Aviation analyst cites problems with U.S. oversight of airlines

Aviation expert Mike Boyd pulls no punches when he talks about the government’s oversight of the airline industry.

In Monday’s kickoff of the Boyd Group International Aviation Forecast Summit in Las Vegas, Boyd didn’t disappoint when he listed problems with federal management of air traffic control, security and airport capacity planning.

But Boyd and three associates speaking on panels on some of the coming shifts in aviation also dished it out to airlines for their failure to keep customers happy with their poor service and lousy on-time performance.

It’s the first time the Boyd summit, now in its 19th year, has met in Las Vegas. With more than 400 in attendance, it’s the largest gathering the Evergreen, Colo. aviation industry consultant has staged. The event at the Wynn Las Vegas has drawn executives from airlines, airports and aircraft manufacturers to discuss a wide variety of issues affecting commercial aviation.

The federal government has been involved in air traffic control in the United States ever since a midair collision between two airliners over the Grand Canyon in 1956. Over time, the Federal Aviation Administration has provided an increasingly sophisticated national air traffic control system and promised upgrades to move an increasing number of aircraft safely through federal airspace with global positioning system technology.

Boyd noted that federal authorities first began talking about a satellite-based, next-generation air traffic control system in 1999. The next-generation system would enable planes to use airspace more efficiently and fly routes that better utilize fuel.

But 15 years later, lawmakers continue to defer the issue, using short-term patchwork funding plans to counter sequestration.

Some panelists told attendees they should continue to press the government to implement the system. But they said airlines should also take a look at their own operational challenges.

“Airlines have taken a capital-intensive business and turned it into a labor-intensive business with high capital costs, the worst of all worlds,” said panelist Michael Baiada, CEO of ATH Group.

Baiada co-authored with Boyd a concept called “Free Flight” that puts air traffic control decisions into a computerized air traffic management system that controls spacing between aircraft.

Baiada said airlines need to look beyond a new system to make air travel better, starting with the industry’s 85 percent on-time rate.

“Operational excellence is critical for consistent airline profitability and employee morale,” Baiada said.

He said fixing scheduling inefficiencies is a first step in treating customers better and fixing “operational dismality.”

A continuing issue for airlines will be what normally is a company’s biggest expense — its fuel costs.

Panelist Ben Brockwell, director of data pricing and informational services for the Oil Price Information Service, said fuel costs would continue to be a concern for airlines because of ongoing geopolitical strife across the globe.

Airlines have seen prices drop in recent years, but Brockwell said political upheaval in Libya, Iran, Iraq, Ukraine, Russia, Nigeria and Venezuela have limited the flow of crude oil to refineries.

Some airlines have undertaken their own strategies to keep fuel costs down. Atlanta-based Delta Air Lines, for example, acquired its own oil refinery to keep costs down while Hong Kong-based Cathay Pacific has invested in alternative fuels.

Another area of concern for airlines is taxation.

Nicholas Calio, president and CEO of Airlines for America, said that a national airline policy is critical to improve air travel by battling flight delays, adding flight frequencies, serving more destinations and keeping tickets affordable. A national airline policy also would address fuel efficiency and working with engine manufacturers toward curbing aircraft engine emissions.

Contact reporter Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow him on Twitter @RickVelotta.

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