Category AVIATION &ТНЕ ROLE OF GOVERNMENT

The European Civil Aviation Conference (ECAC)

The European Civil Aviation Conference is an inde­pendent body of 42 Member States that is closely integrated with ICAO, as anticipated by Article 55 (a) of the Chicago Convention. ECAC was founded in 1955 at the behest of the fledgling European Council to be to the pan-European states what ICAO is to the entire world. As ECAC has matured over the period of one-half century, its functions have been expanded, and it has become the only Europe-wide organization with the membership and expertise capable of responding to the complex needs of the European air transport industry.

ECAC’s stated objectives include the pro­motion of continued development of a safe, effi­cient, and sustainable European air transport system that seeks to harmonize civil aviation pol­icies and practices among its member states and the major industrialized countries of the world. It has become the essential forum for discussions of every major civil aviation topic and regularly conducts seminars and international symposia on various issues. It concerns itself with the envi­ronment, noise, accident investigation, security, immigration, certification, airport policy, and land-use management.

ECAC works closely with the European Commission in aviation affairs and is funded by the European Council. The aviation safety responsibilities of ECAC are currently carried out by the Joint Aviation Authorities and by its successor organization, the European Aviation Safety Agency (EASA).

The cumbersome title, “The Treaty on the Prin­ciples Governing the Activities of States in the Exploration and Use of Outer Space, Includ­ing the Moon and Other Celestial Bodies,” is commonly called the Outer Space Treaty. This treaty is to space law what the Magna Carta is to English Common Law, and what the Treaty of Rome is to the European Union. It is the most inclusive and authoritative document for human governance in space, and it is the basis for all treaties that have come after it. It is modeled on the Antarctica Treaty, which was drafted for much the same reason in 1959, as was the Outer Space Treaty in 1967.

Like the Antarctica Treaty, it is a “no arma­ment” treaty. It seeks to prevent a new form of colonial competition in outer space. The treaty covers the entire outer space environment, including the moon and other celestial bodies. It entered into force on October 10, 1967.

The main provisions of the Outer Space Treaty provide:

• The use and exploration of outer space is to be carried out for the benefit of all.

• Outer space is not subject to national appro­priation by claim of sovereignty.18

• Activities in outer space are to be in accor­dance with international law.

• Outer space is to be free of nuclear weapons or other weapons of mass destruction.

• Military bases and testing of weapons are forbidden, although military personnel may be used for scientific research and other peaceful purposes.

• Astronauts are envoys of mankind and shall be rendered all possible assistance in the event of accident, distress, or emergency landing on any state’s territory or on the high seas.

• States launching objects into outer space are liable for any damage caused.

• Launched objects shall remain the property of the state or party that launched it.

• Use and exploration of outer space is to be carried out without interference to other states, and a procedure for consultation between states is provided for this subject.

• States will inform all concerned, including the public, of intended space activities.

The treaty is broadly worded and, therefore, does not purport to provide definition on many issues. Implicit in the drafting is the expectation that other, more specific agreements would be crafted in the future to address specific concerns as needed.

The United States is a signatory to this treaty.

Ш The Rescue Treaty of 1968

The full title is “The Agreement on the Rescue of Astronauts, the Return of Astronauts, and the Return of Objects Launched into Outer Space.”

Its purpose is to give specificity to the provi­sions of the Outer Space Treaty that call for the rendering of aid to astronauts and the return of space crews and property launched into space.

The Rescue Treaty creates obligations on contracting parties, both as to crew and as to objects launched into space, who learn of any accident, unintended landing, or crew distress, to immediately:

• Notify the launching authority or make a public announcement, and notify the Secretary-General of the UN.

• Rescue crew and render assistance, even if on the high seas.

• Return the crew to the launching authority.

• Return the space object to the launching authority.

The words of the treaty express the senti­ment that astronauts are the “envoys of man­kind,” and that all nations shall have the attitude toward them that reflects the spirit of interna­tional cooperation and assistance.

The United States is a signatory to this treaty.

In 2004, President Bush announced a new space policy for the country termed “Vision for Space Exploration” which included a NASA initiative called the Constellation Program, centering on future human space flight. Its purpose was to give new direction to the American space pro­gram and regain public enthusiasm for space exploration. The new program set out an ambi­tious agenda:

• The International Space Station was to be completed by 2010.

• The Space Shuttle was to be retired by 2010.

• Replacement of the Space Shuttle, by a pro­gram called Orion (successor to the Crew Exploration Vehicle), was slated to be opera­tional by 2014.

• A new generation of reusable and partially reusable launch vehicles was to be devel­oped using some Space Shuttle technology, called Shuttle-Derived Launch Vehicles. These launchers included the Ares I, Ares IV, and the Ares V. The new concept was to use the Ares I for crew lift and the bigger, more expensive Ares V for cargo lift. These were to be the launchers for further moon exploration. (See Figure 41-12.)

* Renew moon exploration by launching robotic missions to the moon by 2008 (which never evolved) and crewed missions to the moon by 2020.

• Continue the exploration of Mars with robotic missions to be followed by crewed missions.

The Reality-2010

Although presidential candidate Barack Obama campaigned on a positive NASA plat­form, including human launches to the moon by 2020, the Obama White House has maintained no consistent position on space development. By 2010, the Constellation program had been canceled, except for a modified version of the Orion space vehicle. The Ares launch vehicle program had been converted into a “Shuttle – Derived Heavy Launch Vehicle,” effectively replacing the Ares V. It appears that the Inter­national Space Station is being approved for funding for an additional five years, through 2020—the ISS has been continuously manned since the year 2000.

The Obama White House also seems to favor the use of commercial launch vehicles and spacecraft as the basis for future U. S. civil space policy. This has brought many powerful Congressmen, who favor stronger government control in manned space flight, and important former astronauts, including Neil Armstrong, into conflict with the administration. Con­gress has provided no money for the COTS program in the NASA budget for 2013. The conflict is over whether there should remain funding for several of the top-ranked commer­cial launch and spacecraft upstarts (like Space X and Orbital Services) or whether a tried and proven commercial launch and services program (like Boeing, Lockheed, United Launch Alli­ances) should be funded alone. The argument against funding several companies in a competi­tive atmosphere is that there is no proven track record (other than the one-time Space X orbit rendezvous with the ISS in 2012), that it would be more costly to fund the competition, and the satellites and other payloads that must be put in orbit are so expensive that launch customers will be hesitant to trust upstarts. Many think that this is a short-sighted view since competition has been historically proven to provide creativity and innovation. It is also contrary to the con­cept of the NASA Centennial Challenges, to the spirit of the Commercial Space Launch Amend­ments, and to the history of pre-space flight innovation.

While the debate continues as to the coun­try’s future in space, American astronauts must be launched to the International Space Station aboard Russian Soyuz spacecraft, since the United States has no human space launch pro­gram. And we have the rather puzzling declara­tion by newly Obama-appointed NASA Chief Charles Bolden that he has been tasked by the White House with a new mission that has noth­ing to do with space. According to an interview given by Bolden to A1 Jazeera while in the Mid­dle East,35 his “foremost” mission as the head of American’s space exploration agency is to improve relations with the Muslim World.36 Spe­cifically, (Bolden said that Obama charged him with three specific assignments: “When I became the NASA administrator—or before I became the NASA administrator—he charged me with three things. One was he wanted me to help re-inspire children to want to get into science and math, he wanted me to expand our international relation­ships, and third, and perhaps foremost, he wanted me to find a way to reach out to the Muslim world and engage much more with dominantly Muslim nations to help them feel good about their historic contribution to science. . . and math and engineering.”).

At the same time, NASA is moving ahead in unmanned, robotic space exploration. In August 2012, a one-ton, four-wheeled vehicle was suc­cessfully landed on Mars. Known as the “Curi­osity Rover,” it is a full-fledged geochemical laboratory equipped with lasers, video cameras,
and measuring instruments, and it has the capa­bility of analyzing soil and air samples and then sending the results back to earth. Its main func­tion is to search for evidence of microbial life. “Curiosity” follows the much smaller and sim­pler Sojourner rover, which landed on Mars in the 1997 Pathfinder mission. “Curiosity” repre­sents the 40th mission to explore the Red Planet over the last 50 years.

There are also currently satellites orbiting the Sun, Mercury, the moon, the asteroid Vesta, Mars, and Saturn, which provide an on-going flow of information, as well as missions now en route to Jupiter and Pluto. Sixteen earth obser­vation satellites are currently studying various
systems of the earth, including climate, the oceans, and the Polar Regions.

Frank Lorenzo next set his sights on Continental Airlines, which had a proud history going back to 1934 as Varney Speed Lines. The airline was renamed Continental Air Lines in 1937, even before the passage of the Civil Aeronautics Act, and before Frank Lorenzo was born. Lorenzo had earlier attempted to interest Robert Six, founder and chief executive of Continental, in a merger with Texas International, to no avail. Six was among the group of original oil-stained visionar­ies who had started it all in the airline business, along with Jack Frye, Eddie Rickenbacker, and Juan Trippe, and he wanted nothing to do with the financial whiz-kid from New York. By 1980, Continental’s all-jet fleet flew routes coast to coast and over the Pacific to the Far East and Australia. But by 1980, the effects of deregula­tion and a long strike by flight attendants had produced a loss of $27 million for the year. An attempted merger with Western Airlines did not succeed, and Continental was at risk.

By 1981, A1 Feldman had replaced Robert Six as CEO. Feldman was also of the old school and was no more interested in hooking up with Lorenzo than Six had been. Before joining Con­tinental, Feldman had successfully turned around Frontier Airlines using traditional business meth­ods. Unable to secure a voluntary merger agree­ment with Feldman, Lorenzo, using the assets of Texas Air, began buying Continental stock in another hostile takeover bid.

Feldman fought the takeover energetically, combining with Continental’s labor forces to present a united front in opposition. Attempts were even made to get financing that would allow the employees to buy into the company through an employee stock ownership plan (ESOP). In spite of these frantic efforts, which included the employees giving up $180 million in projected pay raises, the ESOP failed. Lorenzo ultimately acquired enough company stock through the open market to get voting control. A1 Feldman committed suicide in his office on August 9, 1981.

When Lorenzo took over, a new board of directors was selected, which included Alfred Kahn and John Robson, both former chairmen of the CAB. Because of their roles in bringing about economic deregulation, it could be said that they were both indirectly responsible for the emergence of the voracious Frank Lorenzo as a force in the airline industry. Lorenzo brought in Stephen Wolf from Pan Am as president of Continental. Lorenzo decided to merge Texas International operations and assets with those of Continental, to jettison the Texas Interna­tional name for good, and to move forward as Continental.

As the consolidation proceeded and Loren­zo’s accounting team probed deeper into Con­tinental’s finances, it soon became clear that the company was in much worse shape than Lorenzo had been led to believe. It began to look like Lorenzo might have finally made a fatal miscalculation. If Lorenzo’s investment was to be salvaged, drastic measures were going to be called for.

Phil Bakes, still Lorenzo’s right-hand man, determined that the airline’s main expense challenge was the cost of labor. Pilots aver­aged around $90,000 per year, but flew only about a third of the month. Flight attendants drew $37,500 annually. Mechanics’ wages were $40,000 a year. If Continental was going to survive, labor would have to yield to the com­petitive market consequences of deregulation. Attempts at conciliation between the two sides proved fruitless. The machinists’ union, Inter­national Association of Machinists (IAM), went on strike at Continental in August 1983. On Sep­tember 24, 1983, Continental became the second major airline to file for Chapter 11 protection under the Bankruptcy Act.

Lorenzo turned over operation of the air­line in Chapter 11 to Phil Bakes. A recent deci­sion of the U. S. Supreme Court, National Labor Relations Board v. Bildisco,1 established that labor contracts, to the extent that their provi­sions impaired the claims of other creditors, were not enforceable against the debtor corporation (the airline). This decision opened the way for

Continental to unilaterally abrogate all wage scales and work rules, which it did immediately. In effect, Lorenzo was able to legally cancel all labor contracts that were in force at Continen­tal. He then invited back its employees to work longer hours at half the rate of pay. Those who did not agree were simply out of a job. New hires were made in all areas of the company and, despite the fact that the company was in bank­ruptcy, the pilots’ union called a strike. Through the efforts of Phil Bakes, schedules were largely maintained, additional pilots were brought into the company, fares were lowered to attract more passengers, and gradually the company took on a semblance of normalcy. Two years after Conti­nental entered Chapter 11, it became the first air­line to successfully emerge from bankruptcy and to pay its creditors close to 100 cents on the dol­lar. The restructured and reconfigured airline was now ready to cope with the deregulated world.

There were no unions for cabin attendants work­ing for the airlines prior to the early 1940s. Their roles had been defined early on by passenger ship service, and these attendants were usually males who were termed “stewards” or “pursers.” Dur­ing the 1920s, Pan American World Airways first employed male stewards on their Key West and Miami service to Havana, using 10-passenger Fokker aircraft (see Figure 15-9, p. 144).

Domestically, women came into the airline work force in 1930 when Boeing Air Transport, later United Airlines, hired Ellen Church, a reg­istered nurse. Church was enamored of aviation and had applied unsuccessfully for a pilot’s posi­tion with Boeing Air Transport. Having been rejected as a pilot, she suggested that having a registered nurse on board would help alleviate passengers’ fear of flying in those early days and that she could professionally attend to air sick­ness as well.

Church became the world’s first stewardess on May 15, 1930, in a three-month experiment that ultimately used eight registered nurses on the west coast to Chicago routes. The addition of these nurses was an unqualified success and, within a short time, most airlines in the country also began adding nurses to their flight crews. They were called “stewardesses.”

Stewardesses in the 1930s were required to be unmarried, younger than 25 years old, weigh less than 115 pounds, and be under 5’4” tall. At the time, there was some correlation between these physical requirements and the size of the interior of most passenger planes. In addition to attending to passengers, their duties included fueling the airplanes, hauling baggage, and light cabin maintenance.

In 1953, American Airlines imposed an upper age restriction for continued employment for stewardesses that called for their retirement upon reaching 32 years of age. Their union was able to limit this rule to new hires, exempting current employees. By this time, many airliners had pressurization systems that allowed flights to be conducted at higher altitudes in quite com­fortable conditions, out of most of the weather and turbulence inducing air sickness and fear of earlier times. These aspects of commercial flight were significantly enhanced with the introduction of passenger jets late in the 1950s.

By 1960, the stewardesses were represented by a division of the Air Line Pilots Association known as the Air Line Stewards and Stewardess Association (ALSSA), now an independent union known as the Association of Flight Attendants.2

III fly because it releases my mind from the tyr­anny of petty things. . . . Я

Antoine de Saint-Exupery

ne of the recognized purposes of govern­ment is to protect the “public interest” under its constitutional authority to promote the general welfare. A full and complete definition of the term “public interest” has proven to be elu­sive. The concept of the public interest has, for example, been used to justify both the regulation of the airline industry and its later deregulation. It was invoked to justify the original restrictive regulation of the railroads in 1887 (The Interstate Commerce Act), and later used to justify finan­cial assistance to the same railroads.

The nature of the activity deemed by soci­ety, or the government specifically, to be either in the public interest or against the public interest is often a function of the “times” or of the phi­losophy of the administration that happens to be currently in charge of running the government.

In this chapter we will look at how the government attempts to protect the “public interest,” specifically in the air transportation industry. To do this we will have to review the history of Congressional legislation which makes it unlawful for the private sector or any business
enterprise to prevent or limit competition. These laws are referred to generally as “antitrust” leg­islation, which is in the public interest because competition in the business sector is beneficial to the public, resulting in cheaper and more avail­able products and services.

When this legislation was enacted by the Congress, the aviation industry did not exist. It was enacted primarily to curb abuses by the rail­road industry during the late 19th and early 20th centuries. When the commercial airline industry came along, the courts had to decide whether or how the antitrust statutes would or should be applied to airline transportation.

Once Congress had enacted this type of legislation in the form of statutes, it fell to the executive branch of government to enforce the law. The executive branch does this through its departments and agencies. Jurisdiction over the airlines has bounced around in the executive branch of government, being first exercised by the Department of Commerce, then the agency known as the Civil Aeronautics Board. After deregulation of the airlines in 1978, jurisdiction swung between the newly formed Department of Transportation (DOT) and the Department of Justice (DOJ) and, finally, today, is shared by these two departments and their agencies.

The chronological sequence of statutory law and the agencies that have enforced that law are as follows:

1, The Sherman Antitrust Act

2, The Clayton Antitrust Act

3, The Department of Commerce and its agencies

4, The Civil Aeronautics Board

5, The Department of Transportation

6, The Department of Justice

7, A combination of DOT and DOJ

It would be fair to say that the promise of eco­nomic deregulation of the airlines has been com­promised by continued government operation and control of the remaining two components of the air service industry: airports and air traffic control. Airports are virtually all owned by state and local governments or their subdivisions. Air traffic control is operated by the Federal Avia­tion Administration. Knowledgeable people are asking, “Would the system function at a higher service level if these other two branches of the air service system were also to be economically deregulated?”

Airports and Air Traffic Control:

A Brief History

Airports

Federal subsidization of airports has a long his­tory, as we have seen earlier in this book. Air­ports began in the early days of commercial aviation as local, municipal, state, and even private (Burbank Airport in California) opera­tions. Federal financial participation began as part of the Works Projects Administration and other relief organizations in the 1930s (nota­bly at LaGuardia Airport). After World War II, Congress dived into the airport business with the passage of the Federal Airport Act of 1946 and, while that was a relatively small effort, with it began the acceptance of the principle that air­ports were the primary responsibility of the fed­eral taxpayer.

The federal government also has a long his­tory of levying taxes on the air service industry, beginning with the placing of an excise tax on aviation fuels in 1932 and an excise tax on pas­senger airline tickets in 1941. These revenues were deposited in the General Fund, but in 1970, on the creation of the Airport and Airway Trust Fund (discussed above), revenues received from various sources by the federal government were dedicated to be used for federal aid to airports and for air traffic control and other FA A purposes.

The Federal Aviation Administration is responsible today for the administration of these revenues, which currently amount to some $12 billion annually. Trust fund revenues paid for almost 80 percent of the FAA’s $16.4 billion 2011 budget. The General Fund is still on the hook for the remaining 20 percent.

Airport authorities and their lobbying orga­nizations have attempted to have Congress raise the PFC amount that airlines can charge each passenger, asserting that inflation has eroded the value of the PFC money received by them for airport upgrades, among other things. They have also offered to forego the AIP funds in return for being able to set their own PFC rates. The Con­gress passed the 2012 FAA Reauthorization Act, however, without raising the amount that airports may charge under the PFC program and without disturbing the distribution rationale of the AIP program. This may leave a shortfall in airport funding programs for airport improvement proj­ects going forward. Environmental concerns have brought additional pressures on airport manage­ment practices and funding requirements.

The international community is well out in front of the United States on this issue. Over 32 of the largest 100 foreign airports are now fully or partly privatized, including Athens, Auckland, Brussels, Buenos Aires, Copenha­gen, Dusseldorf, Frankfurt, Johannesburg, Lon­don, Melbourne, Naples, Rome, Sydney, and Vienna. Others are in the process of privatiza­tion, including Hong Kong and Tokyo. Most of these airports are operated under a lease of the entire airport facility to a private operator on a long-term basis, usually 30 years or more. The governmental owner of the airport normally retains ownership of the land and airport facili­ties. The privatization process was begun, of all places, in England with the 1987 privatization of the British Airports Authority, which owns Heathrow and other airports.

Government-owned and managed airports are characterized as risk-averse, passive, and non-innovative. Privatized airports are more will­ing to take new risks, like expansion of facilities and gates. The lack of gates is cited as one of the constraints on new entrant airlines, which is a competitive disincentive. As we have seen, long-term leases with incumbent airlines allow a large degree of control to be lodged with those airlines, another competitive disincentive. Oxford University has conducted recent research into airport management strategies and found that the management approach at privatized airports is significantly more “passenger-friendly” than at government-operated airports.

There are currently some 100 companies worldwide that own or operate airports, finance the privatization of airports, or participate in the design, financing, building, and operation of air­ports and terminals at airports.

The U. S. federal statutory regimen gov­erning airports is a significant disincentive to privatizing airports. Under federal law, airport authorities that have received them must repay federal grants previously received if the airport is sold and, if it is sold, the FAA has said that all monies received in payment for the airport itself must in turn be used for “airport purposes,” rather than placed into the local government’s general fund to be used for other governmental purposes. The other possibility is to lease the airport grounds and facilities, retain title to the airport, and contract out the use of the airport to a qualified operator. These considerations led to the new statute discussed below.

There has been a quiet movement in the United States to convince Congress that priva­tization of the airports is in the ultimate interest of travelers and taxpayers. In 1996, Congress passed the 1996 Airport Privatization Pilot Pro­gram,8 which created five “pilot program slots” that allow up to five airports (but only one large hub airport) to enter into a privatization test pro­gram. This program releases airport owners from the restrictions mentioned above and thus makes feasible the privatization of airports. The law, however, makes mandatory that the airport must secure at least 65 percent approval (by landing weight) from the airlines using the airport.

Progress under this statute has been slow. In fact, the only successful privatization under this program was concluded by Stewart International Airport, located north of New York City, by entering into a 99-year lease with a subsidiary of the British-owned National Express Group. This arrangement lasted only one year when the lease was terminated in 2007 by mutual consent and the operation of the aiiport was taken over by the New York and New Jersey Port Authority, which is not eligible under the privatization statute. This terminated the only successful privatization effort in the U. S. to date.

Applications were made by several other airports. Some of these applications have been withdrawn, while others are going forward, as indicated below. The following airports have made applications: Gwinnett County Briscoe Field in Georgia (application withdrawn June 2012), New Orleans International Airport (appli­cation withdrawn October 2012), Luis Munoz Marin International Airport, San Juan, P. R. (application approved December 2009, Aero – star Airport Holdings selected as operator, July 2012, pending FAA approval, docket number FAA-2009-1144), Hendry County Airglades Airport in Clewiston, FL (application approved October 2012, negotiations ongoing with private operator, docket number FAA-2008-1168), and Niagara Falls International Airport (application withdrawn 2001).

By far the largest airport that has begun the privatization process is Midway Airport in Chicago. This effort has been ongoing for many years and at least one arrangement with a private operator collapsed because of the lack of funding by the City of Chicago. As of July 13, 2012, the City has awarded a new five-year $53.6 million contract for the airport’s operation, but that is subject to FAA approval, so the process contin­ues (docket number FAA-2006-25867).

Box 33-1 The Major Components of the Wendell H. Ford Aviation Snvestment and Reform Act

1, Safety

a. Increases FAA facilities and equipment budget by almost 50 percent for АТС system modernization

b. Increases funds for runways and airport equipment

c. Provides funding for FAA hiring and retention of controllers and inspectors

d. Makes runway incursion prevention devices eligible for AIP funding

2, Competition

a. Funding for new terminals, gates, and taxiways

b. Abolishes slots at O’Hare in 2002; modified by FAA in 2004

c. Abolishes slots at LaGuardia and Kennedy in 2007

d. Creates 24 new slots at Reagan National, 12 of which are to be used for flights within the 1,250-mile perimeter and 12 to be used outside of the perimeter

e. Requires certain large and medium hub airports to submit a competition plan

3, Environment

a. Increases funding for noise abatement

b. Establishes guidelines for air tours over national parks

4, Small Communities

a. Increases funding for non-hub airports

b. Guarantees funding for general aviation airports

c. Doubles the small airport fund

d. Creates an incentive program to help airlines buy regional jets to be used to serve small airports

e. Creates a new funding program to assist small airports in promoting their air services

5, Large Airports

a. Doubles the amount of annual passenger funding for primary airports (those with 10,000 or more passengers per year)

b. Raises the cap on annual funding for large airports from $22 million to $26 million

c. Doubles the funding for cargo airports

d. Raises the cap on Passenger Facility Charges (PFC) by $1.50 (to $4.50) to facilitate airport improve­ments that cannot be funded through the Airport Improvement Plan (AIP). PFCs can only be used to fund airport projects that increase safety and competition or are used for noise abatement

6, FAA Reforms

a. Creates an oversight board (similar to IRS reform legislation)

b. Makes changes in FAA management structure to ensure spending integrity

c. Creates a management board to oversee the АТС modernization program (the DOT is to consult with Congress in board appointments)

Privatization of terminals, as opposed to the entire airport, is a likely continuing trend as Southwest plans its new terminal at Midway and Terminal 4 at JFK continues to be operated by the Dutch Schiphol Group, which also manages Amsterdam’s Schiphol Airport, under contract with the New York and New Jersey Port Author­ity. Delta is expanding Terminal 4 to accommo­date all of its international flights in a new $900 million undertaking.

As a part of the FAA Reauthorization Act of 2012, the Airport Privatization Pilot Act was expanded to allow up to 10 slots for the program, an increase from the original 5 slots. Under the privatization act, commercial service airports may only be leased out to operators, but general aviation airports may be sold. Privatization under this program has been nil to slow.

The only existing privately operated and privately owned commercial service airport in the United States was built in 2009 as Branson Airport by a group of investors known as Bran­son Airport LLC. The airport is located near Branson, Missouri, with the closest commercial service airport 50 miles away near Springfield, MO. Its largest carrier is Air Tran (Southwest is merging its operations with those of Air Tran and has announced that it will take over operations on March 9, 2013), with additional service being offered by Frontier and ExpressJet. One unusual aspect to the private ownership of the airport is that the airport is free to grant exclusive route authority to just one airline. The operators have said that they do not want “suicide fares,” with two or three airlines bashing each other until one or more gives up and stops service. This should be interesting to watch.

The combination of adverse effects due to Sep­tember 11 and its aftermath bore down heavily on the airlines. The domestic air carrier industry was in for five years of negative profitability beginning in 2001. Through 2005, the airlines lost $35.1 billion just for that five-year period. The airlines were also deeply in debt.

Labor

Aside from low passenger traffic counts, the plight of the airlines was complicated by increased labor costs that were the result of protracted negoti­ations with their labor groups from the period
of profitability during the late 1990s. Labor had pushed to make up for some of the concessions that had been granted management to keep the air­lines afloat during the dark days of the early 1990s, and now the cost of those new labor agreements were coming due. Labor costs have traditionally been the largest single expense factor faced by air­lines, historically amounting to some 35 percent of total operating costs. The average airline employee in 2002 made $73,000 a year, including pension and insurance benefits. Because airlines require the services of highly skilled employees, their employ­ees historically are highly paid. Airline wages were 53 percent higher than national averages.

Following September 11 the airlines were forced to reduce their workforces significantly, on average among the 13 largest carriers by 14 percent, although at United the reduction was 20 percent and at US Airways it was an even greater 24 percent. In numbers, there were over

80,0 layoffs immediately. By 2003, that num­ber was 140,000. See Figures 35-7 through 12 and Table 35-1.

Fuel

Fuel prices are inextricably interwoven with overall economic conditions. A close correlation

can be observed between periods of recession and increased energy prices. (See Figure 35-13.) In spite of advances in fuel-efficient aircraft engines (the aircraft fleet in 2002 was twice as fuel effi­cient than 30 years before), fuel prices continued to contribute heavily to the airlines’ financial

woes. During the first 11 months of 2002, jet fuel prices rose 27 percent, and from December 2002 to February 2003, those prices rose an additional 55 percent. Jet fuel prices more than doubled in the one-year period February 2002 to February 2003. Crude oil prices increased by 60 percent in

2004, and in 2005 the airlines’ fuel costs doubled over that in 2003. (See Figure 35-14.)

Southwest Airlines, exhibiting another facet of original thinking, began hedging its fuel costs.9 In 2004, Southwest’s fuel costs were much lower than its competitors’ costs for this reason. South­west continued to demonstrate profitability even under these trying circumstances.

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.