changing latitude location) as viewed from earth, although it will remain at the same line of longitude at all times. A geostationary satellite, however, will remain in the equatorial plane at all times and over the same point on earth at all times. Geo­stationary satellites have a zero inclination. These two types of orbits are often referred to interchangeably, but incorrectly.

31. NGSO or NGEO satellites are all satellites not in GSO or GEO. LEO satellites orbit from lowest achievable orbit to about 2,400 km, medium earth orbit (MEO) satellites orbit from 2,400 km to GSO.

32. See Figure 41-7 for a full list of launch service providers.

33. The X Prize is titled after Anousheh Ansari, a female Iranian who immigrated to the United States as a teen­ager, unable to speak English. She gained financial success through her own superior efforts in the com­puter and technology fields, founding Telecom Tech­nologies in 2001. She became a member of the X Prize Foundation Vision Circle, and in 2006 became the first female private space explorer when she traveled to the International Space Station as part of the Expedition 14 crew.

34. Neil Armstrong was the first human to stand on the moon. Jim Lovell, also on the Apollo 11 crew, was the second.

35. As reported by Fox News on July 5, 2010.

36. http://www. foxnews. com/politics/2010/07/05/ nasa-chief-frontier-better-relations-muslims/ #ixzz24sPua6tq

37. The first “environments" three are land, sea, and air.