Category AVIATION &ТНЕ ROLE OF GOVERNMENT

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.

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.

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.

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.

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.

<w Be Luke Skywalker, not Darth Vader. Ultimately love is stronger than evil, и

Donald Burr, founder of People Express

People Express had done exceedingly well at the beginning, expanding its route structure and purchasing more and more aircraft. Revenues grew at an astonishing rate, from $38 million in 1981 to $1 billion in 1985. People Express even bought Frontier Airlines, headquartered at Denver, to give it a western hub and to rapidly increase its rate of growth. This purchase also gave People Express an elementary CRS system, the lack of which Burr concluded was severely undermining his airline’s ability to compete in 1985. But Frontier was a union airline, and its culture did not mesh well with People Express, not that any conventional carrier could.

It was said that working at People Express was akin to being in a cult, with its emphasis from the top down on philosophical intangibles like love, equality, peace, and brotherhood. All this was the direct influence of Don Burr, who had been caught up in the message of a popu­lar inspirational and self-help book called The Greatest Salesman in the World. The tenets of this book became the basis for his personal phi­losophy. Attempts to put these teachings into practice at Texas International inevitably brought him into conflict with Frank Lorenzo, who had a very different approach to running a corpora­tion for profit. Now at People Express Burr was free to apply these teachings liberally, and he did, in upbeat posters, presidential messages, manuals, and meetings. Morale was high, and most employees joined in the upbeat new-age philosophy that infused the company, attending pep rallies in the company auditorium by chief cheerleader Burr. The employee stock purchase plan swelled, as workers paid out substantial portions of their salaries to the company in stock purchases, stock that went up and seemingly never could go down.

Burr had pulled off the Frontier acquisi­tion right out from under his mentor, Lorenzo, who was also vying for the property. But it had been costly. Lorenzo had offered $22 per share in October 1985, but Burr had successfully lined up employee support at Frontier because of Lorenzo’s anti-union reputation, and secured sig­nificant employee concessions. These, coupled with Burr’s countering bid of $24 per share, were enough to convince Frontier’s board of directors to vote in favor of the People Express acquisition.

People Express’s cash stores were imme­diately and firmly tapped in order to pay Fron­tier’s expenses. It was much worse than anyone had expected. Burr learned from his financial people right after the deal was closed that People Express could expect to lose $100 million in just the next few months covering Frontier’s hemor­rhaging. By June 1986, less than a year after acquiring it, Burr realized he had to dump Fron­tier if People Express was to survive. Within a period of nine months after the Frontier acquisi­tion, People Express was essentially out of cash.

There were not a lot of suitors interested in Frontier. United offered to take Frontier off Burr’s hands for less than one-half of what Burr had paid just a few months earlier. But United’s pilots soon put an end to the takeover discussions with People Express, and United pulled out of the discussions. With no more cash to infuse into Frontier, Frontier filed for Chapter 11 protection on August 28, 1986.

While almost every aspect of commercial air transportation has in some way been changed by deregulation, perhaps the most consistent impact of the effects of deregulation has been to the air­line employee. Due to the relatively liberal wage and benefits package that airline employees as a group enjoyed during the period of CAB fare and rate control, it is understandable that employee wages and benefits would be a primary target for correction when passenger fares and airline revenues began to fall due to competitive pres­sures after deregulation. In addition, deregulation caused increased activity in mergers and down­sizing by the legacy carriers, as well as bankrupt­cies, which had never before been experienced in the airline industry. This resulted not only in downward pressure on wages and benefits, but in the reduction of the number of airline employees overall.

Because no one in government, in academia, or in the private sector had actually analyzed the vast ramifications of deregulation before Con­gress passed the Airline Deregulation Act, the

industry was thrown into a state of turmoil and confusion as it attempted to deal with the reali­ties of unchecked competition. As these realities played out over the first decade or so of deregu­lated air transportation, both the legacy carriers and the new entrant airlines tried to find a work­able business model. The fluctuation of oil prices and the onset of economic recessions compli­cated this process immensely.

In the legacy airlines, over the course of deregulation there has ensued a cycle of wage and benefit concessions during recurring times of financial distress, followed by intermittent peri­ods of airline profitability when some rebound in wages has occurred. But one thing has been constant: the trend line for historical airline employee wages, along with the total number of airline employees, has continued down. With the early new entrant airlines, wages and benefits were significantly lower that the legacy airlines, and during the early days of deregulation, the further bad news was that most new entrant air­lines were mostly unsuccessful and left the field.

Although the Southwest Airlines business model has proved consistently profitable since deregulation, the legacy airlines and the new entrants have had to continuously make adjust­ments to their way of doing business. Beginning with JetBlue in 2000, a new kind of entrant air­line, designated “low cost carrier,” has emerged that appears to be successful and growing. The legacy airlines, on the other hand, continue to enter bankruptcy, shrink and cut services. As of November 2011, there had been 173 bankruptcy filings by domestic carriers since 1978.

The total number of airline employees as of March 2010 was the lowest since 1990, accord­ing to the Department of Transportation. But that is not the whole story. While legacy air­lines continue to downsize, the new breed of low cost carriers, including Southwest, are grow­ing, adding routes and hiring more employees.

There appears, in fact, to be developing a convergence of business models and methods among all airlines.

Finally, domestic airlines have all dramati­cally increased their use of outsourced mainte­nance facilities. From 1996 to 2006, outsourced maintenance dollars increased from 37 percent to 64 percent, and the number of foreign facili­ties servicing U. S. carriers increased by 344 to 698. The Inspector General of the Department of Transportation, in testimony before Congres­sional hearings on aviation, has stated “We have identified challenges in FAA’s ability to effec­tively monitor the increase in outsourcing.”6 Most troubling, there do appear to be critical regulatory differences between repair shops run by the airlines and those by outside vendors, and the concern remains about how effectively the FAA is able to conduct timely inspections over such a wide-spread repair community.7

Endnotes

1. To review the provisions of the RLA and its mandated procedures for the resolution of labor disputes, refer to Chapter 14.

2. The Airline Stewardess Association was founded in 1945 and merged into the Air Line Stewards and Stewardesses Association in 1949. In 1973, ALSSA left ALPA and formed an independent union under the name Association of Flight Attendants (AFA). AFA was chartered by the AFL-CIO in 1984, and merged with the Communications Workers of America in 2004.

3. The Age Discrimination Act in Employment was not passed until 1967, which banned discrimination regarding certain employees 40 years of age or older. The Age Discrimina­tion Act of 1975 bars discrimination on the basis of age

in programs and activities receiving federal financial assis­tance, and applies to all ages.

4. Diaz v. Pan American World Airways, Inc, 311 F. Supp. 599, (S. D. FI 1971).

5. Diaz v. Pan American World Airways, 442 F. 2d 385 (5 Cir. 1972).

6. www. oig. dot. gov/item. jsp? id=2068.

7. McGee, USA Today, October 2007.

The Department of Transportation-1985 to 1988

During the first years after deregulation, and before 1985, antitrust jurisdiction was divided between the DOJ and the CAB. The DOJ pros­ecuted price-fixing violations of the Sherman Act and the CAB retained jurisdiction over mergers and acquisitions. When the sunset provisions of the ADA extinguished the authority of the CAB, jurisdiction over merger authority went to the Department of Transportation (in 1985). Dur­ing this period, the DOJ function with respect to proposed mergers was limited to the submis­sion of comments to the DOT. The DOJ agreed with many of the DOT positions on mergers and acquisitions. In 1986 alone, in fact, some 25 air­lines were involved in 15 mergers.4

But the DOJ strongly opposed two mergers that the DOT approved, namely, the TWA acqui­sition of Ozark and the Northwest acquisition of Republic, both in 1986. The DOJ opposition was based on the fact that the merged carriers operated hubs at common airports, thus only they provided nonstop service to many city-pairs. With the mergers, all competition was lost.

The DOT approved the acquisitions rational­izing that the threat of entry into those markets by other carriers, who would be free to enter because of deregulation, would deter anticompet­itive practices by the merged carriers. This thesis, known as the contestability theory, proved to be incorrect, and fare increases and service reduc­tions followed the mergers.

On April 5, 2000, the far-ranging Wendell H. Ford Aviation Investment and Reform Act for the 21st Century became law. This statute, designed to alleviate many of the intransigent problems faced by the aviation infrastructure arising from deregulation, increased funding for civil aviation in the United States by $10 billion over levels current at the time of its passage. The majority of the increased funding was earmarked for air­port construction and improvement and for radar modernization. The major components of the law, broken out into the general categories that are affected, are outlined in the box on page 315.

For the first time, as a result of AIR-21, large and medium hub airports are required to submit Competition Plans to the FAA as a condi­tion of receiving PFCs at those airports. These requirements are designed to assure a competi­tive environment for all airlines, including gate use monitoring, gate sublease oversight, and pro­cedures for assignment of gates.

When the Deregulation Act was passed in 1978, most airports had in place legally enforce­able gate and lease contacts with the airlines that reflected the economic realities of rules imposed by the CAB. Under these rules, as discussed above, airports were happy to have the airlines serving their airports, and the existing contracts reflected this disparity in negotiating position. As we have seen, the beneficial provisions in these contracts to incumbent airlines translated into anticompetitive barriers to new entrant carriers. With the anticompetition provisions in AIR-21, and with the expiration of these pre-deregulation contracts, all airlines, including new entrants, will have a more level playing field.

In the over 30-year period since deregulation, the existence of the air carrier industry has been characterized by a cyclical “feast or famine” roller coaster ride. Short periods of prosperity have always been followed by periods of stress and financial loss. Each one of these cycles has been precipitated by overriding economic and political conditions, punctuated by high fuel costs, all of which have been largely beyond the control of airline management.

The business model that existed during the period of CAB control beginning in the 1930s, the model the legacy airlines operated under when deregulation began, has been tested and has now been found to be unworkable in the new competitive environment of deregulation. This was not true during the early years of deregula­tion, when the incumbent airlines’ economies of scale (size, experience, computer reservation
systems, gate and slot ownership, and control of the hub and spoke system) did, in fact, inhibit the success of new entrant airlines.

The predominance of the legacy airlines dur­ing the years immediately following deregulation turned out to be a transitional phase in the pro­gression of the industry away from government control. But the challenges of a never-ending stream of new entrant airlines continued to apply pressure to the business model of these airlines, which were still constrained by high labor costs, high fixed costs, low fares, and ever-increasing debt incurred in an effort to continue to exist.

Southwest Airlines brought to the contest a new business model, one which during the more recent period of commercial aviation experience has provided an example to new entrant airlines, and has been instructive to the legacy carriers as well. The “Southwest Effect,” as its way of doing business and culture have been termed, has come to define how an airline can be run profitably in the deregulated world.11

Although Southwest is 82 percent unionized, its employees do not belong to the same unions as the legacy airlines, whose labor contracts are the product of adversarial negotiations of long standing. Southwest’s employee relations are

more personal and informal, and have produced a loyal workforce that views the airline’s success as its own. But perhaps most important is the fact that the various classes and crafts of workers are permitted under their labor contracts to perform cross-functional tasks. One of the sacred cows of railroad style union contracts is that employees are prohibited from performing work that belongs by contract to others’ crafts. A mechanic may not change a light bulb. A clerk may not use a broom. At Southwest, with the use of an incentivized pay structure, everyone pitches in to get the job

done in the quickest and most efficient way pos­sible. This results in much higher productivity. As an example, in 2000 the total labor expense at Southwest, measured per available seat mile, was 25 percent lower than at American and 58 percent lower than at USAir. This business model has produced the lowest operating expense in the industry, calculated on cost per available seat mile, 12.96 cents, compared with Delta Airlines’ 14.76 cents. But the gap is beginning to narrow.

The Southwest model has always used only one type of aircraft, the Boeing 737, which has

resulted in reduced maintenance costs and train­ing costs of pilots and mechanics. Southwest flies into secondary airports rather than primary air­ports where possible, which lowers airport land­ing fees and costs and, along with a non-standard general boarding procedure, results in a compara­tively low turn-around time. It has avoided hub and spoke costs and delays by employing a point – to-point networking system. This allows much higher equipment utilization.

The “no frills” airline group that has emulated many of the practices modeled by Southwest has come to be known as the “low-cost carriers” (LCCs). There have been many new entrants in this category into the domestic air carrier com­munity since deregulation in 1978, but at least 20 have failed, including People Express, ATA Air­lines, and MetroJet. Among the survivors of this group are AirTran, Allegiant Air, Frontier, Jet­Blue Airways, Spirit Airlines, and Virgin Amer­ica. Some of these airlines fly only domestically, and some both domestically and internationally.

Primary among this group is JetBlue, which was founded by a nucleus of former Southwest Airlines employees. While following the basic low – cost model of Southwest, JetBlue offered some dis­tinguishing amenities such as television monitors at every seat and satellite radio. It was kick-started in 1999 when the FA A awarded it 75 slots at its home base at JFK, and it began service in February 2000. As mentioned above, JetBlue was one of the few airlines that recorded a profit during 2001. JetBlue has not been as consistently profitable as Southwest, but it does maintain a certain cache among flyers and the airline community. It has also received high passenger satisfaction awards.

The other notable among the FCCs was AirTran, which operated Boeing 717 and 737 aircraft, headquartered in Orlando, Florida. In March 2012 the government approved the pur­chase of AirTran by Southwest and the merger process is under way. Since Southwest prides itself on operating only the Boeing 737, one of the initial problems with the merger was that AirTran flew both the Boeing 737 and the 717.

Fatest developments indicate that all of the AirTran 717s will be leased to Delta Airlines. Thus Southwest is intent on keeping its opera­tions limited to the Boeing 737.